Nektar’s IL-2 legacy: The two sides of failure
By Jake Simson and Peter Kolchinsky
Jake Simson, PhD, is a partner at RA Capital Management. Peter Kolchinsky, PhD, is RA Capital’s founder and managing partner.
April 20, 2022
Nektar and BMS announced last week that they are terminating all development of Nektar's pegylated-IL-2 cytokine in combination with BMS’s anti PD-1 immunotherapy Opdivo. It’s the end of the road for a once-promising drug candidate and no doubt the companies and the R&D teams that invested so much into the program are gutted.
How promising? Nektar shot up to a huge valuation in early 2018 on the back of data from a small, uncontrolled study and some biomarker data that suggested that their molecule might be the next big thing in immuno-oncology. BMS’s deal with Nektar included an extraordinary $1.85 billion worth of upfront payments and confirmed that a leading IO company thought Nektar’s data was just as promising as the investors driving up Nektar’s valuation did. Besides investing in Nektar, investors and pharmas funded other companies working on seemingly similar programs. But now NKTR is trading at more than a 95% discount from those levels from four years ago.
Some will declare that this is just a case of a small biotech overpromising and underdelivering, or that biotech is stupid and inefficient, or that investors who fund such companies are fools. As evidence, they will point to all the reasons to doubt Nektar back when their supposedly promising data first came out. They will claim they knew Nektar was overvalued and that now they are finally proven right: i.e., “I told you so.”
But there are other perspectives.
If Nektar had been the first company ever to claim that IL-2 of any kind worked, then indeed the recent data would be dispositive, ripping the whole premise of IL-2 working out from under the dozens of companies still working on IL-2-based drug candidates. But Nektar wasn’t the first. Recombinant unmodified IL-2 has long been known to be extremely effective, albeit also extremely toxic. As a single agent, it was shown decades ago to be able to induce cures. It was the OG IO drug. What Nektar was among the first to do was dare to try to improve its therapeutic index, improving safety while retaining efficacy.
We’d argue that Nektar kicked off an appreciation for what might be possible with a better IL-2. Then the market, comprising both financial and strategic investors, signaled its enthusiasm for improving IL-2’s therapeutic index. Not only did the market think it would be possible, but also especially valuable now that an IL-2 could be added to a foundation of PD-1 inhibition. Furthermore, many companies saw opportunities to apply their own unique modifications to IL-2, building off of a body of evidence that Nektar was pioneering. What followed were variations on Nektar’s theme, as other biotechs and pharma companies alike spent considerable time and money attempting to out-do Nektar.
Roche pursued an antibody conjugate approach, figuring it would concentrate in the tumor what would otherwise by a wildly active and toxic molecule if it circulated throughout the body.
Synthorx applied its site-specific pegylation technology to IL-2 and saw the opportunity to do what Nektar couldn't: design an IL-2 that would be permanently skewed towards activating T cells and NK cells without activating Tregs. That latter phenomenon had plagued Nektar because their peg-molecules eroded off their IL-2, releasing naked IL-2 into circulation where it could boost Treg levels, potentially causing capillary leak syndrome, a toxic hallmark of the original IL-2 program. Synthorx went on to get its drug into the clinic and show higher levels of T cell and NK cell amplification than Nektar had. That inspired Sanofi to acquire Synthorx. It's not clear yet whether that molecule will succeed, but the data Sanofi has released leaves plenty of room for improvement.
Towards that end, many other companies reacted to the early signals of value from Nektar/BMS, Synthorx/Sanofi, and Roche by trying to out-do all of them. Along came Xilio tuning out alpha binding like Synthorx but caging their molecule to localize activity within the tumor; Werewolf preserving wild type function but similarly caging it; Asher substituting alpha binding for a CD8-binder; Synthekine instead retaining alpha and attenuating the portion of the molecule that activates the T cell; and Good Therapeutics tethering it to a PD-1 antibody that sequesters the IL-2 in the periphery and releases it upon PD-1 binding on antigen-experienced T Cells.
At each turn, these companies identified a facet of cancer and immunology that had escaped others' notice. For example, Synthekine believes that NK cells might be causing toxicity that limits dosing, so their molecule boosts T cells a lot more than Nektar’s and Synthorx’s but doesn’t boost NK cells; if they are right, they may succeed where Nektar failed.
Or consider that Roche has shown some dose-limiting side effects from their clinical study of a couple of their antibody-conjugated-IL-2 candidates, suggesting that even though their antibodies do concentrate their drug in the tumor, there is enough floating around the body to still cause problems. That’s OK, because Good Therapeutics promises to do better. Good is developing an antibody-conjugated IL-2, like Roche, except Good designed a caging group on their cytokine so that that the cytokine would only be active in the tumor.
If, ultimately, any of these companies crack the code for how to safely extract the efficacy from IL-2 that we know is possible, then it means that Nektar helped get us there. This is scientific spillover in action. We learn as much or more from our failures as we do from our successes.
This pattern of discovery and setback and improvement and (hopefully) eventual success isn't unique to cytokines or oncology. This is exactly how HCV played out. Vertex was the first of what would be many companies to develop oral antivirals and show that it's possible to cure HCV better and faster than we were curing it at the time with interferon/ribavirin alone. Their stock shot up on compelling Phase 2 data and investors, including RA Capital, went in search of other drug candidates that could do even better. We found them in companies like Pharmasset, Enanta, and, we thought, many others. Eventually, what emerged from our ecosystem were several stellar medicines that rapidly cured HCV. They earned a return that made up for all the failures and left patients and investors and all of society better off.
Or consider the field of RNAi. Alnylam IPO’d in 2004 during difficult markets and failed at its early attempts to deliver RNAi to the lung to treat RSV. There was a time it traded at cash. To some, it was a case study of a biotech company going public on false promises, a warning to all intelligent investors not to stray from proper drugs into crazy land. Except Alnylam built on its own learnings, pivoted to liver targeting, and helped seed an entire field of nucleic acid modalities, bleeding now into base editing, ADAR, and even “crazier” ideas. And we’re steadily chipping away at delivery outside the liver.
One might say that we’re just cherry-picking the successes. Except that we could go on. Gene therapies, antibodies, vaccines, autoimmune agents, weight loss agents, radiotherapies, etc. All of these fields have harvested successes growing in soil fertilized with past failures. It’s the story of all innovation. Cars, computers, light bulbs, whatever. It’s so trite that this article shouldn’t need writing.
And yet, there are always people eager to dance on the graves of those who fail, to claim they knew better (but typically stay silent when they fail to predict success). They ensure that it’s a test of one’s grit to even take the first step towards a novel idea, to dare to do what hasn’t been done. Which is good, because most innovation requires a lot of grit.
There are also those who haven’t (yet) known failure who may over-confidently think they won’t fail like Nektar because they know better, which is a shame because that overconfidence can make them fragile. Failure is inevitable. If you don’t fail, you’re doing it wrong.
The biotech ecosystem is built on the premise that most projects will fail. Not because we’re stupid and fail to share lessons learned that could have spared wasteful repetition of past failure (though there is some of that). But because we’re so inspired by the possibility of major breakthroughs that it’s only logical to take chances.
Most people in biotech have known disappointment. Not everyone has tasted success, but at least they know that schadenfreude on the sidelines can never substitute for the thrill of being in the game. Hopefully that inspires them to try again, rationally. And those who systematically persevere even once through adversity discover a confidence that is inconceivable to those who never try. It’s not just a confidence in themselves and their own resilience but a justified confidence that the naysayers aren’t necessarily right. That can come in handy when the next problem they tackle proves even harder, with others arguing more strongly that things are the way they are for good reason.
We’re not inviting anyone to thumb their noses at conventional wisdom. It’s mostly right. But the promise of a better world is hidden behind the word “mostly,” and it takes a lot of guts and brains to pursue it for a living.
Now into our fifth decade as an industry, we’ve achieved so much that we have a critical mass of people who know what it is to persevere. This article isn’t for them. It’s for everyone who hasn’t had their first success. Whether you succeed or fail in your endeavor, know that every intelligently designed, unique experiment (and even some repeated ones in case of prior false negatives) makes a difference in the grand scheme of things.
So if an effective IL-2 emerges from our ecosystem, it will stand on a pile of learnings gleaned from our collective inspiration to pursue what seems possible and our willingness to risk failure to get there. Nektar's story is inseparable from the story of IL-2, which has yet to be written.
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