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Nektar Therapeutics Announces First Quarter 2008 Results

SAN CARLOS, Calif., May 7 /PRNewswire-FirstCall/ -- Nektar Therapeutics (Nasdaq: NKTR) announced today the company's financial results for the first quarter ended March 31, 2008.

Cash, cash equivalents, and short-term investments were $412.6 million at March 31, 2008 compared to $482.4 million at December 31, 2007.

Nektar reported a net loss of $40.7 million or $0.44 per share in the first quarter of 2008, compared to a net loss of $25.7 million or $0.28 per share in the first quarter of 2007. The increase in net loss is primarily the result of $4.1 million of expense for maintaining third-party Exubera manufacturing capacity, $5.3 million of expense for our workforce reduction, loss of gross margin associated with Pfizer's termination of the Exubera relationship, as well as significant incremental investment in clinical development programs. Offsetting these expenses are substantial operating efficiencies Nektar has achieved over the last twelve months.

Revenue totaled $20.0 million in the first quarter of 2008 compared to $85.0 million in the first quarter of 2007. This decrease is the result of the termination of Exubera by Pfizer.

"The first quarter was significant for Nektar as it represents the first time that the company has made substantial investment into the clinical development of innovative proprietary drug candidates," said Howard W. Robin, President and Chief Executive Officer. "Today we have moved past inhaled insulin, and our proprietary small molecule PEGylation drug development platform is generating a great deal of industry and scientific interest. We intend to build and advance our impressive pipeline while continuing to exercise financial responsibility."

Mr. Robin will host a conference call today for analysts and investors beginning at 2:00 p.m. Pacific time to discuss the company's performance. This conference call will be available via webcast and can be accessed through a link that is posted on the Investor Relations section of the Nektar website, The web broadcast of the conference call will be available for replay through March 12, 2008.

To access the conference call, follow these instructions:

Dial: (866) 713-8562 (U.S.); (617) 597-5310 (international)

Passcode: 50572577 (Howard Robin is the host)

Audio replay dial-in and passcode:

Dial: (888) 286-8010 (U.S.) ;(617) 801-6888 (international)

Passcode: 73371402

About Nektar

Nektar Therapeutics is a biopharmaceutical company that develops and enables differentiated therapeutics with its industry-leading PEGylation and pulmonary drug development platforms. Nektar's technology and drug development expertise have enabled nine approved products for partners, which include leading biopharmaceutical companies. Nektar is also developing a robust pipeline of its own high-value therapeutics that addresses unmet medical needs by leveraging and expanding its technology platforms to improve known molecules.

This press release contains forward-looking statements that reflect the company's current views regarding the potential, progress, and clinical plans for the company's proprietary and partnered product pipeline, and the value and potential of the company's technology platforms. These forward-looking statements involve risks and uncertainties, including but not limited to: (i) the company's proprietary product candidates and those of its partners are in various stages of clinical development and the risk of failure is high and can occur at any stage prior to regulatory approval; (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) clinical trials are long, expensive and uncertain processes and the risk of failure of any product that is in clinical development and prior to regulatory approval remains high and can occur at any stage due to efficacy, safety or other factors; (iv) the company'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; and (v) the outcome of any existing or future intellectual property or other litigation related to the company's proprietary product candidates. Other important risks and uncertainties are detailed in the company's reports and other filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K. Actual results could differ materially from the forward-looking statements contained in this press release. The company undertakes no obligation to update forward- looking statements, whether as a result of new information, future events or otherwise.

Tim Warner, 650-283-4915

Stephan Herrera, 415-488-7699

Jennifer Ruddock, 650-631-4954



(In thousands, except per share information)


Three-Months Ended March 31,

2008 2007


Product sales and royalties $10,371 $73,019

Contract research 9,621 11,997

Total revenue 19,992 85,016

Operating costs and expenses:

Cost of goods sold 7,227 56,522

Cost of idle Exubera manufacturing

capacity 5,334 -

Research and development 37,373 37,492

General and administrative 11,711 16,735

Amortization of other intangible

assets 236 236

Total operating costs and expenses 61,881 110,985

Income (Loss) from operations (41,889) (25,969)

Non-Operating income (expense):

Interest income 5,013 5,473

Interest expense (3,918) (4,933)

Other Income 302 6

Total non-operating income 1,397 546

Income (Loss) before provision for

income taxes (40,492) (25,423)

Provision for income taxes 213 250

Net income (loss) $(40,705) $(25,673)

Basic and diluted net earnings (loss)

per share $(0.44) $(0.28)

Shares used in computing basic and

diluted net earnings (loss) per

share (3) 92,330 91,454



(In thousands)


ASSETS March 31, December 31,

2008 2007(1)

Current assets:

Cash and cash equivalents $36,676 $76,293

Short-term investments 375,954 406,060

Accounts receivable, net of

allowance 14,040 21,637

Inventory 11,027 12,187

Other current assets 5,826 7,106

Total current assets 443,523 523,283

Property and equipment, net 114,381 114,420

Goodwill 78,431 78,431

Other intangible assets, net 2,444 2,680

Other assets 5,057 6,289

Total assets $643,836 $725,103


Current liabilities:

Accounts payable $1,556 $3,589

Accrued compensation 10,884 14,680

Accrued expenses to contract

manufacturers 8,450 40,444

Accrued expenses 12,409 12,446

Interest payable 85 2,638

Capital lease obligations, current

portion 2,259 2,335

Deferred revenue, current portion 19,657 19,620

Other current liabilities 2,345 2,340

Total current liabilities 57,645 98,092

Convertible subordinated notes 315,000 315,000

Capital lease obligations 21,330 21,632

Deferred revenue 60,112 61,349

Other long-term liabilities 13,990 14,591

Total liabilites 468,077 510,664

Commitments and contingencies

Stockholders' equity:

Preferred stock - -

Common stock 9 9

Capital in excess of par value 1,303,996 1,302,541

Accumulated other comprehensive

income 2,213 1,643

Accumulated deficit (1,130,459) (1,089,754)

Total stockholders' equity 175,759 214,439

Total liabilities and

stockholders' equity $643,836 $725,103

(1) The consolidated balance sheet at December 31, 2007 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.



(In thousands, except per share information)


Three-Months Ended March 31,

2008 2007

Cash flows provided by (used in)

operating activities:

Net loss $(40,705) $(25,673)

Adjustments to reconcile net loss to

net cash used in operating


Depreciation and amortization 5,917 7,571

Stock-based compensation 1,084 6,861

Amortization of gain related to sale

of building (219) (219)

Loss on sale or disposal of assets 107 304

Changes in assets and liabilities:

Decrease (increase) in trade accounts

receivable 7,597 (17,599)

Decrease (increase) in inventories 1,160 (2,114)

Decrease (increase) in other assets 2,044 3,227

Increase (decrease) in accounts

payable (2,033) (3,547)

Increase (decrease) in accrued

compensation (3,932) (1,635)

Increase (decrease) in accrued

expenses to contract manufacturers (31,994) -

Increase (decrease) in accrued

expenses (37) (2,604)

Increase (decrease) in interest

payable (2,553) (2,684)

Increase (decrease) in deferred

revenue (1,200) 8,801

Increase (decrease) in other

liabilities (208) 314

Net cash used in operating activities (64,972) (28,997)

Cash flows from investing activities:

Purchases of property and equipment (5,281) (5,556)

Purchases of investments (156,092) (79,411)

Maturities of investments 186,758 167,696

Net cash provided by investing

activities 25,385 82,729

Cash flows used in financing


Issuance of common stock 371 2,134

Payments of loan and capital lease

obligations (411) (400)

Repayments of convertible

subordinated notes - (36,026)

Net cash provided by (used in)

financing activities (40) (34,292)

Effect of exchange rates on cash and

cash equivalents 10 (60)

Net increase (decrease) in cash and

cash equivalents $(39,617) $19,380

Cash and cash equivalents at

beginning of period $76,293 $63,760

Cash and cash equivalents at end of

period $36,676 $83,140

SOURCE Nektar Therapeutics
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