PR Newswire | May 6, 2021 04:15PM EDT

05/06 15:15 CDT

Nektar Therapeutics Reports First Quarter 2021 Financial Results SAN FRANCISCO, May 6, 2021

SAN FRANCISCO, May 6, 2021 /PRNewswire/ -- Nektar Therapeutics (Nasdaq: NKTR) today reported financial results for the first quarter ended March 31, 2021.

Cash and investments in marketable securities at March 31, 2021 were approximately $1.1 billion as compared to $1.2 billion at December 31, 2020.

"We continue to build momentum with our clinical pipeline of novel cytokine therapeutics," said Howard W. Robin, President and CEO of Nektar. "We have a robust development program for bempegaldesleukin focused on pursuing large front-line and adjuvant tumor settings. Our five registrational studies underway in melanoma, renal cell carcinoma, and bladder cancer are progressing as planned. In February, we added a sixth registrational study for bempegaldesleukin plus pembrolizumab in head and neck cancer, which we expect to initiate later this year. In addition, we remain on track to report the first data for our PROPEL study evaluating bempegaldesleukin plus pembrolizumab in patients with metastatic non-small cell lung cancer in the second half of 2021."

"For our second cytokine program in oncology, NKTR-255, our initial efforts include two Phase 1 clinical studies in combination with ADCC antibodies, one in hematological malignancies and one in solid tumors, and we look forward to sharing data from these studies in Q4 of this year," continued Mr. Robin. "Finally, as part of the broad development program for NKTR-358, our T regulatory cell IL-2 agent, our partner Eli Lilly is conducting Phase 2 studies in both lupus and ulcerative colitis and plans to initiate additional Phase 2 studies in two different immune-mediated diseases over the next 9-12 months."

Summary of Financial Results

Revenue in the first quarter of 2021 was $23.6 million as compared to $50.6 million in the first quarter of 2020. The decrease was due primarily to the recognition of the $25.0 million milestone payment from Bristol-Myers Squibb related to the initiation of the registrational trial of bempegaldesleukin plus Opdivo(r) in muscle-invasive bladder cancer in the first quarter of 2020.

Total operating costs and expenses in the first quarter of 2021 were $133.0 million as compared to $184.2 million in the first quarter of 2020. Operating costs and expenses decreased 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 and a decrease in R&D expense.

R&D expense in the first quarter of 2021 was $95.6 million as compared to $109.0 million for the first quarter of 2020. R&D expense decreased primarily due to a decrease in manufacturing costs for bempegaldesleukin.

G&A expense was $31.7 million in the first quarter of 2021 and $26.2 million in the first quarter of 2020. G&A expense increased primarily due to an increase in pre-commercial costs for bempegaldesleukin.

Net loss for the first quarter of 2021 was $123.0 million or $0.68 basic and diluted loss per share as compared to a net loss of $138.7 million or $0.78 basic and diluted loss per share in the first quarter of 2020.

First Quarter 2021 and Recent Business Highlights:

* In February 2021, Nektar announced a clinical trial collaboration and supply agreement with Merck for a Phase 2/3 study of bempegaldesleukin, Nektar's investigational IL-2 pathway agent, in combination with Merck's KEYTRUDA(r) (pembrolizumab) for first-line treatment of patients with metastatic or unresectable recurrent squamous cell carcinoma of the head and neck (SCCHN) whose tumors express PD-L1. The study is planned to start in the second half of 2021. * In February 2021, Nektar announced a financing and co-development collaboration with SFJ Pharmaceuticals(r) for the development of bempegaldesleukin plus pembrolizumab in SCCHN. SFJ has agreed to fund up to $150 million to support the planned Phase 2/3 study and manage clinical trial operations for the study. In return, Nektar agrees to pay SFJ success-based annual milestone payments over a period of seven to eight years which are contingent upon receipt of certain U.S. regulatory approvals for specified indications for bempegaldesleukin, and will begin following completion of the SCCHN study, which is projected to be completed in 2024.

Conference Call to Discuss First Quarter 2021 Financial ResultsNektar management will host a conference call to review the results beginning at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time, Thursday, May 6, 2021.

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 June 6, 2021.

To access the conference call, follow these instructions:

Dial: (877) 881-2183 (U.S.); (970) 315-0453 (International)Conference ID: 9233368 (Nektar Therapeutics is the host)

In the event that any non-GAAP financial measure is discussed on the conference call that is not described in the press release, or explained on the conference call, related information will be made available on the Investors page at the Nektar website as soon as practical after the conclusion of the conference call.

About Nektar

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 StatementsThis press release contains forward-looking statements which can be identified by words such as: "may," "design," "potential," "plan," "expect," "project" 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, bempegaldesleukin, NKTR-358 and NKTR-255, and the timing of the initiation of clinical studies for our 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, NKTR-358 and NKTR-255 are based on preclinical and clinical findings and observations and are subject to change as research and development continue; (ii) bempegaldesleukin, NKTR-358 and NKTR-255 are investigational agents and continued research and development for these drug candidates is subject to substantial risks, including negative safety and efficacy findings in ongoing clinical studies (notwithstanding positive findings in earlier preclinical and clinical studies); (iii) bempegaldesleukin, NKTR-358 and NKTR-255 are in various stages of clinical development and the risk of failure is high and 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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2021. 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:Vivian Wu of Nektar Therapeutics628-895-0661

For Media:Dan Budwick of 1AB973-271-6085 dan@1abmedia.com

NEKTAR THERAPEUTICSCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)(Unaudited)

ASSETS March 31, 2021 December 31, 2020 ^1

Current assets:

Cash and cash equivalents $ 150,164 $ 198,955

Short-term investments 887,152 862,941

Accounts receivable 29,156 38,889

Inventory 16,808 15,292

Other current assets 15,771 21,928

Total current assets 1,099,051 1,138,005

Long-term investments 96,093 136,662

Property, plant and equipment, net 58,510 59,662

Operating lease right-of-use assets 124,971 126,476

Goodwill 76,501 76,501

Other assets 1,435 1,461

Total assets $1,456,561 $1,538,767

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable 22,434 22,139

Accrued compensation 23,513 14,532

Accrued clinical trial expenses 41,028 44,207

Accrued contract manufacturing 6,057 11,310expenses

Other accrued expenses 14,833 9,676

Operating lease liabilities, current 15,768 13,915portion

Total current liabilities 123,633 115,779

Operating lease liabilities, less current 134,556 136,373portion

Development derivative liability 4,597 -

Liability related to the sale of future 195,139 200,340royalties, net

Other long-term liabilities 4,130 8,980

Total liabilities 462,055 461,472

Commitments and contingencies

Stockholders' equity:

Preferred stock - -

Common stock 18 18

Capital in excess of par value 3,429,734 3,388,730

Accumulated other comprehensive loss (3,121) (2,295)

Accumulated deficit (2,432,125) (2,309,158)

Total stockholders' equity 994,506 1,077,295

Total liabilities and stockholders' $1,456,561 $1,538,767equity

The consolidated balance sheet at December 31, 2020 has been derived from(1) 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 THERAPEUTICSCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share information)(Unaudited)

Three Months Ended March 31,

2021 2020

Revenue:

Product sales $ 4,795 $ 3,444

Royalty revenue - 9,719

Non-cash royalty revenue related to 18,798 9,895sale of future royalties

License, collaboration and other 54 27,515revenue

Total revenue 23,647 50,573

Operating costs and expenses:

Cost of goods sold 5,756 3,811

Research and development 95,604 108,987

General and administrative 31,679 26,217

Impairment of assets and other costs for - 45,189terminated program

Total operating costs and expenses 133,039 184,204

Loss from operations (109,392) (133,631)

Non-operating income (expense):

Non-cash interest expense on liability (13,296) (6,968)related to sale of future royalties

Change in fair value of development (1,599) -derivative liability

Interest income and other income (expense), 1,412 8,352net

Interest expense - (6,204)

Total non-operating income (expense), net (13,483) (4,820)

Loss before provision for income taxes (122,875) (138,451)

Provision for income taxes 92 200

Net loss $ (122,967) $ (138,651)

Basic and diluted net loss per share $ (0.68) $ (0.78)

Weighted average shares outstanding used in 181,370 177,185computing basic and diluted net loss per share

NEKTAR THERAPEUTICSCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)

Three Months Ended March 31,

2021 2020

Cash flows from operating activities:

Net loss $ (122,967) $ (138,651)

Adjustments to reconcile net loss to net cashused in operating activities:

Non-cash royalty revenue related to sale of (18,798) (9,895)future royalties

Non-cash interest expense on liability 13,296 6,968related to sale of future royalties

Change in fair value of development 1,599 -derivative liability

Non-cash research and development expense 2,248 -

Stock-based compensation 23,898 25,236

Depreciation and amortization 3,543 4,502

Impairment of advance payments to contractmanufacturers and equipment for terminated - 20,351program

Amortization of premiums (discounts), net 2,345 (1,289)and other non-cash transactions

Changes in operating assets and liabilities:

Accounts receivable 9,733 (5,229)

Inventory (1,516) (1,655)

Operating leases, net 1,541 2,940

Other assets 6,183 1,067

Accounts payable 779 2,687

Accrued compensation 8,981 9,920

Other accrued expenses (7,345) 7,483

Deferred revenue (605) (2,510)

Net cash used in operating activities (77,085) (78,075)

Cash flows from investing activities:

Purchases of investments (295,314) (241,068)

Maturities of investments 303,612 439,735

Sales of investments 5,036 -

Purchases of property, plant and equipment (2,876) (900)

Net cash provided by investing activities 10,458 197,767

Cash flows from financing activities:

Proceeds from shares issued under equity 17,106 11,077compensation plans

Cash receipts from development derivative 750 -liability

Net cash provided by financing activities 17,856 11,077

Effect of exchange rates on cash and cash (20) (97)equivalents

Net increase (decrease) in cash and cash (48,791) 130,672equivalents

Cash and cash equivalents at beginning of period 198,955 96,363

Cash and cash equivalents at end of period $ 150,164 $ 227,035

Supplemental disclosure of cash flowinformation:

Cash paid for interest $ - $ 4,951

Operating lease right-of-use asset recognized in $ 1,057 $ 2,133exchange for lease liabilities

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SOURCE Nektar Therapeutics