Nkarta NASDAQ: NKTX, below cash value
Struthers Report V29 # 15.0
Welcome to all the new smart, savvy and contrarian investors who have joined my substack. Many of you were not around in April when we bought Talaris that was taken over by Tormaline. We just sold last week around $20 for a gain of 190%. I hope I can make a repeat with Nkarta.
We did very well with Talaris as a takeover target. My next pick here is Nkarta Inc. NASDAQ:NKTX
Recent Price $3.20 - - - - Shares outstanding 47 million
NKTX is a takeover target, selling below cash value as well as a potential short squeeze.
As of September 30, 2023, Nkarta had cash, cash equivalents, restricted cash, and investments of $278.4 million. So the stock is trading well below cash value of about $5.90
A colleague of mine analyzed the institutional share ownership. He summarized that new owners bought 20% of the company in October, and around 10% of the company was shorted to them. He figures 80% of the stock is unlikely to sell. With 14% of the company shorted, there’s a high likelihood of a short squeeze to cash value which is around $5.65/sh., when we consider some cash burn since Sept 30th.
It is also a take over target to a company like Vertex because both Vertex and Nkarta are partnered and using the same CRISPER technology, a type of cell therapy:
Vertex at $407 per share has a market cap of $105 billion
CRISPER at $62 has a market cap of $5 billion
Nkarta at $3.00 has a market cap of only $141 million
CRISPER's gene therapy treatment got it's first FDA approval. Vertex has popped higher after news on December 8th, Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) and CRISPR Therapeutics (Nasdaq: CRSP) announced that the U.S. Food and Drug Administration (FDA) has approved CASGEVY™ (exagamglogene autotemcel [exa-cel]), a CRISPR/Cas9 genome-edited cell therapy, for the treatment of sickle cell disease (SCD) in patients 12 years and older with recurrent vaso-occlusive crises (VOCs). This approval means that for the first time, approximately 16,000 patients with SCD may be eligible for a durable one-time therapy that offers the potential of a functional cure for their disease by eliminating severe VOCs and hospitalizations caused by severe VOCs.
“CASGEVY’s approval by the FDA is momentous: it is the first CRISPR-based gene-editing therapy to be approved in the U.S. As importantly, CASGEVY is a first-in-class treatment that offers the potential of a one-time transformative therapy for eligible patients with sickle cell disease,” said Reshma Kewalramani, M.D., Chief Executive Officer and President of Vertex. “I want to convey my deepest gratitude to the patients and investigators whose trust in this program paved the way for this landmark approval.”
“When our company was founded, we had a vision to translate CRISPR technology into multiple breakthrough therapies. So, this U.S. approval of the first-ever medicine using CRISPR gene editing is breathtaking, and a truly humbling moment for me personally and for the whole organization,” said Samarth Kulkarni, Ph.D., Chairman and CEO of CRISPR Therapeutics.
CRISPR Therapeutics (Nasdaq: CRSP), is a biopharmaceutical company focused on creatingtransformative gene-based medicines for serious diseases. In early December they provided an update on its immuno-oncology pipeline of CRISPR/Cas9 gene-edited allogeneic chimeric antigen receptor (CAR) T cell product candidates. And more important and expansion into Autoimmune Disease.
Nkarta is also partnered with CRISPER but their treatment is at an earlier stage of the FDA approval process.
Nkarta is a clinical-stage biotechnology company advancing the development of allogeneic, off-the-shelf natural killer (NK) cell therapies. By combining its cell expansion and cryopreservation platform with proprietary cell engineering technologies and CRISPR-based genome engineering capabilities, Nkarta is building a pipeline of future cell therapies engineered for deep therapeutic activity and intended for broad access in the outpatient treatment setting.
The company has been focusing their NKX101 therapy in acute myeloid leukemia (AML). In June 2023, Nkarta reported updated clinical data from its Phase 1 clinical trial evaluating NKX101 in patients with relapsed or refractory (r/r) AML. In patients that received NKX101 after LD comprising fludarabine and cytarabine (Flu/Ara-C), 4 of 6 achieved CR/CRi. Flu/Ara-C LD is expected to be the basis of NKX101 development moving forward. Nkarta plans to present a poster at the American Society of Hematology annual meeting in December 2023 with follow-up data on the six patients from the June 2023 report that received NKX101 after Flu/Ara-C LD.
Short term the stock is over bought and approaching the first resistance area. However, this hopefully provides liquidity for buyers. Stock will most often move up to close previous gaps on the way down and that is what I expect NKTX will do and move up between $4.50 and $5.00. We could do much better if there is a take over offer and/or positive news on their therapy treatment.
All forecasts and recommendations are based on opinion. Markets change direction with consensus beliefs, which may change at any time and without notice. The author/publisher of this publication has taken every precaution to provide the most accurate information possible. The information & data were obtained from sources believed to be reliable, but because the information & data source are beyond the author's control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Because of the ever-changing nature of information & statistics the author/publisher strongly encourages the reader to communicate directly with the company and/or with their personal investment adviser to obtain up to date information. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial adviser & is not acting as such in this publication.