Nektar Therapeutics Reports Financial Results for the Third Quarter of 2013

 Nektar Therapeutics Reports Financial Results for the Third Quarter of 2013

PR Newswire

SAN FRANCISCO, Nov. 7, 2013

SAN FRANCISCO, Nov. 7, 2013 /PRNewswire/ --Nektar Therapeutics (Nasdaq: NKTR)
today reported its financial results for the third quarter ended September 30,
2013.

Cash and investments in marketable securities at September 30, 2013 were
$208.6 million as compared to $302.2 million at December 31, 2012.

"Nektar continues to have a very productive year achieving significant
milestones with both our partnered programs and proprietary pipeline," said
Howard W. Robin, President and Chief Executive Officer of Nektar. "For
naloxegol, the MAA in Europe and NDS in Canada are now accepted for filing and
the NDA in the U.S. was submitted for filing in mid-September. Naloxegol
could be the first once-daily oral peripheral opioid antagonist approved to
treat opioid-induced constipation. BAX 855, Baxter's longer-acting PEGylated
Factor VIII therapy, which is in Phase 3, remains on track for a 2014 BLA
filing. Finally, while I am disappointed that the results from the Phase 2
efficacy study for NKTR-181 were confounded by an unusual placebo response, we
are working with our advisors and the FDA to design an optimal Phase 3
program, which should start by the middle of 2014."

Revenue in the third quarter of 2013 was $60.9 million as compared to $18.4
million in the third quarter of 2012. Year-to-date revenue for 2013 was $117.8
million as compared to $60.0 million in the first nine months of 2012.
Revenues included non-cash royalty revenue, related to our 2012 royalty
monetization, of $4.5 million and $12.7 million in the third quarter and
year-to-date for 2013, respectively, and $3.4 million in the third quarter and
$6.9 million in the first nine months of 2012. This non-cash royalty revenue
is offset by non-cash interest expense. The increases in revenue in the third
quarter and first nine months of 2013 as compared to the same periods in 2012
are primarily due to a $25.0 million milestone achieved upon the acceptance of
the naloxegol MAA filing in Europe as well as increased product sales. In
addition, revenue in the first nine months of 2013 increased as compared to
the same period in 2012 due to a $10.0 million milestone achieved upon the
initiation of Phase 3 studies for Amikacin Inhale in April 2013.

Total operating costs and expenses in the third quarter of 2013 were $67.4
million as compared to $51.3 million in the third quarter of 2012.
Year-to-date total operating costs and expenses in 2013 were $202.0 million as
compared to $157.9 million for the same period in 2012. Total operating costs
and expenses increased primarily as a result of increased clinical development
expenses.

Research and development expenses in the third quarter of 2013 were $43.9
million as compared to $34.0 million in the third quarter of 2012.
Year-to-date R&D expense for 2013 was $141.8 million as compared to $102.3
million for the same period in 2012. R&D expense was higher in the third
quarter and the first nine monthsof 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 study of NKTR-181,
preparation for the Phase 3 study of NKTR-181, the Phase 1 study of NKTR-192,
and the production of devices for the Phase 3 study of Amikacin Inhale.

General and administrative expense was $10.6 million in the third quarter of
2013 as compared to $10.1 million in the third quarter of 2012. G&A expense
in the first nine months of 2013 was $30.7 million as compared to $30.8
million for the same period in 2012.

Non-cash interest expense incurred in connection with the 2012 royalty
monetization was $5.6 million and $16.6 million in the third quarter and first
nine months of 2013, respectively, as compared to $5.5 million and $12.6
million in the third quarter and first nine months of 2012, respectively.

Net loss in the third quarter of 2013 was $16.5 million or $0.14 per share as
compared to a net loss of $43.5 million or $0.38 per share in the third
quarter of 2012. Net loss in the first nine months of 2013 was $114.4 million
or $0.99 per share as compared to a net loss of$118.9 million or $1.04 per
share in the first nine months of 2012.

Conference Call to Discuss Third 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, November 7,
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, December 9, 2013.

To access the conference call, follow these instructions:
Dial: (877) 881.2183 (U.S.); (970) 315.0453 (international)
Passcode: 91919000 (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 (NASDAQ: NKTR) 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 pain, oncology 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. For naloxegol, the MAA in Europe and
the NDS in Canada have been accepted for filing, and an NDA has been submitted
for filing in the U.S. 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 molecule for chronic pain conditions,
has completed Phase 2 development in osteoarthritis patients with chronic knee
pain. NKTR-192, a novel mu-opioid analgesic molecule 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 a number of Phase
2 studies. 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
potential for health authority approvals of naloxegol, the projected timeframe
in which the NKTR-181 Phase 3 clinical study would be commenced, the timing of
regulatory filings with health authorities for BAX 855, 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,
regulatory approval decisions, 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; (v) patents may not issue from our patent applications our
proprietary or partnered drug candidates, patents that have issued may not be
enforceable, or additional intellectual property licenses from third parties
may be required; (vi) the outcome of any existing or future intellectual
property or other litigation related to our proprietary or partnered drug
candidates; and (vii) certain other important risks and uncertainties set
forth in our Quarterly Report on Form 10-Q to be filed with the Securities and
Exchange Commission on November 7, 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 THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
ASSETS                                   September 30,    December 31,   ^(1)
                                         2013             2012
Current assets:
     Cash and cash equivalents           $         $      
                                            65,411        25,437
     Short-term investments              118,139          251,757
     Accounts receivable                 4,557            5,805
     Inventory                           15,076           18,269
     Other current assets                4,759            13,363
               Total current assets      207,942          314,631
Restricted cash                          25,000           25,000
Property and equipment, net              65,082           72,215
Goodwill                                 76,501           76,501
Other assets                             8,510            9,443
     Total assets                        $         $      
                                           383,035        497,790
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
     Accounts payable                    $         $      
                                             3,723       2,863
     Accrued compensation                13,910           8,773
     Accrued expenses                    10,771           8,008
     Accrued clinical trial expenses     15,239           17,500
     Deferred revenue, current portion   21,300           21,896
     Interest payable                    3,167            7,083
     Other current liabilities           12,803           12,414
               Total current             80,913           78,537
               liabilities
Senior secured notes                     125,000          125,000
Capital lease obligations, less current  9,007            11,607
portion
Liability related to sale of future      125,167          128,266
royalties, less current portion
Deferred revenue, less current portion   82,233           96,551
Deferred gain                            1,748            2,404
Other long-term liabilities              9,217            8,407
               Total liabilities         433,285          450,772
Commitments and contingencies
Stockholders' equity (deficit) :
     Preferred stock                     -                -
     Common stock                        11               11
     Capital in excess of par value      1,636,162        1,617,744
     Accumulated other comprehensive     (1,689)          (357)
     loss
     Accumulated deficit                 (1,684,734)      (1,570,380)
               Total stockholders'       (50,250)         47,018
               equity (deficit)
     Total liabilities and stockholders' $         $      
     equity (deficit)                     383,035        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    Nine Months Ended
                               September 30,        September 30,
                               2013       2012       2013         2012
Revenue:
 Product sales             $ 14,672  $      $  36,806  $  
                                          8,355                   24,994
 Royalty revenue            354        498        1,030        3,966
 Non-cash royalty revenue
related to sale of future      4,523      3,427      12,744       6,895
royalties
 License, collaboration and 41,360     6,132      67,195       24,190
other revenue
Total revenue                  60,909     18,412     117,775      60,045
Operating costs and expenses:
 Cost of goods sold         12,877     7,228      29,549       23,138
 Research and development   43,914     34,016     141,762      102,302
 General and                10,643     10,068     30,700       30,750
administrative
 Impairment of long-lived   -          -          -            1,675
assets
Total operating costs and      67,434     51,312     202,011      157,865
expenses
Loss from operations           (6,525)    (32,900)   (84,236)     (97,820)
Non-operating income
(expense):
 Interest income           116        603        639          1,865
 Interest expense           (4,587)    (5,697)    (13,888)     (10,807)
 Non-cash interest expense
on liability related to sale   (5,616)    (5,487)    (16,644)     (12,641)
of future royalties
 Other income (expense),    262        156        385          913
net
Total non-operating expense,   (9,825)    (10,425)   (29,508)     (20,670)
net
Loss before provision for      (16,350)   (43,325)   (113,744)    (118,490)
income taxes
Provision for income taxes     193        222        610          439
Net loss                       $          $        $ (114,354)  $ (118,929)
                               (16,543)   (43,547)
Basic and diluted net loss per $        $      $         $    
share                          (0.14)     (0.38)    (0.99)       (1.04)
Weighted average shares
outstanding used in computing  115,812    114,915    115,557      114,699
basic and diluted net loss per
share





NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                                Nine Months Ended September
                                                30,
                                                2013           2012
Cash flows from operating activities:
Net loss                                       $            $    
                                                (114,354)      (118,929)
Adjustments to reconcile net loss to net cash used in
operating activities:
 Non-cash interest expense on liability      16,644         12,641
related to sale of future royalties
 Non-cash royalty revenue related to sale    (12,744)       (6,895)
of future royalties
 Stock-based compensation                   13,165         12,015
 Depreciation and amortization              10,882         10,810
 Impairment of long-lived assets            -              1,675
 Other non-cash transactions                 332            641
Changes in operating assets and liabilities:
 Accounts receivable                        1,248          1,027
 Inventory                                   3,193          (4,098)
 Other assets                               6,817          10,593
 Accounts payable                           697            (401)
 Accrued compensation                       5,137          (120)
 Accrued expenses                           2,741          (465)
 Accrued clinical trial expenses             (2,261)        1,247
 Deferred revenue                           (14,914)       (3,430)
 Interest payable                            (3,916)        1,528
 Other liabilities                          (4,825)        (219)
Net cash used in operating activities          (92,158)       (82,380)
Cash flows from investing activities:
 Maturities of investments                  274,011        202,768
 Purchases of investments                   (140,569)      (126,609)
 Restricted cash                            -              (25,000)
 Sale of investments                        -              5,378
 Purchases of property and equipment        (1,382)        (5,744)
Net cash provided by investing activities      132,060        50,793
Cash flows from financing activities:
 Payment of capital lease obligations       (2,201)        (1,773)
 (Repayment of) proceeds from sale of future
royalties, net of $4.4 million transaction      (3,000)        119,588
costs in 2012
 Proceeds from issuance of senior secured    -              78,006
notes, net of $4.4 million transaction costs
 Repayment of convertible subordinated       -              (172,407)
notes
 Proceeds from shares issued under equity    5,253          3,177
compensation plans
Net cash provided by financing activities      52             26,591
Effect of exchange rates on cash and cash       20             22
equivalents
Net increase (decrease) in cash and cash        39,974         (4,974)
equivalents
Cash and cash equivalents at beginning of       25,437         15,312
period
Cash and cash equivalents at end of period      $          $       
                                                65,411         10,338
Supplemental disclosure of cash flow
information:
Cash paid for interest                          $          $       
                                                17,097          9,010
Retirement of convertible subordinated notes in $        $       
exchange for senior secured notes                 -         42,548





SOURCE Nektar Therapeutics

Website: http://www.nektar.com
 
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