Nektar: Time To Abandon Ship

Jul. 17, 2022 12:51 PM ETNektar Therapeutics (NKTR)13 Comments


  • Nektar's bempeg has been shelved and 70% of the workforce let go.
  • Two assets now remain, with uncertain pedigree.
  • It is time to forget this ticker for a long time.
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Burst balloon impaled on cactus

Richard Drury/DigitalVision via Getty Images

After three trial failures and a discontinuation, Nektar Therapeutics (NASDAQ:NKTR) is finally giving up on Rumpelstiltskin - I mean bempegaldesleukin. Bempegaldesleukin spun a lot of wool - mostly over our eyes - but none of that turned into gold. And, if you take Nektar’s history of failure after failure, starting with that opioid drug whose name I have forgotten and do not wish to remember, it is no wonder that this company needed some restructuring. Too bad they only removed pedestrian workers (see below, though).

I see from one of my earlier articles that I had good things to say about bempeg:

Especially interesting in all these graphs is the scope of the medicine in attenuating disease conditions in both PD-L1 positive and negative patients. Why? Because 70% of cisplatin-eligible patients are PD-L1 negative, 50% of first-line locally-advanced or metastatic urothelial cancer patients are cisplatin-ineligible; and checkpoint inhibitors do not work on PD-L1 negative patients. So bempeg extends the scope of therapy to cisplatin-ineligible, PD-L1 negative patients. This is its key USP.

I also note the following exchange on a Seeking Alpha report from March, where the author ended his piece with this statement:

Read why Seeking Alpha contributor Avisol Capital Partners considers Nektar (NKTR) a hold.

And a commenter who was bullish NKTR responds with:

And yet again SA miss quotes Avisol partner for their own skewed view. …Get your act together SA, Avisol quoted NKTR as an opportunity!!!

I thank this commenter for the confidence, however I need to clarify something to my readers once again. First, I am not always right; actually, if you believe TipRanks, I am almost always wrong. Of course, their algorithm is a little hard to understand. They have characterized my view on the last 10 covered tickers as all being bullish, which is absolutely not true. I am not bullish SVC, or IGR, or MRTX. If you go to the respective ticker pages on SA, you will see I say “Hold” for MRTX:

MRTX stock

Seeking Alpha MRTX page (Seeking Alpha WEBSITE)

And I say BUY for VSTM:

VSTM stock looks attractive

Seeking Alpha VSTM page (seeking alpha website)

Seeking Alpha has a specific system for its authors - when I submit an article, I am required to say whether the stock is a Buy, Sell or Hold. If I select anything other than Hold, I have to give reasons. In 95% of cases, I choose “Hold.” Hold means the following to me:

  1. If you are already invested, do not buy any further, or sell, because I am not sure about this stock’s future.

  2. If you are not invested, hold off, do not buy or sell, because, again, I am not sure about this stock.

If you see my last 3 articles on NKTR, they are all uniformly “hold.” That means, I did not recommend buying this stock at this time, because I did not form a concrete opinion on this stock.

In March, bempeg failed its most critical trial, melanoma with Opdivo. This wasn’t just a failure but an abysmal failure. The PIVOT IO-001 failed all three endpoints - PFS, ORR and OS. They also discontinued the PIVOT-12 study in adjuvant melanoma. Other studies were continuing with bempeg at that time.

A month later, Nektar/BMY discontinued their entire bempeg clinical programs, including renal cell carcinoma and bladder cancer. This ​​decision was based on the results from pre-planned analyses of two late-stage clinical studies, which must have been bad enough for them to abandon the entire thing. Along with these, they decided to discontinue every other clinical study they had going for bempeg. This IL-2 molecule was basically thrown into the garbage bin.

What they have left now is the following:

NKTR pipeline

NKTR Pipeline (NKTR website)

This looks impressive enough - as it is meant to look. However, before we get all wide-eyed, we have to remember, this company lost an entire set of programs, including pivotal trials, and their latest stage program is now in phase 2. They have to climb the hill all the way up again.

NKTR-255 is in Phase 2 with partners Pfizer (PFE) and Merck KGaA (OTCPK:MKGAF) (OTCPK:MKKGY) for locally advanced or metastatic urothelial carcinoma, while NKTR-358 is in Phase 2 in partnership with Eli Lilly (LLY) for systemic lupus erythematosus and ulcerative colitis. They just let off 70% of their workforce in a major restructuring effort that they say will save them enough money to last them to H1 2025. Almost 500 out of their 740 member staff are being let off. There’s no news of a C-suite reshuffle, though, except for CMO Dimitry Nuyten and chief commercial officer John Northcott, who will also be leaving; the former as the one responsible for the science, I guess, while the latter because he is no longer needed. The CEO is not leaving.

BMY paid $3.6bn for bempeg in 2020 in what was then the largest ever licensing deal in biopharma history. Bempeg is now gone, and there’s not much to talk about the remaining programs at this time. However, the company has proven once again how shaky the biopharma industry is; not even the research team at BMY could figure this one out. Too bad they had to do this in 2022, when the entire industry is already shaken to its core.


NKRT has a market cap of $635mn and a cash balance of $667mn, so they are trading below cash. This cash is the remnant of the huge billion dollar upfront payment they received from BMY back in 2020. With the large layoff, they now expect this cash to last them till 2025.


The conclusion is foregone. There is no dead cat bounce here. NKTR is a ship that needs to be abandoned. In this sort of market, no investor can afford to forgive two pivotal failures.

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This article was written by

Avisol Capital Partners profile picture
Cautious, low key, disciplined investing in biopharma stocks
Avisol Capital Partners runs the Total Pharma Tracker Seeking Alpha Marketplace service. This is managed by Dr Asok Dutta, BVScAH and Dr Udaya Kumar Maiya, MD Oncologist. The service offers end-to-end research on both investing and trading ideas everyday, and includes a 150-stock watchlist and two 40-stock model portfolios that are continuously tracked.

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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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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