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Goldman Throws in the Towel on Nektar After $14 Billion Drop

Goldman Throws in the Towel on Nektar After $14 Billion Drop

(Bloomberg) -- Nektar Therapeutics bull Goldman Sachs is calling it quits after recommending shares since December despite the stock’s slide and subsequent removal from the S&P 500 Index.

Goldman’s Paul Choi downgraded shares two notches, to a sell from buy, citing a lack of near-term catalysts amid drug quality issues and a narrower investor focus for its cancer drug among recent pressures on the stock. He slashed his price target to a Street-low of $16 from $54, which had implied shares could nearly triple from current levels.

Nektar fell as much as 10% Tuesday, its biggest drop since Aug. 12. The shares have lost more than half their value since Choi initiated coverage in December, compared to a 10% rise for the S&P 500 Index. The stock has shed more than $14 billion from a March 2018 peak.

Goldman Throws in the Towel on Nektar After $14 Billion Drop

The drugmaker’s manufacturing snafu that pressured shares in August and raised investor uncertainty paired with a heightened focus on Nektar’s ability to execute late-stage drug development drove Choi to finally throw in the towel. “Nektar now faces significant challenges in rebuilding confidence in the clinical and commercial outlook for” its experimental cancer drug bempegaldesleukin in combination with Bristol-Myers Squibb Co.’s Opdivo, he wrote.

Short bets against the biotech firm have risen over the last year with more than 17% of shares available for trading currently sold short, data compiled by financial analytics firm S3 Partners show.

Nektar wasn’t the only casualty among Choi’s coverage. He separately downgraded shares of beleaguered Puma Biotechnology Inc. to sell from neutral and slashed his price target to $8 from $24. Potential competition for the company’s cancer drug Nerlynx is an underappreciated investor risk, he said. The stock fell 18% Tuesday and has lost 82% in the last year.

--With assistance from Joshua Fineman.

To contact the reporter on this story: Bailey Lipschultz in New York at blipschultz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Courtney Dentch

©2019 Bloomberg L.P.