Nektar Therapeutic's stock tanked 39% on Friday after the biopharmaceutical company disclosed a quality-control issue with a key cancer treatment.

The treatment, known as Bempegaldesleukin (or bempeg for short), is being developed with Bristol-Myers Squibb to treat melanoma and other forms of cancer. The company revealed a manufacturing issue that led to variable results in different batches of the treatment during clinical trials.

Analysts across Wall Street downgraded Nektar and cut their price targets on concerns over the future success of the cancer treatment.

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David Steinberg, an analyst at Jefferies, changed his rating on company to a "hold" from "buy" and reduced his price target to $23 from $59. Steinberg cited the uncertainty around the success of the Bempeg Program as the reason for the downgrade. Another analyst, Josh Schimmer from Evercore ISI, said the news was "yet another reason to be skeptical of Bempeg Results," according to Bloomberg. Schimmer also reduced his price target to $25 from $37. "It's hard to tell if there's a legitimate issue with the batches or another creative way to explain away our concerns that bempeg has not been dosed to have meaningful clinical activity," Schimmer wrote in a note to clients on Friday according to Bloomberg. BMO analyst George Farmer cut his price target to $41 from $75 on similar grounds. Farmer wrote in a note to clients on Friday that the "discovery of defective bempeg drug lots administered in PIVOT-2 clouds our view of on-going non-small cell lung, renal cell, and urothelial carcinoma trials intended to support bempeg marketing approvals."

Nektar also reported an uptick in research and development costs for the quarter, partially attributed to the continued development costs of the bempeg program.

Nektar is down close to 44% year-to-date through Thursday's close.

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