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.
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
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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