BMS, Nektar partner on NKTR-214 combos in $3.6B deal

Nektar Therapeutics (NASDAQ:NKTR) gained $8.34 (11%) to $84 on Wednesday after partnering with Bristol-Myers Squibb Co. (NYSE:BMY) to develop and commercialize Nektar's NKTR-214 in combination with BMS's anti-PD-1 mAb Opdivo nivolumab and Opdivo plus the pharma’s Yervoy ipilimumab in select solid tumors.

The deal leaves the door open for the biotech to still partner the asset for other combinations and indications.

Nektar will receive an upfront payment of $1.9 billion, including $1 billion in cash and $850 million in an equity investment. According to BioCentury's BCIQ database, the deal's total upfront payment is the largest ever for a biotech deal. BMS will purchase 8.3 million shares at $102.60, which represents 4.9% ownership, Nektar President and CEO Howard Robin said on a conference call Wednesday. The price is a 36% premium to Nektar's close of $75.66 on Tuesday, before the deal was announced.

Nektar is also eligible for up to $1.8 billion in milestones. The biotech will receive 65% of worldwide profits, and BMS will receive the remainder.

NKTR-214 is an immunostimulatory cytokine engineered to selectively activate IL-2 receptor beta chain (CD122; IL2RB) receptors on cytotoxic T cells, resulting in increased PD-1 expression on T cells and natural killer cells in the tumor microenvironment.

Nektar and BMS will collaborate on registration-enabling trials to treat more than 20 indications including renal cell carcinoma, melanoma, triple-negative breast cancer, non-small cell lung cancer (NSCLC), small cell lung cancer, bladder cancer, colorectal cancer, gastric cancer and sarcoma. BMS will cover 67.5% of the development costs for trials with Opdivo, and 78% of costs for trials including Opdivo plus Yervoy. On the conference call, Robin said Nektar's annual development costs are capped at $125 million.

A Nektar spokesperson told BioCentury the company estimates that it will spend up to $600 million for development over the next five years.

For the partnered indications, Nektar and BMS will not be able to begin trials of compounds covered under the deal in combination with other potentially competing molecules with an overlapping mechanisms of action. For example, a trial of NKTR-214 plus a rival anti-PD-1 or anti-PD-L1 would need to wait until NKTR-214's launch or three years from the deal's effective date, Robin said. After the latter of those two events, there will be a three-year period in which neither partner will be able to collaborate with a third party on a competing trial. Both partners will be able to otherwise develop NKTR-214 in combinations with their own or third-party compounds.

The deal is expected to close next quarter.

Nektar's ongoing Phase I PROPEL trial of NKTR-214 in combination with anti-PD-1 mAb Keytruda pembrolizumab from Merck & Co. Inc. (NYSE:MRK) or anti-PD-L1 mAb Tecentriq atezolizumab from Genentech Inc. falls outside this waiting period, Nektar told BioCentury. PROPEL will enroll about 60 patients with metastatic melanoma, urothelial bladder cancer or NSCLC.

Nektar and BMS plan to begin mid-year two Phase III trials of NKTR-214 plus Opdivo to treat RCC and melanoma. They previously partnered in September 2016 to evaluate the combination in Phase I/II trials.

Through Tuesday’s close Nektar’s shares were up 104% since Nov. 13, after it reported Phase Ib data showing NKTR-214 plus Opdivo led to overall response rates of up to 64% among 35 evaluable patients with advanced melanoma, RCC and NSCLC in the Phase Ib/II PIVOT-02 trial. Additional data from PIVOT-02 are slated to be reported at the American Society of Clinical Oncology (ASCO) meeting in June (see BioCentury Extra, Nov. 13, 2017).

After rumors that Nektar was exploring options surfaced early this month, buysiders told BioCentury Nektar's valuation is largely tied to NKTR-214 (see BioCentury, Feb. 9).

This quarter, Nektar plans to begin the Phase I REVEAL trial of NKTR-214 in combination with its NKTR-262 to treat cancer, Nektar said. According to Nektar's website, the study will also include Opdivo. NKTR-262 is a small molecule agonist targeting toll-like receptors (TLRs).

Nektar also has an ongoing preclinical collaboration with Takeda Pharmaceutical Co. Ltd. (Tokyo:4502) evaluating NKTR-214 in combination with five compounds, including a proteasome inhibitor to treat lymphoma, melanoma and CRC.

Yervoy is a human mAb against cytotoxic T-lymphocyte associated protein 4 (CTLA4; CD152).