Shares of Nektar Therapeutics (NASDAQ:NKTR) are down over 33% in pre-open Monday after the company said it stopped all trials involving its key cancer drug after it had failed to yield results.
In the suspended trials, Nektar was testing the combination of its drug bempegaldesleukin and Bristol Myers Squibb (NYSE:BMY) and Merck's (NYSE:MRK) cancer drugs OPDIVO and KEYTRUDA, respectively.
Nektar and Bristol Myers struck a deal in 2020 to test a combination drug. Furthermore, Nektar reached an agreement with SFJ Pharmaceuticals in 2021 to test a combination therapy with Keytruda.
In March, Nektar and Bristol stopped the two late-stage studies where they tested their combination therapy after one of the trials on melanoma patients didn’t meet expectations.
The drugmakers also discontinued another trial on Thursday, after their combination therapy failed to meet expectations in a late-stage study in patients with renal cell carcinoma and urothelial carcinoma.
Goldman Sachs analyst Chris Shibutani downgraded to Sell from Neutral with a $3.00 per share price target following the announcement of Thursday. The analyst expects shares to “relatively underperform over the near-to-intermediate term.”
“We view NKTR shares as likely to underperform relative to other names in our coverage over the near to intermediate term as the company transitions through the uncertainties of a strategic realignment. With the potential removed for bempeg to provide upside surprise or generate value, we see limited scope from upcoming nearer term catalysts to drive an inflection in NKTR in the near-to intermediate term,” Shibutani said in a client note.
BTIG analyst Robert "Bert" Hazlett commented:
“These disappointing results follow equally disappointing data for the combo in 1L melanoma, and now result in the discontinuation of these and all other ongoing studies in the collaboration between Nektar and partner Bristol-Myers. We expect a material consolidation in Nektar's operations as a result.”
Nektar stock price closed at $6.16 on Thursday.
By Senad Karaahmetovic