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| EX-5.1 - NEKTAR THERAPEUTICS | v208663_ex5-1.htm |
| EX-1.1 - NEKTAR THERAPEUTICS | v208663_ex1-1.htm |
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): January 19, 2011
NEKTAR
THERAPEUTICS
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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0-24006
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94-3134940
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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455
Mission Bay Boulevard South
San
Francisco, California 94158
(Address
of Principal Executive Offices and Zip Code)
Registrant’s
telephone number, including area code: (415) 482-5300
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:
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¨
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Written communications pursuant
to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 1.01
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Entry into a Material Definitive
Agreement.
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On
January 19, 2011, Nektar Therapeutics, a Delaware corporation (“Nektar”), entered
into an underwriting agreement (the “Underwriting
Agreement”) with Jefferies & Company, Inc. (“Jefferies” or the
“Underwriter”),
relating to the issuance and sale of 19,000,000 shares (the “Firm Shares”) of
common stock, par value $0.0001 per share, of Nektar. The price to the public in
this offering is $11.85 per share, and the Underwriter has agreed to purchase
the Firm Shares from Nektar pursuant to the Underwriting Agreement at a price of
$11.60 per share. The net proceeds to Nektar from this offering are expected to
be approximately $219.8 million, after deducting underwriting discounts and
commissions and other estimated offering expenses payable by
Nektar.
In
addition, under the terms of the Underwriting Agreement, Nektar has granted the
Underwriter an option, exercisable for 30 days after January 19, 2011, to
purchase up to an additional 2,850,000 shares of common stock to cover
over-allotments, if any.
The
offering is expected to close on or about January 24, 2011, subject to customary
closing conditions set forth in the Underwriting Agreement. Jeffries
is acting as sole book-running manager. The offering is being made pursuant to
the effective registration statement on Form S-3ASR (File No. 333-171747)
filed by Nektar with the Securities and Exchange Commission on January 18, 2011
and a prospectus supplement dated January 19, 2011 thereunder.
The
Underwriting Agreement contains customary representations, warranties and
covenants of Nektar, customary conditions to closing, indemnification
obligations of Nektar and the Underwriter (including for liabilities under the
Securities Act of 1933, as amended) and termination and other provisions
customary for transactions of this nature. The representations, warranties and
covenants of Nektar contained in the Underwriting Agreement were made only for
purposes of such agreement and as of specific dates, are solely for the benefit
of the parties to such agreement and may be subject to limitations agreed upon
by the contracting parties. Investors are not third-party
beneficiaries under the Underwriting Agreement and should not rely on the
representations, warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or conditions of
Nektar.
The
foregoing summary of the Underwriting Agreement is qualified in its entirety by
reference to the Underwriting Agreement, a copy of which is filed herewith as
Exhibit 1.1 to this Current Report on Form 8-K. A copy of the opinion of
O’Melveny & Myers LLP relating to the legality of the issuance and sale of
the shares in the offering is attached as Exhibit 5.1 hereto.
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Item 8.01
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Other
Events.
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We are
filing the following information with the Securities and Exchange Commission for
the purpose of updating certain aspects of our publicly disclosed descriptions
of our risk factors. All references below to
“Nektar,” “NKTR,” “we,” “us,” “our” or similar references refer to Nektar
Therapeutics, a Delaware corporation, and its subsidiaries, except where the
context otherwise requires or as otherwise indicated.
Risks Related to Our
Business
Drug
development is an inherently uncertain process with a high risk of failure at
every stage of development.
We have a
number of proprietary product candidates and partnered product candidates in
research and development ranging from the early discovery research phase through
preclinical testing and clinical trials. Preclinical testing and clinical trials
are long, expensive and highly uncertain processes. It will take us, or our
collaborative partners, several years to complete clinical trials. Drug
development is an uncertain scientific and medical endeavor, and failure can
unexpectedly occur at any stage of clinical development even after early
preclinical or mid-stage clinical results suggest that the drug candidate has
potential as a new therapy that may benefit patients and that health authority
approval would be anticipated. Typically, there is a high rate of attrition for
product candidates in preclinical and clinical trials due to scientific
feasibility, safety, efficacy, changing standards of medical care and other
variables. We or our partners have a number of important product candidates in
mid- to late-stage development, such as Bayer’s Amikacin Inhale, Oral NKTR-118
(oral PEGylated naloxol) and NKTR-119, which we partnered with AstraZeneca, and
NKTR-102 (PEGylated irinotecan). We also have an ongoing Phase 1 clinical trial
for NKTR-105 (PEGylated docetaxel) for patients with refractory solid tumors.
Any one of these trials could fail at any time, as clinical development of drug
candidates presents numerous unpredictable and significant risks and is very
uncertain at all times prior to regulatory approval by one or more health
authorities in major markets.
Even
with success in preclinical testing and clinical trials, the risk of clinical
failure remains high prior to regulatory approval.
A number
of companies in the pharmaceutical and biotechnology industries have suffered
significant unforeseen setbacks in later stage clinical trials (i.e., Phase 2 or
Phase 3 trials) due to factors such as inconclusive efficacy results and adverse
medical events, even after achieving positive results in earlier trials that
were satisfactory both to them and to reviewing regulatory agencies. Although we
announced positive preliminary Phase 2 clinical results for Oral NKTR-118 (oral
PEGylated naloxol) in 2009, there are still substantial risks and uncertainties
associated with the future commencement and outcome of a Phase 3 clinical trial
and the regulatory review process even following our partnership with
AstraZeneca. While NKTR-102 (PEGylated irinotecan) continues in Phase 2 clinical
development for multiple cancer indications, it is possible this product
candidate could fail in one or all of the cancer indications in which it is
currently being studied due to efficacy, safety or other commercial or
regulatory factors. In 2010 and in January 2011, we announced preliminary
positive results from our Phase 2 trials for NKTR-102 in ovarian and breast
cancer. These results were based on preliminary data only, and such results
could change based on final audit and verification procedures. In addition, the
preliminary results from the NKTR-102 clinical studies for ovarian and breast
cancer are not necessarily indicative or predictive of the future results from
the completed ovarian or breast cancer trials, anticipated Phase 3 trials in
these indications or clinical trials in the other cancer indications for which
we are studying NKTR-102. There remains a significant uncertainty as to the
success or failure of NKTR-102 and whether this drug candidate will eventually
receive regulatory approval or be a commercial success even if approved by one
or more health authorities in any of the cancer indications for which it is
being studied. The risk of failure is increased for our product candidates that
are based on new technologies, such as the application of our advanced polymer
conjugate technology to small molecules, including Oral NKTR-118, Oral NKTR-119,
NKTR-102, NKTR-105 and other drug candidates currently in the discovery research
or preclinical development phases.
1
The
results from the expanded Phase 2 clinical trial for NKTR-102 in women with
platinum-resistant/refractory ovarian cancer are unlikely to result in
submission of an NDA, and the future results from this trial are difficult to
predict.
In 2010,
we expanded the NKTR-102 Phase 2 study in women with
platinum-resistant/refractory ovarian cancer with the potential for us to
consider an NDA submission after we evaluate these expanded study results. The
FDA almost always requires a sponsor to conduct Phase 3 clinical trials prior to
consideration and approval of an NDA, and, as a result, review or approval of an
NDA by the FDA based on the expanded Phase 2 study prior to completion of
successful Phase 3 clinical studies, if such NDA is submitted, would be unusual
and is highly unlikely. Further, this expansion study will necessarily change
the final efficacy (e.g., overall response rates, progression-free survival,
overall survival) and safety (i.e., frequency and severity of serious adverse
events) results, and, accordingly, the final results in this study remain
subject to substantial change and could be materially and adversely different
from previously announced results. If the clinical studies for NKTR-102 in women
with platinum-resistant/refractory ovarian cancer are not successful, it could
significantly harm our business, results of operations and financial
condition.
We
may not be able to obtain intellectual property licenses related to the
development of our technology on a commercially reasonable basis, if at
all.
Numerous
pending and issued U.S. and foreign patent rights and other proprietary rights
owned by third parties relate to pharmaceutical compositions, medical devices
and equipment and methods for preparation, packaging and delivery of
pharmaceutical compositions. We cannot predict with any certainty which, if any,
patent references will be considered relevant to our or our collaborative
partners’ technology or drug candidates by authorities in the various
jurisdictions where such rights exist, nor can we predict with certainty which,
if any, of these rights will or may be asserted against us by third parties. In
certain cases, we have existing licenses or cross-licenses with third parties,
however the scope and adequacy of these licenses is very uncertain and can
change substantially during long development and commercialization cycles for
biotechnology and pharmaceutical products. There can be no assurance that we can
obtain a license to any technology that we determine we need on reasonable
terms, if at all, or that we could develop or otherwise obtain alternate
technology. If we are required to enter into a license with a third party, our
potential economic benefit for the products subject to the license will be
diminished. If a license is not available on commercially reasonable terms or at
all, our business, results of operation, and financial condition could be
significantly harmed and we may be prevented from developing and selling the
product.
If
any of our pending patent applications do not issue, or are deemed invalid
following issuance, we may lose valuable intellectual property
protection.
The
patent positions of pharmaceutical, medical device and biotechnology companies,
such as ours, are uncertain and involve complex legal and factual issues. We own
greater than 100 U.S. and 380 foreign patents and a number of pending patent
applications that cover various aspects of our technologies. We have filed
patent applications, and plan to file additional patent applications, covering
various aspects of our PEGylation and advanced polymer conjugate technologies
and our proprietary product candidates. There can be no assurance that patents
that have issued will be valid and enforceable or that patents for which we
apply will issue with broad coverage, if at all. The coverage claimed in a
patent application can be significantly reduced before the patent is issued and,
as a consequence, our patent applications may result in patents with narrow
coverage that may not prevent competition from similar products or generics.
Since publication of discoveries in scientific or patent literature often lags
behind the date of such discoveries, we cannot be certain that we were the first
inventor of inventions covered by our patents or patent applications. As part of
the patent application process, we may have to participate in interference
proceedings declared by the U.S. Patent and Trademark Office, which could result
in substantial cost to us, even if the eventual outcome is favorable. Further,
an issued patent may undergo further proceedings to limit its scope so as not to
provide meaningful protection and any claims that have issued, or that
eventually issue, may be circumvented or otherwise invalidated. Any attempt to
enforce our patents or patent application rights could be time consuming and
costly. An adverse outcome could subject us to significant liabilities to third
parties, require disputed rights to be licensed from or to third parties or
require us to cease using the technology in dispute. Even if a patent is issued
and enforceable, because development and commercialization of pharmaceutical
products can be subject to substantial delays, patents may expire early and
provide only a short period of protection, if any, following commercialization
of related products.
There are
many laws, regulations and judicial decisions that dictate and otherwise
influence the manner in which patent applications are filed and prosecuted and
in which patents are granted and enforced. Changes to these laws, regulations
and judicial decisions are subject to influences outside of our control and may
negatively affect our business, including our ability to obtain meaningful
patent coverage or enforcement rights to any of our issued patents. New laws,
regulations and judicial decisions may be retroactive in effect, potentially
reducing or eliminating our ability to implement our patent-related strategies.
Changes to laws, regulations and judicial decisions that affect our business are
often difficult or impossible to foresee, which limits our ability to adequately
adapt our patent strategies to these changes.
2
If
we or our partners are not able to manufacture drugs or drug substances in
quantities and at costs that are commercially feasible, we may fail to meet our
contractual obligations or our proprietary and partnered product candidates may
experience clinical delays or constrained commercial supply which could
significantly harm our business.
If we are
not able to scale-up manufacturing to meet the drug quantities required to
support large clinical trials or commercial manufacturing in a timely manner or
at a commercially reasonable cost, we risk delaying our clinical trials or those
of our partners and may breach contractual obligations and incur associated
damages and costs, and reduce or even eliminate associated revenues. In some
cases, we may subcontract manufacturing or other services. Pharmaceutical
manufacturing involves significant risks and uncertainties related to the
demonstration of adequate stability, sufficient purification of the drug
substance and drug product, the identification and elimination of impurities,
optimal formulations, process validation, and challenges in controlling for all
of these factors during manufacturing scale-up for large clinical trials and
commercial manufacturing and supply. In addition, we have faced and may in the
future face significant difficulties, delays and unexpected expenses as we
validate third party contract manufacturers required for scale-up to clinical or
commercial quantities. Failure to manufacture products in quantities or at costs
that are commercially feasible could cause us not to meet our supply
requirements, contractual obligations or other requirements for our proprietary
product candidates and, as a result, would significantly harm our business,
results of operations and financial condition.
For
instance, we entered a service agreement with Novartis pursuant to which we
subcontract to Novartis certain important services to be performed in relation
to our partnered program for Amikacin Inhale with Bayer Healthcare LLC. If our
subcontractors do not dedicate adequate resources to our programs, we risk
breach of our obligations to our partners. Building and validating large scale
clinical or commercial-scale manufacturing facilities and processes, recruiting
and training qualified personnel and obtaining necessary regulatory approvals is
complex, expensive and time consuming. In the past we have encountered
challenges in scaling up manufacturing to meet the requirements of large scale
clinical trials without making modifications to the drug formulation, which may
cause significant delays in clinical development. Further, our drug and device
combination products, such as Amikacin Inhale and the Cipro Inhale program,
require significant device design, formulation development work and
manufacturing scale-up activities. Further, we have experienced significant
delays in starting the Phase 3 clinical development program for Amikacin Inhale
as we seek to finalize the device design with a demonstrated capability to be
manufactured at commercial scale. This work is ongoing and there remains
significant risk in finalizing the device until those activities are completed.
Drug/device combination products are particularly complex, expensive and
time-consuming to develop due to the number of variables involved in the final
product design, including ease of patient/doctor use, maintenance of clinical
efficacy, reliability and cost of manufacturing, regulatory approval
requirements and standards and other important factors. There continues to be
substantial and unpredictable risk and uncertainty related to manufacturing and
supply until such time as the commercial supply chain is validated and
proven.
We
will need to restructure our convertible notes or raise substantial additional
capital to repay the notes and fund operations, and we may be unable to
restructure the notes or raise such capital when needed and on acceptable
terms.
We have
$215.0 million in outstanding convertible subordinated notes due September 2012.
We do not have sufficient resources to fund the development of the drug
candidates in our current research and development pipeline, complete planned
clinical development of NKTR-102 and NKTR-105 and repay these convertible notes.
We have no material credit facility or other material committed sources of
capital. We expect the Phase 3 clinical trials of NKTR-102 to require
particularly significant resources because we anticipate bearing a majority or
all of the development costs for that drug candidate. Prior to the maturity of
the notes, we plan to explore a number of alternatives to provide for the
repayment of the notes, including restructuring the notes. Despite these
efforts, we may be unable to find a commercially acceptable alternative or any
alternative to repaying the notes by September 2012. Our future capital
requirements will depend upon numerous factors, including:
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the progress, timing, cost and
results of our clinical development programs, including our planned
further clinical development of
NKTR-102;
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patient enrollment in our current
and future clinical studies, including in particular our expected Phase 3
clinical development plans for
NKTR-102;
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whether and when we receive
potential milestone payments and royalties, particularly from the product
candidates that are subject to our collaboration agreements with
AstraZeneca for NKTR-118 and Bayer for Amikacin
Inhale;
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the success, progress, timing and
costs of our business development efforts to implement new business
collaborations, licenses and other strategic
transactions;
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the cost, timing and outcomes of
regulatory reviews of our product candidates (e.g., NKTR-102) and those of
our collaboration partners (e.g., NKTR-118, Amikacin
Inhale);
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our general and administrative
expenses, capital expenditures and other uses of
cash;
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disputes concerning patents,
proprietary rights, or license and collaboration
agreements;
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the availability and scope of
coverage from government and private insurance payment or reimbursement
for our drug candidates partnered with collaboration partners and any
future drug candidates that may receive regulatory approval in the future;
and
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the size, design (i.e., primary
and secondary endpoints) and number of clinical studies required by the
government health authorities in order to consider for approval our
product candidates and those of our collaboration
partners.
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Although
we believe that our cash, cash equivalents and short-term investments in
marketable securities of $303.3 million as of September 30, 2010 will be
sufficient to meet our liquidity requirements through at least the next 12
months, we will need by September 2012 to restructure our notes or obtain
additional funds through one or more financing or collaboration partnership
transactions. If adequate funds are not available or are not available on
acceptable terms when we need them, we may need to delay or reduce our Phase 3
clinical trials of NKTR-102 or otherwise make changes to our operations to cut
costs.
If
we are unable either to create sales, marketing and distribution capabilities or
to enter into agreements with third parties to perform these functions, we will
be unable to commercialize our products successfully.
We
currently have no sales, marketing or distribution capabilities. To
commercialize any of our products that receive regulatory approval for
commercialization, we must either develop internal sales, marketing and
distribution capabilities, which will be expensive and time consuming, or enter
into collaboration arrangements with third parties to perform these services. If
we decide to market our products directly, we must commit significant financial
and managerial resources to develop a marketing and sales force with technical
expertise and with supporting distribution, administration and compliance
capabilities. Factors that may inhibit our efforts to commercialize our products
directly or indirectly with our partners include:
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our inability to recruit and
retain adequate numbers of effective sales and marketing
personnel;
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the inability of sales personnel
to obtain access to or persuade adequate numbers of physicians to use or
prescribe our products;
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the lack of complementary
products or multiple product pricing arrangements may put us at a
competitive disadvantage relative to companies with more extensive product
lines; and
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unforeseen costs and expenses
associated with creating and sustaining an independent sales and marketing
organization.
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If we, or
our partners through our collaboration, are not successful in recruiting sales
and marketing personnel or in building a sales and marketing infrastructure, we
will have difficulty commercializing our products, which would adversely affect
our business, results of operations and financial condition. To the extent we
rely on other pharmaceutical or biotechnology companies with established sales,
marketing and distribution systems to market our products, we will need to
establish and maintain partnership arrangements, and we may not be able to enter
into these arrangements on acceptable terms or at all. To the extent that we
enter into co-promotion or other arrangements, any revenues we receive will
depend upon the efforts of third parties, which may not be successful and are
only partially in our control. In that event, our product revenues would likely
be lower than if we marketed and sold our products directly.
If
we are unable to establish and maintain collaboration partnerships on attractive
commercial terms, our business, results of operations and financial condition
could suffer.
We intend
to continue to seek partnerships with pharmaceutical and biotechnology partners
to fund a portion of our research and development expenses and develop and
commercialize our product candidates. In September 2009, we entered into a
license agreement with AstraZeneca for NKTR-118 and NKTR-119 which included an
upfront payment of $125.0 million. The completion of the AstraZeneca
transaction was critical to our financial results and financial condition for
the year ended December 31, 2009. The timing of new collaboration
partnerships is difficult to predict due to availability of clinical data, the
number of potential partners that need to complete due diligence and approval
processes, the definitive agreement negotiation process and numerous other
unpredictable factors that can delay, impede or prevent significant
transactions. If we are unable to find suitable partners or to negotiate
collaborative arrangements with favorable commercial terms with respect to our
existing and future product candidates or the licensing of our technology, or if
any arrangements we negotiate, or have negotiated, are terminated, our business,
results of operations and financial condition could suffer.
4
The
commercial potential of a drug candidate in development is difficult to predict
and if the market size for a new drug is significantly smaller than we
anticipated, it could significantly and negatively impact our revenue, results
of operations and financial condition.
It is
very difficult to estimate the commercial potential of product candidates due to
factors such as safety and efficacy compared to other available treatments,
including potential generic drug alternatives with similar efficacy profiles,
changing standards of care, third party payer reimbursement, patient and
physician preferences, the availability of competitive alternatives that may
emerge either during the long drug development process or after commercial
introduction, and the availability of generic versions of our successful product
candidates following approval by health authorities based on the expiration of
regulatory exclusivity or our inability to prevent generic versions from coming
to market in one or more geographies by the assertion of one or more patents
covering such approved drug. If due to one or more of these risks the market
potential for a product candidate is lower than we anticipated, it could
significantly and negatively impact the commercial terms of any collaboration
partnership potential for such product candidate or, if we have already entered
into a collaboration for such drug candidate, the revenue potential from royalty
and milestone payments could be significantly diminished and would negatively
impact our revenue, results of operations and financial condition.
Our
revenue is exclusively derived from our collaboration agreements, which can
result in significant fluctuation in our revenue from period to period, and our
past revenue is therefore not necessarily indicative of our future
revenue.
Our
revenue is derived from our collaboration agreements with partners, under which
we may receive contract research payments, milestone payments based on clinical
progress, regulatory progress or net sales achievements, royalties or
manufacturing revenue. Significant variations in the timing of receipt of cash
payments and our recognition of revenue can result from the nature of
significant milestone payments based on the execution of new collaboration
agreements, the timing of clinical, regulatory or sales events which result in
single milestone payments and the timing and success of the commercial launch of
new drugs by our collaboration partners. The amount of our revenue derived from
collaboration agreements in any given period will depend on a number of
unpredictable factors, including our ability to find and maintain suitable
collaboration partners, the timing of the negotiation and conclusion of
collaboration agreements with such partners, whether and when we or our partner
achieve clinical and sales milestones, whether the partnership is exclusive or
whether we can seek other partners, the timing of regulatory approvals in one or
more major markets and the market introduction of new drugs or generic versions
of the approved drug, as well as other factors.
If
our partners, on which we depend to obtain regulatory approvals for and to
commercialize our partnered products, are not successful, or if such
collaborations fail, the development or commercialization of our partnered
products may be delayed or unsuccessful.
When we
sign a collaborative development agreement or license agreement to develop a
product candidate with a pharmaceutical or biotechnology company, the
pharmaceutical or biotechnology company is generally expected to:
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design and conduct large scale
clinical studies;
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prepare and file documents
necessary to obtain government approvals to sell a given product
candidate; and/or
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market and sell our products when
and if they are approved.
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Our
reliance on collaboration partners poses a number of risks to our business,
including risks that:
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we may be unable to control
whether, and the extent to which, our partners devote sufficient resources
to the development programs or commercial marketing and sales
efforts;
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disputes may arise or escalate in
the future with respect to the ownership of rights to technology or
intellectual property developed with
partners;
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disagreements with partners could
lead to delays in, or termination of, the research, development or
commercialization of product candidates or to litigation or arbitration
proceedings;
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contracts with our partners may
fail to provide us with significant protection, or to be effectively
enforced, in the event one of our partners fails to
perform;
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partners have considerable
discretion in electing whether to pursue the development of any additional
product candidates and may pursue alternative technologies or products
either on their own or in collaboration with our
competitors;
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partners with marketing rights
may choose to devote fewer resources to the marketing of our partnered
products than they do to products of their own development or products
in-licensed from other third
parties;
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the timing and level of resources
that our partners dedicate to the development program will affect the
timing and amount of revenue we
receive;
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we do not have the ability to
unilaterally terminate agreements (or partners may have extension or
renewal rights) that we believe are not on commercially reasonable terms
or consistent with our current business
strategy;
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partners may be unable to pay us
as expected; and
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partners may terminate their
agreements with us unilaterally for any or no reason, in some cases with
the payment of a termination fee penalty and in other cases with no
termination fee penalty.
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Given
these risks, the success of our current and future partnerships is highly
unpredictable and can have a substantial negative or positive impact on our
business. We have entered into collaborations in the past that have been
subsequently terminated, such as our collaboration with Pfizer for the
development and commercialization of inhaled insulin that was terminated by
Pfizer in November 2007. If other collaborations are suspended or
terminated, our ability to commercialize certain other proposed product
candidates could also be negatively impacted. If our collaborations fail, our
product development or commercialization of product candidates could be delayed
or cancelled, which would negatively impact our business, results of operations
and financial condition.
If
we or our partners do not obtain regulatory approval for our product candidates
on a timely basis, or at all, or if the terms of any approval impose significant
restrictions or limitations on use, our business, results of operations and
financial condition will be negatively affected.
We or our
partners may not obtain regulatory approval for product candidates on a timely
basis, or at all, or the terms of any approval (which in some countries includes
pricing approval) may impose significant restrictions or limitations on use.
Product candidates must undergo rigorous animal and human testing and an
extensive FDA mandated or equivalent foreign authorities’ review process for
safety and efficacy. This process generally takes a number of years and requires
the expenditure of substantial resources. The time required for completing
testing and obtaining approvals is uncertain, and the FDA and other U.S. and
foreign regulatory agencies have substantial discretion to terminate clinical
trials, require additional clinical development or other testing at any phase of
development, delay or withhold registration and marketing approval and mandate
product withdrawals, including recalls. In addition, undesirable side effects
caused by our product candidates could cause us or regulatory authorities to
interrupt, delay or halt clinical trials and could result in a more restricted
label or the delay or denial of regulatory approval by regulatory
authorities.
Even if
we or our partners receive regulatory approval of a product, the approval may
limit the indicated uses for which the product may be marketed. Our partnered
products that have obtained regulatory approval, and the manufacturing processes
for these products, are subject to continued review and periodic inspections by
the FDA and other regulatory authorities. Discovery from such review and
inspection of previously unknown problems may result in restrictions on marketed
products or on us, including withdrawal or recall of such products from the
market, suspension of related manufacturing operations or a more restricted
label. The failure to obtain timely regulatory approval of product candidates,
any product marketing limitations or a product withdrawal would negatively
impact our business, results of operations and financial condition.
We
are a party to numerous collaboration agreements and other significant
agreements which contain complex commercial terms that could result in disputes,
litigation or indemnification liability that could adversely affect our
business, results of operations and financial condition.
We
currently derive, and expect to derive in the foreseeable future, all of our
revenue from collaboration agreements with biotechnology and pharmaceutical
companies. These collaboration agreements contain complex commercial terms,
including:
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clinical development and
commercialization obligations that are based on certain commercial
reasonableness performance standards that can often be difficult to
enforce if disputes arise as to adequacy of
performance;
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research and development
performance and reimbursement obligations for our personnel and other
resources allocated to partnered product development
programs;
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clinical and commercial
manufacturing agreements, some of which are priced on an actual cost basis
for products supplied by us to our partners with complicated cost
allocation formulas and
methodologies;
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intellectual property ownership
allocation between us and our partners for improvements and new inventions
developed during the course of the
partnership;
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royalties on end product sales
based on a number of complex variables, including net sales calculations,
geography, patent life, generic competitors, and other factors;
and
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indemnity obligations for
third-party intellectual property infringement, product liability and
certain other claims.
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6
On
September 20, 2009, we entered into a worldwide exclusive license agreement
with AstraZeneca for the further development and commercialization of NKTR-118
and NKTR-119. In addition, we have also entered into complex commercial
agreements with Novartis in connection with the sale of certain assets related
to our pulmonary business, associated technology and intellectual property to
Novartis (the Novartis Pulmonary Asset Sale), which was completed on
December 31, 2008. Our agreements with AstraZeneca and Novartis contain
complex representations and warranties, covenants and indemnification
obligations that could result in substantial future liability and harm our
financial condition if we breach any of our agreements with AstraZeneca or
Novartis or any third party agreements impacted by these complex transactions.
As part of the Novartis Pulmonary Asset Sale, we entered an exclusive license
agreement with Novartis Pharma pursuant to which Novartis Pharma grants back to
us an exclusive, irrevocable, perpetual, royalty-free and worldwide license
under certain specific patent rights and other related intellectual property
rights necessary for us to satisfy certain continuing contractual obligations to
third parties, including in connection with development, manufacture, sale and
commercialization activities related to our partnered program for Amikacin
Inhale with Bayer Healthcare LLC. We also entered into a service agreement
pursuant to which we have subcontracted to Novartis certain services to be
performed related to our partner program for Amikacin Inhale.
From time
to time, we have informal dispute resolution discussions with third parties
regarding the appropriate interpretation of the complex commercial terms
contained in our agreements. One or more disputes may arise or escalate in the
future regarding our collaboration agreements, transaction documents, or
third-party license agreements that may ultimately result in costly litigation
and unfavorable interpretation of contract terms, which would have a material
adverse impact on our business, results of operations or financial
condition.
We
purchase some of the starting material for drugs and drug candidates from a
single source or a limited number of suppliers, and the partial or complete loss
of one of these suppliers could cause production delays, clinical trial delays,
substantial loss of revenue and contract liability to third
parties.
We often
face very limited supply of a critical raw material that can only be obtained
from a single, or a limited number of, suppliers, which could cause production
delays, clinical trial delays, substantial lost revenue opportunity or contract
liability to third parties. For example, there are only a limited number of
qualified suppliers, and in some cases single source suppliers, for the raw
materials included in our PEGylation and advanced polymer conjugate drug
formulations, and any interruption in supply or failure to procure such raw
materials on commercially feasible terms could harm our business by delaying our
clinical trials, impeding commercialization of approved drugs or increasing
operating loss to the extent we cannot pass on increased costs to a
manufacturing customer.
We
rely on trade secret protection and other unpatented proprietary rights for
important proprietary technologies, and any loss of such rights could harm our
business, results of operations and financial condition.
We rely
on trade secret protection for our confidential and proprietary information. No
assurance can be given that others will not independently develop substantially
equivalent confidential and proprietary information or otherwise gain access to
our trade secrets or disclose such technology, or that we can meaningfully
protect our trade secrets. In addition, unpatented proprietary rights, including
trade secrets and know-how, can be difficult to protect and may lose their value
if they are independently developed by a third party or if their secrecy is
lost. Any loss of trade secret protection or other unpatented proprietary rights
could harm our business, results of operations and financial
condition.
We
expect to continue to incur substantial losses and negative cash flow from
operations and may not achieve or sustain profitability in the
future.
For the
three and nine months ended September 30, 2010, we reported a net loss of
$8.7 million and $15.4 million, respectively. If and when
we achieve profitability depends upon a number of factors, including the timing
and recognition of milestone payments and royalties received, the timing of
revenue under our collaboration agreements, the amount of investments we make in
our proprietary product candidates and the regulatory approval and market
success of our product candidates. We may not be able to achieve and sustain
profitability.
Other
factors that will affect whether we achieve and sustain profitability include
our ability, alone or together with our partners, to:
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develop products utilizing our
technologies, either independently or in collaboration with other
pharmaceutical or biotech
companies;
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effectively estimate and manage
clinical development costs, particularly the cost of NKTR-102 since we
expect to bear a majority or all of such
costs;
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receive necessary regulatory and
marketing approvals;
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maintain or expand manufacturing
at necessary levels;
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achieve market acceptance of our
partnered products;
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receive royalties on products
that have been approved, marketed or submitted for marketing approval with
regulatory authorities;
and
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maintain sufficient funds to
finance our activities.
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If
we do not generate sufficient cash through restructuring our convertible notes
or raising additional capital, we may be unable to meet our substantial debt
obligations.
As of
September 30, 2010, we had cash, cash equivalents, and short-term
investments in marketable securities valued at approximately $303.3 million
and approximately $240.0 million of indebtedness, including approximately
$215.0 million in convertible subordinated notes due September 2012,
$19.2 million in capital lease obligations, and $5.8 million of other
liabilities.
Our
substantial indebtedness has and will continue to impact us by:
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making it more difficult to
obtain additional financing;
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constraining our ability to react
quickly in an unfavorable economic
climate;
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constraining our stock price;
and
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constraining our ability to
invest in our proprietary product development
programs.
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Currently,
we are not generating positive cash flow. If we are unable to satisfy our debt
service requirements, substantial liquidity problems could result. In relation
to our convertible notes, since the market price of our common stock is
significantly below the conversion price, the holders of our outstanding
convertible notes are unlikely to convert the notes to common stock in
accordance with the existing terms of the notes. If we do not generate
sufficient cash from operations to repay principal or interest on our remaining
convertible notes, or satisfy any of our other debt obligations, when due, we
may have to raise additional funds from the issuance of equity or debt
securities or entry into collaboration partnerships or otherwise restructure our
obligations. Any such financing or restructuring may not be available to us on
commercially acceptable terms, if at all.
If
government and private insurance programs do not provide payment or
reimbursement for our partnered products or proprietary products, those products
will not be widely accepted, which would have a negative impact on our business,
results of operations and financial condition.
In both
domestic and foreign markets, sales of our partnered and proprietary products
that have received regulatory approval will depend in part on market acceptance
among physicians and patients, pricing approvals by government authorities and
the availability of payment or reimbursement from third-party payers, such as
government health administration authorities, managed care providers, private
health insurers and other organizations. Such third-party payers are
increasingly challenging the price and cost effectiveness of medical products
and services. Therefore, significant uncertainty exists as to the pricing
approvals for, and the payment or reimbursement status of, newly approved
healthcare products. Moreover, legislation and regulations affecting the pricing
of pharmaceuticals may change before regulatory agencies approve our proposed
products for marketing and could further limit pricing approvals for, and
reimbursement of, our products from government authorities and third-party
payers. A government or third-party payer decision not to approve pricing for,
or provide adequate coverage and reimbursements of, our products would limit
market acceptance of such products.
We
depend on third parties to conduct the clinical trials for our proprietary
product candidates and any failure of those parties to fulfill their obligations
could harm our development and commercialization plans.
We depend
on independent clinical investigators, contract research organizations and other
third-party service providers to conduct clinical trials for our proprietary
product candidates. Though we rely heavily on these parties for successful
execution of our clinical trials and are ultimately responsible for the results
of their activities, many aspects of their activities are beyond our control.
For example, we are responsible for ensuring that each of our clinical trials is
conducted in accordance with the general investigational plan and protocols for
the trial, but the independent clinical investigators may prioritize other
projects over ours or communicate issues regarding our products to us in an
untimely manner. Third parties may not complete activities on schedule or may
not conduct our clinical trials in accordance with regulatory requirements or
our stated protocols. The early termination of any of our clinical trial
arrangements, the failure of third parties to comply with the regulations and
requirements governing clinical trials or our reliance on results of trials that
we have not directly conducted or monitored could hinder or delay the
development, approval and commercialization of our product candidates and would
adversely affect our business, results of operations and financial
condition.
8
Our
manufacturing operations and those of our contract manufacturers are subject to
governmental regulatory requirements, which, if not met, would have a material
adverse effect on our business, results of operations and financial
condition.
We and
our contract manufacturers are required in certain cases to maintain compliance
with current good manufacturing practices (cGMP), including cGMP guidelines
applicable to active pharmaceutical ingredients, and are subject to inspections
by the FDA or comparable agencies in other jurisdictions to confirm such
compliance. We anticipate periodic regulatory inspections of our drug
manufacturing facilities and the manufacturing facilities of our contract
manufacturers for compliance with applicable regulatory requirements. Any
failure to follow and document our or our contract manufacturers’ adherence to
such cGMP regulations or satisfy other manufacturing and product release
regulatory requirements may disrupt our ability to meet our manufacturing
obligations to our customers, lead to significant delays in the availability of
products for commercial use or clinical study, result in the termination or hold
on a clinical study or delay or prevent filing or approval of marketing
applications for our products. Failure to comply with applicable regulations may
also result in sanctions being imposed on us, including fines, injunctions,
civil penalties, failure of regulatory authorities to grant marketing approval
of our products, delays, suspension or withdrawal of approvals, license
revocation, seizures or recalls of products, operating restrictions and criminal
prosecutions, any of which could harm our business. The results of these
inspections could result in costly manufacturing changes or facility or capital
equipment upgrades to satisfy the FDA that our manufacturing and quality control
procedures are in substantial compliance with cGMP. Manufacturing delays, for us
or our contract manufacturers, pending resolution of regulatory deficiencies or
suspensions would have a material adverse effect on our business, results of
operations and financial condition.
Significant
competition for our polymer conjugate chemistry technology platforms and our
partnered and proprietary products and product candidates could make our
technologies, products or product candidates obsolete or uncompetitive, which
would negatively impact our business, results of operations and financial
condition.
Our
PEGylation and advanced polymer conjugate chemistry platforms and our partnered
and proprietary products and product candidates compete with various
pharmaceutical and biotechnology companies. Competitors of our PEGylation and
polymer conjugate chemistry technologies include The Dow Chemical Company, Enzon
Pharmaceuticals, Inc., SunBio Corporation, Mountain View Pharmaceuticals, Inc.,
Novo Nordisk A/S (formerly assets held by Neose Technologies, Inc.), and NOF
Corporation. Several other chemical, biotechnology and pharmaceutical companies
may also be developing PEGylation technologies or technologies that have similar
impact on target drug molecules. Some of these companies license or provide the
technology to other companies, while others are developing the technology for
internal use.
There are
several competitors for our proprietary product candidates currently in
development. For Amikacin Inhale, the current standard of care includes several
approved intravenous antibiotics for the treatment of either hospital-acquired
pneumonia or ventilator-associated pneumonia in patients on mechanical
ventilators. For Oral NKTR-118 (oral PEGylated naloxol), there are currently
several alternative therapies used to address opioid-induced constipation
(OIC) and opioid-induced bowel dysfunction (OBD), including subcutaneous
Relistor® (methylnaltrexone bromide) and oral and rectal over-the-counter
laxatives and stool softeners such as docusate sodium, senna and milk of
magnesia. In addition, there are a number of companies developing potential
products which are in various stages of clinical development and are being
evaluated for the treatment of OIC and OBD in different patient populations,
including Adolor Corporation, GlaxoSmithKline plc, Progenics Pharmaceuticals,
Inc., Pfizer (via Wyeth acquisition completed in 2009), Mundipharma Int.
Limited, Sucampo Pharmaceuticals and Takeda Pharmaceutical Company Limited. For
NKTR-102 (PEGylated-irinotecan), there are a number of chemotherapies and cancer
therapies approved today and in various stages of clinical development for
ovarian and breast cancers including but not limited to: Avastin ®
(bevacizumab), Camptosar ® (irinotecan), Doxil ® (doxorubicin HCl ), Ellence ®
(epirubicin), Gemzar ® (gemcitabine), Herceptin ® (trastuzumab), Hycamtin ®
(topotecan), Iniparib, Paraplatin ® (carboplatin), and Taxol ® (paclitaxel).
Major pharmaceutical or biotechnology companies with approved drugs or drugs in
development for these cancers include Bristol-Meyers Squibb, Eli Lilly &
Co., Genentech, Inc., GlaxoSmithKline plc, Johnson and Johnson, Pfizer, Inc.,
Sanofi Aventis, and many others. There are also approved therapies
for the treatment of colorectal cancer, including Eloxatin, Camptosar, Avastin,
Erbitux, Vectibux, Xeloda, Adrucil and Wellcovorin. In addition, there are a
number of drugs in various stages of preclinical and clinical development from
companies exploring cancer therapies or improved chemotherapeutic agents to
potentially treat colorectal cancer, including, but not limited to, products in
development from Bristol-Myers Squibb Company, Pfizer, Inc., GlaxoSmithKline
plc, Antigenics, Inc., F. Hoffmann-La Roche Ltd, Novartis AG, Cell Therapeutics,
Inc., Neopharm Inc., Meditech Research Ltd, Alchemia Limited, Enzon
Pharmaceuticals, Inc. and others.
There can
be no assurance that we or our partners will successfully develop, obtain
regulatory approvals for and commercialize next-generation or new products that
will successfully compete with those of our competitors. Many of our competitors
have greater financial, research and development, marketing and sales,
manufacturing and managerial capabilities. We face competition from these
companies not just in product development but also in areas such as recruiting
employees, acquiring technologies that might enhance our ability to
commercialize products, establishing relationships with certain research and
academic institutions, enrolling patients in clinical trials and seeking program
partnerships and collaborations with larger pharmaceutical companies. As a
result, our competitors may succeed in developing competing technologies,
obtaining regulatory approval or gaining market acceptance for products before
we do. These developments could make our products or technologies uncompetitive
or obsolete.
We
could be involved in legal proceedings and may incur substantial litigation
costs and liabilities that will adversely affect our business, results of
operations and financial condition.
From time
to time, third parties have asserted, and may in the future assert, that we or
our partners infringe their proprietary rights, such as patents and trade
secrets, or have otherwise breached our obligations to them. The third party
often bases its assertions on a claim that its patents cover our technology or
that we have misappropriated its confidential or proprietary information.
Similar assertions of infringement could be based on future patents that may
issue to third parties. In certain of our agreements with our partners, we are
obligated to indemnify and hold harmless our partners from intellectual property
infringement, product liability and certain other claims, which could cause us
to incur substantial costs if we are called upon to defend ourselves and our
partners against any claims. If a third party obtains injunctive or other
equitable relief against us or our partners, they could effectively prevent us,
or our partners, from developing or commercializing, or deriving revenue from,
certain products or product candidates in the U.S. and abroad. For instance, F.
Hoffmann-La Roche Ltd, to which we license our proprietary PEGylation reagent
for use in the MIRCERA product, was a party to a significant patent infringement
lawsuit brought by Amgen Inc. related to Roche’s proposed marketing and sale of
MIRCERA to treat chemotherapy anemia in the U.S. In October 2008, a federal
court ruled in favor of Amgen, issuing a permanent injunction preventing Roche
from marketing or selling MIRCERA in the U.S. In December 2009, the U.S.
District court for the District of Massachusetts entered a final judgment and
permanent injunction, and Roche and Amgen entered into a settlement and limited
license agreement which allows Roche to begin selling MIRCERA in the U.S. in
July 2014.
9
Third-party
claims involving proprietary rights or other matters could also result in the
award of substantial damages to be paid by us or a settlement resulting in
significant payments to be made by us. For instance, a settlement might require
us to enter a license agreement under which we pay substantial royalties or
other compensation to a third party, diminishing our future economic returns
from the related product. In 2006, we entered into a litigation settlement
related to an intellectual property dispute with the University of Alabama in
Huntsville pursuant to which we paid $11.0 million and agreed to pay an
additional $10.0 million in equal $1.0 million installments over ten
years ending with the last payment due on July 1, 2016. We cannot predict
with certainty the eventual outcome of any pending or future litigation. Costs
associated with such litigation, substantial damage claims, indemnification
claims or royalties paid for licenses from third parties could have a material
adverse effect on our business, results of operations and financial
condition.
If
product liability lawsuits are brought against us, we may incur substantial
liabilities.
The
manufacture, clinical testing, marketing and sale of medical products involve
inherent product liability risks. If product liability costs exceed our product
liability insurance coverage, we may incur substantial liabilities that could
have a severe negative impact on our financial position. Whether or not we are
ultimately successful in any product liability litigation, such litigation would
consume substantial amounts of our financial and managerial resources and might
result in adverse publicity, all of which would impair our business.
Additionally, we may not be able to maintain our clinical trial insurance or
product liability insurance at an acceptable cost, if at all, and this insurance
may not provide adequate coverage against potential claims or
losses.
Our
future depends on the proper management of our current and future business
operations and their associated expenses.
Our
business strategy requires us to manage our business to provide for the
continued development and potential commercialization of our proprietary and
partnered product candidates. Our strategy also calls for us to undertake
increased research and development activities and to manage an increasing number
of relationships with partners and other third parties, while simultaneously
managing the expenses generated by these activities. Our decision to bring
NKTR-102 into Phase 3 trials and to bear a majority or all of the clinical
development costs substantially increases our expenses. If we are unable to
manage effectively our current operations and any growth we may experience, our
business, financial condition and results of operations may be adversely
affected. If we are unable to effectively manage our expenses, we may find it
necessary to reduce our personnel-related costs through further reductions in
our workforce, which could harm our operations, employee morale and impair our
ability to retain and recruit talent. Furthermore, if adequate funds are not
available, we may be required to obtain funds through arrangements with partners
or other sources that may require us to relinquish rights to certain of our
technologies, products or future economic rights that we would not otherwise
relinquish or require us to enter into other financing arrangements on
unfavorable terms.
We
are dependent on our management team and key technical personnel, and the loss
of any key manager or employee may impair our ability to develop our products
effectively and may harm our business, operating results and financial
condition.
Our
success largely depends on the continued services of our executive officers and
other key personnel. The loss of one or more members of our management team or
other key employees could seriously harm our business, operating results and
financial condition. The relationships that our key managers have cultivated
within our industry make us particularly dependent upon their continued
employment with us. We are also dependent on the continued services of our
technical personnel because of the highly technical nature of our products and
the regulatory approval process. Because our executive officers and key
employees are not obligated to provide us with continued services, they could
terminate their employment with us at any time without penalty. We do not have
any post-employment noncompetition agreements with any of our employees and do
not maintain key person life insurance policies on any of our executive officers
or key employees.
Because
competition for highly qualified technical personnel is intense, we may not be
able to attract and retain the personnel we need to support our operations and
growth.
We must
attract and retain experts in the areas of clinical testing, manufacturing,
regulatory, finance, marketing and distribution and develop additional expertise
in our existing personnel. In particular, as we plan to advance NKTR-102 into
late stage development, additional highly qualified personnel will be required.
We face intense competition from other biopharmaceutical companies, research and
academic institutions and other organizations for qualified personnel. Many of
the organizations with which we compete for qualified personnel have greater
resources than we have. Because competition for skilled personnel in our
industry is intense, companies such as ours sometimes experience high attrition
rates with regard to their skilled employees. Further, in making employment
decisions, job candidates often consider the value of the stock options they are
to receive in connection with their employment. Our equity incentive plan and
employee benefit plans may not be effective in motivating or retaining our
employees or attracting new employees, and significant volatility in the price
of our stock may adversely affect our ability to attract or retain qualified
personnel. If we fail to attract new personnel or to retain and motivate our
current personnel, our business and future growth prospects could be severely
harmed.
10
If
earthquakes and other catastrophic events strike, our business may be
harmed.
Our
corporate headquarters, including a substantial portion of our research and
development operations, are located in the San Francisco Bay Area, a region
known for seismic activity and a potential terrorist target. In addition, we own
facilities for the manufacture of products using our PEGylation and advanced
polymer conjugate technologies in Huntsville, Alabama and own and lease offices
in Hyderabad, India. There are no backup facilities for our manufacturing
operations located in Huntsville, Alabama. In the event of an earthquake or
other natural disaster, political instability, or terrorist event in any of
these locations, our ability to manufacture and supply materials for drug
candidates in development and our ability to meet our manufacturing obligations
to our customers would be significantly disrupted and our business, results of
operations and financial condition would be harmed. Our collaborative partners
may also be subject to catastrophic events, such as hurricanes and tornadoes,
any of which could harm our business, results of operations and financial
condition. We have not undertaken a systematic analysis of the potential
consequences to our business, results of operations and financial condition from
a major earthquake or other catastrophic event, such as a fire, sustained loss
of power, terrorist activity or other disaster, and do not have a recovery plan
for such disasters. In addition, our insurance coverage may not be sufficient to
compensate us for actual losses from any interruption of our business that may
occur.
We
have implemented certain anti-takeover measures, which make it more difficult to
acquire us, even though such acquisitions may be beneficial to our
stockholders.
Provisions
of our certificate of incorporation and bylaws, as well as provisions of
Delaware law, could make it more difficult for a third party to acquire us, even
though such acquisitions may be beneficial to our stockholders. These
anti-takeover provisions include:
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establishment of a classified
board of directors such that not all members of the board may be elected
at one time;
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lack of a provision for
cumulative voting in the election of directors, which would otherwise
allow less than a majority of stockholders to elect director
candidates;
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the ability of our board to
authorize the issuance of “blank check” preferred stock to increase the
number of outstanding shares and thwart a takeover
attempt;
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prohibition on stockholder action
by written consent, thereby requiring all stockholder actions to be taken
at a meeting of
stockholders;
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establishment of advance notice
requirements for nominations for election to the board of directors or for
proposing matters that can be acted upon by stockholders at stockholder
meetings; and
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limitations on who may call a
special meeting of
stockholders.
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Further,
we have in place a preferred share purchase rights plan, commonly known as a
“poison pill.” The provisions described above, our “poison pill” and provisions
of Delaware law relating to business combinations with interested stockholders
may discourage, delay or prevent a third party from acquiring us. These
provisions may also discourage, delay or prevent a third party from acquiring a
large portion of our securities or initiating a tender offer or proxy contest,
even if our stockholders might receive a premium for their shares in the
acquisition over the then current market prices. We also have a change of
control severance benefits plan which provides for certain cash severance, stock
award acceleration and other benefits in the event our employees are terminated
(or, in some cases, resign for specified reasons) following an acquisition. This
severance plan could discourage a third party from acquiring us.
Risks
Related to Our Securities
The
price of our common stock and convertible debt are expected to remain
volatile.
Our stock
price is volatile. During the year ended December 31, 2010, based on
closing bid prices on the NASDAQ Global Select Market, our stock price ranged
from $9.39 to $15.88 per share. We expect our stock price to remain volatile. In
addition, as our convertible notes are convertible into shares of our common
stock, volatility or depressed prices of our common stock could have a similar
effect on the trading price of our notes. Also, interest rate fluctuations can
affect the price of our convertible notes. A variety of factors may have a
significant effect on the market price of our common stock or notes,
including:
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announcements of data from, or
material developments in, our clinical trials or those of our competitors,
including delays in clinical development, approval or
launch;
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announcements by collaboration
partners as to their plans or expectations related to products using our
technologies;
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announcements or terminations of
collaboration agreements by us or our
competitors;
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fluctuations in our results of
operations;
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developments in patent or other
proprietary rights, including intellectual property litigation or entering
into intellectual property license agreements and the costs associated
with those arrangements;
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announcements of technological
innovations or new therapeutic products that may compete with our approved
products or products under
development;
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announcements of changes in
governmental regulation affecting us or our
competitors;
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hedging activities by purchasers
of our convertible notes;
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litigation brought against us or
third parties to whom we have indemnification
obligations;
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public concern as to the safety
of drug formulations developed by us or others;
and
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general market
conditions.
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Our
stockholders may be diluted, and the price of our common stock may decrease, as
a result of the exercise of outstanding stock options and warrants, the
restructuring of our convertible notes, or the future issuances of
securities.
We may
restructure our convertible notes or issue additional common stock, preferred
stock, restricted stock units or securities convertible into or exchangeable for
our common stock. Furthermore, substantially all shares of common stock for
which our outstanding stock options or warrants are exercisable are, once they
have been purchased, eligible for immediate sale in the public market. The
issuance of additional common stock, preferred stock, restricted stock units or
securities convertible into or exchangeable for our common stock or the exercise
of stock options or warrants would dilute existing investors and could lower the
price of our common stock.
Restructuring
of our convertible notes or raising additional funds by issuing equity
securities could cause significant dilution to existing stockholders;
restructured or additional debt financing may restrict our
operations.
If we
raise additional funds through the restructuring of our convertible notes or
issuance of equity or convertible debt securities, the percentage ownership of
our stockholders could be diluted significantly, and these restructured or newly
issued securities may have rights, preferences or privileges senior to those of
our existing stockholders. If we restructure our notes or incur additional debt
financing, the payment of principal and interest on such indebtedness may limit
funds available for our business activities, and we could be subject to
covenants that restrict our ability to operate our business and make
distributions to our stockholders. These restrictive covenants may include
limitations on additional borrowing and specific restrictions on the use of our
assets, as well as prohibitions on the ability of us to create liens, pay
dividends, redeem our stock or make investments.
12
Safe
Harbor Statement
This
Current Report on Form 8-K contains forward-looking statements, including
statements related to the public offering of shares of common stock by Nektar
and the completion of the public offering, and other statements that are based
on current expectations, estimates, forecasts and projections about us, our
future performance, our business or the business of others on our behalf, our
beliefs and our management’s assumptions. Actual results and the timing of
events could differ materially from those anticipated in such forward-looking
statements as a result of risks and uncertainties, which include, without
limitation, risks and uncertainties associated with market conditions and the
satisfaction of customary closing conditions related to the public offering and
other risks detailed in this Current Report on Form 8-K and other Nektar’s
filings with the Securities and Exchange Commission. In addition, we, or others
on our behalf, may make forward-looking statements in press releases or written
statements, or in our communications and discussions with investors and analysts
in the normal course of business through meetings, webcasts, phone calls and
conference calls. Words such as “expect,” “anticipate,” “outlook,” “could,”
“will,” “target,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,”
“should,” “may,” “assume,” or “continue,” and variations of such words and
similar expressions are intended to identify such forward-looking statements.
These forward-looking statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions that are difficult to
predict. We have based our forward-looking statements on our management’s
beliefs and assumptions based on information available to our management at the
time the statements are made. We caution you that actual outcomes and results
may differ materially from what is expressed, implied or forecast by our
forward-looking statements. Reference is made in particular to forward-looking
statements regarding product sales, regulatory activities, clinical trial
results, reimbursement, expenses, earnings per share, liquidity and capital
resources, and trends.
You are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this Current Report on Form 8-K. All
forward-looking statements are qualified in their entirety by this cautionary
statement, and Nektar undertakes no obligation to revise or update any
forward-looking statements to reflect events or circumstances after the date of
this Current Report on Form 8-K.
|
Item 9.01
|
Financial Statements and
Exhibits.
|
(d)
Exhibits
|
Exhibit
No.
|
|
Description
|
|
1.1
|
|
Underwriting
Agreement dated as of January 19, 2011
|
|
5.1
|
Opinion
of O’Melveny & Myers LLP
|
|
|
23.1
|
Consent
of O’Melveny & Myers LLP (included in Exhibit
5.1)
|
13
SIGNATURES
Pursuant
to the requirement 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.
|
By:
|
/s/ Gil M. Labrucherie
|
|
|
Gil
M. Labrucherie
|
||
|
General
Counsel and Secretary
|
||
|
|
Date: |
January
21, 2011
|
14
EXHIBIT
INDEX
|
Exhibit
No.
|
|
Description
|
|
1.1
|
|
Underwriting
Agreement dated as of January 19, 2011
|
|
5.1
|
Opinion
of O’Melveny & Myers LLP
|
|
|
23.1
|
Consent
of O’Melveny & Myers LLP (included in Exhibit
5.1)
|