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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): August 6, 2003
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
Item 12. Results of Operations and Financial Condition
On August 6, 2003, Nektar Therapeutics issued a press release announcing results
for the quarter ended June 30, 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 hereunto duly authorized.
Nektar Therapeutics (Registrant)
By: /s/ AJIT S. GILL
---------------------------------
Ajit S. Gill
Chief Executive Officer,
President and Director
Date: August 6, 2003
By: /s/ AJAY BANSAL
---------------------------------
Ajay Bansal
Chief Financial Officer, and Vice
President, Finance and
Administration
Date: August 6, 2003
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Earnings Press Release of Nektar Therapeutics dated August 6, 2003.
Exhibit 99.1
Nektar Announces Second Quarter 2003 Results
SAN CARLOS, Calif.--(BUSINESS WIRE)--Aug. 6, 2003--Nektar
Therapeutics (Nasdaq:NKTR), formerly Inhale Therapeutic Systems, Inc.,
announced today its financial results for the second quarter ended
June 30, 2003.
The Company reported revenue of $27.7 million for the three months
ending June 30, 2003, including $6.5 million of product revenue and
$21.2 million of contract research revenue compared to $22.3 million
for the three months ended June 30, 2002, including $3.4 million of
product revenue and $18.8 million of contract research revenue. The
increase in revenue is due primarily to expanded activities under
existing collaborative agreements and higher sales of Nektar molecule
engineering advanced PEGylation products.
The Company reported a net loss of $13.0 million or $(0.23) per
share for the three months ending June 30, 2003, compared to a net
loss in the same quarter in 2002 of $24.8 million or $(0.45) per
share.
For the six months ending June 30, 2003, Nektar reported revenue
of $53.3 million, including $13.7 million of product revenue and $39.6
million of contract research revenue compared to $49.0 million for the
same period in 2002, including $8.9 million of product revenue and
$40.1 million of contract research revenue.
For the six months ended June 30, 2003, Nektar reported a net loss
of $33.0 million or $(0.59) per share compared to a net loss in the
same period in 2002 of $49.9 million or $(0.90) per share.
Nektar's balance of cash, cash equivalents and short-term
investments at the end of the quarter was $308.3 million, including
$96.4 million raised in an offering of 3% convertible subordinated
notes due June 2010, net of issuance costs, during the quarter.
Approximately $16.2 million of the proceeds from the sale of 3%
convertible subordinated notes due 2010 were used to retire $20.5
million of 3.5% convertible notes due 2007 in privately negotiated
transactions. This resulted in a $4.3 million gain, which was
reflected as other income in the three and six months ended June 30,
2003. An additional $8.8 million of the proceeds were used to purchase
restricted investments pledged for the benefit of the holders of the
3% convertible subordinated notes purchased in the offering.
"In addition to improving our cash position through an offering of
subordinated convertible notes, we were also particularly pleased with
the steady advancement in the clinic of three partnered drug products
using our technologies, the release of additional encouraging
Exubera(R) (inhaled insulin) data, and new pre-clinical data from one
of our internally initiated products, PEGylated inhaled insulin," said
Ajit S. Gill, Nektar president and chief executive officer.
Summary of Activities
Partner Pipeline Progress
"Our pipeline continues to grow. There are now 21 products using
Nektar technology approved or in human clinical testing," said Gill.
-- Nektar announced today that in the second quarter 2003, Unimed
Pharmaceuticals, Inc., a wholly owned subsidiary of Solvay
Pharmaceuticals, Inc., initiated a Phase I trial of a metered
dose inhaler (MDI) version of dronabinol (synthetic
delta-9-tetrahydrocannabinol). This product is being developed
for use in multiple indications. Dronabinol is the active
ingredient in Unimed Pharmaceuticals' product MARINOL(R)
capsules, which are approved and marketed in the US. This is
Nektar's first MDI development program.
-- Chiron Corporation announced on July 23, 2003 that they
initiated a Phase I trial for inhaled tobramycin, the first
application of Nektar inhaleable technology to inhaled
antibiotics for treatment of lung infections. Inhaled Tobi(R)
is a next-generation inhaled, powder tobramycin product for
the treatment of Pseudomonas aeruginosa in cystic fibrosis
patients. Prior to collaborating with Chiron, Nektar had
previously conducted a proof-of-concept Phase I trial in
healthy subjects of inhaled powdered tobramycin.
-- Celltech Group Plc announced progress with one of its products
that uses Nektar PEGylation technology and services. CDP 860,
a PEGylated antibody fragment drug in testing for cancer,
completed a small Phase II proof-of-concept study. According
to Celltech, the effects observed in this study were
consistent with the proposed mechanism of action and confirmed
the potent biological activity of this molecule.
Exubera(R) (inhaled insulin) Progress
"Our collaborator, Pfizer, commented in June 2003 at its Analyst
Day that the lung function data from long-term safety tests continues
to look positive and expressed confidence that Exubera(R) (inhaled
insulin) will become an important and widely used diabetes
medication," continued Gill.
In addition, Nektar reported on new data released in June 2003 at
the American Diabetes Association (ADA) annual conference from Phase
III studies conducted by Pfizer and Aventis with Exubera(R). The data
suggest 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. Rosiglitazone
is an oral hypoglycemic agent used to reduce the body's resistance to
the action of insulin as a way of lowering blood glucose.
Proprietary Pipeline Progress
"In the first half of 2003, we also reported progress in our
proprietary pipeline. As announced in April, an inhaled small molecule
entered clinical testing in the first quarter. In the second quarter,
we released pre-clinical data of PEGylated inhaled insulin,
demonstrating that PEGylated proteins can be formulated into dry
powders to provide prolonged activity," continued Gill.
In June, Nektar presented pre-clinical data at the ADA from
PEGylated inhaled insulin developed to cross the lungs efficiently and
provide prolonged serum levels of insulin activity.
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 lifecycles of
established products.
This release contains forward-looking statements that reflect
management's current views as to Nektar Therapeutics' 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 Therapeutics' reports and
other filings with the SEC, including its Annual Report on Form 10-K
for the year ended Dec. 31, 2002, as amended and its Quarterly Report
on Form 10-Q for the fiscal quarter ended March 31, 2003. Actual
results could differ materially from these forward-looking statements.
Ajit S. Gill, Nektar president and CEO, will host a conference
call today for analysts and investors beginning at 2:00 p.m. Pacific
Time to further discuss the company's financial results.
Investors can access a live audio-only Webcast through a link that
will be posted on the Investor Relations site at Nektar's Web site at
http://www.nektar.com. The Web broadcast of the conference call will
be available for replay through Aug. 20, 2003.
Analysts and investors can also access the conference call live
via telephone by dialing 866-868-1109 (US); 847-413-2404
(international). The passcode is Nektar and the leader is Ajit Gill.
An audio replay will be available shortly following the call through
Aug. 20, 2003 and can be accessed by dialing 877-213-9653 or
630-652-3041 with a passcode of 7466264.
-- Tables Attached --
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, 2003 Dec. 31, 2002
(unaudited) *
------------- -------------
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $308,271 $293,969
Other current assets 21,382 17,020
------------- -------------
Total current assets 329,653 310,989
Restricted investments 8,799 -
Property and equipment, net 143,439 143,452
Goodwill 130,120 130,120
Other intangible assets 13,216 15,470
Deposits and other assets 9,269 6,607
------------- -------------
$634,496 $606,638
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
liabilities:
Accounts payable and accrued
liabilities $29,456 $40,617
Capital lease obligations -
current 1,118 1,008
Deferred revenue 14,320 22,040
------------- -------------
Total current liabilities 44,894 63,665
Convertible subordinated debentures 378,649 299,149
Accrued rent 2,071 2,033
Capital lease obligations - noncurrent 31,043 31,862
Other long-term liabilities 3,167 3,159
Stockholders' equity:
Preferred stock 40,000 40,000
Common stock 715,796 714,686
Deferred compensation (71) (239)
Accumulated other comprehensive
gain/(loss) 1,280 1,668
Accumulated deficit (582,333) (549,345)
------------- -------------
Total stockholders'
equity 174,672 206,770
------------- -------------
$634,496 $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 Six Months Ended
June 30, June 30,
--------------------- ---------------------
2003 2002 2003 2002
----------- --------- ----------- ---------
(unaudited) (unaudited)
Revenue:
Contract research
revenue $21,210 $18,828 $39,603 $40,129
Product sales 6,538 3,423 13,673 8,868
----------- --------- ----------- ---------
Total revenue 27,748 22,251 53,276 48,997
Operating costs and
expenses:
Cost of goods sold 3,708 1,673 8,330 3,563
Research and
development 32,380 36,551 64,521 78,478
General and
administrative 5,136 5,575 10,314 10,956
Amortization of
other intangible
assets 1,127 1,127 2,254 2,254
----------- --------- ----------- ---------
Total operating costs and
expenses 42,351 44,926 85,419 95,251
----------- --------- ----------- ---------
Loss from operations (14,603) (22,675) (32,143) (46,254)
Other income/(expense),
net 4,452 (599) 4,571 (687)
Interest income 1,262 2,488 2,886 5,287
Interest expense (4,150) (4,031) (8,302) (8,219)
----------- --------- ----------- ---------
Net loss $(13,039) $(24,817) $(32,988) $(49,873)
=========== ========= =========== =========
Basic and diluted net loss
per common share $(0.23) $(0.45) $(0.59) $(0.90)
=========== ========= =========== =========
Shares used in computing
basic and diluted net
loss per common share 55,718 55,216 55,660 55,197
=========== ========= =========== =========
CONTACT: Nektar Therapeutics
Joyce Strand, 650-631-3138