PR Newswire | Nov 5, 2020 04:16PM EST

11/05 15:15 CST

Nektar Therapeutics Reports Third Quarter 2020 Financial Results SAN FRANCISCO, Nov. 5, 2020

SAN FRANCISCO, Nov. 5, 2020 /PRNewswire/ -- Nektar Therapeutics (NASDAQ: NKTR) today reported financial results for the third quarter ended September 30, 2020.

Cash and investments in marketable securities at September 30, 2020 were approximately $1.2 billion as compared to $1.6 billion at December 31, 2019.

"In Q3, we've continued to successfully advance our late-stage registrational and early stage studies for our immune-oncology pipeline of candidates while navigating challenges in the current COVID-19 environment," said Howard W. Robin, President and CEO of Nektar. "Enrollment in our five registrational trials of bempegaldesleukin in combination with nivolumab is going well and our partner BMS recently initiated a new clinical study in renal cell carcinoma to evaluate the doublet therapy with a TKI agent. We are also pleased to report that we are ahead of our enrollment targets for the Phase 2 PROPEL study of bempegaldesleukin with pembrolizumab in patients with metastatic non-small cell lung cancer and we look forward to sharing the initial data from this important study in the first part of 2021."

"Next week's 2020 SITC meeting will feature data presentations that showcase the strength of Nektar's immune-oncology pipeline, including an oral presentation of 2 1/2 year data for metastatic melanoma patients treated with bempegaldesleukin plus nivolumab, and promising early data for NKTR-255, our IL-15 cytokine, as well as NKTR-262, our TLR agonist program," continued Robin. "In immunology, we presented positive new data at ACR 2020 this week highlighting the disease activity observed in lupus patients with NKTR-358, our T regulatory cell agent. We are exceptionally pleased that our partner Lilly is undertaking a broad clinical development program for NKTR-358 with two Phase 1b studies in atopic dermatitis and psoriasis, a Phase 2 study underway in patients with systemic lupus erythematosus and a new Phase 2 study being planned in ulcerative colitis."

Summary of Q3 2020 Financial Results

Revenue in the third quarter of 2020 was $30.0 million compared to $29.2 million in the third quarter of 2019. Year-to-date revenue for 2020 was $129.5 million compared to $80.8 million for the first nine months of 2019. Revenue was higher due to the recognition of $50.0 million in total milestones from Bristol-Myers Squibb related to the start of two new registrational trials of bempegaldesleukin plus Opdivo(r) in adjuvant melanoma and muscle-invasive bladder cancer.

Total operating costs and expenses in the third quarter of 2020 were $133.1 million compared to $128.0 million in the third quarter of 2019. Total operating costs and expenses in the first nine months of 2020 were $443.8 million compared to $411.2 million in the first nine months of 2019. Year-to-date operating costs and expenses increased primarily as a result of $45.2 million in impairment charges in the first quarter of 2020 resulting from the discontinuation of the NKTR-181 program, partially offset by a decrease in R&D expense.

R&D expense in the third quarter of 2020 was $100.5 million compared to $99.0 million for the third quarter of 2019. For the first nine months of 2020, R&D expense was $306.0 million compared to $324.2 million in the first nine months of 2019. Excluding pre-commercial manufacturing costs for NKTR-181 incurred during 2019, research and development expense increased for the third quarter and the first nine months of 2020 primarily due to increases in clinical development costs, partially offset by a decrease in manufacturing costs for clinical trial materials.

Net loss for the third quarter of 2020 was $108.6 million or $0.61 basic and diluted loss per share compared to a net loss of $98.6 million or $0.56 basic and diluted loss per share in the third quarter of 2019. Net loss in the first nine months of 2020 was $327.2 million or $1.84 basic and diluted loss per share compared to a net loss of $328.5 million or $1.88 basic and diluted loss per share in the first nine months of 2019.

Third Quarter 2020 and Recent Business Highlights

* In November 2020, Nektar presented new data from its NKTR-358 program at the American College of Rheumatology (ACR) virtual meeting. Data from the Phase 1b study in patients with mild to moderate systemic lupus erythematosus (SLE) showed that NKTR-358 produced a dose-dependent increase in expression of Treg activation markers, providing a rationale for continued development in SLE and other inflammatory indications. * In October 2020, Nektar received IND clearance and began site initiation activities for a Phase 1/2 study of NKTR-255 in patients with solid tumors. The study will evaluate NKTR-255 in combination with cetuximab in two distinct groups of highly refractory patients with colorectal cancer or head and neck cancer. * In October 2020, Nektar initiated a Phase 1b clinical study of bempegaldesleukin in adult patients with mild COVID-19 infection. The randomized, double-blind, placebo-controlled trial is designed to assess the safety, tolerability, and pharmacokinetic and pharmacodynamic profile of bempegaldesleukin in adult patients with mild COVD-19. * In September 2020, a Phase 1/2 study was initiated by Nektar partner BMS in patients with clear cell renal cell carcinoma to evaluate the triplet combination of bempegaldesleukin with nivolumab in combination with a tyrosine-kinase inhibitor. * In August 2020, Vaccibody AS and Nektar announced that the first patient had been dosed in the Phase 1/2a study evaluating bempegaldesleukin with VB10.NEO, Vaccibody's personalized neoantigen cancer vaccine, in patients with advanced squamous cell carcinoma of the head and neck.

The company also announced upcoming presentations at the following scientific congress:

2020 Society for Immunotherapy of Cancer (SITC) Annual Meeting:

* Oral Presentation: "REVEAL: Phase 1 dose-escalation study of NKTR-262, a novel TLR7/8 agonist, plus bempegaldesleukin: local innate immune activation and systemic adaptive immune expansion for treating solid tumors" * Presenter: Dr. Adi Diab, MD Anderson Cancer Center * Session: Session 102: Combinatorial Therapies * Date and Time: Wednesday, November 11; 11:15 a.m. - 1:10 p.m. Eastern Standard Time

* Oral Presentation: "Progression-free survival and biomarker correlates of response with BEMPEG plus NIVO in previously untreated patients with metastatic melanoma: results from the PIVOT-02 study" * Presenter: Dr. Adi Diab, MD Anderson Cancer Center * Session: Session 104: Concurrent Rapid Oral Abstract Presentation: Clinical * Date and Time: Wednesday, November 11; 1:30 p.m. - 2:00 p.m. Eastern Standard Time

* Poster Presentation: "First-in-human phase I study of NKTR-255 in patients with relapsed/refractory hematologic malignancies", Shah, N., et al. * Session: Virtual Poster Hall * Date and Time: Poster presentations will be available beginning November 9, 2020

* Poster Presentation: "Bempegaldesleukin (BEMPEG; CD122-preferential IL-2 pathway agonist)) and NKTR-262 (TLR7/8 agonist) combination treatment pairs local innate immune activation with systemic CD8+ T cell expansion to enhance anti-tumor immunity", Rolig, A., et al. * Session: Virtual Poster Hall * Date and Time: Poster presentations will be available beginning November 9, 2020

Conference Call to Discuss Third Quarter Financial Results

Nektar management will host a conference call to review the results beginning at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time, today, Thursday, November 5, 2020.

This press release and a live audio-only Webcast of the conference call can be accessed through a link that is posted on the Home Page and Investors section of the Nektar website: https://ir.nektar.com/. The web broadcast of the conference call will be available for replay through Tuesday, December 1, 2020.

To access the conference call, follow these instructions:

Dial: (877) 881-2183 (U.S.); (970) 315-0453 (international)Conference ID: 5192707 (Nektar Therapeutics is the host)

About Nektar Therapeutics

Nektar Therapeutics is a biopharmaceutical company with a robust, wholly owned R&D pipeline of investigational medicines in oncology, immunology, and virology, as well as a portfolio of approved partnered medicines. Nektar is headquartered in San Francisco, California, with additional 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.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements which can be identified by words such as: "may," "design," "potential," "evaluate," "plan," "will," and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding the therapeutic potential of, and future development plans for, our clinical drug candidates, and the timing of the initiation of clinical studies for our clinical drug candidates. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results to differ materially from those indicated in the forward-looking statements include, among others: (i) our statements regarding the therapeutic potential of bempegaldesleukin in patients who have been diagnosed with COVID-19 infection are based on data that is evolving and do not include clinical testing of bempegaldesleukin for this intended patient population, and there is no guarantee that the clinical evaluation of bempegaldesleukin in COVID-19 patients will support the use of bempegaldesleukin in this patient population; (ii) investigational agents and continued research and development for these drug candidates are subject to substantial risks, including negative safety and efficacy findings in ongoing clinical studies (notwithstanding positive findings in earlier preclinical and clinical studies); (iii) as our clinical drug candidates are currently in development, the risk of failure is high and failure can unexpectedly occur at any stage prior to regulatory approval; (iv) the timing of the commencement or end of clinical trials and the availability of clinical data may be delayed or unsuccessful due to regulatory delays, slower than anticipated patient enrollment, manufacturing challenges, changing standards of care, evolving regulatory requirements, clinical trial design, clinical outcomes, competitive factors, or delay or failure in ultimately obtaining regulatory approval in one or more important markets; (v) patents may not issue from our patent applications for our drug candidates, patents that have issued may not be enforceable, or additional intellectual property licenses from third parties may be required; and (vi) certain other important risks and uncertainties set forth in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 7, 2020. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Contact:

For Investors:Jerry Isaacson of Nektar Therapeutics628-895-0634Vivian Wu of Nektar Therapeutics628-895-0661

For Media:Dan Budwick of 1AB973-271-6085

Opdivo is a registered trademark of Bristol-Myers Squibb Company.

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

ASSETS September 30, 2020 December 31, 2019 ^(1)

Current assets:

Cash and cash $ 55,843 $ 96,363 equivalents

Short-term investments 900,163 1,228,499

Accounts receivable 42,925 36,802

Inventory 12,892 12,665

Advance payments to contract 10,483 31,834 manufacturers

Other current assets 21,550 15,387

Total current 1,043,856 1,421,550 assets

Long-term investments 197,715 279,119

Property, plant and equipment, net 60,189 65,665

Operating lease right-of-use assets 128,985 134,177

Goodwill 76,501 76,501

Other assets 1,420 344

Total $ 1,508,666 $ 1,977,356 assets

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Senior secured notes, net and $ - $ 252,891 interest payable

Accounts payable 15,484 19,234

Accrued compensation 29,504 11,467

Accrued clinical trial 48,886 32,626 expenses

Accrued contract 7,141 7,304 manufacturing expenses

Other accrued expenses 9,630 12,338

Operating lease liabilities, 15,348 12,516 current portion

Deferred revenue, current 507 5,517 portion

Total current 126,500 353,893 liabilities

Operating lease liabilities, less 139,022 142,730current portion

Liability related to the sale of 66,378 72,020future royalties, net

Deferred revenue, less current 2,494 2,554portion

Other long-term liabilities 3,291 768

Total liabilities 337,685 571,965

Commitments and contingencies

Stockholders' equity:

Preferred stock - -

Common stock 18 17

Capital in excess of par 3,363,998 3,271,097 value

Accumulated other comprehensive (1,080) (1,005) income (loss)

Accumulated deficit (2,191,955) (1,864,718)

Total stockholders' 1,170,981 1,405,391 equity

Total liabilities and $ 1,508,666 $ 1,977,356 stockholders' equity

(1) The consolidated balance sheet at December 31, 2019 has been derived fromthe audited financial statements at that date but does not include all of theinformation and notes required by generally accepted accounting principles inthe United States for complete financial statements.

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share information)

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Revenue:

Product sales $ 5,691 $ 5,558 $ 14,620 $ 14,302

Royalty 12,289 10,275 31,411 29,008revenue

Non-cash royaltyrevenue related 10,422 10,264 28,001 27,585to sale offuture royalties

License,collaboration 1,631 3,121 55,421 9,860and otherrevenue

Total revenue 30,033 29,218 129,453 80,755

Operating costsand expenses:

Cost of goods 5,570 4,927 15,154 15,385sold

Research and 100,531 99,048 305,954 324,197development

General and 26,982 23,983 77,546 71,570administrative

Impairment ofassets and othercosts for - - 45,189 -terminatedprogram

Total operatingcosts and 133,083 127,958 443,843 411,152expenses

Loss from (103,050) (98,740) (314,390) (330,397)operations

Non-operatingincome(expense):

Interest - (5,425) (6,851) (15,882)expense

Non-cashinterest expenseon liability (8,425) (5,813) (22,084) (17,853)related to saleof futureroyalties

Interest incomeand other 2,910 11,492 16,453 35,964income(expense), net

Totalnon-operating (5,515) 254 (12,482) 2,229income(expense), net

Loss beforeprovision for (108,565) (98,486) (326,872) (328,168)income taxes

Provision for 21 99 365 335income taxes

Net loss $ (108,586) $ (98,585) $ (327,237) $ (328,503)

Basic anddiluted net $ (0.61) $ (0.56) $ (1.84) $ (1.88)loss per share

Weighted averagesharesoutstanding usedin computing 179,090 175,402 178,203 174,609basic anddiluted net lossper share

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended September 30,

2020 2019

Cash flows fromoperating activities:

Net loss $ (327,237) $ (328,503)

Adjustments toreconcile net loss tonet cash used inoperating activities:

Non-cash royaltyrevenue related to (28,001) (27,585)sale of futureroyalties

Non-cash interestexpense on liability 22,084 17,853related to sale offuture royalties

Stock-based 72,274 74,787compensation

Depreciation and 10,937 9,582amortization

Impairment ofadvance payments tocontract manufacturers 20,351 -and equipment forterminated program

Accretion of premiums(discounts), net and 1,150 (9,147)other non-cashtransactions

Changes in operatingassets andliabilities:

Accounts receivable (6,123) 2,008

Inventory (227) (2,339)

Operating leases, 4,316 11,550net

Other assets (5,588) 18,127

Accounts payable (3,337) 16,109

Accrued 20,478 13,164compensation

Other accrued 9,340 10,401expenses

Deferred revenue (5,070) (9,465)

Net cash used in (214,653) (203,458)operating activities

Cash flows frominvesting activities:

Purchases of (791,445) (1,028,883)investments

Maturities of 1,158,722 1,122,902investments

Sales of 41,700 -investments

Purchases ofproperty, plant and (5,504) (22,614)equipment

Net cash provided by 403,473 71,405investing activities

Cash flows fromfinancing activities:

Proceeds from sharesissued under equity 20,651 18,449compensation plans

Repayment of Senior (250,000) -Notes

Net cash provided by(used in) financing (229,349) 18,449activities

Effect of exchangerates on cash and cash 9 (77)equivalents

Net decrease in cash (40,520) (113,681)and cash equivalents

Cash and cashequivalents at 96,363 194,905beginning of period

Cash and cashequivalents at end of $ 55,843 $ 81,224period

Supplementaldisclosures of cashflow information:

Cash paid for $ 9,742 $ 14,299interest

Operating leaseright-of-use asset $ 2,133 $ 56,025recognized in exchangefor lease liabilities

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SOURCE Nektar Therapeutics