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Nektar Therapeutics Reports Operating Results (10-Q)

November 05, 2009 | About:
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10qk

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Nektar Therapeutics (NKTR) filed Quarterly Report for the period ended 2009-09-30.

Nektar Therapeutics formerly Inhale Therapeutic Systems Inc. enables the development of high-value pharmaceutical products based on its leading drug delivery technologies. Nektar's expanded technology and development expertise allows it to develop and offer to partners new product opportunities solve more development challenges and realize the full potential of their therapeutics from new molecular entities to life-cycle management products. Nektar Therapeutics has a market cap of $759.8 million; its shares were traded at around $8.2 with and P/S ratio of 8.4. Nektar Therapeutics had an annual average earning growth of 5.5% over the past 10 years.

Highlight of Business Operations:

At September 30, 2009, we had approximately $275.7 million in cash, cash equivalents, and short-term investments and $241.0 million in indebtedness. We may from time to time purchase or retire convertible subordinated notes through cash purchase or exchanges for other securities of the Company in open market or privately negotiated transactions, depending on, among other factors, our levels of available cash and the price at which such convertible notes are available for purchase. For instance, in the fourth quarter of 2008, we repurchased $100.0 million of the principal amount of our 3.25% convertible subordinated notes. We will evaluate similar future transactions, if any, in light of then-existing market conditions. These transactions, individually or in the aggregate, may be material to our business.

In October 2009, we received a $125.0 million upfront payment from AstraZeneca in connection with the AstraZeneca License for NKTR-118 and NKTR-119. We will begin amortizing the $125.0 million upfront payment in the fourth quarter of 2009 over our estimated performance period.

The decrease in collaboration and other revenue for the three months and nine months ended September 30, 2009 compared to the three months and nine months ended September 30, 2008 is primarily attributable to the termination of our TIP collaboration agreement and the assignment of the Cipro Inhale collaboration agreement as part of the Novartis asset sale transaction, which. These agreements accounted for approximately $5.6 million and $19.3 million of collaboration and other revenue, respectively, for the three months and nine months ended September 30, 2008. We do not expect to recognize any revenue related to these two agreements in 2009. Additionally, milestone revenue recognized from Bayer under our collaborative agreement for Amikacin Inhale decreased by $4.0 million and $4.5 million, respectively, for the three months and nine months ended September 30, 2009 compared to the same periods in 2008 due to changes in our estimates of clinical development progress for this program.

The decrease in research and development expense for the three months and nine months ended September 30, 2009 compared to the three months and nine months ended September 30, 2008, is primarily attributable to the completion of the sale of certain assets related to our pulmonary business, associated property, and intellectual property to Novartis on December 31, 2008 (referred to as the “Novartis Pulmonary Asset Sale”) and the workforce reduction executed in February 2008. As part of the Novartis Pulmonary Asset Sale, we transferred approximately 140 of our personnel dedicated to our pulmonary operations and our San Carlos research and manufacturing facility to Novartis. In addition, we ceased research activities on the TIP research and development program, the Cipro Inhale program and certain other proprietary pulmonary development programs, resulting in a decrease in outside direct costs of $2.0 million and $4.3 million, respectively, for the three months and nine months ended September 30, 2009 compared to the corresponding periods of 2008. For the three months and nine months ended September 30, 2009 compared to the three months and nine months ended September 30, 2008, personnel costs decreased by approximately $6.3 million and $22.3 million, respectively, and facilities costs decreased by approximately $3.2 million and $9.6 million, respectively.

General and administrative expense is associated with administrative staffing, business development and marketing. For the three months and nine months ended September 30, 2009 compared to the three months and nine months ended September 30, 2008, personnel costs decreased by approximately $1.0 million and $3.8 million, respectively, primarily due to headcount reductions made as part of our February 2008 workforce reductions and other operating efficiencies achieved after the Novartis Pulmonary Asset Sale, marketing costs decreased by approximately $0.2 million and $1.2 million, respectively, professional outside service costs decreased by approximately $0.5 million and $1.3 million, respectively, and travel, lodging and meals decreased by $0.2 million and $0.7 million, respectively.

We had cash, cash equivalents and short-term investments in marketable securities of $275.7 million and indebtedness of $241.0 million, including $215.0 million of 3.25% convertible subordinated notes due September 2012, $20.7 million in capital lease obligations, and $5.3 million in other liabilities as of September 30, 2009.

Read the The complete ReportNKTR is in the portfolios of PRIMECAP Management.

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