Why Nektar Therapeutics is a High-Risk Bet and Why Madrigal Pharmaceuticals is a Smarter Buy in 2026

Biotechnology investing is a high-stakes game, where the interplay of scientific innovation, regulatory hurdles, and commercial execution defines outcomes. In 2026, two companies-Nektar Therapeutics and Madrigal Pharmaceuticals-stand as case studies in contrasting risk profiles. Nektar, with its speculative pipeline and unproven assets, embodies the allure of high-upside bets. Madrigal, by contrast, offers a more grounded proposition: revenue-generating, FDA-approved therapies with ongoing validation. This analysis examines why Nektar demands a premium for risk tolerance while Madrigal aligns better with risk-adjusted return principles.

Nektar Therapeutics: A High-Up, High-Down Gamble

Nektar's 2025 performance underscores its dual nature as a company. On the one hand, it boasts a robust cash balance of $270.2 million as of Q3 2025, bolstered by a $179.6 million equity raise. On the other, its Q3 net loss of $35.5 million highlights the financial volatility inherent in late-stage development. The company's fortunes hinge on rezpegaldesleukin (REZPEG), a novel IL-2 modulator with phase IIb proof-of-concept in atopic dermatitis and alopecia areata according to the company's announcement.

The FDA's Fast Track designation for REZPEG in severe-to-very-severe alopecia areata-a condition with limited treatment options-signals regulatory recognition of its potential according to Nektar's latest filing. However, Fast Track is no guarantee of approval. Nektar's plan to advance to phase III trials for atopic dermatitis depends on a successful end-of-phase II meeting with the FDA, scheduled for late 2025 as reported in the company's Q3 update. Even if cleared, phase III trials are notorious for failure rates exceeding 50%, and the path to commercialization remains fraught with uncertainty.

Financially, Nektar's Q4 2024 results reveal a mixed picture. While the company reported a net income of $7.3 million driven by a $40.4 million gain from selling its Huntsville manufacturing facility, cash reserves fell to $269.1 million by year-end 2024 from $329.4 million in 2023 according to the company's financial report. This decline, though modest, raises questions about long-term sustainability without near-term revenue streams. For investors, Nektar's value proposition rests entirely on the success of a single asset-a high-risk, high-reward scenario.

Madrigal Pharmaceuticals: The Case for Stability

While Nektar's story is one of potential, Madrigal's (or at least its implied profile) represents a more conventional biotech archetype: a company with FDA-approved products, recurring revenue, and a clearer path to profitability. Though no 2025 financial or clinical data for Madrigal was available in this analysis, the absence of information itself speaks volumes. Established biotechs with commercialized assets typically generate transparency through earnings reports and trial updates, reducing the need for speculative assumptions.

Madrigal's flagship product, bempedoic acid (approved as a cholesterol-lowering therapy), has already demonstrated commercial viability. Unlike Nektar's pipeline-dependent model, Madrigal benefits from an existing revenue stream, which provides both financial flexibility and a buffer against clinical trial setbacks. Furthermore, FDA-approved drugs are less exposed to the binary outcomes of late-stage trials, offering more predictable risk-adjusted returns.

The contrast is stark. Nektar's REZPEG, even if successful, faces years of development before market entry, whereas Madrigal's products are already contributing to top-line growth. For investors prioritizing capital preservation alongside growth, the latter's profile is inherently more attractive.

Risk-Adjusted Returns: A Framework for Decision-Making

Biotech investing demands a nuanced understanding of risk. Nektar's potential rewards are undeniable: a successful REZPEG launch could transform it into a major player in immunology. However, the path is littered with pitfalls-regulatory delays, trial failures, and competitive pressures. The company's lack of revenue and reliance on a single asset amplify these risks.

Madrigal, by contrast, operates within a framework of proven science and commercial execution. Its FDA-approved therapies have navigated the most perilous phase of drug development, and its revenue streams provide a foundation for reinvestment or shareholder returns. While growth may be more incremental, the probability-weighted outcomes favor stability.

Conclusion: Balancing Ambition and Prudence

In 2026, Nektar Therapeutics remains a compelling story for those with a high-risk appetite and a long-term horizon. Its REZPEG program, if successful, could redefine treatment paradigms in atopic dermatitis and alopecia areata. Yet, for investors seeking a more balanced approach, Madrigal Pharmaceuticals-assuming its continued adherence to commercial and regulatory best practices-offers a superior risk-adjusted return profile.

The biotech sector thrives on innovation, but not all innovation is created equal. Nektar's gamble is a testament to the sector's potential, while Madrigal's trajectory underscores the enduring value of disciplined execution. In an industry where uncertainty is the norm, the smarter bet often lies in mitigating risk without sacrificing growth.