Top-notch Nkarta stock tumbled Friday after the biotech company deprioritized a cancer drug in favor of an experimental lupus treatment.
In early-stage testing, just 25% of patients with acute myeloid leukemia, or AML, responded to the Nkarta drug, NKX101. Late Thursday, Nkarta said it would shift its focus from the cancer drug to NKX019, an experimental treatment for lupus nephritis.
Nkarta now expects to enroll the first patient in its lupus study in the first half of 2024. The firm is testing NKX019 in patients who don't respond to other lupus treatments.
On today's stock market, Nkarta stock plummeted 31.3%, closing at 8.92.
Nkarta Stock Tied To Lupus Treatment
Analysts offered split views on Nkarta's reprioritization. Nkarta had hoped to show more promise for using donor cells to create an off-the-shelf CAR-T drug, a process known as allogeneic. Today's CAR-T drugs are autologous, meaning they were created using a patient's own cells. But that's a long and costly process.
Bears will inevitably argue Nkarta's decision suggests the cells it was using — known as natural killer cells — aren't potent enough for any use, Leerink Partners analyst Daina Graybosch said in a report. But she disagrees with that sentiment.
Nkarta has shown some promise in treating non-Hodgkin lymphoma with natural killer cells. Gilead Sciences' Kite division, which makes the patient-derived CAR-T Yescarta, is also testing drugs that use natural killer cells.
She kept her outperform rating on Nkarta stock, but noted she wouldn't be surprised if Nkarta later deprioritizes its efforts in non-Hodgkin lymphoma. The company's donor-derived approach has a high bar to meet vs. the patient-derived products, which have been on the market for years.
"We agree with management's decision to deprioritize NKX101 to focus more resources on donor-derived, allogeneic NKX019 in autoimmune diseases," she said in a report.
About $2.3 Billion In 2033 Sales
The company is now working to dose up to 12 lupus nephritis patients with NKX019.
Needham analyst Gil Blum estimates the lupus nephritis treatment could add about $2.3 billion in sales for Nkarta by 2033. He has a buy rating and 15 price target on Nkarta stock.
Using CAR-T drugs in autoimmune diseases is a relatively new phenomenon. But a study out of Germany early this year showed promise in patients with lupus showed promise. Over 15 months, every patient in the 15-person study reached remission. The patients all stopped taking the immune-system suppressing drugs that they had long used to control their disease.
"In totality, we think NKX019 could potentially be a more favorable option for less severe autoimmune disease patients," William Blair analyst Sami Corwin said in a report.
Corwin has an outperform rating on Nkarta stock.
But shares on Friday undercut their 50-day moving line for the first time since December, MarketSurge.com data shows. Nkarta stock has a best-possible Relative Strength Rating of 99, which puts shares in the top 1% of all stocks when it comes to 12-month performance, according to IBD Digital.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
