Dive Brief:

• Shares in Nektar Therapeutics fell by more than half Monday morning after the San Francisco biotech company and partner Bristol Myers Squibb disclosed disappointing results from a Phase 3 trial of an experimental cancer immunotherapy they’re developing.
• Nektar’s drug did not improve on Bristol Myers’ approved treatment Opdivo in the study, which tested the two therapies together against Opdivo alone in nearly 800 people with previously untreated melanoma that had either metastasized or was not removable by surgery. Independent monitors overseeing the trial recommended it be stopped.
• The stock drop erased nearly $1 billion in value from Nektar’s market capitalization, as the negative findings raise questions about the experimental medicine’s potential. Nektar and Bristol Myers announced they will also halt enrollment in another late-stage study of the drug combination in melanoma as a result of the data.

Dive Insight:

Bristol Myers bet big on Nektar and its immunotherapy four years ago, agreeing to pay nearly $2 billion to secure partial rights to the drug, which had shown some signs of promise in preliminary tests.

The partnership was one of several struck by large pharmaceutical companies like Bristol Myers in hopes of finding ways to improve on first-generation immunotherapies, such as Opdivo or Merck & Co.’s Keytruda. Bristol Myers and Nektar’s collaboration was notable as they sought to pair two immunotherapies together, rather than others’ strategy of combining immunotherapy with chemotherapy or targeted cancer drugs.

Results from an early-stage study with no control group suggested combining Nektar’s drug with Opdivo could shrink tumors in skin, kidney and bladder cancers, leading the companies to forge ahead with Phase 3 tests without conducting a placebo-controlled mid-stage study. Without a control group, however, the additive benefit of Nektar’s drug on top of Opdivo was unclear, and a complicated trial made the results harder to interpret.

About a year later, in 2019, Bristol Myers significantly narrowed the collaboration with Nektar, which had also revealed manufacturing difficulties that resulted in some trial participants receiving an inactive dose of its drug.

Monday’s results are the most significant setback yet, although the companies will continue testing the combination in renal cell carcinoma and bladder cancer.

“We were all highly surprised and disappointed when we received the news of the independent data monitoring committee analysis,” said Nektar CEO Howard Robin on a Monday morning conference call.

While Nektar and Bristol Myers did not disclose much specific data, they noted the two drugs together did not meet the study’s goal on progression-free survival or treatment response rate over Opdivo alone. Additionally, the analyses found no added survival benefit to the combination.

Nektar’s stock price fell by 55% Monday, with shares trading at less than $5 apiece. In 2018, after the Bristol Myers partnership was signed, shares were worth more than $108 each.

“Today’s results will obviously mean that we have to make changes to our business operations and the structure of Nektar,” said Robin. “These changes will be substantial and will be difficult to undertake.” Details on any changes or cost cuts will come in early May, he added.

Nektar’s drug, which activates as the body metabolizes it, targets a cell-signaling protein called IL-2 and is designed to expand and stimulate cancer-fighting immune cells. Opdivo works by blocking signaling from tumor cells that shuts down the body’s immune response.