Nektar Therapeutics: A Breakthrough in Atopic Dermatitis – Can the Upside Outweigh the Risks?

Nektar Therapeutics (NKTR) is on the cusp of a potential breakout moment in dermatology with its experimental drug rezpegaldesleukin, a first-in-class therapy targeting moderate-to-severe atopic dermatitis (AD). But as investors, we're here to ask: Does this molecule's clinical promise justify the risks, and is this stock positioned for a run?

The Clinical Breakthrough
The Phase 2b trial results for rezpegaldesleukin, announced on June 24, delivered a knockout punch. The drug met its primary endpoint of improving the Eczema Area and Severity Index (EASI) score by a statistically significant margin across all three dose groups compared to placebo. Even better, key secondary endpoints like EASI-75 (75% improvement) and reductions in itch scores were also hit, with the highest dose showing a 25% EASI-90 response rate (a 90% improvement).

The mechanism here is revolutionary: rezpegaldesleukin stimulates regulatory T-cells (Tregs), which help reset the immune system's overactivity in AD. This contrasts with existing therapies like dupilumab (from Regeneron/ Sanofi), which target specific inflammatory pathways but don't address the root imbalance.

The FDA's Fast Track designation in February 2025—secured due to this drug's potential to address unmet needs—has already opened the door to accelerated development. With top-line data from a parallel alopecia areata trial (REZOLVE-AA) expected by year-end, the momentum is undeniable.

The Risks: Don't Let Your Guard Down
But here's where the caution kicks in. First, Nektar's cash reserves of $220.7 million as of March 2025 are sufficient until late 2026, but Phase 3 trials for AD alone could cost hundreds of millions. The company is actively seeking partnerships, which means potential dilution or revenue-sharing deals that might limit upside.

Then there's the litigation with Eli Lilly. A patent dispute over an earlier drug (NKTR-214) could distract management or even delay rezpegaldesleukin's path to market if unresolved.

Competitors aren't standing still either. Dupilumab remains the gold standard, and newcomers like zabalafin (from Incyte) are also vying for share. Rezpegaldesleukin's quarterly dosing could be a big selling point, but insurers might push back on pricing if outcomes aren't definitively superior.

Lastly, while the Phase 2 safety profile was manageable (mostly mild injection site reactions), there's no guarantee these issues won't escalate in larger trials.

Valuation: A Stock With Legs, But How Far?
Nektar's stock has already surged on the June 24 data, but let's look at the numbers.

At current levels, the stock trades at roughly 5x its 2025 revenue guidance, which is cheap relative to peers. But that assumes rezpegaldesleukin wins approval and captures a meaningful slice of the $8B AD market. Analysts' price targets range up to $105, but I'm more conservative.

Investment Thesis
This is a high-risk, high-reward call. Buy if:
1. You're comfortable with biotech volatility and the Phase 3 timeline (data expected in 2026).
2. You believe rezpegaldesleukin's Treg mechanism will carve out a niche despite competition.
3. The stock dips below $60—post-Phase 2 euphoria, a pullback could create a buying opportunity.

Avoid if:
- You're allergic to litigation risks or need immediate profitability.
- You think insurers will crush pricing power in dermatology drugs.

Final Take
Nektar's rezpegaldesleukin is the real deal for atopic dermatitis—potentially a game-changer. But investors need to weigh the risks of execution, competition, and financial stretch. For the aggressive investor, this is a “hold for the ride” stock—but keep a close eye on Phase 3 design and partnership news.

If you're in, set a stop-loss at $55 and aim for $85 in 12 months. And remember: in biotech, data is king. June 24 was a win, but the next dance starts now.