Collaboration with Eli Lilly
Nektar Therapeutics (NKTR) uses its market-leading polymer conjugation technology to develop innovative drugs and PEGylated drug candidates targeting therapeutic areas such as oncology, chronic pain, and autoimmune diseases.
In 3Q17, the company reported revenues of $152.9 million, which is a YoY (year-over-year) rise of 320.7%. The sudden spurt in revenues is mainly due to the upfront payment of $150 million from Eli Lilly. Nektar attributed $128 million of this payment to revenues in 3Q17.
On July 24, 2017, Nektar Therapeutics entered into a collaboration with Eli Lilly to evaluate the clinical potential of Nektar’s investigational first-in-class resolution therapeutic NKTR-358 in at least four autoimmune indications. Nektar will be responsible for Phase 1 of the drug’s clinical development program. Eli Lilly will be responsible for sharing 75% of the total costs of NKTR-358’s Phase 2 clinical development program. Nektar can then exercise the option to participate in the NKTR-358 Phase 3 clinical development program.
Besides the upfront payment, Nektar Therapeutics will also receive $250 million in milestone payments from Eli Lilly in the future. The royalty rate payable to Nektar for NKTR-358 is in the mid-teens. That rate, however, will reach the low 20s if NKTR-358 reports global annual sales of $500 million.
Nektar Therapeutics makes up 0.97% of the total portfolio holdings of the iShares Core S&P Small-Cap (IJR).
Analyst recommendations for Nektar Therapeutics and peers
Of the 11 analysts covering Nektar Therapeutics in November 2017, five have recommended a “strong buy” for the stock, five have recommended a “buy,” and one has recommended a “hold.”
Of the 32 analysts covering Biogen Idec (BIIB) in November 2017, 65.6% have recommended a “buy” for the stock. About 41.7% of the 12 analysts covering Alkermes (ALKS) stock recommended a “buy,” while 52.4% of the 21 analysts tracking Merck & Co. (MRK) recommended a “buy.”
In the next part of this series, we’ll take a look at revenue growth projections for Nektar Therapeutics for fiscal 2017.