AMGN - Nektar Therapeutics Likely To Drift And Wobble Ahead Of Key Phase II Data In 2025

2024-06-20 23:47:38 ET

Summary

• Nektar Therapeutics has two Phase IIb studies underway for rezpeg in atopic dermatitis and severe alopecia areata, with read-outs expected in 1H'25.
• Success in either indication would significantly boost Nektar's prospects (and share price), but Phase Ib data on rezpeg in AD don't establish a clear-cut argument of superiority.
• NKTR-0165 is an interesting compound, but will only just be starting human studies in 2025.
• I can argue for a $2.50 fair value on the basis of rezpeg's prospects in atopic dermatitis, but investors have to accept the potential of total clinical failure.

Failure is the base-case assumption for biotechs, as fewer than 10% of drugs that go into Phase I testing will ever make it through to FDA approval and commercialization. Even so, there are biotechs that had significant, if not crushing, setbacks early in their history only to eventually see significant success later on with different compounds – companies like Alexion and ICOS were acquired some time ago, but current publicly-traded stocks like Exelixis ( EXEL ) and Incyte ( INCY ) could serve as examples as biotechs that enjoyed a “second life” after major setbacks....

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