UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 7, 2017
NEKTAR THERAPEUTICS
(Exact Name of Registrant as Specified in Charter)
| Delaware | 0-24006 | 94-3134940 |
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
455 Mission Bay Boulevard South
San Francisco, California 94158
(Address of Principal Executive Offices and Zip Code)
Registrant’s telephone number, including area code: (415) 482-5300
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
On November 7, 2017, Nektar Therapeutics, a Delaware corporation (“Nektar”), issued a press release (the “Press Release”) announcing its financial results for the quarter ended September 30, 2017. A copy of the Press Release is furnished herewith as Exhibit 99.1.
On October 31, 2017, Nektar announced that it would hold a Webcast conference call on November 7, 2017 to review its financial results for the quarter ended September 30, 2017. This conference call is accessible through a link that is posted on the home page and Investors section of the Nektar website: http://www.nektar.com.
The information in this report, including the exhibit hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing with the Securities and Exchange Commission made by Nektar Therapeutics, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
| Exhibit No. |
Description | |
| 99.1 | Press release titled “Nektar Therapeutics Reports Financial Results for the Third Quarter of 2017” issued by Nektar Therapeutics on November 7, 2017. | |
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| By: | /s/ | Mark A. Wilson |
| Mark A. Wilson | ||
| General Counsel and Secretary | ||
| Date: |
November 7, 2017
| |
Exhibit 99.1
Nektar Therapeutics Reports Financial Results for the Third Quarter of 2017
SAN FRANCISCO, Nov. 7, 2017 /PRNewswire/ -- Nektar Therapeutics (Nasdaq: NKTR) today reported its financial results for the third quarter ended September 30, 2017.
Cash and investments in marketable securities at September 30, 2017 were $412.2 million as compared to $389.1 million at December 31, 2016. The cash balance includes the $150.0 million upfront payment from Nektar's collaboration with Eli Lilly & Company for the development and commercialization of NKTR-358.
"Nektar’s immuno-oncology portfolio continues to expand as we add novel drug candidates to our growing pipeline," said Howard W. Robin, President and CEO of Nektar. "NKTR-214 is the first I-O agent to both increase tumor-infiltrating lymphocytes (TILs) and increase PD-1 expression on human immune cells, which uniquely complements checkpoint inhibition and other anti-cancer mechanisms. As the majority of cancer patients have tumors that do not express PD-L1 and these patients receive limited benefit from treatment with checkpoint inhibitors, the potential of NKTR-214 to help patients is significant. Finally, based on recent positive conversations with the agency regarding our regulatory plans for NKTR-181, we are now planning to submit an NDA for NKTR-181 by April 2018 with our data package of over 2,100 patients and healthy volunteers."
Revenue in the third quarter of 2017 was $152.9 million as compared to $36.3 million in the third quarter of 2016. Year-to-date revenue for 2017 was $212.2 million as compared to $128.0 million in the first nine months of 2016. Revenue in 2017 included recognition of $127.6 million of the $150.0 million upfront payment from Nektar's collaboration with Eli Lilly & Company for the development and commercialization of NKTR-358.
Total operating costs and expenses in the third quarter of 2017 were $83.4 million as compared to $69.2 million in the third quarter of 2016. Year-to-date total operating costs and expenses in 2017 were $247.9 million as compared to $208.7 million for the same period in 2016. Total operating costs and expenses increased primarily as a result of increased research and development (R&D) expense.
Research and development expense in the third quarter of 2017 was $65.7 million as compared to $52.0 million in the third quarter of 2016. Year-to-date R&D expense for 2017 was $187.0 million as compared to $153.6 million for the same period in 2016. R&D expense was higher in the third quarter and first nine months of 2017 as compared to the same periods in 2016 primarily because of expenses for our pipeline programs, including Phase 3 clinical studies for NKTR-181, Phase 1/2 clinical studies of NKTR-214 and NKTR-358 and IND-enabling activities for NKTR-262 and NKTR-255.
General and administrative expense was $12.1 million in the third quarter of 2017 as compared to $10.3 million in the third quarter of 2016. G&A expense in the first nine months of 2017 was $40.0 million as compared to $31.5 million for the same period in 2016. G&A expense in the first nine months of 2017 includes a $3.3 million charge for a litigation settlement related to a cross-license agreement.
Net income in the third quarter of 2017 was $60.9 million or $0.39 basic income per share as compared to net loss of $43.2 million or $0.32 basic loss per share in the third quarter of 2016. Net loss in the first nine months of 2017 was $62.9 million or $0.41 basic loss per share as compared to $111.3 million or $0.82 basic loss per share in the first nine months of 2016.
The company also announced upcoming presentations at the following scientific congresses during the fourth quarter of 2017:
Society for Immunotherapy in Cancer (SITC) 32nd Annual Meeting, National Harbor, MD:
Oral Presentation: "PIVOT-02:
Preliminary safety, efficacy and biomarker results from the Phase 1/2 study of CD-122-biased agonist NKTR-214 plus nivolumab in
patients with locally advanced/metastatic solid tumors"
Presenter: Dr. Adi Diab, Assistant Professor, Department of Melanoma Medical Oncology, Division of
Cancer Medicine, The University of Texas MD Anderson Cancer Center, Houston, Texas
Session: Clinical Trials: Novel Combinations
Date: Saturday, November 11, 2017, 5:00 p.m. Eastern Time
Poster #P77: "The Novel
IL-2 Cytokine Immune Agonist NKTR-214 Harnesses the Adaptive and Innate Immune System for the Treatment of Solid Cancers"
Presenter: Salah Eddine Bentebibel, University of Texas MD Anderson Cancer Center
Session: Biomarkers and Immune Monitoring
Date: Friday, November 10, 2017, 12:30-2:00 p.m. Eastern Time
Poster #P140: "NKTR-214 enhances
anti-tumor T-cell immune responses induced by checkpoint blockade or vaccination"
Presenter: Meenu Sharma, University of Texas MD Anderson Cancer Center
Session: Cancer Vaccines
Date: Saturday, November 11, 2017, 12:30-2:00 p.m. Eastern Time
Poster #P274: "Combination of NKTR-214 and radiotherapy (RT) to reverse anergy and expand
tumor-specific CD8 T-Cells"
Presenter: Joshua Walker, Oregon Health & Science University
Session: Combination Therapy
Date: Saturday, November 11, 2017, 12:30-2:00 p.m. Eastern Time
Poster #P275: "Harnessing
the innate and adaptive immune system to eradicate treated and distant untreated solid tumors"
Presenter: Saul Kivimae, Nektar Therapeutics
Session: Combination Therapy
Date: Friday, November 10, 2017, 12:30-2:00 p.m. Eastern Time
Poster #P332: "Pre-clinical efficacy
and tolerability of NKTR-255, a polymer-conjugated IL-15 for immuno-oncology"
Presenter: Peiwen Kuo, Nektar Therapeutics
Session: Combination Therapy
Date: Saturday, November 11, 2017, 12:30-2:00 p.m. Eastern Time
Poster #434: "Great
Apes Adenoviral vaccine encoding neoantigens synergizes with immunomodulators to cure established tumors in mice"
Presenter: Anna Morena D'Alise, Nouscom srl
Session: Personalized Vaccines and Technologies/Personalized Medicines
Date: Saturday, November 11, 2017, 12:30-2:00 p.m. Eastern Time
American College of Neuropsychopharmacology 56th Annual Meeting, Palm Springs, CA:
Poster #T166: "Abuse potential
of NKTR-181 in recreational opioid users: results from a randomized, double-blind crossover oral study"
Presenter: Snow Ge, Nektar Therapeutics
Session: Poster Session II
Date: Tuesday, December 5, 2017, 5:30-7:30 p.m. Pacific Time
Conference Call to Discuss Third Quarter 2017 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, Tuesday, November 7, 2017.
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 Investors section of the Nektar website: http://ir.nektar.com/index.cfm. The web broadcast of the conference call will be available for replay through Monday, December 11, 2017.
To access the conference call, follow these instructions:
Dial: (877) 881.2183 (U.S.); (970) 315.0453 (international)
Passcode: 4677348 (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 is a research-based development stage biopharmaceutical company whose mission is to discover and develop
innovative medicines to address the unmet medical needs of patients. Our R&D pipeline of new investigational medicines includes
treatments for cancer, auto-immune disease and chronic pain. We leverage Nektar's proprietary and proven chemistry platform in
the discovery and design of our new therapeutic candidates. 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.
Cautionary Note Regarding Forward-Looking Statements
This press release contains uncertain or forward-looking statements which can be identified by words such as: "could,"
"plan," "expect," "should," "may," "will" and similar references to future periods.
Examples of forward-looking statements include, among others, statements we make regarding the potential therapeutic benefits
of and future development plans for our products (including NKTR-181, NKTR-358, NKTR-214, NKTR-262 and NKTR-255), the
potential impact of NKTR-181 with respect to the opioid abuse epidemic, the timing and strategy for regulatory filings (including
the timing and strategy for filing a new drug application, "NDA") and meetings with representatives of the Food and
Drug Administration (FDA) and other governmental officials, and the results of clinical trials. Forward-looking statements
are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations
and assumptions and 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 and you should not rely on such statements. Important factors that could cause our actual results to differ materially
from those indicated in the forward-looking statements include: (i) clinical study outcomes remain very unpredictable and it is
possible that a clinical study could fail even after positive interim data is observed; (ii) the regulatory pathway to review
and approve pharmaceutical products is subject to substantial uncertainty; (iii) the data package required for filing and approval
of an NDA to the FDA is very uncertain and difficult to predict due to broad FDA regulatory discretion, established guidance and
precedent (e.g., the practice of typically requiring two placebo-controlled pivotal studies to support NDA approvals for
drugs like NKTR-181), and changing FDA regulatory guidelines; (iv) the final outcomes and conclusions from
sponsor meetings with FDA are subject to substantial FDA discretion associated with issuing final meeting minutes and outcomes; (v)
regulations concerning and controlling access to opioid-based pharmaceuticals are strict and is difficult to predict
which scheduling category will apply to NKTR-181 if regulatory approval is achieved; (vi) 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 (vii) certain other important risks and uncertainties set forth in our Quarterly Report
on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2017. 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.
Contact:
For Investors:
Jennifer Ruddock of Nektar Therapeutics
415-482-5585
Jodi Sievers of Nektar Therapeutics
415-482-5593
| NEKTAR THERAPEUTICS |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (In thousands) |
| (Unaudited) |
| September 30, 2017 | December 31, 2016(1) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 37,967 | $ | 59,640 | ||||
| Short-term investments | 314,600 | 329,462 | ||||||
| Accounts receivable, net | 3,314 | 15,678 | ||||||
| Inventory | 13,654 | 11,109 | ||||||
| Other current assets | 13,260 | 10,063 | ||||||
| Total current assets | 382,795 | 425,952 | ||||||
| Long-term investments | 59,596 | — | ||||||
| Property, plant and equipment, net | 62,396 | 65,601 | ||||||
| Goodwill | 76,501 | 76,501 | ||||||
| Other assets | 767 | 817 | ||||||
| Total assets | $ | 582,055 | $ | 568,871 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 8,563 | $ | 2,816 | ||||
| Accrued compensation | 19,088 | 18,280 | ||||||
| Accrued clinical trial expenses | 7,000 | 7,958 | ||||||
| Other accrued expenses | 9,302 | 4,711 | ||||||
| Interest payable | 4,198 | 4,198 | ||||||
| Capital lease obligations, current portion | 2,482 | 2,908 | ||||||
| Liability related to refundable upfront payment | 12,500 | 12,500 | ||||||
| Deferred revenue, current portion | 25,491 | 14,352 | ||||||
| Other current liabilities | 3,920 | 4,499 | ||||||
| Total current liabilities | 92,544 | 72,222 | ||||||
| Senior secured notes, net | 244,771 | 243,464 | ||||||
| Liability related to the sale of future royalties, net | 98,394 | 105,950 | ||||||
| Deferred revenue, less current portion | 56,225 | 51,887 | ||||||
| Other long-term liabilities | 5,959 | 7,223 | ||||||
| Total liabilities | 497,893 | 480,746 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 15 | 15 | ||||||
| Capital in excess of par value | 2,170,169 | 2,111,483 | ||||||
| Accumulated other comprehensive loss | (1,907 | ) | (2,363 | ) | ||||
| Accumulated deficit | (2,084,115 | ) | (2,021,010 | ) | ||||
| Total stockholders’ equity | 84,162 | 88,125 | ||||||
| Total liabilities and stockholders’ equity | $ | 582,055 | $ | 568,871 | ||||
(1) The consolidated balance sheet at December 31, 2016 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product sales | $ | 4,448 | $ | 14,698 | $ | 24,897 | $ | 41,664 | ||||||||
| Royalty revenue | 9,302 | 5,573 | 23,953 | 13,150 | ||||||||||||
| Non-cash royalty revenue related to sale of future royalties | 8,066 | 7,692 | 21,367 | 22,341 | ||||||||||||
| License, collaboration and other revenue | 131,112 | 8,373 | 142,028 | 50,829 | ||||||||||||
| Total revenue | 152,928 | 36,336 | 212,245 | 127,984 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of goods sold | 5,674 | 7,033 | 20,794 | 23,611 | ||||||||||||
| Research and development | 65,714 | 51,951 | 187,032 | 153,569 | ||||||||||||
| General and administrative | 12,055 | 10,253 | 40,027 | 31,515 | ||||||||||||
| Total operating costs and expenses | 83,443 | 69,237 | 247,853 | 208,695 | ||||||||||||
| Income (loss) from operations | 69,485 | (32,901 | ) | (35,608 | ) | (80,711 | ) | |||||||||
| Non-operating income (expense): | ||||||||||||||||
| Interest expense | (5,540 | ) | (5,614 | ) | (16,452 | ) | (16,918 | ) | ||||||||
| Non-cash interest expense on liability related to sale of future royalties | (4,471 | ) | (4,902 | ) | (13,535 | ) | (14,929 | ) | ||||||||
| Interest income and other income (expense), net | 1,599 | 332 | 3,163 | 1,666 | ||||||||||||
| Total non-operating expense, net | (8,412 | ) | (10,184 | ) | (26,824 | ) | (30,181 | ) | ||||||||
| Income (loss) before provision for income taxes | 61,073 | (43,085 | ) | (62,432 | ) | (110,892 | ) | |||||||||
| Provision for income taxes | 202 | 139 | 434 | 433 | ||||||||||||
| Net income (loss) | $ | 60,871 | $ | (43,224 | ) | $ | (62,866 | ) | $ | (111,325 | ) | |||||
| Net income (loss) per share: | ||||||||||||||||
| Basic | $ | 0.39 | $ | (0.32 | ) | $ | (0.41 | ) | $ | (0.82 | ) | |||||
| Diluted | $ | 0.37 | $ | (0.32 | ) | $ | (0.41 | ) | $ | (0.82 | ) | |||||
| Weighted average shares outstanding used in computing net income (loss) per share: | ||||||||||||||||
| Basic | 156,411 | 137,094 | 155,153 | 136,415 | ||||||||||||
| Diluted | 162,641 | 137,094 | 155,153 | 136,415 | ||||||||||||
| NEKTAR THERAPEUTICS |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (In thousands) |
| (Unaudited) |
| Nine Months Ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (62,866 | ) | $ | (111,325 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Non-cash royalty revenue related to sale of future royalties | (21,367 | ) | (22,341 | ) | ||||
| Non-cash interest expense on liability related to sale of future royalties | 13,535 | 14,929 | ||||||
| Stock-based compensation | 25,118 | 18,793 | ||||||
| Depreciation and amortization | 12,081 | 11,502 | ||||||
| Other non-cash transactions | (1,370 | ) | (2,190 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | 12,364 | 5,698 | ||||||
| Inventory | (2,545 | ) | 592 | |||||
| Other assets | (2,036 | ) | 6,041 | |||||
| Accounts payable | 5,729 | 4,799 | ||||||
| Accrued compensation | 808 | 9,735 | ||||||
| Accrued clinical trial expenses | (958 | ) | 2,726 | |||||
| Other accrued expenses | 4,971 | 2,386 | ||||||
| Liability related to refundable upfront payment | — | 12,500 | ||||||
| Deferred revenue | 15,477 | (12,665 | ) | |||||
| Other liabilities | 1,046 | (5,793 | ) | |||||
| Net cash used in operating activities | (13 | ) | (64,613 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of investments | (314,439 | ) | (142,972 | ) | ||||
| Maturities of investments | 261,112 | 201,449 | ||||||
| Sales of investments | 8,823 | 4,969 | ||||||
| Purchases of property, plant and equipment | (7,283 | ) | (3,741 | ) | ||||
| Net cash (used in) provided by investing activities | (51,787 | ) | 59,705 | |||||
| Cash flows from financing activities: | ||||||||
| Payment of capital lease obligations | (2,159 | ) | (5,376 | ) | ||||
| Proceeds from shares issued under equity compensation plans | 32,275 | 18,041 | ||||||
| Net cash provided by financing activities | 30,116 | 12,665 | ||||||
| Effect of exchange rates on cash and cash equivalents | 11 | (32 | ) | |||||
| Net (decrease) increase in cash and cash equivalents | (21,673 | ) | 7,725 | |||||
| Cash and cash equivalents at beginning of period | 59,640 | 55,570 | ||||||
| Cash and cash equivalents at end of period | $ | 37,967 | $ | 63,295 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 14,989 | $ | 15,513 | ||||