Nektar Therapeutics Reports Financial Results for the First Quarter of 2013

 Nektar Therapeutics Reports Financial Results for the First Quarter of 2013

PR Newswire

SAN FRANCISCO, May 9, 2013

SAN FRANCISCO, May 9, 2013 /PRNewswire/ --Nektar Therapeutics (Nasdaq: NKTR)
today reported its financial results for the first quarter ended March 31,

Cash and investments in marketable securities at March 31, 2013 were $261.2
million as compared to $302.2 million at December 31, 2012.

"We made great progress advancing two key clinical programs for Nektar over
the past quarter," said Howard W. Robin, President and Chief Executive Officer
of Nektar. "Our partner Bayer initiated Phase 3 studies for Amikacin Inhale in
gram-negative pneumonia. Up to 90% of hospital pneumonias occur in patients
who are on ventilators and Amikacin Inhale could provide physicians with a new
treatment option for treating these deadly pneumonias. In addition, Nektar
initiated our second Phase 2 study for NKTR-181, our wholly-owned analgesic
molecule which has received Fast Track Status from the FDA. We expect to
report data from both Phase 2 studies of NKTR-181 during the summer."

Revenue for the first quarter of 2013 was $23.0 million as compared to $17.9
million in the first quarter of 2012. Revenue for the first quarter of 2013
included $4.4 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. In addition, product sales increased by $4.9 million in the first
quarter of 2013 as compared to the first quarter of 2012. This increase was
partially offset by decreases in royalty revenues and license, collaboration
and other revenues.

Total operating costs and expenses for the first quarter of 2013 were $68.4
million as compared to $55.9 million in the first quarter of 2012. Total
operating costs and expenses increased primarily as a result of increased
clinical development expenses as well as higher cost of goods related to
increased product sales.

Research and development expense in the first quarter of 2013 was $45.6
million as compared to $35.1 million for the first quarter of 2012. R&D
expense was higher in the first quarter of 2013 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, and Phase 2 studies for NKTR-181.

General and administrative expense was $11.1 million in the first quarter of
2013 as compared to $10.4 million in the first quarter of 2012.

Non-cash interest expense was $5.5 million in the first quarter of 2013 as
compared to $1.8 million in the first quarter of 2012. The company incurred
non-cash interest expense as a result of the sale of future royalties related
to Cimzia® and Mircera®.

Net loss for the first quarter of 2013 was $55.1 million or $0.48 loss per
share as compared to $41.1 million or $0.36 loss per share in the first
quarter of 2012.

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

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

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

American Society of Clinical Oncology (ASCO) Annual Meeting, Chicago, IL:

  oAbstract Title: "Etirinotecan pegol (EP) target-specific pharmacodynamic
    (PD) biomarkers measured in circulating tumor cells (CTCs) isolated from
    patients participating in BEACON, a Phase 3 study in patients with
    metastatic breast cancer (mBC)", Hoch et al.

       oAbstract Number: 1087
       oSession Title/Track: Breast Cancer – Triple-Negative/Cytotoxics/Local
       oDate: June 1, 2013, 1:15 p.m. – 5:00 p.m. Central Time
       oLocation: S Hall A2

  oAbstract Title: "An engineered immunotherapy (NKTR-214) with altered
    selectivity towards the IL2 receptor: Efficacy and tolerability in a
    murine tumor model", Charych et al.

       oAbstract Number: 3060
       oSession Title/Track: Developmental Therapies - Immunotherapy
       oDate: June 1, 2013, 8:00 a.m. – 11:45 a.m. Central Time
       oLocation: S Hall A2

The International Conference on Opioids, Boston, MA:

  oAbstract Title: "New Oral Opioid Analgesic NKTR-181 Demonstrates Analgesic
    Response In Cold Pressor Test In Healthy Subjects", M. Eldon, et al.
  oAbstract Title: "No Effect Of Gender And Food On The Pharmacokinetics Of
    The Novel Opioid Analgesic NKTR-181 In Healthy Subjects", A. Odinecs, et

       oJune 9 – 11, 2013

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

  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

  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

Conference Call to Discuss First 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, May 9, 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: The web broadcast of the
conference call will be available for replay through Monday, June 10, 2013.

 To access the conference call, follow these instructions:
 Dial: (877) 881.2183 (U.S.); (970) 315.0453 (international)
 Passcode: 36590300 (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
has completed Phase 3 development 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. 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 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

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
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 May 8, 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 Media Inquiries:  
Karin Bauer/MSL                                           (415) 817-2549
Mike Huckman /MSL                                         (646) 500-7631

(In thousands)
ASSETS                            March 31, 2013     December 31,      ^(1)
Current assets:
    Cash and cash equivalents     $          $        
                                    28,531          25,437
    Short-term investments        207,664            251,757
    Accounts receivable           3,647              5,805
    Inventory                     18,381             18,269
    Other current assets          8,813              13,363
         Total current assets     267,036            314,631
Restricted cash                   25,000             25,000
Property and equipment, net       70,112             72,215
Goodwill                          76,501             76,501
Other assets                      9,252              9,443
    Total assets                  $          $        
                                  447,901           497,790
Current liabilities:
    Accounts payable              $          $        
                                     4,218          2,863
    Accrued compensation          8,952              8,773
    Accrued expenses              6,946              8,008
    Accrued clinical trial        24,032             17,500
    Deferred revenue, current     23,239             21,896
    Interest payable              3,167              7,083
    Other current liabilities     12,667             12,414
         Total current            83,221             78,537
Senior secured notes              125,000            125,000
Capital lease obligations, less   10,766             11,607
current portion
Liability related to sale of
future royalties, less current    122,416            128,266
Deferred revenue, less current    97,918             96,551
Deferred gain                     2,185              2,404
Other long-term liabilities       9,015              8,407
         Total liabilities        450,521            450,772
Commitments and contingencies
Stockholders' equity:
    Preferred stock               -                  -
    Common stock                  11                 11
    Capital in excess of par      1,623,207          1,617,744
    Accumulated other             (395)              (357)
    comprehensive loss
    Accumulated deficit           (1,625,443)        (1,570,380)
         Total stockholders'      (2,620)            47,018
         (deficit) equity
    Total liabilities and         $          $        
    stockholders' equity          447,901           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.

(In thousands, except per share information)
                                                   Three Months Ended

                                                   March 31,
                                                   2013          2012
Product sales                                     $ 11,810     $  6,945
Royalty revenues                                  325           3,177
Non-cash royalty revenue related to sale of future 4,393         -
License, collaboration, and other                  6,476         7,827
Total revenue                                      23,004        17,949
Operating costs and expenses:
Cost of goods sold                                 11,661        8,707
Research and development                           45,618        35,085
General and administrative                         11,129        10,414
Impairment of long-lived assets                    -             1,675
Total operating costs and expenses                 68,408        55,881
Loss from operations                               (45,404)      (37,932)
Non-operating income (expense):
Interest income                                   314           632
Interest expense                                   (4,645)       (2,548)
Non-cash interest expense on liability related to  (5,543)       (1,785)
sale of future royalties
Other income (expense), net                        427           660
Total non-operating expense, net                   (9,447)       (3,041)
Loss before provision for income taxes             (54,851)      (40,973)
Provision for income taxes                         212           124
Net loss                                           $ (55,063)    $ (41,097)
Basic and diluted net loss per share               $   (0.48)  $   (0.36)
Weighted average shares used in computing basic    115,309       114,531
and diluted net loss per share

(In thousands)
                                                  Three Months Ended March 31,
                                                  2013            2012
Cash flows from operating activities:
Net loss                                         $(55,063)       $ (41,097)
Adjustments to reconcile net loss to net cash used in
operating activities:
Non-cash interest expense on liability related to 5,543           1,785
sale of future royalties
Non-cash royalty revenue related to sale of       (4,393)         -
future royalties
Stock-based compensation                         4,245           4,234
Depreciation and amortization                    3,628           3,510
Impairment of long-lived assets                  -               1,675
Other non-cash transactions                       139             295
Changes in operating assets and liabilities:
Accounts receivable                              2,158           (5,865)
Inventory                                         (112)           (1,452)
Other assets                                     3,844           4,305
Accounts payable                                 1,355           (1,290)
Accrued compensation                             179             (4,620)
Accrued expenses                                 (1,130)         1,094
Accrued clinical trial expenses                   6,532           773
Deferred revenue                                 2,710           3,226
Interest payable                                  (3,916)         (1,747)
Other liabilities                                (3,830)         556
Net cash used in operating activities            (38,111)        (34,618)
Cash flows from investing activities:
Maturities of investments                        100,338         151,964
Purchases of investments                         (56,336)        (102,023)
Purchases of property and equipment              (316)           (1,516)
Net cash provided by investing activities        43,686          48,425
Cash flows from financing activities:
Payment of capital lease obligations             (692)           (566)
(Repayment of) proceeds from sale of future       (3,000)         119,589
royalties, net of transaction costs
Proceeds from shares issued under equity          1,218           479
compensation plans
Net cash (used in) provided by financing          (2,474)         119,502
Effect of exchange rates on cash and cash         (7)             (136)
Net increase in cash and cash equivalents        3,094           133,173
Cash and cash equivalents at beginning of period  25,437          15,312
Cash and cash equivalents at end of period        $ 28,531       $ 148,485
Supplemental disclosure of cash flow information:
Cash paid for interest                            $  8,250      $   4,199

SOURCE Nektar Therapeutics