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Nektar Therapeutics Announces Second Quarter 2008 Results

SAN CARLOS, Calif., Aug. 6 /PRNewswire-FirstCall/ -- Nektar Therapeutics (Nasdaq: NKTR) today announced the company's financial results for the second quarter and six-months ended June 30, 2008.

Cash, cash equivalents, and short-term investments were $373.9 million at June 30, 2008 compared to $412.6 million at March 31, 2008.

Revenue for the three month period ended June 30, 2008 was $20.4 million compared to revenue of $65.9 million in the second quarter of 2007. For the first half of 2008, revenue was $40.4 million as compared to $150.9 million in the same period of 2007. This decrease in revenue is the result of lower product manufacturing revenues due to the termination of the Exubera collaboration by Pfizer in late 2007.

Nektar has made significant improvements to our operating efficiencies as compared to a year ago. For the first half of 2008, the company's general and administrative expense was $24.8 million as compared to $29.9 million for the same period a year ago. Research and development expense was $70.9 million in the first half of 2008 as compared to $78.5 million for the same six month period in 2007. Included in the $70.9 million of overall research and development spending is approximately $32 million of new investments in Nektar's preclinical and clinical development programs.

Nektar reported a net loss for the quarter ended June 30, 2008 of $33.4 million or $0.36 per share, compared to a net loss of $27.5 million or $0.30 per share in the second quarter of 2007. For the first half of 2008, the company reported a net loss of $74.1 million or $0.80 per share, compared to a net loss of $53.2 million or $0.58 per share for the same period in 2007.

The increase in net loss for the second quarter and first half of 2008 compared to a year ago is primarily the result of a loss of gross margin associated with Pfizer's termination of the Exubera collaboration and maintenance of Exubera manufacturing capacity through April 2008. The final spending and charges associated with the termination of the Exubera inhaled insulin program were paid and recorded in the second quarter of 2008.

"Over the past year, Nektar has made excellent progress in expanding and advancing our pipeline while at the same time maintaining financial discipline," said Nektar President and CEO Howard W. Robin. "In 2008, we will have seven proprietary programs in clinical development and an impressive preclinical pipeline of important, high-value therapeutics. We have executed on our strategy of building valuable proprietary programs without pursuing any dilutive financings."

Nektar will host a conference call today for analysts and investors at 2:00 p.m. Pacific time to discuss the company's second quarter 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 August 20, 2008.

To access the conference call, follow these instructions:

Dial: (866) 831-5605 (U.S.); (617) 213-8851 (international)

Passcode: 33430853 (Howard Robin is the host)

Audio replay dial-in and passcode:

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

Passcode: 67859021

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 and enable molecules. For more information on Nektar Therapeutics, please visit

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 or complex commercial agreements. 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 Quarterly Report on Form 10-Q. 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.

Stephan Herrera, 415-488-7699

Jennifer Ruddock, 650-631-4954



(In thousands, except per share information)

Unaudited Unaudited

Three-Months Ended Six-Months Ended

June 30, June 30,

2008 2007 2008 2007


Product sales and royalties $9,010 $49,302 $19,381 $122,321

Contract research 11,391 16,615 21,012 28,612

Total revenue 20,401 65,917 40,393 150,933

Operating costs and expenses:

Cost of goods sold 5,444 39,490 12,671 96,012

Idle Manufacturing Costs 1,487 - 6,821 -

Research and development 33,500 41,000 70,873 78,492

General and administrative 13,091 13,178 24,802 29,913

Amortization of other

intangible assets 237 237 473 473

Total operating costs and expenses 53,759 93,905 115,640 204,890

Loss from operations (33,358) (27,988) (75,247) (53,957)

Non-operating income (expense):

Interest income 3,190 5,452 8,203 10,925

Interest expense (3,929) (4,702) (7,847) (9,635)

Other expense, net 769 (22) 1,071 (16)

Total non-operating income 30 728 1,427 1,274

Loss before provision for income

taxes (33,328) (27,260) (73,820) (52,683)

Provision for income taxes 47 250 260 500

Net loss $(33,375) $(27,510) $(74,080) $(53,183)

Basic and diluted net loss per

share $(0.36) $(0.30) $(0.80) $(0.58)

Shares used in computing basic and

diluted net loss per share 92,400 91,804 92,365 91,630



(In thousands)

June 30, December 31,

2008 2007

(unaudited) (1)


Current assets:

Cash and cash equivalents $31,829 $76,293

Short-term investments 342,078 406,060

Accounts receivable, net of

allowance 12,067 21,637

Inventory 10,166 12,187

Other current assets 13,988 7,106

Total current assets 410,128 523,283

Property and equipment, net 114,229 114,420

Goodwill 78,431 78,431

Other intangible assets, net 2,207 2,680

Other assets 4,498 6,289

Total assets $609,493 $725,103


Current liabilities:

Accounts payable $1,862 $3,589

Accrued compensation 11,276 14,680

Accrued expenses to contract

manufacturers - 40,444

Accrued expenses 21,545 12,446

Interest payable 2,645 2,638

Capital lease obligations, current

portion 1,833 2,335

Deferred revenue, current portion 17,053 19,620

Other current liabilities 2,546 2,340

Total current liabilities 58,760 98,092

Convertible subordinated notes 315,000 315,000

Capital lease obligations 21,016 21,632

Deferred revenue 58,595 61,349

Deferred credits 7,626 8,680

Other long-term liabilities 4,795 5,911

Total liabilities 465,792 510,664

Commitments and contingencies

Stockholders' equity:

Preferred stock - -

Common stock 9 9

Capital in excess of par value 1,306,787 1,302,541

Accumulated other comprehensive

income 739 1,643

Accumulated deficit (1,163,834) (1,089,754)

Total stockholders' equity 143,701 214,439

Total liabilities and stockholders'

equity $609,493 $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. Certain 2007 amounts have been reclassified

between line items to conform with the 2008 presentation.



(In thousands, except per share information)


Six Months Ended June 30,

2008 2007

Cash flows provided by (used in)

operating activities:

Net loss $(74,080) $(53,183)

Adjustments to reconcile net loss to

net cash used in operating


Stock-based compensation 3,863 11,690

Depreciation and amortization 11,820 15,250

Amortization of gain related to sale

of building (437) (437)

Loss on sale or disposal of assets 128 904

Changes in assets and liabilities:

Decrease (increase) in trade accounts

receivable 9,570 (2,681)

Decrease (increase) in inventories 2,021 (2,572)

Decrease (increase) in other assets (6,026) 5,388

Increase (decrease) in accounts

payable (1,727) (4,264)

Increase (decrease) in accrued

compensation (3,676) 954

Increase (decrease) in accrued

expenses to contract manufacturers (40,444) -

Increase (decrease) in accrued

expenses 9,099 (1,600)

Increase (decrease) in interest

payable 7 (708)

Increase (decrease) in deferred

revenue (5,321) 16,952

Increase (decrease) in other

liabilities (1,222) (380)

Net cash used in operating activities (96,425) (14,687)

Cash flows from investing activities:

Purchases of investments (334,685) (273,540)

Maturities of investments 369,337 353,171

Sales of investments 28,590 -

Purchases of property and equipment (10,349) (11,765)

Net cash provided by investing

activities 52,893 67,866

Cash flows used in financing


Proceeds from issuance of common

stock 383 2,708

Payments of loan and capital lease

obligations (1,151) (823)

Repayments of convertible

subordinated notes - (36,026)

Net cash used in financing activities (768) (34,141)

Effect of exchange rates on cash and

cash equivalents (164) 58

Net increase (decrease) in cash and

cash equivalents $(44,464) $19,096

Cash and cash equivalents at

beginning of period $76,293 $63,760

Cash and cash equivalents at end of

period $31,829 $82,856

SOURCE Nektar Therapeutics
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