Is NantKwest Stock A Buy?

Nantkwest Inc (NASDAQ:NK) is a next-generation, clinical-stage immunotherapy company. It focuses on stimulating natural killer (NK) cells created by our immune system to fight cancer and other infectious and inflammatory diseases.

The company recently received FDA authorization to expand its phase one clinical trials on oral and sublingual COVID-19 vaccines. It could be a big boost to the vaccine rollout, begging the question is NantKwest stock a Buy?

Share prices surged over 400 percent in the past year, making it a pricey investment. Much of the success of these clinical trials is already baked into the price, but that doesn’t mean it’s a slam dunk. The U.S. Food and Drug Administration has a long process, even with Operation Warp Speed funds.

However, should it succeed, the idea of an oral or sublingual vaccine has widespread implications. IT requires less refrigeration and is more likely to be accepted by anti-vaxers than an intravenous vaccine.

Can NantKwest cure investors’ needs for continuous profitability or will it leave their portfolios sick?

What Makes NantKwest Different

NantKwest is an early-stage company focused on immunotherapies. The company’s treatments focus on delivering specific proteins into our body through skin, stomach, or under the tongue.

These proteins activate the body’s immune system to fight specific diseases. Each treatment requires different protein combinations. The room-temperature oral COVID-19 boost uses S and N proteins to activate T-cell and B-cell memory.

Some analysts believe this method could boost the body’s immune system enough to even recognize and destroy viral mutations. That’s a cutting-edge problem currently facing the U.S. and many parts of Europe.

While single doses aren’t as effective as a double dose (just like the needle-based vaccinations), the double-dose oral treatment does show positive early results. This has investors jumping into the stock, as it could relieve a lot of supply chain issues caused by the current vaccine rollout.

But is the company profitable enough for investors to justify jumping in at this stage of the game?

Is NantKwest Stock A Buy?

By Q1 2021, share prices were up to over $30.00 per share, which is 3x the price since the company’s 2015 initial public offering (IPO).

The company’s most recent earnings report shows it has over $180 million in assets, including over $27 million in cash and equivalents. This compares to nearly $32 million in liabilities for the quarter.

On the P&L side of the financial statements, it leaves the company with a net loss of $0.20 per share.

It’s hard to justify a $3+ billion valuation until the company receives FDA approval through all three stages of clinical trials. At that point, however, the sky could be the limit. It opens doors for the company to continue its research into efficacy for other diseases and proves a new route toward vaccines.

Current vaccines require cold storage and transport while using spike proteins from the COVID-19 virus to stimulate the body’s immune response. This method is a more broad spectrum approach that could prove vital in the future of medicine.

But, like any future technology, this hasn’t happened yet.

NantKwest Treatment Efficacy The Major Risk

The biggest risk of buying NantKwest stock is the treatments proving ineffective. Early investors have already languished for five years as the stock remained in relative obscurity. Positive interim data isn’t enough for the company to sell and market its products.

Once it gains approval, the sky is the limit. But if it doesn’t, this stock could crash. Even if the treatment could be useful for other indications, the company could run out of money before that happens.

That means management could propose a secondary stock sale to raise money, which would dilute value for current shareholders and could put temporarily hinder share price growth potential.

And like any medical company, if it fails to gain full FDA market approval, the company will be in a financial vortex. It’s a great idea, but without proof of efficacy, shareholders could be in for a long wait. It could make sense to buy at a lower price but the risk of a clinical approval occurring more quickly creates potential opportunity cost.

In the meantime competitors are pushing their vaccines out with rapidity.

Can NantKwest Competitors Win?

Current vaccines are already approved, and your favorite politician, athlete or other celebrity likely already got both shots. Meanwhile, many are still waiting to receive their first jab, and delays in the supply chain could make that wait longer.

If the treatments aren’t given within a specific timeframe, the first is rendered less effective. Inefficiencies in this system could drag the pandemic on for years longer than it needs to be.

That could mean a lot of profits for companies like Pfizer (PFE) and Moderna (MRNA) who already have FDA-approved vaccines on the market. It doesn’t matter to them if you’re cured – just that they sell more vaccines.

A non-refrigerated option that can be taken orally is a potential game changer.

Is NantKwest Stock A Buy? The Bottom Line

NantKwest is a clinical stage immunotherapy company developing a room temperature treatment for COVID-19. It stimulates your immune system using two proteins that trigger the response needed to fight both COVID and its mutations.

Early clinical data is positive, and the FDA expanded the phase 1 clinical trials.

This caused a spike in the market price that may be best for new investors to wait out. It still has to pass through two more hoops, and it’s going to take a while. Approved vaccines are having distribution issues though, and if this proves effective, it could make NantKwest the next big name in pharma.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.