UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
8-K
Current
Report
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): December 31,
2008
Nektar
Therapeutics
(Exact
name of registrant as specified in its charter)
Commission
File Number: 0-24006
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Delaware
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94-3134940
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(State
or other jurisdiction of
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(IRS
Employer
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incorporation)
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Identification
No.)
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201
Industrial Road, San Carlos, CA 94070
(Address
of principal executive offices, including zip code)
(650)
631-3100
(Registrant’s
telephone number, including area code)
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Item 9.01
Financial Statements and Exhibits
(b)
Pro Forma Financial Information
As
previously discussed in Item 2.01 of a Current Report on Form 8-K filed on
January 2, 2009, Nektar Therapeutics, a Delaware corporation (“Nektar”), and
Aerogen, Inc., a Delaware corporation and a subsidiary of Nektar, completed the
sale of certain assets and obligations related to Nektar’s pulmonary business,
associated technology and intellectual property to Novartis Pharmaceuticals
Corporation and Novartis Pharma AG for a purchase price of $115.0 million in
cash on December 31, 2008.
The pro
forma financial information required to be filed under Item 9.01(b) is attached
hereto as Exhibit 99.1 and is incorporated herein by reference. The
Unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine
months ended September 30, 2008 and the twelve months ended December 31, 2007
and the Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September
30, 2008 are presented for illustrative purposes only and are not necessarily
indicative of the operating results or the financial position that would have
been achieved had the disposition been consummated as of the dates indicated or
of the results that may be obtained in the future.
(d)
Exhibits
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Exhibit Number
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Description
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99.1
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Pro
forma financial
information.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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Nektar
Therapeutics
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By:
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/s/
Gil M. Labrucherie
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Date:
March 4, 2009
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Gil
M. Labrucherie
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General
Counsel and
Secretary
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EXHIBIT
INDEX
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Exhibit Number
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Description
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99.1
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Pro
forma financial
information.
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Exhibit
99.01
NEKTAR
THERAPEUTICS
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The
following Unaudited Pro Forma Condensed Consolidated Financial Statements of
Nektar Therapeutics and its subsidiaries (the “Company”) have been prepared to
reflect the sale of certain assets and obligations related to the Company’s
pulmonary technology, development, and manufacturing operations to Novartis
Pharmaceuticals Corporation and Novartis Pharma AG (together referred to as
“Novartis”) on December 31, 2008. The Company has retained
its BAY41-6551 (also known as NKTR-061, Amikacin Inhale), program,
which is partnered with Bayer Healthcare LLC, certain royalty rights relating to
its Bayer Schering Pharma AG partnered program Cipro Inhale, its development
program related to NKTR-063 (Inhaled Vancomycin) and certain intellectual
property rights specific to inhaled insulin.
The
following Unaudited Pro Forma Condensed Consolidated Statements of Operations
are based on the Company’s historical Condensed Consolidated Statement of
Operations for the nine months ended September 30, 2008 and Consolidated
Statement of Operations for the twelve months ended December 31, 2007, and give
effect to the disposition transaction as if it had occurred on January 1,
2007. The Unaudited Pro Forma Condensed Consolidated Statements of
Operations do not include any gain or loss on the sale or costs associated with
the disposition. The following Unaudited Pro Forma Condensed
Consolidated Balance Sheet as of September 30, 2008 is based on the Company’s
historical Condensed Consolidated Balance Sheet as of that date and gives effect
to the disposition transaction as if it had occurred on September 30,
2008.
The
Unaudited Pro Forma Condensed Consolidated Statements of Operations are based on
the assumptions and adjustments described in the accompanying notes and do not
reflect any adjustments for non-recurring items or changes in operating
strategies arising as a result of the disposition. The Unaudited Pro
Forma Condensed Consolidated Financial Statements do not include assumptions
regarding the use of proceeds from the disposition transaction, which are
presented as additional cash on the Unaudited Pro Forma Condensed Consolidated
Balance Sheet. Accordingly, the actual effect of the disposition, due
to this and other factors, could differ from the pro forma adjustments presented
herein. However, management believes that the assumptions used and
the adjustments made are reasonable under the circumstances and given the
information available.
The
Unaudited Pro Forma Condensed Consolidated Financial Statements are presented
for illustrative purposes only and are not necessarily indicative of the
operating results or the financial position that would have been achieved had
the disposition been consummated as of the dates indicated or of the results
that may be obtained in the future. The Unaudited Pro Forma Condensed
Consolidated Financial Statements and the accompanying notes should be read in
conjunction with the Company’s audited consolidated financial statements and
accompanying notes as of and for the year ended December 31, 2007, and
Management’s Discussion and Analysis of Financial Condition and Results of
Operations (“MD&A”) included in the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2007, as well as in conjunction with the
Company’s unaudited condensed consolidated financial statements and accompanying
notes as of and for the period ended September 30, 2008, and MD&A included
in the Company’s Quarterly Report on Form 10-Q for the quarter ended September
30, 2008.
NEKTAR
THERAPEUTICS
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2008
(In
thousands, except per share information)
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Unaudited
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||||||||||||
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As Reported
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Pro Forma
Adjustments
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Pro Forma
Statement of
Operations
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||||||||||
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Revenue:
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||||||||||||
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Product
sales and royalties
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$ | 28,855 | $ | — | $ | 28,855 | ||||||
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Contract
research
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32,977 | (19,252 | )[a] | 13,725 | ||||||||
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Total
revenue
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61,832 | (19,252 | ) | 42,580 | ||||||||
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Operating
costs and expenses:
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||||||||||||
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Cost
of goods sold
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18,020 | — | 18,020 | |||||||||
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Cost
of idle Exubera manufacturing capacity
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6,821 | — | 6,821 | |||||||||
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Research
and development
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109,138 | (42,569 | )[b] | 66,569 | ||||||||
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General
and administrative
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36,951 | (438 | )[b] | 36,513 | ||||||||
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Amortization
of other intangible assets
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710 | — | 710 | |||||||||
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Total
operating costs and expenses
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171,640 | (43,007 | ) | 128,633 | ||||||||
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Loss
from operations
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(109,808 | ) | 23,755 | (86,053 | ) | |||||||
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Non-operating
income (expense):
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||||||||||||
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Interest
income
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10,578 | 2,715 | [c] | 13,293 | ||||||||
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Interest
expense
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(11,835 | ) | — | (11,835 | ) | |||||||
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Loss
on equity investment
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(705 | ) | 705 | [d] | — | |||||||
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Other
income (expense), net
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1,188 | — | 1,188 | |||||||||
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Total
non-operating income (expense)
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(774 | ) | 3,420 | 2,646 | ||||||||
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Loss
before provision for income taxes
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(110,582 | ) | 27,175 | (83,407 | ) | |||||||
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Provision
for income taxes
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536 | — | 536 | |||||||||
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Net
income (loss)
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$ | (111,118 | ) | $ | 27,175 | $ | (83,943 | ) | ||||
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Basic
and diluted net loss per share
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$ | (1.20 | ) | $ | (0.91 | ) | ||||||
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Shares
used in computing basic and diluted net loss per share
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92,413 | 92,413 | ||||||||||
NEKTAR
THERAPEUTICS
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR
THE YEAR ENDED DECEMBER 31, 2007
(In
thousands, except per share information)
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Unaudited
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||||||||||||
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As Reported
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Pro Forma
Adjustments
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Pro Forma
Statement of
Operations
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Revenue:
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||||||||||||
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Product
sales and royalties
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$ | 180,755 | $ | — | $ | 180,755 | ||||||
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Contract
research
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85,925 | (25,152 | )[a] | 60,773 | ||||||||
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Exubera
commercialization readiness
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6,347 | — | 6,347 | |||||||||
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Total
revenue
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$ | 273,027 | $ | (25,152 | ) | $ | 247,875 | |||||
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Operating
costs and expenses:
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||||||||||||
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Cost
of goods sold
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137,696 | — | 137,696 | |||||||||
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Cost
of idle Exubera manufacturing capacity
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6,314 | — | 6,314 | |||||||||
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Exubera
commercialization readiness costs
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3,507 | — | 3,507 | |||||||||
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Research
and development
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153,575 | (50,741 | )[b] | 102,834 | ||||||||
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General
and administrative
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56,336 | (550 | )[b] | 55,786 | ||||||||
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Impairment
of long lived assets
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28,396 | — | 28,396 | |||||||||
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Litigation
settlement
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1,583 | — | 1,583 | |||||||||
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Amortization
of intangible assets
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946 | — | 946 | |||||||||
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Gain
on termination of collaborative agreements, net
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(79,178 | ) | — | (79,178 | ) | |||||||
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Total
operating costs and expenses
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$ | 309,175 | $ | (51,291 | ) | $ | 257,884 | |||||
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Loss
from operations
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(36,148 | ) | 26,139 | (10,009 | ) | |||||||
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Non-operating
income
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||||||||||||
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Interest
income
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22,201 | 4,963 | [c] | 27,164 | ||||||||
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Interest
expense
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(18,638 | ) | — | (18,638 | ) | |||||||
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Other
income (expense), net
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1,133 | — | 1,133 | |||||||||
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Total
non-operating income (expense)
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4,696 | 4,963 | 9,659 | |||||||||
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Loss
before provision (benefit) for income taxes
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$ | (31,452 | ) | $ | 31,102 | $ | (350 | ) | ||||
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Provision
for income taxes
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1,309 | — | 1,309 | |||||||||
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Net
income (loss)
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$ | (32,761 | ) | $ | 31,102 | $ | (1,659 | ) | ||||
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Basic
and diluted net loss per share
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$ | (0.36 | ) | $ | (0.02 | ) | ||||||
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Shares
used in computing basic and diluted net loss per share
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91,876 | 91,876 | ||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
NEKTAR
THERAPEUTICS
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS
OF SEPTEMBER 30, 2008
(In
thousands)
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Unaudited
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||||||||||||
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As Reported
September 30,
2008
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Pro Forma
Adjustments
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Pro Forma
Balance Sheet
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||||||||||
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ASSETS
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||||||||||||
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Current
assets:
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||||||||||||
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Cash
and cash equivalents
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$ | 63,713 | $ | 110,724 | [e] | $ | 174,437 | |||||
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Short-term
investments
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280,803 | — | 280,803 | |||||||||
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Accounts
receivable, net of allowance
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8,515 | — | 8,515 | |||||||||
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Inventory
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9,861 | — | 9,861 | |||||||||
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Assets
held for sale
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42,975 | (42,975 | )[f] | — | ||||||||
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Other
current assets
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4,420 | — | 4,420 | |||||||||
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Total
current assets
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$ | 410,287 | $ | 67,749 | $ | 478,036 | ||||||
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Property
and equipment, net
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73,641 | 1,262 | [f] | 74,903 | ||||||||
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Goodwill
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78,431 | (1,930 | )[f] | 76,501 | ||||||||
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Other
intangible assets, net
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1,971 | — | 1,971 | |||||||||
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Other
assets
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4,022 | — | 4,022 | |||||||||
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Total
assets
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$ | 568,352 | $ | 67,081 | $ | 635,433 | ||||||
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LIABILITIES
AND STOCKHOLDERS’ EQUITY
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||||||||||||
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Current
liabilities:
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||||||||||||
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Accounts
payable
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$ | 2,113 | $ | — | $ | 2,113 | ||||||
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Accrued
compensation
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14,723 | (4,276 | )[g] | 10,447 | ||||||||
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Accrued
expenses
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15,715 | 4,609 | [h] | 20,324 | ||||||||
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Interest
payable
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85 | — | 85 | |||||||||
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Capital
lease obligations, current portion
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1,401 | — | 1,401 | |||||||||
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Deferred
revenue, current portion
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11,970 | (539 | )[i] | 11,431 | ||||||||
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Other
current liabilities
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2,515 | (452 | )[f] | 2,063 | ||||||||
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Total
current liabilities
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$ | 48,522 | $ | (658 | ) | $ | 47,864 | |||||
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Convertible
subordinated notes
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315,000 | — | 315,000 | |||||||||
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Capital
lease obligations
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20,689 | — | 20,689 | |||||||||
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Deferred
revenue
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57,027 | (525 | )[i] | 56,502 | ||||||||
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Deferred
gain
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7,323 | (1,204 | )[f] | 6,119 | ||||||||
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Other
long-term liabilities
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11,159 | — | 11,159 | |||||||||
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Total
liabilities
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$ | 459,720 | $ | (2,387 | ) | $ | 457,333 | |||||
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Commitments
and contingencies Stockholders’ equity:
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||||||||||||
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Preferred
stock
|
— | — | — | |||||||||
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Common
stock
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9 | — | 9 | |||||||||
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Capital
in excess of par value
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1,309,973 | — | 1,309,973 | |||||||||
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Accumulated
other comprehensive income
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(478 | ) | — | (478 | ) | |||||||
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Accumulated
deficit
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(1,200,872 | ) | 69,468 | [j] | (1,131,404 | ) | ||||||
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Total
stockholders’ equity
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108,632 | 67,468 | 178,100 | |||||||||
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Total
liabilities and stockholders’ equity
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$ | 568,352 | $ | 67,081 | $ | 635,433 | ||||||
NEKTAR
THERAPEUTICS
NOTES
TO UNAUDITED PRO FORMA
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Note
1 – Basis of Presentation
The accompanying Unaudited Pro Forma
Condensed Consolidated Statements of Operations for the nine months ended
September 30, 2008 and the twelve months ended December 31, 2007 give effect to
the pro forma adjustments necessary to reflect the disposition of certain
pulmonary assets and obligations as if the disposition occurred on January 1,
2007. The accompanying Unaudited Pro Forma Condensed Consolidated
Balance Sheet as of September 30, 2008 includes the pro forma adjustments
necessary to reflect the disposition as if it occurred on September 30,
2008.
Note
2 – Pro Forma Adjustments
The accompanying Unaudited Pro Forma
Condensed Consolidated Statements of Operations and Unaudited Pro Forma
Condensed Consolidated Balance Sheet reflect the effect of the following pro
forma adjustments:
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a)
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The
reduction of revenue is the result of the assignment of our collaboration
agreement for Cipro Inhale with Bayer Schering Pharma AG to Novartis and
the termination of our collaboration agreement for Tobramycin inhalation
powder with Novartis.
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b)
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The
reduction of operating expenses is the result of the assignment of the
operating lease for our San Carlos pulmonary manufacturing facility to
Novartis, the transfer of certain pulmonary development programs, and the
termination of employees related to the pulmonary business due to the sale
of certain pulmonary assets to
Novartis.
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c)
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The
increase in interest income is the result of interest earned on the cash
proceeds received of $115.0 million, net of payments of accrued
compensation and transaction costs of approximately $8.9
million.
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d)
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The
reduction of loss on equity investment is the result of the sale of our
equity interest in Pearl Therapeutics Inc. to
Novartis.
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e)
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Cash
proceeds received of $115.0 million, net of payment of accrued
compensation of approximately $4.3 million for terminated
employees.
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f)
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Elimination
of assets and liabilities associated with the pulmonary assets sold and
obligations transferred to
Novartis.
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g)
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Payment
of accrued compensation for terminated
employees.
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h)
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Transaction
costs on sale of certain pulmonary assets to
Novartis.
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i)
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Write-off
of deferred revenue from our collaboration agreements for Cipro Inhale,
which was assigned to Novartis, and Tobramycin inhalation powder, which
was terminated.
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j)
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Change
in net assets resulting from Pro Forma
Adjustments.
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