NKTR-358, an undervalued asset potentially worth more than BEMPEG
The manufacturing issues with BEMPEG set Nektar back significantly, even though finally resolved. The costs to investors are tremendous. Nevertheless,those who can hold for long term will get all their money back and likely further rewarded handsomely.
However, wall street or main street put little value on another pipeline drug, NKTR-358, which opposes the actions of BEMPEG. NKTR-358 is partnered with Lilly (NKTR-358 also referred to as LY3471851). It is in clinical trials for three indications of autoimmune diseases.
Autoimmune disorders manifested in a variety of diseases, from lupus, rheumatoid arthritis, psoriasis, to crohn’s disease and many others. One of the biologics, Humira, generates about $20 billion revenue alone for treating autoimmune disorders.
What is the cause of autoimmune diseases? Our immune system is critical for our survival by fighting infectious bugs (bacteria and viruses) or rogue cells (cancer). Indeed, our immune system creates numerous attacking immune cells. These cells are our swords to attack foreign invaders or cancer. One can imagine those swords could attack our own tissues or organs as well if not being properly regulated. In order to avoid our own organs being attacked by these swords, our immune system produces another kind of cells that sheath the swords. Autoimmune disorders arise when the immune system makes too many swords or not enough sheathes when there is no infection. Research has shown that most of the disorders are caused by lack of sufficient sheath cells.
It is no wonder all current therapeutics that include Humira, methotrexate, steroid, and many others work through reducing the production of swords (attacking immune cells). That is why most of those medications are also called immune suppressants. Reduction of immune cells increases our risk of infection (such as TB, Tuberculosis) or cancer.
Scientists have been trying a second approach, a better approach: finding ways to get our body to produce more sheath cells (T-regs) that can prevent the swords attacking our own organs without compromising their readiness to fight infections or cancer. So far NKTR-358 is the most viable approach. In fact, Eli Lilly jumped at the opportunity and paid the largest upfront payment for a pre-phase I drug candidate for only half of the US-right. Early studies in healthy volunteers produced the most impressive data in this field-----increasing the production of sheath cells (T-regs) without causing increase in attacking cells (swords). Lilly and Nektar quickly started a phase I trial with lupus patients, which has been concluded and the results will be presented in a conference the first half of this year. I believe the result from lupus trial must be really impressive, since Lilly and Nektar quickly initiated two more trials on psoriasis and Eczema with much longer duration. In addition, both companies have announced trials for additional indications in addition to a controlled phase II lupus trial.
Imagine annual revenue half of Humira……
I project that we will see an impressive phase I result from the finished lupus trial. In the second half of 2021, Lilly and Nektar will initiate three registration trials for NKTR-358, which will justify a market cap of about $15-18 billion by itself. My two-year target for NKTR is at $130-160, and three year target of $230-260.