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Nektar (NKTR) Q1 Loss Wider Than Expected, Sales Soar Y/Y


Nektar Therapeutics NKTR reported a loss of 60 cents per share for the first quarter of 2018, which was wider than the Zacks Consensus Estimate of a loss of 52 cents and the year-ago figure of 42 cents due to higher R&D costs.

Nektar’s stock was up 2.8% on May 11 following the earnings release. Shares of Nektar have outperformed the industry so far this year. The stock has risen 33% while the industry is up 0.6%.

Quarterly revenues soared 53.8% from the year-ago period to $38 million. This upside can mainly be attributed to a $10 million milestone payment under the collaboration agreement with Shire plc SHPG related to the approval of hemophilia drug, Adynovi, in Europe. The top line came in line with the Zacks Consensus Estimate.

Quarter in Detail

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

In the first quarter, product sales rose 32.4% to $6.3 million from $4.8 million a year ago. Moreover, non-cash royalty revenues increased 3.9% to $6.9 million.

The company reported royalty revenues of $11.1 million in the quarter under review, registering an improvement of 53.5% from $7.2 million a year ago.

License, collaboration and other revenues came in at $13.7 million compared with $6.1 million in the prior year, an upside of 125.3%.

Research and development (R&D) expenses escalated 62.8% to $99.4 million, primarily due to investments in pipeline including key candidates NKTR-358, NKTR-214 and NKTR-181.

General and administrative (G&A) expenses were up 56% to $18.7 million in the reported quarter primarily due to higher stock-based compensation.

Pipeline Update

The company received a major boost in February when it announced a global strategic collaboration agreement with Bristol-Myers Squibb BMY. Per the agreement, the companies will jointly develop and commercialize Nektar’s lead immuno-oncology candidate, NKTR-214, in combination with Bristol-Myers’ Opdivo (nivolumab) and Opdivo plus Yervoy (ipilimumab).

Moreover, pursuant to the contract, the company received $1.0 billion in upfront payment and proceeds of $850 million from share purchase in April.

In the same month, Nektar began dosing in a phase I/II study – REVEAL – to evaluate a combination of its two candidates NKTR-262, a toll-like receptor agonist, and NKTR-214, an immuno-stimulatory CD122-biased agonist, in advanced or metastatic solid tumor cancers.

Moreover, the company has also collaborated with Takeda to develop NKTR-214 in combination with the latter’s TAK-659, a dual SYK and FLT-3 inhibitor, in liquid and solid tumors. First study under this collaboration is expected to start in the second half of 2018, which will evaluate the combination in non-Hodgkin lymphoma.

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.

Apart from these, the company’s pipeline includes two late stage candidates, Onzeald and NKTR-181.

Onzeald is currently under evaluation in a phase III (ATTAIN) study for the treatment of adults with advanced breast cancer, having brain metastases. The company is developing NKTR-181 for the treatment of chronic pain. A new drug application is expected to be filed with the FDA this month.

Zacks Rank

Nektar carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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