Full Press Release Details
Nektar Therapeutics Reports Financial Results for the Third Quarter of 2016
SAN FRANCISCO, Nov. 3, 2016 /PRNewswire/ Nektar Therapeutics (Nasdaq: NKTR) today reported its financial results for the third quarter ended September
Cash and investments in marketable securities at September 30, 2016 were $253.5 million as compared to $308.9 million at December 31, 2015. Our
cash and investments in marketable securities at September 30, 2016 do not include net proceeds of approximately $189.1 million from the recent sale and issuance of our common stock on October 24, 2016.
Our pipeline is rapidly advancing with several important data catalysts and potential approvals expected over the next several quarters, said
Howard W. Robin, President and Chief Executive Officer of Nektar. With the positive clinical results from our ongoing Phase 1 study of NKTR-214, we have now demonstrated that NKTR-214 is the first investigational medicine in immuno-oncology
that selectively stimulates the in vivo proliferation of endogenous tumor-killing lymphocytes within the tumor micro-environment. In Q3, these data led to a broad clinical collaboration with Bristol-Myers Squibb to evaluate combination regimens
with their anti-PD-1 agent in five different tumor types and at least seven indications. Within the next two quarters, we will have Phase 3 data for four programs: two Bayer anti-infective programs, Ophthotech s Fovista in wet AMD, and our
own proprietary pain program, NKTR-181, in chronic low back pain. We are also expecting a decision from the European CHMP on conditional approval of ONZEALD by the end of Q1 2017.
Year-to-date revenue for 2016 was $128.0 million as compared to $191.4 million in the first nine months of 2015. Revenue in 2016 included recognition of
$31.0 million from AstraZeneca as a result of its sublicense of MOVENTIG (naloxegol) to ProStrakan (Kyowa Kirin) in Europe. In addition, product sales, royalty revenue, and non-cash
royalty revenue increased in the first nine months of 2016 compared to the first nine months of 2015. Revenue in 2015 included recognition of $90.0 million of the $100.0 million milestone payment from AstraZeneca following the first commercial
sale of MOVANTIK in the U.S. in Q1 2015 and the $40.0 million milestone payment from AstraZeneca following the first commercial sale of MOVENTIG in the EU in Q3 2015. Revenue in the third quarter of 2016 was $36.3 million as compared to $60.0
million in the third quarter of 2015.
Revenue included non-cash royalty revenue, related to our 2012 royalty monetization, of $7.7 million and $22.3
million in the third quarter and first nine months of 2016, respectively, and $6.1 million and $14.8 million in the third quarter and first nine months of 2015, respectively. This non-cash royalty revenue is offset by non-cash interest expense also
incurred in connection with the 2012 royalty monetization of $4.9 million and $14.9 million in the third quarter and first nine months of 2016, respectively and $5.2 million and $15.4 million in the third quarter and first nine months of 2015,
Total operating costs and expenses in the third quarter of 2016 were $69.2 million as compared to $59.5 million in the third quarter of
2015. Year-to-date total operating costs and expenses in 2016 were $208.7 million as compared to $191.4 million for the same period in 2015. Total operating costs and expenses increased primarily as a result of increased research and
development (R&D) expense.
Research and development expense in the third quarter of 2016 was $52.0 million as compared to $43.2 million in the third
quarter of 2015. Year-to-date R&D expense for 2016 was $153.6 million as compared to $135.7 million for the same period in 2015. R&D expense was higher in the third quarter and first nine months of 2016 as compared to the same
periods in 2015 primarily due to expenses for the NKTR-181 Phase 3 studies and the initiation of the Phase 1/2 study of NKTR-214.
administrative expense was $10.3 million in the third quarter of 2016 as compared to $9.5 million in the third quarter of 2015. G&A expense in the first nine months of 2016 was $31.5 million as compared to $30.0 million for the same period
Net loss in the third quarter of 2016 was $43.2 million or $0.32 loss per share as compared to $8.2 million or $0.06 loss per share in the third
quarter of 2015. Net loss in the first nine months of 2016 was $111.3 million or $0.82 loss per share as compared to $27.0 million or $0.21 loss per share in the first nine months of 2015.
The company also announced upcoming presentations at the following scientific congresses during the fourth quarter of 2016:
Society for Immunotherapy in Cancer (SITC) 31st Anniversary Annual Meeting, National Harbor, MD:
EORTC-NCI-AACR Molecular Targets and Cancer Therapeutics Symposium, Munich, Germany:
2016 San Antonio Breast Cancer Symposium,
Conference Call to Discuss Third Quarter
2016 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 3, 2016.
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 Tuesday, December 6, 2016.
To access the conference call, follow these instructions:
Dial: (877) 881.2183 (U.S.); (970) 315.0453 (international)
Passcode: 7718800 (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.
Nektar Therapeutics has a robust R&D
pipeline and portfolio of approved partnered medicines in oncology, pain, immunology and other therapeutic areas. In the area of oncology, Nektar is developing NKTR-214, an immuno-stimulatory CD122-biased agonist, which is in Phase 1/2 clinical
development for patients with solid tumors. ONZEALD (etirinotecan pegol), a long-acting topoisomerase I inhibitor, is being developed for patients with advanced breast cancer and brain metastases and is partnered with Daiichi Sankyo in
Europe. In the area of pain, Nektar has an exclusive worldwide license agreement with AstraZeneca for MOVANTIK (naloxegol), the first FDA-approved once-daily oral peripherally-acting mu-opioid receptor antagonist (PAMORA) medication for
the treatment of opioid-induced constipation (OIC), in adult patients with chronic, non-cancer pain. The product is also approved in the European Union as MOVENTIG (naloxegol) and is
indicated for adult patients with OIC who have had an inadequate response to laxatives. The AstraZeneca agreement also includes NKTR-119, an earlier stage development program that is a co-formulation of MOVANTIK and an opioid. NKTR-181, a wholly
owned mu-opioid analgesic molecule for chronic pain conditions, is in Phase 3 development. In hemophilia, Nektar has a collaboration agreement with Baxalta for ADYNOVATE [Antihemophilic Factor (Recombinant)], a longer-acting PEGylated Factor
VIII therapeutic approved in the U.S. and Japan for patients over 12 with hemophilia A. In anti-infectives, the company has two collaborations with Bayer Healthcare, Cipro Inhale in Phase 3 for non-cystic fibrosis bronchiectasis and Amikacin Inhale
in Phase 3 for patients with Gram-negative pneumonia.
Nektar s technology has enabled nine approved products in the U.S. or Europe through
partnerships with leading biopharmaceutical companies, including AstraZeneca s MOVANTIK , Baxalta s ADYNOVATE , 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.
MOVANTIK is a trademark and MOVENTIG is a registered trademark of the AstraZeneca group of companies. ADYNOVATE is a trademark of Baxalta
ONZEALD is a trademark of Nektar Therapeutics.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements which 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
timing of the CHMP decision for conditional approval of ONZEALD in Europe, the timing of the availability of Phase 3 data for our partnered programs with Bayer and Ophthotech and our NKTR-181 Phase 3 clinical study, the timing and potential approval
of our partnered products and the potential of our technology and drug candidates in our 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) the
CHMP and FDA have substantial discretion as to whether to grant marketing approval for pharmaceutical products (including ONZEALD and those of our partners) and the decisions from these regulatory authorities are difficult to predict and these
decisions have significant financial consequences; (ii) NKTR-214 is in early-stage clinical development and there are substantial risks that can unexpectedly occur for numerous reasons including negative safety and efficacy findings in the ongoing
Phase 1 clinical study notwithstanding positive findings in preclinical studies; (iii) 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 negative safety and efficacy findings even after positive findings in previous preclinical and clinical studies; (iv) the timing of the commencement or end of clinical
trials and the availability of clinical data 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; (v) scientific discovery of new medical breakthroughs is an inherently uncertain process and the future
success of applying our technology platform to potential new drug candidates (such as NKTR-181 and NKTR-214) is therefore highly uncertain and unpredictable and one or more research and development programs could fail; (vi) patents may not issue
from our patent applications for our drug candidates including NKTR-181 and NKTR-214, patents that have issued may not be enforceable, or additional intellectual property licenses from third parties may be required; and (vii) certain other important
risks and uncertainties set forth in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 4, 2016. 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.
Jennifer Ruddock of Nektar Therapeutics
Jodi Sievers of Nektar Therapeutics
Dan Budwick of Pure Communications
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2016 | December 31, 2015 (1) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 63,295 | $ | 55,570 | ||||
| Short-term investments | 190,216 | 253,374 | ||||||
| Accounts receivable, net | 14,249 | 19,947 | ||||||
| Inventory | 10,754 | 11,346 | ||||||
| Other current assets | 4,008 | 9,814 | ||||||
| Total current assets | 282,522 | 350,051 | ||||||
| Property, plant and equipment, net | 65,553 | 71,336 | ||||||
| Goodwill | 76,501 | 76,501 | ||||||
| Other assets | 519 | 754 | ||||||
| Total assets | $ | 425,095 | $ | 498,642 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 7,118 | $ | 2,363 | ||||
| Accrued compensation | 15,733 | 5,998 | ||||||
| Accrued clinical trial expenses | 10,946 | 8,220 | ||||||
| Other accrued expenses | 6,761 | 4,156 | ||||||
| Interest payable | 4,198 | 4,198 | ||||||
| Capital lease obligations, current portion | 2,370 | 4,756 | ||||||
| Liability related to refundable upfront payment | 12,500 | |||||||
| Deferred revenue, current portion | 14,101 | 21,428 | ||||||
| Other current liabilities | 2,578 | 10,127 | ||||||
| Total current liabilities | 76,305 | 61,246 | ||||||
| Senior secured notes, net | 243,004 | 241,699 | ||||||
| Capital lease obligations, less current portion | 2,143 | 1,073 | ||||||
| Liability related to the sale of future royalties, net | 108,893 | 116,029 | ||||||
| Deferred revenue, less current portion | 57,088 | 62,426 | ||||||
| Other long-term liabilities | 5,515 | 9,740 | ||||||
| Total liabilities | 492,948 | 492,213 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders equity (deficit): | ||||||||
| Preferred stock | ||||||||
| Common stock | 13 | 13 | ||||||
| Capital in excess of par value | 1,912,907 | 1,876,072 | ||||||
| Accumulated other comprehensive loss | (1,962 | ) | (2,170 | ) | ||||
| Accumulated deficit | (1,978,811 | ) | (1,867,486 | ) | ||||
| Total stockholders equity (deficit) | (67,853 | ) | 6,429 | |||||
| Total liabilities and stockholders equity (deficit) | $ | 425,095 | $ | 498,642 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share information)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product sales | $ | 14,698 | $ | 7,240 | $ | 41,664 | $ | 26,182 | ||||||||
| Royalty revenue | 5,573 | 187 | 13,150 | 1,057 | ||||||||||||
| Non-cash royalty revenue related to sale of future royalties | 7,692 | 6,050 | 22,341 | 14,752 | ||||||||||||
| License, collaboration and other revenue | 8,373 | 46,475 | 50,829 | 149,423 | ||||||||||||
| Total revenue | 36,336 | 59,952 | 127,984 | 191,414 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of goods sold | 7,033 | 6,760 | 23,611 | 25,738 | ||||||||||||
| Research and development | 51,951 | 43,229 | 153,569 | 135,652 | ||||||||||||
| General and administrative | 10,253 | 9,544 | 31,515 | 30,031 | ||||||||||||
| Total operating costs and expenses | 69,237 | 59,533 | 208,695 | 191,421 | ||||||||||||
| Income (loss) from operations | (32,901 | ) | 419 | (80,711 | ) | (7 | ) | |||||||||
| Non-operating income (expense): | ||||||||||||||||
| Interest expense | (5,614 | ) | (4,202 | ) | (16,918 | ) | (12,491 | ) | ||||||||
| Non-cash interest expense on liability related to sale of future royalties | (4,902 | ) | (5,226 | ) | (14,929 | ) | (15,428 | ) | ||||||||
| Interest income and other income (expense), net | 332 | 898 | 1,666 | 1,355 | ||||||||||||
| Total non-operating expense, net | (10,184 | ) | (8,530 | ) | (30,181 | ) | (26,564 | ) | ||||||||
| Loss before provision for income taxes | (43,085 | ) | (8,111 | ) | (110,892 | ) | (26,571 | ) | ||||||||
| Provision for income taxes | 139 | 92 | 433 | 469 | ||||||||||||
| Net loss | $ | (43,224 | ) | $ | (8,203 | ) | $ | (111,325 | ) | $ | (27,040 | ) | ||||
| Basic and diluted net loss per share | $ | (0.32 | ) | $ | (0.06 | ) | $ | (0.82 | ) | $ | (0.21 | ) | ||||
| Weighted average shares outstanding used in computing basic and diluted net loss per share | 137,094 | 132,631 | 136,415 | 131,882 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended September 30, | ||||||||
| 2016 | 2015 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (111,325 | ) | $ | (27,040 | ) | ||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||
| Non-cash royalty revenue related to sale of future royalties | (22,341 | ) | (14,752 | ) | ||||
| Non-cash interest expense on liability related to sale of future royalties | 14,929 | 15,428 | ||||||
| Stock-based compensation | 18,793 | 14,499 | ||||||
| Depreciation and amortization | 11,502 | 9,109 | ||||||
| Other non-cash transactions | (2,190 | ) | (1,448 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | 5,698 | 641 | ||||||
| Inventory | 592 | 2,600 | ||||||
| Other assets | 6,041 | 3,843 | ||||||
| Accounts payable | 4,799 | (525 | ) | |||||
| Accrued compensation | 9,735 | 7,056 | ||||||
| Accrued clinical trial expenses | 2,726 | 3,394 | ||||||
| Other accrued expenses | 2,386 | 949 | ||||||
| Interest payable | (3,750 | ) | ||||||
| Liability related to refundable upfront payment | 12,500 | |||||||
| Deferred revenue | (12,665 | ) | (11,832 | ) | ||||
| Other liabilities | (5,793 | ) | 3,854 | |||||
| Net cash (used in) provided by operating activities | (64,613 | ) | 2,026 | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of investments | (142,972 | ) | (202,870 | ) | ||||
| Maturities of investments | 201,449 | 155,683 | ||||||
| Sales of investments | 4,969 | 23,778 | ||||||
| Release of restricted cash | 25,000 | |||||||
| Purchases of property, plant and equipment | (3,741 | ) | (8,722 | ) | ||||
| Net cash provided by (used in) investing activities | 59,705 | (7,131 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Payment of capital lease obligations | (5,376 | ) | (3,798 | ) | ||||
| Proceeds from shares issued under equity compensation plans | 18,041 | 15,516 | ||||||
| Net cash provided by financing activities | 12,665 | 11,718 | ||||||
| Effect of exchange rates on cash and cash equivalents | (32 | ) | (159 | ) | ||||
| Net increase in cash and cash equivalents | 7,725 | 6,454 | ||||||
| Cash and cash equivalents at beginning of period | 55,570 | 12,365 | ||||||
| Cash and cash equivalents at end of period | $ | 63,295 | $ | 18,819 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 15,513 | $ | 16,095 | ||||
| Supplemental schedule of non-cash investing and financing activities | ||||||||
| Accrued debt issuance costs | $ | $ | 8,503 |