Nektar Therapeutics' CEO Discusses Q2 2012 Results - Earnings Transcript

Nektar Therapeutics (NKTR)

Q2 2012 Earnings Call

August 09, 2012 17:00 p.m. E.T

Executives

Jennifer Ruddock – Investor Relations

Howard Robin – Chief Executive Officer

John Nicholson – Chief Financial Officer

Robert Medve – Chief Medical Officer

Analysts

Jonathan Aschoff – Brean, Murray

Bob Hazlett – Roth Capital

Rashie Jain – JP Morgan

Biren Amin – Jefferies

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Nektar Therapeutics Second Quarter 2012 Financial Results Conference Call. My name is Erin, and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session toward the end of today’s conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now turn the presentation over to your host for today’s call, Ms. Jennifer Ruddock. Please proceed, ma’am.

Jennifer Ruddock

Good afternoon and thank you for joining us. With us today are Howard Robin, our President and CEO, John Nicholson, our Chief Financial Officer, Dr. Robert Medve, our Chief Medical Officer and Dr. Steve Doberstein, our Chief Scientific Officer.

On this call, we expect to make forward looking statements regarding our business including but not limited to clinical development plans, the timing of future clinical results and regulatory filings, the economic potential of our collaboration partnerships including potential milestone payments, the therapeutic and market potential of our drug candidates and those of our partners, our financial guidance for 2012, and certain other statements regarding the future of our business.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes that are difficult to predict and many of which are outside of our control. Important risks and uncertainties are set forth in our Annual Report on Form 10-K filed in February and our Form 8-k filed today. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise. A webcast of this conference call will be available for replay on the Investor Relations page at Nektar’s website at www.nektar.com.

Now, I would like to hand the call over to Howard Robin.

Howard Robin

Thank you Jennifer, and thanks to everyone for joining us this afternoon. Nektar continues to make significant progress this year advancing our clinical and preclinical programs and greatly strengthening our financial position. I would like to give you a business update and then hand the call over to John for a review of financials. Last month, we completed a $125 million private placement of Senior Secured Notes that strengthens our balance sheet without any dilution to our shareholders.

These Notes, which have no equity or warrants associated with them, are due in July of 2017 and callable by Nektar beginning in July of 2015. Importantly, the notes have no financial performance targets and we retain the freedom to operate our business as we have in the past, including, for example, our ability to enter into collaborative transactions or monetize royalties.

We are very pleased with this transaction which we believe reflects the strength of

Nektar’s proven technology and our late-stage pipeline. The placement of these secured notes builds on the $124 million sale of nonstrategic royalties that we completed in the first quarter of this year. Funds from these two transactions will be used to repay the remaining balance on our convertible debt which is due in September of this year. This will eliminate the significant dilution associated with convertible debt for Nektar.

After repayment of the convertible debt, we now expect to end 2012 with approximately $300 million in cash and investments which should give us multiple years of working capital and bring us through many important potential product milestones. Now I’d like to review the significant progress we’ve made with our clinical pipeline in the past quarter. Let me start first with an update on naloxegol, a peripherally-acting mu-opioid receptor antagonist being developed by AstraZeneca as a once-daily oral tablet for the chronic treatment of opioidinduced constipation or OIC. In 2011, AstraZeneca initiated a global and comprehensive Phase 3 clinical program for naloxegol. The planned registration package will include two pivotal studies to evaluate the efficacy and safety of naloxegol in patients with chronic non-cancer pain, a 6-month extension study, and a long-term safety study. The two pivotal placebo-controlled studies each include an estimated

650 patients with OIC with a primary endpoint based on a 12-week treatment period.

In addition, one of the pivotal studies has a 6-month double-blind extension. Finally, the 52-week long-term safety study is a randomized, open label study design. This comprehensive Phase 3 program is the only one of its scope and size for the treatment of opioid induced constipation. We are very pleased to report today that AstraZeneca and Nektar anticipate announcing high-level results from the two pivotal studies and the extension study in the fourth quarter of this year. AstraZeneca is also planning a full presentation of the efficacy results at a scientific meeting in 2013. Results from the 1,135 patient long-term open label safety study are anticipated in the first quarter of 2013.

Importantly, AstraZeneca remains on track for mid-2013 global regulatory filings for naloxegol. There are an estimated 100 million chronic pain patients worldwide that are treated with opioids and up to 50% of these long-term pain patients develop constipation. AstraZeneca estimates that there are five key markets that account for over 90% of patients taking opioids for chronic pain – these are the U.S., Canada, France, Germany and the UK. Primary care practitioners and pain management specialists make up the majority of prescribers in these key markets. AstraZeneca, with its global presence, is an ideal development and commercial partner for naloxegol.

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