Nektar’s (NKTR) Billion-Dollar Balance Sheet Faces A Multi-Year Test

Nektar’s (NKTR) Billion-Dollar Balance Sheet Faces A Multi-Year Test

Thu, August 27, 2026 at 4:56 PM GMT+3 4 min read

• NKTR +0.11%

On August 13, Nektar Therapeutics (NASDAQ:NKTR) held its second-quarter earnings call and laid out where its lead drug candidate stands after years of development. Rezpegaldesleukin, known as rezpeg, is now enrolling patients in Phase 3 trials for two separate autoimmune conditions, atopic dermatitis and alopecia areata. Management framed the quarter around two numbers that matter most to investors right now: a $1.02 billion cash balance that provides a runway into 2028, and a drug program that finally has late-stage data on the calendar.

Betting Big On Two Diseases

Nektar's Phase 3 program for atopic dermatitis, called ZENITH AD, began randomizing patients in July 2026 across two pivotal studies, each enrolling 510 adolescent and adult patients. A third study in patients who have already tried other treatments is set to start by the end of September 2026. Management expects top-line data from the first studies in mid-2028, with a Biologics License Application submission to follow in 2029 if results hold up. After an end-of-Phase 2 meeting with the FDA, Nektar also finalized a single registrational Phase 3 study for alopecia areata, called ZENITH AA, which will enroll 850 patients and use a SALT score of 20 or less at week 52, meaning 80% or more scalp hair coverage, as its primary endpoint.

The case for rezpeg goes beyond trial design. CEO Howard Robin noted that roughly 15 million people in the U.S. have moderate to severe atopic dermatitis, and fewer than 10% currently get a systemic therapy, leaving room for the market itself to grow. He also pointed out that about half of patients on IL-13 drugs such as Dupixent either stop responding or never respond at all. In alopecia areata, where JAK inhibitors carry boxed warnings that keep many dermatologists away, the market for approved treatments is still projected to reach $5 billion by 2033. Nektar's own market research found that 150 of 151 physicians surveyed preferred rezpeg's short-lived injection site reactions over the longer-lasting conjunctivitis tied to current options, a result management used to argue rezpeg could compete across first, second, and third-line patients.

The Losses Keep Piling Up

None of this comes cheap. Nektar's operating loss widened to $42.3 million in the second quarter, up from $36.2 million a year earlier, and the net loss came in at $40.6 million, or $1.23 per share. Research and development spending is set to climb further, with full-year guidance now at $210 million to $230 million as the Phase 3 programs and manufacturing activities ramp up. The company's only revenue right now is $10.1 million in noncash royalty income, down from $11.2 million a year ago, and full-year revenue guidance tops out at $45 million. That gap between spending and revenue is why Nektar leaned on a public stock offering that raised $373.8 million in gross proceeds in April 2026, a move that keeps the lights on but also dilutes existing shareholders.

The timeline adds to the risk. Even if the atopic dermatitis trials succeed, Nektar does not expect to submit a BLA until 2029, and alopecia areata data is not due until the second half of 2029. On top of years of waiting, a jury trial in federal court in San Francisco is set to begin Sept. 8, 2026, adding a legal overhang that management did not elaborate on during the call.

Wall Street Sits On The Fence

The number of hedge funds holding Nektar fell from 56 in the prior quarter to 50 in the most recent one, a modest pullback in institutional conviction. Short interest sits at 19.92% of the float, a level high enough to suggest a real bear camp has formed around the stock. Funds trimming positions while short sellers stay heavily positioned points to a market that remains unconvinced rezpeg's promise will turn into results anytime soon, even with the company's cash position looking stronger than ever.

A Long Wait For Proof

Nektar has the cash to fund both of its biggest bets through the data that will decide whether rezpeg works, and its own market research suggests physicians want something better than what is already on shelves. But a billion dollars in the bank does not shorten a calendar stretching into 2028 and 2029, and losses keep growing before any of it can pay off. Replicating the physician enthusiasm and Phase 2 results at Phase 3 scale would go a long way toward settling the skepticism baked into the stock's short interest.

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