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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): February 2, 2004
NEKTAR THERAPEUTICS
(Exact name of Registrant as specified in its charter)
Delaware 0-23556 94-3134940
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
150 Industrial Road
San Carlos, California 94070
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code: (650) 631-3100
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Item 12. Results of Operations and Financial Condition
On February 2, 2004, Nektar Therapeutics issued a press release announcing
results for the quarter and the year ended December 31, 2003. A copy of the
press release is attached as Exhibit 99.1 to this Current Report and is
incorporated herein by reference.
The information in this report, including the exhibit hereto, 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.
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/ AJIT S. GILL
-----------------------------------
Ajit S. Gill
Chief Executive Officer,
President and Director
Date: February 2, 2004
By: /s/ AJAY BANSAL
-----------------------------------
Ajay Bansal
Chief Financial Officer and Vice
President, Finance and
Administration
Date: February 2, 2004
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Earnings Press Release of Nektar Therapeutics dated February 2,
2004.
Exhibit 99.1
Nektar Announces Financial Results for the Year and Fourth Quarter
2003
SAN CARLOS, Calif.--(BUSINESS WIRE)--Feb. 2, 2004--Nektar
Therapeutics (Nasdaq:NKTR) today announced its financial results for
the year and fourth quarter ended December 31, 2003.
For the year ended December 31, 2003, revenues were $106.3
million, compared to $94.8 million in 2002. In 2003, Nektar reported
product revenues of $27.3 million compared to $18.5 million for 2002,
and contract research revenues were $79.0 million for 2003, compared
to $76.4 million for the year ended December 31, 2002. The increase in
revenues by 12% for the year is due primarily to higher sales of
Nektar Advanced PEGylation products.
For the twelve months ended December 31, 2003, the company
reported a net loss of $46.7 million or $(0.84) per share, compared to
a net loss of $107.5 million or $(1.94) per share for the year ended
December 31, 2002. The 2003 net loss includes $31.2 million in gain
related to the cancellation of outstanding indebtedness, including a
$26.9 million gain from privately negotiated debt exchange
transactions in the fourth quarter of 2003 and a $4.3 million gain
from the repurchase of $20.5 million of debt in privately negotiated
transactions in the second quarter of 2003.
The company reported revenues of $25.6 million for the three
months ended December 31, 2003, compared to $22.6 million in the same
period in 2002. In the fourth quarter of 2003, product revenues were
$5.9 million compared to $5.2 million in 2002, and contract research
revenues totaled $19.7 million compared to $17.5 million in 2002.
For the three months ended December 31, 2003, Nektar reported a
net income of $3.5 million or $0.06 per share compared to a net loss
of $31.1 million or $(0.56) for the same period in 2002. Net income
for the three month period includes a loss from operations of $19.9
million, interest expense of $4.8 million, a gain of $26.9 million
related to privately negotiated debt exchange transactions, $1.5
million of interest and other income, and a $0.2 million provision for
income taxes.
As of December 31, 2003, the company reported cash, cash
equivalents and short-term investments totaling approximately $286.0
million compared to $304.2 million at the end of the third quarter
2003.
In January 2004, in a privately negotiated transaction, Nektar
exchanged $9.0 million of outstanding 3.5% convertible notes due
October 2007 for 575,605 shares of common stock. In addition, in
January 2004, the company entered into privately negotiated
transactions with a limited number of holders of outstanding 3%
convertible notes due June 30, 2010, to convert approximately $36.0
million aggregate principal amount of such notes into approximately
3.2 million shares of common stock in exchange for cash payments of
approximately $3.1 million in the aggregate. As a result, the
liability for outstanding convertible notes and debentures as of today
stands at $315 million of which approximately $182 million is due at
or prior to October 2007, and approximately $133 million is due in
2010.
For 2004, the company expects revenue growth of approximately
10-20%, a net loss between $85 and $95 million, and year-end cash,
cash equivalents and short-term investments of approximately $200
million.
Summary of 2003
"2003 was an exciting and fruitful year for Nektar," said Ajit S.
Gill, Nektar chief executive officer and president. "We started the
year by re-naming the company Nektar Therapeutics to reflect our
broadened drug delivery capabilities. During the year, we saw
substantial progress in several of our partner pipeline programs,
encouraging data on Exubera(R) (inhaled insulin), the broadening of
our Proprietary Products Program, and improvement in our balance
sheet. Our pipeline of 21 products now includes five products approved
in the U.S., four in pivotal or Phase III clinical trials, and 12
products in Phase I and II clinical testing."
2003 and Early 2004 Partner Pipeline Progress
-- Today, in a separate press release, Nektar disclosed a
collaboration with Roche under which Nektar has licensed its
proprietary PEG reagent for CERA (Continuous Erythropoiesis
Receptor Activator).
-- In January 2004, Celltech announced the initiation of Phase
III trials for CDP 870 for Crohn's disease. CDP 870, which
uses Nektar PEGylation, was also being tested in Phase III
trials for rheumatoid arthritis.
-- In November, Eyetech Pharmaceuticals presented data from Phase
III trials of Macugen(TM), (PEGaptanib sodium), a potential
treatment for age-related macular degeneration and diabetic
macular edema, both leading causes of blindness.
-- In June, Celltech's CDP 860, a PEGylated antibody fragment
drug in testing for cancer, completed a small Phase II
proof-of-concept study.
-- In March, Pfizer's (formerly Pharmacia's) SOMAVERT(R), which
uses Nektar PEGylation, was approved by the U.S. Food and Drug
Administration for the treatment of certain patients with
acromegaly.
-- In addition, during 2003, Nektar partners initiated clinical
trials for four products, including InterMune's PEG-Alfacon
for hepatitis C; Celltech's CDP 791, a PEGylated antibody
fragment drug for cancer; Unimed's inhaled MARINOL(R),
Nektar's first MDI application, being developed for use in
multiple indications; and Chiron's inhaled Tobi(R), a
next-generation inhaled, powder tobramycin product for the
treatment of Pseudomonas aeruginosa in cystic fibrosis
patients.
Exubera(R) (inhaled insulin) Progress
In June, Pfizer and Aventis presented additional Phase III data at
the American Diabetes Association Conference in New Orleans comparing
Exubera(R) to rosiglitazone, an oral hypoglycemic agent used to reduce
the body's resistance to the action of insulin as a way of lowering
blood glucose. The data suggested that Exubera(R) may provide
acceptable glycemic control to significantly more subjects than
rosiglitazone in type 2 diabetes patients not optimally controlled on
diet and exercise.
Advanced-stage clinical studies are continuing for Exubera(R)
(inhaled insulin) for the treatment of diabetes developed by Nektar
for Pfizer and their partner Aventis Pharma. The determination as to
if or when to file a New Drug Application or equivalent European
regulatory filing with respect to Exubera(R) will be made by Pfizer
and their partner Aventis at their discretion.
Proprietary Pipeline Progress
In the first quarter, an inhaled small molecule entered clinical
testing. Phase I clinical trials for this molecule are on-going. Over
the next few years, Nektar intends to significantly increase the
number of products it takes through Phase I clinical testing and, in
some cases, Phase II, before offering the products to Nektar's
biopharmaceutical partners for commercialization. Nektar could have an
additional 1-2 products in clinical trials as part of this program by
the end of 2004.
Conference Call Information
Ajit Gill will host a conference call today for analysts and
investors beginning at 2:00 p.m., Pacific Time, to further discuss the
company's performance.
Investors can access a live audio-only Webcast through a link that
will be posted on the Investor Relations section at Nektar's Web site
at http://www.nektar.com. The Web broadcast of the conference call
will be available for replay through February 17, 2004.
Analysts and investors can also access the conference call live
via telephone by dialing 888-862-6557 (U.S.); 630-691-2748
(international). The passcode is Nektar and the leader is Mr. Ajit
Gill. An audio replay will be available shortly following the call
through February 17, 2004, and can be accessed by dialing 877-213-9653
(U.S.) or 630-652-3041 (international) with a passcode of 8274379.
In the event that any non-GAAP financial measure is discussed on
the conference call that is not described in this release, related
complimentary information will be made available on the Investor
Relations page at Nektar's Web site as soon as practical after the
conclusion of the conference call.
About Nektar
Nektar Therapeutics, formerly Inhale Therapeutic Systems, Inc.,
provides industry-leading drug delivery technologies, expertise and
manufacturing to enable the development of high-value, differentiated
therapeutics. Nektar's advanced drug delivery capabilities are
designed to enable the company's biotechnology and pharmaceutical
partners to solve drug development challenges and realize the full
potential of their therapeutics, from developing new molecular
entities to managing the lifecycles of established products.
This release contains forward-looking statements that reflect
management's current views as to Nektar's business strategy, product
and technology development plans and funding, collaborative
arrangements, clinical trials, and other future events and operations.
These forward-looking statements involve uncertainties and other risks
that are detailed in Nektar's reports and other filings with the SEC,
including its Annual Report on Form 10-K for the year ended December
31, 2002, as amended and its Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 2003. Actual results could differ
materially from these forward-looking statements.
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2003 2002
*
--------- ----------
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $ 285,967 $ 293,969
Other current assets 20,531 17,020
--------- ---------
Total current assets 306,498 310,989
Restricted investments 12,442 -
Property and equipment, net 149,388 143,452
Goodwill 130,120 130,120
Other intangible assets, net 10,963 15,470
Deposits and other assets 7,377 6,607
--------- ---------
$ 616,788 $ 606,638
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 26,797 $ 40,617
Capital lease obligations - current 1,341 1,008
Deferred revenue 18,719 22,040
--------- ---------
Total current liabilities 46,857 63,665
Convertible subordinated debentures 359,988 299,149
Accrued rent 2,110 2,033
Capital lease obligations - noncurrent 31,686 31,862
Other long-term liabilities 11,956 3,159
Stockholders' equity:
Preferred stock 40,000 40,000
Common stock 719,298 714,686
Deferred compensation (38) (239)
Accumulated other comprehensive gain 958 1,668
Accumulated deficit (596,027) (549,345)
--------- ---------
Total stockholders' equity 164,191 206,770
--------- ---------
$ 616,788 $ 606,638
========= =========
* The balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date but does not include all of
the information and footnotes required by accounting principles
generally accepted in the United States for complete financial
statements.
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share information)
Three-Months Ended Twelve-Months Ended
December 31, December 31,
------------------- --------------------
2003 2002 2003 2002
-------- -------- -------- ---------
(audited)
Revenue:
Contract research
revenue $ 19,735 $ 17,451 $ 78,962 $ 76,380
Product sales 5,889 5,179 27,295 18,465
-------- -------- -------- ---------
Total revenue 25,624 22,630 106,257 94,845
Operating costs and
expenses:
Cost of goods sold 2,807 1,517 14,678 7,020
Research and development 35,230 40,722 131,528 157,383
General and
administrative 6,513 8,509 22,017 26,016
Amortization of other
intangible assets 983 1,126 4,219 4,507
-------- -------- -------- ---------
Total operating costs
and expenses 45,533 51,874 172,442 194,926
-------- -------- -------- ---------
Loss from operations (19,909) (29,244) (66,185) (100,081)
Gain on debt extinguishment 26,906 - 31,226 -
Other income/ (expense), net 275 111 983 (996)
Interest income 1,223 2,251 5,360 10,222
Interest expense (4,814) (4,192) (17,897) (16,613)
-------- -------- -------- ---------
Income/(loss) before
provision for income taxes 3,681 (31,074) (46,513) (107,468)
Provision for income taxes 169 - 169 -
-------- -------- -------- ---------
Net income/(loss) $ 3,512 $(31,074) $(46,682) $(107,468)
======== ======== ======== =========
Net earnings/(loss)
per share:
Basic $ 0.06 $ (0.56) $ (0.84) $ (1.94)
Diluted $ 0.06 $ (0.56) $ (0.84) $ (1.94)
Weighted-average shares
used to compute net
earnings/(loss) per share:
Basic 56,121 55,448 55,821 55,282
Diluted 60,868 55,448 55,821 55,282
CONTACT: Nektar Therapeutics
Joyce Strand, 650-631-3138