thx, B! Toby Smith's ChangeWave Biotech reco'd this to subscribers back in March/April 2005 along with ALKS & AMLN & others (see below).
And now that NKTR is getting their management right, perhaps Cramer with come aboard!
ChangeWave Biotech
Date and Time: 2005-03-31 17:00:00
Speculative Company - - Nektar Therapeutics (NKTR)- DIABETES
Nektar (NKTR), formerly Inhale Therapeutics, is a speculative play on inhalable insulin. The company has other agreements for cystic fibrosis and for osteoporosis – but forget about them for now.
I have watched the stock and the company for three years. In March 2002, the ChangeWave Insight service for institutional investors recommended shorting the stock due to improper trial design, predicting it would fail to get FDA approval. A good call – Nektar withdrew its application and the stock blew up.
Subsequent to this fiasco, the company renamed itself and turned over much of the trial design and implementation to marketing partner Pfizer (PFE). Pfizer and NKTR released preliminary data this summer, have submitted a drug application to European regulatory authorities, and prompted some analysts to speculate if it would get limited regulatory approval in 2005. Late last year Pfizer announced it was planning to submit an application to the FDA for Exubera sometime in 2005. The stock popped but now the pessimists are coming back into the debate.
Why I See Approval
Within a few years more than 50 million people worldwide will have diabetes – there are already 17 million-19 million people in the U.S. with some form of the disease. Many know what they are supposed to eat but do not. Many know they are supposed to monitor their glucose levels but they do not. Many know when they are supposed to take medications and inject themselves with insulin but they do not. The cost to society of diabetes and related maladies, many due to under-treatment? More than $125BN per annum (according to the American Diabetes Association) and climbing by double digits every year.
Public health authorities are desperate to contain health costs and this $125BN is a big target. Some analysts estimate 80% of diabetics under medicate themselves, leading to many costly maladies. Inhalable insulin would solve a good part of this problem.
What if There Is Limited Approval?
Many analysts lined up against inhalable insulin are betting it will get only limited regulatory approval in Europe, with a requirement for follow-up lung testing and perhaps a shot a day of insulin. I asked ChangeWave’s survey group to ask doctors about these potential limitations – and they said it would be a hit even if lung function tests and some injections of insulin are still required.
Why is this so? Simply put, many people hate needles and a large number of diabetics under-medicate themselves because of their unwillingness or inability to inject themselves.
Risks?
The risk? There is still a reasonable probability of regulatory rejection –maybe 25%-35% -- and that would cut the stock in half. If approved, it is a rocketship, even with requirements for follow-up testing and/or injected insulin to supplement Exubera.
Why Now?
European regulators are going to start talking soon and approval will occur in 2005
Pfizer is preparing its drug application and more data on the trials will be made public.
The stock has been in a holding pattern for a while.
Conclusions: High risk – a 1-in-3 chance that Pfizer and Nektar will be asked for more data or more trials, although there is little chance the drug will be killed outright. High reward – a ten bagger over the next three to four years with an approved version of Exubera – unless Pfizer takes them out.
"Growth is all that matters!" CRAMER
