Nektar Therapeutics Reports Fourth Quarter and Year-End 2012 Financial Results

Nektar Therapeutics Reports Fourth Quarter and Year-End 2012 Financial Results

PR Newswire

SAN FRANCISCO, Feb. 28, 2013

SAN FRANCISCO, Feb. 28, 2013 /PRNewswire/ --Nektar Therapeutics (Nasdaq:
NKTR) today reported its financial results for the fourth quarter and year
ended December 31, 2012.

Cash, cash equivalents, and investments at December 31, 2012 were $302.2
million as compared to $414.9 million at December 31, 2011.

"As we enter 2013, Nektar is in an excellent position with five highly
valuable late-stage programs across multiple therapeutic areas," said Howard
W. Robin, President and Chief Executive Officer of Nektar. "With positive
efficacy and safety results from the full Phase 3 KODIAC program for
naloxegol, our partner AstraZeneca is preparing to submit registration filings
in the U.S. and EU in the third quarter of this year. We are tremendously
pleased that Bayer is scheduled to start the Phase 3 program next month for
Amikacin Inhale in gram-negative pneumonia. Additionally, we expect to report
key Phase 2 clinical data this summer for NKTR-181, our novel opioid
analgesic, which represents a potential breakthrough for the treatment of
chronic pain."

Revenue for the fourth quarter of 2012 was $21.1 million as compared to $15.8
million in the fourth quarter of 2011. Revenue for the year ended December 31,
2012 was $81.2 million as compared to $71.5 million in 2011. 2012 revenue
included $10.8 million in non-cash revenues resulting from the $124 million
sale of future royalties related to Cimzia® and Mircera®, which was completed
in February 2012. This non-cash royalty revenue is offset by non-cash
interest expense. For both the quarter and the year ended December 31, 2012,
product sales increased significantly. These increases were partially offset
by decreases in royalty revenues.

Total operating costs and expenses in the fourth quarter of 2012 were $64.5
million as compared to $50.3 million in the fourth quarter of 2011. Total
operating costs and expenses for the year ended December 31, 2012 were $222.4
million as compared to $195.4 million in 2011. The increases in 2012 as
compared to 2011 are due primarily to increased clinical development expenses
as well as higher cost of goods related to increased product sales.

Research and development expense in the fourth quarter of 2012 was $46.4
million as compared to $33.3 million for the fourth quarter of 2011. For the
year ended December 31, 2012, R&D expense was $148.7 million as compared to
$126.8 million in 2011. R&D expense was higher in the fourth quarter and year
ended December 31, 2012 as compared to the same periods in 2011 reflecting the
costs of the etirinotecan pegol (NKTR-102) BEACON Phase 3 study, the
production of devices for the Phase 3 study of Amikacin Inhale, the Phase 1
and Phase 2 studies for NKTR-181, and the Phase 1 study for NKTR-192.

General and administrative expense was $10.9 million in the fourth quarter of
2012 as compared to $11.5 million in the fourth quarter of 2011. G&A expense
for the year ended December 31, 2012 was $41.6 million as compared to $46.8
million in 2011.

Non-cash interest expense was $5.4 million and $18.1 million in the fourth
quarter and year ended December 31, 2012, respectively. The company incurred
non-cash interest expense as a result of the sale of future royalties related
to Cimzia® and Mircera®. No non-cash interest expense was incurred in 2011.

Net loss for the fourth quarter ended December 31, 2012 was $52.9 million or
$0.46 loss per share. Net loss for the year ended December 31, 2012 was
$171.9 million or $1.50 loss per share. Net loss for the fourth quarter ended
December 31, 2011 was $37.5 million or $0.33 loss per share. Net loss for the
year ended December 31, 2011 was $134.0 million or $1.19 loss per share.

The company also announced upcoming presentations at the following medical
meetings and scientific congresses during the first half of 2013:

33^rd International Symposium on Intensive Care and Emergency Medicine,
Brussels, Belgium:

  oPoster P081: "In Vitro Efficiency of the Amikacin Inhale System, A Novel
    Integrated Drug-Device Delivery System", Kadrichu, N., et al.

       oDate: March 19, 2013

American Association for Cancer Research 2013 Annual Meeting, Washington, DC:

  oAbstract #482: "Tipping the Balance in the Tumor Microenvironment: An
    Engineered Cytokine (NKTR-214) with Altered IL-2 Receptor Binding
    Selectivity and Improved Efficacy in a Mouse Melanoma Model", Charych, D.,
    et al.

       oDate: April 7, 2013, 1:00 p.m. — 5:00p.m. Eastern Time
       oPoster Session: Immunology 2

  oAbstract #2475: "A new polymer conjugated taxane shows improved efficacy
    in tumor xenograft models", Fry, D., et al.

       oDate: April 9, 2013, 8:00 a.m. — 12:00p.m. Eastern Time
       oPoster Session: Chemistry 4

American Academy of Pain Medicine 29^th Annual Meeting, Fort Lauderdale, FL:

  oPoster #115 : "New Oral Opioid Analgesic NKTR-181 Demonstrates Analgesic
    Response in Cold Pressor Test in Healthy Subjects", Eldon, M., et al.

       oDate: April 11, 2013, 5:15 p.m. — April 12, 2013 10:30a.m. Eastern
         Time

American Pain Society 32^nd Annual Scientific Meeting, New Orleans, LA:

  oPoster: "NKTR-171: A Novel, Oral Sodium Channel Blocker That Exhibits
    Comparable Analgesic Efficacy to Pregabalin with Reduced Central Nervous
    System (CNS) Side Effects", Gursahani, H., et al.

       oDate: May 9, 2013, 9:30 a.m. Eastern Time

Digestive Disease Week 2013, Orlando, FL:

  oAbstract 1594557: "Efficacy and Safety of Naloxegol in Patients with
    Opioid-Induced Constipation: Results from 2 Prospective, Randomized,
    Controlled Trials", Chey, W., et al.

       oDate: May 21, 2013, 8:15 a.m. Eastern Time
       oResearch Forum: New Pharmacological Treatments for Motility
         Disorders

4^th International Congress on Neuropathic Pain, Toronto, Canada:

  oPoster A-484-0002-00647: "NKTR-171: Preclinical Efficacy and Improved
    Central Nervous System (CNS) Side Effect Profile of a Novel Sodium Channel
    Blocker Designed for the Treatment of Neuropathic Pain", Gursahani, H., et
    al.

       oDate: May 25, 2013, 1:30 p.m. – 3:30 p.m. Eastern Time
       oPoster Session II

College on Problems of Drug Dependence 75^th Annual Meeting, San Diego, CA:

  oPoster 1598130: "Opioids With Lower Brain Uptake Are Less Recognizable in
    Rat Drug Discrimination Tests and thus Potentially Less Subject to Abuse",
    Harrison, S., et al.

       oDate: June 19, 2013, 12:00 p.m. – 2:00 p.m. Pacific Time

  oPoster 1605508: "Abuse Potential Assessment of Novel Opioid Analgesic
    NKTR-181: Implications for Labeling", Webster, L., et al.

       oDate: June 20, 2013, 7:30 a.m. – 9:30 a.m. Pacific Time

Conference Call to Discuss Fourth Quarter and Year-End 2012 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, February 28,
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 Friday, March 15, 2013.

To access the conference call, follow these instructions:

Dial: (877) 881.2183 (U.S.); (970) 315.0453 (international)
Passcode: 98224860 (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 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 oncology, pain 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
is being evaluated in Phase 3 clinical studies as a once- daily, oral tablet
for the treatment of opioid-induced constipation. 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 candidate for chronic pain conditions, is in Phase 2 development in
osteoarthritis patients with chronic knee pain. NKTR-192, a novel mu-opioid
analgesic 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 Phase 2 studies for the treatment of ovarian and
colorectal cancers.

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,
statements we make regarding the potential future regulatory filings by
AstraZeneca for naloxegol; the projected timing of the start of the Phase 3
clinical study by Bayer for Amikacin Inhale; the projected availability of
Phase 2 clinical study results for NKTR-181; 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 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; and (v) certain other important risks and uncertainties set forth
in our Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on November 9, 2012. 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 Media Inquiries:  
Amanda Connelly/MSL                                       (404) 870-6865
Mike Huckman /MSL                                         (646) 500-7631



NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
ASSETS                               December 31, 2012  December 31, 2011 ^(1)
Current assets:
   Cash and cash equivalents         $     25,437   $     15,312
   Short-term investments            251,757            225,856
   Accounts receivable, net          5,805              4,938
   Inventory                         18,269             12,656
   Other current assets              13,363             17,944
           Total current assets      314,631            276,706
Long-term investments                -                  173,768
Restricted cash                      25,000             -
Property and equipment, net          72,215             78,576
Goodwill                             76,501             76,501
Other assets                         9,443              999
   Total assets                      $    497,790   $    
                                                        606,550
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                  $            $      
                                     2,863              3,019
   Accrued compensation              8,773              12,807
   Accrued expenses                  8,008              6,669
   Accrued clinical trial expenses   17,500             11,953
   Deferred revenue, current portion 21,896             19,643
   Interest payable                  7,083              1,805
   Convertible subordinated notes    -                  214,955
   Other current liabilities         12,414             4,681
           Total current liabilities 78,537             275,532
Senior secured notes                 125,000            -
Capital lease obligations, less      11,607             14,582
current portion
Liability related to sale of future  128,266            -
royalties, less current portion
Deferred revenue, less current       96,551             108,188
portion
Deferred gain                        2,404              3,278
Other long-term liabilities          8,407              7,159
           Total liabilities         450,772            408,739
Commitments and contingencies
Stockholders' equity:
   Preferred stock                   -                  -
   Common stock                      11                 11
   Capital in excess of par value    1,617,744          1,597,428
   Accumulated other comprehensive   (357)              (1,103)
   loss
   Accumulated deficit               (1,570,380)        (1,398,525)
           Total stockholders'       47,018             197,811
           equity
   Total liabilities and             $    497,790   $    606,550
   stockholders' equity

(1) The consolidated balance sheet at December 31, 2011 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      Twelve Months Ended
                              December 31,            December 31,
                              2012        2011        2012         2011
Revenue:
 Product sales               $ 10,405   $  6,073  $  35,399  $  24,864
 Royalty revenues            908         3,095       4,874        10,327
 Non-cash royalty revenue
related to sale of future     3,896       -           10,791       -
royalties
 License, collaboration and  5,937       6,614       30,127       36,289
other
Total revenue                 21,146      15,782      81,191       71,480
Operating costs and expenses:
 Cost of goods sold          7,290       5,450       30,428       21,891
 Research and development    46,373      33,302      148,675      126,766
 General and administrative  10,864      11,498      41,614       46,760
 Impairment of long-lived    -           -           1,675        -
assets
Total operating costs and     64,527      50,250      222,392      195,417
expenses
Loss from operations          (43,381)    (34,468)    (141,201)    (123,937)
Non-operating income
(expense):
 Interest income            450         661         2,315        2,244
 Interest expense            (4,682)     (2,525)     (15,489)     (10,223)
 Non-cash interest expense
on liability related to sale  (5,416)     -           (18,057)     -
of future royalties
 Other income (expense), net 70          (445)       983          (1,044)
Total non-operating expense,  (9,578)     (2,309)     (30,248)     (9,023)
net
Loss before provision for     (52,959)    (36,777)    (171,449)    (132,960)
income taxes
Provision (benefit) for       (33)        718         406          1,018
income taxes
Net loss                      $ (52,926)  $ (37,495)  $ (171,855)  $ (133,978)
Basic and diluted net loss    $         $         $         $   
per share                     (0.46)      (0.33)      (1.50)       (1.19)
Weighted average shares
outstanding used in computing 115,179     114,446     114,820      112,942
basic and diluted net loss
per share



NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                           Twelve Months Ended December 31,
                                           2012             2011
Cash flows from operating activities:
Net loss                                  $  (171,855)   $   (133,978)
Adjustments to reconcile net loss to net
cash used in operating activities:
Non-cash interest expense on liability     18,057           -
related to sale of future royalties
Non-cash royalty revenue related to sale   (10,791)         -
of future royalties
Stock-based compensation                  16,199           18,885
Depreciation and amortization             14,508           14,951
Impairment of long-lived assets            1,675            -
Other non-cash transactions                845              1,359
Changes in operating assets and
liabilities:
Accounts receivable                        (867)            20,164
Inventory                                  (5,613)          (5,390)
Other assets                               6,031            (12,267)
Accounts payable                           (122)            (3,384)
Accrued compensation                       (4,034)          3,555
Accrued expenses                           1,495            1,013
Accrued clinical trial expenses            5,547            (191)
Deferred revenue                           (9,384)          (17,516)
Interest payable                           5,278            -
Other liabilities                          3,275            (943)
Net cash used in operating activities     (129,756)        (113,742)
Cash flows from investing activities:
Purchases of property and equipment       (10,583)         (9,722)
Restricted cash                            (25,000)         -
Maturities of investments                 307,887          383,052
Sales of investments                      5,378            210,089
Purchases of investments                  (164,662)        (695,371)
Net cash provided by (used in) investing   113,020          (111,952)
activities
Cash flows from financing activities:
Proceeds from issuance of senior secured   77,940           -
notes, net
Repayment of convertible subordinated      (172,407)        -
notes
Payment of capital lease obligations       (2,437)          (1,978)
Proceeds from sale of future royalties,    119,588          -
net
Proceeds from shares issued under equity   4,117            4,530
compensation plans
Issuance of common stock, net              -                219,783
Net cash provided by financing activities 26,801           222,335
Effect of exchange rates on cash and cash  60               916
equivalents
Net increase(decrease)in cash and cash   10,125           (2,443)
equivalents
Cash and cash equivalents at beginning of  15,312           17,755
period
Cash and cash equivalents at end of period $    25,437  $     15,312
Supplemental disclosure of cash flow
information:
Cash paid for interest                     $     9,620  $     10,277
Cash paid for income taxes                 $     1,021  $       957
Supplemental schedule of non-cash
investing and financing activities:
Retirement of convertible subordinated     $    42,548   $        -
notes in exchange for senior secured notes

SOURCE Nektar Therapeutics

Website: http://www.nektar.com
 
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