Adding Nektar Therapeutics' most advanced drug to Bristol Myers Squibb's Opdivo didn't improve outcomes for melanoma patients — leading NKTR stock to crash Monday.
The companies will stop enrollment in one of two melanoma studies still enrolling patients. They will further examine the data. Bristol Myers and Nektar said they will continue evaluating the combination of Opdivo and Nektar's drug called bempegaldesleukin in patients with kidney and bladder cancers.
Mizuho Securities analyst Mara Goldstein notes Bristol Myers and Nektar will have the results of the latter studies in the second quarter. Bempegaldesleukin belongs to a class of drugs called IL-2 prodrugs. It works by stimulating specific cancer-killing cells.
"Though given the failure of (the melanoma study called) Pivot-IO-001, the probability of success of those trials is likely to be heavily discounted," she said in a report to clients.
On today's stock market, NKTR stock plunged 60.9% to close at 4.16. Bristol Myers stock ticked up a fraction to 69.24.
NKTR Stock: Sentiment Was Already Low
Bristol Myers and Nektar tested the regimen against Opdivo alone in patients with melanoma that spread or couldn't be surgically removed.
An independent committee found the regimen didn't lead to improvements for those patients. In response, the companies say they'll dig into the data. They'll also stop another study in patients who've had melanoma removed but are at high risk for reoccurrence.
Mizuho's Goldstein notes sentiment surrounding NKTR stock was low heading into the study. She kept her buy rating and 35 price target on shares, however.
The results also rocked Alkermes stock, which sank 3.3% to 23.57. Alkermes is also working on a potential rival to bempegaldesleukin called nemvaleukin. The latter drug has the same mechanism as Nektar's, but "has arguably shown better data," Mizuho Securities analyst Vamil Divan said.
"However, given the questions and uncertainties around the IL-2 space, we believe today's news may lead to investors taking a more cautious view on the IL-2 space overall," Divan said in a note.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
