Nektar Therapeutics Reports Second Quarter 2010 Financial Results

SAN CARLOS, Calif., July 28 /PRNewswire-FirstCall/ -- Nektar Therapeutics (Nasdaq: NKTR) today reported its financial results for the second quarter ended June 30, 2010.

Cash, cash equivalents, and short-term investments at June 30, 2010 were $338.2 million as compared to $362.0 million at March 31, 2010.

Revenue for the second quarter of 2010 increased to $42.6 million as compared to $13.0 million in the second quarter of 2009. The increase in revenue year over year is largely the result of the amortization of the $125 million milestone payment received from AstraZeneca in September 2009 under the new partnership agreement for NKTR-118.

Total operating costs and expenses in the second quarter of 2010 declined by 6% to $40.7 million, compared to $43.5 million in the second quarter 2009.

Research and development expense increased to $25.6 million in the second quarter 2010 as compared to $24.0 million for the same quarter in 2009. General and administrative expense was $10.2 million in the second quarter 2010 as compared to $9.1 million in the second quarter of 2009.

“The number of drug candidates advanced by Nektar in just three years highlights the unique potential of our polymer conjugation technology to create a steady stream of valuable product opportunities,” said Howard W. Robin, President and Chief Executive Officer of Nektar. “In the second quarter, we reported compelling Phase 2 data for our lead oncology compound, NKTR-102, in both ovarian and breast cancer patients. With a deep pipeline in various stages of development, ranging from preclinical compounds to candidates preparing for Phase 3, Nektar is well-positioned for continued success in 2010.”

Net loss for the second quarter ended June 30, 2010 was $0.5 million or $0.01 per share as compared to a net loss of $32.1 million or $0.35 per share in the second quarter of 2009.

Conference Call to Discuss Second Quarter 2010 Financial Results

A conference call to review results will be held today, Wednesday, July 28, 2010 at 2 PM Pacific Time. To access the conference call, follow these instructions:

Dial: (866) 788-0541 (U.S.); (857) 350-1679 (international)

Passcode: 96449158

An audio replay will also be available shortly following the call through Thursday, August 12, 2010 and can be accessed by dialing (888) 286-8010 (U.S.); or (617) 801-6888 (international) with a passcode of 67523786.

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 Nektar

Nektar 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 areas. In the area of pain, Nektar has an exclusive worldwide license agreement with AstraZeneca for Nektar's oral NKTR-118 development program to treat opioid-induced constipation and its NKTR-119 development program for the treatment of pain without constipation side effects. The company has additional pain compounds in preclinical studies. In oncology, NKTR-102, a novel topoisomerase I-inhibitor, is being evaluated in Phase 2 clinical studies for the treatment of ovarian, breast and colorectal cancers. NKTR-105, a novel anti-mitotic agent, is in a Phase 1 clinical study in cancer patients with refractory solid tumors.

Nektar's technology has enabled nine approved products in the U.S. or Europe through partnerships with leading biopharmaceutical companies, including UCB's Cimzia(R) for Crohn's disease and rheumatoid arthritis, Roche's PEGASYS(R) for hepatitis C and Amgen's Neulasta(R) for neutropenia.

Nektar is headquartered in San Carlos, California, with additional R&D 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.

This press release contains forward-looking statements that reflect management's current views regarding the progress and potential of Nektar's pipeline of proprietary drug candidates, the value and potential of the Nektar's technology platform, and the value and potential of certain of Nektar's collaborations with third parties. These forward-looking statements involve numerous risks and uncertainties, including but not limited to: (i) Nektar's proprietary product candidates and those of its collaboration partners are in various stages of clinical development and the risk of failure is high and can unexpectedly occur at any stage of development prior to regulatory approval for numerous reasons including, without limitation, safety and efficacy findings even after initial preclinical and clinical results have been positive; (ii) the timing or success of the commencement or end of clinical trials and commercial launch of partnered products may be delayed or unsuccessful due to slower than anticipated patient enrollment, drug manufacturing challenges, changing standards of care, clinical trial design, clinical outcomes, or delay or failure in obtaining regulatory approval in one or more important markets; (iii) Nektar's patent applications for its proprietary or partner product candidates may not issue, patents that have issued may not be enforceable, or additional intellectual property licenses from third parties may be required in the future; (iv) the outcome of any future intellectual property or other litigation related to Nektar's proprietary product candidates or complex commercial agreements; (v) if Nektar is unable to establish and maintain collaboration partnerships on attractive commercial terms, our business, results of operations and financial condition could suffer; and (vi) certain other important risks and uncertainties set forth in Nektar's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 to be filed on or about July 28, 2010, the Current Report on Form 8-K filed today, and the most recent Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 filed on May 5, 2010. Actual results could differ materially from the forward-looking statements contained in this press release. Nektar undertakes no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise.

Nektar Investor Inquiries:

Jennifer Ruddock/Nektar Therapeutics

(650) 631-4954

Susan Noonan/SA Noonan Communications, LLC

(212) 966-3650

Nektar Media Inquiries:

Karen Bergman/BCC Partners

(650) 575-1509

Michelle Corral/BCC Partners

(415) 794-8662

NEKTAR THERAPEUTICS CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)

ASSETS

June 30, 2010

December 31, 2009(1)

Current assets:

Cash and cash equivalents

$ 23,244

$ 49,597

Short-term investments

314,976

346,614

Accounts receivable

9,446

4,801

Inventory

9,777

6,471

Other current assets

6,363

6,183

Total current assets

$ 363,806

$ 413,666

Property and equipment, net

88,223

78,263

Goodwill

76,501

76,501

Other assets

2,108

7,088

Total assets

$ 530,638

$ 575,518

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$ 4,627

$ 3,066

Accrued compensation

7,908

10,052

Accrued expenses

10,189

4,354

Accrued clinical trial expenses

13,349

14,167

Deferred revenue, current portion

65,342

115,563

Other current liabilities

6,051

5,814

Total current liabilities

$ 107,466

$ 153,016

Convertible subordinated notes

214,955

214,955

Capital lease obligations

17,887

18,800

Deferred revenue

71,910

76,809

Deferred gain

4,589

5,027

Other long-term liabilities

4,302

4,544

Total liabilities

$ 421,109

$ 473,151

Commitments and contingencies

Stockholders' equity:

Preferred stock

$ -

$ -

Common stock

9

9

Capital in excess of par value

1,342,195

1,327,942

Accumulated other comprehensive income

581

1,025

Accumulated deficit

(1,233,256)

(1,226,609)

Total stockholders' equity

$ 109,529

$ 102,367

Total liabilities and stockholders' equity

$ 530,638

$ 575,518

(1) The consolidated balance sheet at December 31, 2009 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

Six Months Ended

June 30,

June 30,

2010

2009

2010

2009

Revenue:

Product sales and royalties

$ 11,154

$ 10,525

$ 14,738

$ 16,995

License, collaboration and other

31,409

2,463

61,062

5,704

Total revenue

42,563

12,988

75,800

22,699

Operating costs and expenses:

Cost of goods sold

4,889

10,379

9,185

16,005

Research and development

25,600

24,002

48,886

47,365

General and administrative

10,207

9,087

19,220

20,107

Total operating costs and expenses

40,696

43,468

77,291

83,477

Income (loss) from operations

1,867

(30,480)

(1,491)

(60,778)

Non-operating income (expense):

Interest income

393

950

856

2,600

Interest expense

(2,909)

(2,948)

(5,860)

(6,285)

Other income, net

163

203

187

248

Total non-operating expense

(2,353)

(1,795)

(4,817)

(3,437)

Loss before provision (benefit) for income taxes

(486)

(32,275)

(6,308)

(64,215)

Provision (Benefit) for income taxes

31

(206)

339

(339)

Net loss

$ (517)

$ (32,069)

$ (6,647)

$ (63,876)

Basic and diluted net loss per share

$ (0.01)

$ (0.35)

$ (0.07)

$ (0.69)

Shares used in computing basic and

diluted net loss per share

94,065

92,556

93,849

92,536

NEKTAR THERAPEUTICS CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

Six Months Ended June 30,

2010

2009

Cash flows from operating activities:

Net loss

$ (6,647)

$ (63,876)

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

Depreciation and amortization

8,334

7,359

Stock-based compensation

8,105

4,691

Deferred rent

542

Other non-cash transactions

(747)

56

Changes in operating assets and liabilities:

Accounts receivable

(4,645)

2,362

Inventory

(3,306)

(791)

Other assets

(136)

1,284

Accounts payable

2,183

(5,513)

Accrued compensation

(2,144)

(4,687)

Accrued expenses

1,012

(1,344)

Accrued clinical trial expenses

(818)

(5,512)

Deferred revenue

(55,120)

(4,111)

Other liabilities

(729)

(995)

Net cash used in operating activities

$ (54,116)

$ (71,077)

Cash flows from investing activities:

Purchases of investments

(218,275)

(186,016)

Sales of investments

8,197

7,627

Maturities of investments

241,256

221,948

Transaction costs from Novartis pulmonary asset sale

(4,440)

Purchases of property and equipment

(8,796)

(7,999)

Net cash provided by investing activities

$ 22,382

$ 31,120

Cash flows from financing activities:

Payments of loan and capital lease obligations

(731)

(616)

Proceeds from issuances of common stock

6,148

90

Net cash provided by (used in) financing activities

$ 5,417

$ (526)

Effect of exchange rates on cash and cash equivalents

(36)

(109)

Net decrease in cash and cash equivalents

$ (26,353)

$ (40,592)

Cash and cash equivalents at beginning of period

49,597

155,584

Cash and cash equivalents at end of period

$ 23,244

$ 114,992

SOURCE Nektar Therapeutics