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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 28, 2007
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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Item 2.02 Results of Operations and Financial Condition.
On February 28, 2007, Nektar Therapeutics issued a press release (the "Press
Release") announcing results for the three and twelve month periods ended
December 31, 2006; and its financial outlook for 2007. 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/ Howard W. Robin
-----------------------------------
Howard W. Robin
President and
Chief Executive Officer,
Date: February 28, 2007
By: /s/ Louis Drapeau
-----------------------------------
Louis Drapeau
Senior Vice President, Finance
and Chief Financial Officer
Date: February 28, 2007
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Earnings Press Release of Nektar Therapeutics dated
February 28, 2007.
EXHIBIT 99.1
Nektar Announces Financial Results for the Year and Fourth Quarter 2006
SAN CARLOS, Calif.--(BUSINESS WIRE)--Feb. 28, 2007--Nektar
Therapeutics (Nasdaq:NKTR) today announced its financial results for
the year and fourth quarter ended December 31, 2006, which are in line
with the company's financial guidance for 2006.
For 2006, Nektar reported total revenue of $217.7 million,
compared to $126.3 million in 2005. In 2006, product sales and royalty
revenue was $153.6 million compared to $29.4 million in 2005; contract
research revenue was $56.3 million compared to $81.6 for 2005. Revenue
for 2006 related to Exubera(R) (insulin human (rDNA origin))
Inhalation Powder was $110.2 million.
As of December 31, 2006, Nektar had cash, cash equivalents, and
short- and long-term investments of $467.0 million compared to $490.9
million as of September 30, 2006.
For 2006, Nektar reported a generally accepted accounting
principles (GAAP) net loss of $154.8 million or $(1.72) per share
compared to a GAAP net loss in 2005 of $185.1 million or $(2.15) per
share. For 2006, Nektar reported a non-GAAP net loss of $92.3 million
or $(1.03) per share compared to a non-GAAP net loss for 2005 of
$111.9 million or $(1.30) per share. The non-GAAP net loss for 2006
excludes $17.3 million of SFAS 123R stock-based compensation charges,
a $17.7 million charge for a litigation settlement with the University
of Alabama Huntsville, a $5.5 million for impairment of long lived
assets, and $21.9 million in severance and restructuring charges. The
non-GAAP net loss for 2005 excludes the charge of $65.3 million for
non-cash impairment of goodwill and write-off of certain fixed assets
related to Nektar's United Kingdom subsidiary and $7.9 million for
purchased in-process research and development expense associated with
the acquisition of Aerogen, Inc. See the supplemental table attached
to this press release entitled "Reconciliation of GAAP Financial
Measures to Non-GAAP Financial Measures."
"Over the years, Nektar has built a strong diversified business
with a rich pipeline of partner and proprietary products developed
from leading-edge pulmonary and PEGylation technology," said Howard W.
Robin, president and chief executive officer. "I am convinced that
tremendous additional shareholder value can be created by leveraging
these innovative technology platforms into a strong and differentiated
product pipeline for Nektar. In addition, we are excited about the
positive response of patients on Exubera, the most important
innovation in insulin delivery in the last 80 years. We are confident
in the potential of Exubera, and are working closely with Pfizer to
make this product a success."
For the three months ended December 31, 2006, Nektar reported
total revenue of $69.9 million compared to $32.9 million in the same
period in 2005. For the three months ended December 31, 2006, product
sales and royalty revenue was $55.6 million compared to $9.1 million
in the same period in 2005. Contract research revenue was $12.1
million compared to $18.9 million in the same period in 2005. For the
three months ended December 31, 2006, Exubera product sales and
royalty revenue was $39.8 million.
The company's GAAP net loss was $38.9 million or $(0.43) per share
for the three months ended December 31, 2006, compared to a GAAP net
loss of $108.1 million or $(1.23) per share in the same period 2005.
The company's non-GAAP net loss was $29.0 million or $(0.32) per share
for the three months ended December 31, 2006 compared to a non-GAAP
net loss of $34.9 million or $(0.40) per share in the three months
ended December 31, 2005. The non-GAAP net loss for the three months
ended December 31, 2006 excludes $4.0 million of SFAS 123R stock-based
compensation charges and $5.5 million for impairment of long lived
assets. The non-GAAP net loss for the three months ended December 31,
2005 excludes the charge of $65.3 million for non-cash impairment of
goodwill and the write-off of certain fixed assets related to Nektar's
United Kingdom subsidiary and $7.9 million for purchased in-process
research and development expense associated with the acquisition of
Aerogen, Inc. See the supplemental table attached to this press
release entitled, "Reconciliation of GAAP Financial Measures to
Non-GAAP Financial Measures."
Financial Outlook for 2007
Today Nektar is reiterating its full year 2007 financial
performance estimates, provided on November 2, 2006. The company's
financial guidance for 2007 is as follows:
- -- Total revenue in the range of $210 to $250 million, including
Exubera product and royalty revenue of $110 to $130 million, with
most of the estimated Exubera revenue based on estimated
manufacturing sales of Exubera to Pfizer;
- -- GAAP net loss of $110 to $130 million;
- -- Non-GAAP net loss of $75 to $95 million. The non-GAAP net loss
estimated range excludes approximately $25 million of estimated
SFAS 123R stock-based compensation charges and $10 million Aerogen
restructuring costs. See the supplemental table attached to this
press release entitled "Reconciliation of Non-GAAP Projected
Financial Guidance for 2007."
Highlights of the Past Year
- -- New President and CEO Howard W. Robin joined Nektar on January 15,
2007, bringing more than 25 years of successful biopharmaceutical
experience managing clinical development and commercial
operations.
- -- Exubera was approved in the U.S., EU, Mexico, and Brazil with
launches in the U.S., U.K., Germany, and Ireland. Pfizer commenced
a phased launch in the U.S. focusing on the education of
endocrinologists and most recently primary care physicians,
diabetes educators, and pharmacists.
- -- Nektar made advances in its proprietary product development
programs, where the company is applying its pulmonary and
PEGylation platform technology to develop new and improved
medicines from existing molecules. Progress included:
-- Phase 2 trials were conducted for the inhaled antibiotics
(amikacin) product candidate;
-- The Amphotericin B Inhalation Powder (ABIP) product candidate
was granted orphan drug designation in the U.S. and EU; and
fast-track designation in the U.S.; and
-- A human proof-of-concept trial was completed for a pain-related
product candidate under development with the company's
PEGylation technology.
- -- Product candidates were also advanced in the company's partner
pipeline, where leading pharmaceutical and biotechnology companies
have created unique products using Nektar pulmonary or PEGylation
technology. Progress included:
-- UCB's Cimzia for Crohn's disease was filed for regulatory
approval in the U.S. and EU;
-- Affymax, Inc., initiated and completed a Phase 2 clinical trial
of Hematide(TM) to treat anemia in cancer patients; and
-- Zelos Therapeutics' inhaled parathyroid hormone-analogue for
osteoporosis entered Phase 1 trials.
About Nektar Pulmonary Technology
The company's Pulmonary Technology uses innovative molecular
formulations and novel inhalers designed for ease-of-use to improve or
enable administration of medicines to and through the lungs for both
lung diseases and systemic conditions. Nektar has two proprietary
pulmonary anti-infective products currently in clinical development
and four additional pulmonary products in the clinic with various
partners. Exubera, which has been approved in the U.S., EU, Brazil and
Mexico, is the first approved product using Nektar Pulmonary
Technology and is the result of a developmental collaboration between
Pfizer Inc and Nektar.
About Nektar PEGylation Technology
The company's PEGylation Technology has the potential to minimize
the invasiveness and improve the safety and efficacy of therapeutic
agents by increasing drug circulation time in the bloodstream,
decreasing immunogenicity and dosing frequency, increasing
bioavailability and improving drug solubility and stability. It is
based on the use of non-toxic polyethylene glycol (PEG) polymers,
which can be attached to most major drug classes, including proteins,
peptides, antibody fragments, small molecules, and other drugs and is
used in eight approved products in the U.S. and/or Europe today. Two
other products using Nektar PEGylation have been filed for approval by
Nektar partners in both the U.S. and the EU, including UCB's
Cimzia(TM) for Crohn's Disease.
Conference Call Information
Mr. Howard W. Robin, president and chief executive officer, 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
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 March 14, 2007.
Analysts and investors can also access the conference call live
via telephone by dialing 800-640-9765 (U.S.); 1-847-413-4837
(international). The passcode is 17025300 and the host is Mr. Howard
Robin. An audio replay will be available shortly following the call
through March 14, 2007 and can be accessed by dialing 877-213-9653
(U.S.); or 1-630-652-3041 (international) with a passcode of 17025300.
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 is a biopharmaceutical company with a mission
to develop and enable differentiated therapeutics with its
industry-leading technologies, expertise and manufacturing
capabilities. Nektar technology and know-how have enabled nine
approved products for partners, which include the world's leading
pharmaceutical and biotechnology companies. Nektar is also developing
its own products by applying its technologies and expertise to
existing medicines with the objective 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 net loss and non-GAAP net loss per common share which
excludes, as applicable, SFAS 123R stock-based compensation charges,
litigation charges, impairment of long-lived assets, and severance and
restructuring charges to evaluate the company's ongoing and future
financial and operating results.
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 forecasting 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 and future
projections of revenue and net loss financial measures. 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 the company's current views and expectations as to the Exubera
product potential, the value of the company's technology platforms,
prospects for the company's business, and financial estimates for the
2007 calendar year. These forward-looking statements involve risks and
uncertainties, including but not limited to: (i) the commercial launch
of Exubera is in the early stages and it is difficult to predict
future Exubera sales which will depend upon, among other factors,
specialist and physician education, patient experiences, third party
payor reimbursement, and the impact of competition from alternative
diabetes therapies (ii) the company's and Pfizer's ability to
manufacture and supply sufficient quantities of Exubera product to
meet patient 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) investment in the company's
proprietary product development programs may adversely impact results
of operations and financial condition (v) Nektar's success or the
success of Nektar's partners in obtaining regulatory approvals for
product candidates, (vi) a material negative impact on results of
operations for future periods as a result of the application of SFAS
123R related to expensing of stock-based compensation, and (vii) the
outcome of any existing or future intellectual property or other
litigation related to our partner or proprietary products and product
candidates. 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.
NEKTAR THERAPEUTICS
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2006 2005
(unaudited) (1)
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $63,760 $261,273
Short-term investments 394,880 214,928
Accounts receivable, net of allowance 47,148 12,494
Inventory 14,656 18,627
Other current assets 14,595 12,521
------------ ------------
Total current assets 535,039 519,843
Long-term investments 8,337 90,222
Property and equipment, net 133,812 142,127
Goodwill 78,431 78,431
Other intangible assets, net 3,626 13,452
Other assets 8,932 14,479
------------ ------------
$768,177 $858,554
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $8,160 $16,131
Accrued compensation 12,994 10,385
Accrued expenses 16,987 12,439
Interest payable 3,814 3,791
Capital lease obligations, current
portion 711 536
Deferred revenue, current portion 16,409 15,487
Convertible subordinated notes, current
portion 102,653 -
Other current liabilities 3,586 10,826
------------ ------------
Total current liabilities 165,314 69,595
Convertible subordinated notes 315,000 417,653
Capital lease obligations 19,759 20,470
Deferred revenue 23,697 8,374
Other long-term liabilities 17,347 15,651
Commitments and contingencies
Stockholders' equity:
Preferred stock - -
Common stock 9 9
Capital in excess of par value 1,283,982 1,233,690
Deferred compensation - (2,949)
Accumulated other comprehensive income
(loss) 62 (1,707)
Accumulated deficit (1,056,993) (902,232)
------------ ------------
Total stockholders' equity 227,060 326,811
------------ ------------
$768,177 $858,554
============ ============
(1) The consolidated 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 notes required by accounting
principles generally accepted in the United States for complete
financial statements. Certain 2005 amounts have been reclassified
between line items to conform with the 2006 presentation.
NEKTAR THERAPEUTICS
CONSOLIDATED STATEMENTS OF OPERATIONS
( In thousands, except per share information)
Unaudited Unaudited
-------------------- ---------------------
Three-Months Ended Twelve-Months Ended
December 31, December 31,
-------------------- ---------------------
2006 2005 2006 2005
--------- ---------- ---------- ----------
Revenue:
Product sales and
royalties $55,551 $9,053 $153,556 $29,366
Contract research 12,053 18,865 56,303 81,602
Exubera commercialization
readiness 2,300 4,963 7,859 15,311
--------- --------------------- ----------
Total revenue 69,904 32,881 217,718 126,279
Operating costs and
expenses:
Cost of goods sold 40,100 6,915 113,921 23,728
Exubera commercialization
readiness costs 1,042 4,233 4,168 12,268
Research and development 42,521 42,338 149,381 151,659
General and
administrative 17,441 13,659 78,319 43,852
Litigation settlement - - 17,710 -
Amortization of
intangible assets 708 1,261 4,039 4,206
Impairment of long lived
assets 8,254 65,340 9,410 65,340
Purchased in-process R&D - 7,859 - 7,859
--------- ---------- ---------- ----------
Total operating costs and
expenses 110,066 141,605 376,948 308,912
--------- ---------- ---------- ----------
Loss from operations (40,162) (108,724) (159,230) (182,633)
Interest income 6,134 5,339 23,450 13,022
Interest expense (4,921) (5,177) (20,256) (14,085)
Other income (expense), net 922 323 2,103 (1,249)
Loss on extinguishment of
debt - - - (303)
--------- ---------- ---------- ----------
Loss before benefit for
income taxes (38,027) (108,239) (153,933) (185,248)
Benefit for income taxes (828) 137 (828) 137
--------- ---------- ---------- ----------
Net loss $(38,855) $(108,102) $(154,761) $(185,111)
========= ========== ========== ==========
Basic and diluted net loss
per share $(0.43) $(1.23) $(1.72) $(2.15)
Weighted average shares used
in computing basic and
diluted net loss per share 90,499 87,648 89,789 85,915
The consolidated statement of operations at December 31, 2005 has been
derived from the audited financial statements at that date but does
not include all of the information and notes required by accounting
principles generally accepted in the United States for complete
financial statements. Certain 2005 amounts have been reclassified
between line items to conform with the 2006 presentation.
NEKTAR THERAPEUTICS
Reconciliation of GAAP Financial Measures to Non-GAAP Financial
Measures
( In thousands, except per share information)
Unaudited Unaudited
-------------------- ---------------------
Three-Months Ended Twelve-Months Ended
December 31, December 31,
-------------------- ---------------------
2006 2005 2006 2005
--------- ---------- ---------- ----------
GAAP net loss $(38,855) $(108,102) $(154,761) $(185,111)
Adjustments to GAAP net
loss:
SFAS 123R stock-based
compensation expense,
excluding severance 4,028 - 17,318 -
Litigation settlement - - 17,710 -
Impairment of long lived
asset (1) 5,497 65,340 5,497 65,340
Purchased in-process R&D 7,859 7,859
Severance and
restructuring charges 311 - 21,896 -
--------- ---------- ---------- ----------
Non-GAAP net loss (2) $(29,019) $(34,903) $(92,340) $(111,912)
========= ========== ========== ==========
GAAP basic and diluted net
loss per common share $(0.43) $(1.23) $(1.72) $(2.15)
Adjustments to GAAP basic
and diluted net loss per
common share:
SFAS 123R stock-based
compensation expense,
excluding severance 0.05 - 0.19 -
Litigation settlement - - 0.20 -
Impairment of long lived
asset 0.06 0.75 0.06 0.76
Purchased in-process R&D - 0.09 - 0.09
Severance and
restructuring charges 0.00 - 0.24 -
--------- ---------- ---------- ----------
Non-GAAP basic and diluted
net loss per common share
(1) $(0.32) $(0.40) $(1.03) $(1.30)
========= ========== ========== ==========
Shares used in computing
non-GAAP basic and diluted
net loss per share 90,499 87,648 89,789 85,915
(1) 2005 - writeoff of intangible assets associated with Nektar UK
subsidiary; 2006 - writeoff of intangible assets associated with
Aerogen, Inc.
(2) These non-GAAP financial measures are not presented as a measure
of operating results and should not be construed as an alternative to
either (i) income from operations or (ii) cash flows from operating
activities. The company's management provides these non-GAAP
financial measures to present investors with additional information
that the company's management considers in assessing the company's
results of operations, and to enhance investors' overall
understanding of the company's financial performance.
NEKTAR THERAPEUTICS
Reconciliation of Non-GAAP Projected Financial Guidance for 2007
(In millions)
Refer to the discussion of non-GAAP financial measures included in the
accompanying press release for additional information.
2007 Projected Financial Guidance
---------------------------------
2007 Exubera-related projected to
revenue range $110 $130
2007 other revenue 100 120
-------------- -----------
2007 projected total revenue range $210 to $250
============== ===========
Projected GAAP net loss $(110) to $(130)
Adjustments to GAAP net loss:
SFAS 123R stock-based compensation
expense 25 25
Aerogen restructuring 10 10
Projected Non-GAAP net loss $(75) to $(95)
============== ===========
CONTACT: Nektar Therapeutics
Joyce Strand, 650-631-3138