YB new stock pitches (Tue, Feb 24)

Nektar Therapeutics (NKTR) is developing rezpegaldesleukin, an IL-2 biologic for atopic dermatitis and alopecia areata, trading at a $1.47B enterprise value ($2.23B market cap with $760M cash, ~28M fully diluted shares at $73.86). In atopic dermatitis, rezpeg achieved a 27% EASI-75 delta in Phase 2b (16 weeks), targeting the massive 2L+ market (over half of 80M+ AtD patients) who fail IL-4/13 inhibitors like Dupixent, which only achieves 47% EASI-75 responses with 25% losing efficacy by one year. Recent maintenance data showed rezpeg matched or exceeded Dupixent's response maintenance rates, with 35-59% of patients achieving new EASI-75 responses and 12-40% reaching EASI-90, while Q12W dosing (4 shots/year vs Dupixent's 26) performed as well as Q4W, with <1% discontinuations due to injection site reactions and ISRs decreasing over time. The Phase 3 study extends induction from 16 to 24 weeks, potentially improving efficacy further, positioning rezpeg superior to competitor amlitelimab (OX40 inhibitor with 18% EASI-75 delta and Kaposi sarcoma risk, though Sanofi still projects $3-$5B peak sales) in the 2L+ space where Rezpeg would be the only safe, non-IL-4/13 option. In alopecia areata, December 2025 Phase 2 data showed 17% SALT reduction (ITT) or 24% (mITT excluding protocol violators), missing statistical significance in ITT but hitting in mITT, causing the stock to drop 55% from highs as the market wrote off AA to $0 value. However, rezpeg's slow onset of action (best responders showed no improvement until after week 16, some after week 36) combined with 40% early discontinuations (vs ~10% typical in Phase 3 JAK inhibitor trials, with only ~1% due to adverse events) artificially suppressed efficacy, while the Phase 3 study will run 52 weeks (vs 36) allowing for response deepening similar to AtD maintenance data. The author argues rezpeg could dominate the ~$3B+ AA market despite lower efficacy than JAK inhibitors (baricitinib: 25-40% SALT delta; upadacitinib: 42-49% SALT<20 delta) because JAK inhibitors carry black box warnings for lymphoma, cancer, blood clots, cardiovascular events, and severe infections, making them last-line treatments, analogous to how Dupixent generates 5-10x more AtD sales than Rinvoq despite being half as effective (33% vs 62% EASI-75 delta), with rezpeg potentially becoming first-line AA therapy, chronic maintenance after JAK induction, or treatment for mild/moderate disease (400K patients vs 400K severe, with no approved drugs). The AtD market is projected to exceed $50B by 2040 (per Apogee), 3x larger than psoriasis with far worse drug efficacy (<50% EASI-75 vs >90% PASI-75), creating high patient cycling rates favoring late entrants with differentiated mechanisms, while competitors include Apogee's zumilokibart (IL-4/13, $4.25B EV, 42% EASI-75 delta) and Kymera's KT-621 (STAT6, $7.6B EV, minimal data, >2 years behind), with NKTR ahead of all non-IL-4/13 drugs and valued at a fraction of peers despite superior positioning. Comparing to Galderma's Nemluvio (IL-33 inhibitor doing $500M+ annualized in first year, >$3B peak projection despite 13% EASI-75 delta and prurigo nodularis secondary indication 1/4 the size of AA), rezpeg appears significantly undervalued with potential $3B+ AtD and $1.5B+ AA peak sales ($4.5B total, implying $6.75-9B valuation at 1.5-2x peak sales vs current $2B market cap). Additional catalysts include Q2 2026 AA maintenance data (18 patients with potential for deepening responses), 4Q26 AA treatment-free interval data (24 weeks post-dose), and 1Q27 AtD drug-withdrawal data (1 year post-dose) which could demonstrate disease-modifying/remittive effects unlike any current therapy (Dupixent maintains only 30% EASI-75 and 14% IGA 0/1 at one year vs rezpeg's Phase 1b showing maintained responses at 36 weeks), potentially paradigm-shifting for first-line use in the largest I&I indication. The drug has dosed over 1,000 patients with clean safety (no concerning signals, no genetic cancer risk like OX40's Kaposi sarcoma or ITK inhibitor lymphoma risk), with only injection site reactions that decreased over time. Key risks include new safety signals in Phase 3 and worsening efficacy in larger trials (though longer 24-week AtD induction and 52-week AA induction vs Phase 2's 16 and 36 weeks should favor improvement), while non-dilutive financing opportunities exist through the Eli Lilly lawsuit (where Lilly/CRO miscalculated efficacy leading to wrongful discontinuation, potentially worth 9-figures) and dapirolizumab royalties (~$100M from monetization). The investor remains long and highly bullish, viewing current valuation as dramatically undervaluing both indications, with particular emphasis that the AA opportunity (currently priced at $0) alone could justify significantly higher valuations given four separate pharma companies launched JAK inhibitors into this 'cosmetic' indication despite severe safety issues, demonstrating substantial market opportunity for a safe alternative, and projects NKTR could reach triple digits in 2026, especially with positive AA maintenance data, though acknowledges market skepticism will take time to shift despite compelling fundamental case.

Read the full article here. Read time: 70 min

Bombardier Inc. (BBD-B.TO), operating in a private jet duopoly, achieved FAA certification for its Global 8000 in December 2025, now the fastest and arguably best private jet globally. The company is protected from tariffs under USMCA and Section 122 aerospace exemptions, though faces a 50% aluminum tariff under Section 232 that disadvantages U.S. competitor Gulfstream. Over a five-year turnaround, Bombardier achieved 12% revenue CAGR, expanded adjusted EBIT margins from 3.6% to 11.5%, improved free cash flow from -$289 million to +$1.07 billion, reduced long-term debt by $2.5 billion, and doubled services revenue to $2.3 billion. Aircraft deliveries increased from 120 in 2021 to 157 in 2025, with order backlog up $3.1 billion. The company is positioned to benefit from Canada's Defence Industrial Strategy for military aerospace platforms and autonomous aerial systems, likely collaborating with SAAB. Debt repayment, including $750 million paid on 2028 bonds, should add approximately $4 per share in EPS by eliminating $400 million in annual interest expense. Management estimates 10-11 USD EPS for 2026, implying a 20x forward P/E at the current 200 USD price (276 CAD). In a conservative scenario with 10% sales growth, 0.8% annual EBIT margin expansion, and full debt repayment over five years, the company could reach 25 CAD EPS, supporting a 500 CAD price target at 20x earnings. The stock has tripled since its March 2025 low of 78 CAD, now representing 27% of the investor's portfolio as a new concentrated position established by swapping Amazon shares on March 4th.

Read the full article here. Read time: 9 min

Graphic Packaging (GPK), trading at $12.37 with a price target of $22 (78% upside), is a North American leader in fiber-based consumer packaging with approximately 40% folding carton market share that generates packaging for CPG companies like General Mills, Coca-Cola, and Procter & Gamble, currently masked by three temporary headwinds: Waco facility startup costs, SBS overcapacity pricing pressure, and CPG volume softness. The company operates a vertically integrated model producing coated recycled board at significantly lower cost than bleached alternatives with 4x lower sustaining CapEx, bolstered by the completed Kalamazoo K2 machine ($130M incremental EBITDA) and the newly operational Waco, Texas facility projected to add $160M EBITDA as it ramps through 2026-2027. Management guides $700-800M adjusted FCF in 2026 versus a $3.65B market cap (19% FCF yield), rising to $5B cumulative through 2030, driven by CapEx normalizing to 5% of sales from the peak $1.2B spent in 2024, with innovation revenue ($170M+ annually) targeting a $15B plastic-to-fiber addressable market supported by EU regulatory tailwinds. The company trades at 6.5x EV/EBITDA and 8.4x trailing earnings despite generating normalized owner earnings of approximately $650M (~$2.20/share), implying intrinsic value of at least $22/share, though risks include 3.8x net leverage (target $500M debt reduction in 2026), new CEO Robbert Rietbroek from PepsiCo with minimal packaging experience replacing 35-year veteran Mike Doss, persistent SBS overcapacity potentially extending pricing pressure beyond management's projected resolution timeline, the 2024 Smurfit-WestRock merger creating a larger competitor, and execution risk on Waco's ramp where a 20% EBITDA miss would push leverage to 5.5x. The bull case rests on three simultaneous headwinds resolving as Waco reaches full utilization, SBS capacity rationalizes through unsustainable competitor economics, CPG volumes stabilize, and the company transitions from capital consumer to significant FCF generator, with diversification across customers (none above 10% revenue), 2-5 year contracts with switching costs, and proprietary innovation formats (KeelClip, Boardio, PaperSeal) providing contract-cycle-bound moats, while the bear case centers on new management executing a complex industrial turnaround under time pressure with elevated leverage, potential for Smurfit WestRock to replicate GPK's recycled board cost advantage through major capital investment, and risk of next-generation recyclable plastics gaining regulatory acceptance to slow plastic-to-fiber conversion tailwinds.

Read the full article here. Read time: 17 min