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NEKTAR THERAPEUTICS (NKTR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 beat S&P consensus on both revenue and EPS: revenue $11.18M vs $9.42M est (+18.5%); Primary EPS (normalized) $(2.78) vs $(3.03) est (+$0.25). GAAP EPS was $(2.95), with the delta driven by excluding a $2.4M equity-method loss in the non-GAAP figure (S&P Global estimates)*.
  • YoY revenue decline (to $11.18M from $23.49M) was expected given the sale of the Huntsville facility—product sales are no longer recognized; total operating expenses fell materially due to elimination of COGS and lower restructuring/impairment .
  • Cash and investments were $175.9M at 6/30 (pre-raise); with ~$107.5M net offering proceeds on 7/2, management guides runway into Q1 2027; FY25 exit cash guided to $180–$185M .
  • Pipeline momentum is the stock catalyst: Phase 2b AD induction met primary/secondary endpoints with rapid EASI and itch relief; AA Phase 2b topline expected December 2025, 52-week AD maintenance/escape data in Q1 2026, end-of-Phase II FDA meeting before YE25 to enable Phase III in 2026 .

What Went Well and What Went Wrong

  • What Went Well

    • Clinical validation in AD: “transformative” 16-week induction data with rapid EASI and itch relief, including EASI-75/90 and itch NRS significance at higher doses; safety profile without increased conjunctivitis/oral herpes seen with other agents .
    • Strengthened balance sheet and runway: $115M gross equity raise in July; runway into 2027 enables Phase III readiness and CMC scale-up; FY25 exit cash $180–$185M guided .
    • Regulatory traction: Fast Track designations in AD (Feb) and AA (July), enabling more frequent FDA engagement; end-of-Phase II meeting planned for 2025 to position Phase III start in 2026 .

  • What Went Wrong

    • Revenue reset YoY: total revenue down to $11.18M from $23.49M due to discontinuation of product sales after the Huntsville divestiture .
    • Equity-method losses: non-cash losses from Gannet BioChem of $2.4M in Q2 and $6.8M YTD pressured GAAP EPS (offset in non-GAAP) .
    • Ongoing operating losses: Q2 loss from operations $(36.23)M and net loss $(41.59)M highlight the continued funding needs pending pivotal programs .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Total Revenue ($USD)$23.489M $10.460M $11.175M
Loss from Operations ($USD)$(49.774)M $(44.535)M $(36.230)M
Net Loss ($USD)$(52.363)M $(50.882)M $(41.593)M
GAAP EPS (Basic & Diluted)$(3.76) $(0.24) $(2.95)
Primary EPS (Actual, normalized)$(2.81)*$(3.61)*$(2.78)*
Revenue Consensus (S&P)$17.545M*$15.355M*$9.416M*
Primary EPS Consensus (S&P)$(3.06)*$(2.50)*$(3.03)*

Values with an asterisk (*) retrieved from S&P Global.

Q2 2025 vs Estimates

MetricActualConsensusSurprise
Revenue$11.175M $9.416M*+$1.759M / +18.5%*
Primary EPS (normalized)$(2.78)*$(3.03)*+$0.25*

Values with an asterisk (*) retrieved from S&P Global.

Notes:

  • YoY revenue decline primarily reflects the sale of Huntsville in Dec-2024 (no product sales recognized in 2025) .
  • Non-GAAP EPS excludes equity-method losses (Q2: $2.4M), reconciling to $(2.78) from GAAP $(2.95) .

KPIs and Balance Sheet

KPIQ4 2024Q1 2025Q2 2025
Cash & Investments$269.1M $220.7M $175.9M
Equity Raise (post-Q2)——~$107.5M net (closed 7/2/25); $115M gross
RunwayInto 4Q26 Into 4Q26 Into Q1 2027 (post-raise)
Liab. related to sales of future royalties (net)$91.776M $86.322M $80.573M

Operating Expense Mix (Quarterly)

MetricQ2 2024Q2 2025
R&D Expense$29.724M $29.886M
G&A Expense$20.510M $17.072M
Restructuring & Impairment$13.289M $0.447M
COGS$9.740M $0.000M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Non-cash royalty revenueFY 2025Not provided in Q1 materials reviewed~$40M New
R&D ExpenseFY 2025Not provided$125–$130M (incl. $5–$10M non-cash) New
G&A ExpenseFY 2025Not provided$70–$75M (incl. $5–$10M non-cash) New
Non-cash interest expenseFY 2025Not provided~$20M New
Year-end cash & investmentsFY 2025Not provided$180–$185M New
Cash runwayMulti-yearInto 4Q26 before raise Into 2027 (post-raise) Raised

Note: Q1 and Q4 materials reviewed did not include quantified FY25 OpEx/royalty guidance; CFO introduced ranges in Q2 call .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
AD clinical data/timingEnrollment complete; expecting Q2’25 topline 16-week induction met primary/secondary endpoints; fast onset; maintenance/escape data in Q1’26 Strong positive validation; moving to Phase III readiness
AA programEnrollment completed; Q4’25 topline planned AA topline December 2025; benchmarking vs JAKs (SALT change, SALT20/10) On track; competitive positioning clarified
Regulatory interactionsFast Track (AD) in Feb-2025 Fast Track (AA) in July; EOP2 meeting planned before YE25 Accelerating path; broader engagement
Phase III strategy—Two monotherapy pivotal trials incl. biologic-naive and -experienced; LTE; randomized withdrawal contemplated Clearer pivotal blueprint
ISR mitigation—Mechanistic work with skin organoids; auto-injector expected to standardize admin and reduce ISRs; ISRs mostly mild/moderate and non-limiting De-risking tolerability perception
Financing/partnership—Runway into 2027; active BD discussions; potential non-dilutive options (e.g., monetizing 3–4% dapiromab stake) Optionality for Phase III funding
Other pipelineNKTR-255 data presented; NKTR-0165/0166 preclinical progress NKTR-0165 IND-enabling progressing; clinic in 2026; NKTR-0166 bispecific updates expected Continued advancement

Management Commentary

  • “This quarter, we announced transformative data for rezpegaldesleukin… rapid onset of EASI response and itch relief… advantage of a broad-based Treg mechanism” — Howard Robin, CEO .
  • “We have the opportunity to move more quickly… Fast Track… poised to enter Phase III development in 2026” — Howard Robin .
  • “All three rezpegaldesleukin arms met significance… every-two-weeks regimens met vIGA-AD and itch NRS… safety profile consistent… no increased conjunctivitis/oral herpes” — Jonathan Zalevsky, CRDO .
  • “We now expect to end the year with approximately $180–$185M in cash and investments… R&D $125–$130M; G&A $70–$75M; non-cash interest ~$20M” — Sandra Gardiner, CFO .

Q&A Highlights

  • Pivotal design: two monotherapy Phase III studies plus LTE; include both biologic-naive and biologic-experienced patients to support a broad label; EOP2 meeting before YE25 .
  • Partnership/financing: runway into 2027 post-raise; ongoing strategic and non‑dilutive financing discussions; potential asset monetization (minor external equity stake) .
  • AA competitive bar: aiming for SALT % reductions in the ~30–40% range (low/high-dose JAK benchmarks) and SALT20/SALT10 responder rates similar to class leaders, with differentiation via Treg biology and durability .
  • ISR mitigation: modeling with skin organoids to map IL‑2 pathways; transition to auto-injector expected to reduce variability; ISRs largely mild/moderate and not treatment-limiting in trials .
  • Remission/durability: plan to assess deepening of responses beyond 16 weeks and randomized withdrawal in long-term extension to evaluate remission potential .

Estimates Context

  • Q2 revenue beat consensus by ~18.5% ($11.18M vs $9.42M est) and Primary EPS beat by ~$0.25 (($(2.78)) vs $(3.03) est). Beats driven by lower operating expenses (no COGS, minimal restructuring) and normalized EPS excluding equity-method losses, partially offset by lower non-cash royalty revenue YoY (S&P Global estimates)*.
  • Given updated FY25 OpEx ranges and non-cash royalty outlook (~$40M), street models may need to lift near-term EPS (less negative) and revise cash runway/Phase III spend expectations; AA and 52-week AD readouts are key to out-year revenue probability and expense pacing .

Values with an asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Clinical validation in AD underpins a clear path to Phase III in 2026; inclusion of biologic-experienced patients could broaden the eventual label and TAM .
  • Near-term catalysts: AA Phase 2b topline in Dec-2025 and 52-week AD maintenance/escape data in Q1-2026—both capable of moving sentiment and estimate revisions .
  • Q2 delivered clean beats on revenue/EPS despite revenue reset post-Huntsville; cost structure benefits (no COGS, minimal restructuring) aided results; watch Gannet BioChem equity-method losses in GAAP EPS .
  • Balance sheet strengthened: $115M gross raise; YE25 cash guided to $180–$185M; runway into 2027 supports pivotal readiness without immediate financing pressure .
  • Regulatory momentum (dual Fast Tracks) and EOP2 in 2025 de-risk timelines; Phase III CMC/regulatory readiness underway .
  • Tolerability narrative: ISRs mechanistically IL‑2–mediated and largely mild/moderate; auto-injector expected to standardize administration; safety profile lacks conjunctivitis/oral herpes signals seen with some comparators .
  • Strategic optionality: active BD dialogue and potential non-dilutive funding avenues could mitigate dilution risk into pivotal programs .

Citations:

  • Q2’25 8‑K/Press release and financial statements .
  • Q2’25 earnings call (prepared remarks and Q&A) .
  • Other relevant Q2-period press releases (Fast Track AA; equity raise) .
  • Prior quarters for trend (Q1’25 8‑K; Q4’24 8‑K) .

Values with an asterisk (*) retrieved from S&P Global.