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Nektar battered over manufacturing issues and Bristol-Myers pullback

(Credit: Julphar )
  • Shares in Nektar Therapeutics plummeted following the company’s disclosure that it administered inactive doses of its experimental drug bempegaldesleukin in clinical trials due to manufacturing issues.
  • Skin, kidney and bladder cancer patients in a combination trial with Bristol-Myers Squibb’s Opdivo progressed more quickly after receiving the suboptimal doses than those treated with active bempegaldesleukin. The ineffective drug also was used in a lung cancer trial in combination with Merck & Co.’s Keytruda.
  • Nektar executives also announced that Bristol-Myers has cut back its commitment to the bempegaldesleukin partnership to just five or six trials aimed at regulatory approval, from 18 previously. The big pharma paid nearly $1.9 billion up front to secure rights to the agent.

Nektar has struggled to show that bempegaldesleukin should be mentioned in the same breath with other immuno-oncology agents like Opdivo (nivolumab) and Keytruda (pembrolizumab), and the manufacturing issues will not help its credibility.

Coming as it did in the wake of Novartis’ disclosure of data manipulation in manufacturing analyses of its gene therapy Zolgensma, Nektar’s disclosure was especially damaging. Awareness of what had happened to Novartis may have prompted Nektar executives to provide a detailed analysis of its findings in the company’s second quarter earnings conference call.

CEO Howard Robin chalked the issue up to a “single suboptimal batch of in-process intermediate” that led to two lots of 22 being ineffectively produced. The problem was not identified on release, but the variations of results in the PIVOT-02 combination trial with Opdivo prompted a review of the quality, he said.

The company has developed a new quality monitoring strategy for ingredients, Robin said. None of the ineffective bempegaldesleukin has been used in Phase 3 trials that are hoped to be used for Food and Drug Administration approval, he said.

Reviewing the PIVOT-02 data by lot, the company identified differences in outcomes. In melanoma, urothelial cancer and renal cell carcinoma, patients taking the ineffective doses survived 5.2, 3.5 and 5.5 months before disease progression or death, respectively. By comparison, the overall progression free survival numbers in those trial cohorts, including those patients receiving effective doses, were 12.7, 4.1 and 7.6 months, respectively.

Following the disclosure, Jefferies analyst David Steinberg downgraded his rating on Nektar from Buy to Hold, stating management “believes they have a handle on the situation and if this hypothesis is correct, the program in theory should read smoothly.”

“However, there won’t be clarity on this for some time as the first of the registration study readouts is not expected until [late 2020] and it is not inconceivable that management’s hypothesis could ultimately turn out to be incorrect as well,” he wrote.

Shares fell by as much as 39% in trading Friday, wiping away $4 billion in valuation.