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Nektar Therapeutics Reports Third Quarter 2009 Financial Results

SAN CARLOS, Calif., Nov. 4 /PRNewswire-FirstCall/ -- Nektar Therapeutics (Nasdaq: NKTR) today reported its financial results for the third quarter ended September 30, 2009.

Net loss for the quarter ended September 30, 2009 improved to $31.0 million or $0.33 per share, as compared to a net loss of $37.0 million or $0.40 per share in the third quarter of 2008.

Nektar continued to make improvements to its operating efficiencies as compared to a year ago. Total operating costs and expenses were down 30% to $39.1 million in the third quarter of 2009 as compared to $56.0 million in the third quarter of 2008. For the first nine months of 2009, total operating costs and expenses were down 29% to $122.6 million as compared to $171.6 million in the first nine months of 2008.

"We are extremely pleased with our success in the third quarter," said Howard W. Robin, President and Chief Executive Officer of Nektar. "We signed a landmark collaboration with AstraZeneca for NKTR-118 and NKTR-119 that highlights the compelling value we are creating in our clinical pipeline. We are also making great progress with NKTR-102, with enrollment in our Phase 2 ovarian cancer study completed ahead of schedule. Our clinical results continue to validate the potential of Nektar's proprietary advanced polymer conjugate technology in creating important new therapeutics."

Research and development expense was $23.5 million in the third quarter of 2009 as compared to $38.3 million for the same quarter in 2008. For the first nine months of 2009, research and development expense was $71.5 million as compared to $109.1 million in the same period in 2008. Included in the $71.5 million of overall research and development expenses in the first nine months of 2009 is approximately $40.0 million of investment in Nektar preclinical and clinical development programs.

Revenue for the three month period ended September 30, 2009 was $10.2 million compared to revenue of $21.4 million in the third quarter of 2008. Revenue year-to-date September 30, 2009 was $32.9 million as compared to revenue of $61.8 million in the same period in 2008. This decrease in revenue is largely the result of lower contract research and manufacturing revenues primarily resulting from the sale of certain of the company's pulmonary assets to Novartis which occurred on December 31, 2008.

Cash, cash equivalents, and short-term investments at September 30, 2009 were $275.7 million. Not included in this cash balance is the cash payment of $125 million received from AstraZeneca in October 2009 as a result of the collaboration for NKTR-118 and NKTR-119.

Conference Call to Discuss Third Quarter 2009 Financial Results

A conference call to review results will be held today, Wednesday, November 4, 2009 at 2 PM Pacific Time.

Details are below:

Howard Robin, president and chief executive officer, and John Nicholson, chief financial officer, will host a conference call beginning at 5:00 p.m. Eastern Time (ET)/2:00 p.m. Pacific Time (PT) on Wednesday, November 4, 2009.

To access the conference call, follow these instructions:

Dial: 866-356-3095 (U.S.); 617-597-5391 (international)

Passcode: 27967367

An audio replay will also be available shortly following the call through Wednesday, November 18, 2009 and can be accessed by dialing 888-286-8010 (U.S.); or 617-801-6888 (international) with a passcode of 60261022.

About Nektar

Nektar Therapeutics is a biopharmaceutical company developing novel therapeutics based on its PEGylation and advanced polymer conjugation technology platforms. Nektar's technology and drug development expertise have enabled nine approved products in the U.S. or Europe for leading biopharmaceutical company partners, including UCB's Cimzia® for Crohn's disease and rheumatoid arthritis, Roche's PEGASYS® for hepatitis C and Amgen's Neulasta® for neutropenia. Nektar has created a robust pipeline of potentially high-value therapeutics to address unmet medical needs by leveraging and expanding its technology platforms to improve and enable molecules. Nektar is also currently conducting clinical and preclinical programs in oncology, pain and other therapeutic areas. Nektar recently entered into an exclusive worldwide license agreement with AstraZeneca for its oral NKTR-118 program to treat opioid-induced constipation and its NKTR-119 program for the treatment of pain without constipation side effects. NKTR-102, PEGylated irinotecan, is currently being evaluated in Phase 2 clinical studies for the treatment of ovarian, breast and colorectal cancers. NKTR-105, PEGylated docetaxel, is currently in a Phase 1 clinical study in cancer patients with refractory solid tumors.

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

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 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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 6, 2009, the Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 filed on August 5, 2009, the Current Report on Form 8-K filed today, and the most recent Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 to be filed on or about November 5, 2009. 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 THERAPEUTICS
           (In thousands, except per share information)

                       Three Months Ended   Nine Months Ended
                          September 30,       September 30,
                          -------------       -------------
                          2009      2008      2009       2008
                          ----      ----      ----       ----

      Product sales
       and royalties    $7,461    $9,474   $24,456    $28,855
       and other         2,762    11,965     8,466     32,977
                         -----    ------     -----     ------
    Total revenue       10,223    21,439    32,922     61,832

    Operating costs
     and expenses:
      Cost of goods
       sold              5,691     5,349    21,021     18,020
      Other cost of
       revenue               -                   -      6,821
      Research and
       development      23,474    38,265    71,514    109,138
      General and
       administrative    9,917    12,386    30,024     37,661
                         -----    ------    ------     ------
    Total operating
     costs and
     expenses           39,082    56,000   122,559    171,640
                        ------    ------   -------    -------

    Loss from
     operations        (28,859)  (34,561)  (89,637)  (109,808)

    Non-operating income
       income              560     2,375     3,160     10,578
       expense          (2,928)   (3,988)   (9,213)   (11,835)
      Other income
       (expense), net      120      (588)      368        483
                           ---      ----       ---        ---
    Total non-
     operating income
     (expense)          (2,248)   (2,201)   (5,685)      (774)

    Loss before
     provision for
     income taxes      (31,107)  (36,762)  (95,322)  (110,582)

     provision for
     income taxes         (140)      276      (479)       536
                          ----       ---      ----        ---

    Net loss          $(30,967) $(37,038) $(94,843) $(111,118)
                      ========  ========  ========  =========

    Basic and
     diluted net loss
     per share          $(0.33)   $(0.40)   $(1.02)    $(1.20)

    Shares used in
     computing basic
     and diluted net
     loss per share     92,789    92,425    92,621     92,413

                               NEKTAR THERAPEUTICS
                                 (In thousands)

                ASSETS            September 30, 2009  December 31, 2008  (1)
                                  ------------------  -----------------
    Current assets:
      Cash and cash equivalents              $32,777           $155,584
      Short-term investments                 242,901            223,410
      Accounts receivable, net
       of allowance                            6,330             11,161
      Inventory                                8,930              9,319
      Other current assets                     7,275              6,746
                                               -----              -----
        Total current assets                $298,213           $406,220

    Property and equipment, net               74,624             73,578
    Goodwill                                  76,501             76,501
    Other assets                               3,313              4,237
                                               -----              -----
      Total  assets                         $452,651           $560,536
                                            ========           ========


    Current liabilities:
      Accounts payable                        $6,397            $13,832
      Accrued compensation                     9,711             11,570
      Accrued clinical trial
       expenses                               13,012             17,622
      Accrued expenses                         7,132              9,923
      Deferred revenue, current
       portion                                 9,547             10,010
      Other current liabilities                3,558              5,417
                                               -----              -----
        Total current liabilities            $49,357            $68,374

    Convertible subordinated
     notes                                   214,955            214,955
    Capital lease obligations                 19,228             20,347
    Deferred revenue                          53,308             55,567
    Deferred gain                              5,245              5,901
    Other long-term liabilities                4,458              5,238
                                               -----              -----
        Total liabilities                   $346,551           $370,382

    Commitments and contingencies

    Stockholders' equity:
      Preferred stock                             $-                 $-
      Common stock                                 9                  9
      Capital in excess of par
       value                               1,323,907          1,312,796
      Accumulated other
       comprehensive income                    1,117              1,439
      Accumulated deficit                 (1,218,933)        (1,124,090)
                                          ----------         ----------
        Total stockholders'
         equity                             $106,100           $190,154
                                            --------           --------
      Total liabilities and
       stockholders' equity                 $452,651           $560,536
                                            ========           ========

      (1) The consolidated balance sheet at December 31, 2008 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
                                 (In thousands)

                                                          Nine Months Ended
                                                            September 30,
                                                            2009       2008
                                                            ----       ----
    Cash flows from operating activities:               $(94,843) $(111,118)
      Net loss
      Adjustments to reconcile net loss to net cash
       used in operating activities:
          Depreciation and amortization                   11,076     18,610
          Stock-based compensation                         7,290      6,955
          Other non-cash transactions                       (124)       759
      Changes in assets and liabilities:
          Decrease (increase) in trade accounts
           receivable                                      4,505     13,122
          Decrease (increase) in inventory                   389      2,326
          Decrease (increase) in other assets             (1,272)     2,659
          Increase (decrease) in accounts payable         (4,047)    (1,476)
          Increase (decrease) in accrued compensation     (1,859)      (229)
          Increase (decrease) in accrued clinical
           trial expenses                                 (4,610)     4,659
          Increase (decrease) in accrued expenses         (1,413)    (1,390)
          Increase (decrease) in accrued expenses to
           contract manufacturers                              -    (40,444)
          Increase (decrease) in deferred revenue         (2,722)   (11,972)
          Increase (decrease) in other liabilities        (2,823)     2,474
                                                          ------      -----
      Net cash used in operating activities             $(90,453) $(115,065)

    Cash flows from investing activities:
          Purchases of investments                      (298,054)  (411,417)
          Sales of investments                            11,923     28,590
          Maturities of investments                      266,202    506,348
          Purchases of property and equipment            (10,763)   (15,064)
          Transaction costs from Novartis pulmonary
           asset sale                                     (4,440)         -
          Investment in Pearl Therapeutics Inc.                -     (4,236)
                                                             ---     ------
      Net cash (used in) provided by investing
       activities                                       $(35,132)  $104,221

    Cash flows from financing activities:
          Payments of loan and capital lease
           obligations                                      (935)    (1,910)
          Proceeds from issuances of common stock          3,821        477
                                                           -----        ---
      Net cash provided by (used in) financing
       activities                                         $2,886    $(1,433)
                                                          ------    -------
      Effect of exchange rates on cash and
       cash equivalents                                     (108)      (303)
                                                            ----       ----
      Net decrease in cash and cash equivalents        $(122,807)  $(12,580)
      Cash and cash equivalents at beginning of period   155,584     76,293
                                                         -------     ------
      Cash and cash equivalents at end of period         $32,777    $63,713
                                                         =======    =======
    Jennifer Ruddock
    Nektar Therapeutics

    Susan Noonan
    The SAN Group

SOURCE Nektar Therapeutics

SOURCE Nektar Therapeutics
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