Shares of Nektar Therapeutics (NASDAQ:NKTR), a biopharmaceutical company that utilizes its proprietary intellectual property via licensing deals and through collaborations in the clinical development process to help fight cancer, autoimmune diseases, and chronic pain, surged as much as 20% on Thursday after the company reported its fourth-quarter and full-year results after the closing bell on Wednesday.
For the quarter, Nektar wound up reporting sales of $37.5 million, a decline of 5% from the prior-year period. For the year, sales fell to $165.4 million from $230.8 million in 2015. However, it's worth noting that Nektar received a $130 million milestone payment in 2015 from AstraZeneca following the first commercial sale of Movantik in the U.S. and Moventig in the European Union (EU) during the first quarter of 2015. Without this one-time milestone payment, Nektar would have demonstrated year-over-year sales growth. Both its product sales and royalty revenue increased substantially on a year-over-year basis.
In terms of its bottom line, Nektar reported a loss of $42.2 million, or $0.28 per share, during the fourth quarter, which was considerably lower than the $54.1 million, or $0.40 per share, that it lost in Q4 2015. Comparatively, Wall Street had been looking for Nektar to report a slightly narrower loss of $0.27 per share and $40.6 million in sales. In other words, Nektar actually missed on both fronts.
So why is it up? Look no further than the likely excitement surrounding its pipeline update. Among the items discussed in Nektar's press release were:
- The expectation of an opinion from the Committee for Medicinal Products for Human Use in Europe during the first-half of 2017 for Onzeald, an experimental therapy designed to treat advanced breast cancer and brain metastases.
- Initial data from a dose-escalation trial with NKTR-214 and Bristol-Myers Squibb's cancer immunotherapy Opdivo, which is expected by mid-2017.
- Amikacin inhale, which is in a phase 3 program that's partnered with Bayer as a treatment for gram-negative pneumonia, is expected to complete its trial during the second quarter and deliver top-line results soon thereafter.
Long story short, investors are overlooking a minor sales and profit miss given Nektar's lumpy milestone recognition from one year to the next, and are instead focusing on the company's growing pipeline.
In addition to the company's fourth-quarter press release, Nektar also announced five upcoming presentations at the American Association for Cancer Research's annual meeting, which will be held during the first week of April. Based on the abstracts provided, Nektar will be reporting on a number of early-stage cancer products that seem to have elicited a response, which is creating buzz with the stock today.
The allure of Nektar, despite its ongoing losses, remains in its intellectual property and the ability to license that technology in developing cancer products. Because of its bountiful pipeline and the ability to control its expenses, Nektar has the potential to become immensely profitable as more of its products become licensed and approved, and as its pipeline expands. Though recurring profits are still probably three years away, if not longer, Nektar remains an intriguing company to consider buying, or at least keep on your radar, given its ability to license its technology to other drug developers.