Nektar (NKTR) A Dream Stock For Senior Biotech Analyst; Solid Phase I Data For NKTR-105 Predicted
On Monday April 26, 2010, 10:26 am
67 WALL STREET, New York - April 26, 2010 - The Wall Street Transcript has recently published its Biotechnology & Pharmaceuticals Report offering a timely review of the sector to serious investors and industry executives. This Special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
In the following brief excerpt from the Biotech And Pharmaceuticals Report, expert analysts discuss the outlook for the sector and for investors.
Dr. Jonathan Aschoff, Ph.D., is a Senior Equity Analyst at Brean Murray, Carret & Co., LLC. Prior to joining the firm in 2003, he held positions as a Senior Biotechnology Analyst at Friedman, Billings, Ramsey & Co., Inc., and at what is now RBC. He also served as an Analyst at Sturza Institutional Research. Prior to Wall Street, Dr. Aschoff was a Research Technician at New England Medical Center. He earned a Ph.D. in molecular biology and microbiology, as well as a B.S. in biology from Tufts University.
TWST: What about Dendreon? You had a "sell" rating for five years and now you have a "buy" rating. What happened?
Dr. Aschoff: They put up solid data early in 2009. I think the thing to learn from Dendreon (DNDN) is when a stock is essentially at an all-time low going into a pivotal event, you might want to back off from being so aggressive with a "sell" rating. You might have wanted to consider that hardly anyone favored it then, so how much lower could it go? I was able to see the data presented in Chicago last year, and then my last concern of stroke imbalance, which was an imbalance in the first two Phase III trials, was assuaged when there was no imbalance in the IMPACT trial.
The trial arms were perfectly balanced, 6-3 for a 2-1 randomized trial. So I had no safety concerns, and that's when I went from the "hold" rating that I went to about a week before to a "buy" rating at about $20 per share, and it has been almost a double from there. I don't see anything getting in the way of FDA approval for Provenge. Approval would be a material risk reduction that would justify the stock to be well into the $40s because now you have removed FDA risk and Dendreon now just has to commercialize it, which they have enough money to do smoothly, and to train the employees properly.
TWST: Why do you like Ardea?
Dr. Aschoff: Because by the time this interview is published, I think you are going to get a very positive Phase IIb monotherapy result. The bears think Ardea's drug is unsafe; they think it works, but that it's unsafe. I think it works, I agree with them on that, and I think it's safe. I don't think you are going to have kidney complications - that's the whole argument. I cover a lot of battle ground stocks and RDEA is one of them. Their monotherapy Phase IIb data should look good and so should their combination therapy data in April. And so we have imminent catalysts, which is why I launched coverage in December. I expect positive Phase IIb data to beget acquisition of the company.
TWST: What about Nektar?
Dr. Aschoff: Nektar (NKTR) is one of my favorite companies. I had an excellent experience with the CEO and the Chief Operating Officer when they ran Sirna, my best-performing stock. Now Howard Robin is the CEO of the company. He came in, completely altered the company, just like he did at Sirna, and he's taking it in a different direction successfully and getting deals that are far more lucrative than Nektar ever got prior to Howard joining the company in January 2007, which was a month after Merck (MRK) bought Sirna. To come into a platform technology and completely revamp that platform technology to something much more appealing to partners and investors - and he clearly did that - I'm looking for him to sell this company just like he sold Sirna. It's ready to be sold for a specific reason, and that is that this is the only company I know that can reproducibly pegylate or add polymers to small-molecule drugs.
This is common with protein drugs, but this company is the only one that can reproducibly do this to small-molecule drugs. And that gives you 20 more years of patent life because you've changed a generic drug, meaning that you've actually covalently bound something to it. You are not putting it in some control-release pill or something like that. When you change the chemistry of it, now it is a new chemical entity and you get a full 20-year patent on it. And they've already done this; they had some great Phase II data. I assume they are going to get some very solid Phase I data from the next cancer drug they'd modified, NKTR-105.
And you can take less of those drugs, NKTR-102 and NKTR-105, because you increase the half-life through modifying them. The drugs last almost 50 times, 40 times, 20 times as long as the original versions. So the drug stays in your body for a lot longer than the original drug. I don't know of too many other instances where you get a safety benefit and an efficacy benefit. They are generally at odds with one another - improve one, lose the other. Nektar's pipeline is something that would keep a pharma company busy, altering small-molecule drugs that they know work, but just making them materially better.
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