A little less than a year ago, an FDA adcomm unanimously rejected Nektar Therapeutics’ opioid program, effectively sending it to the chopping block. Now, looking for a quick cash infusion to finance clinical tests for two other candidates, Nektar will sell off royalties for its only two approved US medicines.
Royalties on future sales of partner meds Adynovate and Movantik will be turned over to Healthcare Royalty Management in exchange for $150 million in cash, San Francisco-based Nektar announced Tuesday morning. HCR is expected to make the payment by the end of the year, and Nektar said it plans to put the funds toward clinical trials for its early- and late-stage immune-oncology programs targeting IL-2 and IL-15.
Investors were mostly muted on the news, with Nektar $NKTR shares up as much as 4% in early Tuesday trading. But by the closing bell, the stock price had fallen to mostly flat.
With the deal, HCR is eligible for royalty payments of up to $210 million for each drug through 2025; if that figure isn’t met by then, $240 million for each. Once those numbers are reached, royalty rights will be returned to Nektar.
Adynovate is a hemophilia A drug on which Nektar partnered with Baxalta, a former Shire company now owned by Takeda. It’s an extended half-life recombinant factor VIII (rFVIII) treatment. Per the terms of Nektar’s collaboration with Baxalta, Nektar had been eligible for royalties of 4% to 6% on the first $1.2 billion in yearly sales, followed by a flat 13% royalty on every subsequent dollar.
Movantik, meanwhile, was developed in tandem with AstraZeneca for opioid-related constipation in adults. Nektar had pinned the drug as a potential blockbuster, but sales got off to a slow start after its 2014 approval. Eventually, AstraZeneca sold most of Movantik’s global rights to RedHill Biopharma for $67.5 million back in February.
Under its deal with AstraZeneca, Nektar was to receive escalating royalties on the drug starting at 20%.
Nektar’s cash infusion will go mainly toward two of its programs: bempegaldesleukin (or NKTR-214) and NKTR-255. The former is the company’s current lead pipeline program, a CD122-preferential IL-2 agonist, and is being studied in several Phase III trials in combination with Bristol Myers Squibb’s Opdivo. Some of the indications being looked at include metastatic melanoma, renal cell carcinoma and muscle-invasive bladder cancer.
Researchers are also looking at bempegaldesleukin as a monotherapy and in combination with Keytruda and other in-house programs, though those studies are earlier in the development stages.
NKTR-255 is an IL-15 receptor agonist that Nektar says is designed to expand NK cells. The candidate, wholly owned by Nektar, is in two Phase II studies — one for non-Hodgkin’s lymphoma and multiple myeloma in combo with Rituxan or Darzalex, and another in head, neck and colorectal cancer paired with Erbitux.
Nektar got off to a rough start in 2020 when its opioid program was rebuffed by an FDA adcomm 27-0 in January. The former program, dubbed NKTR-181, had been billed by the company as a less-addictive option to oxycodone, but regulators as well as adcomm members noted the declining use of opioids by physicians across the country.
The agency was also concerned over the fact that the experimental drug could still be physically manipulated, after which it could be subject to abuse. CEO Howard Robin had laid out a glowing sales pitch for the program in 2017, only to change his plans and spin it out into a new subsidiary in 2019.