Thursday saw one of the S&P 500’s worst-performing stocks, a biotech company that is focused on treating breast cancer, get booted off the index entirely. Nektar Therapeutics (NASDAQ: NKTR) saw itself get removed from the S&P 500 due to its poor performance over the past year, instead to be replaced by another company, Las Vegas Sands Corp.
The S&P Dow Jones Indices announced on Thursday that Nektar Therapeutics would be demoted from the index, getting placed instead in the S&P MidCap 400. Despite still having $3 billion in market cap in spite of its recent losses, it was decided that the company’s poor performance has pushed its overall size down to a level where it is better to list it among other mid-cap stocks.
“Las Vegas Sands Corp will replace Nektar Therapeutics in the S&P 500, and Nektar Therapeutics will replace Sotheby’s in the S&P MidCap 400 effective prior to the open of trading on Thursday, October 3,” read a brief press release on the subject from the S&P Dow Jones Indices. “Nektar Therapeutics is ranked near the bottom of the S&P 500 and has a market capitalization more representative of the mid-cap market space.”
It definitely wasn’t a good piece of news for the biotech stock as shares fell by 6.6% on the NASDAQ in response to the surprise delisting. Even just in 2019, Nektar Therapeutics has seen its stock plummet by 59.8% since early December, making it the worst-performing stock in the index.
This decline comes in light of a series of disappointing clinical results from the company. New data from a phase ½ clinical trial evaluating the effects of one of its drug combinations on breast cancer patients was pretty poor, resulting in only a 13% response rate. At the same time, the rate of serious adverse reactions came in at 26%, with the most common behind dehydration, muscle aches (myalgia), and hypotension.
While it’s common for biotech stocks to steadily decline as they conduct trials until hitting a major success that sends share price soaring, Nektar’s decline has been especially noticeable. According to its recent Q2 financial results, the company saw a net loss of $109.9 million for the quarter, a significant decline for the company. In comparison to Q2 2018 when the company posted a net income of $971.5 million, this is a major decline for the once-successful biotech company.
Back in 2018, shares were trading above the $100 range, whereas now Nektar is trading for only $17.56 per share. Interestingly enough, most analysts who are covering the stock have a “buy” rating for the company with an average price target of $39.45, well over double its current price. While it might be the case that Nektar is undervalued now, investors should remain cautious about this particular biotech stock.
Nektar Therapeutics Company Profile
Nektar Therapeutics is a San Francisco-based emerging biotechnology company specializing in PEGylation technology. Its portfolio includes PEGylated biologics in immuno-oncology, chronic pain, hemophilia, breast cancer, and autoimmune disease. The company partners with several large pharmaceutical and biotechnology companies to co-develop therapies in a range of indications, which includes a collaboration with Bristol-Myers Squibb to develop bempegaldesleukin, the firm’s leading immuno-oncology candidate, in combination with Bristol’s Opdivo. – Warrior Trading News
