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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): May 5, 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 May 5, 2004, Nektar Therapeutics issued a press release announcing results
for the quarter ended March 31, 2004. 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: May 5, 2004
By: /s/ AJAY BANSAL
-----------------------------------
Ajay Bansal
Chief Financial Officer and Vice
President, Finance and
Administration
Date: May 5, 2004
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Earnings Press Release of Nektar Therapeutics dated May 5, 2004.
Exhibit 99.1
Nektar Announces First Quarter 2004 Results
SAN CARLOS, Calif.--(BUSINESS WIRE)--May 5, 2004--Nektar
Therapeutics (Nasdaq:NKTR) announced today its financial results for
the first quarter ended March 31, 2004.
The company reported revenues of $25.8 million for the three
months ended March 31, 2004, compared to $25.5 million for the first
quarter of 2003. In the first quarter of 2004, product revenues were
$4.3 million compared to $7.1 million in 2003, and contract research
revenues totaled $21.5 million compared to $18.4 million in 2003. The
product revenue decline is due primarily to re-scheduling some PEG
product sales from the first quarter to later quarters in 2004, as
well as lower PEG demand for some of the partner marketed products.
The company reported a net loss of $40.0 million or $(0.64) per
share for the three months ended March 31, 2004, compared to a net
loss in the same quarter in 2003 of $19.9 million or $(0.36) per
share. Net loss for the three month period ended March 31, 2004
includes a loss from operations of $16.1 million, net interest expense
of $14.8 million, of which $12.7 million is attributable to payments
made in connection with the conversion of convertible subordinated
notes, a loss from debt extinguishment of $9.3 million, and $0.3
million other income.
As of March 31, 2004, the company reported cash, cash equivalents
and short-term investments totaling approximately $467.4 million
compared to $286.0 million at the end of 2003.
"So far, 2004 has been a year of significant progress," said Ajit
S. Gill, Nektar president and chief executive officer. "We have seen
positive developments on three late stage programs. Exubera(R)
(inhaled insulin) achieved a key milestone through the filing by
Pfizer and Aventis of a marketing authorization application in the
E.U.; Celltech reported encouraging preliminary Phase III CDP870 data
for rheumatoid arthritis; and Roche advanced CERA (Continuous
Erythropoiesis Receptor Activator) to Phase III trials. We are also
pleased with the progress of our Proprietary Products Group. We have
moved the proprietary inhaled small molecule to a follow-on Phase I
trial, and we are working towards enabling the filing of
Investigational New Drug applications (INDs) by Enzon of inhaled
leuprolide and another small molecule given via inhalation. Further,
we made substantial progress toward improving our balance sheet by
adding considerable cash and significantly reducing our outstanding
convertible debt. In addition, so far this year we have signed two
license agreements, one with GlaxoSmithKline and one with an
undisclosed biotechnology company."
Summary of 2004 Progress
Exubera
On March 4, 2004 Nektar reported that Pfizer and Aventis announced
that the European Medicines Evaluation Agency (EMEA) has accepted the
filing of a marketing authorization application for Exubera. Nektar
developed and provides the inhalers and the powdered insulin for the
Exubera product. Pfizer and Aventis are seeking approval to market
Exubera for adult patients with type 1 and type 2 diabetes.
Partner Pipeline
-- Today, in a separate release, Nektar announced an agreement
with GlaxoSmithKline who will license Nektar Advanced
PEGylation for use in the formulation of a protein under
pre-clinical investigation as a potential therapy for cancer.
-- In addition, Nektar signed an agreement with an undisclosed
biotechnology company under which Nektar Advanced PEGylation
will be used in the formulation of another pre-clinical
product.
-- Additional late-stage products in Nektar's partner pipeline
besides Exubera also showed progress, including Celltech's
announcement on March 31, 2004 of preliminary Phase III CDP870
data for rheumatoid arthritis indicating that the study met
its primary endpoint; and Roche's advancement of CERA to Phase
III trials. Both products use Nektar Advanced PEGylation.
-- On March 16, 2004, Celltech announced that in 2003 they had
initiated large placebo controlled Phase I/II trials in
rheumatoid arthritis patients for CDP484, an antibody fragment
using Nektar Advanced PEGylation.
-- In addition, on March 16, Celltech disclosed that due to their
lack of progress in partnering discussions they have
discontinued development of CDP860, an antibody fragment using
Nektar Advanced PEGylation formerly in Phase II trials for
cancer. Further, Nektar has dropped from its pipeline an
undisclosed product listed in Phase II trials as the company's
partner has decided not to pursue further development.
Proprietary Products Group
The Proprietary Products Group applies Nektar technologies to
create highly differentiated versions of already-approved drug
molecules. In the first quarter of 2003, Nektar announced that an
inhaled small molecule had entered Phase I trials under the
Proprietary Products Group. This initial Phase I trial is now complete
and confirms the drug's tolerability at and above projected
therapeutic dosing levels, and the drug has subsequently entered a
follow-on Phase I trial to confirm dosing regimen in humans.
Summary of 2004 Offering and Convertible Note Transactions
In March 2004, Nektar sold 9.5 million shares of common stock at
$20.71 per share resulting in proceeds of approximately $196.2 million
net of issuance costs.
In March 2004, Nektar also completed the full redemption of its
outstanding 3% convertible subordinated notes due June 2010. The
aggregate principal amount outstanding of the notes was $133.3 million
at the time of the call for redemption. All of the outstanding
convertible notes were converted in accordance with their terms prior
to the redemption date. The company paid cash "make-whole" payments to
the holders of the notes surrendered for conversion in the aggregate
amount of approximately $10.0 million. As a result of these
conversions, approximately 11.7 million shares of Nektar's common
stock were issued to these note holders.
In February 2004, the company entered into privately negotiated
transactions with a limited number of holders of outstanding 3%
convertible notes due in June 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.
In January 2004, in a privately negotiated transaction, Nektar
exchanged $9.0 million of outstanding 3.5% convertible notes due
October 2007 for 0.6 million shares of common stock.
Subsequent to the end of the first quarter, on April 22, 2004
Nektar completed the full redemption of its outstanding 6 3/4%
convertible subordinated debentures due October 2006. The aggregate
principal amount outstanding of the debentures was $7.8 million at the
time of the call for redemption. All but $10,000 of the outstanding
convertible notes were converted in accordance with their terms prior
to the redemption date resulting in the issuance of approximately 0.5
million shares of common stock.
After giving effect to the conversion of October 2006 notes,
Nektar has outstanding convertible subordinated notes in the principal
amount of approximately $173.9 million due in 2007. The total number
of shares of the company's outstanding common stock is approximately
83.5 million shares.
Conference Call Information
Ajit Gill, Nektar president and CEO, will host a conference call
today for analysts and investors beginning at 2:00 p.m. Pacific Time,
to discuss further 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 May 19, 2004.
Analysts and investors can also access the conference call live
via telephone by dialing (800) 559-2403 (US); (847) 619-6534
(international). The passcode is Nektar and the leader is Mr. Ajit
Gill. An audio replay will be available shortly following the call
through May 19, 2004 and can be accessed by dialing (877) 213-9653
(U.S.) or (630) 652-3041 (international) with a passcode of 8892347.
About Nektar
Nektar Therapeutics 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 life cycles 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 fiscal year ended
December 31, 2003, as amended. Actual results could differ materially
from these forward-looking statements.
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share information)
Three Months Ended
March 31,
----------------------
2004 2003
---------- ---------
(unaudited)
Revenues:
Contract research revenue $ 21,509 $ 18,393
Product sales 4,322 7,135
---------- ---------
Total revenues 25,831 25,528
Operating costs and expenses:
Cost of goods sold 2,536 4,622
Research and development 34,020 32,141
General and administrative 4,422 5,178
Amortization of other intangible assets 981 1,127
---------- ---------
Total operating costs and expenses 41,959 43,068
----------- ---------
Loss from operations (16,128) (17,540)
Loss on extinguishment of debt (9,258) --
Other income/(expense), net 307 119
Interest income/(expense), net (14,789) (2,528)
---------- ---------
Net loss before provision for income taxes (39,868) (19,949)
Provision for income taxes 132 --
---------- ---------
Net loss $(40,000) $(19,949)
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Basic and diluted net loss per common share $ (0.64) $ (0.36)
========== =========
Shares used in computing basic and
diluted net loss per common share 62,139 55,601
========== =========
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, 2004 December 31, 2003
(unaudited) *
--------------- -----------------
ASSETS
Current assets:
Cash, cash equivalents, and
short-term investments $467,410 $285,967
Other current assets 22,363 20,531
--------------- -----------------
Total current assets 489,773 306,498
Restricted investments -- 12,442
Property and equipment, net 154,023 149,388
Goodwill 130,120 130,120
Other intangible assets, net 9,836 10,963
Deposits and other assets 3,383 7,377
--------------- -----------------
$787,135 $616,788
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 26,350 $ 26,797
Capital lease obligations -
current 1,405 1,341
Deferred revenue 21,783 18,719
--------------- -----------------
Total current liabilities 49,538 46,857
Convertible subordinated debentures 181,709 359,988
Accrued rent 2,129 2,110
Capital lease obligations -
noncurrent 31,070 31,686
Other long-term liabilities 11,750 11,956
Stockholders' equity:
Preferred stock at par -- --
Common stock at par 8 6
Capital in excess of par 1,168,530 778,500
Deferred compensation (3,718) (38)
Accumulated other comprehensive
gain 1,354 958
Accumulated deficit (655,235) (615,235)
--------------- -----------------
Total stockholders'
equity 510,939 164,191
--------------- -----------------
$787,135 $616,788
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* The balance sheet at December 31, 2003 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.
CONTACT: Nektar Therapeutics
Joyce Strand, 650-631-3138