Nektar Therapeutics Reports Operating Results (10-Q)
Nektar Therapeutics has a market cap of $1.36 billion; its shares were traded at around $14.51 with and P/S ratio of 18.8. NKTR is in the portfolios of RS Investment Management, Jim Simons of Renaissance Technologies LLC, PRIMECAP Management.
Highlight of Business Operations:At March 31, 2010, we had approximately $362.0 million in cash, cash equivalents, and short-term investments and $240.5 million in indebtedness. We may from time to time purchase or retire convertible subordinated notes through cash purchase or exchanges for our other securities 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 approximately $100.0 million in par value of our 3.25% convertible subordinated notes for an aggregate purchase price of $47.8 million. 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.
Research and development expense related to NKTR-118 and NKTR-119 for the three months ended March 31, 2009 totaled approximately $4.4 million compared to $0.5 million in the same period of 2010. In addition, outside spending with contract manufacturing and contract research organizations decreased by approximately $0.6 million for the three months ended March 31, 2010 compared to the three months ended March 31, 2009. These decreases were off-set by the following increases: $1.0 million increase for the NKTR-102 program as we continue the Phase 2 clinical trials for our breast, ovarian and colorectal cancer programs; $0.8 million increase for our India operations after the completion of the India research facility; $1.7 million increase in U.S. employee costs as a result of headcount additions and salary and benefit cost increases; and $0.8 million increase in non-cash stock-based compensation expense.
We had cash, cash equivalents and short-term investments in marketable securities of $362.0 million and indebtedness of $240.5 million, including $215.0 million of 3.25% convertible subordinated notes due September 2012, $20.0 million in capital lease obligations, and $5.5 million in other liabilities as of March 31, 2010.
Cash flows used in operating activities for the three months ended March 31, 2010 totaled $34.2 million, which includes $7.2 million for employee bonus payments related to services performed in 2009, $3.5 million for interest payments on our convertible subordinated notes, and $23.5 million of other net operating cash uses. Because of the nature and timing of certain cash receipts and payments, net cash utilization is not expected to be ratable over the four quarters of the year.
For the three months ended March 31, 2009, cash used in operations included $4.7 million for employee bonus payments related to services performed in 2008, $3.5 million for interest payments on our convertible subordinated notes, $2.7 million for severance payments, and $31.5 million of other net operating cash uses.
We purchased $4.0 million and $5.1 million of property and equipment in the three months ended March 31, 2010 and 2009, respectively. During the three months ended March 31, 2009, we paid $4.8 million of previously expensed transaction costs related to the sale of certain assets related to our pulmonary business, associated technology and intellectual property to Novartis, which was completed on December 31, 2008.
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