Nektar Therapeutics Reports Financial Results for the Second Quarter of 2013

 Nektar Therapeutics Reports Financial Results for the Second Quarter of 2013

PR Newswire

SAN FRANCISCO, Aug. 8, 2013

SAN FRANCISCO, Aug. 8, 2013 /PRNewswire/ -- Nektar Therapeutics (Nasdaq: NKTR)
today reported its financial results for the second quarter ended June 30,
2013.

Cash and investments in marketable securities at June 30, 2013 were $226.9
million.

"I am very pleased with Nektar's performance this year," said Howard W. Robin,
President and Chief Executive Officer of Nektar. "AstraZeneca has confirmed
that they will be filing both the naloxegol NDA and MAA in September.
Naloxegol could be the firstonce-daily oral medication to treat patients with
opioid-induced constipation. In June, we announced positive data from our
Human Abuse Liability study for NKTR-181, our wholly-owned analgesic molecule
which has received Fast Track Status from the FDA. The results clearly
demonstrated that drug abusers could not discriminate NKTR-181 from placebo at
doses that we know produced analgesia in earlier studies. We are on track to
report high-level results from the Phase 2 efficacy study of NKTR-181 in
chronic pain patients this summer. Finally, we recently completed enrollment
in our Phase 3 study of NKTR-102 ahead of schedule. NKTR-102 is the first
long-acting topoisomerase I inhibitor being developed for the treatment of
advanced breast cancer and we expect survival data from this pivotal trial
next year."

Revenue in the second quarter of 2013 was $33.9 million as compared to $23.7
million in the second quarter of 2012. Year-to-date revenue for 2013 was $56.9
million as compared to $41.6 million in the first half of 2012. Revenues
included non-cash royalty revenue, related to our February 2012 royalty
monetization, of $3.8 million and $8.2 million in the second quarter and first
half of 2013, respectively, and $3.5 million in both the second quarter and
first half of 2012. This non-cash royalty revenue is offset by non-cash
interest expense. The increases in revenue in the second quarter and first
half of 2013 as compared to the same periods in 2012 are primarily due to a
$10.0 million milestone achieved upon the initiation of Phase 3 studies for
Amikacin Inhale as well as increased product sales.

Total operating costs and expenses in the second quarter of 2013 were $66.5
million as compared to $50.7 million in the second quarter of 2012. Total
operating costs and expenses in the first half of 2013 were $134.6 million as
compared to $106.6 million in the first half of 2012. Total operating costs
and expenses increased primarily as a result of increased clinical development
expenses.

Research and development expenses in the second quarter of 2013 were $52.2
million as compared to $33.2 million in the second quarter of 2012. For the
first half of 2013, R&D expense was $97.8 million as compared to $68.3 million
in the first half of 2012. R&D expense was higher in the second quarter and
first half 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 studies of NKTR-181, preparation for the Phase 3
study of NKTR-181, the Phase 1 studies of NKTR-192, and the production of
devices for the Phase 3 study of Amikacin Inhale.

General and administrative expense was $9.2 million in the second quarter of
2013 as compared to $10.3 million in the second quarter of 2012. G&A expense
in the first half of 2013 was $20.1 million as compared to $20.7 million in
the first half of 2012.

Non-cash interest expense incurred in connection with the February 2012
royalty monetization was $5.5 million and $11.0 million in the second quarter
and first half of 2013, respectively, as compared to $5.4 million and $7.2
million in the second quarter and first half of 2012, respectively.

Net loss in the second quarter of 2013 was $42.7 million or $0.37 loss per
share as compared to $34.3 million or $0.30 loss per share in the second
quarter of 2012. Net loss in the first half of 2013 was $97.8 million or $0.85
loss per share as compared to $75.4 million or $0.66 loss per share in the
first half of 2012.

The company also announced upcoming presentations at the following medical
meetings and scientific congresses during the third and fourth quarters of
2013:

2013 American Chemical Society Annual Meeting, Indianapolis, IN:

  oAbstract Title: "The Discovery of a Multi-arm Polymer Conjugated Taxane
    with Improved Efficacy in a Tumor Xenograft Model",  Ren, M., et al.

       oPoster Session: "Division of Medicinal Chemistry"
       oDate: September 8, 2013, 7:00p.m. Eastern Time

2013 53^rd ICAAC Annual Meeting, Denver, CO:

  oAbstract Title: "NKTR-223: Gram-Negative Activity of a Novel Polymer
    Conjugated Antimicrobial Peptide with a Superior Safety Profile",
    VanderVeen, L. A., et al.

       oPoster Session: "Targeting the Gram-negative outer membrane"
       oDate: September 12, 2013, 11:00 a.m. — 1:00p.m. Mountain Time

ECCO-ESMO-ESTRO European Cancer Congress, Amsterdam, The Netherlands:

  oAbstract Title: "Etirinotecan Pegol Prolongs Survival in an Experimental
    Model of Brain Metastasis of Human Triple Negative Breast Cancer", Hoch,
    U., et al.

       oPoster Session: "Breast Cancer – Advance Disease"
       oDate: September 30, 2013, 2:00 p.m. — 4:30p.m. Central European
         Summer Time

Cytokines 2013, San Francisco, CA:

  oAbstract Title: "Modulation of Cytokine Activity Through Advanced Polymer
    Conjugation", Kirk, P., et al.

       oPoster Session II
       oDate: October 1, 2013, 6:00 p.m. — 7:30p.m. Pacific Time

Society for Neuroscience, San Diego, CA:

  oAbstract Title: "What's 'Mu' Got to Do With It: Understanding the Role of
    Opioids in Neuropathic Pain ", Choi, I., et al.

       oPoster Session 68: "Pain Models: Pharmacology I"
       oDate: November 9, 2013, 1:00 p.m. — 5:00p.m. Pacific Time

Conference Call to Discuss Second 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, August 8,
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, September 9,
2013.

 To access the conference call, follow these instructions:

 Dial: (877) 881.2183 (U.S.); (970) 315.0453 (international)
 Passcode: 23081302 (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 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
projected regulatory submission dates for naloxegol, 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 9, 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



NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
ASSETS                                June 30, 2013     December 31, 2012 ^(1)
Current assets:
   Cash and cash equivalents          $             $        
                                      41,432             25,437
   Short-term investments             160,453           251,757
   Accounts receivable                6,041             5,805
   Inventory                          20,479            18,269
   Other current assets               6,018             13,363
           Total current assets       234,423           314,631
Restricted cash                       25,000            25,000
Property and equipment, net           67,849            72,215
Goodwill                              76,501            76,501
Other assets                          9,036             9,443
   Total assets                       $    412,809  $        
                                                        497,790
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
   Accounts payable                   $            $        
                                      5,572               2,863
   Accrued compensation               11,087            8,773
   Accrued expenses                   11,356            8,008
   Accrued clinical trial expenses    16,935            17,500
   Deferred revenue, current portion  22,113            21,896
   Interest payable                   6,917             7,083
   Other current liabilities          16,297            12,414
           Total current liabilities  90,277            78,537
Senior secured notes                  125,000           125,000
Capital lease obligations, less       9,901             11,607
current portion
Liability related to sale of future   124,074           128,266
royalties, less current portion
Deferred revenue, less current        93,516            96,551
portion
Deferred gain                         1,967             2,404
Other long-term liabilities           8,623             8,407
           Total liabilities          453,358           450,772
Commitments and contingencies
Stockholders' equity (deficit) :
   Preferred stock                    -                 -
   Common stock                       11                11
   Capital in excess of par value     1,628,967         1,617,744
   Accumulated other comprehensive    (1,336)           (357)
   loss
   Accumulated deficit                (1,668,191)       (1,570,380)
           Total stockholders' equity (40,549)          47,018
           (deficit)
   Total liabilities and              $    412,809  $        
   stockholders' equity (deficit)                      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 allof 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         Six Months Ended
                                 June 30,                  June 30,
                                 2013        2012           2013      2012
Revenue:
 Product sales               $  10,324  $         $       $  
                                             9,694         22,134    16,639
 Royalty revenues            351         290            676       3,467
 Non-cash royalty revenue
related to sale of future        3,828       3,469          8,221     3,469
royalties
 License, collaboration and   19,359      10,231         25,835    18,058
other revenue
Total revenue                    33,862      23,684         56,866    41,633
Operating costs and expenses:
 Cost of goods sold           5,011       7,203          16,672    15,910
 Research and development     52,230      33,201         97,848    68,286
 General and administrative   9,226       10,268         20,057    20,682
 Impairment of long-lived     -           -              -         1,675
assets
Total operating costs and        66,467      50,672         134,577   106,553
expenses
Loss from operations             (32,605)    (26,988)       (77,711)  (64,920)
Non-operating income (expense):
 Interest income             209         630            523       1,262
 Interest expense             (4,656)     (2,562)        (9,301)   (5,109)
 Non-cash interest expense on
liability related to sale of     (5,485)     (5,369)        (11,028)  (7,155)
future royalties
 Other income (expense), net  (6)         97             123       757
Total non-operating expense, net (9,938)     (7,204)        (19,683)  (10,245)
Loss before provision for income (42,543)    (34,192)       (97,394)  (75,165)
taxes
Provision for income taxes       205         93             417       217
Net loss                         $ (42,748)  $           $       $ 
                                             (34,285)      (97,811)  (75,382)
Basic and diluted net loss per   $         $        $      $   
share                            (0.37)     (0.30)         (0.85)   (0.66)
Weighted average shares
outstanding used in computing    115,544     114,649        115,427   114,590
basic and diluted net loss per
share





NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                          Six Months Ended June 30,
                                          2013               2012
Cash flows from operating activities:
 Net loss                             $          $       
                                           (97,811)         (75,382)
 Adjustments to reconcile net loss to
net cash used in operating activities:
  Non-cash interest expense on
liability related to sale of future       11,028             7,155
royalties
  Non-cash royalty revenue related  (8,221)            (3,469)
to sale of future royalties
  Stock-based compensation         8,601              8,035
  Depreciation and amortization    7,281              6,952
  Impairment of long-lived assets  -                  1,675
  Other non-cash transactions       159                688
 Changes in operating assets and
liabilities:
  Accounts receivable              (236)              (6,423)
  Inventory                         (2,210)            (2,059)
  Other assets                     5,508              8,176
  Accounts payable                 2,631              80
  Accrued compensation             2,314              (2,288)
  Accrued expenses                 3,280              191
  Accrued clinical trial expenses   (565)              654
  Deferred revenue                 (2,818)            1,075
  Interest payable                  (166)              -
  Other liabilities                (1,223)            (269)
Net cash used in operating activities    (72,448)           (55,209)
Cash flows from investing activities:
  Maturities of investments        200,477            179,766
  Purchases of investments         (109,400)          (120,410)
  Purchases of property and         (794)              (3,172)
equipment
 Net cash provided by investing        90,283             56,184
activities
Cash flows from financing activities:
  Payment of capital lease          (1,466)            (1,151)
obligations
  (Repayment of) proceeds from sale
of future royalties, net of $4.4 million  (3,000)            119,589
transaction costs in 2012
  Proceeds from shares issued under 2,621              1,337
equity compensation plans
 Net cash (used in) provided by        (1,845)            119,775
financing activities
 Effect of exchange rates on cash and  5                  92
cash equivalents
 Net increase in cash and cash         15,995             120,842
equivalents
 Cash and cash equivalents at          25,437             15,312
beginning of period
 Cash and cash equivalents at end of   $          $       
period                                      41,432        136,154
Supplemental disclosure of cash flow
information:
 Cash paid for interest                $          $        
                                             9,070        5,179





SOURCE Nektar Therapeutics

Website: http://www.nektar.com
 
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