Nektar Therapeutics' Capital Raise: A Calculated Gamble on Immunotherapy's Next Breakthrough

Nektar Therapeutics' recent $150 million underwritten public offering, announced in June 2025, marks a pivotal moment for the biotech firm. The offering—structured with a 15% over-allotment option for underwriters Jefferies and Piper Sandler—seeks to balance near-term equity dilution with the long-term potential of its lead immunotherapy candidate, rezpegaldesleukin (REZPEG). As the company stands on the brink of pivotal Phase 2b data reads for this drug in atopic dermatitis and alopecia areata, investors must weigh whether the dilution risks are justified by the transformative upside of clinical success.

The Dilution Dilemma
The offering's immediate impact is clear: existing shareholders will face dilution, with Nektar's stock price dipping 8% on the news. With a cash runway projected to Q4 2026 without the offering, the company needed to act preemptively. However, the 15% over-allotment option—common in biotech offerings—provides flexibility for underwriters to adjust the offering size, potentially mitigating short-term pressure if demand outstrips expectations.

Financially, Nektar's Q1 2025 results underscore urgency: a $50.9 million net loss and a cash burn rate of ~$122 million annually (assuming a $220.7 million cash balance) signal the need for capital. The offering's net proceeds will fund not only REZPEG's Phase 2b trials but also its manufacturing scale-up and preclinical programs like NKTR-0165 for autoimmune diseases.

The Clinical Catalyst: REZPEG's Phase 2b Data
The crux of this investment calculus lies in REZPEG's Phase 2b trial results, expected in late 2025. Positive data in atopic dermatitis—a $20 billion market—could position Nektar as a leader in cytokine-based therapies. The trial's completion of enrollment (396 patients) and FDA Fast Track designation are encouraging, but the drug's ability to meet primary endpoints—like EASI-75 scores—will determine its commercial viability.

Analysts estimate REZPEG's peak sales at $1.5–2.5 billion if approved, a figure that could attract partnerships or acquisitions. If the data disappoints, the dilution becomes a permanent drag. Yet, the Phase 2b's success would likely offset near-term share dilution, as institutional investors and biotech funds often prioritize clinical milestones over short-term valuation hits.

Underwriters' Role: Credibility and Market Access
Jefferies and Piper Sandler, both experienced in biotech underwritings, add credibility to the offering. Their networks may attract long-term investors focused on Nektar's pipeline rather than short-term volatility. The over-allotment option also signals underwriters' confidence in the stock's recovery post-data read.

Strategic Timing and Risk Management
Timing the offering just before the Phase 2b results is a double-edged sword. A positive readout could ignite a sharp rebound in the stock, rewarding investors who bought into the offering. A negative result, however, might amplify the dilution's impact. Nektar's decision to proceed suggests it views the trial's success as sufficiently probable to justify the risk.

Investment Thesis: A High-Reward, High-Risk Bet
For biotech investors with a 2–3 year horizon, Nektar presents an intriguing opportunity. The stock's current valuation—trading at ~6x its estimated 2026 revenue—already discounts near-term dilution. A successful Phase 2b readout could propel the stock toward analyst targets of $90–100, nearly tripling its June 2025 price.

However, the gamble hinges on execution. Competitors like Pfizer's JAK inhibitors and Regeneron's dupilumab loom large in atopic dermatitis. REZPEG must demonstrate superior efficacy or safety to carve out a niche.

Conclusion: A Call for Courageous Biotech Investors
Nektar's offering is a classic “risk vs. reward” scenario. The dilution is painful but manageable, given the company's burn rate and the urgency of its pipeline. For investors willing to accept volatility, the potential upside from REZPEG's validation—coupled with Nektar's robust preclinical programs—makes it a compelling buy.

Actionable Advice:
- Buy: For long-term biotech investors who prioritize clinical milestones over short-term dilution.
- Hold: For those skeptical of REZPEG's differentiation or risk-averse.
- Avoid: For traders focused on quarterly results, as the stock's trajectory will hinge on binary events.

In the end, Nektar's offering is not just a capital raise—it's a high-stakes bid to transform from a clinical-stage player into a biopharma leader. The coming months will test whether this gamble pays off.