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Nov 6, 2014
Nektar Therapeutics Reports Financial Results for the Third Quarter of 2014

SAN FRANCISCO, Nov. 6, 2014 /PRNewswire/ -- Nektar Therapeutics (Nasdaq: NKTR) today reported its financial results for the third quarter ended September 30, 2014.

Cash and investments in marketable securities at September 30, 2014 were $261.6 million as compared to $301.4 million at June 30, 2014.

"The recent FDA approval of MOVANTIKTM (naloxegol) was a major milestone for Nektar," said Howard W. Robin, President and Chief Executive Officer of Nektar. "As the first once-daily oral PAMORA approved in the U.S., MOVANTIK provides a new treatment option for a common and potentially debilitating side effect experienced by millions of adult patients treated with opioids.  MOVANTIK is the first oral small molecule medicine to be created using our proprietary polymer chemistry platform and it represents a tremendous breakthrough for our technology.  In Q3, our partner Baxter announced positive topline data from the pivotal Phase 3 study of BAX 855, a longer-acting PEGylated Factor VIII therapy to treat hemophilia A.  Our wholly-owned late-stage clinical pipeline continues to advance as well.  We plan to initiate the Phase 3 program for NKTR-181 this quarter and importantly, we are on track to report topline results from our NKTR-102 Phase 3 study in metastatic breast cancer in the first quarter of 2015."

Revenue in the third quarter of 2014 was $132.9 million as compared to $60.9 million in the third quarter of 2013. Year-to-date revenue for 2014 was $181.2 million as compared to $117.8 million in the first nine months of 2013.  Revenue increased in the third quarter and first nine months of 2014 as compared to the same periods in 2013 primarily due to $105.0 million in milestones recognized in September 2014 upon the approval of MOVANTIK in the U.S., of which $70.0 million was received in November 2013.  These increases in revenue in 2014 were partially offset by a $25.0 million milestone payment recognized in September 2013 upon the acceptance of the MOVANTIK EMA regulatory application.  Additionally, product sales and royalty revenue decreased by $8.9 million in the third quarter and $19.9 million for the first nine months of 2014 as compared to the same periods in 2013.  Revenue included non-cash royalty revenue, related to our February 2012 royalty monetization, of $6.1 million in the third quarter and $16.8 million year-to-date in 2014, respectively, and $4.5 million in the third quarter and $12.7 million in the first nine months of 2013. This non-cash royalty revenue is offset by non-cash interest expense.

Total operating costs and expenses in the third quarter of 2014 were $52.6 million as compared to $67.4 million in the third quarter of 2013.  Year-to-date total operating costs and expenses in 2014 were $160.2 million as compared to $202.0 million for the same period in 2013.  Total operating costs and expenses decreased primarily as a result of decreased research and development (R&D) expense, as well as decreased cost of goods sold associated with decreased product sales.

Research and development expenses in the third quarter of 2014 were $34.2 million as compared to $43.9 million in the third quarter of 2013.  Year-to-date R&D expense for 2014 was $109.2 million as compared to $141.8 million for the same period in 2013.  R&D expense was lower in the third quarter of 2014 and year-to-date as compared to the same periods in 2013 primarily because of reduced activities for the Phase 3 study of etirinotecan pegol (NKTR-102) in metastatic breast cancer as the study progresses toward completion and the completion of our Phase 2 clinical study for NKTR-181 in the third quarter of 2013. These decreases in R&D expense in 2014 were partially offset by costs for the ongoing Phase 1 study of NKTR-171.

General and administrative (G&A) expense was $9.1 million in the third quarter of 2014 as compared to $10.6 million in the third quarter of 2013.  G&A expense in the first nine months of 2014 was $28.7 million as compared to $30.7 million for the same period in 2013.

Non-cash interest expense incurred in connection with the February 2012 royalty monetization was $5.2 million and $15.7 million in the third quarter and first nine months of 2014, respectively, as compared to $5.6 million and $16.6 million in the third quarter and first nine months of 2013, respectively.

Net income in the third quarter of 2014 was $70.6 million or $0.53 net income per diluted share as compared to net loss of $16.5 million or $0.14 net loss per diluted share in the third quarter of 2013. Net loss in the first nine months of 2014 was $8.2 million or $0.07 loss per diluted share as compared to net loss of $114.4 million or $0.99 net loss per diluted share in the first nine months of 2013.

The company also announced an upcoming presentation at the following scientific congress during the fourth quarter of 2014:

Society for Neuroscience, Washington, DC:

  • Abstract Title: "SEO-16: an orally active opioid analgesic with rapid onset of activity and reduced CNS side effects ", Harrison, S., et al. 

    • Poster Session 244: "Opioids and Other Analgesics"
    • Date: November 16, 2014, 1:00 p.m. — 5:00 p.m. Eastern Time

26th EORTC-NCI-AACR Symposium on Molecular Targets and Cancer Therapeutics, Barcelona, Spain:

  • Abstract Title: "Combining the long-acting topoisomerase 1 inhibitor etirinotecan pegol with the PARP inhibitor rucaparib to provide anti-tumor synergy without increased toxicity ", Hoch, U., et al. 

    • Poster Session: "Cytotoxics"
    • Date: November 19, 2014, 8:00 a.m. — 7:30 p.m. Central European Time

AACR Tumor Immunology and Immunotherapy, Orlando, FL:

  • Abstract Title: "Combining the Long-Acting Engineered Cytokine NKTR-214 with Checkpoint Inhibitors is Synergistic and Shows Long Lasting Anti-Tumor Immunity in Murine Tumor Models ", Kantak, S., et al. 

    • Poster Session A
    • Date: December 2, 2014, 1:15 p.m. - 3:30 p.m. Eastern Time

2014 San Antonio Breast Cancer Symposium, San Antonio, TX:

  • Poster P3-10-03: "Etirinotecan pegol target specific pharmacodynamics (PD) biomarkers in circulating tumor cells (CTCs) from patients in the Phase 3 BEACON study in patients with metastatic breast cancer ", Perez, E., et al. 

    • Poster Session 3-10: "Treatment: Advanced Chemotherapy"
    • Date: December 11, 2014, 5:00 p.m. — 7:00 p.m. Central Time

Conference Call to Discuss Third Quarter 2014 Financial Results

Nektar management will host a conference call to review the results beginning at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time today, Thursday, November 6, 2014.

This press release and a live audio-only Webcast of the conference call can be accessed through a link that is posted on the home page and Investor Relations section of the Nektar website: http://www.nektar.com. The web broadcast of the conference call will be available for replay through Monday, December 8, 2014.

   To access the conference call, follow these instructions:

   Dial: (877) 881.2183 (U.S.); (970) 315.0453 (international)
   Passcode: 25628597 (Nektar Therapeutics is the host)

In the event that any non-GAAP financial measure is discussed on the conference call that is not described in the press release, or explained on the conference call, related information will be made available on the Investor Relations page at the Nektar website as soon as practical after the conclusion of the conference call.

About Nektar
Nektar Therapeutics has a robust R&D pipeline of potentially high-value therapeutics in pain, oncology, hemophilia and other therapeutic areas. In the area of pain, Nektar has an exclusive worldwide license agreement with AstraZeneca for MOVANTIKTM, the first FDA-approved once-daily oral peripherally-acting mu-opioid receptor antagonist (PAMORA) medication for the treatment of opioid-induced constipation (OIC), in adult patients with chronic, non-cancer pain. The AstraZeneca agreement also includes NKTR-119, an earlier stage development program that is a co-formulation of MOVANTIKTM and an opioid. NKTR-181, a wholly-owned mu-opioid analgesic molecule for chronic pain conditions, has completed Phase 2 development. NKTR-171, a wholly-owned new sodium channel blocker being developed as an oral therapy for the treatment of peripheral neuropathic pain, is in Phase 1 clinical development. In oncology, etirinotecan pegol (NKTR-102) is being evaluated in a Phase 3 clinical study (the BEACON study) for the treatment of metastatic breast cancer. In hemophilia, BAX 855, a longer-acting PEGylated Factor VIII therapeutic is in Phase 3 development conducted by partner Baxter. In anti-infectives, Amikacin Inhale is in Phase 3 studies conducted by Bayer Healthcare as an adjunctive treatment for intubated and mechanically ventilated patients with Gram-negative pneumonia.

Nektar's technology has enabled nine approved products in the U.S. or Europe through partnerships with leading biopharmaceutical companies, including AstraZeneca's MOVANTIKTM, UCB's Cimzia® for Crohn's disease and rheumatoid arthritis, Roche's PEGASYS® for hepatitis C and Amgen's Neulasta® for neutropenia.

Nektar is headquartered in San Francisco, California, with additional operations in Huntsville, Alabama and Hyderabad, India. Further information about the company and its drug development programs and capabilities may be found online at http://www.nektar.com.

MOVANTIKTM is a trademark of the AstraZeneca group of companies.

Cautionary Note Regarding Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "expect," "believe," "should," "may," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding the potential of MOVANTIK™; the timing of the initiation of the Phase 3 clinical program for NKTR-181; the timing of availability of topline overall survival data for the NKTR-102 Phase 3 study; and the value and potential of our technology and research and development pipeline. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results to differ materially from those indicated in the forward-looking statements include, among others, (i) our drug candidates and those of our collaboration partners are in various stages of clinical development and the risk of failure is high and can unexpectedly occur at any stage prior to regulatory approval for numerous reasons including safety and efficacy findings even after positive findings in previous preclinical and clinical studies; (ii) the timing of the commencement or end of clinical trials and the commercial launch of drug candidates may be delayed or unsuccessful due to regulatory delays, slower than anticipated patient enrollment, manufacturing challenges, changing standards of care, evolving regulatory requirements, clinical trial design, clinical outcomes, competitive factors, or delay or failure in ultimately obtaining regulatory approval in one or more important markets; (iii) acceptance, review and approval decisions for new drug applications by health authorities is an uncertain and evolving process and health authorities retain significant discretion at all stages of the regulatory review and approval decision process; (iv) scientific discovery of new medical breakthroughs is an inherently uncertain process and the future success of the application of our technology platform to potential new drug candidates is therefore highly uncertain and unpredictable and one or more research and development programs could fail; (v) patents may not issue from our patent applications for our drug candidates, patents that have issued may not be enforceable, or additional intellectual property licenses from third parties may be required; and (vi) the outcome of any existing or future intellectual property or other litigation related to our drug candidates and those of our collaboration partners.  Other important risks and uncertainties set forth in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 1, 2014. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. 

 

Nektar Investor Inquiries:




Jennifer Ruddock/Nektar Therapeutics

(415) 482-5585



Andrea Rabney/Argot Partners

(212) 600-1494





Nektar Media Inquiries:




Nadia Hasan/WCG

(212) 257-6738

 

NEKTAR THERAPEUTICS


CONDENSED CONSOLIDATED BALANCE SHEETS


(In thousands)


(Unaudited)














ASSETS


September 30, 2014


December 31, 2013

(1)

Current assets:










Cash and cash equivalents




$                     32,008


$                   39,067



Restricted cash





25,000


-



Short-term investments




204,635


197,959



Accounts receivable, net




46,074


2,229



Inventory





11,695


13,452



Other current assets




4,708


5,175




Total current assets




324,120


257,882














Restricted cash





-


25,000


Property and equipment, net




69,275


66,974


Goodwill






76,501


76,501


Other assets





7,006


8,170



Total assets





$                  476,902


$                 434,527














LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


















Current liabilities:










Accounts payable




$                       5,428


$                      9,115



Accrued compensation




13,753


14,254



Accrued expenses




7,760


6,243



Accrued clinical trial expenses



9,643


16,905



Interest payable





3,167


6,917



Deferred revenue, current portion



24,626


23,664



Other current liabilities




16,172


21,123




Total current liabilities




80,549


98,221














Senior secured notes




125,000


125,000


Capital lease obligations, less current portion



5,339


8,049


Liability related to receipt of refundable milestone payment


-


70,000


Liability related to sale of future royalties, less current portion


120,492


121,520


Deferred revenue, less current portion



82,902


82,384


Other long-term liabilities




15,402


19,256




Total liabilities




429,684


524,430














Commitments and contingencies



















Stockholders' equity (deficit) :









Preferred stock





-


-



Common stock





12


11



Capital in excess of par value



1,789,010


1,643,660



Accumulated other comprehensive loss



(1,178)


(1,181)



Accumulated deficit




(1,740,626)


(1,732,393)




Total stockholders' equity (deficit) 



47,218


(89,903)



Total liabilities and stockholders' equity (deficit) 


$                  476,902


$                 434,527



(1) The consolidated balance sheet at December 31, 2013 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles in the United States for complete financial statements.

 

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share information)

(Unaudited)




















Three Months Ended


Nine Months Ended







September 30


September 30,







2014


2013


2014


2013



























Revenue:











Product sales and royalty revenue

$            6,172


$       15,026


$        17,980


$      37,836

Non-cash royalty revenue related to sale of future royalties

6,143


4,523


16,753


12,744

License, collaboration and other revenue

120,556


41,360


146,422


67,195

Total revenue



132,871


60,909


181,155


117,775














Operating costs and expenses:








Cost of goods sold


9,220


12,877


22,235


29,549

Research and development


34,200


43,914


109,240


141,762

General and administrative


9,130


10,643


28,677


30,700

Total operating costs and expenses

52,550


67,434


160,152


202,011














Income (loss) from operations


80,321


(6,525)


21,003


(84,236)














Non-operating income (expense):








Interest income 



133


116


399


639

Interest expense



(4,391)


(4,587)


(13,412)


(13,888)

Non-cash interest expense on liability related to sale of future royalties

(5,203)


(5,616)


(15,725)


(16,644)

Other income (expense), net


(7)


262


136


385

Total non-operating expense, net

(9,468)


(9,825)


(28,602)


(29,508)














Income (loss) before provision for income taxes

70,853


(16,350)


(7,599)


(113,744)














Provision for income taxes


248


193


634


610

Net income (loss)



$          70,605


$      (16,543)


$         (8,233)


$  (114,354)














Net income (loss) per share:









    Basic




$              0.55


$          (0.14)


$           (0.07)


$         (0.99)














    Diluted 




$              0.53


$          (0.14)


$           (0.07)


$         (0.99)














Weighted average shares outstanding used in computing net income (loss) per share








    Basic




127,504


115,812


126,043


115,557














    Diluted 




132,177


115,812


126,043


115,557

 

 

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)











Nine Months Ended September 30,











2014


2013

Cash flows from operating activities:








Net loss 








$      (8,233)


$  (114,354)

Adjustments to reconcile net loss to net cash used in operating activities:





Recognition of previously received milestone payment which is no longer refundable 

(70,000)


-

Non-cash royalty revenue related to sale of future royalties




(16,753)


(12,744)

Non-cash interest expense on liability related to sale of future royalties 


15,725


16,644

Stock-based compensation 





12,647


13,165

Depreciation and amortization 





9,733


10,882

Other non-cash transactions





313


332

Changes in operating assets and liabilities:








Accounts receivable, net






(43,845)


1,248

Inventory







1,757


3,193

Other assets 







679


6,817

Accounts payable 






(3,670)


697

Accrued compensation 






(501)


5,137

Accrued expenses 






1,667


2,741

Accrued clinical trial expenses





(7,262)


(2,261)

Interest payable






(3,750)


(3,916)

Deferred revenue 






1,480


(14,914)

Other liabilities 






(7,366)


(4,825)

Net cash used in operating activities 





(117,379)


(92,158)














Cash flows from investing activities:








Maturities of investments 






171,826


274,011

Purchases of investments 





(200,160)


(140,569)

Sales of investments 






21,661


-

Purchases of property and equipment 





(6,090)


(1,382)

Net cash (used in) provided by investing activities 




(12,763)


132,060














Cash flows from financing activities:








Payment of capital lease obligations 





(2,578)


(2,201)

Repayment of proceeds from sale of future royalties

(7,000)


(3,000)

Issuance of common stock, net of issuance costs




116,536


-

Proceeds from shares issued under equity compensation plans



16,168


5,253

Net cash provided by financing activities 





123,126


52














Effect of exchange rates on cash and cash equivalents 




(43)


20

Net (decrease) increase in cash and cash equivalents 




(7,059)


39,974

Cash and cash equivalents at beginning of period




39,067


25,437

Cash and cash equivalents at end of period





$     32,008


$      65,411














Supplemental disclosure of cash flow information:







Cash paid for interest






$     16,487


$      17,097

 

SOURCE Nektar Therapeutics

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