NantKwest Stock Price Increased 9.93%: Why It Happened

By Amit Chowdhry ● December 23, 2020
  • The stock price of NantKwest Inc (NASDAQ: NK) increased by 9.93% on December 22. This is why it happened.

The stock price of NantKwest Inc (NASDAQ: NK) increased by 9.93% on December 22. The main trigger for why it happened is immunotherapy company ImmunityBio and NantKwest announcing that they have entered into an agreement to merge in a stock-for-stock transaction. And the combination will create a leading immunotherapy and cell therapy company focused on oncology and infectious disease.

ImmunityBio and NantKwest will have a broad clinical-stage pipeline including 13 assets in clinical trials and 11 in Phase II to III as well as an early stage pipeline to address other difficult to treat cancers. 

The combination of NantKwest’s Natural Killer (NK) cell platform and ImmunityBio’s immunotherapy fusion protein, immunomodulator, and adenovirus platforms have already resulted in complete responses in late-stage and difficult to treat metastatic cancers. 

And so far, complete responses have been noted in patients with second-line or greater metastatic pancreatic cancer, triple-negative breast cancer, head and neck cancer, and Merkel Cell Carcinoma. This strong track record of combination immunotherapies across the two companies’ platforms supports the potential of the combined assets to transform the future of immunotherapy beyond checkpoints by utilizing NantKwest’s cell-based therapies with ImmunityBio’s immunotherapy platforms.

This week, ImmunityBio also announced that ImmunityBio’s IL-15 fusion protein Anktiva with FDA Breakthrough Therapy status for non-muscle invasive bladder cancer CIS, has achieved primary endpoint with 72% complete response.

ImmunityBio was founded by Dr. Patrick Soon-Shiong, MD, a physician and scientist who invented Abraxane for the treatment of metastatic breast cancer, lung cancer, and advanced pancreatic cancer. And the companies — including their operations — are aligned given their long-standing collaboration programs with opportunities for advancing clinical development of the late-stage Phase II and III trials.

The deal is structured as a tax-free 100% stock-for-stock merger with ImmunityBio to reverse merge with NantKwest. And under the terms of the agreement, ImmunityBio shareholders will receive a fixed exchange ratio of 0.8190 shares of NantKwest for each share of ImmunityBio owned. 

Upon the closing of the deal, on a fully diluted basis, ImmunityBio shareholders will own approximately 72% of the combined company and NantKwest shareholders will own approximately 28% of the combined company, on a fully diluted basis.

And a Special Committee of the NantKwest Board of Directors, consisting of independent Directors, undertook a thorough review of the transaction and unanimously recommended that the company proceed with the transaction.

The deal, which is expected to close in the first half of 2021, is subject to shareholder approval by a majority of unaffiliated shareholders of NantKwest in addition to other customary closing conditions.

After the closing of the deal, the combined company will assume the ImmunityBio name and continue to be listed on the NASDAQ exchange. But the combined company ticker symbol is expected to be changed to IBRX.

Richard Adcock will become the CEO of the combined company and Dr. Soon-Shiong will serve as Executive Chairman of the Board. And the combined company will be headquartered at ImmunityBio’s offices in Culver City, California.

KEY QUOTES:

“We are developing next-generation immunotherapies to defeat cancer and infectious disease. By combining ImmunityBio’s immunotherapy platform, which includes the Anktiva IL-15 superagonist, with NantKwest’s natural killer cell platform, the merged entity will have a powerful and broad product portfolio that can activate both the innate (natural killer cell and macrophage) and adaptive (T cell) immune systems to create long-term immunological memory. What distinguishes the merged entity is the late-stage immunotherapy product pipeline that is designed to eliminate the need for high-dose chemotherapy, improve the outcomes of current CAR T cell therapies, and extend beyond checkpoint inhibitors. With 13 clinical trials across multiple tumor types at Phase I to III and with the combined talent in research, clinical development and manufacturing, the merged entity is poised to be a leader in the immunotherapy space.”

— Dr. Soon-Shiong

“We are excited to join forces with ImmunityBio, a company and team we have collaborated with for many years across our platforms. With the integration of ImmunityBio’s pipeline, cutting-edge R&D capabilities, talented employees and clinical expertise, we expect to accelerate the delivery of new treatments for patients with unmet needs. Together we can unlock the combined potential of our assets, and look forward to building on our continued success as one company.”

— Rich Adcock, NantKwest Chief Executive Officer

“This transaction is a compelling opportunity to drive value creation for shareholders. Our Special Committee carefully evaluated the ImmunityBio proposal and determined it is in the best interests of shareholders and also benefits other stakeholders, including our employees, partners and patients.”

— Michael Blaszyk, an independent director of NantKwest and member of the Special Committee