Nektar Therapeutics (NKTR) Incurs Wider-Than-Expected Q3 Loss
Nektar Therapeutics NKTR reported an adjusted loss of 19 cents per share for the third quarter of 2023, which was wider than the Zacks Consensus Estimate of a loss of 18 cents. In the year-ago quarter, the loss was 24 cents per share.
Total revenues increased 2.1% year over year to $24.1 million during the third quarter. Revenues beat the Zacks Consensus Estimate of $21 million.
Quarter in Detail
In the third quarter, product sales increased around 16% from the year-ago quarter’s levels to $5.8 million. Product revenues beat our model estimate of $3.5 million.
Non-cash royalty revenues were $18.2 million, down 0.5% from the year-ago quarter. Non-cash royalty revenues were better than our model estimate of $16.4 million.
License, collaboration and other revenues were $0.2 million in the reported quarter compared with $0.3 million reported in the year-ago quarter.
Research and development (R&D) expenses declined 28.5% to $24 million due to the winding down of the development of bempegaldesleukin (bempeg). NKTR stopped all clinical studies on bempeg in April 2022.
General and administrative (G&A) expenses declined 6.2% year over year to $21.1 million due to the discontinuation of the development of bempeg.
Cash and investments in marketable securities as of Sep 30, 2023 were $372.7 million compared with $409.4 million as of Jun 30, 2023.
Shares of Nektar have plunged 75.8% in the year-to-date period compared with the industry’s decline of 15.1%.
Image Source: Zacks Investment Research
2023 Guidance
Nektar continues to expect revenues in the range of $80-$90 million, which includes $65-$70 million in non-cash royalties and $15-$20 million in product sales.
R&D costs are expected to range between $105 million and $115 million, unchanged from the previous expectation. G&A costs are now expected to be between $80 million and $85 million compared with the earlier projection of $75-$80 million. Nektar expects to end 2023 with at least $320 million in cash and investments, higher than the prior projection of $315 million.
Pipeline Update
Nektar has two key candidates in its pipeline, rezpegaldesleukin (rezpeg) and NKTR-255.
The company regained full rights to rezpeg from Eli Lily LLY in April 2023 and took charge of its clinical development. Rezpeg was earlier developed in collaboration with Eli Lilly for several autoimmune indications.
Rezpeg is now a wholly owned asset of Nektar, and the latter owes no royalty payments to LLY.
In October 2023, Nektar initiated a phase IIb study of rezpeg in biologic-naïve patients with moderate-to-severe atopic dermatitis (AD), also called eczema.
Data from this study on the primary endpoint of EASI reduction over the 16-week induction period is expected in the first half of 2025. EASI is a validated and widely used standard measurement for AD studies.
Nektar also expects to begin a phase IIb study on rezpeg for treating patients with alopecia areata by early 2024.
In September 2023, Nektar entered into a partnership with Cellular Biomedicine to develop NKTR-255 as a combination therapy for advanced non-small cell lung cancer (NSCLC) patients who are relapsed or refractory to anti-PD-1 therapy.
The study will investigate NKTR-255 in combination with Cellular Biomedicine’s C-TIL051 — a tumor-infiltrating lymphocyte therapy for the given indication.
NKTR-255 is also being evaluated in two separate mid-stage studies in combination with cell therapies and immunotherapy. Along with partner Merck KGaA, Nektar is evaluating NKTR-255 in a phase II study in combination with cell therapies and the phase II JAVELIN Bladder Medley study.
Nektar Therapeutics Price, Consensus and EPS Surprise
Nektar Therapeutics price-consensus-eps-surprise-chart | Nektar Therapeutics Quote
Zacks Rank & Stocks to Consider
Nektar currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the healthcare sector are Dynavax Technologies Corporation DVAX and MEI Pharma, Inc. MEIP. Each stock presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, estimates for Dynavax Technologies’ 2023 loss per share have narrowed from 24 cents to 15 cents. Meanwhile, during the same period, earnings per share estimates for 2024 have improved from 2 cents to 12 cents. Year to date, shares of DVAX have rallied 25.3%.
Earnings of Dynavax Technologies beat estimates in two of the last four quarters while missing the same on the remaining two occasions. DVAX delivered a four-quarter average earnings surprise of 25.78%.
In the past 60 days, estimates for MEI Pharma’s 2023 loss per share have improved from $6.54 to $4.89. During the same period, loss per share estimates for 2024 have narrowed from $5.14 to $4.02. Year to date, shares of MEIP have rallied 52.7%.
Earnings of MEI Pharma beat estimates in three of the trailing four quarters and met the same on the other occasion. On average, MEIP delivered a four-quarter earnings surprise of 53.58%.
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