Nektar’s long-acting IL-2 NKTR-214 has 'zero value,' claims analyst

Nektar stock has tripled in the past year on high expectations for NKTR-214. (nosheep / Pixabay)

Nektar Therapeutics is a multibillion-dollar biotech with most of its value tied to a single drug—and that drug simply doesn’t work, according to a just-published report.

The source of the report is Plainvew LLC, which acknowledges it has a short position in Nektar, but analyst Aaron Wedlund is adamant that the biotech’s long-acting interleukin-2 (IL-2) candidate NKTR-214 is destined to fail. He reckons that the drug is “the next epacadostat”, referring to Incyte’s ill-fated IDO inhibitor.

“The stock has tripled in the past year on high expectations for NKTR-214 (pegylated IL-2) which makes up most of the current enterprise value,” says Wedlund. “Debate has centered on objective response rates, but when you look under the hood and compare NKTR-214 with IL-2, it is stunningly obvious that NKTR-214 does not work.”

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Top-line data from the phase 1/2 PIVOT trial of NKTR-214 in combination with Bristol-Myers Squibb’s checkpoint inhibitor Opdivo were reported at this year’s ASCO meeting and spooked investors by showing a reduced overall response rate from an earlier read-out. While the company said the patients hadn’t been on the combination long enough to show a response, concerns were voiced that the company may be pitching into a phase 3 program with a fairly limited set of clinical data.

NKTR-214 has already failed to hit the mark as a monotherapy, and Plainview says that is down to a lack of efficacy compared to short-acting IL-2, with Nektar’s drug actually compromised by its extended half-life as the pegylation “severely hinders” its ability to bind with target IL-2 receptors.

“The notion that a failed monotherapy will add statistically significant value as part of a combination therapy has never worked in practice,” says the Plainview report.

“In cancer research, the total efficacy of combination therapy is less than the sum of the parts, not more. This is especially true for IL-2 which—despite showing indisputable efficacy as monotherapy—failed to show benefit in any of the three controlled trials where it was tested as part of a combination therapy.”

NKTR-214 was designed to work like IL-2 by stimulating cytotoxic T cells, but sidestep IL-2’s boosting of immunosuppressive Treg cells that is thought to limit the drug’s efficacy. However, Plainview argues that it never matches conventional IL-2 when it comes to activity in the body because it is driven by a long half-life rather than potency and only achieves 7% to 20% of IL-2’s pharmacological activity. It also doesn’t prevent Treg cells from proliferating, according to the report.

Put simply, the argument is that NKTR-214 didn’t work in PIVOT because its therapeutic effect on lymphocytes is too weak; past studies show that a 200-300% increase in lymphocytes is required for IL-2 to achieve a clinical response, but in PIVOT NKTR-214 induced only a 33-50% increase.

“Using NKTR-214 to treat cancer is akin to trying to cook a steak by heating it 4° F for 1,000 minutes instead of 400° F for 10 minutesit never generates enough effect to overwhelm and kill the malignant cells,” it says.

The report also takes a swipe at Nektar’s decision to disclose response rate at ASCO for only 31% of dosed patients, having reported 95% at the earlier read-out, which it says is an “unprecedented level of data opacity.”

“First rule of biotechnology investing: if a company withholds data from investors, that data is always bad. Nektar’s promises may sound sweet, but reality will prove to be very bitter.”

If that turns out to be the case, it will also be a blow to BMS, which bought into NKTR-214 in 2016, shortly after Opdivo failed a phase 3 trial in first-line non-small cell lung cancer (NSCLC). Earlier this year, the company upped the ante on the deal, offering $1 billion upfront out of a total potential value of $3.6 billion.

The company's shares were down more than 3% in early trading on the news this morning.

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