The latest results from a collaboration testing Bristol-Myers Squibb’s cancer drug Opdivo with Nektar Therapeutics’ NKTR-214 didn’t exactly impress investors.
Wall Street analysts described the phase 1/2 clinical trial data as “underwhelming” and “immature,” and Nektar NKTR, -40.29% shares plummeted nearly 42% in extremely heavy Monday morning trade.
Combination treatments that pair two cancer drugs in an effort to boost their effect are an important trend in cancer research right now. Bristol-Myers BMY, -5.59% and Nektar’s recent phase 1/2 clinical trial looked to show that pairing NKTR-214 with Opdivo — already a blockbuster cancer drug in its own right — makes Opdivo work better.
As such, the trial results might not have reflected much on Bristol-Myers itself — if not for the company’s $1.85 million deal with Nektar, announced this past Valentine’s Day, and predicated largely on the success of this exact combination of drugs.
Bristol-Myers shares declined 5% in heavy Monday morning trade.
This made for an existential crisis of sorts, at least for observers. EvercoreISI analyst Umer Raffat asked, “was this the right collaboration to enter for BMY?”
Based on his analysis, which found that the combination was active in PD-L1 cell proteins in melanoma and renal cell carcinoma, Raffat said, “I believe this collaboration makes sense for BMY and makes sense to progress to pivotal trials.”
The February deal was structured to limit Bristol-Myers’ upfront payments and, as a result, its risk. It made Nektar eligible for up to $1.78 billion in milestone payments and allowed for profit sharing geared in Nektar’s favor, with Bristol-Myers getting a 35% cut of net profits and losses for NKTR-214.
But it was a big gamble on the success of NKTR-214, Nektar’s lead immuno-oncology drug candidate, aiming to test the drug in more than 20 indications in nine tumor types, including in combinations like NKTR-214 and Opdivo and NKTR-214 and Opdivo as well as Bristol-Myers’ Yervoy.
In spite of the market’s reaction to the news, the companies emphasized that the latest trial results met efficacy criteria in three types of cancer, and they plan to start phase 3 trials for those cancers, including one for advanced melanoma in the third quarter.
Expectations had been high prior to the results, which were announced at the American Society for Clinical Oncology’s annual meeting, in part because of the high-priced deal, and because previous results for the combination — from a phase 1/2 trial in November — had been so good.
Many also found the way the latest data were presented unclear.
The companies enrolled patients in the trial in two stages, but didn’t present results for the second stage of patients on their own. As a result, analysts had to do their own, haphazard math.
“And when we do — it doesn’t look good,” said EvercoreISI analyst Josh Schimmer, who covers Nektar. “We remain unconvinced that ‘214 adds benefit to Opdivo,” he added.
Others, however, noted the positive results for PD-L1 patients, and response rate improvements over time.
The data are “supportive of the long-term potential for NKTR-214 to enhance the efficacy of PD-1 in a number of tumor types,” said J.P. Morgan analyst Jessica Fye, “but expect near-term volatility based on immature response rate data (not entirely unexpected) that came in on the low end of Street expectations” and without an update on lung cancer patients.
Nektar shares have dropped 33.8% month-to-date, while Bristol-Myers shares have dropped 4.2%. The S&P 500 SPX, +0.26% has risen 1.4% month-to-date, and the Dow Jones Industrial DJIA, +0.71% as surged 1.7%.