Nektar Therapeutics Reports Second Quarter 2010 Financial Results

SAN CARLOS, Calif., July 28 /PRNewswire-FirstCall/ -- Nektar Therapeutics (Nasdaq: NKTR) today reported its financial results for the second quarter ended June 30, 2010.

Cash, cash equivalents, and short-term investments at June 30, 2010 were $338.2 million as compared to $362.0 million at March 31, 2010.

Revenue for the second quarter of 2010 increased to $42.6 million as compared to $13.0 million in the second quarter of 2009.  The increase in revenue year over year is largely the result of the amortization of the $125 million milestone payment received from AstraZeneca in September 2009 under the new partnership agreement for NKTR-118.  

Total operating costs and expenses in the second quarter of 2010 declined by 6% to $40.7 million, compared to $43.5 million in the second quarter 2009.

Research and development expense increased to $25.6 million in the second quarter 2010 as compared to $24.0 million for the same quarter in 2009. General and administrative expense was $10.2 million in the second quarter 2010 as compared to $9.1 million in the second quarter of 2009.

“The number of drug candidates advanced by Nektar in just three years highlights the unique potential of our polymer conjugation technology to create a steady stream of valuable product opportunities,” said Howard W. Robin, President and Chief Executive Officer of Nektar. “In the second quarter, we reported compelling Phase 2 data for our lead oncology compound, NKTR-102, in both ovarian and breast cancer patients. With a deep pipeline in various stages of development, ranging from preclinical compounds to candidates preparing for Phase 3, Nektar is well-positioned for continued success in 2010.”  

Net loss for the second quarter ended June 30, 2010 was $0.5 million or $0.01 per share as compared to a net loss of $32.1 million or $0.35 per share in the second quarter of 2009.

Conference Call to Discuss Second Quarter 2010 Financial Results

A conference call to review results will be held today, Wednesday, July 28, 2010 at 2 PM Pacific Time.  To access the conference call, follow these instructions:

Dial: (866) 788-0541 (U.S.); (857) 350-1679 (international)

Passcode: 96449158

An audio replay will also be available shortly following the call through Thursday, August 12, 2010 and can be accessed by dialing (888) 286-8010 (U.S.); or (617) 801-6888 (international) with a passcode of 67523786.

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 areas. In the area of pain, Nektar has an exclusive worldwide license agreement with AstraZeneca for Nektar's oral NKTR-118 development program to treat opioid-induced constipation and its NKTR-119 development program for the treatment of pain without constipation side effects.  The company has additional pain compounds in preclinical studies.  In oncology, NKTR-102, a novel topoisomerase I-inhibitor, is being evaluated in Phase 2 clinical studies for the treatment of ovarian, breast and colorectal cancers. NKTR-105, a novel anti-mitotic agent, is in a Phase 1 clinical study in cancer patients with refractory solid tumors.

Nektar's technology has enabled nine approved products in the U.S. or Europe through partnerships with leading biopharmaceutical companies, including UCB's Cimzia(R) for Crohn's disease and rheumatoid arthritis, Roche's PEGASYS(R) for hepatitis C and Amgen's Neulasta(R) for neutropenia.

Nektar is headquartered in San Carlos, California, with additional R&D 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.

This press release contains forward-looking statements that reflect management's current views regarding the progress and potential of Nektar's pipeline of proprietary drug candidates, the value and potential of the Nektar's technology platform, and the value and potential of certain of Nektar's collaborations with third parties.  These forward-looking statements involve numerous risks and uncertainties, including but not limited to: (i) Nektar's proprietary product candidates and those of its collaboration partners are in various stages of clinical development and the risk of failure is high and can unexpectedly occur at any stage of development prior to regulatory approval for numerous reasons including, without limitation, safety and efficacy findings even after initial preclinical and clinical results have been positive; (ii) the timing or success of the commencement or end of clinical trials and commercial launch of partnered products may be delayed or unsuccessful due to slower than anticipated patient enrollment, drug manufacturing challenges, changing standards of care, clinical trial design, clinical outcomes, or delay or failure in obtaining regulatory approval in one or more important markets; (iii) Nektar's patent applications for its proprietary or partner product candidates may not issue, patents that have issued may not be enforceable, or additional intellectual property licenses from third parties may be required in the future; (iv) the outcome of any future intellectual property or other litigation related to Nektar's proprietary product candidates or complex commercial agreements; (v) if Nektar is unable to establish and maintain collaboration partnerships on attractive commercial terms, our business, results of operations and financial condition could suffer; and (vi) certain other important risks and uncertainties set forth in Nektar's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 to be filed on or about July 28, 2010, the Current Report on Form 8-K filed today, and the most recent Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 filed on May 5, 2010.  Actual results could differ materially from the forward-looking statements contained in this press release.  Nektar undertakes no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise.

Nektar Investor Inquiries:

Jennifer Ruddock/Nektar Therapeutics

(650) 631-4954


Susan Noonan/SA Noonan Communications, LLC

(212) 966-3650


Nektar Media Inquiries:

Karen Bergman/BCC Partners

(650) 575-1509


Michelle Corral/BCC Partners

(415) 794-8662



NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)





ASSETS

June 30,
2010


December 31,
2009(1)

Current assets:





Cash and cash equivalents

$        23,244


$                 49,597


Short-term investments

314,976


346,614


Accounts receivable

9,446


4,801


Inventory

9,777


6,471


Other current assets

6,363


6,183



Total current assets

$      363,806


$               413,666







Property and equipment, net

88,223


78,263

Goodwill

76,501


76,501

Other assets

2,108


7,088


Total  assets

$      530,638


$               575,518







LIABILITIES AND STOCKHOLDERS' EQUITY










Current liabilities:





Accounts payable

$          4,627


$                   3,066


Accrued compensation

7,908


10,052


Accrued expenses

10,189


4,354


Accrued clinical trial expenses

13,349


14,167


Deferred revenue, current portion

65,342


115,563


Other current liabilities

6,051


5,814



Total current liabilities

$      107,466


$               153,016







Convertible subordinated notes

214,955


214,955

Capital lease obligations

17,887


18,800

Deferred revenue

71,910


76,809

Deferred gain

4,589


5,027

Other long-term liabilities

4,302


4,544



Total liabilities

$      421,109


$               473,151







Commitments and contingencies










Stockholders' equity:





Preferred stock

$                -


$                         -


Common stock

9


9


Capital in excess of par value

1,342,195


1,327,942


Accumulated other comprehensive income

581


1,025


Accumulated deficit

(1,233,256)


(1,226,609)



Total stockholders' equity

$      109,529


$               102,367


Total liabilities and stockholders' equity

$      530,638


$               575,518







(1) The consolidated balance sheet at December 31, 2009 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


Six Months Ended



June 30,


June 30,



2010


2009


2010


2009



















Revenue:








Product sales and royalties

$ 11,154


$  10,525


$ 14,738


$  16,995

License, collaboration and other

31,409


2,463


61,062


5,704

Total revenue

42,563


12,988


75,800


22,699










Operating costs and expenses:








Cost of goods sold

4,889


10,379


9,185


16,005

Research and development

25,600


24,002


48,886


47,365

General and administrative

10,207


9,087


19,220


20,107

Total operating costs and expenses

40,696


43,468


77,291


83,477










Income (loss) from operations

1,867


(30,480)


(1,491)


(60,778)










Non-operating income (expense):








Interest income

393


950


856


2,600

Interest expense

(2,909)


(2,948)


(5,860)


(6,285)

Other income, net

163


203


187


248

Total non-operating expense

(2,353)


(1,795)


(4,817)


(3,437)










Loss before provision (benefit) for income taxes

(486)


(32,275)


(6,308)


(64,215)










Provision (Benefit) for income taxes

31


(206)


339


(339)










Net loss

$    (517)


$ (32,069)


$ (6,647)


$ (63,876)










Basic and diluted net loss per share

$   (0.01)


$     (0.35)


$   (0.07)


$     (0.69)










Shares used in computing basic and









diluted net loss per share

94,065


92,556


93,849


92,536



NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)






Six Months Ended June 30,


2010


2009

Cash flows from operating activities:




Net loss

$   (6,647)


$ (63,876)

Adjustments to reconcile net loss to net cash used in operating activities:




Depreciation and amortization

8,334


7,359

Stock-based compensation

8,105


4,691

Deferred rent

542


-

Other non-cash transactions

(747)


56

Changes in operating assets and liabilities:




Accounts receivable

(4,645)


2,362

Inventory

(3,306)


(791)

Other assets

(136)


1,284

Accounts payable

2,183


(5,513)

Accrued compensation

(2,144)


(4,687)

Accrued expenses

1,012


(1,344)

Accrued clinical trial expenses

(818)


(5,512)

Deferred revenue

(55,120)


(4,111)

Other liabilities

(729)


(995)

Net cash used in operating activities

$ (54,116)


$ (71,077)





Cash flows from investing activities:




Purchases of investments

(218,275)


(186,016)

Sales of investments

8,197


7,627

Maturities of investments

241,256


221,948

Transaction costs from Novartis pulmonary asset sale

-


(4,440)

Purchases of property and equipment

(8,796)


(7,999)

Net cash provided by investing activities

$  22,382


$   31,120





Cash flows from financing activities:




Payments of loan and capital lease obligations

(731)


(616)

Proceeds from issuances of common stock

6,148


90

Net cash provided by (used in) financing activities

$    5,417


$      (526)

Effect of exchange rates on cash and cash equivalents

(36)


(109)

Net decrease in cash and cash equivalents

$ (26,353)


$ (40,592)

Cash and cash equivalents at beginning of period

49,597


155,584

Cash and cash equivalents at end of period

$  23,244


$ 114,992



SOURCE Nektar Therapeutics

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