Nektar Loss Widens, Gives Guidance

Zacks

Nektar Therapeutics (NKTR) reported a loss of 46 cents per share in the fourth quarter of 2012, wider than the year-ago loss of 33 cents and the Zacks Consensus Estimate of a loss of 45 cents. The wider loss during the quarter was primarily due to higher expenses.

Nektar suffered a loss of $1.50 per share for the full year 2012, wider than the Zacks Consensus Estimate of a loss of $1.48 and the year-ago loss of $1.19 per share. Nektar’s full-year revenues were $81.2 million, up 13.6% year over year. Nektar’s 2012 revenues were just above the Zacks Consensus Estimate of $80 million.

Quarter in Details

Total revenues in the reported quarter jumped 34% to $21.1 million. The increase in quarterly revenues was primarily due to higher product sales and non-cash royalty revenues related to UCB’s (UCBJY) Cimzia and Roche Holding’s (RHHBY) Mircera. Revenues were above the Zacks Consensus Estimate of $20 million.

Total revenues comprised net product revenues, royalty revenues, license and collaboration revenues and others.

Nektar’s net product revenues of approximately $10.4 million were up 71.3% during the reported quarter. The company generated non-cash royalty revenues of $3.9 million in the fourth quarter of 2012 related to Cimzia and Mircera. In Feb 2012, the company had sold all its rights to receive future royalty payments on the net sales of Cimzia and Mircera to Royalty Pharma for $124 million.

Nektar’s royalty revenues decreased 70.7% to $0.9 million during the quarter. The company’s license, collaboration and other revenues also decreased in the fourth quarter. The company recorded license, collaboration and other revenues of $5.9 million, down 10.2%.

Nektar’s R&D expenses were up 39.2% to $46.3 million in the fourth quarter of 2012. R&D expenses during the quarter increased primarily due to higher clinical expenses related to NKTR-102 and NKTR-181. However, the company’s general and administrative (G&A) expenses declined 5.5% to $10.9 million.

2013 Outlook

Apart from disclosing its financial results, Nektar provided guidance for 2013. The company expects total revenues in the range of $200–$210 million, including potential milestone payments of $95 million. The revenue guidance also includes $20 million of non-cash royalty revenues in relation to Cimzia and Mircera.

R&D expenses for 2013 are expected in the range of $200 million to $220 million. The company expects to complete the enrollment process for the phase III BEACON study on NKTR-102 by the end of this year. The company also expects to initiate a phase III study on NKTR-181 this yaer. Nektar’s G&A expenses for 2013 are expected to be $42–$44 million.

Nektar, a biopharma company, currently carries a Zacks Rank #4 (Sell). However, other biopharma stocks such as Array BioPharma, Inc. (ARRY) carry a Zacks Rank #2 (Buy).

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