AstraZeneca (NYSE: AZN) is drinking nectar,
but it might be getting
drunkoff the stuff. After all, the company gave
Nektar Therapeutics (Nasdaq: NKTR) one sweet
deal yesterday.
Nektar is getting an up-front payment of $125 million and
AstraZeneca is taking over development of two compounds.
NKTR-118, which has completed phase 2 testing, treats the
constipation that's often caused by opioid painkillers.
Further back in the pipeline, NKTR-119 combines NKTR-118 with
an opioid painkiller, making it more convenient for
patients.
In addition to the up-front payment, Nektar could receive
as much as $235 million if NKTR-118 reaches milestones like a
Food and Drug Administration approval. And it only gets
better from there. If approved, Nektar is due tiered
sales-milestone payments of as much as $375 million, and
double-digit royalties that CEO Howard Robin implied would be
a lot higher than 10%.
There are also potential milestone and royalty payments
for NKTR-119, although the companies didn't give
specifics.
If approved, NKTR-118 would compete with
Progenics Pharmaceuticals (Nasdaq: PGNX) and
Wyeth 's (NYSE: WYE) Relistor. It would have
a distinct advantage of being an oral compound, compared to
Relistor, which needs to be injected. Progenics and Wyeth,
soon to be
Pfizer (NYSE: PFE), are working on an oral
version of Relistor, however, so investors may get to see a
nice showdown in a few years as both drugs finish phase 3
testing.
The infusion of cash, and not having to pay for the phase
3 trials, is a good move for Nektar. But at a market cap
approaching $1 billion, without any late-stage compounds that
it hasn't already partnered, Nektar isn't necessarily cheap.
Still, management seems to be making sweet deals to keep the
company going, and that
shouldn't be overlooked.
This article was originally published as
Nektar Tastes Sweeton
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