SAN FRANCISCO - Nektar Therapeutics (NASDAQ:NKTR), a biotech company specializing in autoimmune therapies, has agreed to sell its Huntsville, Alabama manufacturing operations to Ampersand Capital Partners. The transaction includes a $90 million total consideration, with $70 million in cash and a $20 million equity stake in a new Ampersand portfolio company.
The strategic sale enables Nektar to concentrate on its core research and development programs in immunology, including its lead product candidate rezpegaldesleukin. The divestiture is part of Nektar's broader effort to streamline operations and extend its cash runway into late 2026.
Ampersand, a private equity firm with a focus on the healthcare sector, will take over the 124,000-square-foot facility known for producing PEGylation reagents, crucial in the development of certain therapeutic drugs. This move is expected to maintain the supply chain continuity for Nektar's commercial customers and provide uninterrupted access to PEGylation reagents for the company's ongoing projects.
The Huntsville site's employees will be offered positions at the new portfolio company, ensuring expertise retention. Nektar will also have the right to appoint a board member to the new company and will enter into supply agreements to meet its PEG reagent needs for specific pipeline programs.
Ampersand's General Partner, David Anderson, expressed enthusiasm for the facility's capabilities and the firm's plans to invest in its growth. The transaction is set to close by December 2, 2024, and is not contingent on financing. It is, however, subject to customary closing conditions.
Nektar retains rights to current and future royalty streams and milestones from existing PEGylated product license agreements. UBS Investment Bank and Sidley Austin LLP advised Nektar on the deal, while Goodwin Procter LLP served as legal advisor to Ampersand.
This transaction is based on a press release statement and reflects the companies' current plans and expectations, which are subject to change.
In other recent news, Nektar Therapeutics has been the focus of multiple analyst notes, including BTIG and Piper Sandler, both of which have initiated coverage with positive outlooks. Piper Sandler set a price target of $7.00, highlighting the potential of Nektar's lead asset, rezpegaldesleukin (REZPEG). BTIG also upgraded Nektar's stock based on the potential of REZPEG in treating inflammatory and autoimmune diseases.
Nektar reported positive results from two Phase 1b studies on REZPEG for treating atopic dermatitis and psoriasis. The company plans to report topline data from ongoing Phase 2b studies of REZPEG in atopic dermatitis and alopecia areata next year.
In addition, Nektar Therapeutics revealed clinical data from a Phase 1 study of NKTR-255, an IL-15 receptor agonist, used with CD19-22 CAR-T cell therapy for patients with B-cell acute lymphoblastic leukemia. The study showed that NKTR-255 doubled the 12-month relapse-free/progression-free survival rate compared to historical controls.
These are recent developments, and as Nektar Therapeutics progresses towards the expected trial outcomes in the first half of 2025, investors and industry observers will likely be watching closely.
InvestingPro Insights
Nektar Therapeutics' strategic decision to sell its Huntsville manufacturing operations aligns with several key financial indicators and trends highlighted by InvestingPro data. As of the latest available data, Nektar's market capitalization stands at $226.42 million, reflecting the company's current market valuation amidst this restructuring effort.
The sale's $90 million consideration is particularly significant given Nektar's financial position. An InvestingPro Tip notes that the company "holds more cash than debt on its balance sheet," which this transaction will further bolster. This cash infusion is crucial, as another InvestingPro Tip warns that Nektar is "quickly burning through cash." The $70 million cash component of the deal will help extend the company's runway, supporting their stated goal of maintaining operations into late 2026.
Nektar's focus on core R&D programs comes at a critical time, as the company faces financial challenges. The InvestingPro data shows a negative operating income of -$135.1 million for the last twelve months as of Q2 2024, with an operating income margin of -145.03%. This underscores the importance of the company's strategic shift towards its immunology pipeline, including the lead candidate rezpegaldesleukin.
Despite these challenges, Nektar has shown some positive trends. The company's revenue growth stands at 6.17% for the last twelve months, with a more impressive 14.59% growth in the most recent quarter. This growth, coupled with the strategic sale, may contribute to improving the company's financial health.
It's worth noting that while Nektar's stock has taken a significant hit recently, with a -9.56% return over the past week, it has shown remarkable resilience over the longer term. The YTD price total return stands at an impressive 117.7%, indicating investor optimism about the company's strategic direction.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights beyond those mentioned here. The platform currently lists 10 additional tips for Nektar Therapeutics, providing a deeper understanding of the company's financial position and market performance.
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