Nektar Therapeutics Reports Financial Results for the Third Quarter of 2013

SAN FRANCISCO, Nov. 7, 2013 /PRNewswire/ -- Nektar Therapeutics (Nasdaq: NKTR) today reported its financial results for the third quarter ended September 30, 2013.

Cash and investments in marketable securities at September 30, 2013 were $208.6 million as compared to $302.2 million at December 31, 2012.

"Nektar continues to have a very productive year achieving significant milestones with both our partnered programs and proprietary pipeline," said Howard W. Robin, President and Chief Executive Officer of Nektar. "For naloxegol, the MAA in Europe and NDS in Canada are now accepted for filing and the NDA in the U.S. was submitted for filing in mid-September.  Naloxegol could be the first once-daily oral peripheral opioid antagonist approved to treat opioid-induced constipation.  BAX 855, Baxter's longer-acting PEGylated Factor VIII therapy, which is in Phase 3, remains on track for a 2014 BLA filing.  Finally, while I am disappointed that the results from the Phase 2 efficacy study for NKTR-181 were confounded by an unusual placebo response, we are working with our advisors and the FDA to design an optimal Phase 3 program, which should start by the middle of 2014." 

Revenue in the third quarter of 2013 was $60.9 million as compared to $18.4 million in the third quarter of 2012. Year-to-date revenue for 2013 was $117.8 million as compared to $60.0 million in the first nine months of 2012.  Revenues included non-cash royalty revenue, related to our 2012 royalty monetization, of $4.5 million and $12.7 million in the third quarter and year-to-date for 2013, respectively, and $3.4 million in the third quarter and $6.9 million in the first nine months of 2012. This non-cash royalty revenue is offset by non-cash interest expense. The increases in revenue in the third quarter and first nine months of 2013 as compared to the same periods in 2012 are primarily due to a $25.0 million milestone achieved upon the acceptance of the naloxegol MAA filing in Europe as well as increased product sales.  In addition, revenue in the first nine months of 2013 increased as compared to the same period in 2012 due to a $10.0 million milestone achieved upon the initiation of Phase 3 studies for Amikacin Inhale in April 2013.

Total operating costs and expenses in the third quarter of 2013 were $67.4 million as compared to $51.3 million in the third quarter of 2012.  Year-to-date total operating costs and expenses in 2013 were $202.0 million as compared to $157.9 million for the same period in 2012.  Total operating costs and expenses increased primarily as a result of increased clinical development expenses.

Research and development expenses in the third quarter of 2013 were $43.9 million as compared to $34.0 million in the third quarter of 2012.  Year-to-date R&D expense for 2013 was $141.8 million as compared to $102.3 million for the same period in 2012.  R&D expense was higher in the third quarter and the first nine months of 2013 as compared to the same periods in 2012 reflecting the costs of the Phase 3 study of etirinotecan pegol (NKTR-102) in metastatic breast cancer, the Phase 2 study of NKTR-181, preparation for the Phase 3 study of NKTR-181, the Phase 1 study of NKTR-192, and the production of devices for the Phase 3 study of Amikacin Inhale.

General and administrative expense was $10.6 million in the third quarter of 2013 as compared to $10.1 million in the third quarter of 2012.  G&A expense in the first nine months of 2013 was $30.7 million as compared to $30.8 million for the same period in 2012.

Non-cash interest expense incurred in connection with the 2012 royalty monetization was $5.6 million and $16.6 million in the third quarter and first nine months of 2013, respectively, as compared to $5.5 million and $12.6 million in the third quarter and first nine months of 2012, respectively.

Net loss in the third quarter of 2013 was $16.5 million or $0.14 per share as compared to a net loss of $43.5 million or $0.38 per share in the third quarter of 2012. Net loss in the first nine months of 2013 was $114.4 million or $0.99 per share as compared to a net loss of $118.9 million or $1.04 per share in the first nine months of 2012.

Conference Call to Discuss Third Quarter 2013 Financial Results

Nektar management will host a conference call to review the results beginning at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time today, Thursday, November 7, 2013.

This press release and a live audio-only Webcast of the conference call can be accessed through a link that is posted on the home page and Investor Relations section of the Nektar website: http://www.nektar.com. The web broadcast of the conference call will be available for replay through Monday, December 9, 2013.

To access the conference call, follow these instructions:


Dial: (877) 881.2183 (U.S.); (970) 315.0453 (international)

Passcode: 91919000 (Nektar Therapeutics is the host)

In the event that any non-GAAP financial measure is discussed on the conference call that is not described in the press release, or explained on the conference call, 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 (NASDAQ: NKTR) is a biopharmaceutical company developing novel therapeutics based on its PEGylation and advanced polymer conjugation technology platforms. Nektar has a robust R&D pipeline of potentially high-value therapeutics in pain, oncology and other therapeutic areas. In the area of pain, Nektar has an exclusive worldwide license agreement with AstraZeneca for naloxegol (NKTR-118), an investigational drug candidate, which has completed Phase 3 development as a once- daily, oral tablet for the treatment of opioid-induced constipation. For naloxegol, the MAA in Europe and the NDS in Canada have been accepted for filing, and an NDA has been submitted for filing in the U.S. This agreement also includes NKTR-119, an earlier stage development program that is a co-formulation of naloxegol and an opioid. NKTR-181, a novel mu-opioid analgesic molecule for chronic pain conditions, has completed Phase 2 development in osteoarthritis patients with chronic knee pain. NKTR-192, a novel mu-opioid analgesic molecule in development to treat acute pain is in Phase 1 clinical development. In oncology, etirinotecan pegol (NKTR-102) is being evaluated in a Phase 3 clinical study (the BEACON study) for the treatment of metastatic breast cancer and is also in a number of Phase 2 studies. In anti-infectives, Amikacin Inhale is in Phase 3 studies conducted by Bayer Healthcare to treat patients with Gram-negative pneumonia.

Nektar's technology has enabled eight approved products in the U.S. or Europe through partnerships with leading biopharmaceutical companies, including UCB's Cimzia® for Crohn's disease and rheumatoid arthritis, Roche's PEGASYS® for hepatitis C and Amgen's Neulasta® for neutropenia. Additional development-stage products that leverage Nektar's proprietary technology platform include Baxter's BAX 855, a long-acting PEGylated rFVIII program, which is in Phase 3 clinical development.

Nektar is headquartered in San Francisco, California, with additional operations in Huntsville, Alabama and Hyderabad, India. Further information about the company and its drug development programs and capabilities may be found online at http://www.nektar.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "expect," "believe," "should," "may," "will" and similar references to future periods. Examples of forward-looking statements include, among others, the potential for health authority approvals of naloxegol, the projected timeframe in which the NKTR-181 Phase 3 clinical study would be commenced, the timing of regulatory filings with health authorities for BAX 855, and the value and potential of our technology and research and development pipeline. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results to differ materially from those indicated in the forward-looking statements include, among others, (i) our drug candidates and those of our collaboration partners are in various stages of clinical development and the risk of failure is high and can unexpectedly occur at any stage prior to regulatory approval for numerous reasons including safety and efficacy findings even after positive findings in previous preclinical and clinical studies; (ii) the timing of the commencement or end of clinical trials, regulatory approval decisions, and the commercial launch of our drug candidates may be delayed or unsuccessful due to regulatory delays, slower than anticipated patient enrollment, manufacturing challenges, changing standards of care, evolving regulatory requirements, clinical trial design, clinical outcomes, competitive factors, or delay or failure in ultimately obtaining regulatory approval in one or more important markets; (iii) acceptance, review and approval decisions for new drug applications by health authorities is an uncertain and evolving process and health authorities retain significant discretion at all stages of the regulatory review and approval decision process; (iv) scientific discovery of new medical breakthroughs is an inherently uncertain process and the future success of the application of our technology platform to potential new drug candidates is therefore highly uncertain and unpredictable and one or more research and development programs could fail; (v) patents may not issue from our patent applications our proprietary or partnered drug candidates, patents that have issued may not be enforceable, or additional intellectual property licenses from third parties may be required; (vi) the outcome of any existing or future intellectual property or other litigation related to our proprietary or partnered drug candidates; and (vii) certain other important risks and uncertainties set forth in our Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on November 7, 2013. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Nektar Investor Inquiries: 




Jennifer Ruddock/Nektar Therapeutics

(415) 482-5585



Susan Noonan/SA Noonan Communications, LLC 

(212) 966-3650



 

 

NEKTAR THERAPEUTICS


CONDENSED CONSOLIDATED BALANCE SHEETS


(In thousands)


(Unaudited)













ASSETS

September 30, 2013


December 31, 2012

(1)

Current assets:









Cash and cash equivalents



$                     65,411


$                    25,437



Short-term investments



118,139


251,757



Accounts receivable



4,557


5,805



Inventory




15,076


18,269



Other current assets



4,759


13,363




Total current assets



207,942


314,631













Restricted cash




25,000


25,000


Property and equipment, net



65,082


72,215


Goodwill





76,501


76,501


Other assets




8,510


9,443



Total assets




$                   383,035


$                  497,790













LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
















Current liabilities:









Accounts payable



$                        3,723


$                      2,863



Accrued compensation



13,910


8,773



Accrued expenses



10,771


8,008



Accrued clinical trial expenses


15,239


17,500



Deferred revenue, current portion


21,300


21,896



Interest payable




3,167


7,083



Other current liabilities



12,803


12,414




Total current liabilities



80,913


78,537













Senior secured notes



125,000


125,000


Capital lease obligations, less current portion


9,007


11,607


Liability related to sale of future royalties, less current portion

125,167


128,266


Deferred revenue, less current portion


82,233


96,551


Deferred gain




1,748


2,404


Other long-term liabilities



9,217


8,407




Total liabilities



433,285


450,772













Commitments and contingencies

















Stockholders' equity (deficit) :








Preferred stock




-


-



Common stock




11


11



Capital in excess of par value


1,636,162


1,617,744



Accumulated other comprehensive loss


(1,689)


(357)



Accumulated deficit



(1,684,734)


(1,570,380)




Total stockholders' equity (deficit) 


(50,250)


47,018



Total liabilities and stockholders' equity (deficit) 

$                   383,035


$                  497,790













(1) The consolidated balance sheet at December 31, 2012 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles in the United States for complete financial statements.

 

 

 

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share information)

(Unaudited)




















Three Months Ended


Nine Months Ended







September 30, 


September 30,







2013


2012


2013


2012



























Revenue:











    Product sales 



$  14,672


$         8,355


$    36,806


$      24,994

    Royalty revenue



354


498


1,030


3,966

    Non-cash royalty revenue related to sale of future royalties

4,523


3,427


12,744


6,895

    License, collaboration and other revenue

41,360


6,132


67,195


24,190

Total revenue



60,909


18,412


117,775


60,045














Operating costs and expenses:








    Cost of goods sold


12,877


7,228


29,549


23,138

    Research and development


43,914


34,016


141,762


102,302

    General and administrative


10,643


10,068


30,700


30,750

    Impairment of long-lived assets

-


-


-


1,675

Total operating costs and expenses

67,434


51,312


202,011


157,865














Loss from operations


(6,525)


(32,900)


(84,236)


(97,820)














Non-operating income (expense):








    Interest income 



116


603


639


1,865

    Interest expense



(4,587)


(5,697)


(13,888)


(10,807)

    Non-cash interest expense on liability related to sale of future royalties

(5,616)


(5,487)


(16,644)


(12,641)

    Other income (expense), net


262


156


385


913

Total non-operating expense, net

(9,825)


(10,425)


(29,508)


(20,670)














Loss before provision for income taxes

(16,350)


(43,325)


(113,744)


(118,490)














Provision for income taxes


193


222


610


439

Net loss




$ (16,543)


$      (43,547)


$ (114,354)


$  (118,929)














Basic and diluted net loss per share

$     (0.14)


$          (0.38)


$       (0.99)


$         (1.04)














Weighted average shares outstanding used in computing basic and diluted net loss per share

115,812


114,915


115,557


114,699

 

 

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)









Nine Months Ended September 30,









2013


2012

Cash flows from operating activities:






Net loss 






$     (114,354)


$         (118,929)

Adjustments to reconcile net loss to net cash used in operating activities:



    Non-cash interest expense on liability related to sale of future royalties 

16,644


12,641

    Non-cash royalty revenue related to sale of future royalties


(12,744)


(6,895)

    Stock-based compensation 



13,165


12,015

    Depreciation and amortization 



10,882


10,810

    Impairment of long-lived assets 



-


1,675

    Other non-cash transactions



332


641

Changes in operating assets and liabilities:






    Accounts receivable 




1,248


1,027

    Inventory





3,193


(4,098)

    Other assets 





6,817


10,593

    Accounts payable 




697


(401)

    Accrued compensation 




5,137


(120)

    Accrued expenses 




2,741


(465)

    Accrued clinical trial expenses



(2,261)


1,247

    Deferred revenue 




(14,914)


(3,430)

    Interest payable




(3,916)


1,528

    Other liabilities 




(4,825)


(219)

Net cash used in operating activities 



(92,158)


(82,380)












Cash flows from investing activities:






    Maturities of investments 




274,011


202,768

    Purchases of investments 



(140,569)


(126,609)

    Restricted cash 




-


(25,000)

    Sale of investments 




-


5,378

    Purchases of property and equipment 



(1,382)


(5,744)

Net cash provided by investing activities 



132,060


50,793












Cash flows from financing activities:






    Payment of capital lease obligations 



(2,201)


(1,773)

    (Repayment of) proceeds from sale of future royalties, net of $4.4 million transaction costs in 2012

(3,000)


119,588

    Proceeds from issuance of senior secured notes, net of $4.4 million transaction costs

-


78,006

    Repayment of convertible subordinated notes



-


(172,407)

    Proceeds from shares issued under equity compensation plans


5,253


3,177

Net cash provided by financing activities 



52


26,591












Effect of exchange rates on cash and cash equivalents 


20


22

Net increase (decrease) in cash and cash equivalents 


39,974


(4,974)

Cash and cash equivalents at beginning of period


25,437


15,312

Cash and cash equivalents at end of period



$         65,411


$                10,338












Supplemental disclosure of cash flow information:





Cash paid for interest




$         17,097


$                  9,010

Retirement of convertible subordinated notes in exchange for senior secured notes

$                  -


$                42,548

 

 

SOURCE Nektar Therapeutics



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