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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 5, 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 November 5, 2003, Nektar Therapeutics issued a press release announcing
results for the quarter ended September 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 thereunto duly authorized.
By: /s/ AGIT S. GILL
Ajit S. Gill
-----------------------------------
Chief Executive Officer,
President and Director
Date: November 5, 2003
By: /s/ AJAY BANSAL
Ajay Bansal
-----------------------------------
Chief Financial Officer and Vice
President, Finance and
Administration
Date: November 5, 2003
EXHIBIT INDEX
Exhibit Description
No.
99.1 Earnings Press Release of Nektar Therapeutics dated November 5, 2003.
Exhibit 99.1
Nektar Announces Third Quarter 2003 Results
SAN CARLOS, Calif.--(BUSINESS WIRE)--Nov. 5, 2003--Nektar
Therapeutics (Nasdaq:NKTR), formerly Inhale Therapeutic Systems, Inc.,
announced today its financial results for the third quarter ended
September 30, 2003.
The Company reported revenues of $27.4 million for the three
months ended September 30, 2003, compared to $23.2 million for the
third quarter of 2002. In the third quarter of 2003, product revenues
were $7.7 million compared to $4.4 million in 2002, and contract
research revenues totaled $19.6 million compared to $18.8 million in
2002. The increase in revenue is due primarily to higher sales of
Nektar advanced PEGylation products.
The Company reported a net loss of $17.2 million or $(0.31) per
share for the three months ended September 30, 2003, compared to a net
loss in the same quarter in 2002 of $26.5 million or $(0.48) per
share.
For the nine months ended September 30, 2003, Nektar reported
revenues of $80.6 million compared to $72.2 million in the same period
in 2002. For the first nine months of 2003, Nektar reported product
revenue of $21.4 million compared to $13.3 million for the same period
in 2002, and contract research revenues were $59.2 million for the
first nine months of 2003 compared to $58.9 million for the same
period in 2002.
For the nine months ended September 30, 2003, Nektar reported a
net loss of $50.2 million or $(0.90) per share compared to a net loss
in the same period in 2002 of $76.4 million or $(1.38) per share.
Nektar's balance of cash, cash equivalents and short-term
investments at the end of the quarter was $304.2 million, including
net proceeds of $9.7 million from the exercise in July 2003 of an
option granted to the initial purchasers of the company's 3%
convertible subordinated notes due June 2010 originally issued in June
2003. This additional purchase increased the aggregate principal
amount of 3% convertible subordinated notes due June 2010 to $110
million.
In October 2003, in a limited number of privately negotiated
transactions, certain holders of Nektar's outstanding 3.5% convertible
subordinated notes due October 2007 exchanged and cancelled $87.9
million in aggregate principal amount of the 3.5% notes, for the
issuance of $59.3 million in aggregate principal amount of newly
issued 3% convertible subordinated notes due June 2010. This
transaction will result in a gain on the reduction of debt in the
fourth quarter. The newly issued notes are convertible into shares of
the Company's Common Stock at an initial conversion price of $11.35
per share. The newly issued notes are redeemable on terms consistent
with the redemption provisions of the 3% convertible notes issued in
June 2003. As with the 3% convertible notes issued in June 2003,
restricted investments equal to initial six payments of interest have
been purchased and pledged for the benefit of the holders of newly
issued notes.
"We are pleased with the continued growth of our product revenues
and are on target to achieve revenue growth of 5-10% in 2003. Further,
with the recent convertible notes transactions in October, we are
pleased with the improvement in our balance sheet," said Ajit Gill,
Nektar president and CEO.
Summary of Activities
Partner Pipeline
During the quarter, Celltech Group Plc announced that CDP 791, a
PEGylated antibody fragment drug that uses Nektar PEGylation
technology and services, entered Phase I trials for cancer.
Nektar disclosed today that Nektar and Aventis Behring intend to
terminate their collaboration to develop an inhaleable form of Alpha1
Proteinase Inhibitor for an inherited form of emphysema caused by
alpha one antitrypsin deficiency. The product has completed a Phase 1B
clinical trial in which all doses were well tolerated and dose related
response was achieved. Nektar, who is expected to retain the rights,
intends to seek another partner for further development of inhaleable
Alpha1 Proteinase Inhibitor.
At the request of Chiron, Nektar and Chiron for strategic
marketing reasons discontinued development of an inhaled pre-clinical
compound, PA2794, announced in June 2002 as part of a multiple-product
collaboration between the two companies. Nektar continues to
collaborate with Chiron on inhaled powdered tobramycin, a
next-generation inhaleable antibiotic product, that is in Phase I
clinical trials.
Exubera(R) (inhaled insulin)
Advanced-stage clinical studies are continuing for Exubera(R)
(inhaled insulin) for the treatment of diabetes developed by Nektar
for Pfizer and their partner Aventis Pharma. The determination as to
when or if to file a New Drug Application or equivalent European
regulatory filing with respect to Exubera(R) will be made by Pfizer
and their partner Aventis at their discretion.
Proprietary Pipeline
Phase I clinical trials for an inhaled small molecule are
on-going. In addition, the Company has established a business unit and
expanded clinical, regulatory and product identification expertise.
With these expanded development capabilities, Nektar will
significantly increase the number of products it takes through Phase I
clinical testing and, in some cases, Phase II, before offering the
products to Nektar's biopharmaceutical partners for commercialization.
Nektar could have an additional 1-2 products in clinical trials as
part of this program by the end of 2004.
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.
Conference Call
Ajit Gill, Nektar president and CEO, will host a conference call
for analysts and investors beginning at 2:00 p.m. Pacific Time today
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 section at Nektar's Web site
at http://www.nektar.com. The Web broadcast of the conference call
will be available for replay through November 20, 2003.
Analysts and investors can also access the conference call live
via telephone by dialing (866) 541-2081 (US); (630) 424-2081
(international). The passcode is Nektar and the leader is Mr. Ajit
Gill. An audio replay will be available shortly following the call
through November 20, 2003 and can be accessed by dialing (877)
213-9653 or (630) 652-3041 with a passcode of 7901996. In the event
that any Non-GAAP financial measure is discussed on the conference
call that is not described in this earnings release, related
complimentary information will be made available on the Investor
Relations page at our WEB site as soon as practicable after the
conclusion of this conference call.
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 year ended December
31, 2002, as amended and its Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 2003. Actual results could differ
materially from these forward-looking statements.
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2003 2002
(unaudited) *
------------- ------------
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $ 304,190 $ 293,969
Other current assets 22,651 17,020
------------- ------------
Total current assets 326,841 310,989
Restricted investments 9,707 -
Property and equipment, net 145,037 143,452
Goodwill 130,120 130,120
Other intangible assets 12,089 15,470
Deposits and other assets 9,131 6,607
------------- ------------
$ 632,925 $ 606,638
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 32,358 $ 40,617
Capital lease obligations - current 1,175 1,008
Deferred revenue 15,269 22,040
------------- ------------
Total current liabilities 48,802 63,665
Convertible subordinated debentures 388,649 299,149
Accrued rent 2,091 2,033
Capital lease obligations - noncurrent 30,543 31,862
Other long-term liabilities 4,246 3,159
Stockholders' equity:
Preferred stock 40,000 40,000
Common stock 717,182 714,686
Deferred compensation (53) (239)
Accumulated other comprehensive gain 1,004 1,668
Accumulated deficit (599,539) (549,345)
------------- ------------
Total stockholders' equity 158,594 206,770
------------- ------------
$ 632,925 $ 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 Nine-Months Ended
September 30, September 30,
2003 2002 2003 2002
--------------------- ---------------------
(unaudited) (unaudited)
Revenue:
Contract research revenue $ 19,624 $ 18,800 $ 59,227 $ 58,929
Product sales 7,733 4,418 21,406 13,286
----------- --------- ----------- ---------
Total revenue 27,357 23,218 80,633 72,215
Operating costs and expenses:
Cost of goods sold 3,541 1,940 11,871 5,503
Research and development 31,777 38,183 96,298 116,661
General andadministrative 5,190 6,551 15,504 17,507
Amortization of other
intangible assets 982 1,127 3,236 3,381
----------- --------- ----------- ---------
Total operating costs and
expenses 41,490 47,801 126,909 143,052
----------- --------- ----------- ---------
Loss from operations (14,133) (24,583) (46,276) (70,837)
Other income/ (expense), net 457 (420) 5,028 (1,107)
Interest income 1,251 2,687 4,137 7,974
Interest expense (4,781) (4,205) (13,083) (12,424)
----------- --------- ----------- ---------
Net loss $ (17,206) $(26,521) $ (50,194) $(76,394)
=========== ========= =========== =========
Basic and diluted net loss
per common share $ (0.31) $ (0.48) $ (0.90) $ (1.38)
=========== ========= =========== =========
Shares used in computing
basic and diluted net loss
per common share 55,837 55,316 55,719 55,226
=========== ========= =========== =========
CONTACT: Nektar Therapeutics
Joyce Strand, 650-631-3138