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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): November 3, 2005
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 November 3, 2005, Nektar Therapeutics issued a press release (the "Press
Release") announcing results for the three-month and nine-month periods ended
September 30, 2005. 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: November 3, 2005
By: /s/ AJAY BANSAL
--------------------------
Ajay Bansal
Chief Financial Officer and
Vice President, Finance and
Administration
Date: November 3, 2005
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Earnings Press Release of Nektar Therapeutics dated
November 3, 2005.
Exhibit 99.1
Nektar Announces Third Quarter 2005 Financial Results
SAN CARLOS, Calif.--(BUSINESS WIRE)--Nov. 3, 2005--Nektar Therapeutics
(Nasdaq:NKTR):
-- Exubera(R) receives positive recommendations in Europe and US; FDA
extends review period by 3 months;
-- Two proprietary products in clinic address unmet need for prevention
of lung infections;
-- New high-value Baxter agreement to develop PEGylated therapeutic forms
of blood clotting proteins;
-- Chiron and Nektar advance TIP to Phase III;
-- Aerogen acquisition broadens Nektar pulmonary leadership;
-- Company strengthens balance sheet.
Nektar Therapeutics (Nasdaq:NKTR) announced today its financial results for
the third quarter ended September 30, 2005.
The Company reported total revenue of $36.4 million for the three months
ended September 30, 2005 compared to $28.5 million for the three months ended
September 30, 2004. In the third quarter of 2005, product and royalty revenue
was $8.5 million compared to $5.0 million in the third quarter of 2004, and
contract revenue totaled $23.7 million compared to $23.6 million in the third
quarter of 2004. Nektar also reported that in the third quarter of 2005 the
Company received $4.2 million from Pfizer for Exubera(R) (inhaled insulin)
commercialization readiness for reimbursement of certain agreed upon operating
costs related to the Exubera drug powder manufacturing facility in preparation
for commercial production.
Nektar reported a net loss of $23.8 million or $(0.28) per share for the
three months ended September 30, 2005 compared to a net loss of $20.5 million or
$(0.24) per share for the three months ended September 30, 2004.
For the nine months ended September 30, 2005, Nektar reported total revenue
of $93.4 million compared to $82.9 million for the nine months ended September
30, 2004. For the nine months ended September 30, 2005, product and royalty
revenue was $20.3 million compared to $15.7 million for the nine months ended
September 30, 2004, and contract research revenue totaled $62.7 million compared
to $67.2 million for the nine months ended September 30, 2004. Exubera
commercialization readiness totaled $10.3 million for the first nine months of
2005.
For the nine months ended September 30, 2005, Nektar reported a net loss of
$76.9 million or $(0.90) per share compared to a net loss for the nine months
ended September 30, 2004 of $82.6 million or $(1.08) per share.
As of September 30, 2005, the Company reported cash, cash equivalents and
short-term investments of approximately $620.3 million compared to $378.5
million as of June 30, 2005. The cash, cash equivalents and short-term
investments include the net proceeds from the sale of $315 million aggregate
principal amount of its 3.25% convertible subordinated notes due 2012.
Substantial Progress Made
"This quarter Nektar achieved multiple milestones, including the
recommendations for Exubera approval, announcement of two proprietary products,
and new partner activities," said Ajit S. Gill, president and chief executive
officer.
Exubera Approval Recommended in the EU and US; FDA Extends Review Period 3
Months
"The recommendations of the approval of Exubera in the US and the EU are
significant milestones. The next steps for Exubera are final approvals from both
regulatory agencies," said Gill.
-- On September 8, 2005, a US Food and Drug Administration (FDA) advisory
committee panel recommended the approval of Exubera (insulin (rDNA
origin) powder for oral inhalation), an inhaleable, rapid-acting
powder insulin for the treatment of adults with type 1 and type 2
diabetes. While the FDA usually follows the advice of its advisory
committees, it is not obligated to do so.
-- On October 13, 2005, the Committee for Medicinal Products for Human
Use (CHMP) of the European Medicines Evaluation Agency (EMEA) issued a
positive opinion recommending approval of Exubera. The European
Commission is expected to act upon that recommendation early next
year.
-- On October 28, 2005, the FDA notified Pfizer and sanofi-aventis that
it is extending its original review period for Exubera by three
months.
Nektar pioneered the advanced pulmonary technology for Exubera, including
the inhaler, the formulation for the powdered insulin, and the manufacturing
processes for making and packaging the powdered insulin.
Nektar Proprietary Products Target Local Lung Infections in Seriously Ill
Patients; Aerogen Acquisition Broadens Pulmonary Leadership
"Nektar announced two proprietary products that highlight how our
technology and expertise can generate unique product opportunities for Nektar
that will enable us to build a high-value pipeline. These new products could
help reduce mortality rates from fungal and bacterial lung infections while
reducing the costs of patient treatment. Because they focus on improving
existing medicines, they offer a lower risk profile with potential excellent
returns-on-investment compared with typical new drug development programs," said
Gill.
On September 29, 2005 at its Investor Day in New York, Nektar disclosed two
anti-infective products targeted at preventing local lung infections in
seriously ill patients.
-- Inhaled amphotericin B product is being developed for preventing fatal
pulmonary fungal infections in immunosuppressed patients to reduce the
incidence, morbidity, mortality and high cost of treating these
infections. Using a small proprietary pocket size inhaler, the company
has conducted two Phase I trials and has long-term toxicity studies
underway to support the planned pivotal trials. More than 150,000
patients annually in the US and Europe are at risk of developing often
fatal and costly fungal infections in the lungs. Nektar's inhaleable
amphotericin B potentially could be the first prophylactic therapy to
prevent these serious infections.
-- Inhaled ICU antibiotics product is being developed for the prevention
of ventilator-associated pneumonia (VAP) in the intensive care unit
(ICU). VAP is a form of hospital-acquired, or nosocomial pneumonia,
occurring in patients on mechanical ventilators. Nektar's novel
drug-device system uses a nebulizer and Nektar proprietary adapter
technology, along with a unique formulation of liquid antibiotics, to
target the lungs directly with preventative doses of medicine in a
ventilated patient. More than 450,000 patients in the US are at the
highest risk for this disease. A proof-of-principle study sponsored by
Nektar demonstrated that aerosolized antibiotics reduce the
persistence of VAP after its onset by approximately half as compared
to placebo.
The acquisition of Aerogen, Inc., which closed on October 20, 2005, will
broaden Nektar's pulmonary technology base by adding capabilities in aerosolized
liquid drugs to Nektar's leadership position with inhaleable powdered drugs.
Initially, Nektar will incorporate Aerogen technology into its proprietary
inhaled ICU antibiotics product.
Partner Pipeline Progress: New Collaboration with Baxter; Advances in the
Clinic
"We also saw progress in our partner pipeline. The new collaboration with
Baxter exemplifies the higher value Nektar can gain through investment in early
product concept work," said Gill. "The initiation of Phase III trials of
tobramycin inhalation powder (TIP) by Chiron is an indication that our unique
powder formulation and advanced inhaleable technologies may enable innovative
therapeutics, such as TIP, to target local lung infections."
-- On September 29, 2005, Nektar announced an agreement with subsidiaries
of Baxter International Inc. to develop PEGylated therapeutic forms of
blood clotting proteins for patients with hemophilia, in order to
reduce the frequency of injections required to treat blood clotting
disorders such as hemophilia A. This agreement allows Nektar to
capitalize on the internal work on PEGylated proteins to provide
Baxter with a differentiated product.
-- On October 5, 2005, Chiron Corporation and Nektar announced the
initiation of clinical testing in the Phase III program evaluating
tobramycin inhalation powder (TIP), an investigational inhaled
antibiotic. The TIP Phase III program includes two clinical trials and
will evaluate the efficacy and safety of TIP in the treatment of lung
infections caused by Pseudomonas aeruginosa in patients living with
cystic fibrosis (CF). The first trial, called ASPIRE I, is underway.
Conference Call Information
Ajit S. Gill will host a conference call for analysts and investors today
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 November 17, 2005.
Analysts and investors can also access the conference call live via
telephone by dialing (800) 559-9370 (U.S.); (847) 619-6819 (international). The
passcode is 13029999 and the host is Mr. Ajit Gill. An audio replay will be
available shortly following the call through November 17, 2005 and can be
accessed by dialing (877) 213-9653 (U.S.); or (630) 652-3041 (International)
with a passcode of 13029999. 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 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.
This release contains forward-looking information about a product candidate
which is under review by the United States Food and Drug Administration and the
European Medicines Evaluation Agency that involves substantial risks and
uncertainties. Such risks and uncertainties include, among other things, whether
and when such regulatory authorities will approve the product candidate, their
decisions regarding labeling and other matters that could affect its commercial
potential as well as competitive developments.
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, status of clinical trials, the potential of
Nektar's collaborative partnerships to bring new products to market and produce
revenue, and developments in connection with the regulatory approval process for
Exubera. 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, as amended, for the year ended December 31, 2004
and its Quarterly Report on 10-Q for the quarter ended June 30, 2005. 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 Nine Months Ended
September 30, September 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
(unaudited) (unaudited)
Revenue:
Contract research revenue $ 23,657 $ 23,556 $ 62,737 $ 67,167
Product sales and royalty
revenue 8,450 4,990 20,313 15,737
Exubera(R) commercialization
readiness revenue 4,247 - 10,348 -
--------- --------- --------- ---------
Total revenue 36,354 28,546 93,398 82,904
Operating costs and expenses:
Cost of goods sold 6,125 4,477 16,813 13,746
Exubera(R) commercialization
readiness costs 3,075 - 8,035 -
Research and development 38,591 34,534 109,321 99,476
General and administrative 10,948 7,382 30,193 22,281
Amortization of other
intangible assets 982 981 2,945 2,944
--------- --------- --------- ---------
Total operating costs and
expenses 59,721 47,374 167,307 138,447
--------- --------- --------- ---------
Loss from operations (23,367) (18,828) (73,909) (55,543)
Gain/(loss) on extinguishment
of debt (303) - (303) (9,258)
Other income/ (expense), net (32) (128) (1,435) 303
Interest income 2,899 1,763 7,683 4,617
Interest expense (2,992) (3,259) (8,908) (22,603)
--------- --------- --------- ---------
Net loss before provision for
income taxes (23,795) (20,452) (76,872) (82,484)
(Provision) /benefit for
income taxes - - - (132)
--------- --------- --------- ---------
Net loss $(23,795) $(20,452) $(76,872) $(82,616)
========= ========= ========= =========
Basic and diluted net loss per
common share $ (0.28) $ (0.24) $ (0.90) $ (1.08)
========= ========= ========= =========
Shares used in computing basic
and diluted net loss per
common share 86,228 83,853 85,331 76,550
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NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2005 2004
(unaudited)
------------- ------------
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $ 620,328 $ 418,740
Inventory 13,152 10,691
Other current assets 24,729 25,108
----------- -----------
Total current assets 658,209 454,539
Property and equipment, net 144,716 151,247
Goodwill 129,986 130,120
Other intangible assets 3,075 6,456
Deposits and other assets 10,924 2,559
----------- -----------
$ 946,910 $ 744,921
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 25,614 $ 24,231
Capital lease obligations - current 444 1,532
Deferred revenue 21,767 29,890
----------- -----------
Total current liabilities 47,825 55,653
Convertible subordinated debentures 417,653 173,949
Accrued rent 2,071 2,117
Capital lease obligations - noncurrent 20,419 23,568
Other long-term liabilities 24,838 22,292
Stockholders' equity:
Preferred stock at par - -
Common stock at par 9 8
Capital in excess of par 1,232,718 1,187,575
Deferred compensation (3,423) (2,764)
Accumulated other comprehensive
gain/(loss) (1,207) (356)
Accumulated deficit (793,993) (717,121)
----------- -----------
Total stockholders' equity 434,104 467,342
----------- -----------
$ 946,910 $ 744,921
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CONTACT: Nektar Therapeutics
Joyce Strand, 650-631-3138
Jennifer Ruddock, 650-631-4954