NEKTAR
- --------------------------------------------------------------------------------
News Release
Nektar Therapeutics 201 Industrial Road San Carlos, CA 94070
650-631-3100 Phone 650-631-3150 Fax www.nektar.com
- --------------------------------------------------------------------------------
Nektar Therapeutics Announces Second Quarter 2008 Results
SAN CARLOS, Calif., August 6, 2008 -- 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,
www.nektar.com. 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 www.nektar.com.
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
sherrera@nektar.com
Jennifer Ruddock, 650-631-4954
jruddock@nektar.com
# # #
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share information)
Unaudited Unaudited
----------------------------------------- ---------------------------------------
Three-Months Ended June 30, Six-Months Ended June 30,
--------------------------- -------------------------
2008 2007 2008 2007
------------------- ------------------- ------------------- -------------------
Revenue:
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
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, 2008 December 31, 2007
(unaudited) (1)
-------------------------- --------------------------
ASSETS
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
========================== ==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
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.
NEKTAR THERAPEUTICS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except per share information)
(unaudited)
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 activities:
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 activities:
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
====================== ======================