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Feb 29, 2012
Nektar Therapeutics Reports Fourth Quarter and Year-End 2011 Financial Results

SAN FRANCISCO, Feb. 29, 2012 /PRNewswire/ -- Nektar Therapeutics (Nasdaq: NKTR) today reported its financial results for the fourth quarter and year ended December 31, 2011.

Cash, cash equivalents, and investments at December 31, 2011 were $414.9 million as compared to $315.9 million at December 31, 2010. The 2011 year-end cash balance does not include the $124.0 million payment related to the sale of Cimzia and Mircera royalties also announced today.

"In 2011, Nektar continued to demonstrate that our technology platform is capable of generating multiple new drug candidates in high value therapeutic areas such as pain, oncology and hemophilia," said Howard W. Robin, President and Chief Executive Officer of Nektar. "In Q4, we achieved excellent results in our Phase 1 program for our new opioid molecule, NKTR-181 for chronic pain, and we are advancing it into Phase 2 this year.  We also began enrollment in our Phase 3 BEACON study for NKTR-102 in metastatic breast cancer.  Finally, BAX 855, a long-acting PEGylated Factor VIII therapy for hemophilia A, entered Phase 1 clinical development with our partner, Baxter."  

The company also announced today that AstraZeneca is planning regulatory filings in the US and EU in the middle of 2013 for NKTR-118 (naloxegol) in opioid-induced constipation. Naloxegol is currently in Phase 3 clinical development as a once-daily, oral tablet for the treatment of opioid-induced constipation.

Revenue for the fourth quarter of 2011 was $15.8 million. Revenue in the fourth quarter of 2011 decreased as compared to $45.3 million in the fourth quarter of 2010 primarily as a result of the completion as of December 31, 2010 of the amortization of the $125.0 million upfront payment received in 2009 from AstraZeneca for the NKTR-118 and NKTR-119 license agreement.

Total operating costs and expenses in the fourth quarter of 2011 were $50.3 million as compared to $65.9 million in the fourth quarter of 2010.   Research and development expense in the fourth quarter of 2011 was $33.3 million as compared to $31.5 million for the fourth quarter in 2010.  General and administrative expense was $11.5 million in the fourth quarter of 2011 as compared to $11.6 million in the fourth quarter of 2010.

Net loss for the fourth quarter ended December 31, 2011 was $37.5 million or $0.33 loss per share.

The company also announced upcoming partner events and presentations at the following medical meeting during the first and second quarters of 2012:

- Partner Event: March 26, 2012, FDA PDUFA (Prescription Drug User Fee Act) Date for MAP Pharmaceutical's LEVADEX for acute treatment of migraine

- Partner Event: March 27, 2012, FDA PDUFA (Prescription Drug User Fee Act) Date for Affymax and Takeda's peginesatide for renal anemia in patients with chronic kidney disease on dialysis

- IMPAKT Breast Cancer Conference, Brussels, Belgium:

Phase 2 results of NKTR-102 in metastatic breast cancer will be reviewed and the BEACON Phase 3 study design will be highlighted to members of the European breast cancer community.

  • Abstract Title: "Significant antitumor activity in a randomized phase 2 study comparing 2 schedules of NKTR-102 in patients with metastatic breast cancer", Awada A, et. al.  
  • Abstract/Poster Number: #249
  • Session Title/Track:  "New Drug Development"
  • Date: May 4, 2012, Gold Hall, 16:15 — 17:20 pm CET

  • Abstract Title: "Phase 3 study of NKTR-102 versus Treatment of Physician's Choice (TPC) in patients (pts) with locally recurrent or metastatic breast cancer (MBC) previously treated with an anthracycline, a taxane, and capecitabine (ATC)", Cortes, J, et. al.  
  • Abstract/Poster Number: #173
  • Session Title/Track:  "New Drug Development"
  • Date: May 4, 2012, Gold Hall, 16:15 — 17:20 pm CET

Conference Call to Discuss Year-end and Fourth Quarter 2011 Financial Results

Nektar management will host a conference call to review the results beginning at 5:00 p.m. Eastern Time (ET)/2:00 p.m. Pacific Time (PT) today, Wednesday, February 29, 2012.

The 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 April 1, 2012.

To access the conference call, follow these instructions:

Dial: (800) 299-0433 (U.S.); (617) 801-9712(international)
Passcode: 34860642 (Nektar Therapeutics is the host)

An audio replay will also be available shortly following the call through Sunday, April 1, 2012 and can be accessed by dialing (888) 286-8010 (U.S.); or (617) 801-6888 (international) with a passcode of 45200354.

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 biopharmaceutical company developing novel therapeutics based on its PEGylation and advanced polymer conjugation technology platforms. Nektar has a robust R&D pipeline of potentially high-value therapeutics in oncology, pain and other therapeutic areas. In the area of pain, Nektar has an exclusive worldwide license agreement with AstraZeneca for NKTR-118, an investigational drug candidate, which is being evaluated in Phase 3 clinical studies as a once-daily, oral tablet for the treatment of opioid-induced constipation.  The agreement also includes NKTR-119, an earlier stage development program that is a co-formulation of NKTR-118 and an opioid.  NKTR-181, a novel mu-opioid analgesic, has completed Phase 1 development and is being prepared for a Phase 2 study.  In oncology, NKTR-102 is being evaluated in a Phase 3 clinical study for the treatment of metastatic breast cancer and Phase 2 studies for the treatment of ovarian and colorectal cancers.  Nektar's technology has enabled seven approved products in the U.S. or Europe through partnerships with leading biopharmaceutical companies, including UCB's Cimzia® for Crohn's disease and rheumatoid arthritis, Roche's PEGASYS® for hepatitis C and Amgen's Neulasta® for neutropenia. Additional development stage products that leverage Nektar's proprietary technology platform include peginesatide, for which Affymax and partner Takeda submitted an NDA to the FDA in May 2011, and Baxter's BAX 855, a long-acting PEGylated rFVIII program which is in Phase 1 clinical development.

Nektar is headquartered in San Francisco, California, with additional R&D 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 "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 our plans to initiate a Phase 2 clinical study for NKTR-181; our plans to initiate a Phase 1 clinical study for NKTR-192; AstraZeneca's planned regulatory filings with government health authorities for approval of NKTR-118 in one or more countries if the Phase 3 clinical studies for this drug candidate are successful; the value and potential of certain drug candidates being developed by our collaboration partners; the expected decision on approval by the FDA at the PDUFA dates for Levadex® and peginesatide; and the value and potential of Nektar's 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) we need to fund our research and development programs as well as the repayment of the principal amount of the $215 million in outstanding convertible subordinated notes due in September 2012 by raising additional cash through the monetization of other assets held by us or through one or more financing transactions, which may be dilutive to our existing stockholders, or by reducing or slowing research and development. (ii) 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 preclinical and clinical studies; (iii) the timing of the commencement or end of clinical trials and the commercial launch of our 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; (iv) while the FDA endeavors to complete its review of NDAs by the PDUFA date, it does not always do so and the FDA's decision regarding a NDA can be delayed significantly beyond the original PDUFA date through various regulatory delays or regulatory actions; (v) 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; and (vi) certain other important risks and uncertainties set forth in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2012.  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

Susan Noonan/SA Noonan Communications, LLC

(212) 966-3650



Nektar Media Inquiries:

Karen Bergman/BCC Partners

(650) 575-1509

Michelle Corral/BCC Partners

(415) 794-8662



NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)






ASSETS

December 31, 2011


December 31, 2010

(1)

Current assets:









Cash and cash equivalents


$                 15,312


$                 17,755



Short-term investments



225,856


298,177



Accounts receivable



4,938


25,102



Inventory




12,656


7,266



Other current assets



17,944


5,679




Total current assets


276,706


353,979












Long-term investments



173,768


-


Property and equipment, net


78,576


89,773


Goodwill




76,501


76,501


Other assets




999


972



Total  assets



$               606,550


$               521,225












LIABILITIES AND STOCKHOLDERS' EQUITY















Current liabilities:








Accounts payable



$                   3,019


$                   7,194



Accrued compensation



12,807


9,252



Accrued expenses



6,669


8,540



Accrued clinical trial expenses


11,953


12,144



Deferred revenue, current portion


19,643


20,584



Convertible subordinated notes, current portion

214,955


-



Other current liabilities



6,486


6,394




Total current liabilities


275,532


64,108












Convertible subordinated notes


-


214,955


Capital lease obligations



14,582


17,014


Deferred revenue



108,188


124,763


Deferred gain




3,278


4,152


Other long-term liabilities



7,159


5,571




Total liabilities



408,739


430,563












Commitments and contingencies
















Stockholders' equity:








Preferred stock



-


-



Common stock



11


9



Capital in excess of par value


1,597,428


1,354,232



Accumulated other comprehensive (loss) income

(1,103)


968



Accumulated deficit



(1,398,525)


(1,264,547)




Total stockholders' equity


197,811


90,662



Total liabilities and stockholders' equity


$               606,550


$               521,225












(1) The consolidated balance sheet at December 31, 2010 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


Twelve Months Ended



December 31,


December 31,



2011


2010


2011


2010



















Revenue:








Product sales

$    6,073


$  10,700


$    24,864


$  27,412

Royalty revenues

3,095


1,999


10,327


7,255

License, collaboration and other

6,614


32,615


36,289


124,372

Total revenue

15,782


45,314


71,480


159,039










Operating costs and expenses:








Cost of goods sold

5,450


10,237


21,891


25,667

Research and development

33,302


31,455


126,766


108,065

General and administrative

11,498


11,585


46,760


40,986

Impairment of long-lived assets

-


12,576


-


12,576

Total operating costs and expenses

50,250


65,853


195,417


187,294










Loss from operations

(34,468)


(20,539)


(123,937)


(28,255)










Non-operating income (expense):








Interest income

661


320


2,244


1,545

Interest expense

(2,525)


(2,488)


(10,223)


(11,174)

Other income (expense), net

(445)


391


(1,044)


827

Total non-operating expense, net

(2,309)


(1,777)


(9,023)


(8,802)










Loss before provision for income taxes

(36,777)


(22,316)


(132,960)


(37,057)










Provision for income taxes

718


264


1,018


881










Net loss

$ (37,495)


$ (22,580)


$ (133,978)


$ (37,938)










Basic and diluted net loss per share

$     (0.33)


$     (0.24)


$       (1.19)


$     (0.40)










Weighted average shares outstanding used in









computing basic and diluted net loss per









share

114,446


94,398


112,942


94,079



NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)






Twelve Months Ended December 31,

2011


2010

Cash flows from operating activities:




Net loss

$ (133,978)


$ (37,938)

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




Depreciation and amortization

14,951


16,551

Stock-based compensation

18,885


17,399

Impairment of long-lived assets

-


12,576

Other non-cash transactions

1,359


198

Changes in operating assets and liabilities:




Accounts receivable

20,164


(20,301)

Inventory

(5,390)


(795)

Other assets

(12,267)


577

Accounts payable

(3,384)


4,274

Accrued compensation

3,555


(800)

Accrued expenses

1,013


1,683

Accrued clinical trial expenses

(191)


(2,023)

Deferred revenue

(17,516)


(47,025)

Other liabilities

(943)


(247)

Net cash used in operating activities

(113,742)


(55,871)





Cash flows from investing activities:




Purchases of investments

(695,371)


(443,122)

Sales of investments

210,089


15,479

Maturities of investments

383,052


475,813

Purchases of property and equipment

(9,722)


(31,457)

Net cash (used in) provided by investing activities

(111,952)


16,713





Cash flows from financing activities:




Proceeds from issuances of common stock

224,313


8,891

Payments of loan and capital lease obligations

(1,978)


(1,356)

Net cash provided by financing activities

222,335


7,535

Effect of exchange rates on cash and cash equivalents

916


(219)

Net decrease in cash and cash equivalents

$     (2,443)


$ (31,842)

Cash and cash equivalents at beginning of period

17,755


49,597

Cash and cash equivalents at end of period

$    15,312


$  17,755



SOURCE Nektar Therapeutics

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