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Nektar, Bristol-Myers Tie-Up for Cancer Combos Drives Stock


Nektar Therapeutics' NKTR shares increased more than 11% on Feb 14 after the company announced a global strategic collaboration agreement with Bristol-Myers Squibb BMY. Per the agreement, both companies will jointly develop and commercialize the lead immuno-oncology candidate, NKTR-214, of the former in combination with the latter’s Opdivo (nivolumab) and Opdivo plus Yervoy (ipilimumab).

Pursuant to the contract, Nektar is entitled to receive an upfront payment of $1.85 billion, which includes a payment of $1 billion in cash and an equity investment of $850 million. Nektar will also get an additional $1.78 billion potential payment on achievement of certain developmental and sale-based milestones.

Both Nektar and Bristol-Myers will share profits in the respective ratios of 65% and 35% from the potential sales of NKTR-214, worldwide.

On a positive note, Nektar not only retains its ownership of the candidate but can also continue to collaborate with other companies for its further development. While Nektar will jointly commercialize NKTR-214/Opdivo combinations in the United States as well as major markets in the EU and Japan, Bristol-Myers is entitled to solely commercialize the combinations in the other global markets.

We remind investors that Nektar is already evaluating NKTR-214/Opdivo in phase I/II PIVOT studies across five tumor types (melanoma, kidney, colorectal, bladder and non-small cell lung cancer) and eight potential indications. With this latest deal with Bristol Myers, it has been agreed upon by both companies to evaluate NKTR-214/Opdivo and NKTR-214/Opdivo plus Yervoy combinations in more than 20 cancer indications across nine tumor types.

In November 2017, the two companies reported a positive interim data from dose-escalation part of the study, evaluating the safety and efficacy of the combo therapy on patients with melanoma, renal cell carcinoma and non-small cell lung cancers.

Nektar's shares have significantly outperformed the industry in a year's time. The stock has skyrocketed 513.2% compared with the industry’s 0.4% increase.

Importantly, Nektar is also conducting a phase I/II PROPEL study to evaluate the efficacy and safety of NKTR-214 in combination with Roche's RHHBY Tecentriq (atezolizumab) and Merck's MRK Keytruda (pembrolizumab). Notably, this PROPEL study complements the company’s ongoing PIVOT trial.

Additionally, in May 2017, Nektar had entered into a research collaboration with Takeda Pharmaceuticals to explore the combination of NKTR-214 with five oncology compounds from Takeda’s cancer portfolio.

Zacks Rank

Nektar carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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