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Nektar Therapeutics Reports Financial Results for the Second Quarter of 2018

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Nektar Therapeutics Reports Financial Results for the Second Quarter of 2018

PR Newswire

SAN FRANCISCO, Aug. 8, 2018 /PRNewswire/ -- Nektar Therapeutics (NASDAQ:NKTR) today reported its financial results for the second quarter ended June 30, 2018.

Cash and investments in marketable securities at June 30, 2018 were $2.1 billion as compared to $353.2 million at December 31, 2017. This includes the $1.0 billion upfront payment and $850.0 million share purchase proceeds received on April 3, 2018, as a result of our Bristol-Myers Squibb collaboration for the global development and commercialization of NKTR-214.

"Over the past few months, we have reported significant progress across all areas of our pipeline, with notable milestones for our immuno-oncology, immunology and pain programs," said Howard W. Robin, President and CEO of Nektar. "Together with Bristol-Myers Squibb, we plan to initiate 20 registrational studies in nine tumor settings under our joint development plan with the first wave of studies in melanoma, renal cell carcinoma, and urothelial cancers starting this year.  We initiated our first study of NKTR-358 in patients with lupus with our partner Eli Lilly.  And importantly, we recently achieved a significant milestone for our pain program, with the FDA's acceptance of the NDA filing for NKTR-181, a first-in-class opioid analgesic."

Revenue in the second quarter of 2018 was $1.088 billion as compared to $34.6 million in the second quarter of 2017. Year-to-date revenue for 2018 was $1.126 billion as compared to $59.3 million in the first half of 2017. Revenue was higher in the second quarter and first half of 2018 as compared to the same periods in 2017 primarily because of the recognition of $1.06 billion of license revenue from the Bristol-Myers Squibb collaboration agreement.

Total operating costs and expenses in the second quarter of 2018 were $114.1 million as compared to $85.2 million in the second quarter of 2017. Total operating costs and expenses in the first half of 2018 were $238.9 million as compared to $164.4 million in the first half of 2017. Total operating costs and expenses increased primarily as a result of increased research and development (R&D) expense.

R&D expense in the second quarter of 2018 was $88.3 million as compared to $60.3 million in the second quarter of 2017.  For the first half of 2018, R&D expense was $187.8 million as compared to $121.3 million in the first half of 2017. R&D expense was higher in the second quarter and first half of 2018 as compared to the same periods in 2017 primarily because of expenses for our pipeline programs, including the continued development of NKTR-214 in Phase 1/2 studies and Phase 3 preparatory activities, costs related to the NKTR-181 New Drug Application and NKTR-181 pre-commercial manufacturing, Phase 1 clinical studies of NKTR-358, initiation of the Phase 1 study of NKTR-262 in combination with NKTR-214 and IND-enabling activities for NKTR-255.

General and administrative (G&A) expense was $20.3 million in the second quarter of 2018 as compared to $16.0 million in the second quarter of 2017.  G&A expense in the first half of 2018 was $38.9 million as compared to $28.0 million in the first half of 2017.  G&A expense was higher in the second quarter and first half of 2018 as compared to the same periods in 2017 primarily due to an increase in non-cash stock based compensation expense.

Net income in the second quarter of 2018 was $971.5 million or $5.33 diluted earnings per share as compared to a net loss of $59.9 million or $0.39 basic and diluted loss per share in the second quarter of 2017.  Net income in the first half of 2018 was $875.7 million or $4.91 diluted earnings per share as compared to a net loss of $123.7 million or $0.80 basic and diluted loss per share in the first half of 2017.

Second Quarter 2018 and Recent Business Highlights

  • In July, the U.S. Food and Drug Administration filed and accepted a New Drug Application (NDA) for NKTR-181, a first-in-class opioid analgesic, to treat chronic low back pain in adult patients new to opioid therapy. The NDA has been assigned a PDUFA (Prescription Drug User Fee Act) target action date of May 29, 2019 by the FDA.
  • In June, Nektar presented data for NKTR-181 at the 80th Annual Scientific Meeting of the College on Problems of Drug Dependence. The data show that NKTR-181 consistently demonstrates low abuse potential.
  • In June, Nektar presented data from the Phase 1 dose escalation and preliminary data from the Phase 2 dose expansion phase of the ongoing PIVOT study for NKTR-214 in combination with Opdivo (nivolumab) at the 2018 ASCO Annual Meeting. This data showed that pre-specified efficacy criteria were achieved in three tumor types: first-line melanoma, first-line renal cell carcinoma and first-line urothelial cancer. Nektar and Bristol-Myers Squibb expect to initiate a Phase 3 registrational trial in first-line advanced melanoma patients in Q3 2018, and pivotal studies are also being designed in renal cell carcinoma and urothelial cancer.
  • In May, Nektar announced a clinical collaboration with Syndax Pharmaceuticals to evaluate NKTR-214 in combination with entinostat, an oral, small molecule Class 1 specific HDAC inhibitor, in patients with metastatic melanoma who have previously progressed on treatment with an anti-PD-1 agent.
  • In May, Nektar began dosing patients with systemic lupus erythematosus in a Phase 1b multiple ascending dose study of NKTR-358, a first-in-class regulatory T cell stimulator, designed to correct the underlying immune system dysfunction found in patients with immune disorders.

The company also announced the following upcoming presentations during the second half of 2018:

American Chemical Society Annual Meeting, Boston, MA:

  • Oral Presentation: "Confronting the Opioid Epidemic: Novel Treatments for Chronic Pain"
    • Presenter: Stephen Doberstein, Ph.D., Nektar Therapeutics
    • Date: Monday, August, 20, 2018, 1:35 p.m. - 2:05 p.m., Eastern Daylight Time

SMI Immuno-Oncology Conference, London, UK:

  • Oral Presentation: "Enhanced cancer vaccine effectiveness with NKTR-214, a CD122-biased cytokine"
    • Presenter: Loui Marakamutil, Ph.D., Nektar Therapeutics
    • Date: September 26, 2018, 11:00 a.m., British Summer Time

Ninth American Conference on Pharmacometrics, San Diego, CA:

  • Poster: "NKTR-255 Exhibits Target Mediated Drug Disposition and Stimulates Proliferation of Cytotoxic Immune Cells in Cyonomolgous Monkeys", Bhasi, K., et al.
    • Date: October 6-12, 2018

ESMO 2018 Congress, Munich, Germany:

  • Poster 362TiP: "ATTAIN: Phase 3 study of etirinotecan pegol (EP) vs treatment of physician's choice (TPC) in patients (pts) with metastatic breast cancer (MBC) who have stable brain metastases (BM) previously treated with an anthracycline, a taxane, and capecitabine (ATC).", Tripathy, D., et al.
    • Date: October 22, 2018, 12:45-13:45 p.m. Central European Summer Time

  • Poster 446TiP: "REVEAL: A phase 1/2, open-label, multicenter, dose escalation and dose expansion study of NKTR-262 [TLR 7/8 agonist] plus NKTR-214 [CD122-biased agonist] with or without nivolumab (nivo) in patients (pts) with locally advanced or metastatic solid tumor malignancies.", Diab, A., et al.
    • Date: October 22, 2018, 12:45-13:45 p.m. Central European Summer Time

Conference Call to Discuss Second Quarter 2018 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, August 8, 2018.

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 Investors section of the Nektar website: http://ir.nektar.com/.  The web broadcast of the conference call will be available for replay through Monday, September 10, 2018.

To access the conference call, follow these instructions:
Dial: (877) 881.2183 (U.S.); (970) 315.0453 (international)
Passcode: 7099844 (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 Investors page at the Nektar website as soon as practical after the conclusion of the conference call.

About Nektar Therapeutics
Nektar Therapeutics is a research-based development stage biopharmaceutical company whose mission is to discover and develop innovative medicines to address the unmet medical needs of patients. Our R&D pipeline of new investigational medicines includes treatments for cancer, auto-immune disease and chronic pain. We leverage Nektar's proprietary and proven chemistry platform in the discovery and design of our new therapeutic candidates. 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 uncertain or forward-looking statements which can be identified by words such as: "expect," "may," "will," "design," "develop," and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding the potential therapeutic benefits of and future development plans for our products (including NKTR214, NKTR-181, NKTR-358, NKTR-262 and NKTR-255) and the initiation of Phase 3 registrational trials.  Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions and 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 and you should not rely on such statements. Important factors that could cause our actual results to differ materially from those indicated in the forward-looking statements include: (i) clinical study outcomes remain very unpredictable and it is possible that a clinical study could fail even after positive interim data is observed; (ii) the data package required for approval of an NDA to the FDA is very uncertain and difficult to predict due to broad FDA regulatory discretion, and changing FDA regulatory guidelines; (iii) regulations concerning and controlling access to opioid-based pharmaceuticals are strict and it is difficult to predict which scheduling category will apply to NKTR-181 if regulatory approval is achieved; (iv) patents may not issue from our patent applications for our drug candidates, patents that have issued may not be enforceable, or additional intellectual property licenses from third parties may be required; and (v) certain other important risks and uncertainties set forth in our Annual Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2018.  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.

Contacts:

For Investors:

Jennifer Ruddock of Nektar Therapeutics
415-482-5585

Jodi Sievers of Nektar Therapeutics
415-482-5593

For Media:

Dan Budwick of 1AB
973-271-6085
dan@1abmedia.com

 

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


ASSETS


June 30, 2018


December 31, 2017

(1)

Current assets:







Cash and cash equivalents


$       911,125


$                      4,762



Short-term investments


912,683


291,370



Accounts receivable, net


35,315


5,014



Inventory


11,884


10,726



Other current assets


34,940


14,948




Total current assets


1,905,947


326,820








Long-term investments


282,277


57,088


Property, plant and equipment, net


45,000


47,463


Goodwill


76,501


76,501


Other assets


3,362


994




Total assets


$   2,313,087


$                 508,866








LIABILITIES AND STOCKHOLDERS' EQUITY










Current liabilities:







Accounts payable


$         10,674


$                      4,782



Accrued compensation


18,980


8,263



Accrued clinical trial expenses


20,028


9,461



Other accrued expenses


14,993


10,064



Interest payable


4,144


4,198



Deferred revenue, current portion


17,988


18,949



Other current liabilities


10,090


446




Total current liabilities


96,897


56,163








Senior secured notes, net


246,078


245,207


Liability related to the sale of future royalties, net


88,867


94,655


Deferred revenue, less current portion


13,780


19,021


Other long-term liabilities


7,051


5,992




Total liabilities


452,673


421,038








Commitments and contingencies












Stockholders' equity:







Preferred stock


-


-



Common stock


17


15



Capital in excess of par value


3,094,095


2,207,865



Accumulated other comprehensive loss


(4,002)


(2,111)



Accumulated deficit


(1,229,696)


(2,117,941)




Total stockholders' equity


1,860,414


87,828



Total liabilities and stockholders' equity


$   2,313,087


$                 508,866



(1) The consolidated balance sheet at December 31, 2017 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.

 

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share information)

(Unaudited)












Three Months Ended June 30,


Six Months Ended June 30,



2018


2017


2018


2017


Revenue:









   Product sales


$           5,863


$                   15,693


$    12,158


$    20,449

   Royalty revenue 


8,563


7,434


19,639


14,651

   Non-cash royalty revenue related to sale of future royalties


9,045


6,638


15,965


13,301

   License, collaboration and other revenue


1,064,246


4,824


1,077,973


10,916

Total revenue


1,087,717


34,589


1,125,735


59,317










Operating costs and expenses:









   Cost of goods sold


5,522


8,989


12,168


15,120

   Research and development


88,334


60,260


187,758


121,318

   General and administrative


20,261


15,996


38,948


27,972

Total operating costs and expenses


114,117


85,245


238,874


164,410










Income (loss) from operations


973,600


(50,656)


886,861


(105,093)










Non-operating income (expense):









   Interest expense


(5,385)


(5,510)


(10,725)


(10,912)

   Non-cash interest expense on liability related to sale of future royalties


(4,975)


(4,512)


(9,994)


(9,064)

  Interest income and other income (expense), net


12,105


906


13,676


1,564

Total non-operating income (expense), net


1,745


(9,116)


(7,043)


(18,412)










Income (loss) before provision for income taxes


975,345


(59,772)


879,818


(123,505)










Provision for income taxes


3,885


99


4,150


232

Net income (loss)


$       971,460


$                  (59,871)


$  875,668


$ (123,737)










Net income (loss) per share:









   Basic


$             5.67


$                      (0.39)


$         5.27


$       (0.80)

   Diluted


$             5.33


$                      (0.39)


$         4.91


$       (0.80)










Weighted average shares outstanding used in computing net income (loss) per share:









   Basic


171,378


155,352


166,160


154,514

   Diluted


182,291


155,352


178,281


154,514

 

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)




Six Months Ended June 30,



2018


2017

Cash flows from operating activities:





Net income (loss)


$                 875,668


$ (123,737)

Adjustments to reconcile net income (loss) to net cash provided by

(used in) operating activities:


Non-cash royalty revenue related to sale of future royalties


(15,965)


(13,301)

Non-cash interest expense on liability related to sale of future royalties 


9,994


9,064

Stock-based compensation 


40,608


16,283

Depreciation and amortization 


5,115


8,287

Other non-cash transactions


(3,991)


(1,089)

Changes in operating assets and liabilities:





Accounts receivable, net 


(19,557)


11,564

Inventory


(1,158)


101

Other assets 


(14,282)


2,280

Accounts payable 


5,791


3,221

Accrued compensation 


10,717


(3,934)

Accrued clinical trial expenses


10,567


(1,275)

Other accrued expenses 


4,904


2,388

Interest payable


(54)


(54)

Deferred revenue 


(6,249)


(3,887)

Other liabilities 


5,068


1,000

Net cash provided by (used in) operating activities 


907,176


(93,089)






Cash flows from investing activities:





Purchases of investments 


(989,850)


(121,135)

Maturities of investments 


132,779


147,558

Sales of investments 


11,963


8,823

Purchases of property, plant and equipment 


(3,730)


(6,344)

Sales of property, plant and equipment 


2,633


-

Net cash (used in) provided by investing activities 


(846,205)


28,902






Cash flows from financing activities:





Payment of capital lease obligations 


-


(1,369)

Issuance of common stock


790,231


-

Proceeds from shares issued under equity compensation plans


55,208


22,016

Net cash provided by financing activities 


845,439


20,647






Effect of exchange rates on cash and cash equivalents 


(47)


49

Net increase (decrease) in cash and cash equivalents 


906,363


(43,491)

Cash and cash equivalents at beginning of period


4,762


59,640

Cash and cash equivalents at end of period


$                 911,125


$    16,149






Supplemental disclosure of cash flow information:





  Cash paid for interest


$                      9,795


$    10,010

 

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SOURCE Nektar Therapeutics

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