Morningstar | Nektar Reports $119 Million Loss in 1Q as Phase 3 Clinical Trials for Bempeg Ramp Up in Oncology
We don't anticipate any changes to our fair value estimate of $39 per share for no-moat Nektar following its first-quarter results. The company's valuation is heavily based on the potential of its immuno-oncology pipeline. In the first quarter, the company earned $4.4 million in product sales, $11.4 million in royalties, $8.2 million in non-cash royalties, and $4.2 million in license and collaboration revenue. In sum, the $28 million in revenue represents a 26% decline from last year, with the decline largely stemming from a decline in collaboration revenue, which tends to be sporadically timed. Operating costs in the first quarter were $149 million, up 19% from last year. We model full-year operating expenses increasing significantly year over year, driven by the phase 3 trials of bempegaldesleukin (or bempeg), the company's lead candidate, in addition to studies for its earlier-stage candidates in immuno-oncology and autoimmune disease.The company remains flush with cash, ending the quarter with about $1.8 billion in cash and investments thanks to last year's payment from Bristol. The company anticipates ending the year with $1.5 billion, in addition to a $65 million-$75 million receivable due from Bristol at the end of the year as reimbursement for development costs. As a reminder, per the collaboration agreement with Bristol, Nektar is only responsible for $125 million in bempeg development costs each year, which should allow it to simultaneously develop other pipeline candidates besides bempeg. If successfully approved, these candidates could form a solid portfolio of immuno-oncology and auto-immune therapies for the emerging biotech. However, until the company proves its mettle, we are maintaining our no-moat rating for Nektar.
Nektar Therapeutics is a research-based biopharmaceutical company. The company's proprietary drugs and drug candidates that have either received regulatory approval or are being developed by the company or in collaboration with other pharmaceutical companies or independent investigators include: ONZEALD?, a topoisomerase I inhibitor targeted for advanced metastatic breast cancer in patients with brain metastases; NKTR-181, an orally-available mu-opioid analgesic molecule for moderate to severe chronic pain; NKTR-214, a CD122-biased immune-stimulatory cytokine targeted for oncology; NKTR-358 for autoimmune disease; NKTR-262 targeted for solid tumors; and NKTR-255 targeted for immuno-oncology.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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