Nektar Therapeutics NKTR reported a loss of 45 cents per share for the second quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of 69 cents and the year-ago loss of 63 cents.

Quarterly revenues were up 109.4% year over year to $48.8 million owing to the recognition of a milestone payment from its collaboration partner, Bristol-Myers BMY, during the quarter. Revenues also beat the Zacks Consensus Estimate of $22.84 million.

Nektar’s shares have gained 5.3% so far this year against  the industry’s decline of 4.2%.

Quarter in Detail

Nektar’s top line comprises product sales, royalty revenues, non-cash royalty revenues along with license, collaboration and other revenues.

In the second quarter, product sales increased 26.2% from the year-ago period to $5.5 million.  Non-cash royalty revenues were down 15.5% to $7.7 million.

Nektar’s royalty revenues increased 28.1% year over year to $9.4 million in the quarter.

License, collaboration and other revenues were $26.3 million in the quarter compared with $2.5 million in the year-ago quarter. The increase was due to the recognition of a $25-million milestone payment from Bristol-Myers (BMY), triggered by the initiation of the registrational study of Nektar’s bempegaldesleukin plus Bristol-Myers’ Opdivo in adjuvant melanoma.

Research and development expenses decreased 9.6% to $96.4 million. Notably, the company had recorded pre-commercial manufacturing costs for NKTR-181 in the year-ago quarter, which was not present in the reported quarter and led to the decline in expenses. The company discontinued the development of NKTR-181 in January.

General and administrative expenses rose 7.8% to $24.3 million in the reported quarter.

Pipeline Update

On the earnings call, Nektar cautioned that uncertainties concerning COVID-19 may impact clinical study timelines. The company will continue to assess timelines throughout the year to get more visibility into the timing and extent of the COVID-19 impact.

The company is primarily focusing on development of five clinical studies in immuno-oncology including first-line bladder cancer and renal cell carcinoma studies of bempegaldesleukin plus Opdivo, the PROPEL study of bempegaldesleukin plus Merck’s MRK Keytruda, and NKTR-262 REVEAL study with bempegaldesleukin and the NKTR-255 studies.

Please note that bempegaldesleukin is the company’s leading immuno-oncology candidate. The company is developing bempegaldesleukin in combination with Bristol-Myers’ PD-1 inhibitor, Opdivo, in several registrational studies as a potential treatment for melanoma, urothelial cancer and renal cell carcinoma. In July, Nektar started enrollment in the registrational study of the combination therapy evaluating it in first-line adjuvant melanoma.

Nektar also has collaboration agreements with Takeda and Pfizer PFE to develop bempegaldesleukin in combination with their respective drugs, targeting several cancer indications.

Zacks Rank

Nektar currently has a Zacks Rank #3 (Hold).

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