Nektar (NKTR) Q3 Earnings & Sales Beat Estimates, Shares Up

Nektar Therapeutics (NASDAQ:NKTR) reported a loss of 56 cents per share for the third quarter of 2018, narrower than the Zacks Consensus Estimate of a loss of 64 cents. The company had recorded a loss of 37 cents per share in the year-ago period.

Nektar’s stock was up 2.1% in pre-market trading on Nov 8. Shares of Nektar have lost 36.5% so far this year compared with the industry’s decrease of 2.7%.

Quarterly revenues were $27.8 million compared with the year-ago figure of $152.9 million. The significant decrease in revenues was attributable to $127.6 million in upfront fees received from Eli Lilly (NYSE:LLY) in the third quarter of 2017 related to development and commercialization collaboration deal of NKTR-358. The top line beat the Zacks Consensus Estimate of $25 million.

Quarter in Detail

The top line comprises product sales, royalty revenues, non-cash royalty revenues besides license, collaboration and other revenues.

In the third quarter, product sales declined 4.3% to $4.3 million from the year-ago period. However, non-cash royalty revenues increased 3.8% to $8.4 million.

The company reported royalty revenues of $10.3 million in the quarter, registering an improvement of 10.3% from $9.3 million a year ago.

License, collaboration and other revenues came in at $4.9 million compared with $131.1 million in the prior year. In the year-ago period, the company recorded upfront fees from Eli Lilly related to a license agreement for NKTR-358.

Research and development (R&D) expenses escalated 56.6% to $102.9 million, primarily due to investments in pipeline, including key candidates NKTR-358, NKTR-214 and NKTR-262. It also included costs related to filing of a new drug application (“NDA”) for NKTR-181.

Nektar is looking to get NKTR-181, an opioid analgesic, for the treatment of chronic low back pain, approved. A decision from the FDA is expected by May 29, 2019.

General and administrative (G&A) expenses were up 55.3% to $18.7 million in the reported quarter primarily due to higher stock-based compensation expenses.

Pipeline Update

Nektar is developing several candidates across important therapeutic areas including Onzeald in breast cancer and NKTR-181 in chronic pain. The company is also developing several immuno-oncology candidates, with NKTR-214 being a primary candidate among them.

In November, the company entered into clinical collaboration with Pfizer (NYSE:PFE) to develop doublet or triplet combination therapies of NKTR-214 in several cancer indications including metastatic castration-resistant prostate cancer and squamous cell carcinoma of the head and neck. Per the terms of the agreement, Pfizer will initiate a phase Ib/II study in 2019 to evaluate combination therapies of its cancer drugs/candidates Bavencio (avelumab) and talazoparib or Xtandi (enzalutamide) with NKTR-214.

In September, Nektar and partner, Bristol-Myers (NYSE:BMY) , initiated a phase III study to evaluate NKTR-214 plus Opdivo (nivolumab) for treating previously untreated unresectable or metastatic melanoma.

Onzeald is currently being evaluated in a phase III (ATTAIN) study for the treatment of adults with advanced breast cancer, having brain metastases.

Zacks Rank

Nektar currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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