Full Press Release Details
Nektar Therapeutics Reports Financial Results for the Third Quarter of 2018
SAN FRANCISCO, November 7, 2018 - Nektar Therapeutics
(Nasdaq: NKTR) today reported its financial results for the third quarter ended September 30, 2018.
Cash and investments in marketable securities at September 30,
2018 were $2.0 billion as compared to $353.2 million at December 31, 2017.
"We have made tremendous progress advancing our portfolio
of immuno-oncology, immunology and pain programs in 2018," said Howard W. Robin, President and CEO of Nektar. "We are
implementing the broad joint development plan for NKTR-214 with partner Bristol-Myers Squibb across a range of tumor types, with
the first Phase 3 trial in melanoma initiated in September and the next seven trials in renal cell carcinoma, urothelial cancer
and non-small cell lung cancer starting over the next several months. In addition, our new collaboration with Pfizer underscores
the promise of NKTR-214 as a backbone therapy in multiple cancer treatment regimens. NKTR-358 continues to advance with the ongoing
clinical study in lupus patients and NKTR-181 is continuing through the NDA review process with the FDA. Finally, we are in an
exceptionally strong financial position to execute on our strategy, ending the quarter with $2.0 billion in cash."
Revenue in the third quarter of 2018 was $27.8 million as compared
to $152.9 million in the third quarter of 2017. Year-to-date revenue for 2018 was $1.2 billion as compared to $212.2 million in
the first nine months of 2017 and included the recognition of $1.06 billion of license revenue
from the Bristol-Myers Squibb collaboration agreement. Revenue in the third quarter of 2017 included recognition of $127.6
million of the $150.0 million upfront payment from Nektar's collaboration with Eli Lilly & Company for the development
and commercialization of NKTR-358.
Total operating costs and expenses in the third quarter of 2018
were $126.4 million as compared to $83.4 million in the third quarter of 2017. Year-to-date total operating costs and expenses
in 2018 were $365.3 million as compared to $247.9 million for the same period in 2017. 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 2018
was $102.9 million as compared to $65.7 million in the third quarter of 2017. Year-to-date R&D expense for 2018 was $290.7
million as compared to $187.0 million for the same period in 2017. R&D expense was higher in the third quarter and first nine
months 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 and related manufacturing
costs, costs related to the NKTR-181 New Drug Application and NKTR-181 pre-commercial manufacturing, Phase 1 clinical studies of
NKTR-358, 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 $18.7 million
in the third quarter of 2018 as compared to $12.1 million in the third quarter of 2017. G&A expense in the first nine months
of 2018 was $57.7 million as compared to $40.0 million for the same period in 2017. G&A expense was higher in the third quarter
and first nine months of 2018 as compared to the same periods in 2017 primarily due to an
increase in non-cash stock based compensation expense.
Net loss in the third quarter of 2018 was $96.1 million or $0.56
basic and diluted loss per share as compared to net income of $60.9 million or $0.37 diluted earnings per share in the third quarter
of 2017. Net income in the first nine months of 2018 was $779.5 million or $4.34 diluted earnings per share as compared to net
loss of $62.9 million or $0.41 basic and diluted loss per share in the first nine months of 2017.
Third Quarter 2018 and Recent Business Highlights
The Company also announced the following upcoming presentations
through year-end 2018:
2018 Society for Immunotherapy and Cancer (SITC) Annual Meeting,
Poster Presentations:
Session: Combination Therapy
Session: Cytokines in Anti-Tumor Immunity
Session: Mechanisms of Resistance to Immunotherapy
2018 American Society of Hematology Annual Meeting, San Diego,
Conference Call to Discuss Third 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, November 7, 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, December 10, 2018.
To access the conference call, follow these instructions:
Dial: (877) 881-2183 (U.S.); (970) 315-0453 (international)
Passcode: 9395678 (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.
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 https://www.nektar.com/.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements which
can be identified by words such as: "will" and "can" and similar references to future periods. Examples of
forward-looking statements include, among others, statements we make regarding the therapeutic potential of our pipeline molecules
alone or in combination with other therapeutic agents, and the availability of results and outcomes from clinical and preclinical
studies of our new drug candidates. 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, 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 statements regarding
the therapeutic potential of our pipeline molecules are based on preclinical and clinical findings and observations; (ii) the clinical
and commercial risks associated with our pipeline molecules remains high and failure can unexpectedly occur at any stage for one
or more of the indications being studied prior to regulatory approval due to lack of sufficient efficacy, safety considerations
or other factors that impact drug development; (iii) data reported from ongoing preclinical and clinical trials are necessarily
interim data only and the final results will change based on continuing observations; (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 Nektar's Quarterly Report
on Form 10-Q filed with the Securities and Exchange Commission on August 9, 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, 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
CONSOLIDATED BALANCE SHEETS
| ASSETS | September 30, 2018 | December 31, 2017 (1) | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 222,261 | $ | 4,762 | ||||
| Short-term investments | 1,198,149 | 291,370 | ||||||
| Accounts receivable, net | 31,937 | 5,014 | ||||||
| Inventory | 13,296 | 10,726 | ||||||
| Advance payments to contract manufacturers | 26,999 | 7,155 | ||||||
| Other current assets | 12,540 | 7,793 | ||||||
| Total current assets | 1,505,182 | 326,820 | ||||||
| Long-term investments | 619,140 | 57,088 | ||||||
| Property, plant and equipment, net | 44,881 | 47,463 | ||||||
| Goodwill | 76,501 | 76,501 | ||||||
| Other assets | 3,394 | 994 | ||||||
| Total assets | $ | 2,249,098 | $ | 508,866 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 7,494 | $ | 4,782 | ||||
| Accrued compensation | 27,922 | 8,263 | ||||||
| Accrued clinical trial expenses | 21,966 | 9,461 | ||||||
| Other accrued expenses | 24,217 | 10,064 | ||||||
| Interest payable | 4,198 | 4,198 | ||||||
| Deferred revenue, current portion | 15,676 | 18,949 | ||||||
| Other current liabilities | 6,610 | 446 | ||||||
| Total current liabilities | 108,083 | 56,163 | ||||||
| Senior secured notes, net | 246,514 | 245,207 | ||||||
| Liability related to the sale of future royalties, net | 85,402 | 94,655 | ||||||
| Deferred revenue, less current portion | 11,410 | 19,021 | ||||||
| Other long-term liabilities | 7,567 | 5,992 | ||||||
| Total liabilities | 458,976 | 421,038 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock | - | - | ||||||
| Common stock | 17 | 15 | ||||||
| Capital in excess of par value | 3,121,322 | 2,207,865 | ||||||
| Accumulated other comprehensive loss | (5,378 | ) | (2,111 | ) | ||||
| Accumulated deficit | (1,325,839 | ) | (2,117,941 | ) | ||||
| Total stockholders' equity | 1,790,122 | 87,828 | ||||||
| Total liabilities and stockholders' equity | $ | 2,249,098 | $ | 508,866 |
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.
CONSOLIDATED STATEMENTS OF OPERATIONS
thousands, except per share information)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product sales | $ | 4,256 | $ | 4,448 | $ | 16,414 | $ | 24,897 | ||||||||
| Royalty revenue | 10,259 | 9,302 | 29,898 | 23,953 | ||||||||||||
| Non-cash royalty revenue related to sale of future royalties | 8,372 | 8,066 | 24,337 | 21,367 | ||||||||||||
| License, collaboration and other revenue | 4,875 | 131,112 | 1,082,848 | 142,028 | ||||||||||||
| Total revenue | 27,762 | 152,928 | 1,153,497 | 212,245 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of goods sold | 4,783 | 5,674 | 16,951 | 20,794 | ||||||||||||
| Research and development | 102,895 | 65,714 | 290,653 | 187,032 | ||||||||||||
| General and administrative | 18,718 | 12,055 | 57,666 | 40,027 | ||||||||||||
| Total operating costs and expenses | 126,396 | 83,443 | 365,270 | 247,853 | ||||||||||||
| Income (loss) from operations | (98,634 | ) | 69,485 | 788,227 | (35,608 | ) | ||||||||||
| Non-operating income (expense): | ||||||||||||||||
| Interest expense | (5,442 | ) | (5,540 | ) | (16,167 | ) | (16,452 | ) | ||||||||
| Non-cash interest expense on liability related to sale of future royalties | (4,814 | ) | (4,471 | ) | (14,808 | ) | (13,535 | ) | ||||||||
| Interest income and other income (expense), net | 11,847 | 1,599 | 25,523 | 3,163 | ||||||||||||
| Total non-operating income (expense), net | 1,591 | (8,412 | ) | (5,452 | ) | (26,824 | ) | |||||||||
| Income (loss) before provision for income taxes | (97,043 | ) | 61,073 | 782,775 | (62,432 | ) | ||||||||||
| Provision for income taxes | (900 | ) | 202 | 3,250 | 434 | |||||||||||
| Net income (loss) | $ | (96,143 | ) | $ | 60,871 | $ | 779,525 | $ | (62,866 | ) | ||||||
| Net income (loss) per share: | ||||||||||||||||
| Basic | $ | (0.56 | ) | $ | 0.39 | $ | 4.63 | $ | (0.41 | ) | ||||||
| Diluted | $ | (0.56 | ) | $ | 0.37 | $ | 4.34 | $ | (0.41 | ) | ||||||
| Weighted average shares outstanding used in computing net income (loss) per share: | ||||||||||||||||
| Basic | 172,698 | 156,411 | 168,363 | 155,153 | ||||||||||||
| Diluted | 172,698 | 162,641 | 179,619 | 155,153 |
CONSOLIDATED STATEMENTS OF CASH FLOWS