Nektar Therapeutics: The Time Is Nigh

| About: Nektar Therapeutics (NKTR)


There is a binary event coming up within the next four weeks.

ASCO data are coming within two weeks.

It is time for good science to be revealed.

In my earlier article, I associated (NASDAQ:NKTR) with good timing and good science. With the just confirmed FDA announcement that the opioid-induced constipation (OIC) advisory meeting will take place on June 11th and 12th, we now have the potential for getting the issue of timing answered for those who have believed in the science behind the energies of Nektar and AstraZeneca's efforts in getting FDA clearance for Naloxegol. The first look at what this critical advisory committee will be seeking as for answers is the public release planned by the FDA, where they will publish for public consumption the background material at least two business days before the meeting. So if all goes as planned, on June 9th, we should be able to see the precise issues that Nektar and AZN will have to address during their specific time before the committee.

The FDA has requested this OIC meeting based on the following agenda:

The committee will discuss the potential cardiovascular risk associated with products in the class of peripherally-acting opioid receptor antagonists and the necessity, timing, design and size of cardiovascular outcomes trials to support approval of products in the class for the proposed indication of opioid-induced constipation in patients taking opioids for chronic pain.

The basis for this advisory committee being formed is due to the previous observations that cardiovascular events have occurred in this class of drugs. Entereg, the FDA-approved drug developed by Cubist, has clear warning labels for cardiac events. As a result of these events, they have highly restricted usage for Entereg, where they limit dosage to 15 doses being the maximum. Currently, Cubist has on hold its trials for expanding the usage of Entereg.

However, it appears the reason for the called advisory meeting is the currently submitted drug, Relistor, which is marketed by Salix (NASDAQ:SLXP). Salix and its partner, Progenics (NASDAQ:PGNX), are hoping for an expanded usage for this drug, however, the FDA has questions about the cardiac events noted in their expansion trials. In 2012, the FDA issued a CRL that requested additional testing for this drug that is delivered by injection. It should be noted that the Nektar drug is a pill formulation.

It is my opinion that Nektar and AstraZeneca are being grouped into this cardiac review by association that isn't borne out in the extensive clinical trials that have been conducted for Naloxegol. There is no question that Nektar and Astra have conducted the most comprehensive Phase III trials in the history of OIC drugs. Through four clinical trials, they have proven the safety and efficacy of Naloxegol. With the latest two trials that involved 1,300 patients, the 25-milligram dose of Naloxegol achieved statistical significance in both the primary and secondary endpoints. More importantly, as it relates to cardiac events, there were two externally adjudicated MACE events in the 270 patients in the usual care arm of the trial. But for the more important arm of patients in this detailed trial, there were only two externally adjudicated MACE events in the 534 patients taking Naloxegol. In layman's terms, this simply reflects that with twice as many patients taking Naloxegol as compared with the other arm of patients in the trial, there were the same numbers of cardiac events. This clearly, in my opinion, demonstrates the safety of Naloxegol for the massive number of patients that are in need of an effective and safe treatment method for OIC.

The market for an effective OIC drug is huge. There are nearly 70 million patients in the five largest markets that are being prescribed opioids for the treatment of pain. For those being prescribed such opioids, nearly 80%, or 56 million, develop OIC. Of this number, 50%, or 28 million, find that a normal laxative provides them no relief from their OIC condition.

This is why AstraZeneca was willing to offer such a lucrative deal in order to partner with Nektar. If one ignores the previously paid upfront monies that Astra has provided Nektar, we are looking at $35 million if no significant pre-approval CE safety studies are required in the United States. Then, if the planned launch gets the go-ahead in the first quarter of 2015, Nektar will receive $100 million in the US and another $40 million for the European launch. Plus, Astra will then pay Nektar escalating double-digit royalties on global sales. An additional part of the marketing agreement allows for sales milestones adding additional payments up to $375 million accruing to Nektar.

Investors in Nektar should note one major caveat as it relates to the already paid upfront milestone payments made by AstraZeneca. Should the FDA require additional and onerous additional trials before approving Naxolegol, there are clawback provisions in the Nektar contract that would force it to repay some of the payments that Astra has provided it with. This contract provision only adds to the critical issues that must be resolved in Nektar's favor in this upcoming OIC meeting.

Other events that will be occurring in the near future will be limited Phase II data for NKTR-102 presented at ASCO on May 31st. The data will be on a 20-patient trial for those suffering from glioma. The abstract for this major cancer conference is already available for public consumption. The data to this point and for this indication look good; however, it will be the Phase III data that become available in Q1 2015 for treating metastatic breast cancer that will be the tipping point for NKTR-102 receiving FDA approval for what is already a drug on Fast Track Approval by the FDA. This Phase III trial is fully enrolled, and in January of this year, the DMC review process gave approval, based on safety and efficacy, to move to final review without any modification in the Phase III trial.

However, the full utility of this potential cancer therapy will not be known until the Phase III data are released in Q1 2015. Giving any predictions on the success of the drug would be premature at this time. However, at the bare minimum, it would be good news if efficacy is non-inferior to the current formulation of this cancer drug, and the NKTR drug presents fewer adverse dosing issues than are common for cancer therapies. Current data for NKTR-102 have clearly indicated that patients have fewer debilitating complications in taking the drug. So, non-inferior efficacy with fewer toxicity issues found in most chemotherapies should provide the FDA with the urgency to move this already fast-tracked drug candidate to a quick final approval. Nektar is looking at being able to file for regulatory approval in Europe and the United States in the second half of 2015. This drug is fully controlled by Nektar, so any partnership alliances made in the near future would be a real plus for investors.

The next major event that should impact Nektar within the next few months is the development project with Baxter for its BAX 855 therapy used by hemophilia patients. The trial enrollment was completed last November, and Baxter is planning to file its Biologics License Application (BLA) before the end of the year. Since this project involves the utilization of Nektar's PEGylation technology, this will extend the half-life recombinant factor for the already approved Baxter drug. This FDA approval will give Nektar the opportunity to gain meaningful royalties on a drug that is already the dominant drug in this market. Baxter currently generates about $2 billion in annual sales, and with this newer version, it will extend the patent on this highly successful treatment for those suffering from hemophilia.


  • NKTR-102 -- Data will be presented on May 31st at the most important cancer conference - ASCO.
  • Naloxegol -- Will be reviewed by FDA Adcom Committee on June 11-12, 2014. The agenda for this meeting will be available for public consumption on June 9th. A positive response from this committee and no request for additional safety trials is critical for the immediate success of Nektar and its stock investors. The immediate accrual of upfront monies due on approval and launch, planned by AstraZeneca in early 2015, will be the biggest milestone in the history of Nektar.
  • BAX-855 -- Should final trial results warrant the filing of the planned BLA by the end of this year, this will bring in additional milestones payments and then significant royalties on what is already a $2 billion product for Baxter.

Yes! Timing and good science is the key for biotech investing. As for Nektar, it has been a long wait for the good science being converted into good timing. The time is nigh. Less than four weeks until the answers start unfolding in order to answer these two assumptions - good science and good timing. Now is the time to deliver more than the promises. The journey has been long and arduous for some of us! At the current time, I have plans for attending the June 11-12 Adcom meeting in Silver Spring, Maryland. I will provide an update based on the decisions made by this committee -- fingers are crossed!

Disclosure: I am long NKTR, SLXP, PGNX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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