Nektar Hit With Double Downgrade From Goldman: 'Significant Challenges In Rebuilding Confidence'

Nektar Therapeutics NKTR has seen several setbacks in the near-term, including sagging revenues and a regulatory delay for its investigational opioid analgesic.

The Analyst

Goldman Sachs analyst Paul Choi downgraded Nektar from Buy to Sell and reduced the price target from $54 to $16. 

The Thesis

Nektar shares have underperformed over the past 18 months as execution missteps related to suboptimal batches of the multiple myeloma drug bempegaldesleukin overshadowed announcements of mostly positive clinical developments, Choi said in the Tuesday downgrade note. (See his track record here.) 

This has driven investor uncertainty over bempeg's safety or efficacy, shifting the focus to the company's ability to execute on a large-scale clinical development program, the analyst said. 

Notwithstanding the 60% downside in the stock since its Jan. 19 high, Choi said the uncertainty on both these points will likely continue to be an overhang.

"We believe NKTR now faces significant challenges in rebuilding confidence in the clinical and commercial outlook for bempeg + Opdivo, which we now believe will take several years longer than prior, opening opportunities for competitor drugs that have recently reported positive trial results." 

Citing negative clinician checks and the developmental plateauing of the broader I/O field, Goldman Sachs downgraded Nektar to Sell.

Near-term catalysts are unlikely to re-rate the stock in the face of quality issues and a narrower focus for bempeg, Choi said.

The Price Action

At last check, Nektar shares were sliding 10.93% to $16.63. 

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