For a sense of just how speculative biotech investing is at the moment, look no further than Nektar Therapeutics, a developer of cancer immunotherapy drugs. On Monday, a disappointing update of clinical trial data from just 15 additional skin cancer patients helped drive down Nektar’s stock by 42%, wiping out $6 billion in market capitalization. It’s the biggest one-day drop for a S&P 500 company in more than five years, according to Bloomberg. Before Monday’s drop, its stock had roughly quadrupled since last fall to a market capitalization of $15 billion, largely based on promising data from a mere 13 patients. Bristol Myers-Squibb also signed a $2 billion drug development deal with Nektar on the strength of the earlier results.
It’s the latest reason for investor caution around immunotherapy, which is currently the biggest growth story in biotech but is proving to be a highly volatile bet. Nektar’s drug is part of a stampede to find drug combinations that can boost the efficacy of two competing blockbuster drugs, Merck’s Keytruda and Bristol-Myers Squibb’s Opdivo. In April, the field saw its highest-profile failure when disappointing results of a combination trial from Incyte caused that company’s market cap to drop by billions. More wild swings are sure to be ahead.