Narrower-than-Expected Loss at Nektar - Analyst Blog

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Nektar Therapeutics ( NKTR ) reported a loss of 37 cents per share in the second quarter of 2013, wider than the year-ago loss of 30 cents but narrower than the Zacks Consensus Estimate of a loss of 44 cents. The wider year-over-year loss during the quarter was primarily due to higher expenses.

However, Nektar's share price was up significantly following the second quarter 2013 results based on strong top-line results.

Quarter in Details

Total revenues in the reported quarter jumped 43% to $33.9 million. The increase in quarterly revenues was primarily due to a $10.0 million milestone received from Bayer ( BAYRY ) for the initiation of phase III studies on Amikacin Inhale. Second quarter revenues were also benefited from higher product sales. Revenues were well above the Zacks Consensus Estimate of $24 million.

Amikacin Inhale is being developed for the treatment of gram-negative bacterial pneumonias in ventilated patients. Results from phase III studies are expected by the first half of 2015.

Total revenues comprised net product revenues, royalty revenues, non-cash royalty revenues, license and collaboration revenues and others.

Nektar's net product revenues of approximately $10.3 million were up 6.5% during the reported quarter.

Nektar's royalty revenues decreased 21% to $0.4 million during the quarter. The company's license, collaboration and other revenues however increased 89.2% to $19.4 million in the reported quarter primarily due to the milestone received from Bayer.

Research and development (R&D) expenses were up 57.3% to $52.2 million in the second quarter of 2013. R&D expenses during the quarter increased primarily due to higher clinical expenses related to its pipeline.

The company recently completed the enrolment process for the phase III BEACON study on its metastatic breast cancer candidate NKTR-102 (etirinotecan pegol). Nektar Therapeutics plans to conduct an interim futility analysis on the phase III study at the beginning of 2014 and expects top-line survival data by the end of that year.

Nektar's general and administrative (G&A) expenses decreased 10.1% to $9.2 million during the quarter.

2013 Outlook

Apart from disclosing its financial results, Nektar maintained its guidance for 2013. The company still expects total revenues in the range of $200-$210 million, including potential milestone payments of $95 million. The revenue guidance also includes $20 million of non-cash royalty revenues in relation to Cimzia and Mircera.

Nektar also reiterated its R&D expenses for 2013 in the range of $200 million to $220 million. Nektar's G&A expenses for 2013 are also maintained in the range of $42-$44 million.

Our Take

The company's second-quarter 2013 results were encouraging. We are also impressed with the pipeline progress at Nektar. We expect investor focus to stay on the company's pipeline going forward.

Nektar, a biopharma company, currently carries a Zacks Rank #3 (Hold). However, among other biopharma stocks, Actelion Ltd. ( ALIOF ) and Biogen Idec Inc. ( BIIB ) currently looks better positioned with a Zacks Rank #1 (Strong Buy).



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ALIOF , BAYRY , BIIB , NKTR

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