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A Look at Nektar Therapeutics’ Financial Performance

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Diversified revenue streams

Nektar Therapeutics’ (NKTR) total revenue includes product sales, royalty revenue, non-cash revenue related to the sale of future royalties, and license and collaboration revenue. Nektar had product sales of $4.4 million in 3Q17, compared with $144.7 million in 3Q16. Between 3Q16 and 3Q17, its royalty revenue rose from $5.5 million to $9.3 million, and its license and collaboration revenue rose from $8.3 million to $131.1 million. As a result, Nektar’s total revenue rose from $36.3 million to $152.9 million. Nektar Therapeutics is expected to report revenue of $252 million in fiscal 2017.

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Operating expenses

In comparison, the company’s total operating expenses rose at a slower pace, from $69.2 million in 3Q16 to $83.4 million in 3Q17. Its operating expense components tell a different story between 3Q16 and 3Q17. Its cost of goods sold fell from $7 million to $5.6 million, while its research and development expenses rose from $51.9 million to $65.7 million. General and administrative expenses rose from $10.2 million to $12 million.

Debt levels

At the end of 3Q17, the company had ~$250 million in outstanding debt. Whereas Nektar has a debt-to-equity ratio of 2.9, peers Amgen (AMGN), Bristol-Myers Squibb (BMY), and Eli Lilly (LLY) have ratios of 1.1, 0.57, and 0.90, respectively.

Improved bottom line

The company’s jump in revenue improved its bottom line significantly. Between 3Q16 and 3Q17, Nektar’s net income rose from -$43.2 million to $60.8 million, its earnings per share rose from -$0.32  to $0.39, and its outstanding shares rose from ~137 million to ~162 million. Nektar Therapeutics makes up ~1.5% of the iShares NASDAQ Biotechnology ETF (IBB).

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