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Nektar Therapeutics Reports Financial Results for the First Quarter of 2019

SAN FRANCISCO, May 8, 2019 /PRNewswire/ -- Nektar Therapeutics (NKTR) today reported its financial results for the first quarter ended March 31, 2019.

Cash and investments in marketable securities at March 31, 2019 were approximately $1.8 billion as compared to $1.9 billion at December 31, 2018.

"Nektar continues to advance our immuno-oncology and immunology pipeline with clinical trials initiating for multiple drug candidates across multiple indications," said Howard W. Robin, President and CEO of Nektar. "We are working with our partner, Bristol-Myers Squibb, to execute on our broad joint development program for bempegaldesleukin in combination with nivolumab, with registrational trials in melanoma, RCC, urothelial and non-small cell lung cancer underway and additional trials planned to begin in the coming months."

"NKTR-181 is under review with the FDA and we are planning for a potential launch later this year," continued Robin. "With respect to NKTR-358, we will report the first data for this exciting drug candidate in an oral presentation at the EULAR Congress in June and our multiple-ascending dose trial in lupus patients is continuing. With our partner Lilly, we continue to advance development of NKTR-358 with two new Phase 1b studies in additional auto-immune disorders planned to start in 2019. We are also completing our IND-enabling activities for our next immuno-oncology candidate, NKTR-255, which activates the IL-15 pathway."

Revenue in the first quarter of 2019 was $28.2 million as compared to $38.0 million in the first quarter of 2018. Revenue in the first quarter of 2019 was lower primarily due to the recognition of $10.0 million received in the first quarter of 2018 from Takeda for the approval of Adynovi® in Europe.

Total operating costs and expenses in the first quarter of 2019 were $148.9 million as compared to $124.8 million in the first quarter of 2018. Total operating costs and expenses increased primarily as a result of increased research and development (R&D) expense.

R&D expense in the first quarter of 2019 was $118.5 million as compared to $99.4 million for the first quarter of 2018. R&D expense was higher in the first quarter of 2019 as compared to the same period in 2018 primarily because of expenses for our pipeline programs, including the continued development of bempegaldesleukin in Phase 2 and registrational studies and related manufacturing costs, costs related to Phase 1 clinical studies of NKTR-358 and IND-enabling activities for NKTR-255.

General and administrative expense was $25.0 million in the first quarter of 2019 as compared to $18.7 million in the first quarter of 2018 and increased primarily due to costs related to commercialization readiness activities for NKTR-181 and increased non-cash stock-based compensation.

In the first quarter of 2019, net loss was $118.5 million, or $0.68 loss per share as compared to net loss of $95.8 million, or $0.60 loss per share in the first quarter of 2018.

2019 Business Highlights

  • In April, Nektar presented positive preclinical data on its immuno-oncology pipeline candidates, bempegaldesleukin and NKTR-255, an IL-15 receptor agonist, at the 2019 AACR Annual Meeting.
  • In March, Nektar presented preliminary immune activation, safety and clinical activity data from the ongoing dose-escalation stage of the REVEAL study at the 2019 ASCO-SITC Meeting. The REVEAL Phase 1/2 study is evaluating the safety and efficacy of NKTR-262, a novel TLR agonist, in combination with bempegaldesleukin.
  • In February, Nektar presented clinical data from first-line Stage IV urothelial carcinoma patients enrolled in the PIVOT-02 study of bempegaldesleukin with nivolumab at the 2019 ASCO Genitourinary Cancers Symposium.

The company also announced upcoming presentations at the following scientific congresses during the second quarter of 2019:

4th Drug Discovery Nexus, Boston, MA:

  • Presentation: "Harnessing cytokines to develop immune therapeutic agents"

4th Annual Advances in Immuno-Oncology Congress 2019, London, U.K.:

  • Presentation: "Bempegaldesleukin (NKTR-214): Targeting the IL-2 Pathway for Immuno-Oncology Applications"

American Society for Clinical Oncology (ASCO) 2019 Annual Meeting, Chicago, IL:

  • Oral Abstract # 11010: "Pilot study of bempegaldesleukin (NKTR-214) and nivolumab in patients with sarcomas"
  • Poster #228/Abstract # 2584: "Overcoming genetically-based resistance mechanisms to PD-1 blockade", Torrejon, D., et al.
  • Poster #267/Abstract # 2623: "Baseline tumor immune signatures associated with response to bempegaldesleukin (NKTR-214) and nivolumab", Hurwitz, M., et al.
  • Poster #416b/Abstract # TPS4595: "A phase III randomized open label study comparing bempegaldesleukin (NKTR-214) plus nivolumab to sunitinib or cabozantinib (investigator's choice) in patients with previously untreated advanced renal cell carcinoma", Tannir, N., et al.
  • Poster 168b/Abstract # TPS9601: "A phase III, randomized, open-label study of bempegaldesleukin (NKTR-214) plus nivolumab (NIVO) versus NIVO monotherapy in patients (pts) with previously untreated, unresectable or metastatic melanoma (MEL)", Khushalani, N., et al.

Pharmaceutical & Bioscience Society Symposium: Advances in Immuno-Oncology, Foster City, CA:

  • Presentation: "Bempegaldesleukin (NKTR-214), a first-in-class, CD122-preferential IL-2 pathway agonist"

24th Congress of European Hematology Association (EHA), Amsterdam, Netherlands:

  • Abstract # PS1208: " Effects Of NKTR-255, A Polymer Conjugated Human IL-15, on Efficacy of CD19 CAR T Cell Immunotherapy in a Preclinical Lymphoma Model"

Annual European Congress of Rheumatology (EULAR) 2019, Madrid, Spain:

  • Abstract # OP0195: "Selective Expansion of Regulatory T-Cells in Humans by a Novel IL-2 Conjugate T-reg Stimulator, NKTR-358, Being Developed for the Treatment of Autoimmune Diseases"

Conference Call to Discuss First Quarter 2019 Financial Results
Nektar management will host a conference call to review the results beginning at 5:00 p.m. Eastern Daylight Time/2:00 p.m. Pacific Daylight Time, Wednesday, May 8, 2019.

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 Monday, June 10, 2019.

To access the conference call, follow these instructions:

Dial: (877) 881-2183 (U.S.); (970) 315-0453 (international)
Passcode: 8249707 (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.

About Nektar
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, autoimmune disease and chronic pain. We leverage our 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 Nektar and its drug development programs and capabilities may be found online at www.nektar.com.

Cautionary Note Regarding Forward-Looking Statements
This press release contains uncertain or forward-looking statements which can be identified by words such as: "advance," "planned," "preparing," "potential," "continue," "may," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding the potential therapeutic benefits of and future development plans for our investigational products [including bempegaldesleukin ("bempeg"), NKTR-181, NKTR-358, NKTR-262 and NKTR-255], the timing of a potential launch for NKTR-181, and the results of clinical trials.  Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions and 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 and you should not rely on such statements. Important factors that could cause our actual results to differ materially from those indicated in the forward-looking statements include: (i) the timing of the commencement or end of clinical studies 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, and enrollment competition; (ii) the timing and probability of regulatory approval, if any, for NKTR-181 is uncertain and difficult to predict; (iii) scientific discovery of new medical breakthroughs is an inherently uncertain process and the future success of applying our technology platform to drug candidates [such as bempegaldesleukin ("bempeg"), NKTR-262, NKTR-358, and NKTR-255] is therefore highly uncertain and unpredictable and one or more of these programs may fail; (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 Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission on March 1, 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.

Adynovi is a registered trademark of Baxalta Incorporated.

Contact:
For Investors:
Jennifer Ruddock of Nektar Therapeutics
415-482-5585

For Media:
Jodi Sievers of Nektar Therapeutics
415-482-5593

Dan Budwick of 1AB
973-271-6085
dan@1abmedia.com

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)







ASSETS


March 31, 2019


December 31, 2018

(1)

Current assets:







Cash and cash equivalents


$         106,752


$                 194,905



Short-term investments


1,281,913


1,140,445



Accounts receivable


42,894


43,213



Inventory


11,778


11,381



Advance payments to contract manufacturers


27,425


26,450



Other current assets


19,352


21,293




Total current assets


1,490,114


1,437,687










Long-term investments


455,867


582,889


Property, plant and equipment, net


58,158


48,851


Operating lease right-of-use assets


83,475


-


Goodwill


76,501


76,501


Other assets


2,367


4,244




Total assets


$      2,166,482


$              2,150,172










LIABILITIES AND STOCKHOLDERS' EQUITY













Current liabilities:







Accounts payable


$           11,012


$                      5,854



Accrued compensation


18,371


9,937



Accrued contract manufacturing expenses


21,384


23,841



Accrued clinical trial expenses


17,496


14,700



Other accrued expenses


14,624


9,580



Interest payable


4,090


4,198



Operating lease liabilities, current portion


1,649


-



Deferred revenue, current portion


11,092


13,892




Total current liabilities


99,718


82,002










Senior secured notes, net


247,386


246,950


Operating lease liabilities, less current portion


95,024


-


Liability related to the sale of future royalties, net


80,837


82,911


Deferred revenue, less current portion


9,340


10,744


Other long-term liabilities


666


9,990




Total liabilities


532,971


432,597










Commitments and contingencies













Stockholders' equity:







Preferred stock


-


-



Common stock


17


17



Capital in excess of par value


3,178,773


3,147,925



Accumulated other comprehensive loss


(2,716)


(6,316)



Accumulated deficit


(1,542,563)


(1,424,051)




Total stockholders' equity


1,633,511


1,717,575



Total liabilities and stockholders' equity


$      2,166,482


$              2,150,172



(1) The consolidated balance sheet at December 31, 2018 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.

 

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share information)

(Unaudited)








Three Months Ended March 31,



2019


2018






Revenue:





   Product sales


$              4,398


$                      6,295

   Royalty revenue 


11,390


11,076

   Non-cash royalty revenue related to sale of future royalties


8,230


6,920

   License, collaboration and other revenue


4,204


13,727

Total revenue


28,222


38,018






Operating costs and expenses:





   Cost of goods sold


5,440


6,646

   Research and development


118,463


99,424

   General and administrative


25,006


18,687

Total operating costs and expenses


148,909


124,757






Loss from operations


(120,687)


(86,739)






Non-operating income (expense):





   Interest expense


(5,226)


(5,340)

   Non-cash interest expense on liability related to sale of future royalties


(6,065)


(5,019)

   Interest income and other income (expense), net


12,483


1,571

Total non-operating income (expense), net


1,192


(8,788)






Loss before provision for income taxes


(119,495)


(95,527)






Provision (benefit) for income taxes


(983)


265

Net loss


$        (118,512)


$                  (95,792)











Basic and diluted net loss per share


$              (0.68)


$                      (0.60)






Weighted average shares outstanding used in computing basic and diluted net loss per share


173,859


160,884

 

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



Three Months Ended March 31,



2019


2018

Cash flows from operating activities:





  Net loss


$        (118,512)


$                  (95,792)

  Adjustments to reconcile net loss to net cash used in operating activities:





     Non-cash royalty revenue related to sale of future royalties


(8,230)


(6,920)

     Non-cash interest expense on liability related to sale of future royalties 


6,065


5,019

     Stock-based compensation 


25,385


19,949

     Depreciation and amortization 


3,077


2,541

     Accretion of discounts, net and other non-cash transactions


(4,303)


(370)

  Changes in operating assets and liabilities:





     Accounts receivable


319


151

     Inventory


(397)


51

     Other assets 


4,209


1,853

     Accounts payable 


5,156


6,492

     Accrued compensation 


8,434


6,867

     Other accrued expenses 


774


10,826

     Deferred revenue 


(4,204)


(3,678)

     Other liabilities 


1,332


545

  Net cash used in operating activities 


(80,895)


(52,466)






Cash flows from investing activities:





     Purchases of investments 


(368,739)


-

     Maturities of investments 


362,249


37,232

     Sales of investments 


-


11,963

     Purchases of property, plant and equipment 


(5,648)


(985)

  Net cash provided by (used in) investing activities 


(12,138)


48,210






Cash flows from financing activities:





     Proceeds from shares issued under equity compensation plans


4,894


34,352

  Net cash provided by financing activities 


4,894


34,352






  Effect of exchange rates on cash and cash equivalents 


(14)


(53)

  Net increase (decrease) in cash and cash equivalents 


(88,153)


30,043

  Cash and cash equivalents at beginning of period


194,905


4,762

  Cash and cash equivalents at end of period


$         106,752


$                   34,805






Supplemental disclosure of cash flow information:





  Cash paid for interest


$              4,805


$                      4,952

 

Cision

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