UPDATE: Oct. 11, 2022: PureTech Health and Nektar Therapeutics have agreed to end their discussions over a possible combination. The disclosure that talks were ongoing was made to comply with U.K. merger laws, PureTech said in an Oct. 11 statement, and “created the impression that discussions were more advanced than they were.” As negotiations were still in an early-stage, the companies decided to terminate them instead.
Shaken by clinical failure and a major restructuring earlier this year, Nektar Therapeutics is in talks on “a possible combination” with PureTech Health, which could include the acquisition of some or all of Nektar’s shares, PureTech said Friday.
Responding to media speculation, the two sides have “exchanged indicative, non-binding proposals,” PureTech said in a press release. The disclosure was required under U.K. takeover law, which specifies procedures for carrying out — and sets deadlines on — mergers and acquisitions for companies like PureTech that have shares listed on the London Stock Exchange.
Under U.K. law, today’s announcement now sets a deadline of Nov. 3 to make a firm offer for Nektar, although that deadline can be extended under certain circumstances.
Nektar faced a double blow earlier this year when its lead program, a melanoma drug, failed in a clinical trial as an add-on to Bristol Myers Squibb’s Opdivo. The larger drugmaker had paid nearly $2 billion to Nektar for rights to the drug in an effort to see if the combination could help patients more than Opdivo alone. After the failure, Bristol Myers pulled out of the partnership and Nektar laid off 70% of its workers in a cost-saving move.
The clinical setback knocked $1 billion off of Nektar’s market capitalization, and at Thursday’s $3.38-a-share close the company valuation was $633 million, slightly above its $619 million in cash holdings as of June 30.
Nektar’s shares were little changed on Friday morning, changing hands at about $3.31. PureTech’s London-listed shares fell 13%.
Should PureTech follow through, it could be a relatively inexpensive acquisition. Although the melanoma drug may be shuttered, Nektar has in its pipeline a promising Phase 2 autoimmune project partnered with Eli Lilly. That experimental drug delivered disappointing results in severe eczema at a recent conference, but it is also being tested in lupus and psoriasis.
Another experimental drug is being evaluated across various types of cancer in collaboration with Pfizer and Johnson & Johnson. Nektar also has drug formulation technologies that have been successfully developed as part of such drugs as Cimzia, Neulasta and Adynovate.
PureTech’s business model has been to create companies to shepherd specific drugs or technologies to the market. Through Gelesis it has launched a weight management pill called Plenity and through Akili Interactive a video game that helps ADHD patients improve attention span. Karuna Therapeutics, meanwhile, is in late-stage development of an experimental drug for schizophrenia.
Additionally, PureTech has a proprietary pipeline that includes candidates in fibrotic disease, cancer, neurology and digestive disease.
PureTech’s cash holdings as of June 30 stood at $314 million.