Nektar still far from the land of milk and honey

Hitting Nektar hardest were $65.3m in asset impairment related to Nectar UK, formerly Bradford Particle Design and acquired by Nektar in 2001, and $7.9m in purchased in-process research and development expenses associated with the acquisition of Aerogen, a drug delivery specialist.

However, even without these one-off items the company would have posted a net loss of $35m, $15.7m more than the $19.3m it lost in the Q4 of the previous year.

This was not down to decreased revenue; this came in at $32.9m compared to $31.4m year-on-year as the $5m Nektar got from Pfizer, for the preparation for commercial manufacture of its eagerly anticipated insulin drug Exubera, more than offset the $3.1m decline in contract research revenue, due to the fact that Exubera is ready for commercialisation, and the $300,000 drop in product and royalty revenue.

Where the company's bottom line suffered was in R&D costs, up $8.3m because of Nektar's focus on its proprietary drugs, general and administrative costs, up $4.9m as the firm increased its head count, and $4.2m in commercialization readiness costs for Exubera.

Whether the company's investment in proprietary drugs will pay off remains to be seen since Nektar's own drug furthest ahead in the pipeline is still in phase I; its amphotericin B inhalation powder for the prevention of lung fungal infections could help 200,000 patients in the US and Europe in a $400m market.

Nevertheless, newly acquired Aerogen does have a proprietary drug in phase II - amikacin, an inhaled antibiotic for the treatment of gram negative pneumonias in patients on mechanical ventilation.

Nektar UK's time on the other hand may soon be up as company spokeswoman Jennifer Ruddock hinted to In-PharmaTechnologist.com​ that, following the losses it caused to the company, 2006 will be a crunch year for the division, which supports activities ranging from laboratory evaluations to supply manufacturing.

"So far we have found Nektar UK to be an asset to our business but we will look at some clinical trials that come out of it later in the year and consider if it has value that we wish to unlock,"​ she said.

"After Exubera we are concentrating on proprietary drugs in specialty markets where short development times and low costs allow us to do so."​

Yet Nektar is also continuing to seek partnerships to benefit from its expertise in advanced pulmonary delivery, PEGylation and supercritical fluids.

In 2005 it struck deals with Bayer Healthcare, for inhaled ciprofloxacin for lung infections in cystic fibrosis patients, Baxter, who is using Nektar's PEGylation technology to develop longer-acting forms of blood clotting proteins for hemophiliacs,and Zelos Therapeutics, to create an inhaleable powder form of their parathyroid hormone analogue that is under development for osteoporosis patients.

What is more, two drugs licensed with Nektar's technology, Roche's CERA for renal anemia and UCB's Cimzia for Crohn's disease, are both in Phase III trials and are expected to be filed for approval by the end of 2006.

Then of course there is Exubera, approved in the US and the EU and scheduled to be distributed by Pfizer by mid-2006, providing manufacturing and royalty revenue in 2006 in the range of $60m to $80m, Nektar estimates.

The company projects total revenue to be between $160m to $190m in 2006 and net loss to be in the range of $115m to $130m, with $80m to $90m accounted for by R&D expenditure in Nektar's products and technology platforms.

If this materialises, revenue would go up from $126.3m it was in 2005, net loss would be significantly reduced from $185.1m in 2005, while R&D costs in the proprietary line, which were around $68m in 2005, would of course increase.

Nektar anticipates ending the 2006 year with cash, cash equivalents and short-term investments at approximately $415m to $440m, down from $566.4m in 2005.

The challenge now for the company is spending enough on developing its own pipeline while keeping costs under control.