Nektar Crushed Under Pfizer's Boot (NKTR, PFE)

Nektar Therapeutics (NASDAQ:NKTR) is seeing shares hitting 52-week lows after its pharmaceutical partner Pfizer Inc. (NYSE:PFE) unexpectedly said it would end its involvement in inhaled diabetes drug Exubera and return the licensing rights to Nektar.  Nektar had been receiving a 15% royalty on sales of Exubera since early 2006.

Shares are trading down almost 15% at $6.90, well under the $7.59 lows of the last year.  This actually takes Nektar back to lows not seen since 2003.  The good news is that Nektar won’t be a biotech zombie and it has a partnered product portfolio comprising of Neulasta for neutropenia, PEGASY for Hepatitis-C, Somavert for Acromegaly, PEG-INTRON for Hepatitis-C, Macugen for age-related macular degeneration, Cimzia for Crohn’s disease, and MIRCERA for renal anemia.  It also has many other products in various trial stages.

The bad news is that this was one of the big hypes and big hopes for the company that at one point was being touted as a potential blockbuster drug (over $1 Billion in annual sales).  When the partnership first launched, Business Week had noted that inhaled insulin products could have worldwide sales of $4.8 Billion annually by 2010.  Even in late 2006 there were calls that Exubera wasn’t living up to expectations and some of the issue was blamed on the fact that physicians and patients had to be trained to use the device.  Another critical issue the cost factor, with Exubera being considered more costly than other diabetes treatments.

Analysts were not expecting Nektar to be profitable this year nor in 2008, but now you’ll likely see some strong downward revisions to forward numbers.  Without Pfizer selling this it looks like those losses are going to be worse.

Jon C. Ogg
October 18, 2007