Nektar (NKTR) Q2 Earnings In Line, Product Sales Down Y/Y

Nektar TherapeuticsNKTR reported earnings of $5.33 per share in the second quarter of 2018, matching the Zacks Consensus Estimate. The company had recorded a loss of 39 cents per share in the year-ago period.

Nektar's stock was down 4.6% in after-market trading on Aug 8, presumably on significant decrease in product revenues. Shares of Nektar have lost 6.3% so far this year while the industry rose 1.6%.

Quarterly revenues were $1.09 billion compared with the year-ago figure of $34.6 million. The significant increase in revenues was attributable to upfront fees received from Bristol-Myers BMY related to new strategic collaboration agreement entered into in April. The top line beat the Zacks Consensus Estimate of $1.04 billion.

Quarter in Detail

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

In the second quarter, product sales declined 62.6% to $5.9 million from $15.7 million a year ago. However, non-cash royalty revenues increased 36.3% to $9 million.

The company reported royalty revenues of $8.6 million in the quarter, registering an improvement of 15.2% from $7.4 million a year ago.

License, collaboration and other revenues came in at $1.06 billion compared with $4.8 million in the prior year. In April 2018, the company signed a new strategic collaboration agreement with Bristol-Myers, replacing its earlier clinical collaboration agreement to develop Nektar's cancer candidate, NKTR-214, in combination with Bristol-Myers' Opdivo and/or Yervoy. This agreement triggered an upfront payment of $1.1 billion and purchase of $850 million worth of Nektar's common shares by Bristol-Myers.

Research and development (R&D) expenses escalated 46.4% to $88.3 million, primarily due to investments in pipeline including key candidates NKTR-358, NKTR-214 and NKTR-181. It also included costs related to filing of a new drug application ("NDA") for NKTR-181.

General and administrative (G&A) expenses were up 26.9% to $20.3 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 an immuno-oncology candidates, with NKTR-214 being a key among them.

In July, the company announced that that the FDA has accepted the NDA for NKTR-181 seeking approval of the opioid analgesic for the treatment of chronic low back pain.

In June, the company presented positive data from a phase II study, evaluating NKTR-214 in combination with Opdivo for treating melanoma, renal cell carcinoma and urothelial cancer in the first-line setting. Nektar and Bristol-Myers are planning to initiate a phase III study to evaluate the combination in first-line melanoma in the third quarter of 2018.

In May, Nektar initiated a dose ranging phase Ib study to evaluate NKTR-358, a regulatory T cell stimulator, in patients with systemic lupus erythematosus, an autoimmune disease. The company has a worldwide license agreement with Eli Lilly LLY related to the development of NKTR-358.

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

Nektar Therapeutics Price, Consensus and EPS Surprise

Nektar Therapeutics Price, Consensus and EPS Surprise | Nektar Therapeutics Quote

Zacks Rank & Stock to Consider

Nektar currently carries a Zacks Rank #3 (Hold). Seattle Genetics SGEN is a better-ranked stock in the pharma sector, carrying a Zacks Rank of #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Seattle Genetics' 2018 loss per share estimates narrowed from $1.81 to 83 cents and from 81 cents to 39 cents in the last 30 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with an average beat of 12.93%. The company's shares have rallied 34.8% year to date.

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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 Nasdaq, Inc.

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

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