Manufacturing issues raised regarding Nektar Therapeutics' investigative cancer drug sent share prices plummeting Aug. 9 by more than 40% as markets opened.
Shares of the company were still down 32.70% to $19.90 as of 1:51 p.m. ET on Aug. 9.
During Nektar's premarket earnings call Aug. 8, executives outlined problems with quality control for two batches of its drug bempegaldesleukin, otherwise known as NKTR-214.
Combined with Bristol-Myers Squibb Co.'s immuno-oncology blockbuster Opdivo, the drug was granted a breakthrough-therapy designation from the U.S. Food and Drug Administration at the beginning of August to treat an advanced form of untreated skin cancer.
NKTR-214 is designed to activate immune cells to fight tumors and increase antibody expression that Opdivo then activates.
In the two batches, the scale-up of manufacturing for commercialization caused the product to be suboptimal and led to outliers in the clinical trials.
"As a result of this discovery, we have developed a comprehensive control strategy to limit variances in raw materials, intermediates and the final product in our manufacturing," Nektar CEO Howard Robin said on the Aug. 8 call.
Calling the revelation a "mis-step," SVB Leerink analyst Daina Graybosch said the issue "reduces our confidence in the clinical signal and will likely diminish investor confidence in Nektar management."
Nektar has since changed leadership around manufacturing, with Kevin Brodbeck taking over that arm while Chief Scientific Officer Jonathan Zalevsky now oversees the biologics process.
Robin suggested that Nektar and Bristol-Myers would be reevaluating the direction of their collaboration.
"As you develop a program that has this type of magnitude, you have to look very carefully at the landscape," Robin said. "And the landscape for PD-1 agents has clearly evolved and changed — and we're looking at that carefully with BMS, seeing where it makes more sense to develop [Opdivo and bempegaldesleukin]."