10-Q: Nektar Therapeutics Reports Q3 Loss, Advances Key Immunotherapies

Nektar Therapeutics reported a reduced net loss in Q3 2025, driven by lower operating expenses, while advancing its lead immunotherapy candidates and securing significant capital.

Summary

• Nektar Therapeutics reported a net loss of $35.5 million for the three months ended September 30, 2025, an improvement from a net loss of $37.1 million in the same period of 2024.
• Total revenue for Q3 2025 was $11.8 million, a 51% decrease from $24.1 million in Q3 2024, primarily due to the sale of its manufacturing facility in December 2024, eliminating product sales and cost of goods sold.
• Research and development (R&D) expenses decreased by 22% to $27.3 million in Q3 2025 from $35.0 million in Q3 2024, mainly due to lower manufacturing activities and rezpegaldesleukin's atopic dermatitis study entering a maintenance phase.
• General and administrative (G&A) expenses decreased by 15% to $16.1 million in Q3 2025 from $19.0 million in Q3 2024, attributed to lower facilities expense and stock-based compensation.
• The company completed an underwritten public offering in July 2025, raising approximately $107.2 million in net proceeds, and issued additional shares through an at-the-market (ATM) offering in Q3 2025 and October 2025, raising $34.3 million and $38.3 million respectively.
• As of September 30, 2025, Nektar had approximately $270.2 million in cash and investments in marketable securities, which it believes is sufficient to fund operations for at least the next twelve months.
• The Phase 2b REZOLVE-AD trial for rezpegaldesleukin in moderate-to-severe atopic dermatitis met its primary and key secondary endpoints at week 16, showing statistically significant improvements in EASI scores and other measures.
• Rezpegaldesleukin received FDA Fast Track designation for both moderate-to-severe atopic dermatitis (February 11, 2025) and severe-to-very severe alopecia areata (July 29, 2025).
• The company initiated IND-enabling studies for NKTR-0165, a TNFR2 agonist for autoimmune diseases, and is advancing NKTR-0166, a bispecific antibody in preclinical studies.
• The lawsuit against Eli Lilly and Company for breach of contract is ongoing, with Lilly's counterclaims dismissed and the jury trial postponed due to a federal government shutdown.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to strong clinical trial results for rezpegaldesleukin and successful capital raises that improve liquidity. However, significant revenue decline, ongoing substantial net losses, and the inherent risks of drug development and litigation temper the overall outlook, preventing a higher score.

Positives

• Net loss decreased by 4% for the three months ended September 30, 2025, compared to the same period in 2024, indicating improved cost management.
• The Phase 2b REZOLVE-AD trial for rezpegaldesleukin in atopic dermatitis met its primary and key secondary endpoints, demonstrating statistically significant efficacy.
• Rezpegaldesleukin received two FDA Fast Track designations, one for atopic dermatitis and another for alopecia areata, potentially accelerating development and review.
• Successful capital raises, including a $107.2 million public offering and $72.5 million from ATM offerings, significantly bolstered the company's cash and investment position to $270.2 million.
• The company believes it has sufficient cash and investments to fund operations for at least the next twelve months.
• Preclinical development is advancing for NKTR-0165 and NKTR-0166, expanding the pipeline of immunomodulatory agents.
• Results from the Phase 2 proof-of-concept study for NKTR-255 in combination with CAR-T cell therapy showed an improved complete response rate of 73% at six months compared to 50% for placebo in large B-cell lymphoma patients.

Negatives

• Total revenue decreased by 51% for the three months ended September 30, 2025, and 52% for the nine months ended September 30, 2025, primarily due to the sale of the manufacturing facility and lower non-cash royalty revenue.
• The company continues to incur substantial net losses, with a net loss of $128.0 million for the nine months ended September 30, 2025.
• Loss from equity method investment in Gannet BioChem was $7.4 million for the nine months ended September 30, 2025, reflecting Ampersand's liquidation preferences and Gannet BioChem's net losses.
• The jury trial in the legal dispute with Eli Lilly and Company has been postponed due to a federal government shutdown, introducing further uncertainty and delay.
• Non-cash royalty revenue is expected to decrease for 2025 compared to 2024 due to a lower royalty rate from UCB and the end of the royalty term for US sales of MIRCERA in late 2024.
• Interest income decreased for both the three and nine months ended September 30, 2025, due to lower investment balances and expected lower interest rates.

Risks

• Clinical drug development is a lengthy and uncertain process, and there is no guarantee of generating successful drug candidates for commercial use.
• High dependence on the success of rezpegaldesleukin; failure in clinical studies would significantly harm the business.
• Outcomes from competitive immunotherapy clinical trials and the discovery of new immunotherapies could adversely impact the value of the pipeline.
• Preliminary and interim clinical data are subject to audit and verification, which could result in material changes in final data.
• Clinical trials for drug candidates could be delayed for various reasons, including patient enrollment rates and site activation, which are often outside of the company's control.
• Reliance on third parties to conduct laboratory experiments, preclinical studies, and clinical trials, with any failure potentially harming research and development plans.
• No guarantee that prior strategic reorganization and cost restructuring plans will achieve intended benefits, potentially requiring additional cost-saving measures.
• Substantial future capital requirements and the risk of not having access to sufficient capital to meet the current business plan.
• Significant source of revenue and R&D capital derived from collaboration agreements; inability to establish and maintain partnerships on attractive terms could harm the business.
• Expectation to continue incurring substantial net losses and may not achieve or sustain profitability in the future.
• If contract manufacturers cannot produce drugs or drug substances in sufficient quantities meeting quality standards, business, financial condition, and results of operations could be harmed.
• Dependence on single or limited suppliers for starting materials for drugs and drug candidates, with potential for delays, loss of revenue, and contract liability.
• Inability to obtain regulatory approval for drug candidates on a timely basis, or at all, or approval terms imposing significant restrictions.
• Patents may not issue from applications, issued patents may not be enforceable, or additional intellectual property licenses from third parties may be required on unfavorable terms.
• Involvement in legal proceedings may incur substantial litigation costs and liabilities.
• High dependence on Eli Lilly and Company's cooperation in transferring documents, records, and data for the rezpegaldesleukin program; failure to cooperate could significantly harm development.
• Reliance on academic and private non-academic institutions for investigator-sponsored clinical studies; failure to meet obligations may delay or impair regulatory approval and commercialization.
• Significant competition could render partnered and proprietary drugs and drug candidates obsolete or noncompetitive.
• Additional cost-savings measures may be necessary following implementation of strategic reorganization and cost restructuring plans.
• Results of operations and financial condition depend significantly on collaboration partners' ability to successfully develop and market drugs.
• Commercial potential of drug candidates is difficult to predict; smaller than anticipated market size could negatively impact revenue.
• If government and private insurance programs do not provide payment or reimbursement for partnered or proprietary drugs, they will not be widely accepted.
• Inability to obtain sufficient capital resources to advance the drug candidate pipeline would negatively impact business value.
• Manufacturing operations of contract manufacturers are subject to laws and regulatory requirements; non-compliance could have a material adverse effect.
• Reliance on information technology systems; any failure, inadequacy, damage, interruption, compromise, or breach could disrupt operations.
• Changes in tax law could adversely affect business and financial condition.
• Global economic and political conditions may negatively affect the company and magnify certain risks.
• Business could be negatively impacted by corporate citizenship and sustainability matters.
• Natural disasters or other catastrophic events could harm the business.

Future Outlook

Nektar Therapeutics expects to continue incurring substantial losses and negative cash flows from operations as it makes significant investments in building and advancing its pipeline of drug candidates. R&D expense for rezpegaldesleukin is projected to increase for the full year 2025 as activities supporting a Phase 3 trial commence. Development expense for NKTR-0165 is expected to increase slightly, while NKTR-255 development expense is anticipated to decrease. The company aims to continue entering into revenue-generating collaboration agreements to fund development costs and believes its current cash and investments are sufficient for at least the next twelve months. However, future capital requirements are substantial and depend on unpredictable factors like clinical trial outcomes, milestone payments, and new collaborations.

Management Comments

• We continue to make significant investments in building and advancing our pipeline of drug candidates as we believe that this is the best strategy to build long-term shareholder value.
• We believe we have sufficient cash and investments in marketable securities to fund operations through at least the next twelve months from the date of the filing of these financial statements.
• As a result of the data from our Phase 2b RESOLVE-AD trial, we expect research and development expense for rezpegaldesleukin for full year 2025 to increase as compared to 2024, as we commence certain activities to support a Phase 3 trial for this program.
• We expect research and development expense in total for full year 2025 to increase slightly as compared to 2024, as we commence certain activities to support a Phase 3 trial for rezpegaldesleukin, continue development of NKTR-0165 and initiate research activities for NKTR-0166.
• We expect general and administrative expense for full year 2025 to be comparable to full year 2024.
• We expect interest income to decrease for 2025 due to lower interest rates.

Industry Context

Nektar Therapeutics operates in the highly competitive and rapidly evolving biopharmaceutical industry, specifically focusing on immunotherapy for autoimmune diseases and cancer. The field of immunomodulatory agents is attracting significant investment, with many companies developing competing therapies. Nektar's focus on Treg cell activation (rezpegaldesleukin) and IL-15 pathway targeting (NKTR-255) places it in areas with high unmet medical needs but also intense competition from cytokine-based, microbiome-based, and other T-cell therapies. The recent Nobel Prize for Treg cell research highlights the scientific importance of Nektar's rezpegaldesleukin program. The industry faces challenges including lengthy and uncertain drug development, evolving regulatory frameworks, and the need for substantial capital, often through collaborations, to advance drug candidates.

Comparison to Industry Standards

• The positive Phase 2b REZOLVE-AD trial results for rezpegaldesleukin in atopic dermatitis, meeting primary and key secondary endpoints, are competitive within the autoimmune space, where companies like Symbiotix, Apogee Therapeutics, Janssen, AstraZeneca, and Tizona Therapeutics are developing cytokine-based, microbiome-based, or toleragenic-based therapies.
• The 73% complete response rate at six months for NKTR-255 combined with CAR-T cell therapy in large B-cell lymphoma patients compares favorably to the 50% placebo rate, positioning it against engineered IL-15 biologics and cell therapies from competitors such as Artiva Biotherapeutics, Fate Therapeutics, ImmunityBio, Inc., Nkarta Therapeutics, NKMax America, and Roche/Genentech.
• The receipt of two FDA Fast Track designations for rezpegaldesleukin indicates recognition of its potential to address serious conditions with unmet medical needs, a common goal for innovative therapies in the biopharmaceutical sector.

Corporate Governance

Legal Proceedings

• Nektar filed a complaint against Eli Lilly and Company (Lilly) on August 7, 2023, in the U.S. District Court for the Northern District of California, alleging breach of contract and breach of implied covenant of good faith and fair dealing.
• Lilly's counterclaims against Nektar, alleging breach of confidentiality and defamation, were voluntarily dismissed with prejudice on October 7, 2025.
• Lilly has filed a motion for summary judgment, and other pre-trial motions remain pending.
• The jury trial, previously scheduled for October 27, 2025, was postponed to a new date after December 11, 2025, due to a federal government shutdown.
• Indian GST authorities issued a demand in September 2025 seeking recovery of approximately $3.3 million in GST refunds, plus penalties and interest, for which Nektar has filed an appeal and believes a loss is not probable.

Related Party Transactions

• Nektar's equity method investment in Gannet BioChem, an affiliate of Ampersand Management LLC, is considered a related party. Nektar recorded a loss from this investment of $534,000 for the three months and $7,381,000 for the nine months ended September 30, 2025.
• Nektar entered into supply agreements with Gannet BioChem for the manufacture and supply of PEG reagents for rezpegaldesleukin and NKTR-255, with no purchases made in the three and nine months ended September 30, 2025.
• Nektar is performing certain transition services for Gannet BioChem (information technology and accounting) and Gannet BioChem is performing services for Nektar (R&D support) under services agreements. Nektar recorded $0.4 million and $1.2 million as R&D expense for services from Gannet BioChem, and $0.2 million and $1.1 million as other income for services to Gannet BioChem for the three and nine months ended September 30, 2025, respectively.
• As of September 30, 2025, Nektar recorded a net receivable of $0.2 million from Gannet BioChem and a payable of $0.3 million to Gannet BioChem.

Stakeholder Impact

• Shareholders: Experienced dilution from recent equity offerings but also benefited from improved liquidity and positive clinical data for rezpegaldesleukin. Stock price volatility remains a concern.
• Employees: Restructuring plans in 2022 and 2023 involved workforce terminations. The increase in authorized shares for the incentive plan could positively impact employee motivation and retention.
• Customers/Partners: The sale of the manufacturing facility means Nektar no longer directly supplies products, relying on Gannet BioChem. Ongoing collaborations, particularly for rezpegaldesleukin and NKTR-255, are critical for future revenue and drug development.
• Creditors: Improved liquidity from capital raises may reduce immediate concerns about the company's ability to meet short-term obligations, though substantial future capital requirements persist.
• Regulatory Authorities: Fast Track designations for rezpegaldesleukin indicate potential for expedited review, which could benefit patients awaiting new treatments for atopic dermatitis and alopecia areata.

Next Steps

• Continue clinical development of rezpegaldesleukin, including activities to support a Phase 3 trial.
• Anticipate topline data readout from the Phase 2b RESOLVE-AA study in December 2025.
• Continue IND-enabling studies for NKTR-0165 and initiate preclinical studies for NKTR-0166.
• Evaluate additional strategic partnership pathways for the NKTR-255 program.
• Continue oncology clinical collaboration with Merck KGaA for NKTR-255 in combination with avelumab in urothelial carcinoma.
• Continue clinical study collaboration with AbelZeta Pharma for NKTR-255 in combination with C-TIL051 in NSCLC.
• Participate in a status conference on December 11, 2025, to learn additional details concerning the new starting date of the jury trial with Eli Lilly and Company.
• Continue to appeal the demand from Indian GST authorities regarding the $3.3 million refund.

Key Dates

Recommendation

Nektar Therapeutics presents a mixed but cautiously optimistic picture. The positive Phase 2b clinical data for rezpegaldesleukin in atopic dermatitis, coupled with two FDA Fast Track designations, represents a significant de-risking event for its lead asset and provides a strong foundation for future development. The successful capital raises have substantially improved the company's liquidity, providing a runway for at least the next 12 months. However, the company continues to incur substantial net losses, and revenue has significantly declined due to the manufacturing facility sale and lower royalty income. The ongoing litigation with Eli Lilly, despite the dismissal of counterclaims, adds a layer of uncertainty, and the inherent risks of drug development remain high. For existing investors, the clinical progress and improved cash position warrant holding the stock, as future positive clinical milestones or collaboration agreements could drive significant value. For new investors, the stock remains speculative due to continued unprofitability and reliance on future clinical and commercial success, suggesting a 'NA' or 'hold' until further clarity on the path to profitability or additional late-stage data emerges.

Keywords

Immunotherapy, Biopharmaceutical, Rezpegaldesleukin, Atopic Dermatitis, Alopecia Areata, Type 1 Diabetes, NKTR-0165, TNFR2 Agonist, NKTR-255, IL-15 Receptor Agonist, Oncology, Autoimmune Diseases, Clinical Trials, FDA Fast Track, SEC Filing, 10-Q, Biotech, Drug Development, Capital Raise, Financial Results