Nektar Therapeutics NKTR reported first-quarter 2015 earnings of 25 cents per share, as compared to the year-ago loss of 37 cents per share and the Zacks Consensus Estimate of a loss of 41 cents. The company’s bottom-line results were boosted by higher revenues. The company’s shares jumped 20.6% after the announcement.
Total revenues in the reported quarter shot up to $108.8 million from $19.8 million a year ago. The increase was primarily due to the recognition of $90.0 million of milestone payment from AstraZeneca AZN. Revenues were way ahead of the Zacks Consensus Estimate of $20.2 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 during the quarter came in at $96.7 million as compared to $8.1 million in the year-ago quarter. The increase was primarily due to the recognition of $90.0 million of milestone payment out of the $100.0 million payment from AstraZeneca in relation to the first commercial sale of Movantik in the U.S. Nektar has an agreement with AstraZeneca for Movantik.
Moventig (EU trade name of Movantik) gained approval in the EU during the fourth quarter 2014 for the treatment of opioid-induced constipation (OIC) in adult patients who have had an inadequate response to laxatives. The drug was approved in the U.S. in Sep 2014 for the treatment of OIC in adults with chronic non-cancer pain.
Nektar’s net product sales and royalty revenues were $8.1 million during the reported quarter, up 36.9%. Non-cash royalty revenues related to the sale of future royalties decreased 31.4% year over year to $4.0 million.
Research and development (R&D) expenses increased 22.6% year over year to $47.0 million, primarily due to higher pipeline development related expenses. General and administrative (G&A) expenses increased 3.8% year over year to $10.3 million during the quarter.
Pipeline Update
Nektar has made significant progress with its pipeline so far. Baxter BAX filed a biologics license application with the FDA for the approval of BAX 855 for the treatment of hemophilia A. Baxter plans to launch BAX 855 later in 2015, upon approval. Nektar has an agreement with Baxter for BAX 855.
Nektar reported disappointing top-line data from the phase III study (BEACON) on NKTR-102 (metastatic breast cancer) in March this year. The company said that it will not be conducting any study on the candidate.
Meanwhile, Nektar has initiated patient enrolment in the first phase III study on NKTR-181 (chronic pain). Apart from these candidates, Nektar also made substantial progress with early-stage pipeline candidates like NKTR-171 (peripheral nerve pain) and NKTR-214 (cancer).
2015 Outlook Updated
Nektar now expects total revenues in the range of $215 million to $225 million from the previous range of $225 million to $235 million. The company expects to recognize $40 million in milestone payment in the third quarter for the first commercial sale of Moventig in Germany.
The Zacks Consensus Estimate for total revenues currently stands at $237 million.
R&D spend is now expected in the range of $185 million to $195 million as compared to the previous range of $195 million to $205 million. The SG&A spend is now expected in the $42–$44 million range (previous: $44–$46 million range).
Our Take
Nektar’s first-quarter results were encouraging. The launch of Movantik was a huge positive for Nektar. We expect investor focus to remain on Nektar’s pipeline and commercialization of Movantik. However, the pipeline setback related to NKTR-102 was disappointing.
Nektar currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Biogen Inc. BIIB carrying a Zacks Rank #1 (Strong Buy).
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