Nektar Therapeutics (NKTR) Loss Wider Than Expected In Q1

Nektar Therapeutics (NASDAQ:NKTR) reported first-quarter 2017 loss of 42 cents per share, wider than the Zacks Consensus Estimate of a loss of 40 cents. The reported loss was also significantly wider than the year-ago loss of 14 cents per share. The company’s shares gained 8.15% following the release of first-quarter results.

In fact, Nektar saw its shares significantly outperform the Zacks classified Medical-Drugs industry in the past one year. The company’s shares have gained 54.6%, while the industry registered an increase of 5.6%.



Quarterly revenues decreased 58.1% to $24.7 million from the year-ago quarter. The decrease in revenues can mainly be attributed to the recognition of $28.0 million received from AstraZeneca (NYSE:AZN) for the sublicense of Moventig in Europe in the first quarter of 2016. Revenues missed the Zacks Consensus Estimate of $30 million.

Quarter in Detail

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

In the first quarter, product sales decreased significantly to almost $4.8 million from $14.1 million a year ago. Non-cash royalty revenues increased 3.1% to $6.7 million.

The company reported royalty revenues of $7.2 million in the first quarter compared with $4.1 million the year-ago quarter. This was mainly due to royalty revenues from Movantik sales. License, collaboration and other revenues came in at $6.1 million as against $34.2 million a year ago.

Research and development (R&D) expenses increased 24.1% to $61.1 million, primarily due to investments in pipeline, including candidates like NKTR-358 and NKTR-214.

General and administrative (G&A) expenses were up 17.6% to $12 million.

Pipeline Update

Nektar expects a decision from the European Medicines Agency’s Committee for Medicinal Products for Human Use for Onzeald for the treatment of advanced breast cancer with a history of brain metastases by the end of the first half of 2017. The company is looking to get the candidate approved for the treatment of patients with advanced breast cancer and brain metastases.

Upon the first sale of Onzeald in Europe, Nektar will receive a milestone payment of $10 million and will be eligible to receive 20% royalties on all European sales of Onzeald from Daiichi Sankyo.

Moreover, a phase I/II study evaluating NKTR-214 as a potential combination treatment regimen with Opdivo in collaboration with Bristol-Myers Squibb (NYSE:BMY) is underway. The company plans to report initial data from the dose-escalation part of the study by the middle of this year.

In Feb 2017, Nektar submitted an investigational new drug (IND) application to the FDA for NKTR-358, a new biologic designed to treat autoimmune disease. Clinical trials are planned to evaluate NKTR-358 in patients with systemic lupus erythematous (SLE) and other indications. Data from the trial are expected in the second half of 2017.

Zacks Rank & Key Picks

Nektar currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is VIVUS, Inc. (NASDAQ:VVUS) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

VIVUS’s loss per share estimates narrowed from 50 cents to 39 cents for 2017, over the last 30 days. The company posted positive earnings surprises in all of the four trailing quarters with an average beat of 233.69%.

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