Nektar again looks to bempeg to sweeten its valuation

The depressed company’s bempegaldesleukin, which underwhelmed in melanoma, now faces two key near-term clinical data readouts.

Few well-funded biotechs can be in need of a sentiment boost as much as Nektar. The group’s bempegaldesleukin got a $1.85bn buy-in from Bristol Myers Squibb in 2018, followed by a pledge to expand the IL-2 asset’s clinical programme, and yet its stock languishes nearly 90% off that 2018 high.

This is down to bempeg’s seriously underwhelming performance in the melanoma cohort of the Pivot-02 trial. Still, if this justifies some investors writing off bempeg, others will point to two key upcoming clinical catalysts. And, since Nektar has $1.1bn in the bank and a paltry $2.5bn market cap, its profile could offer a pleasing mix of relatively low risk and high reward.

The next big readout, expected by the end of this year, will come from the Propel study, in second-line, PD-(L)1-naive lung cancer, in which bempeg is being combined with Merck & Co’s Keytruda. Then, the first half of 2022 should bring Nektar an important controlled dataset, from a front-line phase 3 melanoma trial of bempeg plus Opdivo compared against Opdivo alone.

Analysts have slowly started priming the markets for these readouts, and well they might. There is much still riding on bempeg: if the buyside has fallen out of love with the CD122-biased IL-2 receptor agonist this is not the case for the sellside, which according to Evaluate Pharma consensus expects bempeg to bring in sales of $1.3bn in 2026.

Project Bempegaldesleukin
Company Nektar Therapeutics
Market cap $2.5bn
Product NPV $3.4bn
% of market cap 137%
Event type Data from Propel & phase 3 trials
Indication 2nd-line NSCLC & 1st-line melanoma
Date H2 2021 & H1 2022
Trial ID NCT03138889 & NCT03635983

For the Propel trial Nektar has promised remission data from around 60 subjects by the end of 2021. These will by cut by PD-L1 level into non-expressers, those expressing this biomarker at 1-49%, and 50% or above.

Since Propel is an uncontrolled study investors will have to gauge the performance of bempeg plus Keytruda on a cross-trial basis, likely against Merck’s second-line NSCLC study Keynote-001. This will not be an easy win as Keytruda is fast becoming a front-line standard of care, so Propel’s second-line, post-chemo setting might not resemble real-world use.

Indeed, since the only metastatic NSCLC setting in which Keytruda monotherapy cannot be given is PD-L1 non-expressers, it is these patients that analysts are zeroing in on. In Keynote-001 only 8-10% of PD-L1-negative patients reported remissions with Keytruda, providing a benchmark for Propel.

As such, the bull case seems to be that bempeg can turn cold tumours hot – something it was unable convincingly to do in the Pivot-02 melanoma trial – and thus make more NSCLC patients candidates for immuno-oncology. Nektar also recently added a chemo combo cohort to Propel, to help inform phase 3 design, but data from this are unlikely this year.

The big one

However Propel goes, the big readout for Nektar will be bempeg’s pivotal front-line melanoma/Opdivo combo trial, which is being run by Bristol.

This is on track to deliver PFS and ORR data together from 760 patients, after a pre-specified number of disease progressions; an initial plan for interim analysis looking just at ORR was scrapped, which some saw as positive given that ORR in front-line Pivot-02 patients was relatively weak, at 53%, versus 40% in Opdivo’s registrational Checkmate-067 trial.

Indeed, analysts have been enthused by the prospect of attention falling instead on PFS, which in Pivot-02 hit a median of 30.9 months – numerically much longer on a cross-trial basis than Checkmate-067’s 6.9 months. A third co-primary, overall survival, will be insufficiently mature at this point.

It is interesting what analysts have been able to salvage from the wreckage of Pivot-02, and no doubt Nektar and Bristol will use what they know about that trial to present the upcoming data in its best light. Investors will note that demonstrating activity head to head against Opdivo will be more difficult than showing this on a cross-trial basis, and Opdivo monotherapy need not necessarily perform as it did in Checkmate-067.

Nevertheless, the stage is set for results that could reinvigorate Nektar and the cytokine approach more generally. Evaluate Vantage will present a broader analysis of the IL-2 space in a separate upcoming story.

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