Nektar Therapeutics Reports Fourth Quarter and Year-End 2013 Financial Results

Nektar Therapeutics Reports Fourth Quarter and Year-End 2013 Financial Results

PR Newswire

SAN FRANCISCO, Feb. 26, 2014

SAN FRANCISCO, Feb. 26, 2014 /PRNewswire/ --Nektar Therapeutics (Nasdaq:
NKTR) today reported its financial results for the fourth quarter and year
ended December 31, 2013.

Cash and investments in marketable securities at December 31, 2013 were $262.0
million as compared to $302.2 million at December 31, 2012. The 2013 year-end
cash balance does not include net proceeds of $117.2 million received from the
completion of a public equity offering in January 2014.

"2014 has the potential to be a transformative year for Nektar as several of
our highly valuable late-stage programs advance toward approval or filing,"
said Howard W. Robin, President and Chief Executive Officer of Nektar. "For
naloxegol, our partner AstraZeneca has filed for regulatory approvals in the
U.S., Europe and Canada. Naloxegol could be the first once-daily oral therapy
approved to treat opioid-induced constipation. The Phase 3 study for BAX 855,
a longer-acting PEGylated Factor VIII therapy, has completed enrollment and
our partner Baxter intends to file the BLA by the end of 2014. Finally, the
NKTR-102 BEACON Phase 3 study in advanced breast cancer successfully passed
its interim efficacy analysis. Topline data from this pivotal study is
expected by early 2015 and we intend to file NKTR-102 in both the U.S. and
Europe in 2015."

Revenue for the fourth quarter of 2013 was $31.1 million as compared to $21.1
million in the fourth quarter of 2012. Revenue for the year ended December 31,
2013 was $148.9 million as compared to $81.2 million in 2012. Revenues
included non-cash royalty revenue, related to our 2012 royalty monetization,
of $9.3 million and $22.1 million in the fourth quarter and the full year of
2013, respectively, and $3.9 million and $10.8 million in the fourth quarter
and the full year of 2012. This non-cash royalty revenue is offset by non-cash
interest expense. The increase in revenue in the fourth quarter of 2013 as
compared to the fourth quarter of 2012 is primarily due to increased
productshipments to one ofour collaboration partners. In addition, the
increase in revenue in 2013 as compared to 2012 is primarily due to a $25.0
million milestone achieved in September 2013 upon the acceptance of the
naloxegol MAA filing in Europe as well as 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 fourth quarter of 2013 were $67.0
million as compared to $64.5 million in the fourth quarter of 2012. Total
operating costs and expenses for the year ended December 31, 2013 were $269.1
million as compared to $222.4 million in 2012. The increase in 2013 as
compared to 2012 is due primarily to increased clinical development expenses.

Research and development expense in the fourth quarter of 2013 was $48.2
million as compared to $46.4 million for the fourth quarter of 2012. For the
year ended December 31, 2013, R&D expense was $190.0 million as compared to
$148.7 million in 2012. R&D expense was higher in the year ended December 31,
2013 as compared to 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 $9.8 million in the fourth quarter of
2013 as compared to $10.9 million in the fourth quarter of 2012. G&A expense
for the year ended December 31, 2013 was $40.5 million as compared to $41.6
million in 2012.

Non-cash interest expense incurred in connection with the 2012 royalty
monetization was $5.7 million and $22.3 million in the fourth quarter and year
ended December 31, 2013, respectively, as compared to $5.4 million and $18.1
million in the fourth quarter and year ended December 31, 2012, respectively.

Net loss for the fourth quarter ended December 31, 2013 was $47.7 million or
$0.41 loss per share. Net loss for the year ended December 31, 2013 was
$162.0 million or $1.40 loss per share. 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.

Conference Call to Discuss Fourth Quarter and Year-End 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, Wednesday, February
26, 2014.

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, March 31, 2014.

To access the conference call, follow these instructions:

Dial: (877) 881.2183 (U.S.); (970) 315.0453 (international)
Passcode: 72309374 (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 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 been filed for regulatory approvals in the U.S., Europe and Canada 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 molecule for chronic pain conditions, has completed Phase
2 development in osteoarthritis patients with chronic knee pain. NKTR-171, a
new sodium channel blocker being developed as an oral therapy for the
treatment of peripheral neuropathic 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,
colorectal, lung and brain 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.
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 for patients with hemophilia
A.

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.

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 regulatory approval of naloxegol;
potential future regulatory filings by Baxter Healthcare for BAX 855; the
timing of availability of topline overall survival data for the NKTR-102
BEACON study and our plans for future regulatory filings if the Phase 3 data
is positive; 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) the United States Food and Drug
Administration (FDA) is currently planning to hold an advisory committee
meeting in 2014 to discuss the cardiovascular safety and potential additional
safety study requirements for the peripheral mu-opioid receptor antagonist
class of drugs, including naloxegol, and the outcome of this advisory
committee and the subsequent FDA review determinations for naloxegol will have
a significant impact on the Company's financial position based on significant
potential regulatory and launch milestone opportunities and potential
repayment obligations; (iv) 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; (v) 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 (vi) 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 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 Media Inquiries:  
Brianne Cannon/MSL                                         (415) 512-0770

NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
ASSETS                                December 31,     December 31,   ^(1)
                                      2013             2012
Current assets:
      Cash and cash equivalents       $          $      
                                         39,067        25,437
      Short-term investments          197,959          251,757
      Accounts receivable, net        2,229            5,805
      Inventory                       13,452           18,269
      Other current assets            5,175            13,363
                   Total current      257,882          314,631
                   assets
Restricted cash                       25,000           25,000
Property and equipment, net           66,974           72,215
Goodwill                              76,501           76,501
Other assets                          8,170            9,443
      Total assets                    $          $      
                                        434,527        497,790
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
      Accounts payable                $          $      
                                          9,115       2,863
      Accrued compensation            14,254           8,773
      Accrued expenses                6,243            8,008
      Accrued clinical trial          16,905           17,500
      expenses
      Deferred revenue, current       23,664           21,896
      portion
      Interest payable                6,917            7,083
      Liability related to sale of
      future royalties, current       7,000            3,000
      portion
      Other current liabilities       14,123           9,414
                   Total current      98,221           78,537
                   liabilities
Senior secured notes                  125,000          125,000
Capital lease obligations, less       8,049            11,607
current portion
Liability related to receipt of       70,000           -
refundable milestone payment
Liability related to sale of future   121,520          128,266
royalties, less current portion
Deferred revenue, less current        82,384           96,551
portion
Other long-term liabilities           19,256           10,811
                   Total              524,430          450,772
                   liabilities
Commitments and contingencies
Stockholders' equity (deficit) :
      Preferred stock                 -                -
      Common stock                    11               11
      Capital in excess of par        1,643,660        1,617,744
      value
      Accumulated other               (1,181)          (357)
      comprehensive loss
      Accumulated deficit             (1,732,393)      (1,570,380)
                   Total
                   stockholders'      (89,903)         47,018
                   equity
                   (deficit)
      Total liabilities and           $          $      
      stockholders' equity              434,527        497,790
      (deficit)
(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        Twelve Months Ended
                            December 31,             December 31,
                            2013         2012         2013         2012
Revenue:
Product sales         $        $       $       $     
                            8,040        10,405        44,846     35,399
 Royalty revenue       118          908          1,148        4,874
 Non-cash royalty
revenue related to sale of  9,311        3,896        22,055       10,791
future royalties
 License,
collaboration and other     13,677       5,937        80,872       30,127
revenue
Total revenue               31,146       21,146       148,921      81,191
Operating costs and
expenses:
 Cost of goods sold    8,960        7,290        38,509       30,428
 Research and          48,248       46,373       190,010      148,675
development
 General and           9,832        10,864       40,532       41,614
administrative
 Impairment of         -            -            -            1,675
long-lived assets
Total operating costs and   67,040       64,527       269,051      222,392
expenses
Loss from operations        (35,894)     (43,381)     (120,130)    (141,201)
Non-operating income
(expense):
 Interest income      93           450          732          2,315
 Interest expense      (4,565)      (4,682)      (18,453)     (15,489)
 Non-cash interest
expense on liability        (5,665)      (5,416)      (22,309)     (18,057)
related to sale of future
royalties
 Other income          7            70           392          983
(expense), net
Total non-operating         (10,130)     (9,578)      (39,638)     (30,248)
expense, net
Loss before provision for   (46,024)     (52,959)     (159,768)    (171,449)
income taxes
Provision (benefit) for     1,635        (33)         2,245        406
income taxes
Net loss                    $         $        $        $    
                            (47,659)    (52,926)    (162,013)    (171,855)
Basic and diluted net loss  $       $       $       $     
per share                   (0.41)       (0.46)      (1.40)     (1.50)
Weighted average shares
outstanding used in         116,259      115,179      115,732      114,820
computing basic and
diluted net loss per share

NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                                  Twelve Months Ended December
                                                  31,
                                                  2013             2012
Cash flows from operating activities:
 Net loss                                       $             $   
                                                  (162,013)       (171,855)
 Adjustments to reconcile net loss to net cash
used in operating activities:
Non-cash royalty revenue related to sale of       (22,055)         (10,791)
future royalties
Non-cash interest expense on liability related to 22,309           18,057
sale of future royalties
Stock-based compensation                         17,708           16,199
Depreciation and amortization                    14,275           14,508
Impairment of long-lived assets                  -                1,675
Other non-cash transactions                       664              845
 Changes in operating assets and
liabilities:
Accounts receivable, net                          3,576            (867)
Inventory                                         4,817            (5,613)
Other assets                                     6,423            6,031
Accounts payable                                 6,199            (122)
Accrued compensation                             5,481            (4,034)
Accrued expenses                                 (1,915)          1,495
Accrued clinical trial expenses                   (595)            5,547
Deferred revenue                                 (12,399)         (9,384)
Interest payable                                  (166)            5,278
Liability related to receipt of refundable        70,000           -
milestone payment
Other liabilities                                9,164            3,275
 Net cash used in operating                      (38,527)         (129,756)
activities
Cash flows from investing activities:
Maturities of investments                        319,181          307,887
Purchases of investments                         (268,068)        (164,662)
Sales of investments                             2,887            5,378
Restricted cash                                  -                (25,000)
Purchases of property and equipment              (4,091)          (10,583)
 Net cash provided by investing                  49,909           113,020
activities
Cash flows from financing activities:
Payment of capital lease obligations             (2,992)          (2,437)
(Repayment of) proceeds from sale of future
royalties, net of $4.4 million of transaction     (3,000)          119,588
costs in 2012
Proceeds from issuance of senior secured notes,   -                77,940
net of $4.5 million of issuance costs
Repayment of convertible subordinated             -                (172,407)
notes
Proceeds from shares issued under equity          8,208            4,117
compensation plans
 Net cash provided by financing                  2,216            26,801
activities
 Effect of exchange rates on cash and cash       32               60
equivalents
 Net increase in cash and cash                   13,630           10,125
equivalents
 Cash and cash equivalents at                    25,437           15,312
beginning of period
 Cash and cash equivalents at end of             $            $    
period                                            39,067           25,437
Supplemental disclosure of cash flow information:
 Cash paid for interest                          $            $    
                                                  17,590           9,620
 Cash paid for income taxes                      $           $    
                                                  1,014            1,021
 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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