Nektar (NKTR) Q4 Loss Narrower Than Expected, Sales Soar Y/Y

Nektar Therapeutics (NASDAQ:NKTR) reported a loss of 14 cents per share in the fourth quarter of 2017, substantially narrower than both the Zacks Consensus Estimate of a loss of 38 cents and the year-ago figure of 28 cents.

Shares of Nektar have significantly outperformed the industry in a year’s time. The stock has skyrocketed 471.6% while the industry has decreased 2.6%.

Quarterly revenues substantially soared 154.7% to $95.5 million from the year-ago period. This upside can mainly be attributed to a massive rise in license and collaboration revenues. The top line also significantly beat the Zacks Consensus Estimate of $31 million.

Quarter in Detail

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

In the fourth quarter, product sales tumbled 43.1% to $7.8 million from $13.7 million a year ago. However, non-cash royalty revenues increased 17.9% to $9.2 million.

The company reported royalty revenues of $9.6 million in the quarter under review, registering a huge improvement of 50% from $6.4 million a year ago. This uptrend was mainly on the back of royalty revenues received under a license agreement with AstraZeneca for Movantik and Shire plc for Adynovate.

License, collaboration and other revenues came in at $68.9 million compared with $9.6 million in the prior year. This upside was mainly due to a receipt of $60 million in non-recurring revenues related to a new sublicense agreement.

Research and development (R&D) expenses mounted 62.2% to $81.4 million, primarily due to investments in pipeline including key candidates NKTR-358, NKTR-214 and NKTR-181.

General and administrative (G&A) expenses were down 3.9% to $12.3 million in the reported quarter.

2017 Results

Full-year sales jumped 86% year over year to $307.7 million. Sales outpaced the consensus mark of $243.7 million as well as the previously guided range of $250-$255 million.

The 2017 loss of 35 cents per share was narrower than both the Zacks Consensus Estimate of 78 cents and the year-earlier figure of 80 cents.

Pipeline Update

The most advanced candidate in the company’s portfolio is Onzeald, currently under evaluation in a phase III (ATTAIN) study for treatment of adults with advanced breast cancer, having brain metastases.

Apart from Onzeald, another candidate in the company’s immuno-oncology portfolio is NKTR-214. Last year in September, Nektar announced initiation of phase I/II PROPEL study to evaluate the efficacy and safety of NKTR-214 in combination with Roche’s (OTC:RHHBY) Tecentriq (atezolizumab) and Merck’s (NYSE:MRK) Keytruda (pembrolizumab). Data from the trial is expected in the second half of 2018.

A phase I/II study evaluating NKTR-214 as a potential combination treatment regimen with Bristol-Myers Squibb’s (NYSE:BMY) Opdivo is also underway. The candidate is being examined across nine tumor types including melanoma, renal cell carcinoma, non-small cell lung cancer, bladder and triple negative breast cancer. The combo therapy will also be evaluated in more than 20 potential indications.

Another candidate, NKTR-181, is being evaluated in a phase III program for chronic pain management. Last July, the company reported positive top-line results from an oral human abuse potential study, evaluating NKTR-181, to assess the opioid abuse potential compared with oxycodone. The company is planning to submit a new drug application (NDA) for the candidate by April 2018.

2018 Outlook

Nektar estimates revenues in the range of $100-$110 million excluding payments from the collaboration with Bristol-Myers, entered last month. Per the agreement, both companies will jointly develop and commercialize the lead immuno-oncology candidate, NKTR-214, of the former in combination with the latter’s Opdivo and Opdivo plus Yervoy (ipilimumab).

Nektar anticipates cash of approximately $1.9-$1.925 billion at year-end 2018 including upfront payments from the collaboration with Bristol-Myers.

Notably, cash and investments in marketable securities as of Dec 31, 2017 were $353.2 million in comparison to $389.1 million as of Dec 31, 2016.

Zacks Rank

Nektar carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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