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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 10, 2006
NEKTAR THERAPEUTICS
(Exact name of Registrant as specified in its charter)
Delaware 0-24006 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
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))
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1
Item 2.02 Results of Operations and Financial Condition.
On May 10, 2006, Nektar Therapeutics issued a press release (the "Press
Release") announcing results for the quarter ended March 31, 2006. 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.
Item 9.01 Financial Statements and Exhibits.
Exhibits
99.1 Earnings Press Release of Nektar Therapeutics dated May 10, 2006.
2
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/ Robert B. Chess
----------------------------------
Robert B. Chess
Interim Chief Executive Officer,
President and Director
Date: May 10, 2006
By: /s/ Louis Drapeau
----------------------------------
Louis Drapeau
Senior Vice President, Finance and
Administration and Chief Financial
Officer
Date: May 10, 2006
3
Exhibit 99.1
Nektar Announces First Quarter 2006 Results
SAN CARLOS, Calif.--(BUSINESS WIRE)--May 10, 2006--Nektar Therapeutics
(Nasdaq:NKTR)
-- Highlights include approval of Exubera(R) (insulin human (rDNA
origin)) Inhalation Powder in the U.S. and EU with first launch in
Germany in mid-May; the filing for approval of two partner products
with Nektar technology; and presentation of clinical data for
Amphotericin B Inhalation Powder product
Nektar Therapeutics (Nasdaq:NKTR) announced today its financial results for
the first quarter ended March 31, 2006.
The company reported revenue of $29.0 million for the first quarter of
2006, compared to $28.5 million for the first quarter of 2005. In the first
quarter of 2006, product and royalty revenue was $12.4 million compared to $6.4
million in the first quarter of 2005, including only one month of revenue
recognized from Exubera product sales, as a result of a 60-day acceptance
condition on product sales to Pfizer. Each of the remaining quarters in 2006
will have three months of Exubera product sales to Pfizer. Contract research
revenue totaled $14.8 million in the first quarter of 2006 compared to $19.5
million in the first quarter of 2005 primarily related to lower Exubera contract
research payments from Pfizer.
The company reported a net loss of $33.5 million or $(0.38) per share for
the first quarter of 2006 compared to a net loss of $26.2 million or $(0.31) per
share for the first quarter of 2005. The net loss in the first quarter of 2006
includes $5.0 million of non-severance stock-based compensation expense as a
result of the implementation of FAS 123R during the quarter. In addition, the
loss also included $3.9 million of severance costs, including $2.2 million of
stock-based severance compensation, related to the retirement of the former
president and chief executive officer and other personnel.
As of March 31, 2006, Nektar reported cash, cash equivalents, short-term
investments, and investments in marketable securities totaling approximately
$528.1 million compared to approximately $566.4 million as of December 31, 2005.
"With the approval of Exubera and the progress of our proprietary and
partner product pipelines, we are well positioned for future growth and
success," said Robert B. Chess, chairman of the board, and acting president and
chief executive officer. "To help us achieve success over the next few years, I
am spending my time as interim president and CEO to focus the company on
building those components of our business that will result in the highest
shareholder value and on managing our underlying cost structure. Our most
important priorities are to meet the manufacturing demand for Exubera inhalers
and powdered insulin; expand our long-term leadership position in inhaled
insulin; and manage the clinical development of our proprietary products."
Financial Outlook for 2006
Today the company is updating its guidance provided on February 28, 2006 in
the press release announcing its fourth quarter and year-end 2005 results,
including an increase in the amount of FAS 123R non-severance stock-based
compensation charges and increased severance and restructuring expenses. In
summary, Nektar expects:
-- Revenue for 2006 in the range of $160 to $190 million, including $60
to $80 million manufacturing and royalty revenue related to Exubera,
with the majority of the revenue being generated by manufacturing
sales to Pfizer.
-- GAAP net loss of $135 to $150 million, and a non-GAAP net loss of $100
to $115 million. Non-GAAP net loss excludes $20 million of FAS 123R
non-severance stock based compensation charges, and expenses of
approximately $15 million of special charges related to restructuring
and severances. The 2006 net loss estimate may change as the company
continues to evaluate potential restructuring activities in 2006. See
supplemental table attached to this press release entitled
"Reconciliation of Non-GAAP Projected Financial Guidance for 2006."
-- Cash, cash equivalents, and short-term investments and investments in
marketable securities at the end of the year of approximately $415 to
$440 million.
Recent Highlights
Exubera Approved in the U.S. and EU; German launch mid-May
On January 26, 2006, the European Commission approved Exubera for the
treatment of adults with type 1 and type 2 diabetes. On January 27, 2006, the
U.S. Food and Drug Administration (FDA) approved Exubera for the treatment of
adults with type 1 and type 2 diabetes. Nektar partnered with Pfizer to develop
the inhalers and the powdered insulin formulation for Exubera. Nektar will
receive revenue from Pfizer for the manufacture of all the Exubera Inhalers and
insulin release units, and for some of the insulin powder processing. In
addition, Nektar will receive revenue from royalties as a percentage of Pfizer's
end-product sales.
Nektar is also reporting today that Pfizer will be initiating the first
launch of Exubera(R) in Germany in mid-May.
Nektar Presents Encouraging Clinical Data for Amphotericin B Inhalation
Powder
Nektar presented promising clinical data from Phase I clinical trials of
the company's Amphotericin B Inhalation Powder product at the 2nd Advances
Against Aspergillosis Meeting, February 22-25, 2006 in Athens, Greece. The
objective of the study was to investigate the tolerability and pharmacokinetics
of pulmonary administration of amphotericin B. Single doses of up to 25 mg of
amphotericin B were well tolerated by the healthy subjects.
In addition, Nektar presented pre-clinical data both at the Advances
Against Aspergillosis Meeting as well as at the Focus on Fungal Infections 16th
Annual Meeting, March 8-10, 2006 in Las Vegas. These data indicated that
Nektar's Amphotericin B Inhalation Powder, given in a single prophylactic
inhalation dose, prevented fungal (Aspergillus fumigatus) infection-induced
morbidity and mortality in an immunosuppressed animal model.
Nektar is developing Amphotericin B Inhalation Powder to prevent serious
lung fungal infections that can occur in patients who are severely
immunosuppressed, specifically during treatment for acute leukemia and organ or
bone marrow transplants. By delivering therapeutic doses of an antifungal
directly to the lungs, the Amphotericin B Inhalation Powder could prevent fatal
infections without toxicities typical of systemically administered antifungal
drugs. The product has FDA orphan drug designation that could provide a
seven-year period of exclusive marketing for the approved indication to the
first sponsor who obtains marketing approval for that indication.
Two Partner Products Filed for Approval
On April 27, 2006, Roche announced that it has filed a marketing
authorization application (MAA) in the EU for CERA, which uses Nektar
technology, for the treatment of anemia associated with chronic kidney disease.
Previously, Roche announced on April 20, 2006, that it has submitted a
Biological License Application (BLA) to the U.S. Food and Drug Administration
(FDA) to market CERA for the treatment of anemia associated with chronic kidney
disease including patients on dialysis and not on dialysis.
In March and April 2006, UCB announced that they submitted a BLA to the FDA
and an MAA to the European Medicines Evaluation Agency for Cimzia(TM), a unique
PEGylated antibody fragment, for Crohn's Disease. Cimzia is also in Phase III
trials for the treatment of rheumatoid arthritis.
Nine products with Nektar technology have been approved for marketing in
the U.S. and/or Europe.
Conference Call Information
Robert B. Chess will host a conference call for analysts and investors
today beginning at 2:00 p.m. Pacific Daylight Time, to discuss further the
company's performance.
Investors can access a live audio-only webcast through a link that is
posted on the Investor Relations section of Nektar's website at
http://www.nektar.com. The web broadcast of the conference call will be
available for replay through May 24, 2006.
Analysts and investors can also access the conference call live via
telephone by dialing (800) 559-2403 (U.S.); (847) 619-6534 (international). The
passcode is 14548843# and the host is Mr. Robert Chess. An audio replay will be
available shortly following the call through May 24, 2006 and can be accessed by
dialing (877) 213-9653 (U.S.); or (630) 652-3041 (International) with a passcode
of 14548843#. In the event that any non-GAAP financial measure is discussed on
the conference call that is not described in the press release, 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 develops and enables high-value, differentiated
therapeutics with its industry-leading drug delivery technologies, expertise and
manufacturing capabilities. The world's top biotechnology and pharmaceutical
companies are developing new and better therapeutics using Nektar's advanced
technologies and know-how. Nektar also develops its own products by applying its
drug delivery technologies and its expertise to existing medicines to enhance
performance, such as improving efficacy, safety and compliance.
Non-GAAP Financial Measures
The Company provides all information required in accordance with GAAP, but
it believes that evaluating its ongoing results of operations may be difficult
to understand if limited to reviewing only GAAP financial results. In managing
the Company's business, management reviews non-GAAP results of operations,
including non-GAAP net income (loss) which excludes as applicable, stock-based
compensation charges and severance and restructuring charges to evaluate the
company's ongoing operating results.
Nektar management does not itself, nor does it suggest that investors
should, consider such non-GAAP financial measures in isolation from, or as a
substitute for, GAAP financial measures. The Company considers and presents such
non-GAAP financial measures in measuring, reporting, and forecast its financial
results to provide management and investors with an additional tool to evaluate
the Company's operating results in a manner that focuses on what management
believes to be the Company's ongoing business operations. Management believes
that the inclusion of non-GAAP financial measures provides consistency and
comparability with past reports of financial results. Investors should note,
however, that the non-GAAP financial measures used by the Company may not be the
same non-GAAP financial measures as, and may not be calculated in the same
manner as, that of other companies with which investors may compare the
financial results of the Company. Management believes it is useful for the
Company and investors to review both GAAP information that includes the expenses
and charges mentioned above and the non-GAAP financial measures that exclude
such special expenses and charges to have a better understanding of the overall
performance of the Company's business, its allocation of resources, and its
ability to perform in the future. Investors are encouraged to review the related
GAAP financial measures and the reconciliation of these non-GAAP financial
measures to their most directly comparable GAAP financial measure.
This press release contains forward-looking statements that reflect
management's current views and expectations as to the Exubera product launch,
product and technology development plans and funding, current business position
of the company, clinical plans and expectations for the clinical advancement of
our proprietary and partner products, the potential for new product efficacy,
safety, compliance, and economic benefits for patients, the value and risk
profile of our proprietary product programs, and financial projections for the
2006 calendar year. These forward-looking statements involve uncertainties and
other risks, including but not limited to: (i) the timing and success of the
Exubera commercial launch (ii) the company's ability to manufacture and supply
sufficient quantities of Exubera dry powder insulin and inhalation devices to
meet market demand (iii) the discovery of any new or more severe side effects or
negative efficacy findings for Exubera or any product liability claims related
thereto (iv) increased investment in our proprietary products prior to seeking
partner collaborations may adversely impact our results of operations and
financial condition (v) our success or the success of our partners in obtaining
regulatory approvals and (vi) a material negative impact on our results of
operations for future periods as a result of the application of FAS 123R related
to expensing of stock-based compensation. Other important risks and
uncertainties are detailed in the company's reports and other filings with the
SEC, including its most recent Annual Report on Form 10-K, Quarterly Report on
Form 10-Q, and Current Reports on Form 8-K. Actual results could differ
materially from the forward-looking statements contained in this press release.
The Company undertakes no obligation to update forward-looking statements,
whether as a result of new information, future events or otherwise.
Exubera is a registered trademark of Pfizer Inc. Cimzia is a trademark of
UCB.
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share information)
Unaudited
-------------------
Three-Months Ended
March 31,
-------------------
2006 2005
--------- ---------
Revenue:
Contract research revenue $ 14,817 $ 19,529
Product sales and royalty revenue 12,397 6,392
Exubera commercialization readiness 1,745 2,573
--------- ---------
Total
revenue 28,959 28,494
Operating costs and expenses:
Cost of goods sold 7,500 5,255
Exubera(R) commercialization
readiness costs 1,495 2,294
Research and development 31,401 34,945
General and administrative 20,373 9,110
Amortization of other intangible
assets 1,364 982
--------- ---------
Total operating costs and expenses 62,133 52,586
--------- ---------
Loss from operations (33,174) (24,092)
Other income/(expense), net (37) (1,285)
Interest income 4,882 2,272
Interest expense (5,142) (3,060)
--------- ---------
Income/(loss) before benefit/(provision)
for income taxes (33,471) (26,165)
Benefit/(provision) for income taxes -- --
--------- ---------
Net loss $(33,471) $(26,165)
========= =========
Basic and diluted net loss per
common share $ (0.38) $ (0.31)
Shares used in computing basic and
diluted net loss per share 88,926 84,708
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2006 2005
(unaudited) (1)
------------ ------------
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $479,516 $476,201
Inventory 33,180 18,627
Other current assets 36,670 25,015
------------ ------------
Total current assets 549,366 519,843
Investments in marketable securities 48,601 90,222
Property and equipment, net 140,301 142,127
Goodwill 78,431 78,431
Other intangible assets, net 11,944 13,452
Deposits and other assets 12,895 14,479
------------ ------------
$841,538 $858,554
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 56,624 $ 53,626
Capital lease obligations - current 521 482
Convertible subordinated notes and
debentures - current 36,026
Deferred revenue 17,130 15,487
------------ ------------
Total current liabilities 110,301 69,595
Convertible subordinated notes and debentures 381,627 417,653
Accrued rent 2,390 2,409
Capital lease obligations - noncurrent 20,129 20,276
Other long-term liabilities 20,285 21,810
Stockholders' equity:
Preferred stock at par -- --
Common stock at par 9 9
Capital in excess of par value 1,244,234 1,233,690
Deferred compensation -- (2,949)
Accumulated other comprehensive loss (1,734) (1,707)
Accumulated deficit (935,703) (902,232)
------------ ------------
Total stockholders' equity 306,806 326,811
------------ ------------
$841,538 $858,554
========================
(1) The balance sheet at December 31, 2005 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.
Supplemental Table
NEKTAR THERAPEUTICS
Reconciliation of Non-GAAP Projected Financial Guidance for 2006
In millions of dollars
Refer to the discussion of non-GAAP measures included in the
accompanying press release for additional information.
2006 Projected Financial Guidance
----------------------------------
2006 projected Exubera-related
revenue range $ 60 to $ 80
2006 projected other revenue
range 100 to 110
----------- -----------
2006 projected total revenue range $ 160 to $ 190
Projected GAAP loss from operations
range $(135) to $(150)
Non-GAAP adjustments to loss
from operations
Projected stock-based
compensation expense 20 20
(non-severance related)
Projected severance and
restructuring charges(2) 15 15
----------- -----------
Projected Non-GAAP loss from
operations range $(100) to $(115)
(2) The company expects to record $15 million in projected severance
and restructuring charges, of which approximately $11 million is
related to severance-related stock-based compensation expense.
CONTACT: Nektar Therapeutics
Joyce Strand, 650-631-3138
Jennifer Ruddock, 650-631-4954