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Nektar's (NKTR) Q2 Earnings and Revenues Miss Estimates

·4-min read

Nektar Therapeutics NKTR reported a loss of 85 cents per share for the second quarter of 2022, narrower than the Zacks Consensus Estimate of a loss of $1.01 but wider than the year-ago quarter’s loss of 69 cents.

Quarterly revenues were down 23.8% year over year to $21.6 million during the quarter. Revenues also missed the Zacks Consensus Estimate of $23.2 million.

Shares of Nektar have plunged 67.3% so far this year compared with the industry’s decline of 19.6%.

Zacks Investment Research
Zacks Investment Research


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Quarter in Detail

Nektar’s top line comprises product sales, royalty revenues, non-cash royalty revenues and license, collaboration and other revenues.

In the second quarter, product sales declined 32.3% from the year-ago quarter’s levels to $5.3 million. Non-cash royalty revenues were $16.3 million in the quarter, down 20.5% from the year-ago quarter’s levels.

License, collaboration and other revenues were $9,000 in the quarter compared with $28,000 in the year-ago quarter.

Research and development (R&D) expenses declined 57.8% to $42.7 million. General and administrative (G&A) expenses were down 30.6% year over year to $20.5 million in the reported quarter. The lower expenses were due to the discontinuation of the development of the company’s lead candidate, bempegaldesleukin (bempeg), in April.

Following the discontinuation of the bempeg program, Nektar announced strategic plans to focus on its other pipeline candidates and also extend its cash runway. During the quarter, Nektar recorded expenses of $106.0 million as restructuring, impairment and other costs of the terminated program. This is in line with management’s estimates, which projected restructuring initiatives to cost Nektar between $150 million and $160 million, with a major portion of the expenses being recorded in the second quarter.

Cash and investments in marketable securities as of Jun 30, 2022, were $628.2 million compared with $704.4 million as of Mar 31, 2022.

The company expects its cost-saving initiatives to help it to end 2022 with cash resources of $440 million to $450 million. It expects its cash resources to be enough to fund its operations into the first half of 2025.

Pipeline Updates

Nektar faced its first setback in March 2022 when one pivotal late-stage study evaluating bempeg plus Bristol-Myers’ BMY immunotherapy drug, Opdivo, in melanoma indication, failed to achieve study goals. The lead candidate was being developed in collaboration with BMY for multiple oncology indications.

In April 2022, Nektar and Bristol Myers announced that bempeg plus Opdivo is unlikely to meet primary endpoints in two clinical studies evaluating the combination in renal cell carcinoma (RCC) and bladder cancer. A potential approval in melanoma was anticipated as early as 2023. However, the study failure and dismal data readouts led Nektar and Bristol Myers to discontinue all development programs for bempeg.

The partnership with Bristol Myers was one of Nektar’s most lucrative deals providing the company with significant cash resources to support progress of its pipeline. As a result of this discontinuation, the partnership with Bristol Myers has now come to a close and is no longer eligible to receive any payments from Bristol-Myers.

Following the discontinuation of the bempeg programs, Nektar is currently focusing on its other key pipeline candidates, NKTR-358 and NKTR-255. The company will also focus on several core research programs. It also announced a cost restructuring plan to extend its cash runway.

Nektar’s partner, Eli Lilly LLY is evaluating NKTR-358 in mid-stage studies involving patients with systemic lupus erythematosus (SLE). Lilly plans to initiate two more mid-stage studies to evaluate the candidate as a potential treatment for atopic dermatitis soon and another undisclosed auto-immune indication in 2023. The candidate demonstrated sustained disease control for at least six months in AD patients in a previously complete proof-of-concept study.

Nektar is developing NKTR-255 as a cell therapy potentiator to boost the anti-tumor immune response of other cancer therapies, especially CAR T therapies. The candidate is currently in early-stage development and is being evaluated for multiple oncology indications.

Nektar Therapeutics Price

 

Nektar Therapeutics Price
Nektar Therapeutics Price

Nektar Therapeutics price | Nektar Therapeutics Quote

 

Zacks Rank & Stock to Consider

Nektar currently has a Zacks Rank #3 (Hold).

A better-ranked stock in the biotech sector is Novavax NVAX, which currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Novavax’s stock has plunged 56.7% this year so far. Novavax’s earnings estimates for 2023 have increased from $10.43 per share to $10.62 per share over the past 30 days.

Novavax missed earnings estimates in each of the last four quarters, delivering a negative earnings surprise of 184.49%, on average. In the last reported quarter, NVAX delivered a negative earnings surprise of 23.12%.


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