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Press release from PR Newswire

Nektar Therapeutics Reports Fourth Quarter and Year-End 2012 Financial Results

Thursday, February 28, 2013

Nektar Therapeutics Reports Fourth Quarter and Year-End 2012 Financial Results16:15 EST Thursday, February 28, 2013SAN FRANCISCO, Feb. 28, 2013 /PRNewswire/ -- Nektar Therapeutics (Nasdaq: NKTR) today reported its financial results for the fourth quarter and year ended December 31, 2012. Cash, cash equivalents, and investments at December 31, 2012 were $302.2 million as compared to $414.9 million at December 31, 2011. "As we enter 2013, Nektar is in an excellent position with five highly valuable late-stage programs across multiple therapeutic areas," said Howard W. Robin, President and Chief Executive Officer of Nektar. "With positive efficacy and safety results from the full Phase 3 KODIAC program for naloxegol, our partner AstraZeneca is preparing to submit registration filings in the U.S. and EU in the third quarter of this year.  We are tremendously pleased that Bayer is scheduled to start the Phase 3 program next month for Amikacin Inhale in gram-negative pneumonia.  Additionally, we expect to report key Phase 2 clinical data this summer for NKTR-181, our novel opioid analgesic, which represents a potential breakthrough for the treatment of chronic pain." Revenue for the fourth quarter of 2012 was $21.1 million as compared to $15.8 million in the fourth quarter of 2011. Revenue for the year ended December 31, 2012 was $81.2 million as compared to $71.5 million in 2011.  2012 revenue included $10.8 million in non-cash revenues resulting from the $124 million sale of future royalties related to Cimzia® and Mircera®, which was completed in February 2012.  This non-cash royalty revenue is offset by non-cash interest expense.  For both the quarter and the year ended December 31, 2012, product sales increased significantly.  These increases were partially offset by decreases in royalty revenues.Total operating costs and expenses in the fourth quarter of 2012 were $64.5 million as compared to $50.3 million in the fourth quarter of 2011.  Total operating costs and expenses for the year ended December 31, 2012 were $222.4 million as compared to $195.4 million in 2011.  The increases in 2012 as compared to 2011 are due primarily to increased clinical development expenses as well as higher cost of goods related to increased product sales.Research and development expense in the fourth quarter of 2012 was $46.4 million as compared to $33.3 million for the fourth quarter of 2011.  For the year ended December 31, 2012, R&D expense was $148.7 million as compared to $126.8 million in 2011. R&D expense was higher in the fourth quarter and year ended December 31, 2012 as compared to the same periods in 2011 reflecting the costs of the etirinotecan pegol (NKTR-102) BEACON Phase 3 study, the production of devices for the Phase 3 study of Amikacin Inhale, the Phase 1 and Phase 2 studies for NKTR-181, and the Phase 1 study for NKTR-192.  General and administrative expense was $10.9 million in the fourth quarter of 2012 as compared to $11.5 million in the fourth quarter of 2011.  G&A expense for the year ended December 31, 2012 was $41.6 million as compared to $46.8 million in 2011. Non-cash interest expense was $5.4 million and $18.1 million in the fourth quarter and year ended December 31, 2012, respectively.  The company incurred non-cash interest expense as a result of the sale of future royalties related to Cimzia® and Mircera®.  No non-cash interest expense was incurred in 2011.Net loss for the fourth quarter ended December 31, 2012 was $52.9 million or $0.46 loss per share.  Net loss for the year ended December 31, 2012 was $171.9 million or $1.50 loss per share.  Net loss for the fourth quarter ended December 31, 2011 was $37.5 million or $0.33 loss per share.  Net loss for the year ended December 31, 2011 was $134.0 million or $1.19 loss per share. The company also announced upcoming presentations at the following medical meetings and scientific congresses during the first half of 2013:33rd International Symposium on Intensive Care and Emergency Medicine, Brussels, Belgium: Poster P081: "In Vitro Efficiency of the Amikacin Inhale System, A Novel Integrated Drug-Device Delivery System", Kadrichu, N., et al.  Date: March 19, 2013 American Association for Cancer Research 2013 Annual Meeting, Washington, DC: Abstract #482: "Tipping the Balance in the Tumor Microenvironment: An Engineered Cytokine (NKTR-214) with Altered IL-2 Receptor Binding Selectivity and Improved Efficacy in a Mouse Melanoma Model", Charych, D., et al.  Date: April 7, 2013, 1:00 p.m. ? 5:00 p.m. Eastern Time Poster Session: Immunology 2 Abstract #2475: "A new polymer conjugated taxane shows improved efficacy in tumor xenograft models", Fry, D., et al. Date: April 9, 2013, 8:00 a.m. ? 12:00 p.m. Eastern Time Poster Session: Chemistry 4 American Academy of Pain Medicine 29th Annual Meeting, Fort Lauderdale, FL: Poster #115 : "New Oral Opioid Analgesic NKTR-181 Demonstrates Analgesic Response in Cold Pressor Test in Healthy Subjects", Eldon, M., et al.  Date: April 11, 2013, 5:15 p.m. ? April 12, 2013 10:30 a.m. Eastern Time American Pain Society 32nd Annual Scientific Meeting, New Orleans, LA: Poster: "NKTR-171: A Novel, Oral Sodium Channel Blocker That Exhibits Comparable Analgesic Efficacy to Pregabalin with Reduced Central Nervous System (CNS) Side Effects", Gursahani, H., et al.  Date: May 9, 2013, 9:30 a.m. Eastern Time Digestive Disease Week 2013, Orlando, FL: Abstract 1594557: "Efficacy and Safety of Naloxegol in Patients with Opioid-Induced Constipation: Results from 2 Prospective, Randomized, Controlled Trials", Chey, W., et al.  Date: May 21, 2013, 8:15 a.m. Eastern Time Research Forum: New Pharmacological Treatments for Motility Disorders  4th International Congress on Neuropathic Pain, Toronto, Canada: Poster A-484-0002-00647: "NKTR-171: Preclinical Efficacy and Improved Central Nervous System (CNS) Side Effect Profile of a Novel Sodium Channel Blocker Designed for the Treatment of Neuropathic Pain", Gursahani, H., et al.  Date: May 25, 2013, 1:30 p.m. ? 3:30 p.m. Eastern Time Poster Session II College on Problems of Drug Dependence 75th Annual Meeting, San Diego, CA: Poster 1598130: "Opioids With Lower Brain Uptake Are Less Recognizable in Rat Drug Discrimination Tests and thus Potentially Less Subject to Abuse", Harrison, S., et al.  Date: June 19, 2013, 12:00 p.m. ? 2:00 p.m. Pacific TimePoster 1605508: "Abuse Potential Assessment of Novel Opioid Analgesic NKTR-181: Implications for Labeling", Webster, L., et al.  Date: June 20, 2013, 7:30 a.m. ? 9:30 a.m. Pacific Time Conference Call to Discuss Fourth Quarter and Year-End 2012 Financial ResultsNektar 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, February 28, 2013.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 Investor Relations section of the Nektar website: http://www.nektar.com. The web broadcast of the conference call will be available for replay through Friday, March 15, 2013. To access the conference call, follow these instructions:Dial: (877) 881.2183 (U.S.); (970) 315.0453 (international)Passcode: 98224860 (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 Investor Relations page at the Nektar website as soon as practical after the conclusion of the conference call. About NektarNektar Therapeutics is a biopharmaceutical company developing novel therapeutics based on its PEGylation and advanced polymer conjugation technology platforms.  Nektar has a robust R&D pipeline of potentially high-value therapeutics in oncology, pain and other therapeutic areas. In the area of pain, Nektar has an exclusive worldwide license agreement with AstraZeneca for naloxegol (NKTR-118), an investigational drug candidate, which is being evaluated in Phase 3 clinical studies as a once- daily, oral tablet for the treatment of opioid-induced constipation.  This agreement also includes NKTR-119, an earlier stage development program that is a co-formulation of naloxegol and an opioid.  NKTR-181, a novel mu-opioid analgesic candidate for chronic pain conditions, is in Phase 2 development in osteoarthritis patients with chronic knee pain.  NKTR-192, a novel mu-opioid analgesic in development to treat acute pain is in Phase 1 clinical development.  In oncology, etirinotecan pegol (NKTR-102) is being evaluated in a Phase 3 clinical study (the BEACON study) for the treatment of metastatic breast cancer and is also in Phase 2 studies for the treatment of ovarian and colorectal cancers.Nektar's technology has enabled eight approved products in the U.S. or Europe through partnerships with leading biopharmaceutical companies, including UCB's Cimzia® for Crohn's disease and rheumatoid arthritis, Roche's PEGASYS® for hepatitis C and Amgen's Neulasta® for neutropenia.  Additional development-stage products that leverage Nektar's proprietary technology platform include Baxter's BAX 855, a long-acting PEGylated rFVIII program, which is in Phase 3 clinical development.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 StatementsThis press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "expect," "believe," "should," "may," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding the potential future regulatory filings by AstraZeneca for naloxegol; the projected timing of the start of the Phase 3 clinical study by Bayer for Amikacin Inhale; the projected availability of Phase 2 clinical study results for NKTR-181; and the value and potential of our technology and research and development pipeline. 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 drug candidates and those of our collaboration partners 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 for numerous reasons including safety and efficacy findings even after positive findings in previous preclinical and clinical studies; (ii) the timing of the commencement or end of clinical trials and the commercial launch of our drug candidates 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; (iii) acceptance, review and approval decisions for new drug applications by health authorities is an uncertain and evolving process and health authorities retain significant discretion at all stages of the regulatory review and approval decision process; (iv) scientific discovery of new medical breakthroughs is an inherently uncertain process and the future success of the application of our technology platform to potential new drug candidates is therefore highly uncertain and unpredictable and one or more research and development programs could fail; and (v) 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 9, 2012. 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.Nektar Investor Inquiries:Jennifer Ruddock/Nektar Therapeutics(415) 482-5585Susan Noonan/SA Noonan Communications, LLC(212) 966-3650 Nektar Media Inquiries:                                  Amanda Connelly/MSL(404) 870-6865Mike Huckman /MSL(646) 500-7631 NEKTAR THERAPEUTICSCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)(Unaudited)ASSETSDecember 31, 2012December 31, 2011(1)Current assets:Cash and cash equivalents$         25,437$          15,312Short-term investments251,757225,856Accounts receivable, net5,8054,938Inventory18,26912,656Other current assets13,36317,944Total current assets314,631276,706Long-term investments-173,768Restricted cash25,000-Property and equipment, net72,21578,576Goodwill76,50176,501Other assets9,443999Total assets$        497,790$          606,550LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable$             2,863$             3,019Accrued compensation8,77312,807Accrued expenses8,0086,669Accrued clinical trial expenses17,50011,953Deferred revenue, current portion21,89619,643Interest payable7,0831,805Convertible subordinated notes-214,955Other current liabilities12,4144,681Total current liabilities78,537275,532Senior secured notes125,000-Capital lease obligations, less current portion11,60714,582Liability related to sale of future royalties, less current portion128,266-Deferred revenue, less current portion96,551108,188Deferred gain2,4043,278Other long-term liabilities8,4077,159Total liabilities450,772408,739Commitments and contingenciesStockholders' equity:Preferred stock--Common stock1111Capital in excess of par value1,617,7441,597,428Accumulated other comprehensive loss(357)(1,103)Accumulated deficit(1,570,380)(1,398,525)Total stockholders' equity47,018197,811Total liabilities and stockholders' equity$        497,790$        606,550(1) The consolidated balance sheet at December 31, 2011 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 THERAPEUTICSCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share information)(Unaudited)Three Months EndedTwelve Months EndedDecember 31,December 31,2012201120122011Revenue:  Product sales$  10,405$    6,073$    35,399$    24,864  Royalty revenues9083,0954,87410,327  Non-cash royalty revenue related to sale of future royalties3,896-10,791-  License, collaboration and other5,9376,61430,12736,289Total revenue21,14615,78281,19171,480Operating costs and expenses:  Cost of goods sold7,2905,45030,42821,891  Research and development46,37333,302148,675126,766  General and administrative10,86411,49841,61446,760  Impairment of long-lived assets--1,675-Total operating costs and expenses64,52750,250222,392195,417Loss from operations(43,381)(34,468)(141,201)(123,937)Non-operating income (expense):  Interest income 4506612,3152,244  Interest expense(4,682)(2,525)(15,489)(10,223)  Non-cash interest expense on liability related to sale of future royalties(5,416)-(18,057)-  Other income (expense), net70(445)983(1,044)Total non-operating expense, net(9,578)(2,309)(30,248)(9,023)Loss before provision for income taxes(52,959)(36,777)(171,449)(132,960)Provision (benefit) for income taxes(33)7184061,018Net loss$ (52,926)$ (37,495)$ (171,855)$ (133,978)Basic and diluted net loss per share$     (0.46)$     (0.33)$       (1.50)$       (1.19)Weighted average shares outstanding used in computing basic and diluted net loss per share115,179114,446114,820112,942 NEKTAR THERAPEUTICSCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)Twelve Months Ended December 31,20122011Cash flows from operating activities:Net loss $    (171,855)$      (133,978)Adjustments to reconcile net loss to net cash used in operating activities:Non-cash interest expense on liability related to sale of future royalties 18,057-Non-cash royalty revenue related to sale of future royalties(10,791)-Stock-based compensation 16,19918,885Depreciation and amortization 14,50814,951Impairment of long-lived assets1,675-Other non-cash transactions8451,359Changes in operating assets and liabilities:Accounts receivable(867)20,164Inventory(5,613)(5,390)Other assets6,031(12,267)Accounts payable(122)(3,384)Accrued compensation(4,034)3,555Accrued expenses1,4951,013Accrued clinical trial expenses5,547(191)Deferred revenue(9,384)(17,516)Interest payable5,278-Other liabilities3,275(943)Net cash used in operating activities (129,756)(113,742)Cash flows from investing activities:Purchases of property and equipment (10,583)(9,722)Restricted cash(25,000)-Maturities of investments 307,887383,052Sales of investments 5,378210,089Purchases of investments (164,662)(695,371)Net cash provided by (used in) investing activities 113,020(111,952)Cash flows from financing activities:Proceeds from issuance of senior secured notes, net77,940-Repayment of convertible subordinated notes(172,407)-Payment of capital lease obligations(2,437)(1,978)Proceeds from sale of future royalties, net119,588-Proceeds from shares issued under equity compensation plans4,1174,530Issuance of common stock, net-219,783Net cash provided by financing activities 26,801222,335Effect of exchange rates on cash and cash equivalents 60916Net increase (decrease) in cash and cash equivalents 10,125(2,443)Cash and cash equivalents at beginning of period15,31217,755Cash and cash equivalents at end of period$        25,437$         15,312Supplemental disclosure of cash flow information:Cash paid for interest$         9,620$         10,277Cash paid for income taxes$         1,021$             957Supplemental schedule of non-cash investing and financing activities:Retirement of convertible subordinated notes in exchange for senior secured notes$       42,548$                -SOURCE Nektar Therapeutics