The week is barely underway and already we are seeing plenty of activity in the biotechnology space. Things moved considerably during the session on Monday on a variety of different inputs and, as we head into a fresh session today, there is a good chance that these inputs will continue to influence sentiment in the stocks in question near term.
With this in mind, here is a look at two of the early week movers in the biotechnology sector with an analysis of what’s moving each and where we expect the stocks to go next based on the most recent information.
So, the two companies in our crosshairs for today are Nektar Therapeutics (NASDAQ:NKTR) and Zymeworks Inc. (NYSE:ZYME).
First up, then, Nektar.
This one is a classic biotechnology move. On Monday, the company announced some data from one of its lead development trials – a phase 1/2 investigation into the safety and efficacy of a drug called NKTR-214, when combined with Opdivo, Bristol-Myers Squibb Co (NYSE:BMY)’s blockbuster oncology asset.
The trial looked at the combination as a potential treatment for people with solid tumor cancers and – as per the data – it looks as though there is some real value in adding NKTR-214 to the Opdivo regimen early on in the treatment cycle of these patients.
Some of the highlights from the released data include responses being observed in seven out of eleven (63%) efficacy-evaluable melanoma patients, with two classed as complete responses and five classed as partial responses, and, in renal cell carcinoma patients, responses observed in 46% patients, with one classed as a complete response and five classed as a partial response.
That’s pretty strong data for both types of cancer and, when considered against the fact that these two cancers can be some of the most difficult to treat once the standard of care regimen has been exhausted, it really strengthens the company’s case for pushing forward into a mid-stage investigation.
So where do things go from here?
Now it is up to Nektar to build on the data that it has collected as part of a mid-stage study and, importantly, one that shows a similar response rate but in a larger patient population. These cancers are highly prevalent and this means that the company shouldn’t have any trouble expanding the trial population in practice, but whether this will translate to a similar rate of response remains to be seen.
Chances are we will see the company continue to pick up strength heading into the middle of the week. Right now, Nektar is up around 15% on its Monday open, with after-hours activity last night adding around 1% to the 14% gained during the session.
Okay, moving on, Zymeworks.
This one is another well-documented type of move in the biotechnology space, but in this instance, it’s rooted in a drug development partnership as opposed to any fresh clinical trial data. Specifically, Zymeworks has just announced that it has struck a deal with Janssen Biotech, which is a subsidiary of healthcare behemoth Johnson & Johnson (NYSE:JNJ).
As per the announcement, Zymeworks will receive an upfront payment of $50 million and is eligible to potentially receive up to $282 million in development and up to $1.12 billion in commercial milestone payments, and tiered royalties on potential sales. For a company the size of Zymeworks, which was valued at a market capitalization of a little over $217 million at last count, that’s a potentially game-changing deal. The collaboration is rooted in the development of six bio-specific antibodies using a proprietary technology platform that was developed by Zymeworks called Azymetric.
As far as detail goes, that’s pretty much all we have right now. Both companies have been pretty quiet on the specifics and we’re going to have to wait for more data to hit press before we get an idea of what target indications the collaboration will go after and, in turn, what chance the company has of scoring on the milestone payments inked as part of the deal.
What we do know, however, is that Zymeworks will use the initial capital injection (the $50 million) to fund the continued development of its lead in-house asset, a drug called ZW25, which the company is trying to get approved as a potential treatment for breast cancer.
At last count, Zymeworks was up in and around 25% on its pre-announcement market capitalization.