EX-99 3 a4449310_ex991.txt NEKTAR EXHIBIT 99.1 Exhibit 99.1 Nektar Announces Second Quarter 2003 Results SAN CARLOS, Calif.--(BUSINESS WIRE)--Aug. 6, 2003--Nektar Therapeutics (Nasdaq:NKTR), formerly Inhale Therapeutic Systems, Inc., announced today its financial results for the second quarter ended June 30, 2003. The Company reported revenue of $27.7 million for the three months ending June 30, 2003, including $6.5 million of product revenue and $21.2 million of contract research revenue compared to $22.3 million for the three months ended June 30, 2002, including $3.4 million of product revenue and $18.8 million of contract research revenue. The increase in revenue is due primarily to expanded activities under existing collaborative agreements and higher sales of Nektar molecule engineering advanced PEGylation products. The Company reported a net loss of $13.0 million or $(0.23) per share for the three months ending June 30, 2003, compared to a net loss in the same quarter in 2002 of $24.8 million or $(0.45) per share. For the six months ending June 30, 2003, Nektar reported revenue of $53.3 million, including $13.7 million of product revenue and $39.6 million of contract research revenue compared to $49.0 million for the same period in 2002, including $8.9 million of product revenue and $40.1 million of contract research revenue. For the six months ended June 30, 2003, Nektar reported a net loss of $33.0 million or $(0.59) per share compared to a net loss in the same period in 2002 of $49.9 million or $(0.90) per share. Nektar's balance of cash, cash equivalents and short-term investments at the end of the quarter was $308.3 million, including $96.4 million raised in an offering of 3% convertible subordinated notes due June 2010, net of issuance costs, during the quarter. Approximately $16.2 million of the proceeds from the sale of 3% convertible subordinated notes due 2010 were used to retire $20.5 million of 3.5% convertible notes due 2007 in privately negotiated transactions. This resulted in a $4.3 million gain, which was reflected as other income in the three and six months ended June 30, 2003. An additional $8.8 million of the proceeds were used to purchase restricted investments pledged for the benefit of the holders of the 3% convertible subordinated notes purchased in the offering. "In addition to improving our cash position through an offering of subordinated convertible notes, we were also particularly pleased with the steady advancement in the clinic of three partnered drug products using our technologies, the release of additional encouraging Exubera(R) (inhaled insulin) data, and new pre-clinical data from one of our internally initiated products, PEGylated inhaled insulin," said Ajit S. Gill, Nektar president and chief executive officer. Summary of Activities Partner Pipeline Progress "Our pipeline continues to grow. There are now 21 products using Nektar technology approved or in human clinical testing," said Gill. -- Nektar announced today that in the second quarter 2003, Unimed Pharmaceuticals, Inc., a wholly owned subsidiary of Solvay Pharmaceuticals, Inc., initiated a Phase I trial of a metered dose inhaler (MDI) version of dronabinol (synthetic delta-9-tetrahydrocannabinol). This product is being developed for use in multiple indications. Dronabinol is the active ingredient in Unimed Pharmaceuticals' product MARINOL(R) capsules, which are approved and marketed in the US. This is Nektar's first MDI development program. -- Chiron Corporation announced on July 23, 2003 that they initiated a Phase I trial for inhaled tobramycin, the first application of Nektar inhaleable technology to inhaled antibiotics for treatment of lung infections. Inhaled Tobi(R) is a next-generation inhaled, powder tobramycin product for the treatment of Pseudomonas aeruginosa in cystic fibrosis patients. Prior to collaborating with Chiron, Nektar had previously conducted a proof-of-concept Phase I trial in healthy subjects of inhaled powdered tobramycin. -- Celltech Group Plc announced progress with one of its products that uses Nektar PEGylation technology and services. CDP 860, a PEGylated antibody fragment drug in testing for cancer, completed a small Phase II proof-of-concept study. According to Celltech, the effects observed in this study were consistent with the proposed mechanism of action and confirmed the potent biological activity of this molecule. Exubera(R) (inhaled insulin) Progress "Our collaborator, Pfizer, commented in June 2003 at its Analyst Day that the lung function data from long-term safety tests continues to look positive and expressed confidence that Exubera(R) (inhaled insulin) will become an important and widely used diabetes medication," continued Gill. In addition, Nektar reported on new data released in June 2003 at the American Diabetes Association (ADA) annual conference from Phase III studies conducted by Pfizer and Aventis with Exubera(R). The data suggest that Exubera(R) may provide acceptable glycemic control to significantly more subjects than rosiglitazone in type 2 diabetes patients not optimally controlled on diet and exercise. Rosiglitazone is an oral hypoglycemic agent used to reduce the body's resistance to the action of insulin as a way of lowering blood glucose. Proprietary Pipeline Progress "In the first half of 2003, we also reported progress in our proprietary pipeline. As announced in April, an inhaled small molecule entered clinical testing in the first quarter. In the second quarter, we released pre-clinical data of PEGylated inhaled insulin, demonstrating that PEGylated proteins can be formulated into dry powders to provide prolonged activity," continued Gill. In June, Nektar presented pre-clinical data at the ADA from PEGylated inhaled insulin developed to cross the lungs efficiently and provide prolonged serum levels of insulin activity. About Nektar Nektar Therapeutics provides industry-leading drug delivery technologies, expertise and manufacturing to enable the development of high-value, differentiated therapeutics. Nektar's advanced drug delivery capabilities are designed to enable the Company's biotechnology and pharmaceutical partners to solve drug development challenges and realize the full potential of their therapeutics, from developing new molecular entities to managing the lifecycles of established products. This release contains forward-looking statements that reflect management's current views as to Nektar Therapeutics' business strategy, product and technology development plans and funding, collaborative arrangements, clinical trials, and other future events and operations. These forward-looking statements involve uncertainties and other risks that are detailed in Nektar Therapeutics' reports and other filings with the SEC, including its Annual Report on Form 10-K for the year ended Dec. 31, 2002, as amended and its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003. Actual results could differ materially from these forward-looking statements. Ajit S. Gill, Nektar president and CEO, will host a conference call today for analysts and investors beginning at 2:00 p.m. Pacific Time to further discuss the company's financial results. Investors can access a live audio-only Webcast through a link that will be posted on the Investor Relations site at Nektar's Web site at http://www.nektar.com. The Web broadcast of the conference call will be available for replay through Aug. 20, 2003. Analysts and investors can also access the conference call live via telephone by dialing 866-868-1109 (US); 847-413-2404 (international). The passcode is Nektar and the leader is Ajit Gill. An audio replay will be available shortly following the call through Aug. 20, 2003 and can be accessed by dialing 877-213-9653 or 630-652-3041 with a passcode of 7466264. -- Tables Attached -- NEKTAR THERAPEUTICS CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) June 30, 2003 Dec. 31, 2002 (unaudited) * ------------- ------------- ASSETS Current assets: Cash, cash equivalents and short-term investments $308,271 $293,969 Other current assets 21,382 17,020 ------------- ------------- Total current assets 329,653 310,989 Restricted investments 8,799 - Property and equipment, net 143,439 143,452 Goodwill 130,120 130,120 Other intangible assets 13,216 15,470 Deposits and other assets 9,269 6,607 ------------- ------------- $634,496 $606,638 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $29,456 $40,617 Capital lease obligations - current 1,118 1,008 Deferred revenue 14,320 22,040 ------------- ------------- Total current liabilities 44,894 63,665 Convertible subordinated debentures 378,649 299,149 Accrued rent 2,071 2,033 Capital lease obligations - noncurrent 31,043 31,862 Other long-term liabilities 3,167 3,159 Stockholders' equity: Preferred stock 40,000 40,000 Common stock 715,796 714,686 Deferred compensation (71) (239) Accumulated other comprehensive gain/(loss) 1,280 1,668 Accumulated deficit (582,333) (549,345) ------------- ------------- Total stockholders' equity 174,672 206,770 ------------- ------------- $634,496 $606,638 ============= ============= * The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. NEKTAR THERAPEUTICS CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share information) Three Months Ended Six Months Ended June 30, June 30, --------------------- --------------------- 2003 2002 2003 2002 ----------- --------- ----------- --------- (unaudited) (unaudited) Revenue: Contract research revenue $21,210 $18,828 $39,603 $40,129 Product sales 6,538 3,423 13,673 8,868 ----------- --------- ----------- --------- Total revenue 27,748 22,251 53,276 48,997 Operating costs and expenses: Cost of goods sold 3,708 1,673 8,330 3,563 Research and development 32,380 36,551 64,521 78,478 General and administrative 5,136 5,575 10,314 10,956 Amortization of other intangible assets 1,127 1,127 2,254 2,254 ----------- --------- ----------- --------- Total operating costs and expenses 42,351 44,926 85,419 95,251 ----------- --------- ----------- --------- Loss from operations (14,603) (22,675) (32,143) (46,254) Other income/(expense), net 4,452 (599) 4,571 (687) Interest income 1,262 2,488 2,886 5,287 Interest expense (4,150) (4,031) (8,302) (8,219) ----------- --------- ----------- --------- Net loss $(13,039) $(24,817) $(32,988) $(49,873) =========== ========= =========== ========= Basic and diluted net loss per common share $(0.23) $(0.45) $(0.59) $(0.90) =========== ========= =========== ========= Shares used in computing basic and diluted net loss per common share 55,718 55,216 55,660 55,197 =========== ========= =========== ========= CONTACT: Nektar Therapeutics Joyce Strand, 650-631-3138