Nektar Therapeutics: Navigating the Challenges of Drug Development

Nektar Therapeutics is a biopharmaceutical company focused on developing innovative medicines in the areas of immunology, oncology, and autoimmune disorders. The company’s financial report for the first quarter of 2025 provides insights into its recent performance, pipeline progress, and future outlook.

Financial Performance

Nektar’s revenue for the first quarter of 2025 was $10.5 million, a 52% decrease compared to the same period in 2024. This decline was primarily due to the sale of the company’s manufacturing facility in December 2024, which resulted in the elimination of product sales and cost of goods sold. The company also saw a 33% decrease in non-cash royalty revenue related to sales of future royalties.

Research and development (R&D) expenses increased by 11% to $30.5 million, driven by the advancement of the company’s lead drug candidate, rezpegaldesleukin, in Phase 2b studies for atopic dermatitis and alopecia areata. General and administrative (G&A) expenses also rose by 21% to $24.3 million, primarily due to increased legal expenses, partially offset by decreases in facilities expenses and stock-based compensation.

Overall, Nektar reported a net loss of $50.9 million for the first quarter of 2025, a 38% increase compared to the same period in 2024. This was largely attributable to the company’s continued investment in its pipeline and the loss from its equity method investment in Gannet BioChem, a new manufacturing entity formed after the sale of Nektar’s facility.

Pipeline Progress

Nektar’s pipeline is anchored by three key drug candidates: rezpegaldesleukin, NKTR-255, and NKTR-0165.

Rezpegaldesleukin (cytokine Treg stimulant):

• Nektar regained full rights to rezpegaldesleukin in April 2023 after the termination of its collaboration with Eli Lilly.
• The company has initiated two Phase 2b studies of rezpegaldesleukin, one in patients with moderate-to-severe atopic dermatitis and another in patients with severe-to-very severe alopecia areata.
• Nektar will also collaborate with TrialNet to conduct a Phase 2 study of rezpegaldesleukin in patients with new-onset stage 3 type 1 diabetes mellitus.

NKTR-255 (IL-15 receptor agonist):

• Nektar is continuing select developmental studies of NKTR-255 in combination with cell therapies and checkpoint inhibitors.
• The company reported positive results from a Phase 2 proof-of-concept study evaluating NKTR-255 following Yescarta® or Breyanzi® CD19 CAR-T cell therapy in patients with large B-cell lymphoma.
• Nektar is also evaluating NKTR-255 in combination with avelumab (a PD-L1 inhibitor) in patients with locally advanced or metastatic urothelial carcinoma, and in combination with C-TIL051 (a tumor-infiltrating lymphocyte therapy) in advanced non-small cell lung cancer patients.

NKTR-0165 (tumor necrosis factor receptor type II agonist):

• Nektar exercised an option in December 2023 to gain an exclusive license to specified agonistic antibodies and other materials developed under a research collaboration with Biolojic Design, Ltd.
• The company began conducting Investigational New Drug (IND) enabling studies for NKTR-0165 in 2024, targeting autoimmune diseases such as ulcerative colitis, multiple sclerosis, and vitiligo.

Nektar continues to advance its early-stage research programs, with a focus on identifying new drug candidates across various molecule classes and therapeutic areas.

Strengths and Weaknesses

Strengths:

• Diverse pipeline of drug candidates targeting important therapeutic areas, including immunology, oncology, and autoimmune disorders.
• Successful track record of collaborations and partnerships that have resulted in approved drugs and provided development funding.
• Experienced management team with a history of navigating the challenges of drug development.
• Solid financial position, with approximately $220.7 million in cash and investments as of March 31, 2025.

Weaknesses:

• Heavy reliance on the success of a few key drug candidates, particularly rezpegaldesleukin, which could significantly impact the company’s future if they fail in clinical development.
• Uncertainty surrounding the continued development of rezpegaldesleukin following the termination of the Lilly collaboration, including potential challenges in obtaining necessary materials from Lilly.
• Ongoing restructuring and facility sale, which have resulted in impairment charges and increased uncertainty around the company’s future manufacturing and operational capabilities.
• Declining revenue from non-cash royalties, which have historically been an important source of funding.

Outlook and Future Considerations

Nektar’s future success will largely depend on the continued advancement and potential regulatory approval of its lead drug candidates, particularly rezpegaldesleukin. The company’s ability to navigate the challenges of drug development, secure new collaborations, and manage its operational and financial resources will be critical in the years ahead.

The successful completion of the ongoing Phase 2b studies for rezpegaldesleukin in atopic dermatitis and alopecia areata, as well as the planned Phase 2 study in type 1 diabetes, will be key milestones for the company. Positive results from these trials could pave the way for late-stage development and potential regulatory approval, which would be a significant boost to Nektar’s prospects.

The company’s oncology pipeline, led by NKTR-255, also holds promise, with ongoing studies evaluating the drug in combination with various therapies. If these collaborative efforts yield positive results, Nektar may be able to secure additional partnerships or advance NKTR-255 further in its development.

Nektar’s early-stage research efforts, including the NKTR-0165 program, represent the company’s long-term growth potential. Successful advancement of these programs into clinical development could diversify Nektar’s pipeline and provide additional opportunities for value creation.

However, Nektar’s reliance on a few key drug candidates, particularly rezpegaldesleukin, remains a significant risk. The failure of these programs in clinical trials could have a devastating impact on the company’s financial position and future prospects.

Additionally, the ongoing restructuring and facility sale have introduced operational and financial uncertainties that Nektar will need to navigate. The company’s ability to effectively manage its resources, secure new collaborations, and maintain a strong financial position will be crucial in the coming years.

In conclusion, Nektar Therapeutics is at a critical juncture, with both opportunities and challenges ahead. The company’s success will depend on its ability to advance its pipeline, secure strategic partnerships, and manage its operational and financial resources effectively. Investors should closely monitor the progress of Nektar’s key drug candidates, as well as the company’s ability to adapt to the evolving landscape of the biopharmaceutical industry.