Nektar Therapeutics Reports Financial Results for the Second Quarter of 2018

Published: Aug 08, 2018

 

SAN FRANCISCO, Aug. 8, 2018 /PRNewswire/ -- Nektar Therapeutics (Nasdaq: NKTR) today reported its financial results for the second quarter ended June 30, 2018.

Cash and investments in marketable securities at June 30, 2018 were $2.1 billion as compared to $353.2 million at December 31, 2017. This includes the $1.0 billion upfront payment and $850.0 million share purchase proceeds received on April 3, 2018, as a result of our Bristol-Myers Squibb collaboration for the global development and commercialization of NKTR-214.

"Over the past few months, we have reported significant progress across all areas of our pipeline, with notable milestones for our immuno-oncology, immunology and pain programs," said Howard W. Robin, President and CEO of Nektar. "Together with Bristol-Myers Squibb, we plan to initiate 20 registrational studies in nine tumor settings under our joint development plan with the first wave of studies in melanoma, renal cell carcinoma, and urothelial cancers starting this year. We initiated our first study of NKTR-358 in patients with lupus with our partner Eli Lilly. And importantly, we recently achieved a significant milestone for our pain program, with the FDA's acceptance of the NDA filing for NKTR-181, a first-in-class opioid analgesic."

Revenue in the second quarter of 2018 was $1.088 billion as compared to $34.6 million in the second quarter of 2017. Year-to-date revenue for 2018 was $1.126 billion as compared to $59.3 million in the first half of 2017. Revenue was higher in the second quarter and first half of 2018 as compared to the same periods in 2017 primarily because of the recognition of $1.06 billion of license revenue from the Bristol-Myers Squibb collaboration agreement.

Total operating costs and expenses in the second quarter of 2018 were $114.1 million as compared to $85.2 million in the second quarter of 2017. Total operating costs and expenses in the first half of 2018 were $238.9 million as compared to $164.4 million in the first half of 2017. Total operating costs and expenses increased primarily as a result of increased research and development (R&D) expense.

R&D expense in the second quarter of 2018 was $88.3 million as compared to $60.3 million in the second quarter of 2017. For the first half of 2018, R&D expense was $187.8 million as compared to $121.3 million in the first half of 2017. R&D expense was higher in the second quarter and first half of 2018 as compared to the same periods in 2017 primarily because of expenses for our pipeline programs, including the continued development of NKTR-214 in Phase 1/2 studies and Phase 3 preparatory activities, costs related to the NKTR-181 New Drug Application and NKTR-181 pre-commercial manufacturing, Phase 1 clinical studies of NKTR-358, initiation of the Phase 1 study of NKTR-262 in combination with NKTR-214 and IND-enabling activities for NKTR-255.

General and administrative (G&A) expense was $20.3 million in the second quarter of 2018 as compared to $16.0 million in the second quarter of 2017. G&A expense in the first half of 2018 was $38.9 million as compared to $28.0 million in the first half of 2017. G&A expense was higher in the second quarter and first half of 2018 as compared to the same periods in 2017 primarily due to an increase in non-cash stock based compensation expense.

Net income in the second quarter of 2018 was $971.5 million or $5.33 diluted earnings per share as compared to a net loss of $59.9 million or $0.39 basic and diluted loss per share in the second quarter of 2017. Net income in the first half of 2018 was $875.7 million or $4.91 diluted earnings per share as compared to a net loss of $123.7 million or $0.80 basic and diluted loss per share in the first half of 2017.

Second Quarter 2018 and Recent Business Highlights

  • In July, the U.S. Food and Drug Administration filed and accepted a New Drug Application (NDA) for NKTR-181, a first-in-class opioid analgesic, to treat chronic low back pain in adult patients new to opioid therapy. The NDA has been assigned a PDUFA (Prescription Drug User Fee Act) target action date of May 29, 2019 by the FDA.
  • In June, Nektar presented data for NKTR-181 at the 80th Annual Scientific Meeting of the College on Problems of Drug Dependence. The data show that NKTR-181 consistently demonstrates low abuse potential.
  • In June, Nektar presented data from the Phase 1 dose escalation and preliminary data from the Phase 2 dose expansion phase of the ongoing PIVOT study for NKTR-214 in combination with Opdivo (nivolumab) at the 2018 ASCO Annual Meeting. This data showed that pre-specified efficacy criteria were achieved in three tumor types: first-line melanoma, first-line renal cell carcinoma and first-line urothelial cancer. Nektar and Bristol-Myers Squibb expect to initiate a Phase 3 registrational trial in first-line advanced melanoma patients in Q3 2018, and pivotal studies are also being designed in renal cell carcinoma and urothelial cancer.
  • In May, Nektar announced a clinical collaboration with Syndax Pharmaceuticals to evaluate NKTR-214 in combination with entinostat, an oral, small molecule Class 1 specific HDAC inhibitor, in patients with metastatic melanoma who have previously progressed on treatment with an anti-PD-1 agent.
  • In May, Nektar began dosing patients with systemic lupus erythematosus in a Phase 1b multiple ascending dose study of NKTR-358, a first-in-class regulatory T cell stimulator, designed to correct the underlying immune system dysfunction found in patients with immune disorders.

The company also announced the following upcoming presentations during the second half of 2018:

American Chemical Society Annual Meeting, Boston, MA:

  • Oral Presentation: "Confronting the Opioid Epidemic: Novel Treatments for Chronic Pain"
    • Presenter: Stephen Doberstein, Ph.D., Nektar Therapeutics
    • Date: Monday, August, 20, 2018, 1:35 p.m. - 2:05 p.m., Eastern Daylight Time

SMI Immuno-Oncology Conference, London, UK:

  • Oral Presentation: "Enhanced cancer vaccine effectiveness with NKTR-214, a CD122-biased cytokine"
    • Presenter: Loui Marakamutil, Ph.D., Nektar Therapeutics
    • Date: September 26, 2018, 11:00 a.m., British Summer Time

Ninth American Conference on Pharmacometrics, San Diego, CA:

  • Poster: "NKTR-255 Exhibits Target Mediated Drug Disposition and Stimulates Proliferation of Cytotoxic Immune Cells in Cyonomolgous Monkeys", Bhasi, K., et al.
    • Date: October 6-12, 2018

ESMO 2018 Congress, Munich, Germany:

  • Poster 362TiP: "ATTAIN: Phase 3 study of etirinotecan pegol (EP) vs treatment of physician's choice (TPC) in patients (pts) with metastatic breast cancer (MBC) who have stable brain metastases (BM) previously treated with an anthracycline, a taxane, and capecitabine (ATC).", Tripathy, D., et al.
    • Date: October 22, 2018, 12:45-13:45 p.m. Central European Summer Time
       
  • Poster 446TiP: "REVEAL: A phase 1/2, open-label, multicenter, dose escalation and dose expansion study of NKTR-262 [TLR 7/8 agonist] plus NKTR-214 [CD122-biased agonist] with or without nivolumab (nivo) in patients (pts) with locally advanced or metastatic solid tumor malignancies.", Diab, A., et al.
    • Date: October 22, 2018, 12:45-13:45 p.m. Central European Summer Time

Conference Call to Discuss Second Quarter 2018 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, Wednesday, August 8, 2018.

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 Investors section of the Nektar website: http://ir.nektar.com/. The web broadcast of the conference call will be available for replay through Monday, September 10, 2018.

To access the conference call, follow these instructions:
Dial: (877) 881.2183 (U.S.); (970) 315.0453 (international)
Passcode: 7099844 (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 Investors page at the Nektar website as soon as practical after the conclusion of the conference call.

About Nektar Therapeutics
Nektar Therapeutics is a research-based development stage biopharmaceutical company whose mission is to discover and develop innovative medicines to address the unmet medical needs of patients. Our R&D pipeline of new investigational medicines includes treatments for cancer, auto-immune disease and chronic pain. We leverage Nektar's proprietary and proven chemistry platform in the discovery and design of our new therapeutic candidates. 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 uncertain or forward-looking statements which can be identified by words such as: "expect," "may," "will," "design," "develop," and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding the potential therapeutic benefits of and future development plans for our products (including NKTR?214, NKTR-181, NKTR-358, NKTR-262 and NKTR-255) and the initiation of Phase 3 registrational trials. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions and 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 and you should not rely on such statements. Important factors that could cause our actual results to differ materially from those indicated in the forward-looking statements include: (i) clinical study outcomes remain very unpredictable and it is possible that a clinical study could fail even after positive interim data is observed; (ii) the data package required for approval of an NDA to the FDA is very uncertain and difficult to predict due to broad FDA regulatory discretion, and changing FDA regulatory guidelines; (iii) regulations concerning and controlling access to opioid-based pharmaceuticals are strict and it is difficult to predict which scheduling category will apply to NKTR-181 if regulatory approval is achieved; (iv) patents may not issue from our patent applications for our drug candidates, patents that have issued may not be enforceable, or additional intellectual property licenses from third parties may be required; and (v) certain other important risks and uncertainties set forth in our Annual Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2018. 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.

Contacts:

For Investors:

Jennifer Ruddock of Nektar Therapeutics
415-482-5585

Jodi Sievers of Nektar Therapeutics
415-482-5593

For Media:

Dan Budwick of 1AB
973-271-6085
dan@1abmedia.com

 

                                                   NEKTAR THERAPEUTICS

                                          CONDENSED CONSOLIDATED BALANCE SHEETS

                                                      (In thousands)

                                                       (Unaudited)


                      ASSETS                                June 30, 2018            December 31, 2017           (1)
                                                            -------------            -----------------

    Current assets:

                Cash and cash
                equivalents                                                 $911,125                      $4,762

                Short-term
                investments                                                  912,683                     291,370

                Accounts
                receivable, net                                               35,315                       5,014

               Inventory                                                      11,884                      10,726

                Other current
                assets                                                        34,940                      14,948

               Total current assets                                        1,905,947                     326,820


    Long-term investments                                                 282,277                      57,088

    Property, plant and equipment, net                                     45,000                      47,463

    Goodwill                                                               76,501                      76,501

    Other assets                                                            3,362                         994
                                                                            -----                         ---

               Total assets                                               $2,313,087                    $508,866
                                                                          ==========                    ========


                           LIABILITIES AND STOCKHOLDERS' EQUITY


    Current liabilities:

               Accounts payable                                              $10,674                      $4,782

                Accrued
                compensation                                                  18,980                       8,263

                Accrued clinical
                trial expenses                                                20,028                       9,461

                Other accrued
                expenses                                                      14,993                      10,064

               Interest payable                                                4,144                       4,198

                Deferred
                revenue,
                current portion                                               17,988                      18,949

                Other current
                liabilities                                                   10,090                         446

               Total current liabilities                                      96,897                      56,163


    Senior secured notes, net                                             246,078                     245,207

    Liability related to the sale of future
     royalties, net                                                        88,867                      94,655

    Deferred revenue, less current portion                                 13,780                      19,021

    Other long-term liabilities                                             7,051                       5,992

               Total liabilities                                             452,673                     421,038


    Commitments and contingencies


    Stockholders' equity:

               Preferred stock                                                     -                          -

               Common stock                                                       17                          15

                Capital in
                excess of par
                value                                                      3,094,095                   2,207,865

                Accumulated
                other
                comprehensive
                loss                                                         (4,002)                    (2,111)

                Accumulated
                deficit                                                  (1,229,696)                (2,117,941)


               Total stockholders' equity                                  1,860,414                      87,828

                Total
                liabilities and
                stockholders'
                equity                                                    $2,313,087                    $508,866


    (1) The consolidated balance
     sheet at December 31, 2017 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 June 30,                       Six Months Ended June 30,
                                  ---------------------------                       -------------------------

                                                             2018                                                     2017       2018        2017
                                                             ----                                                     ----       ----        ----


    Revenue:

       Product sales                                       $5,863                                                  $15,693    $12,158     $20,449

       Royalty revenue                                      8,563                                                    7,434     19,639      14,651

       Non-cash royalty revenue
        related to sale of future
        royalties                                           9,045                                                    6,638     15,965      13,301

       License, collaboration and
        other revenue                                   1,064,246                                                    4,824  1,077,973      10,916
                                                        ---------                                                    -----  ---------      ------

    Total revenue                                       1,087,717                                                   34,589  1,125,735      59,317


    Operating costs and
     expenses:

       Cost of goods sold                                   5,522                                                    8,989     12,168      15,120

       Research and development                            88,334                                                   60,260    187,758     121,318

       General and administrative                          20,261                                                   15,996     38,948      27,972

    Total operating costs and
     expenses                                             114,117                                                   85,245    238,874     164,410
                                                          -------                                                   ------    -------     -------


    Income (loss) from
     operations                                           973,600                                                 (50,656)   886,861   (105,093)


    Non-operating income
     (expense):

       Interest expense                                   (5,385)                                                 (5,510)  (10,725)   (10,912)

       Non-cash interest expense
        on liability related to
        sale of future royalties                          (4,975)                                                 (4,512)   (9,994)    (9,064)

      Interest income and other
       income (expense), net                               12,105                                                      906     13,676       1,564
                                                           ------                                                      ---     ------       -----

    Total non-operating income
     (expense), net                                         1,745                                                  (9,116)   (7,043)   (18,412)


    Income (loss) before
     provision for income taxes                           975,345                                                 (59,772)   879,818   (123,505)


    Provision for income taxes                              3,885                                                       99      4,150         232
                                                            -----                                                      ---      -----         ---

    Net income (loss)                                    $971,460                                                $(59,871)  $875,668  $(123,737)
                                                         ========                                                 ========   ========   =========


    Net income (loss) per share:

       Basic                                                $5.67                                                  $(0.39)     $5.27     $(0.80)
                                                            =====                                                   ======      =====      ======

       Diluted                                              $5.33                                                  $(0.39)     $4.91     $(0.80)
                                                            =====                                                   ======      =====      ======


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

       Basic                                              171,378                                                  155,352    166,160     154,514
                                                          =======                                                  =======    =======     =======

       Diluted                                            182,291                                                  155,352    178,281     154,514
                                                          =======                                                  =======    =======     =======

 

                                                     NEKTAR THERAPEUTICS

                                       CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        (In thousands)

                                                         (Unaudited)


                                                                                         Six Months Ended June 30,
                                                                                       -------------------------

                                                                                                      2018               2017
                                                                                                      ----               ----

    Cash flows from operating activities:

    Net income (loss)                                                                             $875,668         $(123,737)

    Adjustments to reconcile net income (loss) to net cash provided by

    (used in) operating activities:

    Non-cash royalty revenue related to sale of future royalties                                  (15,965)          (13,301)

    Non-cash interest expense on liability related to sale of future
     royalties                                                                                       9,994              9,064

    Stock-based compensation                                                                        40,608             16,283

    Depreciation and amortization                                                                    5,115              8,287

    Other non-cash transactions                                                                    (3,991)           (1,089)

    Changes in operating assets and liabilities:

    Accounts receivable, net                                                                      (19,557)            11,564

    Inventory                                                                                      (1,158)               101

    Other assets                                                                                  (14,282)             2,280

    Accounts payable                                                                                 5,791              3,221

    Accrued compensation                                                                            10,717            (3,934)

    Accrued clinical trial expenses                                                                 10,567            (1,275)

    Other accrued expenses                                                                           4,904              2,388

    Interest payable                                                                                  (54)              (54)

    Deferred revenue                                                                               (6,249)           (3,887)

    Other liabilities                                                                                5,068              1,000
                                                                                                     -----              -----

    Net cash provided by (used in) operating activities                                            907,176           (93,089)


    Cash flows from investing activities:

    Purchases of investments                                                                     (989,850)         (121,135)

    Maturities of investments                                                                      132,779            147,558

    Sales of investments                                                                            11,963              8,823

    Purchases of property, plant and equipment                                                     (3,730)           (6,344)

    Sales of property, plant and equipment                                                           2,633                  -
                                                                                                     -----                ---

    Net cash (used in) provided by investing activities                                          (846,205)            28,902


    Cash flows from financing activities:

    Payment of capital lease obligations                                                                 -           (1,369)

    Issuance of common stock                                                                       790,231                  -

    Proceeds from shares issued under equity compensation plans                                     55,208             22,016
                                                                                                    ------             ------

    Net cash provided by financing activities                                                      845,439             20,647


    Effect of exchange rates on cash and cash equivalents                                             (47)                49
                                                                                                       ---                ---

    Net increase (decrease) in cash and cash equivalents                                           906,363           (43,491)

    Cash and cash equivalents at beginning of period                                                 4,762             59,640

    Cash and cash equivalents at end of period                                                    $911,125            $16,149
                                                                                                  ========            =======


    Supplemental disclosure of cash flow information:

      Cash paid for interest                                                                        $9,795            $10,010
                                                                                                    ======            =======

 

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SOURCE Nektar Therapeutics

Company Codes: NASDAQ-NMS:NKTR

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