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