Full Press Release Details
Nektar Therapeutics Reports Fourth Quarter
and Year-End 2019 Financial Results
SAN FRANCISCO, February 27, 2020 - Nektar Therapeutics
(Nasdaq: NKTR) today reported financial results for the fourth quarter and full year ended December 31, 2019.
Cash and investments in marketable securities
at December 31, 2019 were approximately $1.6 billion as compared to $1.9 billion at December 31, 2018.
"Nektar's progress over the
past year has established a strong foundation for growth, with a robust portfolio of clinical-stage immuno-oncology and immunology
candidates addressing multiple therapeutic areas," said Howard W. Robin, President and CEO of Nektar. "Our amended
joint development plan with Bristol-Myers Squibb for bempegaldesleukin in combination with Opdivo expands the active registrational
program for the doublet to five indications, including new Phase 3 studies in the adjuvant melanoma setting and muscle invasive
bladder cancer. It also provides a path forward in first-line lung cancer and enhances our ability to pursue new combinations
in additional indications."
Mr. Robin continued, "We also advanced
NKTR-255, a novel IL-15 agonist that stimulates NK cells and memory T cells, into the clinic in combination with ADCC therapies.
With NKTR-358, we have an opportunity to address the underlying immune imbalance associated with multiple autoimmune and chronic
inflammatory diseases. Our partner Eli Lilly is on track to initiate a Phase 2 study in lupus, advance ongoing Phase 1b clinical
trials in psoriasis and atopic dermatitis, and start an additional Phase 2 study in a new autoimmune indication this year."
Summary of Financial Results
Revenue in the fourth quarter of 2019 was $33.9 million as compared
to $39.8 million in the fourth quarter of 2018. Revenue for the year ended December 31, 2019 was $114.6 million as compared to
$1.2 billion in 2018 and was lower primarily due to the recognition of $1.06 billion of license revenue from the Bristol-Myers
Squibb collaboration agreement in the second quarter of 2018.
Total operating costs and expenses in the fourth quarter of
2019 were $143.5 million as compared to $140.1 million in the fourth quarter of 2018. Total operating costs and expenses for 2019
were $554.7 million as compared to $505.4 million in 2018. Total operating costs and expenses increased primarily as a result of
increases in research and development (R&D) expense and general and administrative (G&A) expense.
R&D expense in the fourth quarter
of 2019 was $110.4 million as compared to $108.9 million for the fourth quarter of 2018. R&D expense for the year ended December
31, 2019 was $434.6 million as compared to $399.5 million in 2018. R&D expense was higher in 2019 as compared to 2018 primarily
because of the continued clinical development of bempegaldesleukin, including the registrational studies in melanoma, bladder
cancer and renal cell carcinoma, and manufacture of Phase 2 drug supply for NKTR-358, which were partially offset by lower bempegaldesleukin
and NKTR-181 manufacturing costs.
G&A expense was $27.1 million in the fourth quarter of 2019
as compared to $23.8 million in the fourth quarter of 2018. G&A expense for 2019 was $98.7 million as compared to $81.4 million
in 2018. G&A expense was higher in the fourth quarter and full year 2019 as compared to the same periods in 2018 primarily
due to non-cash stock based compensation expense, limited commercialization readiness activities for NKTR-181, as well as other
costs related to personnel, facilities and outside services.
Net loss for the fourth quarter of 2019 was $112.2 million or
$0.64 basic and diluted loss per share as compared to a net loss of $98.2 million or $0.57 basic and diluted loss per share in
the fourth quarter of 2018. Net loss for the year ended December 31, 2019 was $440.7 million or $2.52 diluted loss per share as
compared to net income of $681.3 million or $3.78 diluted earnings per share in 2018.
2019 and Year-to-Date Business Highlights:
The company also announced upcoming presentations at the following
scientific congresses:
Society of Toxicology (SOT) 59th Annual Meeting,
American Chemical Society National Meeting
Conference Call to Discuss Fourth Quarter and Year-End 2019
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, Thursday, February 27, 2020.
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: https://ir.nektar.com/.
The web broadcast of the conference call will be available for replay through March 27, 2020.
To access the conference call, follow these instructions:
Dial: (877) 881-2183 (U.S.); (970) 315-0453
Passcode: 2507828 (Nektar Therapeutics is
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 biopharmaceutical company with a robust,
wholly-owned R&D pipeline of investigational medicines in oncology and immunology as well as a portfolio of approved partnered
medicines. 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 which can be identified by words such as: "may," "design," "potential" and similar references
to future periods. Examples of forward-looking statements include, among others, statements we make regarding the therapeutic
potential of, and future development plans for, bempegaldesleukin, NKTR-358 and NKTR-255, and the timing of the initiation of
clinical studies for our 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, 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 statements
regarding the therapeutic potential of bempegaldesleukin, NKTR-358 and NKTR-255 are based on preclinical and clinical findings
and observations and are subject to change as research and development continue; (ii) bempegaldesleukin, NKTR-358 and NKTR-255
are an investigational agents and continued research and development for these drug candidates is subject to substantial risks,
including negative safety and efficacy findings in ongoing clinical studies (notwithstanding positive findings in earlier preclinical
and clinical studies); (iii) bempegaldesleukin, NKTR-358 and NKTR-255 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; (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) 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 (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, 2019. 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.
Vivian Wu of Nektar Therapeutics
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, 2019 | December 31, 2018 (1) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 96,363 | $ | 194,905 | ||||
| Short-term investments | 1,228,499 | 1,140,445 | ||||||
| Accounts receivable | 36,802 | 43,213 | ||||||
| Inventory | 12,665 | 11,381 | ||||||
| Advance payments to contract manufacturers | 31,834 | 26,450 | ||||||
| Other current assets | 15,387 | 21,293 | ||||||
| Total current assets | 1,421,550 | 1,437,687 | ||||||
| Long-term investments | 279,119 | 582,889 | ||||||
| Property, plant and equipment, net | 64,999 | 48,851 | ||||||
| Operating lease right-of-use assets | 134,177 | - | ||||||
| Goodwill | 76,501 | 76,501 | ||||||
| Other assets | 1,010 | 4,244 | ||||||
| Total assets | $ | 1,977,356 | $ | 2,150,172 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 19,234 | $ | 5,854 | ||||
| Accrued compensation | 11,467 | 9,937 | ||||||
| Accrued clinical trial expenses | 32,626 | 14,700 | ||||||
| Accrued contract manufacturing expenses | 7,304 | 23,841 | ||||||
| Other accrued expenses | 11,414 | 9,087 | ||||||
| Senior secured notes, net | 248,693 | - | ||||||
| Interest payable | 4,198 | 4,198 | ||||||
| Lease liability, current portion | 12,516 | - | ||||||
| Deferred revenue, current portion | 5,517 | 13,892 | ||||||
| Other current liabilities | 924 | 493 | ||||||
| Total current liabilities | 353,893 | 82,002 | ||||||
| Senior secured notes, net | - | 246,950 | ||||||
| Lease liability, less current portion | 142,730 | - | ||||||
| Liability related to the sale of future royalties, net | 72,020 | 82,911 | ||||||
| Deferred revenue, less current portion | 2,554 | 10,744 | ||||||
| Other long-term liabilities | 768 | 9,990 | ||||||
| Total liabilities | 571,965 | 432,597 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock | - | - | ||||||
| Common stock | 17 | 17 | ||||||
| Capital in excess of par value | 3,271,097 | 3,147,925 | ||||||
| Accumulated other comprehensive loss | (1,005 | ) | (6,316 | ) | ||||
| Accumulated deficit | (1,864,718 | ) | (1,424,051 | ) | ||||
| Total stockholders' equity | 1,405,391 | 1,717,575 | ||||||
| Total liabilities and stockholders' equity | $ | 1,977,356 | $ | 2,150,172 |
CONDENSED CONSOLIDATED STATEMENTS OF
(In thousands, except per share information)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product sales | $ | 5,815 | $ | 4,360 | $ | 20,117 | $ | 20,774 | ||||||||
| Royalty revenue | 12,214 | 12,078 | 41,222 | 41,976 | ||||||||||||
| Non-cash royalty revenue related to sale of future royalties | 8,718 | 8,971 | 36,303 | 33,308 | ||||||||||||
| License, collaboration and other revenue | 7,115 | 14,417 | 16,975 | 1,097,265 | ||||||||||||
| Total revenue | 33,862 | 39,826 | 114,617 | 1,193,323 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of goods sold | 5,989 | 7,461 | 21,374 | 24,412 | ||||||||||||
| Research and development | 110,369 | 108,883 | 434,566 | 399,536 | ||||||||||||
| General and administrative | 27,142 | 23,777 | 98,712 | 81,443 | ||||||||||||
| Total operating costs and expenses | 143,500 | 140,121 | 554,652 | 505,391 | ||||||||||||
| Income (loss) from operations | (109,638 | ) | (100,295 | ) | (440,035 | ) | 687,932 | |||||||||
| Non-operating income (expense): | ||||||||||||||||
| Interest expense | (5,428 | ) | (5,415 | ) | (21,310 | ) | (21,582 | ) | ||||||||
| Non-cash interest expense on liability related to sale of future royalties | (7,191 | ) | (6,388 | ) | (25,044 | ) | (21,196 | ) | ||||||||
| Interest income and other income (expense), net | 10,371 | 12,048 | 46,335 | 37,571 | ||||||||||||
| Total non-operating income (expense), net | (2,248 | ) | 245 | (19 | ) | (5,207 | ) | |||||||||
| Income (loss) before provision for income taxes | (111,886 | ) | (100,050 | ) | (440,054 | ) | 682,725 | |||||||||
| Provision for income taxes | 278 | (1,838 | ) | 613 | 1,412 | |||||||||||
| Net income (loss) | $ | (112,164 | ) | $ | (98,212 | ) | $ | (440,667 | ) | $ | 681,313 | |||||
| Net income (loss) per share: | ||||||||||||||||
| Basic | $ | (0.64 | ) | $ | (0.57 | ) | $ | (2.52 | ) | $ | 4.02 | |||||
| Diluted | $ | (0.64 | ) | $ | (0.57 | ) | $ | (2.52 | ) | $ | 3.78 | |||||
| Weighted average shares outstanding used in computing net income (loss) per share: | ||||||||||||||||
| Basic | 176,130 | 173,271 | 174,993 | 169,600 | ||||||||||||
| Diluted | 176,130 | 173,271 | 174,993 | 180,119 |
CONDENSED CONSOLIDATED STATEMENTS OF
| Year Ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | (440,667 | ) | $ | 681,313 | |||
| 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 | (36,303 | ) | (33,308 | ) | ||||
| Non-cash interest expense on liability related to sale of future royalties | 25,044 | 21,196 | ||||||
| Stock-based compensation | 99,795 | 88,101 | ||||||
| Depreciation and amortization | 13,156 | 10,870 | ||||||
| Accretion of discounts, net and other non-cash transactions | (11,394 | ) | (10,952 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 6,411 | (25,505 | ) | |||||
| Inventory | (1,284 | ) | (655 | ) | ||||
| Operating lease right-of-use assets, net of operating lease liabilities | 13,090 | - | ||||||
| Other assets | 1,190 | (31,652 | ) | |||||
| Accounts payable | 12,967 | 971 | ||||||
| Accrued compensation | 1,530 | 1,674 | ||||||
| Other accrued expenses | 3,816 | 27,947 | ||||||
| Deferred revenue | (16,565 | ) | (15,331 | ) | ||||
| Other liabilities | 533 | 3,545 | ||||||
| Net cash provided by (used in) operating activities | (328,681 | ) | 718,214 | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of investments | (1,380,865 | ) | (2,271,250 | ) | ||||
| Maturities of investments | 1,614,036 | 890,957 | ||||||
| Sales of investments | - | 11,963 | ||||||
| Purchases of property, plant and equipment | (26,285 | ) | (14,239 | ) | ||||
| Sales of property and plant | - | 2,633 | ||||||
| Net cash provided by (used in) investing activities | 206,886 | (1,379,936 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Payment of capital lease obligations | - | - | ||||||
| Proceeds from shares issued under equity compensation plans | 23,355 | 61,735 | ||||||
| Issuance of common stock to Bristol-Myers Squibb | - | 790,231 | ||||||
| Net cash provided by financing activities | 23,355 | 851,966 | ||||||
| Effect of exchange rates on cash and cash equivalents | (102 | ) | (101 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | (98,542 | ) | 190,143 | |||||
| Cash and cash equivalents at beginning of year | 194,905 | 4,762 | ||||||
| Cash and cash equivalents at end of year | $ | 96,363 | $ | 194,905 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 19,199 | $ | 19,471 | ||||
| Cash paid for income taxes | $ | 555 | $ | 618 | ||||
| Right-of-use assets recognized in exchange for operating lease liabilities | $ | 57,691 | $ | - |