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Nektar Therapeutics Reports Financial Results for the Second Quarter of 2019

Company to Host Conference Call with Analysts to Review Financial Results and Provide Update on the NKTR-214 (bempegaldesleukin) Program

SAN FRANCISCO, Aug. 8, 2019 /PRNewswire/ --  Nektar Therapeutics (NKTR) today reported its financial results for the second quarter ended June 30, 2019.

Cash and investments in marketable securities at June 30, 2019 were $1.8 billion as compared to $1.9 billion at December 31, 2018.

"Nektar is making good progress advancing our multiple programs in immuno-oncology, immunology and pain," said Howard W. Robin, President and CEO of Nektar. "With our partner Bristol-Myers Squibb, although we've experienced some delays, we are working to finalize the development program for bempegaldesleukin in combination with nivolumab in a number of tumor types and which are designed to support registration for this unique I-O doublet. We have a number of registrational trials already started and we recently received a breakthrough designation from FDA for bempeg and nivo in the setting of first-line untreated metastatic melanoma. Our partner Eli Lilly will be initiating several new studies later this year for NKTR-358, our T regulatory stimulator candidate. These studies will expand the program with additional indications beyond lupus.  We recently filed an IND with the FDA for NKTR-255, our IL-15 agonist, and will initiate our first-in-human clinical study this quarter in patients with relapsed, refractory NHL and in patients with multiple myeloma."

Nektar is hosting a conference call with analysts and investors today on which it will discuss quarterly results. On the call, the company will provide a specific update and discussion on its bempegaldesleukin clinical development program, including recent developments related to the manufacturing of bempegaldesleukin.

Revenue in the second quarter of 2019 was $23.3 million as compared to $1.088 billion in the second quarter of 2018. Year-to-date revenue for 2019 was $51.5 million as compared to $1.126 billion in the first half of 2018. Revenue was lower in the second quarter and first half of 2019 as compared to the same periods in 2018 primarily because of 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 second quarter of 2019 were $134.3 million as compared to $114.1 million in the second quarter of 2018. Total operating costs and expenses in the first half of 2019 were $283.2 million as compared to $238.9 million in the first half 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 second quarter of 2019 was $106.7 million as compared to $88.3 million in the second quarter of 2018. For the first half of 2019, R&D expense was $225.1 million as compared to $187.8 million in the first half of 2018. R&D expense was higher in the second quarter and first half of 2019 as compared to the same periods 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. These increases were partially offset by cost decreases related to the NKTR-181 New Drug Application and NKTR-181 pre-commercial manufacturing which were higher during the second quarter and first half of 2018.

General and administrative (G&A) expense was $22.6 million in the second quarter of 2019 as compared to $20.3 million in the second quarter of 2018. G&A expense in the first half of 2019 was $47.6 million as compared to $38.9 million in the first half of 2018. G&A expense was higher in the second quarter and first half of 2019 as compared to the same periods in 2018 primarily due to costs related to commercialization readiness activities for NKTR-181 and increased non-cash stock-based compensation.

Net loss in the second quarter of 2019 was $109.9 million or $0.63 basic and diluted loss per share as compared to a net income of $971.5 million or $5.33 diluted earnings per share in the second quarter of 2018. Net loss in the first half of 2019 was $228.4 million or $1.31 basic and diluted loss per share as compared to a net income of $875.7 million or $4.91 diluted earnings per share in the first half of 2018.

Second Quarter 2019 and Recent Business Highlights

  • In August, the FDA granted Breakthrough Therapy Designation for bempegaldesleukin in combination with Opdivo (nivolumab) for the treatment of patients with previously untreated unresectable or metastatic melanoma.
  • In July, for NKTR-181, Nektar received a General Advice Letter from FDA that stated that it is postponing product-specific advisory committee meetings for opioid analgesics, including the one previously scheduled for August 21, 2019 to discuss the NDA for the NKTR-181 product, while the agency continues to consider a number of scientific and policy issues relating to this class of drugs. The FDA indicated that it will continue to review the NDA for NKTR-181 according to the existing Prescription Drug User Fee Act ("PDUFA") timeline; however, because of the postponed Advisory Committee Meeting, it is possible the agency may not be able to meet the PDUFA goal date of August 29, 2019.
  • In June, Nektar presented data from a first-in-human Phase 1a study evaluating single-ascending doses of NKTR-358, supporting development of the candidate as a first-in-class T regulatory cell stimulator for the treatment of autoimmune and other chronic inflammatory conditions.
  • In June, Nektar presented data for NKTR-181 at the 81st Annual Scientific Meeting of the College on Problems of Drug Dependence. The data presented identified low rates of withdrawal and a low risk of abuse potential, diversion or addiction associated with NKTR-181 in Phase 3 trials according to the MADDERS® system, the first standardized system for discerning abuse-related events.
  • In June, Nektar presented biomarker and clinical data from the ongoing Phase 2 PIVOT-02 study for bempegaldesleukin in combination with Opdivo (nivolumab) at the 2019 ASCO Annual Meeting. Clinical data presented included 12 month follow-up for the Stage 4 first-line melanoma patient cohort and showed a deepening and durability of response over time. Registrational studies in melanoma, renal cell carcinoma and urothelial cancer are currently recruiting patients.
  • In May, Nektar announced formation of Inheris Biopharma, Inc., a wholly-owned subsidiary responsible for launch preparation and commercialization for NKTR-181, a novel, first-in-class, investigational opioid molecule. NKTR-181 is currently under review with the U.S. Food and Drug Administration (FDA).

The company also announced the following upcoming presentations during the second half of 2019:

CAR-TCR Summit, Boston, MA: 

  • Presentation: "Utilizing Next Generation Cytokines to Enhance Efficacy and Durability of CAR-Ts"

Oxford Global 2nd Annual Advances In Immuno-Oncology USA Congress, San Diego, CA:

  • Presentation: "Harnessing Potent Cytokine Agonist Pathways by Polymer Engineering to Develop Novel Immune Therapeutic Agents"

American Conference on Pharmacometrics (ACoP) 2019, Orlando, FL:

  • Poster Title: "NKTR-262 Released Below Quantifiable Levels of TLR 7/8 Agonist in Human Plasma in Phase 1b/2 Clinical Study as Predicted A-Priori by PK Modeling and Scaling to Humans", Bhasi, K., et al.

Conference Call to Discuss Second Quarter 2019 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, Thursday, August 8, 2019.

This press release and a live 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, September 9, 2019.

To access the conference call, follow these instructions:

Dial: (877) 881-2183 (U.S.); (970) 315-0453 (international)
Passcode: 2879328 (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 Therapeutics

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 http://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," "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-214"), 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-214"), 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 Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 9, 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.

Contacts:

For Investors:

Jennifer Ruddock of Nektar Therapeutics
415-482-5585

Jodi Sievers of Nektar Therapeutics
415-482-5593

For Media:

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


NEKTAR THERAPEUTICS


CONDENSED CONSOLIDATED BALANCE SHEETS


(In thousands)


(Unaudited)










ASSETS


June 30, 2019



December 31, 2018

(1)

Current assets:








Cash and cash equivalents


$         85,424



$                 194,905



Short-term investments


1,429,955



1,140,445



Accounts receivable


37,299



43,213



Inventory


13,188



11,381



Advance payments to contract manufacturers


17,738



26,450



Other current assets


13,213



21,293




Total current assets


1,596,817



1,437,687











Long-term investments


276,305



582,889


Property, plant and equipment, net


65,453



48,851


Operating lease right-of-use assets


82,177



-


Goodwill


76,501



76,501


Other assets


2,400



4,244




Total assets


$   2,099,653



$              2,150,172











LIABILITIES AND STOCKHOLDERS' EQUITY
















Current liabilities:








Accounts payable


$           9,346



$                      5,854



Accrued compensation


19,710



9,937



Accrued clinical trial expenses


29,540



14,700



Accrued contract manufacturing expenses


23,159



23,841



Other accrued expenses


13,830



9,580



Interest payable


4,144



4,198



Operating lease liabilities, current portion


3,749



-



Deferred revenue, current portion


9,892



13,892




Total current liabilities


113,370



82,002











Senior secured notes, net


247,821



246,950


Operating lease liabilities, less current portion


94,822



-


Liability related to the sale of future royalties, net


77,813



82,911


Deferred revenue, less current portion


8,029



10,744


Other long-term liabilities


643



9,990




Total liabilities


542,498



432,597











Commitments and contingencies
















Stockholders' equity:








Preferred stock


-



-



Common stock


17



17



Capital in excess of par value


3,210,398



3,147,925



Accumulated other comprehensive loss


(788)



(6,316)



Accumulated deficit


(1,652,472)



(1,424,051)




Total stockholders' equity


1,557,155



1,717,575



Total liabilities and stockholders' equity


$   2,099,653



$              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 June 30,


Six Months Ended June 30,





2019


2018


2019


2018












Revenue:









Product sales


$           4,346


$                      5,863


$       8,744


$    12,158

Royalty revenue 


7,343


8,563


18,733


19,639

Non-cash royalty revenue related to sale of future royalties


9,091


9,045


17,321


15,965

License, collaboration and other revenue


2,535


1,064,246


6,739


1,077,973

Total revenue


23,315


1,087,717


51,537


1,125,735












Operating costs and expenses:









Cost of goods sold


5,018


5,522


10,458


12,168

Research and development


106,686


88,334


225,149


187,758

General and administrative


22,581


20,261


47,587


38,948

Total operating costs and expenses


134,285


114,117


283,194


238,874












Income (loss) from operations


(110,970)


973,600


(231,657)


886,861












Non-operating income (expense):









Interest expense


(5,231)


(5,385)


(10,457)


(10,725)

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


(5,975)


(4,975)


(12,040)


(9,994)

Interest income and other income (expense), net


11,989


12,105


24,472


13,676

Total non-operating income (expense), net


783


1,745


1,975


(7,043)












Income (loss) before provision for income taxes


(110,187)


975,345


(229,682)


879,818












Provision (benefit) for income taxes


(278)


3,885


(1,261)


4,150

Net income (loss)


$     (109,909)


$                 971,460


$ (228,421)


$  875,668












Net income (loss) per share:









Basic


$            (0.63)


$                        5.67


$       (1.31)


$         5.27

Diluted


$            (0.63)


$                        5.33


$       (1.31)


$         4.91












Weighted average shares outstanding used in computing net income (loss) per share:









Basic


174,549


171,378


174,206


166,160

Diluted


174,549


182,291


174,206


178,281

 

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)





Six Months Ended June 30,





2019


2018

Cash flows from operating activities:





Net income (loss)


$                (228,421)


$  875,668

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


(17,321)


(15,965)

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


12,040


9,994

Stock-based compensation 


49,907


40,608

Depreciation and amortization 


6,132


5,115

Accretion of discounts, net and other non-cash transactions


(7,826)


(3,991)

Changes in operating assets and liabilities:





Accounts receivable


5,914


(19,557)

Inventory


(1,807)


(1,158)

Other assets 


15,818


(14,282)

Accounts payable 


3,480


5,791

Accrued compensation 


9,773


10,717

Other accrued expenses 


15,508


15,417

Deferred revenue 


(6,715)


(6,249)

Other liabilities 


8,701


5,068

Net cash provided by (used in) operating activities 


(134,817)


907,176








Cash flows from investing activities:





Purchases of investments 


(603,702)


(989,850)

Maturities of investments 


634,145


132,779

Sales of investments 


-


11,963

Purchases of property, plant and equipment 


(17,291)


(3,730)

Sales of property, plant and equipment 


-


2,633

Net cash provided by (used in) investing activities 


13,152


(846,205)








Cash flows from financing activities:





Issuance of common stock


-


790,231

Proceeds from shares issued under equity compensation plans


12,200


55,208

Net cash provided by financing activities 


12,200


845,439








Effect of exchange rates on cash and cash equivalents 


(16)


(47)

Net increase (decrease) in cash and cash equivalents 


(109,481)


906,363

Cash and cash equivalents at beginning of period


194,905


4,762

Cash and cash equivalents at end of period


$                   85,424


$  911,125








Supplemental disclosure of cash flow information:





Cash paid for interest


$                      9,455


$       9,795

 

Cision

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