Nektar Therapeutics Reports Financial Results for the Third Quarter of 2015

Nov 05, 2015, 16:15 ET from Nektar Therapeutics

SAN FRANCISCO, Nov. 5, 2015 /PRNewswire/ -- Nektar Therapeutics (Nasdaq: NKTR) today reported its financial results for the third quarter ended September 30, 2015.

Cash and investments in marketable securities at September 30, 2015 were $267.8 million as compared to $279.7 million at June 30, 2015. Cash and investments at September 30, 2015 include a $40.0 million milestone payment received from AstraZeneca in Q3 2015 for the first commercial sale of MOVENTIG® (naloxegol) in Germany.  Cash and investments at September 30, 2015 do not include the proceeds from the $250 million direct private placement of 7.75% Senior Secured Notes due in 2020, which was closed on October 5, 2015.  A portion of the proceeds from these new $250 million Senior Notes were used to redeem fully $125.0 million of 12% Senior Secured Notes due in 2017.

"We have made great progress in advancing our pipeline this year," said Howard W. Robin, President and Chief Executive Officer of Nektar. "MOVANTIK is performing very well with positive feedback from physicians and patients, ADYNOVATE is poised for approval, the NKTR-181 Phase 3 SUMMIT-07 efficacy study is enrolling ahead of schedule and we are exceptionally pleased to report that the FDA cleared the NKTR-214 IND earlier than anticipated.  NKTR-214 has the potential to bring a new mechanism – direct and selective stimulation of a patient's cancer-fighting T-cells -- to the next generation of cancer immunotherapies.  We expect to dose our first patients shortly at MD Anderson Cancer Center and Yale Cancer Center."

Year-to-date revenue for 2015 was $191.4 million as compared to $181.2 million in the first nine months of 2014.  The increase in revenue in the first nine months of 2015 as compared to the same period in 2014 includes the recognition of $90.0 million of the $100.0 million milestone payment from AstraZeneca following the first commercial sale of MOVANTIK in the U.S. and the recognition of the $40.0 million milestone payment from AstraZeneca following the first commercial sale of MOVANTIK in a major European country. In addition, product sales and royalty revenue increased by $9.3 million in the first nine months of 2015 as compared to the same period in 2014.  Revenue in the third quarter of 2015 was $60.0 million as compared to $132.9 million in the third quarter of 2014 due to the recognition of a one-time $105 million approval milestone for MOVANTIK in the third quarter of 2014.

Total operating costs and expenses in the third quarter of 2015 were $59.5 million as compared to $52.6 million in the third quarter of 2014.  Year-to-date total operating costs and expenses in 2015 were $191.4 million as compared to $160.2 million for the same period in 2014.  Total operating costs and expenses increased primarily as a result of increased research and development (R&D) expense.

Research and development expense in the third quarter of 2015 was $43.2 million as compared to $34.2 million in the third quarter of 2014.  Year-to-date R&D expense for 2015 was $135.7 million as compared to $109.2 million for the same period in 2014.  R&D expense was higher in the third quarter and first nine months of 2015 as compared to the same periods in 2014 primarily due to the initiation of the Phase 3 efficacy trial of NKTR-181 in chronic low back pain and the long-term safety study for NKTR-181. R&D expense for the first nine months of 2015 also increased as a result of IND-enabling and clinical study start-up activities for NKTR-214.

General and administrative expense was $9.5 million in the third quarter of 2015 as compared to $9.1 million in the third quarter of 2014.  G&A expense in the first nine months of 2015 was $30.0 million as compared to $28.7 million for the same period in 2014.

Net loss in the third quarter of 2015 was $8.2 million or $0.06 net loss per diluted share as compared to net income of $70.6 million or $0.53 net income per diluted share in the third quarter of 2014. Net loss in the first nine months of 2015 was $27.0 million or $0.21 net loss per diluted share as compared to net loss of $8.2 million or $0.07 net loss per diluted share in the first nine months of 2014.

The company also announced upcoming presentations at the following scientific congresses during the fourth quarter of 2015:

Society for Immunotherapy in Cancer (SITC) 30th Anniversary Annual Meeting, National Harbor, MD:

  • Abstract Title: "Synergistic antitumor activity of the CD122-biased immunostimulatory cytokine NKTR-214 when combined with anti-PD-1 in murine tumor models", Hoch, U., et al.
    • Date: November 6, 2015, 12:45 p.m. — 2:00 p.m. Eastern Time

2015 San Antonio Breast Cancer Symposium, San Antonio, TX:

  • Poster P1-13-02: "Early change in topoisomerase 1 (Top1) positive circulating tumor cells (CTCs) is associated with overall survival (OS) in patients with advanced breast cancer after treatment with etirinotecan pegol", Rugo, H., et al.
    • Poster Session: Advanced Chemotherapy
    • Date: December 9, 2015, 5:00 p.m.7:00 p.m. Central Time
  • Poster P4-11-08: "Impact of treatment on quality of life (QOL) in the BEACON study, a randomized phase III trial of etirinotecan pegol (EP) versus Treatment of Physician's Choice (TPC) in patients (pts) with advanced breast cancer (aBC) whose disease has progressed following treatment with an Anthracycline, a Taxane and Capecitabine", Cortes, J., et al.
    • Poster Session: "Psychosocial, Quality of Life, and Educational Aspects: Psychosocial, QOL, and Educational Aspects -- Other"
    • Date: December 11, 2015, 7:30 a.m. — 9:00 a.m. Central Time

Conference Call to Discuss Third Quarter 2015 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 5, 2015.

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 7, 2015.

To access the conference call, follow these instructions:

Dial: (877) 881.2183 (U.S.); (970) 315.0453 (international)   
Passcode: 65851649 (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 has a robust R&D pipeline in pain, oncology, hemophilia and other therapeutic areas. In the area of pain, Nektar has an exclusive worldwide license agreement with AstraZeneca for MOVANTIK™ (naloxegol), the first FDA-approved once-daily oral peripherally-acting mu-opioid receptor antagonist (PAMORA) medication for the treatment of opioid-induced constipation (OIC), in adult patients with chronic, non-cancer pain. The product is also approved in the European Union as MOVENTIG® (naloxegol) and is indicated for adult patients with OIC who have had an inadequate response to laxatives. The AstraZeneca agreement also includes NKTR-119, an earlier stage development program that is a co-formulation of MOVANTIK and an opioid. NKTR-181, a wholly-owned mu-opioid analgesic molecule for chronic pain conditions, is in Phase 3 development. In hemophilia, ADYNOVATE™ [Antihemophilic Factor (Recombinant)], a longer-acting PEGylated Factor VIII therapeutic has been filed for approval in the U.S. by partner Baxalta Inc. In anti-infectives, Amikacin Inhale is in Phase 3 studies conducted by Bayer Healthcare as an adjunctive treatment for intubated and mechanically ventilated patients with Gram-negative pneumonia.

Nektar's technology has enabled nine approved products in the U.S. or Europe through partnerships with leading biopharmaceutical companies, including AstraZeneca's MOVANTIK™, UCB's Cimzia® for Crohn's disease and rheumatoid arthritis, Roche's PEGASYS® for hepatitis C and Amgen's Neulasta® for neutropenia.

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.

MOVANTIK™ is a trademark and MOVENTIG® is a registered trademark of the AstraZeneca group of companies.

ADYNOVATE is a trademark of Baxalta Inc.

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, statements we make regarding the potential of MOVANTIK, the enrollment status of the SUMMIT-07 efficacy study of NKTR-181, the projected time-frame for dosing the first patient in the clinical program for NKTR-214, Baxalta's regulatory expectations for ADYNOVATE, and the value and potential of our polymer conjugate 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) the commercial potential of a new drug at the early stages of commercial launch, such as MOVANTIK, is difficult to predict and will have a significant impact on our future results of operation and financial condition; (ii) the timing of the commencement or end of clinical trials and the commercial launch of our drug candidates and those of our partners may be delayed or unsuccessful due to regulatory delays, institutional review board review and approvals, 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) 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; (iv) patents may not issue from our patent applications for our drugs (including MOVANTIK and ADYNOVATE) and drug candidates, patents that have issued may not be enforceable, or additional intellectual property licenses from third parties may be required; and (v) the outcome of any existing or future intellectual property or other litigation related to our drugs and drug candidates and those of our collaboration partners including MOVANTIK and ADYNOVATE.  Other important risks and uncertainties set forth in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 6, 2015.  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



Susie Kim/Argot Partners

(212) 600-1902



Nektar Media Inquiries:




Nadia Hasan/BrewLife

 (212) 257-6738

                                                       

 

NEKTAR THERAPEUTICS


CONDENSED CONSOLIDATED BALANCE SHEETS


(In thousands)


(Unaudited)










ASSETS


September 30, 2015


December 31, 2014

(1)

Current assets:







Cash and cash equivalents


$                      18,819


$                     12,365



Short-term investments


249,000


225,459



Accounts receivable, net


2,966


3,607



Inventory


10,352


12,952



Restricted cash


-


25,000



Other current assets


5,214


8,817




Total current assets


286,351


288,200










Property, plant and equipment, net


72,532


70,368


Goodwill


76,501


76,501


Other assets


13,862


6,552



Total assets


$                   449,246


$                  441,621










LIABILITIES AND STOCKHOLDERS' EQUITY














Current liabilities:







Accounts payable


$                        2,279


$                       2,703



Accrued compensation


12,805


5,749



Accrued clinical trial expenses


11,102


7,708



Other accrued expenses


16,561


6,418



Interest payable


3,167


6,917



Capital lease obligations, current portion


5,883


4,512



Deferred revenue, current portion


20,611


24,473



Senior secured notes, current portion


125,000


-



Other current liabilities


10,690


5,567




Total current liabilities


208,098


64,047










Senior secured notes, less current portion


-


125,000


Capital lease obligations, less current portion


1,335


4,139


Liability related to sale of future royalties


121,147


120,471


Deferred revenue, less current portion


68,941


76,911


Other long-term liabilities


10,672


14,721




Total liabilities


410,193


405,289










Commitments and contingencies














Stockholders' equity:







Preferred stock


-


-



Common stock


13


13



Capital in excess of par value


1,854,210


1,824,195



Accumulated other comprehensive loss


(1,821)


(1,567)



Accumulated deficit


(1,813,349)


(1,786,309)




Total stockholders' equity


39,053


36,332



Total liabilities and stockholders' equity


$                   449,246


$                  441,621



(1) The consolidated balance sheet at December 31, 2014 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,


2015


2014


2015


2014

















Revenue:








Product sales and royalty revenue

$       7,427


$      6,172


$     27,239


$      17,980

Non-cash royalty revenue related to sale of future royalties

6,050


6,143


14,752


16,753

License, collaboration and other revenue

46,475


120,556


149,423


146,422

Total revenue

59,952


132,871


191,414


181,155









Operating costs and expenses:








Cost of goods sold

6,760


9,220


25,738


22,235

Research and development

43,229


34,200


135,652


109,240

General and administrative

9,544


9,130


30,031


28,677

Total operating costs and expenses

59,533


52,550


191,421


160,152









Income (loss) from operations

419


80,321


(7)


21,003









Non-operating income (expense):








Interest expense

(4,202)


(4,391)


(12,491)


(13,412)

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

(5,226)


(5,203)


(15,428)


(15,725)

Interest income and other income (expense), net

898


126


1,355


535

Total non-operating expense, net

(8,530)


(9,468)


(26,564)


(28,602)









Income (loss) before provision for income taxes

(8,111)


70,853


(26,571)


(7,599)









Provision for income taxes

92


248


469


634

Net income (loss)

$      (8,203)


$    70,605


$    (27,040)


$       (8,233)









Net income (loss) per share:








Basic

$        (0.06)


$        0.55


$        (0.21)


$         (0.07)









Diluted 

$        (0.06)


$        0.53


$        (0.21)


$         (0.07)









Weighted average shares outstanding used in computing net income (loss) per share








Basic

132,631


127,504


131,882


126,043









Diluted 

132,631


132,177


131,882


126,043









NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)





Nine Months Ended September 30,





2015


2014

Cash flows from operating activities:





Net loss 


$                (27,040)


$                (8,233)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:





Non-cash royalty revenue related to sale of future royalties


(14,752)


(16,753)

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


15,428


15,725

Stock-based compensation 


14,499


12,647

Depreciation and amortization 


9,109


9,733

Other non-cash transactions


(1,448)


313

Changes in operating assets and liabilities:





Accounts receivable, net


641


(43,845)

Inventory


2,600


1,757

Other assets 


3,843


679

Accounts payable 


(525)


(3,670)

Accrued compensation 


7,056


(501)

Accrued clinical trial expenses


3,394


(7,262)

Other accrued expenses 


949


1,667

Interest payable


(3,750)


(3,750)

Deferred revenue 


(11,832)


1,480

Liability related to receipt of refundable milestone payment


-


(70,000)

Other liabilities 


3,854


(7,366)

Net cash provided by (used in) operating activities 


2,026


(117,379)








Cash flows from investing activities:





Maturities of investments 


155,683


171,826

Purchases of investments 


(202,870)


(200,160)

Sales of investments 


23,778


21,661

Release of restricted cash


25,000


-

Purchases of property, plant and equipment 


(8,722)


(6,090)

Net cash used in investing activities 


(7,131)


(12,763)








Cash flows from financing activities:





Payment of capital lease obligations 


(3,798)


(2,578)

Repayment of proceeds from sale of future royalties

-


(7,000)

Issuance of common stock, net of issuance costs


-


116,536

Proceeds from shares issued under equity compensation plans


15,516


16,168

Net cash provided by financing activities 


11,718


123,126








Effect of exchange rates on cash and cash equivalents 


(159)


(43)

Net increase (decrease) in cash and cash equivalents 


6,454


(7,059)

Cash and cash equivalents at beginning of period


12,365


39,067

Cash and cash equivalents at end of period


$                  18,819


$               32,008








Supplemental disclosure of cash flow information:





Cash paid for interest


$                  16,095


$               16,487








Supplemental schedule of non-cash investing and financing activities:





Accrued debt issuance costs


$                    8,503


$                         -








SOURCE Nektar Therapeutics



RELATED LINKS

http://www.nektar.com