Wider-than-Expected Loss at Nektar, Guidance Disappoints - Analyst Blog

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Nektar Therapeutics ( NKTR ) reported a loss of 41 cents per share in the fourth quarter of 2013, wider than the Zacks Consensus Estimate of a loss of 16 cents. Fourth quarter loss was however narrower than the year-ago loss of 46 cents. The narrower year-over-year loss was primarily due to higher revenues.

Total revenues in the reported quarter jumped 47.3% to $31.1 million. The huge increase in quarterly revenues was primarily due to increased product shipments to one of the company's partners. Revenues were however well below the Zacks Consensus Estimate of $56 million.

The company reported a loss of $1.40 per share in 2013, wider than the Zacks Consensus Estimate of a loss of $1.14 but narrower than the year-ago loss of $1.48 per share. Nektar's total revenues in 2013 increased 83.4% to $148.9 million. Revenues were however well below the Zacks Consensus Estimate of $181 million.

Quarter in Detail

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

License, collaboration and other revenues increased 130.4% to $13.7 million. Nektar has a partnership with AstraZeneca ( AZN ) for naloxegol, which is being developed for the treatment of opioid-induced constipation (OIC). Nektar triggered a $70 million milestone payment from AstraZeneca after the candidate's New Drug Application (NDA) was accepted in the U.S. AstraZeneca intends to launch naloxegol in the U.S. and the EU in 2015, which will trigger another $100 million and $40 million respectively.

Nektar's net product revenues of approximately $8.0 million were down 22.7% during the reported quarter. Nektar's royalty revenues decreased 28.9% to $0.4 million during the quarter. Non-cash royalty revenues related to the sale of future royalties increased 140% to $9.3 million in the reported quarter.

Research and development (R&D) expenses were up 4.0% to $48.2 million in the fourth quarter of 2013. R&D expenses during the quarter increased primarily due to higher clinical expenses related to its pipeline. Nektar's general and administrative (G&A) expenses decreased 9.5% to $9.8 million during the quarter.

Disappointing 2014 Guidance

Nektar expects 2014 total revenues in the range of $190-$195 million. The Zacks Consensus Estimate of $267 million is well above the company's guidance range.

The company's revenue guidance includes the recognition of $70 million and $35 million milestone payments from AstraZeneca related to naloxegol. The guidance also includes $20 million of non-cash royalty revenues in relation to Cimzia and Mircera.

Nektar expects 2014 R&D expenses between $165 million and $175 million and G&A expenses within $40-$42 million.

Pipeline Update

Nektar has progressed well with its pipeline in the last few quarters and is awaiting several pipeline related events in the coming quarters. Nektar expects to report phase III data on NKTR-102 in early 2015. The candidate is being developed for the treatment of patients suffering from advanced breast cancer. Nektar is currently designing a phase III study on NKTR-181 in chronic pain patients, which is expected to start in mid-2014.

Our Take

The company's fourth quarter results were disappointing. Nektar also provided a weak 2014 guidance. However, the company's progress with naloxegol is encouraging. The company has a series of pipeline related events in the coming quarters and we expect investor focus to remain on Nektar's pipeline.

Nektar currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the same sector include Alexion Pharmaceuticals ( ALXN ) and Auxilium Pharmaceuticals Inc. ( AUXL ). Both the stocks carry a Zacks Rank #1 (Strong Buy).



ALEXION PHARMA (ALXN): Free Stock Analysis Report

AUXILIUM PHARMA (AUXL): Free Stock Analysis Report

ASTRAZENECA PLC (AZN): Free Stock Analysis Report

NEKTAR THERAP (NKTR): Free Stock Analysis Report

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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: ALXN , AUXL , AZN , NKTR

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