Nektar Therapeutics: Outcomes Study Still Required

Nektar’s (NKTR) pipeline features several late-stage assets. Naloxegol for opioid-induced constipation (OIC) currently gets the most attention. Positive Phase III data are already in hand, but long-term cardiovascular (CV) safety concerns persist. Given recent FDA precedence, a long-term CV outcomes study may be required, which by itself should make investors cautious on the stock at these levels.

Encouraging Phase III efficacy data...
Naloxegol is an oral, mu-opioid antagonist for OIC in non-cancer pain, a significant issue affecting 40-50% of those taking opioids. The 12-week Phase III efficacy studies (KODIAC-4 and KODIAC-5) showed encouraging but somewhat mixed results in producing statistically significant improvements in spontaneous bowel movements (SBM) compared to placebo. AstraZeneca holds WW rights to naloxegol.

...but potential long-term CV liability cannot be ruled out yet
Mu-opioid antagonist drugs are associated with potential CV toxicity – Cubist’s Entereg has a block box warning, while the FDA has concerns about a potential CV risk with the chronic use of mu-opioid antagonists and has requested Salix to conduct a CV outcomes study for Relistor. In KODIAC-4 and KODIAC-5 (and KODIAC-7, a 12-week safety extension of KODIAC-4), there were no clinically relevant imbalances in serious adverse events, but these were relatively small studies. KODIAC-8, a longer-term 52-week safety study with data expected in Q113, is therefore key to providing a better barometer of naloxegol’s safety profile.

Pipeline buffer options
If naloxegol hits a CV safety barrier with the FDA, Nektar has six further clinical-stage pipeline candidates to turn to, some already partnered with Bayer and Baxter. Nektar’s key unpartnered assets are NKTR-181 for chronic pain, a novel, abuse-resistant opioid undergoing a 200-patient Phase II (results H213); and NKTR-102 (etirinotecanin) in an 840-patient Phase III for breast cancer (results H115) and a recently complete 169-patient Phase II in ovarian cancer (FDA/EMA review Q213).

Valuation: $835m EV
Nektar has an EV of c $835m ($125m debt, $300m cash), driven primarily by expectations for naloxegol. An NDA filing is expected in Q313, but if FDA requires another CV study, the stock could suffer. Upside could come from positive KODIAC-8 data and progress with other pipeline candidates.

To Read the Entire Report Please Click on the pdf File Below.