nktr-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________________________________________________________

FORM 10-Q

_______________________________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-24006

_______________________________________________________________________

NEKTAR THERAPEUTICS

(Exact name of registrant as specified in its charter)

_______________________________________________________________________


Delaware						94-3134940
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

455 Mission Bay Boulevard South

San Francisco, California 94158

(Address of principal executive offices)

415-482-5300

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading symbol(s)	Trading symbol(s)
Common Stock, $0.0001 par value	NKTR	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the registrant’s Common Stock, $0.0001 par value, was 182,308,999 on April 30, 2021.

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NEKTAR THERAPEUTICS

INDEX



	Summary of Risks	4
PART I: FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements — Unaudited:	6
	Condensed Consolidated Balance Sheets — March 31, 202 1 and December 31, 2 02 0	6
	Condensed Consolidated Statements of Operations for the three months ended March 31, 202 1 and 20 20	7
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 202 1 and 20 20	8
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 202 1 and 2 0 20	6
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 202 1 and 20 20	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38

PART II: OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3.	Defaults Upon Senior Securities	61
Item 4.	Mine Safety Disclosures	61
Item 5.	Other Information	61
Item 6.	Exhibits	63
Signatures		64

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Forward-Looking Statements

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). All statements other than statements of historical fact are “forward-looking statements” for purposes of this quarterly report on Form 10-Q, including any projections of market size, earnings, revenue, milestone payments, royalties, sales or other financial items, any statements of the plans and objectives of management for future operations (including, but not limited to, preclinical development, clinical trials and manufacturing), any statements related to our financial condition and future working capital needs, any statements regarding potential future financing alternatives, any statements concerning proposed drug candidates, any statements regarding the timing for the start or end of clinical trials or submission of regulatory approval filings, any statements regarding future economic conditions or performance, any statements regarding the initiation, formation, or success of our collaboration arrangements, timing of commercial launches and product sales levels by our collaboration partners and future payments that may come due to us under these arrangements, any statements regarding our plans and objectives to initiate or continue clinical trials, any statements related to potential, anticipated, or ongoing litigation, any statements concerning estimates and predictions of the COVID-19 pandemic's impact on our business and clinical trials and any statements of assumptions underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,” “potential” or “continue,” or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, such expectations or any of the forward-looking statements may prove to be incorrect and actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, including, but not limited to, the risk factors set forth in Part II, Item 1A “Risk Factors” below and for the reasons described elsewhere in this quarterly report on Form 10-Q. All forward-looking statements and reasons why results may differ included in this report are made as of the date hereof and we do not intend to update any forward-looking statements except as required by law or applicable regulations. Except where the context otherwise requires, in this quarterly report on Form 10-Q, the terms “Company,” “Nektar,” “we,” “us,” and “our” refer to Nektar Therapeutics, a Delaware corporation, and, where appropriate, its subsidiaries.

Trademarks

The Nektar brand and product names, including but not limited to Nektar®, contained in this document are trademarks and registered trademarks of Nektar Therapeutics in the United States (U.S.) and certain other countries. This document also contains references to trademarks and service marks of other companies that are the property of their respective owners.

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Summary of Risks

We are providing the following cautionary discussion of risk factors, uncertainties and assumptions that we believe are relevant to our business. These are factors that, individually or in the aggregate, we think could cause our actual results to differ materially from expected and historical results and our forward-looking statements. We note these factors for investors as permitted by Section 21E of the Exchange Act and Section 27A of the Securities Act. Investors in Nektar Therapeutics should carefully consider the risks described below before making an investment decision. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider this section to be a complete discussion of all potential risks or uncertainties that may substantially impact our business. Moreover, we operate in a competitive and rapidly changing environment. New factors emerge from time to time and it is not possible to predict the impact of all of these factors on our business, financial condition or results of operations.

Risks to our business are more fully described below in Item IA in this Form 10-Q, which risks include, among others:

•Risks Related to our Research and Development Efforts:

◦we are highly dependent on the success of bempegaldesleukin, our lead immuno-oncology (I-O) candidate, and our business will be significantly harmed if we are not successful in developing this drug candidate;

◦the outcomes from competitive I-O and combination therapy clinical trials, and the discovery and development of new potential oncology therapies could have a material and adverse impact on the value of our I-O pipeline;

◦significant competition for our polymer conjugate chemistry technology platforms and our partnered and proprietary products and drug candidates could make our technologies, drug products or drug candidates obsolete or uncompetitive;

◦preliminary and interim data from our clinical studies are subject to audit and verification procedures that could result in material changes in the final data and may change as more patient data become available; and

◦clinical trials for any of our drug candidates could be delayed for a variety of reasons.

•Risks Related to our Collaboration Partners:

◦we are highly dependent on our collaboration partners to initiate, properly conduct and prioritize clinical trials for bempegaldesleukin and NKTR-358 and to perform important additional development and commercialization activities, and our business will be significantly harmed if their actions deprioritize or otherwise harm the prospects of our drug candidates; and

◦the operations of our collaboration partners may be more affected by the COVID-19 pandemic than we are, or they may adopt more restrictive procedures for addressing the COVID-19 pandemic, either of which would delay initiating or completing one or more clinical trials involving our drug candidates.

•Risks Related to our Financial Condition and Capital Requirements:

◦we have substantial future capital requirements and there is a risk we may not have access to sufficient capital to meet our current business plan;

◦if the market size for a new drug that received approval is significantly smaller than we anticipate, it could negatively impact our revenue, results of operations and financial condition;

◦if third-party payers (including government programs) do not provide payment or reimbursement for our products, those products will not be widely accepted, which would negatively impact our business, results of operations and financial condition; and

◦our revenue is exclusively derived from our collaboration agreements. If we are unable to establish and maintain collaboration partnerships on attractive commercial terms, our business, results of operations and financial condition could suffer.

•Risks Related to the COVID-19 Pandemic: Our business could be adversely affected by the effects of health epidemics, including the recent COVID-19 pandemic.

•Risks Related to Supply and Manufacturing:

◦if we or our contract manufacturers are not able to manufacture drugs or drug substances in sufficient quantities that meet applicable quality standards, our business, financial condition and results of operations could be negatively harmed; and

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◦we purchase some of the starting material for drugs and drug candidates from a single source or a limited number of suppliers, and the partial or complete loss of one of these suppliers could cause delays, loss of revenue and contract liability.

•Risks Related to Business Operations: If we are unable to create robust sales, marketing and distribution capabilities or to enter into agreements with third parties to perform these functions, we will be unable to commercialize our drug candidates successfully.

•Risks Related to Intellectual Property, Litigation and Regulatory Concerns:

◦we may not elect or be able to take advantage of any expedited development or regulatory review and approval processes available to drug candidates granted Breakthrough Therapy designation by the United States Food and Drug Administration (FDA);

◦we or our partners may not obtain regulatory approval for our drug candidates on a timely basis, or at all; and

◦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, which may not be available on commercially reasonable terms.

In addition to the above-mentioned risks, our business is subject to a number of additional risks faced by businesses generally.

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PART I: FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements—Unaudited:

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)


	March 31, 2021		December 31, 2020
ASSETS
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 expenses	6,057		11,310
Other accrued expenses	14,833		9,676
Operating lease liabilities, current portion	15,768		13,915
Total current liabilities	123,633		115,779
Operating lease liabilities, less current portion	134,556		136,373
Development derivative liability	4,597		—
Liabilities related to the sales of future royalties, net	195,139		200,340
Other long-term liabilities	4,130		8,980
Total liabilities	462,055		461,472
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000 shares authorized; no shares designated or outstanding at March 31, 2021 or December 31, 2020	—		—
Common stock, $0.0001 par value; 300,000 shares authorized; 182,290 shares and 180,091 shares outstanding at March 31, 2021 and December 31, 2020, respectively	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’ equity	$	1,456,561	$	1,538,767

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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NEKTAR THERAPEUTICS

CONDENSED 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 sale of future royalties	18,798		9,895
License, collaboration and other revenue	54		27,515
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 terminated program	—		45,189
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 related to sale of future royalties	(13,296)		(6,968)
Change in fair value of development derivative liability	(1,599)		—
Interest income and other income (expense), net	1,412		8,352
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 computing basic and diluted net loss per share	181,370		177,185

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)


	Three months ended March 31,
	2021		2020
Net loss	$	(122,967)	$	(138,651)
Other comprehensive income (loss):
Net unrealized gain (loss) on available-for-sale investments	(766)		(5,121)
Net foreign currency translation gain (loss)	(60)		(751)
Other comprehensive income (loss)	(826)		(5,872)
Comprehensive loss	$	(123,793)	$	(144,523)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Common Shares	Par Value		Capital in Excess of Par Value		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Balance at December 31, 2019	176,505	$	17	$	3,271,097	$	(1,005)	$	(1,864,718)	$	1,405,391
Shares issued under equity compensation plans	1,358	—		11,347		—		—		11,347
Stock-based compensation	—	—		24,211		—		—		24,211
Comprehensive loss	—	—		—		(5,872)		(138,651)		(144,523)
Balance at March 31, 2020	177,863	$	17	$	3,306,655	$	(6,877)	$	(2,003,369)	$	1,296,426

	Common Shares	Par Value		Capital in Excess of Par Value		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Balance at December 31, 2020	180,091	$	18	$	3,388,730	$	(2,295)	$	(2,309,158)	$	1,077,295
Shares issued under equity compensation plans	2,199	—		17,106		—		—

SEC Form 10-Q filed by Nektar Therapeutics