Nektar Therapeutics 10-Q for FY2026 Q3
Nektar Therapeutics (NKTR)
About this 10-Q
Nektar Therapeutics filed this 10-Q on November 13, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Nektar Therapeutics initiated three Phase 3 ZENITH AD trials, plans ZENITH AA-1 for December 2026, and reported $952.9 million in cash and marketable securities at September 30, 2026. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $9.39M
- down 20.4% from $11.79M a year earlier
- Net loss
- $55.65M
- compared with a net loss of $35.52M a year earlier
- Diluted EPS
- -$1.63
- compared with -$1.87 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(IRS Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: |
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Title of each class |
Trading symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of outstanding shares of the registrant’s Common Stock, $0.0001 par value, was
NEKTAR THERAPEUTICS
INDEX
2
Forward-Looking Statements
This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of this Quarterly Report on Form 10-Q, including any projections of market size, earnings, revenue, milestone payments, royalties, sales or other financial items, any statements of the plans and objectives of management for future operations (including, but not limited to, preclinical development, clinical trials and manufacturing), any statements related to our financial condition and future working capital needs, any statements related to our potential cost-savings or restructuring measures, any statements regarding potential future financing alternatives, any statements concerning proposed drug candidates and our future research and development plans, any statements regarding the timing for the start or end of clinical trials or submission of regulatory approval filings, any statements regarding future economic conditions or performance, any statements regarding the initiation, formation, or success of any collaboration arrangements, commercialization activities and product sales levels and future payments that may come due to us under these arrangements, any statements regarding our plans and objectives to initiate or continue clinical trials, any statements related to potential, anticipated, or ongoing litigation (including the timing and outcome of court hearings, trials, post-trial proceedings and any appeals) and any statements of assumptions underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of terminology such as “believe,” “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,” “potential” or “continue,” or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, such expectations or any of the forward-looking statements may prove to be incorrect and actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, including, but not limited to, the risk factors set forth in Part II, Item 1A “Risk Factors” below and for the reasons described elsewhere in this Quarterly Report on Form 10-Q. All forward-looking statements and reasons why results may differ included in this report are made as of the date hereof and we do not intend to update any forward-looking statements except as required by law or applicable regulations. Except where the context otherwise requires, in this Quarterly Report on Form 10-Q, the “Company,” “Nektar,” “we,” “us,” and “our” refer to Nektar Therapeutics, a Delaware corporation, and, where appropriate, its subsidiaries.
Trademarks
The Nektar brand and product names, including but not limited to Nektar®, contained in this document are trademarks and registered trademarks of Nektar Therapeutics in the United States (U.S.) and certain other countries. This document also contains references to trademarks and service marks of other companies that are the property of their respective owners.
3
Summary of Risks
We are providing the following cautionary discussion of risk factors, uncertainties and assumptions that we believe are relevant to our business. These are factors that, individually or in the aggregate, we think could cause our actual results to differ materially from expected and historical results and our forward-looking statements. We note these factors for investors as permitted by Section 21E of the Exchange Act and Section 27A of the Securities Act. Investors in Nektar Therapeutics should carefully consider the risks described below before making an investment decision. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider this section to be a complete discussion of all potential risks or uncertainties that may substantially impact our business. Moreover, we operate in a competitive and rapidly changing environment. New factors emerge from time to time and it is not possible to predict the impact of all of these factors on our business, financial condition or results of operations.
Risks to our business are more fully described below in Part II, Item 1A under “Risk Factors” in this Form 10-Q, which risks include, among others:
4
In addition to the above-mentioned risks, our business is subject to a number of additional risks faced by businesses generally.
5
PART I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements—Unaudited:
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
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September 30, 2026 |
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December 31, 2025 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Other current assets (including $ |
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Total current assets |
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Long-term investments |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable (including $ |
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$ |
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$ |
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Accrued expenses (including $ |
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Operating lease liabilities, current portion |
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Total current liabilities |
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Operating lease liabilities, less current portion |
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Liabilities related to the sales of future royalties, net |
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Other long-term liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Capital in excess of par value |
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Accumulated other comprehensive income (loss) |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenue: |
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Non-cash royalty revenue related to the sales of future royalties |
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$ |
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$ |
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$ |
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$ |
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License, collaboration and other revenue |
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Total revenue |
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Operating costs and expenses: |
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Research and development (including $ |
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General and administrative |
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Restructuring and impairment |
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( |
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( |
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Total operating costs and expenses |
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Loss from operations |
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( |
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( |
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( |
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( |
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Non-operating income (expense): |
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Non-cash interest expense on liabilities related to the sales of future royalties |
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( |
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( |
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( |
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( |
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Interest income |
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Other income (expense), net (including income of $ |
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( |
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( |
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( |
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Total non-operating income (expense), net |
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( |
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( |
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Loss before provision (benefit) for income taxes and equity method investment |
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( |
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( |
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( |
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( |
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Provision (benefit) for income taxes |
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( |
) |
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( |
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Loss before equity method investment |
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( |
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( |
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( |
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( |
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Loss from equity method investment |
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( |
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( |
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( |
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( |
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Net loss |
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$ |
( |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Basic and diluted net loss per share |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted average shares outstanding used in computing basic and diluted net loss per share |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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Other comprehensive income (loss): |
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Net unrealized gain (loss) on available-for-sale securities |
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( |
) |
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( |
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( |
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Net foreign currency translation adjustment |
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Other comprehensive income (loss) |
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( |
) |
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( |
) |
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( |
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Comprehensive loss |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
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$ |
( |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands, except share data)
(Unaudited)
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Common Stock |
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Treasury Stock |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital in |
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Accumulated |
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Accumulated |
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Total |
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Balance at December 31, 2024 |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
( |
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$ |
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Shares issued under equity compensation plans |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Comprehensive income (loss) |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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( |
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Balance at March 31, 2025 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
( |
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$ |
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Shares issued under equity compensation plans |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Comprehensive income (loss) |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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( |
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Balance at June 30, 2025 |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Shares issued under equity compensation plans |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Shares issued under secondary offering, net of underwriting discounts and offering costs of $ |
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( |
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— |
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— |
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Shares sold under at-the-market offering, net of commissions and offering costs of $ |
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— |
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— |
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— |
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— |
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— |
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Exercise of pre-funded warrant |
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— |
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— |
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— |
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— |
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— |
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Comprehensive income (loss) |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance at September 30, 2025 |
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$ |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands, except share data)
(Unaudited)
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Common Stock |
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Treasury Stock |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital in |
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Accumulated |
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Accumulated |
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Total |
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Balance at December 31, 2025 |
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$ |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
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$ |
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Shares issued under equity compensation plans |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Shares and pre-funded warrants sold in underwritten offering, net of underwriting discounts and offering costs of $ |
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— |
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— |
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— |
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— |
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Shares sold under at-the-market offering, net of commissions and offering costs of $ |
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— |
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— |
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— |
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— |
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— |
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Comprehensive income (loss) |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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( |
) |
Balance at March 31, 2026 |
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$ |
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— |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Shares issued under equity compensation plans |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Shares sold in underwritten offering, net of underwriting discounts and offering costs of $ |
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— |
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— |
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— |
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— |
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— |
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Shares sold under at-the-market offering, net of commissions and offering costs of $ |
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— |
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— |
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|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Exercise of pre-funded warrants |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2026 |
|
|
|
|
$ |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Shares issued under equity compensation plans |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2026 |
|
|
|
|
$ |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10
NEKTAR THERAPEUTICS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
Nine Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Non-cash royalty revenue related to the sales of future royalties |
|
|
( |
) |
|
|
( |
) |
Non-cash interest expense on liabilities related to the sales of future royalties |
|
|
|
|
|
|
||
Loss from equity method investment |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of premiums (discounts), net |
|
|
( |
) |
|
|
( |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Operating leases, net |
|
|
( |
) |
|
|
( |
) |
Other assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
|
|
|
|
||
Accrued expenses |
|
|
|
|
|
( |
) |
|
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of investments |
|
|
( |
) |
|
|
( |
) |
Maturities of investments |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Payment of transaction costs and working capital adjustment from the sale of the Huntsville manufacturing facility |
|
|
|
|
|
( |
) |
|
Net cash provided by (used in) investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Proceeds from shares issued under equity compensation plans and other |
|
|
|
|
|
|
||
Proceeds from underwritten offering, net of underwriting discounts of $ |
|
|
|
|
|
|
||
Proceeds from at-the-market offering, net of commissions of $ |
|
|
|
|
|
|
||
Payments of offering costs associated with issuance of common stock and pre-funded warrants |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
Effect of foreign exchange rates on cash and cash equivalents |
|
|
|
|
|
|
||
Net increase (decrease) in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
11
NEKTAR THERAPEUTICS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Note 1 — Organization and Summary of Significant Accounting Policies
Organization
Nektar Therapeutics (Nektar, we) is a clinical-stage biotechnology company headquartered in San Francisco, California and incorporated in Delaware, focused on developing treatments that address the underlying immunological dysfunction in autoimmune and chronic inflammatory diseases. Within this growing field, we direct our efforts toward creating new immunomodulatory agents that selectively induce, amplify, attenuate or prevent immune responses in order to achieve desired therapeutic outcomes. Our pipeline of clinical-stage and preclinical-stage immunomodulatory agents, such as rezpegaldesleukin, NKTR-0165 and NKTR-0166, target the treatment of autoimmune diseases.
We are evaluating rezpegaldesleukin in moderate-to-severe atopic dermatitis and severe-to-very-severe alopecia areata and, in collaboration with TrialNet, in new-onset stage 3 Type 1 diabetes mellitus.
We have initiated three global registrational trials (ZENITH AD-1, ZENITH AD-2 and ZENITH AD-3) in the Phase 3 ZENITH AD program evaluating rezpegaldesleukin in patients who are 12 years of age or older with moderate-to-severe atopic dermatitis.
We are also continuing Phase 2b trials of rezpegaldesleukin in patients with moderate-to-severe atopic dermatitis which we initiated in October 2023 (the Phase 2b REZOLVE-AD trial) and in patients with severe-to-very-severe alopecia areata which we initiated in March 2024 (the Phase 2b REZOLVE-AA trial).
In October 2026, at the European Academy of Dermatology and Venereology (EADV) 2026, we announced results from the 52-week treatment extension cohort and the 6-month off-treatment period of the Phase 2b REZOLVE-AA trial.
In February 2025, we announced that we had entered into a collaboration agreement with TrialNet to evaluate rezpegaldesleukin in patients with new-onset stage 3 Type 1 diabetes mellitus in a Phase 2 study, which was initiated in May 2026. TrialNet will conduct the study with funding from the National Institutes of Health, primarily through the Special Statutory Funding Program for Type 1 Diabetes through the National Institute of Diabetes and Digestive and Kidney Diseases. Nektar will supply rezpegaldesleukin for the study and will retain all rights to the rezpegaldesleukin program under the collaboration.
Our research and development activities have required significant ongoing investment to date and are expected to continue to require significant investment. As a result, we expect to continue to incur substantial losses and negative cash flows from operations in the future. We have financed our operations primarily through public and private placements of debt and equity securities, royalties and product sales, as well as, revenue from upfront and milestone payments under our strategic collaboration agreements. As of September 30, 2026, we had approximately $
As we continue our research and development activities, we will need additional cash to fund our operations. Accordingly, we may enter into new collaboration agreements or other similar transactions, and we may also seek financing transactions, which may include public or private equity or debt financings, or other strategic transactions. There can be no assurance that any additional collaboration agreements or financings will be available to us on commercially reasonable terms. 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 condensed consolidated financial statements.
From July 2025 through September 30, 2026, we completed a number of equity-based financing transactions, under which we sold
12
Basis of Presentation and Principles of Consolidation
We have prepared our Condensed Consolidated Financial Statements pursuant to U.S. generally accepted accounting principles (U.S. GAAP) and the rules and regulations of the SEC for interim reporting. As permitted under those rules, we may condense or omit certain footnotes or other financial information that are normally required by U.S. GAAP for annual periods. In the opinion of management, these financial statements include all normal and recurring adjustments that we consider necessary for the fair presentation of our financial position and operating results.
Our Condensed Consolidated Financial Statements include the financial position, results of operations and cash flows of our wholly-owned subsidiaries. In determining whether we are the primary beneficiary of a variable interest entity, we consider whether we have both the power to direct activities of the entity that most significantly impact the entity’s economic performance and the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. We do not have any interests in any variable interest entities of which we are the primary beneficiary. We have eliminated all intercompany accounts and transactions in consolidation.
Our Condensed Consolidated Financial Statements are denominated in U.S. dollars. Accordingly, changes in exchange rates between the applicable foreign currency and the U.S. dollar will affect the translation of each foreign subsidiary’s financial results into U.S. dollars for purposes of reporting our consolidated financial results.
Our comprehensive loss consists of our net loss plus our foreign currency translation gains and losses (to the extent recognized in other comprehensive income (loss)) and unrealized holding gains and losses on available-for-sale securities. There were no significant reclassifications out of accumulated other comprehensive income (loss) to the statements of operations during the three and nine months ended September 30, 2026 and 2025. We include translation gains and losses in accumulated other comprehensive income (loss) in the stockholders’ equity section of our Condensed Consolidated Balance Sheets. However, if we have concluded that we have substantially liquidated the entity, such as for our subsidiary in India, we recognize subsequent translation gains and losses in other income (expense) in our Condensed Consolidated Statements of Operations.
The accompanying Condensed Consolidated Financial Statements are unaudited. The Condensed Consolidated Balance Sheet data as of December 31, 2025 was derived from the audited consolidated financial statements which are included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 13, 2026. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and the accompanying notes to those financial statements.
Revenue, expenses, assets, and liabilities can vary during each quarter of the year. The results and trends in these interim Condensed Consolidated Financial Statements are not necessarily indicative of the results to be expected for the full year or any other period.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Accounting estimates and assumptions are inherently uncertain.
Actual results could differ materially from those estimates and assumptions. As appropriate, we assess estimates each period, update them to reflect current information, and generally reflect any changes in estimates in the period first identified.
Related Parties
Transactions between related parties are considered to be related party transactions even though they may not be given accounting recognition. Accounting Standards Codification (ASC) 850, Related Party Disclosures (ASC 850) requires that transactions with related parties that would make a difference in decision making shall be disclosed so that users of the financial statements can evaluate their significance. The related party transactions disclosed on our Condensed Consolidated Statements of
13
Operations and Condensed Consolidated Balance Sheets relate to transactions with Gannet BioChem. Please see Note 4 regarding our related party transactions with Gannet BioChem.
Significant Concentrations
We are dependent on our contract manufacturers in the supply chain of our drug candidates to provide raw materials, manufacturing services and other development services with appropriate quality and reliability to meet applicable regulatory requirements. In certain cases, we rely on a single contract manufacturer for its role in our supply chain. Consequently, in the event that these services are delayed or interrupted for any reason, our ability to develop and produce our drug candidates could be significantly impaired, which could have a material adverse effect on our business, financial condition and results of operations.
For our available-for-sale securities, we have significant concentrations of issuers in the banking and financial services industries. While our investment policy requires that we invest only in highly-rated securities and limit our exposure to any single issuer, various factors may materially affect the financial condition of issuers. Additionally, pursuant to our investment policy, we may sell securities before maturity if the issuer’s credit rating has been downgraded below our minimum credit rating requirements, which may result in a loss on the sale. Accordingly, if various factors result in downgrades below our minimum credit rating requirements and if we decide to sell these securities, we may experience losses on such sales.
Net Loss Per Share
For all periods presented in the Condensed Consolidated Statements of Operations, the net loss available to common stockholders is equal to the reported net loss. We calculate basic net loss per share based on the weighted-average number of common shares outstanding, including pre-funded warrants outstanding, during the periods presented. Pre-funded warrants are considered outstanding for the purposes of computing basic net loss per share because the shares are issuable for little consideration, are fully vested and are exercisable after the original issuance date. For the three and nine months ended September 30, 2026 and 2025, basic and diluted net loss per share are the same due to our net losses and the requirement to exclude potentially dilutive securities which would have an antidilutive effect on net loss per share. We
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Potentially dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, an accounting standard update that requires the Company to disclose more detailed information about the types of expenses (including employee compensation, depreciation, and amortization) included in each relevant income statement expense caption. In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, to clarify the effective date of ASU 2024-03. The ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the incremental disclosures that will be required in our consolidated financial statements.
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset in developing reasonable and supportable forecasts during the application of the current expected credit loss model for current accounts receivable and current contract assets arising from transactions under ASC 606. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025 and interim reporting periods within those annual reporting periods. Early adoption is permitted. We have determined there is no impact of adopting ASU 2025-05 as we do not develop forecasts as part of estimating expected credit losses.
14
In December 2025, the FASB issued ASU 2025‑11, Interim Reporting (Topic 270): Narrow-Scope Improvements. ASU 2025-11 improves clarity for interim financial reporting requirements under the existing guidance within ASC 270, Interim Reporting. ASU 2025-11 is effective for public entities for interim reporting periods within annual periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of ASU 2025-11 on our consolidated financial statements and related disclosures.
Note 2 — Cash and Investments in Marketable Securities
Cash and investments in marketable securities, including cash equivalents, are as follows (in thousands):
|
|
Estimated Fair Value at |
|
|||||
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Short-term investments |
|
|
|
|
|
|
||
Long-term investments |
|
|
|
|
|
|
||
Total cash and investments in marketable securities |
|
$ |
|
|
$ |
|
||
Our portfolio of cash and investments in marketable securities, including cash equivalents, consists of the following (in thousands):
|
|
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||||||
|
|
Fair Value Hierarchy Level |
|
Amortized Cost |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
|
Fair Value |
|
|||||
Corporate notes and bonds |
|
2 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Corporate commercial paper |
|
2 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
U.S. Treasuries |
|
2 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Obligations of U.S. government agencies |
|
2 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Available-for-sale investments |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Money market funds |
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Certificates of deposit |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash |
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total cash and investments in marketable securities |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||||||
For the three and nine months ended September 30, 2026 and 2025, there were no transfers between Level 1 and Level 2 of the fair value hierarchy. All of our long-term investments as of September 30, 2026 had maturities between and
Note 3 — Condensed Consolidated Financial Statement Details
Other Current Assets
Other current assets consist of the following (in thousands):
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Prepaid research and development expenses |
|
$ |
|
|
$ |
|
||
Interest receivable |
|
|
|
|
|
|
||
Other prepaid expenses and other non-trade receivables |
|
|
|
|
|
|
||
Total other current assets |
|
$ |
|
|
$ |
|
||
15
Other Assets
Other assets consist of the following (in thousands):
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Long-term prepaid research and development expenses |
|
$ |
|
|
$ |
|
||
Operating lease right-of-use assets |
|
|
|
|
|
|
||
Property and equipment, net |
|
|
|
|
|
|
||
Equity method investment in Gannet BioChem |
|
|
|
|
|
|
||
Other long-term assets |
|
|
|
|
|
|
||
Total other assets |
|
$ |
|
|
$ |
|
||
Accrued Expenses
Accrued expenses consist of the following (in thousands):
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Accrued research and development expenses |
|
$ |
|
|
$ |
|
||
Accrued compensation |
|
|
|
|
|
|
||
Accrued contract termination costs |
|
|
|
|
|
|
||
Other accrued expenses |
|
|
|
|
|
|
||
Total accrued expenses |
|
$ |
|
|
$ |
|
||
Liabilities Related to the Sales of Future Royalties
In 2012 and 2020, we sold to RPI Finance Trust (RPI) and entities managed by Healthcare Royalty Management, LLC (HCR), respectively, our rights to receive royalties under our license and manufacturing agreements with certain pharmaceutical partners under the 2012 Purchase and Sale Agreement and the 2020 Purchase and Sale Agreement, respectively. We account for these transactions as debt and recognize non-cash royalty revenue and non-cash interest expense to amortize the proceeds over the lives of the respective arrangements. We periodically update our prospective non-cash interest rate based on our estimates of future royalties. As of September 30, 2026, our imputed interest rate for the arrangement with HCR was
The following is a reconciliation of the changes in our liabilities related to the sales of future royalties for the nine months ended September 30, 2026 (in thousands):
|
|
Nine Months Ended September 30, 2026 |
|
|||||||||
|
|
2012 Purchase and Sale Agreement |
|
|
2020 Purchase and Sale Agreement |
|
|
Total |
|
|||
Liabilities related to the sales of future royalties, net – beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Non-cash royalty revenue |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Non-cash interest expense |
|
|
|
|
|
|
|
|
|
|||
Amortization of transaction costs |
|
|
|
|
|
|
|
|
|
|||
Liabilities related to the sales of future royalties, net – ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Note 4 — Equity Method Investment
In December 2024, we completed the sale of our manufacturing facility located in Huntsville, Alabama (the Facility) and certain other manufacturing assets related thereto, including the assignment of our existing manufacturing and supply obligations, to Gannet BioChem, an affiliate of Ampersand Management LLC d/b/a Ampersand Capital Partners (Ampersand), via an Asset
16
Purchase Agreement (the APA), for consideration of $
Our ownership interest in Gannet BioChem is as follows:
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Common units owned by Nektar |
|
|
|
|
|
|
||
Percentage ownership of common units outstanding |
|
|
% |
|
|
% |
||
Percentage ownership of common and preferred units outstanding |
|
|
% |
|
|
% |
||
Our investment in Gannet BioChem is considered a variable interest entity for which we are not the primary beneficiary. We have significant influence, but do not control, Gannet BioChem through our noncontrolling representation on Gannet BioChem’s board of directors and our equity interests in Gannet BioChem. Accordingly, we do not consolidate Gannet BioChem and account for our investment in Gannet BioChem using the equity method of accounting, under which we record our share of Gannet BioChem’s profits and losses as gain or loss from equity method investment in our Condensed Consolidated Statements of Operations. As a result of Ampersand’s liquidation preferences, we record our share of Gannet BioChem’s gains and losses under the hypothetical liquidation at book value method, which is a balance sheet approach that calculates the change in the hypothetical amount Ampersand and we would be entitled to receive if Gannet BioChem were liquidated at book value at the end of each period, adjusted for any contributions made and distributions received during the period, as well as basis differences between the initial fair value of our investment in Gannet BioChem and our claim on the net assets of Gannet BioChem. Our maximum exposure to loss in Gannet BioChem is limited to the carrying value of our investment.
Our loss from our investment in Gannet BioChem is as follows (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Claim on net assets of Gannet BioChem - beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Claim on net assets of Gannet BioChem - end of period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in claim on net assets of Gannet BioChem |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Gannet BioChem is considered a related party to Nektar. We have entered into agreements with Gannet BioChem for the supply of the polyethylene glycol reagents used in the manufacture of rezpegaldesleukin and certain other development services. We also provided certain accounting and information technology services to Gannet BioChem under a transition services agreement, which concluded during the three months ended June 30, 2026.
Note 5 — Commitments and Contingencies
Legal Matters
From time to time, we are involved in lawsuits, arbitrations, claims, investigations and proceedings, consisting of intellectual property, commercial, employment and other matters, which arise in the ordinary course of business. We make provisions for liabilities when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Such provisions are reviewed at each reporting date and adjusted to reflect the impact of settlement negotiations, judicial and administrative rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable. If any unfavorable ruling were to occur in any specific period, there exists the possibility of a material adverse impact on the results of our operations for that period and on our cash flows and liquidity.
In August 2023, we filed a complaint in the United States District Court for the Northern District of California (the Court) against Eli Lilly and Company (Lilly) alleging, among other claims, breach of contract and breach of implied covenant of good faith and fair dealing (the Complaint), in connection with the license agreement governing our prior collaboration with Lilly for the development and commercialization of rezpegaldesleukin (the License Agreement). A jury trial commenced in September 2026 and later that month, the jury returned a verdict finding that Lilly had breached the implied covenant of good faith and fair dealing in the License Agreement. The jury awarded us $
17
jury’s verdict remains subject to post-trial proceedings, and any resulting judgment may be subject to appeal. As of September 30, 2026, we have not recorded any amounts related to the damages awarded by the jury.
After previously authorizing goods and services tax (GST) refunds of approximately $
In March 2026, a putative class action complaint was filed in the U.S. District Court for the Northern District of California (and amended in August 2026) against the Company, our CEO, our Chief Medical Officer and our Chief Research and Development Officer, captioned Schramke v. Nektar Therapeutics, et al. The complaint asserts claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act and SEC rules promulgated thereunder, seeks damages, attorneys’ fees and other relief, and alleges, among other things, that from February 2025 through December 2025, the defendants made misleading statements and/or failed to disclose material information regarding the REZOLVE-AA trial. The Company denies the claims, believes they are without merit, and intends to defend vigorously against this litigation. This case is in the early stages. We filed a motion to dismiss in October 2026. We have not recorded a liability for this matter as of September 30, 2026.
We have recorded
Commitments — Biolojic Design, Ltd. (Biolojic)
In 2021, we entered into a research collaboration and license option agreement with Biolojic to discover and develop agonistic antibodies that activate a novel and previously un-drugged target for the treatment of autoimmune diseases. In 2023, we exercised an option to gain an exclusive license to specified agonistic antibodies and other materials that were developed pursuant to this arrangement in all fields of use (other than in the field of oncology), which we have used in our research program based on tumor necrosis factor (TNF) receptor type II (TNFR2) agonism, including NKTR-0165 and NKTR-0166. As a result of exercising this option, we may be required to pay up to $
Purchase Commitments
In May 2026, we entered into an agreement with a contract manufacturing organization for the production of our drug substance. The agreement includes a minimum purchase commitment for manufacturing services. As of September 30, 2026, the aggregate remaining minimum commitment under the agreement was $
Indemnifications in Connection with Commercial Agreements
As part of our collaboration agreements with our partners related to the license, development, manufacture and supply of our proprietary drug candidates, we generally agree to defend, indemnify and hold harmless our partners from and against third party liabilities arising out of the agreement, including product liability (with respect to our activities) and infringement of intellectual property to the extent the intellectual property is developed by us and licensed to our partners. The term of these indemnification obligations is generally perpetual commencing after execution of the agreement. There is generally no limitation on the potential amount of future payments we could be required to make under these indemnification obligations.
18
From time to time, we enter into other strategic agreements such as divestitures and financing transactions pursuant to which we are required to make representations and warranties and undertake to perform or comply with certain covenants. For example, we made certain intellectual property representations in connection with our 2020 Purchase and Sale Agreement. In the event it is determined that we breached certain of the representations and warranties or covenants made by us in any such agreements or certain express indemnification provisions are applicable, we could incur substantial indemnification liabilities depending on the timing, nature, and amount of any such claims.
To date, we have not incurred any costs to defend lawsuits or settle claims related to these indemnification obligations, nor any breaches of representations or warranties or covenants. Because the aggregate amount of any potential indemnification obligation is not a stated amount, we cannot reasonably estimate the overall maximum amount of any such obligations.
Note 6 — Stockholders’ Equity
Financing Transactions
We filed a shelf registration statement on Form S-3 and a related prospectus (the April 2025 Shelf Registration Statement) that was declared effective by the Securities and Exchange Commission (the SEC) in April 2025. Pursuant to the April 2025 Shelf Registration Statement, we may offer and sell common stock, preferred stock, debt securities, warrants and/or units having an aggregate public offering price of up to $
In November 2025, we filed a new registration statement on Form S-3 and a related prospectus (the November 2025 Shelf Registration), as a “well-known seasoned issuer,” as defined in Rule 405 under the Securities Act. The November 2025 Shelf Registration became automatically effective upon filing, and permits us to offer, from time to time, an unspecified amount of common stock, preferred stock, debt securities and warrants.
The following table presents the securities sold and net proceeds received pursuant to these shelf registrations:
Registration Statement |
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Offering Type |
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Date |
|
Shares of Common Stock Sold |
|
|
Pre-Funded Warrants Sold |
|
|
Price per Share |
|
|
Net Proceeds (in millions) (1) |
|
||||
April 2025 Shelf Registration (2) |
|
Underwritten offering |
|
7/2/2025 |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
April 2025 Shelf Registration (3) |
|
ATM offering |
|
9/23/2025 to 10/16/2025 |
|
|
|
|
|
|
|
|
|
(7) |
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|
||||
November 2025 Shelf Registration (4) |
|
Underwritten offering |
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2/13/2026 |
|
|
|
|
|
|
|
|
|
(7) |
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|
||||
April 2025 Shelf Registration (5) |
|
ATM offering |
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2/20/2026 to 4/1/2026 |
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|
|
|
|
|
|
|
|
(7) |
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||||
November 2025 Shelf Registration (6) |
|
Underwritten offering |
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4/23/2026 |
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$ |
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||||
19
In May 2026, we entered into a new equity distribution agreement (the May 2026 ATM Sales Agreement) with Guggenheim Securities, LLC and H.C. Wainwright & Co., LLC, relating to the sale of our common stock having an aggregate offering price of up to $
Pre-funded Warrants
In March 2024, we issued a pre-funded warrant to purchase an aggregate of
In February 2026, as disclosed above, we completed the sale and issuance of
We classified the pre-funded warrants as a component of permanent equity in our Condensed Consolidated Balance Sheets as they are freestanding financial instruments that are immediately exercisable, do not embody an obligation for the Company to repurchase its own shares and permit the holder to receive a fixed number of shares of common stock upon exercise. All of the shares underlying the pre-funded warrants have been included in the weighted-average number of shares of common stock used to calculate net loss per share attributable to common stockholders because the shares may be issued for little or no consideration, are fully vested and are exercisable after the original issuance dates of the pre-funded warrants.
Note 7 — License and Collaboration Agreements
We have entered into various collaboration agreements including license agreements and collaborative research, development and commercialization agreements with various pharmaceutical and biotechnology companies. Under these collaboration arrangements, we may be entitled to receive license fees, upfront payments, milestone and other contingent payments, royalties, sales milestone payments, and reimbursements for research and development activities. We generally include our costs of performing these services in research and development expense. We analyze our agreements to determine whether we should account for the agreements within the scope of ASC 808 Collaborative Arrangements, and, if so, we analyze whether we should account for any elements under ASC 606 Revenue from Contracts with Customers.
We have a collaboration agreement with UCB for dapirolizumab pegol, under which we are entitled to a total of up to $
Certain of our other collaboration agreements have resulted in commercialized products for our collaborations partners. Under these agreements, we are entitled to receive royalties based on net sales of these products as well as sales milestones. As discussed in Note 3, we have sold our rights to receive royalties from these other collaboration agreements. Our non-cash royalty
20
revenue, which totaled $
Note 8 — Restructuring and Impairment
In connection with our prior restructuring measures, we have incurred significant contract termination costs. Because we continue to adjust the liability based on updates to our assumptions at each reporting date, our estimates may continue to change, resulting in the recognition of expense or benefit, until settlement.
The following are reconciliations of accrued contract termination and other costs for the three and nine months ended September 30, 2026 and 2025 (in thousands):
|
|
For the Nine Months Ended September 30, |
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|||||
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2026 |
|
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2025 |
|
||
Contract termination costs as of December 31, 2025 and 2024, respectively |
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$ |
|
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$ |
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||
|
|
|
|
|
|
|||
Payments during the period |
|
|
( |
) |
|
|
( |
) |
Contract termination costs as of March 31, 2026 and 2025, respectively |
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$ |
|
|
$ |
|
||
Expense (benefit) recognized during the period |
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|
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||
Payments during the period |
|
|
( |
) |
|
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( |
) |
Contract termination costs as of June 30, 2026 and 2025, respectively |
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$ |
|
|
$ |
|
||
Expense (benefit) recognized during the period |
|
|
( |
) |
|
|
|
|
Payments during the period |
|
|
( |
) |
|
|
( |
) |
Contract termination costs as of September 30, 2026 and 2025, respectively |
|
$ |
|
|
$ |
|
||
Less: current portion of contract termination costs, as of September 30, 2026 and 2025, respectively |
|
$ |
( |
) |
|
$ |
( |
) |
Long term portion of contract termination costs, as of September 30, 2026 and 2025, respectively |
|
$ |
|
|
$ |
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||
We report the current portion of accrued contract termination costs within accrued expenses and the long-term portion within other long-term liabilities on our Condensed Consolidated Balance Sheets.
Note 9 — Stock-Based Compensation
In June 2026, our stockholders approved an amendment to the Amended and Restated 2017 Performance Incentive Plan to increase the aggregate number of shares of common stock authorized for issuance thereunder by
We recognized total stock-based compensation expense in our Condensed Consolidated Statements of Operations as follows (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
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||||||||||
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|
2026 |
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2025 |
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|
2026 |
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|
2025 |
|
||||
Research and development |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
General and administrative |
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||||
Total stock-based compensation |
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$ |
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|
$ |
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|
$ |
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|
$ |
|
||||
Note 10 — Segment Reporting
We operate in
21
The following is a summary of the significant expense categories and consolidated net loss details provided to the CODM (in thousands):
|
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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||||||||||
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2026 |
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2025 |
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2026 |
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2025 |
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Revenue: |
|
$ |
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|
$ |
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|
$ |
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|
$ |
|
||||
Operating costs and expenses: |
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||||
Clinical development, contract manufacturing and other third party costs |
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Rezpegaldesleukin (IL-2 receptor agonist/regulatory T cell agent) |
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Tumor necrosis factor receptor type II (TNFR2) program |
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||||
Discovery research and other programs |
|
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( |
) |
|
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( |
) |
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||
Total clinical development, contract manufacturing and other third party costs |
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Employee costs (a) |
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Facilities costs |
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Other operating costs (b) |
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Other segment expenses |
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Total operating costs and expenses |
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||||
Loss from operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Non-operating income (expense): |
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|
||||
Non-cash interest expense on liability related to sale of future royalties |
|
|
( |
) |
|
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( |
) |
|
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( |
) |
|
|
( |
) |
Interest income |
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||||
Other income (expense), net |
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( |
) |
|
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( |
) |
|
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( |
) |
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Total non-operating income (expense), net |
|
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|
( |
) |
|
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|
|
|
( |
) |
||
Loss before provision for income taxes and equity method investment |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Provision (benefit) for income taxes |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Loss before equity method investment |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Loss from equity method investment |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other segment expense items included within net loss include the following (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Contract termination costs |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Stock-based compensation |
|
|
|
|
|
|
|
|
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|
||||
Depreciation and amortization expense |
|
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|
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|
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|
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Total other segment expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed here. Factors that could cause or contribute to such differences include, but are not limited to those discussed in this section as well as factors described in Part II, Item 1A “Risk Factors.”
Overview
Strategic Direction of Our Business
Nektar Therapeutics is a clinical-stage biotechnology company focused on developing treatments that address the underlying immunological dysfunction in autoimmune and chronic inflammatory diseases. Within this growing field, we direct our efforts toward creating new immunomodulatory agents that selectively induce, amplify, attenuate or prevent immune responses in order to achieve desired therapeutic outcomes. We apply our deep understanding of immunology to identify and create innovative drug candidates and use our drug development expertise to advance these molecules through preclinical and clinical development. Our pipeline of clinical-stage and preclinical-stage immunomodulatory agents, such as rezpegaldesleukin, NKTR-0165, and NKTR-0166, targets the treatment of autoimmune diseases. We continue to make significant investments in advancing and building our pipeline of drug candidates as we believe that this is the best strategy to build long-term shareholder value.
Autoimmune and inflammatory diseases cause the immune system to mistakenly attack and damage healthy cells in a person’s body. A failure of the body’s self-tolerance mechanisms enables the formation of the pathogenic T lymphocytes that conduct this attack. Our drug candidate rezpegaldesleukin is a potential first-in-class disease-modifying therapeutic that may address this underlying immune system imbalance in people with many autoimmune disorders and inflammatory diseases. It is designed to target the interleukin-2 (IL-2) receptor complex in the body in order to stimulate proliferation of powerful inhibitory immune cells known as regulatory T cells (Treg cells). Describing the critical role of Treg cells in maintaining balance in the immune system earned Drs. Mary E. Brunkow, Fred Ramsdell and Shimon Sakaguchi, the Nobel Prize in medicine in October 2025. By activating these Treg cells, rezpegaldesleukin may act to bring the immune system back into balance. Rezpegaldesleukin is being developed as a self-administered injection for a number of autoimmune disorders and inflammatory diseases.
We are evaluating rezpegaldesleukin in moderate-to-severe atopic dermatitis, severe-to-very-severe alopecia areata and, in collaboration with TrialNet, in new-onset stage 3 Type 1 diabetes mellitus. The FDA has granted Fast Track designation for rezpegaldesleukin for the treatment of adult and pediatric patients 12 years of age and older with moderate-to-severe atopic dermatitis whose disease is not adequately controlled with topical prescription therapies or when those therapies are not advisable and Fast Track designation for rezpegaldesleukin for the treatment of severe-to-very-severe alopecia areata in adult and pediatric patients 12 years of age and older who weigh at least 40 kg.
We have initiated three global registrational trials (ZENITH AD-1, ZENITH AD-2 and ZENITH AD-3) in the Phase 3 ZENITH AD program for rezpegaldesleukin. The Phase 3 ZENITH AD program is evaluating rezpegaldesleukin in patients who are 12 years of age or older with moderate-to-severe atopic dermatitis. The program includes three global, randomized, double-blind, placebo-controlled trials: ZENITH AD-1 and ZENITH AD-3 will evaluate rezpegaldesleukin as a monotherapy with ZENITH AD-1 enrolling biologic and systemic JAK inhibitor treatment-naive patients and ZENITH AD-3 enrolling patients with prior biologic and/or systemic JAK inhibitor treatment experience. We have recently modified ZENITH AD-2 to evaluate rezpegaldesleukin in combination with topical corticosteroids, enrolling both biologic and systemic JAK inhibitor treatment-naive patients and patients with prior biologic and/or systemic JAK inhibitor treatment experience. We intend to initiate a global registrational trial (ZENITH AA-1) in December 2026 to evaluate rezpegaldesleukin in patients who are 12 years of age or older with severe-to-very-severe alopecia areata. Our ZENITH AD and AA programs will also include long-term extension studies in both indications and other supportive trials.
23
We are also continuing Phase 2b trials of rezpegaldesleukin in patients with moderate-to-severe atopic dermatitis which we initiated in October 2023 (the Phase 2b REZOLVE-AD trial) and in patients with severe-to-very-severe alopecia areata which we initiated in March 2024 (the Phase 2b REZOLVE-AA trial).
In February 2026, we announced data from the blinded 36-week maintenance period of the Phase 2b REZOLVE-AD trial. Rezpegaldesleukin demonstrated long-term durability and continued atopic dermatitis disease symptom improvement during the maintenance period. Every four weeks (q4w) and every twelve weeks (q12w) dosing regimens resulted in sustained disease control for EASI-75 (percent of patients who achieve ≥75% reduction in Eczema Area and Severity Score (EASI) from baseline), EASI-90 (percent of patients who achieve ≥90% reduction in EASI Score from baseline), validated Investigator’s Global Assessment for Atopic Dermatitis (vIGA-AD) response, and Itch Numerical Rating Score (NRS) response, with the 24 µg/kg q4w and q12w regimens showing the highest maintenance of response at week 52. 71% and 83% of patients maintained EASI-75 responses and 85% and 63% maintained vIGA-AD 0/1 responses with 24 µg/kg q4w and q12w dosing, respectively, at week 52. A meaningful proportion of patients achieved new EASI-75, EASI-90, Itch NRS and vIGA-AD 0/1 responses at week 52 of the study. A two to five fold increase in percentage of patients who achieved EASI-100 (percent of patients who achieve 100% reduction in EASI Score from baseline) was observed in the 24 µg/kg q4w and q12w dosing regimens. Among all re-randomized patients from week 16 to week 52, q4w maintenance dosing increased EASI-100 response from 4% to 22% and q12w dosing increased EASI-100 response from 9% to 18%. Among re-randomized patients who had an EASI-75 or vIGA-AD response at maintenance baseline, q4w dosing increased EASI-100 response from 6% to 30% and q12w dosing increased EASI-100 response from 14% to 27%.
The safety profile of rezpegaldesleukin in maintenance was consistent with observations from the induction part of the study. Rezpegaldesleukin was well-tolerated with no new safety concerns identified during the maintenance and escape periods. The discontinuation rate due to adverse events was 3.5% for all aggregated patients. Overall rates of treatment-emergent adverse events (TEAEs) were 72% for rezpegaldesleukin treated patients, 65% for placebo patients in maintenance, and 83% for all escape patients. The most frequent TEAE was injection site reactions (ISRs), nearly all of which were mild (77%), and which occurred at a lower rate and frequency than observed in the initial induction part of the study (discontinuation rate due to injection site reactions was 0.7%). The Phase 2b REZOLVE-AD trial remains ongoing for a 52-week posttreatment follow-up period.
In April 2026, we announced 52-week topline results from the 16-week blinded treatment extension period of the REZOLVE-AA trial. Following completion of the induction phase, patients with a Severity of Alopecia Tool (SALT) Score greater than 20 at week 36 who also demonstrated hair growth were eligible to continue on rezpegaldesleukin at their induction dose level in a blinded 16-week exploratory treatment extension through week 52. From week 36 to week 52, 29% of patients at 18 µg/kg dose and 31% of patients at 24 µg/kg dose achieved new SALT Score ≤20 responses as compared to none in the placebo arm. Increasing proportions of patients achieved clinically meaningful hair growth thresholds across numerous SALT measurements with 94% of patients completing treatment extension.
In October 2026, at EADV 2026, we announced new results from the 52-week treatment extension cohort and the 6-month off-treatment period of the REZOLVE-AA trial. A new subgroup analysis of all patients who entered the treatment extension showed similar efficacy data regardless of current alopecia areata episode duration. SALT Score ≤20 responses were achieved by 29% and 30% of patients whose current episode was less than four years and those whose current episode was four years or longer, respectively. We also announced that patients treated for 52 weeks showed 75% maintenance of SALT Score ≤20 after 4 months off treatment and 63% maintenance of SALT Score ≤20 after 6 months off treatment. Hair regrowth continued for 6 months off treatment with 19% of patients achieving SALT Score ≤10, an improvement from 7% at the end of 52 weeks of treatment.
In February 2025, we announced that we had entered into a collaboration agreement with TrialNet to evaluate rezpegaldesleukin in patients with new-onset stage 3 Type 1 diabetes mellitus in a Phase 2 study, which was initiated in May 2026. TrialNet will conduct the study with funding from the National Institutes of Health, primarily through the Special Statutory Funding Program for Type 1 Diabetes through the National Institute of Diabetes and Digestive and Kidney Diseases. Nektar will supply rezpegaldesleukin for the study and will retain all rights to the rezpegaldesleukin program under the collaboration.
24
We continue to advance our most promising research drug candidates into preclinical development with the objective of advancing these early-stage research programs to human clinical studies over the next several years. Our lead research program is based on tumor necrosis factor (TNF) receptor type II (TNFR2) agonism, without modulation of the TNFR1 signaling, after we exercised an option in December 2023 to gain an exclusive license to specified agonistic antibodies and other materials that were developed pursuant to a research collaboration and license option agreement we entered into with Biolojic Design, Ltd. (Biolojic) in 2021. TNFR2 signaling drives immunoregulatory function and can provide a direct protective effect for tissue cells. TNFR2 is highly expressed on Tregs, neuronal cells and endothelial cells and has been shown to potentiate the suppressive effects and overall functional properties of Tregs. NKTR-0165 is being developed for potential treatment of autoimmune diseases, such as ulcerative colitis, multiple sclerosis and vitiligo. NKTR-0165 is currently in the Investigational New Drug (IND) enabling phase. We have also designed a unique bispecific antibody, NKTR-0166, that incorporates the TNFR2 agonist epitope and an antagonist epitope validated in the treatment of rheumatology diseases. As a dual agonist:antagonist of known pathways associated with key pathways linked to disease pathogenesis, this investigational antibody is being developed to address a number of rheumatic disorders.
We have historically derived substantially all of our revenue and significant amounts of research and development operating capital from our collaboration agreements, public or private equity or debt financings, third-party funding, the sale of revenue interests and other arrangements. We have received upfront and milestone payments and cost-sharing reimbursements under a number of previous collaboration agreements, and certain of our collaboration partners have borne substantial costs of developing our drug candidates. We may continue our approach of entering into revenue-generating collaboration agreements to pay in whole or in part the development costs of our drug candidates, or we may finance the development of our drug candidates with our own capital, including through public or private equity or debt financings, or other strategic transactions.
Our pipeline also includes NKTR-255, an investigational biologic in oncology that is designed to target the IL-15 pathway in order to activate the body’s innate and adaptive immunity. Through optimal engagement of the IL-15 receptor complex, NKTR-255 is designed to enhance functional NK cell populations and formation of long-term immunological memory, which may lead to sustained and durable anti-tumor immune response. We are seeking potential partnerships for this asset.
Several of our historical collaboration agreements have resulted in approved drugs, for which we may be entitled to royalties for net sales of these approved drugs. However, we have sold our rights to receive royalties under these arrangements, including:
We continued to manufacture the polymer reagents used in the production of some of the drug products until the sale of our manufacturing facility in Huntsville, Alabama (the Facility) in December 2024. See Note 4 to our Condensed Consolidated Financial Statements for additional information. The sale of the Facility does not alter the royalties or other milestones payable under these agreements or our collaboration agreement with UCB for dapirolizumab pegol as further disclosed in Note 7 to our Condensed Consolidated Financial Statements.
Our business is subject to significant risks, including the risks inherent in our development efforts, the results of our clinical trials, our dependence on marketing efforts by our collaboration partners, uncertainties associated with obtaining and
25
enforcing patents, the lengthy and expensive regulatory approval process and competition from other products. Drug research and development is an inherently uncertain process with a high risk of failure at every stage prior to approval. The timing and outcome of clinical trial results are extremely difficult to predict. Clinical development successes and failures can have a disproportionately positive or negative impact on our scientific and medical prospects, financial condition and prospects, results of operations and market opportunities. For a discussion of these and some of the other key risks and uncertainties affecting our business, see Item 1A “Risk Factors” below.
In September 2026, the jury in our litigation against Eli Lilly and Company (Lilly) returned a verdict finding that Lilly had breached the implied covenant of good faith and fair dealing in the license agreement governing our prior collaboration for the development and commercialization of rezpegaldesleukin and awarded us $90.0 million in damages plus interest to be determined by the court. The jury’s verdict remains subject to post-trial proceedings, and any resulting judgment may be subject to appeal. We have not recorded any amounts related to the damages award as of September 30, 2026. See Note 5 to our Condensed Consolidated Financial Statements for additional information.
With respect to financing our near-term business needs, as set forth below in “Liquidity and Capital Resources”, we estimate we have working capital to fund our current business plans through at least the next twelve months. At September 30, 2026, we had approximately $952.9 million in cash and investments in marketable securities.
From July 2025 through September 30, 2026, we completed a number of equity-based financing transactions, under which we have sold 19,400,822 shares of our common stock and 293,103 pre-funded warrants, resulting in net proceeds of $1,068.6 million. See Note 6 to our Condensed Consolidated Financial Statements for additional information. All pre-funded warrants issued in the February 2026 offering had been exercised as of June 30, 2026.
Results of Operations
The following sets forth our Condensed Consolidated Statements of Operations data for each of the periods indicated (in thousands, except percentages).
|
|
Three Months Ended September 30, |
|
|
$ Change |
|
|
% Change |
|
|||||||
|
|
2026 |
|
|
2025 |
|
|
|
|
|
|
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-cash royalty revenue related to the sales of future royalties |
|
$ |
9,386 |
|
|
$ |
11,490 |
|
|
$ |
(2,104 |
) |
|
|
(18 |
)% |
License, collaboration and other revenue |
|
|
— |
|
|
|
300 |
|
|
|
(300 |
) |
|
|
(100 |
)% |
Total revenue |
|
|
9,386 |
|
|
|
11,790 |
|
|
|
(2,404 |
) |
|
|
(20 |
)% |
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
44,123 |
|
|
|
27,252 |
|
|
|
16,871 |
|
|
|
62 |
% |
General and administrative |
|
|
24,569 |
|
|
|
16,070 |
|
|
|
8,499 |
|
|
|
53 |
% |
Restructuring and impairment |
|
|
(1,504 |
) |
|
|
140 |
|
|
|
(1,644 |
) |
|
|
(1,174 |
)% |
Total operating costs and expenses |
|
|
67,188 |
|
|
|
43,462 |
|
|
|
23,726 |
|
|
|
55 |
% |
Loss from operations |
|
|
(57,802 |
) |
|
|
(31,672 |
) |
|
|
(26,130 |
) |
|
|
83 |
% |
Non-operating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-cash interest expense on liabilities related to sale of future royalties |
|
|
(6,763 |
) |
|
|
(6,047 |
) |
|
|
(716 |
) |
|
|
12 |
% |
Interest income |
|
|
9,578 |
|
|
|
2,819 |
|
|
|
6,759 |
|
|
|
240 |
% |
Other income (expense), net |
|
|
(59 |
) |
|
|
(121 |
) |
|
|
62 |
|
|
|
(51 |
)% |
Total non-operating income (expense), net |
|
|
2,756 |
|
|
|
(3,349 |
) |
|
|
6,105 |
|
|
|
(182 |
)% |
Loss before provision (benefit) for income taxes and equity method investment |
|
|
(55,046 |
) |
|
|
(35,021 |
) |
|
|
(20,025 |
) |
|
|
57 |
% |
Provision (benefit) for income taxes |
|
|
22 |
|
|
|
(33 |
) |
|
|
55 |
|
|
|
(167 |
)% |
Loss before equity method investment |
|
|
(55,068 |
) |
|
|
(34,988 |
) |
|
|
(20,080 |
) |
|
|
57 |
% |
Loss from equity method investment |
|
|
(583 |
) |
|
|
(534 |
) |
|
|
(49 |
) |
|
|
9 |
% |
Net loss |
|
$ |
(55,651 |
) |
|
$ |
(35,522 |
) |
|
$ |
(20,129 |
) |
|
|
57 |
% |
26
|
|
Nine Months Ended September 30, |
|
|
$ Change |
|
|
% Change |
|
|||||||
|
|
2026 |
|
|
2025 |
|
|
|
|
|
|
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-cash royalty revenue related to the sales of future royalties |
|
$ |
30,378 |
|
|
$ |
33,125 |
|
|
$ |
(2,747 |
) |
|
|
(8 |
)% |
License, collaboration and other revenue |
|
|
— |
|
|
|
300 |
|
|
|
(300 |
) |
|
|
(100 |
)% |
Total revenue |
|
|
30,378 |
|
|
|
33,425 |
|
|
|
(3,047 |
) |
|
|
(9 |
)% |
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
118,932 |
|
|
|
87,618 |
|
|
|
31,314 |
|
|
|
36 |
% |
General and administrative |
|
|
50,773 |
|
|
|
57,488 |
|
|
|
(6,715 |
) |
|
|
(12 |
)% |
Restructuring and impairment |
|
|
(130 |
) |
|
|
756 |
|
|
|
(886 |
) |
|
|
(117 |
)% |
Total operating costs and expenses |
|
|
169,575 |
|
|
|
145,862 |
|
|
|
23,713 |
|
|
|
16 |
% |
Loss from operations |
|
|
(139,197 |
) |
|
|
(112,437 |
) |
|
|
(26,760 |
) |
|
|
24 |
% |
Non-operating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-cash interest expense on liabilities related to sale of future royalties |
|
|
(21,911 |
) |
|
|
(16,415 |
) |
|
|
(5,496 |
) |
|
|
33 |
% |
Interest income |
|
|
23,166 |
|
|
|
7,662 |
|
|
|
15,504 |
|
|
|
202 |
% |
Other income (expense), net |
|
|
(495 |
) |
|
|
405 |
|
|
|
(900 |
) |
|
|
(222 |
)% |
Total non-operating income (expense), net |
|
|
760 |
|
|
|
(8,348 |
) |
|
|
9,108 |
|
|
|
(109 |
)% |
Loss before provision (benefit) for income taxes and equity method investment |
|
|
(138,437 |
) |
|
|
(120,785 |
) |
|
|
(17,652 |
) |
|
|
15 |
% |
Provision (benefit) for income taxes |
|
|
88 |
|
|
|
(169 |
) |
|
|
257 |
|
|
|
(152 |
)% |
Loss before equity method investment |
|
|
(138,525 |
) |
|
|
(120,616 |
) |
|
|
(17,909 |
) |
|
|
15 |
% |
Loss from equity method investment |
|
|
(2,652 |
) |
|
|
(7,381 |
) |
|
|
4,729 |
|
|
|
(64 |
)% |
Net loss |
|
$ |
(141,177 |
) |
|
$ |
(127,997 |
) |
|
$ |
(13,180 |
) |
|
|
10 |
% |
Revenue
Our revenue has historically been derived from our collaboration agreements, under which we may receive product sales revenue, royalties, and license fees, as well as development and sales milestones and other contingent payments. We recognize revenue when we transfer promised goods or services to our collaboration partners.
27
Research and Development Expense
Research and development expense consists primarily of clinical study costs, contract manufacturing costs, direct costs of outside research, materials, supplies, licenses and fees as well as personnel costs (including salaries, benefits, contractor and temporary workers, and non-cash stock-based compensation). Research and development expense also includes certain overhead allocations of support costs.
Research and development expense increased for the three and nine months ended September 30, 2026 as compared to the three and nine months ended September 30, 2025, respectively, as reported in the following table, which presents expenses incurred for direct third-party costs, including clinical and regulatory services, contract manufacturing, clinical supplies, and preclinical study support for each of our drug candidates. The table also presents personnel, overhead and other indirect costs as we utilize our employee, contractor and infrastructure resources across multiple research and development programs (in thousands):
|
|
Three Months Ended September 30, |
|
|
$ Change |
|
|
Nine Months Ended September 30, |
|
|
$ Change |
|
||||||||||||
|
|
2026 |
|
|
2025 |
|
|
|
|
|
2026 |
|
|
2025 |
|
|
|
|
||||||
Rezpegaldesleukin (IL-2 receptor agonist/regulatory T cell agent) |
|
$ |
24,417 |
|
|
$ |
11,155 |
|
|
$ |
13,262 |
|
|
$ |
67,542 |
|
|
$ |
37,888 |
|
|
$ |
29,654 |
|
Tumor necrosis factor receptor type II (TNFR2) program |
|
|
357 |
|
|
|
3,261 |
|
|
|
(2,904 |
) |
|
|
1,890 |
|
|
|
9,505 |
|
|
|
(7,615 |
) |
Discovery research and other programs |
|
|
(1,024 |
) |
|
|
1,434 |
|
|
|
(2,458 |
) |
|
|
(692 |
) |
|
|
5,478 |
|
|
|
(6,170 |
) |
Total clinical development, contract manufacturing and other third party costs |
|
|
23,750 |
|
|
|
15,850 |
|
|
|
7,900 |
|
|
|
68,740 |
|
|
|
52,871 |
|
|
|
15,869 |
|
Personnel, overhead and other costs |
|
|
18,250 |
|
|
|
9,747 |
|
|
|
8,503 |
|
|
|
44,453 |
|
|
|
30,246 |
|
|
|
14,207 |
|
Stock-based compensation and depreciation |
|
|
2,123 |
|
|
|
1,655 |
|
|
|
468 |
|
|
|
5,739 |
|
|
|
4,501 |
|
|
|
1,238 |
|
Research and development expense |
|
$ |
44,123 |
|
|
$ |
27,252 |
|
|
$ |
16,871 |
|
|
$ |
118,932 |
|
|
$ |
87,618 |
|
|
$ |
31,314 |
|
Research and development expense for rezpegaldesleukin increased for the three and nine months ended September 30, 2026 as compared to the three and nine months ended September 30, 2025, as we commenced activities to support the Phase 3 ZENITH AD program in atopic dermatitis and the Phase 3 ZENITH AA program in alopecia areata, including site activation, patient enrollment and clinical trial start-up activities with our contract research organizations, and manufacturing activities associated with rezpegaldesleukin. This increase was partially offset by lower costs from our Phase 2b studies in atopic dermatitis and alopecia areata, as patients have completed the induction phase and moved into the maintenance or off-treatment follow up phases of these studies. We expect the costs of development of rezpegaldesleukin for full year 2026 to significantly increase as we continue the development of rezpegaldesleukin, including the Phase 3 ZENITH AD program in atopic dermatitis, the Phase 3 ZENITH AA program in alopecia areata, and manufacturing activities associated with rezpegaldesleukin. We expect research and development expense to increase significantly in future periods as patients are enrolled in our Phase 3 ZENITH AD and ZENITH AA programs and our contract manufacturing organizations produce clinical drug supply to support these studies and complete other development activities.
Research and development expense for our TNFR2 program decreased for the three and nine months ended September 30, 2026 as compared to the three and nine months ended September 30, 2025, as we have completed a significant portion of our IND enabling activities for NKTR-0165. We expect the costs of development of TNFR2 program to decrease for full year 2026 as compared to 2025 for the same reason. We may owe additional milestone payments to Biolojic, as further disclosed in Note 5 to our Condensed Consolidated Financial Statements.
Research and development expense for discovery research and other programs for the three and nine months ended September 30, 2026 decreased as compared to the three and nine months ended September 30, 2025, and reflect a net benefit primarily due to a change in estimate for certain accrued expenses based on updated information from a vendor.
Personnel, overhead and other costs increased significantly for the three and nine months ended September 30, 2026 as compared to the three and nine months ended September 30, 2025, due to increased personnel to support our Phase 3 rezpegaldesleukin program. We expect personnel, overhead and other costs for full year 2026 to increase significantly compared to full year 2025 to support our development of rezpegaldesleukin.
28
We expect total research and development expense to increase significantly for full year 2026 compared to 2025 to support our development of rezpegaldesleukin, including the Phase 3 ZENITH AD program in atopic dermatitis, the Phase 3 ZENITH AA program in alopecia areata, and manufacturing activities associated with rezpegaldesleukin.
The timing and amount of our future clinical trial expenses will vary significantly based upon our evaluation of ongoing clinical results and the structure, timing, and scope of additional clinical development programs and potential clinical collaboration partnerships (if any) for these programs.
In addition to our drug candidates that we plan to evaluate in clinical development during 2026 and beyond, we believe it is vitally important to continue our investment in a pipeline of new drug candidates to continue to build the value of our drug candidate pipeline and our business. We continue our interest in identifying new drug candidates across a wide range of molecule classes, including small molecules and large proteins, peptides and antibodies, across multiple therapeutic areas. We also plan from time to time to evaluate opportunities to in-license potential drug candidates from third parties to add to our drug discovery and development pipeline. We plan to continue to advance our most promising early research drug candidates into preclinical development with the objective to advance these early-stage research programs to human clinical studies over the next several years.
Our expenditures on current and future preclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. In order to advance our drug candidates through clinical development, each drug candidate must be tested in numerous preclinical safety, toxicology and efficacy studies. We then conduct clinical studies for our drug candidates that take several years to complete. The cost and time required to complete clinical trials may vary significantly over the life of a clinical development program as a result of a variety of factors, including but not limited to:
Furthermore, our strategy includes the potential of entering into collaborations with third parties to participate in the development and commercialization of some of our drug candidates, or clinical collaborations where we would share costs and operational responsibility with a partner. In certain situations, the clinical development program and process for a drug candidate and the estimated completion date will largely be under the control of that third party and not under our control. We cannot forecast with any degree of certainty which of our drug candidates will be subject to future collaborations or how such arrangements would affect our development plans or capital requirements.
29
General and Administrative Expense
General and administrative expense includes the cost of administrative staffing, finance and legal activities, including certain overhead support allocations. Additionally, general and administrative expense includes our lease and other facilities expenses, net of sublease income.
General and administrative expense increased for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to higher legal expenses. General and administrative expense decreased for the nine months ended September 30, 2026 as compared to nine months ended September 30, 2025, primarily due to lower legal expenses in the first half of 2026.
We expect general and administrative expense for full year 2026 to decrease slightly as compared to full year 2025.
Restructuring and Impairment
As discussed in Note 8 to our Condensed Consolidated Financial Statements, we have incurred significant contract termination costs under our prior restructuring measures, which we report as restructuring and impairment expense. We recognized $4.9 million in contract termination costs for the full year 2025. Because we continue to adjust the liability based on updates to our assumptions at each reporting date, our estimates may continue to change, resulting in the recognition of expense or benefit, until settlement. During the three months ended September 30, 2026, updates to our estimated contract termination obligations resulted in a decrease of the liability.
During full year 2025, we recognized $4.4 million in non-cash impairment charges related to our lease spaces.
Interest Income
Interest income increased for the three and nine months ended September 30, 2026 as compared to the three and nine months ended September 30, 2025, respectively, due to higher investment balances as a result of our equity-based financings as further disclosed in Note 6 to our Condensed Consolidated Financial Statements. We expect interest income to increase for full year 2026 compared to full year 2025 for the same reason.
Loss from Equity Method Investment
As discussed in Note 4 to our Condensed Consolidated Financial Statements, we determine our gain or loss on our equity method investment in Gannet BioChem using the hypothetical liquidation at book value (HLBV) due to Ampersand’s priority liquidation preference and right to receive a cumulative preferred dividend. The HLBV method is a balance sheet approach that calculates the change in the hypothetical amount we and Ampersand would be entitled to receive if Gannet BioChem were liquidated at book value at the end of each period, subject to certain adjustments for any contributions, distributions and basis differences. We report our gain or loss from our equity method investment in Gannet BioChem on a three-month lag. Therefore, our loss recorded for the three months ended September 30, 2026 and 2025 reflects Gannet BioChem’s activities for the three months ended June 30, 2026 and 2025, respectively. Our loss recorded for the nine months ended September 30, 2026 and 2025, reflects Gannet BioChem’s activities for the nine months ended June 30, 2026 and from closing on December 2, 2024 through June 30, 2025, respectively. Our losses for these periods reflect Ampersand’s cumulative preferred dividend earned for such periods and Gannet BioChem’s net losses for such periods. Our loss of $7.4 million for the nine months ended September 30, 2025 includes $2.5 million of Ampersand’s closing transaction costs deducted from Ampersand’s cash investment in Gannet BioChem.
We do not expect a significant gain or loss from equity method investment in 2026.
Liquidity and Capital Resources
We have historically financed our operations from our collaboration agreements, public or private equity or debt financings, third-party funding, the sale of revenue interests and other arrangements. As of September 30, 2026, we had
30
approximately $952.9 million in cash and investments in marketable securities. We estimate that we have working capital to fund our current business plans for at least the next twelve months from the date of filing.
From July 2025 through September 30, 2026, we completed a number of equity-based financing transactions, under which we sold 19,400,822 shares of our common stock and 293,103 pre-funded warrants, resulting in net proceeds of $1,068.6 million. All pre-funded warrants issued in the February 2026 offering had been exercised as of June 30, 2026. We have an active shelf registration statement that we filed on Form S-3 and a related prospectus in November 2025 (the November 2025 Shelf Registration), as a “well-known seasoned issuer,” as defined in Rule 405 under the Securities Act. The November 2025 Shelf Registration became automatically effective upon filing, and permits us to offer, from time to time, an unspecified amount of common stock, preferred stock, debt securities and warrants.
In May 2026, we entered into a new equity distribution agreement (the May 2026 ATM Sales Agreement) with Guggenheim Securities, LLC and H.C. Wainwright & Co., LLC, relating to the sale of our common stock having an aggregate offering price of up to $150.0 million in an ATM equity offering under the November 2025 Shelf Registration. We agreed to pay Guggenheim Securities, LLC and H.C. Wainwright & Co. LLC a commission equal to 3.0% of the gross sales price of all common stock sold under the May 2026 ATM Sales Agreement. As of September 30, 2026, no shares have been issued under the May 2026 ATM Sales Agreement.
See Note 6 to our Condensed Consolidated Financial Statements for additional information.
We expect the clinical development of our drug candidates, including rezpegaldesleukin and our TNFR2 program, including NKTR-0165 and NKTR-0166 will continue to require significant investment to continue to advance in clinical development with the objective of obtaining regulatory approval or entering into one or more collaboration partnerships. In particular, we will require substantial amounts of capital to complete our Phase 3 ZENITH AD and AA programs and related manufacturing activities and to file for potential regulatory approvals.
In the past, we have received a number of significant payments from collaboration agreements and other significant transactions. Additionally, certain of our collaboration partners have borne substantial costs of developing our drug candidates. We may continue our approach of entering into revenue-generating collaboration agreements to pay in whole or in part the development costs of our drug candidates, or we may finance the development of our drug candidates with our own capital, including through public or private equity or debt financings, or other strategic transactions.
Our current business is subject to significant uncertainties and risks as a result of, among other factors, clinical and regulatory outcomes for rezpegaldesleukin, and our TNFR2 program, including NKTR-0165 and NKTR-0166; the sales levels for those products, if and when they are approved; whether, when and on what terms we are able to enter into new collaboration transactions; expenses being higher or timelines being longer than anticipated, unplanned expenses and the need to satisfy contingent liabilities, including litigation matters and indemnification obligations; and cash receipts, including interest and sublease income, being lower than anticipated.
We have no credit facility or any other sources of committed capital. The availability and terms of various financing alternatives, if required in the future, substantially depend on many factors including the success or failure of drug development programs in our pipeline. The availability and terms of financing alternatives and any future significant payments from existing or new collaborations depend on the positive outcome of ongoing or planned clinical studies, whether we or our partners are successful in obtaining regulatory authority approvals in major markets, and if approved, the commercial success of these drugs, as well as general capital market conditions. We may pursue various financing alternatives to fund the expansion of our business as appropriate.
Our cash and investments in marketable securities do not include any amounts in respect of the jury verdict in our litigation against Lilly; the verdict remains subject to post-trial proceedings and any resulting judgment may be subject to appeal, and we cannot predict whether or when we will collect any amounts in respect of the award.
As a result of our prior restructuring plans, we are seeking to sublease all of our leased facilities in San Francisco, California, including our laboratory and office space on Mission Bay Blvd. South (the Mission Bay Facility) and our office space on Third St. (the Third St. Facility), and we have current subleases for a portion of the Mission Bay Facility. The San Francisco
31
Bay Area office lease market has been negatively impacted by economic uncertainties, particularly impacting the technology industry, and the change in work habits, as employees continue to work remotely. Meanwhile, the San Francisco Bay Area life sciences lease market continues to be weak as a significant amount of leasable space remains available in the San Francisco Bay Area. Accordingly, for the Third St. Facility and the unleased portions of the Mission Bay Facility, there is significant uncertainty as to whether or when we will be able to enter into a sublease as well as the economic terms of such subleases, if any. If we enter into additional sublease arrangements, we will be subject to the credit risks of the sublessees. If a sublessee fails to satisfy its payment obligations, we remain responsible for our obligations under the underlying lease and may incur losses, additional impairment charges, or other expenses.
Due to the potential for adverse developments in the credit markets, we may experience reduced liquidity with respect to some of our investments in marketable securities. These investments are generally held to maturity, which, in accordance with our investment policy, is less than two years. However, if the need arises to liquidate such securities before maturity, we may experience losses on liquidation. To date we have not experienced any liquidity issues with respect to these securities. We believe that, even allowing for potential liquidity issues with respect to these securities and the effect of various conditions on the financial markets, our remaining cash and investments in marketable securities will be sufficient to meet our anticipated cash needs for at least the next twelve months.
Cash flows from operating activities
Cash flows used in operating activities for the nine months ended September 30, 2026 and 2025 totaled $192.0 million and $143.6 million, respectively. The increase in cash flows used in operating activities for the nine months ended September 30, 2026, reflects activities to support our Phase 3 ZENITH AD and AA programs and manufacturing activities associated with rezpegaldesleukin, including prepayments to our contract manufacturing and contract research organizations, as well as increases in employee costs to support our Phase 3 programs.
We expect that cash flows used in operating activities, excluding upfront, milestone and other contingent payments received, if any, will increase significantly for 2026 as compared to 2025 to support our development of rezpegaldesleukin primarily focusing on the Phase 3 ZENITH AD program in atopic dermatitis, the Phase 3 ZENITH AA program in alopecia areata and manufacturing activities related to rezpegaldesleukin.
Cash flows from investing activities
During the nine months ended September 30, 2026 and 2025, we purchased $682.5 million and $0.7 million, respectively, of investments in marketable securities, net of maturities, as we have invested the proceeds from our equity financings, offset by funding our operations.
Cash flows from financing activities
Other than the financing activities described above and further disclosed in Note 6 to our Condensed Consolidated Financial Statements, we also received proceeds of $5.6 million from issuance of common stock related to our employee option and stock purchase plans during the nine months ended September 30, 2026.
Critical Accounting Policies and Estimates
The preparation and presentation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates on an ongoing basis. Actual results may differ from those estimates under different assumptions or conditions.
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There have been no material changes to our critical accounting policies and estimates, from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Our market risks at September 30, 2026 have not changed materially from those discussed in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2025 on file with the SEC.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 (Exchange Act) reports is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon, and as of the date of, this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
We continuously seek to improve the efficiency and effectiveness of our internal controls. This results in refinements to processes throughout the Company. There was no change in our internal control over financial reporting that occurred in the three months ended September 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on the Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II: OTHER INFORMATION
Item 1. Legal Proceedings
Reference is hereby made to our disclosures in “Legal Matters” under Note 5 to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q and the information under the heading “Legal Matters” is incorporated by reference herein.
Item 1A. Risk Factors
We are providing the following cautionary discussion of risk factors, uncertainties and assumptions that we believe are relevant to our business. These are factors that, individually or in the aggregate, we think could cause our actual results to differ materially from expected and historical results and our forward-looking statements. We note these factors for investors as permitted by Section 21E of the Exchange Act and Section 27A of the Securities Act.
Investors in Nektar Therapeutics should carefully consider the risks described below before making an investment decision. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider this section to be a complete discussion of all potential risks or uncertainties that may substantially impact our business. Moreover, we operate in a competitive and rapidly changing environment. New factors emerge from time to time and it is not possible to predict the impact of all of these factors on our business, financial condition or results of operations. The risks described below may not be the only ones relating to our company. This description includes any material changes to and supersedes the description of the risk factors associated with our business previously disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.
Risks Related to our Business
We are highly dependent on the success of drug candidates, particularly rezpegaldesleukin (previously referred to as NKTR-358). If these drug candidates fail in clinical development or do not obtain regulatory approval, our business will be significantly harmed.
Our future success is highly dependent on the clinical success of our drug candidates, particularly rezpegaldesleukin. In general, most investigational drugs, including drug candidates designed to treat patients suffering from autoimmune disorders, such as rezpegaldesleukin, do not become approved drugs. Accordingly, there is a very meaningful risk that our drug candidates will not succeed in one or more clinical trials sufficient to support one or more regulatory approvals.
We previously relied on Eli Lilly and Company (Lilly) under our license agreement with Lilly (the License Agreement) to initiate, properly conduct, and prioritize clinical trials and other development-related activities for rezpegaldesleukin. In February 2023, we announced that the Phase 2 Lupus Study of rezpegaldesleukin in systemic lupus erythematosus (SLE) conducted by Lilly did not meet the study’s primary endpoint and that Lilly did not intend to advance rezpegaldesleukin to Phase 3 development in SLE. In April 2023, we announced that we would be regaining the full rights to rezpegaldesleukin from Lilly, and the License Agreement subsequently terminated. Following the return of our rights to develop rezpegaldesleukin, we bear all costs of development. We initiated two Phase 2b rezpegaldesleukin studies: one in patients with moderate-to-severe atopic dermatitis in October 2023, and another in patients with severe-to-very severe alopecia areata in March 2024, which remain ongoing. We have initiated three global registrational trials (ZENITH AD-1, ZENITH AD-2 and ZENITH AD-3) in the Phase 3 ZENITH AD program for rezpegaldesleukin. The Phase 3 ZENITH AD program is evaluating rezpegaldesleukin in patients who are 12 years of age or older with moderate-to-severe atopic dermatitis. The program includes three global, randomized, double-blind, placebo-controlled trials: ZENITH AD-1 and ZENITH AD-3 will evaluate rezpegaldesleukin as a monotherapy with ZENITH AD-1 enrolling biologic and systemic JAK inhibitor treatment-naive patients and ZENITH AD-3 enrolling patients with prior biologic and/or systemic JAK inhibitor treatment experience. We have recently modified ZENITH AD-2 to evaluate rezpegaldesleukin in combination with topical corticosteroids, enrolling both biologic and systemic JAK inhibitor treatment-naive patients and patients with prior biologic and/or systemic JAK inhibitor treatment experience. We intend to initiate a global registrational trial (ZENITH AA-1) in December 2026 to evaluate rezpegaldesleukin in patients who are 12 years of age or older with severe-to-very-severe
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alopecia areata. Our ZENITH AD and AA programs will also include long-term extension studies in both indications and other supportive trials.
We are also collaborating with TrialNet to conduct a Phase 2 study of rezpegaldesleukin in patients with new onset stage 3 Type 1 diabetes mellitus. We will also explore other autoimmune indications for the development of rezpegaldesleukin. While we believe we currently have the documents, records, and data that are necessary for us to continue clinical development of rezpegaldesleukin, we may need or benefit from additional documents, records and data that Lilly generated as part of the early development of rezpegaldesleukin under the License Agreement and for which Lilly has not yet transferred to us , and the continued clinical development of rezpegaldesleukin could be delayed or impaired if we cannot obtain or independently source them. The September 2026 jury verdict in our litigation against Lilly remains subject to post-trial proceedings and any appeal; see “ - We are involved in legal proceeding and may incur substantial litigation costs and liabilities that will adversely affect our business, financial condition and results of operations” below. Even if the applicable agreement provides us with enforcement or other curative rights to address the harm caused by Lilly’s action (or failure to act), our efforts in pursuing a remedy would be costly and there is no guarantee that these efforts would succeed or be sufficient to fully address the harm. If continued development of rezpegaldesleukin is not ultimately successful, our market valuation, prospects, financial condition and results of operations would be materially harmed.
Additionally, promising results from earlier trials may not predict similarly favorable outcomes in subsequent trials. For example, our drug candidates (such as in connection with the placebo crossover patients in the Phase 2b REZOLVE-AD study) have been tested in clinical trials or parts of clinical trials that utilize an “open-label” approach. An “open-label” approach occurs where both the patient and investigator know whether the patient is receiving the investigational drug candidate or either an existing approved drug or placebo. Most typically, open-label clinical trials test only the investigational drug candidate and sometimes may do so at different dose levels. Open-label clinical trials are subject to various limitations that may exaggerate any therapeutic effect as patients in open-label clinical trials are aware when they are receiving treatment. Open-label clinical trials may be subject to a “patient bias” where patients perceive their symptoms to have improved merely due to their awareness of receiving an experimental treatment. In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which patients have received treatment and may interpret the information of the treated group more favorably given this knowledge. The results from an open-label trial may not be predictive of future clinical trial results with any of our drug candidates for which we include an open-label clinical trial when studied in a controlled environment with a placebo or active control. Also, results from “double blinded” studies where both the patient and investigator do not know whether the patient is receiving the investigational drug candidate may not be predictive of future clinical trial results. One or more clinical failures of our drug candidates would jeopardize and could materially harm our business, results of operations and financial condition.
Delays in clinical studies are common and have many causes, and any significant delay in clinical studies being conducted by us or our partners could result in delay in our development programs, regulatory approvals and potential commercialization.
We or our partners may experience delays in conducting clinical trials of our drug candidates. As we advance our drug candidates into larger, later-stage clinical trials, the complexity and cost of conducting our clinical development programs will increase. Clinical studies may not begin on time, enroll a sufficient number of patients or be completed on schedule, if at all. Clinical trials for any of our drug candidates could be delayed for a variety of reasons, including:
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If the initiation or completion of any of the planned clinical studies for our drug candidates is delayed for any of the above or other reasons, results for the studies would be delayed, and consequently the regulatory approval process would be delayed which would also delay the ability to commercialize these drug candidates, which could have a material adverse effect on our business, financial condition and results of operations. Clinical study delays could also shorten any commercial periods during which our products have patent protection and may allow our competitors to bring products to market before we do, which could impair our ability to successfully commercialize our drug candidates and may harm our business and results of operations.
We currently rely on academic and private non-academic institutions to conduct investigator-sponsored clinical studies or trials of our drug candidates. Any failure by the investigator-sponsor to meet its obligations with respect to the clinical development of our drug candidates may delay or impair our ability to obtain regulatory approval or commercialize our drug candidates.
We currently rely on academic and private non-academic institutions to conduct and sponsor clinical studies or trials relating to our drug candidates. For example, we have entered a collaboration agreement with TrialNet to evaluate rezpegaldesleukin in patients with new-onset stage 3 Type 1 diabetes mellitus in a Phase 2 study, which was initiated in May 2026. TrialNet is conducting the study with funding from the National Institutes of Health, primarily through the Special Statutory Funding Program for Type 1 Diabetes through the National Institute of Diabetes and Digestive and Kidney Diseases. We do not control the design or conduct of the investigator-sponsored trials, and it is possible that the FDA or non-U.S. regulatory authorities will not view these investigator-sponsored studies or trials as providing adequate support for future clinical trials, whether controlled by us or independent investigators, for any one or more reasons, including elements of the design or execution of the trials or safety concerns or other trial results.
Such arrangements will likely provide us certain information concerning our drug candidates with respect to the investigator-sponsored studies or trials, including access to and the ability to use and reference the data, including for our own regulatory filings, resulting from the investigator-sponsored studies or trials. However, we would not have control over the timing and reporting of the data from investigator-sponsored trials, nor would we own the data from the investigator-sponsored studies or trials. If we are unable to confirm or replicate the results from the investigator-sponsored studies or trials or if negative results are obtained, we would likely be further delayed or prevented from advancing further clinical development of our drug candidates. Further, if investigators or institutions breach their obligations with respect to the clinical development of our drug candidates, or if the data proves to be inadequate compared to the first-hand knowledge we might have gained had the investigator-sponsored
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studies or trials been sponsored and conducted by us, then our ability to design and conduct any future clinical trials ourselves may be adversely affected.
Additionally, the FDA or non-U.S. regulatory authorities may disagree with the sufficiency of our right of reference to the preclinical, manufacturing or clinical data generated by these investigator-sponsored studies or trials or our interpretation of preclinical, manufacturing or clinical data from these investigator-sponsored studies or trials. If so, the FDA or other non-U.S. regulatory authorities may require us to obtain and submit additional preclinical, manufacturing or clinical data before we may initiate our planned clinical trials and/or may not accept such additional data as adequate to initiate our planned clinical trials.
The outcomes from the clinical trials of drug candidates from others, and the discovery and development of new potential therapies in immunology, could have a material and adverse impact on the value of the drug candidates in our research and development pipeline.
The research and development of immunomodulatory agents is a very competitive global segment in the biopharmaceutical industry attracting tens of billions of dollars of investment each year. Our clinical trial plans for rezpegaldesleukin and other drug candidates face substantial competition from other regimens already approved, and many more that are either ahead of or in parallel development in patient populations where we are studying our drug candidates. As immunotherapy represents a relatively new approach to treatment of autoimmune disorders and few have successfully completed late stage development, drug development in this area entails substantial risks and uncertainties that include rapidly changing standards of care, identifying contribution of components when therapeutic combinations are employed, patient enrollment competition, evolving regulatory frameworks to evaluate regimens, and varying risk-benefit profiles of competing therapies, any or all of which could have a material and adverse impact on the probability of success of our drug candidates.
The risk of clinical failure for any drug candidate remains high prior to regulatory approval and there can be no assurance that our drug candidates will obtain regulatory approval for any particular indications.
A number of companies have suffered significant unforeseen failures in clinical studies due to factors such as inconclusive efficacy or safety, even after achieving preclinical proof-of-concept or positive results from earlier clinical studies that were satisfactory both to them and to reviewing regulatory authorities. Clinical study outcomes remain very unpredictable and it is possible that one or more of our clinical studies could fail at any time due to efficacy, safety or other important clinical findings or regulatory requirements. The results from preclinical testing or early clinical trials of a drug candidate may not predict the results that will be obtained in later phase clinical trials of the drug candidate. We, the FDA, an independent Institutional Review Board (IRB), an independent ethics committee (IEC), or other applicable regulatory authorities may suspend clinical trials of a drug candidate at any time for various reasons, including a belief that patients participating in such trials are being exposed to unacceptable health risks or adverse side effects. Similarly, an IRB or IEC may suspend a clinical trial at a particular trial site. If one or more of our drug candidates fail in clinical studies, it could have a material adverse effect on our business, financial condition and results of operations.
Significant competition could render our partnered and proprietary drugs and drug candidates obsolete or noncompetitive, which would negatively impact our business, results of operations and financial condition.
Our partnered and proprietary products and drug candidates may compete with the drug products and candidates of other pharmaceutical and biotechnology companies. For rezpegaldesleukin, there are a number of competitors with approved therapies or investigational therapies in mid to late stage development in the indications that we are pursuing for rezpegaldesleukin. These companies include, among others, AbbVie, Apogee Therapeutics, AstraZeneca, Eli Lilly and Company, Galderma, Johnson & Johnson Innovative Medicine (formerly Janssen Pharmaceuticals), Kymera Therapeutics, Pfizer, Sanofi, and UCB Pharma. For our TNFR2 program, including NKTR-0165 and NKTR-0166, we believe companies targeting the TNFR2 pathway for the treatment of patients with autoimmune disease include TRexBio, Inc. and Odyssey Therapeutics, Inc. 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
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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 noncompetitive or obsolete.
Preliminary and interim data from our clinical studies that we announce or publish from time to time are subject to audit and verification procedures that could result in material changes in the final data and may change as more patient data become available.
From time to time, we publish preliminary or interim data from our clinical studies. Preliminary data remain subject to audit confirmation and verification procedures that may result in the final data being materially different from the preliminary data we previously published. Interim data are also subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. As a result, preliminary and interim data should be viewed with caution until the final data are available. Material adverse changes in the final data could significantly harm our business prospects.
Risks Related to our Financial Condition and Capital Requirement
Our results of operations and financial condition depend significantly on the ability of our collaboration partners to successfully develop and market drugs and they may fail to do so.
Under our collaboration agreements with various pharmaceutical or biotechnology companies, our collaboration partner is generally solely responsible for:
Our reliance on collaboration partners poses a number of significant risks to our business, including risks that:
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Given these risks, the success of our current and future collaboration partnerships is highly unpredictable and can have a substantial negative impact on our business. If the approved drugs fail to achieve commercial success or the drug candidates in development fail to have positive late stage clinical outcomes sufficient to support regulatory approval in major markets, it could significantly impair our access to capital necessary to fund our research and development efforts. If we are unable to obtain sufficient capital resources to advance our drug candidate pipeline, it would negatively impact the value of our business, results of operations and financial condition.
We have substantial future capital requirements and there is a risk that we may not have access to sufficient capital to meet our current business plan. If we are unable to raise additional capital in one or more financing transactions, execute new high value collaborations or other arrangements, or do not receive substantial milestone or royalty payments from our existing collaboration agreements, we would be unable to continue our current level of investment in research and development.
As of September 30, 2026, we had cash and investments in marketable securities valued at approximately $952.9 million. While we believe that our cash position will be sufficient to meet our liquidity requirements through at least the next 12 months, our future capital requirements will depend upon numerous unpredictable factors, including:
A significant multi-year capital commitment is required to advance our drug candidates through the various stages of research and development in order to generate sufficient data to enable high value collaboration partnerships with significant upfront payments or to successfully advance through late-stage clinical development to achieve potential regulatory approval and
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commercialization. As we initiate Phase 3 clinical trials, our capital requirements are expected to increase and will include significant expenditures associated with conducting multinational registrational trials, manufacturing and maintaining adequate clinical supply, scaling manufacturing processes and capabilities, preparing regulatory submissions and preparing for potential commercialization. In the event we do not enter into any new collaboration partnerships with significant upfront payments and we continue to advance our drug candidates through later stage research and development towards potential regulatory approval and commercialization, we may need to pursue financing alternatives, including dilutive equity-based financings, such as an offering of convertible debt or common stock, which would dilute the percentage ownership of our current common stockholders and could significantly lower the market value of our common stock, or pursue debt financings or other strategic transactions. If sufficient capital is not available to us or is not available on commercially reasonable terms, it could require us to delay or reduce one or more of our research and development programs. If we are unable to sufficiently advance our research and development programs toward regulatory approval and potential commercialization, it could substantially impair the value of such programs and result in a material adverse effect on our business, financial condition and results of operations.
The commercial potential of a drug candidate in development is difficult to predict. If the market size for a new drug is significantly smaller than we anticipate, it could significantly and negatively impact our revenue, results of operations and financial condition.
It is very difficult to estimate the commercial potential of drug candidates due to important factors such as safety and efficacy compared to other available treatments, including changing standards of care, third party payer reimbursement standards, 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 and biosimilar versions of our drug candidates following approval by regulatory authorities based on the expiration of regulatory exclusivity or our inability to prevent generic or biosimilar versions from coming to market by asserting our patents. If due to one or more of these risks the market potential for a drug candidate is lower than we anticipated, it could significantly and negatively impact the commercial potential of the drug candidate, the commercial terms of any collaboration partnership potential for such drug 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 this would negatively impact our business, financial condition and results of operations. We may also depend on our relationships with other companies for sales and marketing performance and the commercialization of drug candidates. Poor performance by these companies, or disputes with these companies, could negatively impact our revenue and financial condition.
If government and private insurance programs do not provide payment or reimbursement for our partnered drug or proprietary drugs, those drugs will not be widely accepted, which would have a negative impact on our business, results of operations and financial condition.
In the United States and markets in other countries, patients generally rely on third party payers to reimburse all or part of the costs associated with their treatment. In both domestic and foreign markets, sales of our partnered and proprietary products that receive regulatory approval will depend in part on market acceptance among physicians and patients, pricing approvals by government authorities and the availability of coverage and payment or reimbursement from third party payers, such as government programs, including Medicare and Medicaid in the U.S., managed care providers, private health insurers and other organizations. However, eligibility for coverage does not necessarily signify that a drug candidate will be adequately reimbursed in all cases or at a rate that covers costs related to research, development, manufacture, sale, and distribution. Third party payers are increasingly challenging the price and cost effectiveness of medical products and services. Therefore, significant uncertainty exists as to the coverage and pricing approvals for, and the payment or reimbursement status of, newly approved healthcare products. For more information, see “Business – Government Regulation – Coverage, Reimbursement, and Pricing” section in our Annual Report on Form 10-K for the year ended December 31, 2025.
There is also significant uncertainty related to the insurance coverage and reimbursement of newly approved products and coverage may be more limited than the purposes for which the medicine is approved by the FDA or comparable foreign regulatory authorities. In the United States, the principal decisions about reimbursement for new medicines are typically made by the Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services. CMS decides
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whether and to what extent a new medicine will be covered and reimbursed under Medicare and private payers tend to follow CMS to a substantial degree.
Factors payers consider in determining reimbursement are based on whether the product is: (i) a covered benefit under its health plan; (ii) safe, effective and medically necessary; (iii) appropriate for the specific patient; (iv) cost-effective; and (v) neither experimental nor investigational.
In addition, net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payers and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States.
Increasingly, third party payers are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. We cannot be sure that reimbursement will be available for any of our drug candidates that are commercialized and, if reimbursement is available, the level of reimbursement.
In addition, many pharmaceutical manufacturers must calculate and report certain price reporting metrics to the government, such as average sales price, or ASP, and best price. Penalties may apply in some cases when such metrics are not submitted accurately and timely. Further, these prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs.
Moreover, legislation and regulations affecting the pricing of pharmaceuticals may change before regulatory agencies approve our proposed products for marketing and could further limit coverage or pricing approvals for, and reimbursement of, our products from government authorities and third party payers. Federal agencies, Congress and state legislatures have continued to show interest in implementing cost containment programs to limit the growth of health care costs, including price controls, restrictions on reimbursement and other fundamental changes to the healthcare delivery system. In addition, in recent years, Congress has enacted various laws seeking to reduce the federal debt level and contain healthcare expenditures, and the Medicare and other healthcare programs are frequently identified as targets for spending cuts. New government legislation or regulations related to pricing or other fundamental changes to the healthcare delivery system as well as a government or third party payer decision not to approve pricing for, or provide adequate coverage or reimbursement of, our products hold the potential to severely limit market opportunities of such products.
In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, the European Union provides options for its Member States to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost effectiveness of a particular product candidate to currently available therapies. A Member State may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our drug candidates. Historically, products launched in the European Union do not follow price structures of the U.S. and generally prices tend to be significantly lower.
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 capital requirements. The timing of new collaboration partnerships is difficult to predict due to availability of clinical data, the outcomes from our clinical studies, 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 negotiate collaboration arrangements with favorable commercial terms with respect to our existing and future drug candidates or the licensing of our
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intellectual property, or if any arrangements we negotiate, or have negotiated, are terminated, it could have a material adverse effect on our business, financial condition and results of operations.
Our revenue has historically been 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 has historically been exclusively derived from our collaboration agreements (whether based on our drug candidates or polymeric reagents), from which we receive upfront fees, research and development reimbursement and funding, milestone and other contingent payments based on clinical progress, regulatory progress or net sales achievements, royalties and product sales. Significant variations in the timing of receipt of cash payments and our recognition of revenue can result from payments based on the execution of new collaboration agreements, the timing of clinical outcomes, regulatory approval, commercial launch or the achievement of certain annual sales thresholds. The amount of our revenue derived from collaboration agreements in any given period will depend on a number of unpredictable factors, including whether and when we or our collaboration partners achieve clinical, regulatory and sales milestones, the timing of regulatory approvals in one or more major markets, reimbursement levels by private and government payers, and the market introduction of new drugs or generic versions of the approved drug, as well as other factors. Our past revenue generated from collaboration agreements is not necessarily indicative of our future revenue. If any of our existing or future collaboration partners fails to develop, obtain regulatory approval for, manufacture or ultimately commercialize any drug candidate under our collaboration agreement, our business, financial condition, and results of operations could be materially and adversely affected.
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 nine months ended September 30, 2026, we reported a net loss of $141.2 million. If and when we achieve profitability depends upon a number of factors, including the timing and recognition of milestones and other contingent payments and royalties received, the timing of revenue under our collaboration agreements, the amount of investments we make in our proprietary drug candidates and the regulatory approval and market success of our drug 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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If our available capital is insufficient to fund our planned operations or developmental activities, we may implement cost-savings or restructuring measures, which could adversely affect our business.
If our available capital is insufficient to fund our planned operations and development activities, and we are unable to obtain additional capital or other sources of funding on acceptable terms, we may need to implement cost-savings or restructuring measures, including workforce reductions or program reprioritization or discontinuation. These measures may disrupt our research and development efforts and may not be successful, which could have a material adverse effect on our business, financial condition and prospects.
Risks Related to Supply and Manufacturing
If our contract manufacturers are not able to manufacture biologic substance or substances in sufficient quantities that meet applicable quality standards, it could delay clinical studies or constitute a breach of our contractual obligations, any of which could significantly harm our business, financial condition and results of operations.
If our contract manufacturing organizations (CMOs) are not able to manufacture and supply sufficient drug quantities meeting applicable quality standards required to support large clinical studies or commercial manufacturing in a timely manner, it could delay our or our collaboration partners’ clinical studies or result in a breach of our contractual obligations. As a result, we could incur substantial costs and any royalty revenue or product sale that we would otherwise be entitled to receive could be reduced, delayed or eliminated. In most cases, we rely on sole source CMOs to manufacture and supply drug product for our clinical studies and those of our collaboration partners with whom we may have long-term and minimum manufacturing purchase commitments. As a result of the sale of the Facility, we are currently dependent on Gannet BioChem for the supply of the PEG reagents used in the manufacture of our PEG-conjugate drug candidates, including rezpegaldesleukin. The manufacturing of biologics 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 and analytical methods validations, and challenges in controlling for all of these variables. We have faced and may in the future face significant difficulties, delays and unexpected expenses as we validate third party CMOs required for drug supply to support our clinical studies and the clinical studies and products of our collaboration partners. Failure by us or our CMOs to supply API or drug products in sufficient quantities that meet all applicable quality requirements could result in supply shortages for our clinical studies or the clinical studies and commercial activities of our collaboration partners. Such failures could significantly and materially delay clinical trials and regulatory submissions or result in reduced sales, any of which could significantly harm our business prospects, results of operations and financial condition.
If any CMO with whom we contract fails to perform its obligations, we may be forced to enter into an agreement with a different CMO, which we may not be able to do on reasonable terms, if at all, and our clinical trials or commercial distribution could be delayed significantly as we establish alternative supply sources. In some cases, the technical skills required to manufacture our products or drug candidates may be unique or proprietary to the original CMO and we may have difficulty, or there may be contractual restrictions prohibiting us from, transferring such skills to a back-up or alternate supplier, or we may be unable to transfer such skills at all. In addition, if we are required to change CMOs for any reason or if our CMOs change manufacturing facility sites, we will be required to verify that the new CMO maintains facilities and procedures that comply with quality standards and with all applicable regulations. We will also need to verify, such as through a manufacturing comparability study, that any new manufacturing process will produce our product or drug candidate according to the specifications previously submitted to or approved by the FDA or another regulatory authority. The delays associated with the verification of a new CMO or a facility and additional costs, including potential tariffs associated with international sites, could negatively affect our ability to develop drug candidates or commercialize our products in a timely manner or within budget. Furthermore, a CMO may possess technology related to the manufacture of our drug candidate that such CMO owns independently. This would increase our reliance on such a CMO or require us to obtain a license from such CMO in order to have another CMO manufacture our products or drug candidates. In addition, in the case of the CMOs that supply our drug candidates, changes in manufacturers often involve changes in manufacturing procedures and processes, which could require that we conduct bridging studies between our prior clinical supply used in our clinical trials and that of any new manufacturer. We may be unsuccessful in demonstrating the comparability of clinical supplies which could require the conduct of additional clinical trials.
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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 or drug delivery method, which may cause significant delays in clinical development, or increased costs. 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.
Our CMOs purchase some of the starting material for biologics and biologic candidates from a single source or a limited number of suppliers, and we are dependent on Gannet BioChem for the supply of PEG reagents, and the partial or complete loss of one of these suppliers could cause production delays, and clinical trial delays.
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 or clinical trial delays. 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. As a result of the sale of the Facility, we are also dependent on Gannet BioChem for PEG reagents used in the manufacture of rezpegaldesleukin. Any interruption in supply, diminution in quality of raw materials supplied to our CMOs or failure to procure such raw materials on commercially feasible terms or in the supply of PEG reagents could harm our business by delaying our clinical trials, impeding potential commercialization of drugs or increasing our costs.
The manufacturing operations of our contract manufacturers are subject to laws and other governmental regulatory requirements, which, if not met, would have a material adverse effect on our business, results of operations and financial condition.
Our CMOs are required in certain cases to maintain compliance with current good manufacturing practices (cGMP), including cGMP guidelines applicable to active pharmaceutical ingredients, and drug products, and with laws and regulations governing manufacture and distribution of controlled substances, and are subject to inspections by the FDA, or comparable agencies in other jurisdictions administering such requirements. We anticipate periodic regulatory inspections of the manufacturing facilities of our CMOs for compliance with applicable regulatory requirements. Any failure of our CMOs to follow and document adherence to such cGMP and other laws and governmental regulations or satisfy other manufacturing and product release regulatory requirements may 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 laws and 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, administrative detention, or recalls of products, operating restrictions and criminal prosecutions, any of which could harm our business. Regulatory 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 our CMOs pending resolution of regulatory deficiencies or suspensions could have a material adverse effect on our business, results of operations and financial condition.
Risks Related to Business Operations
We depend on third parties to conduct the preclinical studies and clinical trials for our drug candidates and any failure of those parties to fulfill their obligations according to protocol standards could harm our development plans and adversely affect our business.
We depend on our collaboration partners, independent clinical investigators, contract research organizations and other third-party service providers to conduct preclinical studies and clinical trials for our drug candidates, including to monitor, record, manage and analyze data generated from these studies. We rely heavily on these parties for the successful execution of our preclinical studies and clinical trials. Though we are ultimately responsible for the results of their activities, many aspects of their activities are beyond our control, such as the timing, conduct and management of data developed through these studies and trials. For example, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the general
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investigational plan and protocols for the trials, but the independent clinical investigators may prioritize other projects over ours or communicate issues regarding our drug candidates 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, such as good laboratory practice or good clinical practice, or our stated protocols or eligibility criteria and enrollment standards and any subsequent data generated may be deemed unacceptable. We rely on our collaboration partners and other third parties to manage, analyze and transmit clinical data, and those partners and third parties may not carry out the performance of their duties with the required degree of care or skill to ensure valid and scientifically reliable work products. 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, the failure of third parties to properly conduct our clinical trials, or erroneously reported data 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.
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 of our proprietary drug candidates. Our strategy also calls for us to manage the capital necessary to fund key programs through value-enhancing data and other milestones. If we are unable to manage effectively our current operations, 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 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 dilutive financing arrangements on unfavorable terms.
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 research, development (including clinical testing), manufacturing, regulatory and finance, and may need to attract and retain commercial, marketing and distribution experts and develop additional expertise in our existing personnel. 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 awards 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.
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
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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.
Inflation has increased our operating costs and could negatively impact our operations.
Increased price levels resulting from inflation have resulted in increased operating costs. In addition, the United States Federal Reserve has held interest rates at higher levels than in the past decade in response to concerns about inflation and the timing and extent of future reductions remain uncertain. Increases in or elevated interest rates, especially if coupled with reduced government spending and volatility in financial markets, may further increase economic uncertainty and heighten these risks.
Our business could be adversely affected by the effects of future health epidemics.
Our business could be adversely affected, directly or indirectly, by health epidemics in regions where we have concentrations of clinical trial sites or other business operations, including the manufacturing operations of third parties upon whom we rely. Health epidemics can negatively affect our clinical trials and those run by our collaborators or other third parties through delays in investigator recruitment, clinical site initiation, patient screening, or patient enrollment. In addition, health epidemics may cause disruptions in our supply chain or shortages in raw materials and equipment, which would affect our ability to supply drug candidates for clinical trials.
If the health epidemic is sufficiently severe and widespread, it may require us to change the way in which we can conduct our business, which may negatively result in unexpected expenses, decreased employee productivity and availability and employee work culture. Further, a severe and widespread epidemic may have a broad impact on global financial markets and could reduce our ability to access capital, which could in the future negatively affect our liquidity. In addition, a recession or market correction resulting from a health epidemic could materially affect our business and the value of our common stock.
The ultimate effects of health epidemics are uncertain and subject to change and these effects could have a negative impact on our clinical trial timelines, operations, financial condition and prospects.
Risks Related to Intellectual Property, Litigation and Regulatory Concerns
If we or our partners do not obtain regulatory approval for our drug 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 drug 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. Drug candidates must undergo rigorous animal and human testing and an extensive review process for safety and efficacy by the FDA and equivalent foreign regulatory authorities. The time required for obtaining regulatory decisions is uncertain and difficult to predict. The FDA and other U.S. and foreign regulatory authorities have substantial discretion, at any phase of development, to terminate clinical studies, require additional clinical development or other testing, delay or withhold registration and marketing approval and mandate product withdrawals, including recalls. Further, regulatory authorities have the discretion to analyze data using their own methodologies that may differ from those used by us or our partners, which could lead such authorities to arrive at different conclusions regarding the safety or efficacy of a biologic candidate. In addition, undesirable side effects caused by our drug 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 drug may be marketed. Our and our partnered drugs 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 drug candidates, any product marketing limitations or a product withdrawal would negatively impact our business, results of operations and financial condition.
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We may seek orphan drug status or Breakthrough Therapy or Fast Track designations or other designation for one or more of our drug candidates, but even if any such designation or status is granted, it may not lead to a faster development process or regulatory review and may not increase the likelihood that our drug candidates will receive marketing approval, and we may be unable to maintain any benefits associated with such designations or status, including market exclusivity.
We have been awarded Fast Track designations for rezpegaldesleukin for two different treatments: one for the treatment of adult and pediatric patients 12 years of age and older with moderate-to-severe atopic dermatitis whose disease is not adequately controlled with topical prescription therapies or when those therapies are not advisable; and another for the treatment of severe-to-very-severe alopecia areata in adult and pediatric patients 12 years of age and older who weigh at least 40 kg. We may continue to seek Breakthrough Therapy and Fast Track designations for our current or future drug candidates. Receipt of a designation to facilitate drug candidate development is within the discretion of the FDA. Accordingly, even if we believe one of our drug candidates meets the criteria for a designation, the FDA may disagree. In any event, the receipt of such a designation for our drug candidates may not result in a faster development process, review, or approval compared to drug candidates considered for approval under conventional FDA procedures and does not ensure ultimate marketing approval by the FDA. In addition, the FDA may later decide that the product candidates no longer meet the designation conditions.
Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient populations as orphan drugs. We may not be able to obtain orphan drug designation for any indications for our drug candidates, and we may not be able to maintain such designations if granted.
Generally, if a drug candidate with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA from approving another marketing application for the same drug or biologic for the same approved use or indications for seven years. Even if we are able to obtain orphan drug designation or orphan drug exclusivity, that exclusivity may not effectively protect the product from competition because different drugs can be approved for the same approved use or condition. Even after an orphan drug is approved, the FDA can subsequently approve the same drug for the same approved use or condition if, among other things, the FDA concludes that the later drug is clinically superior, if it is shown to be safer, more effective or makes a major contribution to patient care. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process. Even if we receive orphan drug designation or orphan drug exclusivity for any of our drug candidates, there is no guarantee that we will enjoy the benefits of such designations or exclusivity periods.
Even if we receive regulatory approval of our drug candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our drug candidates.
Any regulatory approvals that we receive for our drug candidates will require surveillance to monitor the safety and efficacy of the drug candidate. The FDA may also require a REMS in order to approve our drug candidates, which could entail requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA or a comparable foreign regulatory authority approves our drug candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for our drug candidates will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with applicable cGMP, GLP and GCP requirements, for any clinical trials that we conduct post-approval. For certain commercial prescription drug products, manufacturers and other parties involved in the supply chain must also meet chain of distribution requirements and build electronic, interoperable systems for product tracking and tracing and for notifying the FDA of counterfeit, diverted, stolen and intentionally adulterated products or other products that are otherwise unfit for distribution in the United States. Later discovery of previously unknown problems with our drug candidates, including adverse events of unanticipated severity or frequency, or with our third party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:
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Further, if any of our drug candidates are approved and we are found to have improperly promoted off-label uses of those products, we may become subject to significant liability. The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products, if approved. In particular, while the FDA permits the dissemination of truthful and non-misleading information about an approved product, a manufacturer may not promote a product for uses that are not approved by the FDA or such other regulatory agencies as reflected in the product’s approved labeling. If we are found to have promoted such off-label uses, we may become subject to significant liability. The federal government has levied large civil and criminal fines against companies for alleged improper promotion of off-label use and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees, corporate integrity agreements or permanent injunctions under which specified promotional conduct must be changed or curtailed. If we cannot successfully manage the promotion of our drug candidates, if approved, we could become subject to significant liability, which would materially adversely affect our business and financial condition.
Additionally, sponsors of approved drugs and biologics must provide 6 months’ notice to the FDA of any changes in marketing status, such as the withdrawal of a drug, and failure to do so could result in the FDA placing the product on a list of discontinued products, which would revoke the product’s ability to be marketed. The FDA’s and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our drug candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability.
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 have derived, and expect to derive in the foreseeable future, substantially all of our revenue from collaboration agreements with biotechnology and pharmaceutical companies. These collaboration agreements contain complex commercial terms, including:
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We are a party to numerous significant collaboration agreements and other strategic transaction agreements (e.g. financings and asset divestitures) that contain complex representations and warranties, covenants and indemnification obligations. If we are found to have materially breached such agreements, we could be subject to substantial liabilities, which would harm our financial condition.
From time to time, we are involved in litigation matters involving the interpretation and application of complex terms and conditions of 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 effect on our business, financial condition and results of operations.
We may not be able to obtain intellectual property licenses related to the development of our drug candidates 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, methods of preparation and manufacturing, and methods of use and administration. We cannot predict with any certainty which, if any, patent rights will be considered relevant to our or our collaboration 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 sufficiency of the scope and adequacy of these licenses is very uncertain in view of the 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 to avoid a need to secure a license. 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, we may be prevented from developing and commercializing the biologic, which could significantly harm our business, results of operations, and financial condition.
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 and biotechnology companies, such as ours, are uncertain and involve complex legal and factual issues. We own more than 130 U.S. and 650 foreign patents and have a number of pending patent applications that cover various aspects of our technologies. There can be no assurance that patents that have been issued will be held valid and enforceable in a court of law. Even for patents that are held valid and enforceable, the legal process associated with obtaining such a judgment is time consuming and costly. Additionally, issued patents can be subject to opposition, inter partes review, re-examinations or other proceedings that can result in the revocation of the patent or maintenance of the patent in amended form (and potentially in a form that renders the patent without commercially relevant and/or broad coverage). Further, our competitors may be able to circumvent and otherwise design around our patents. Even if a patent is issued and enforceable, because development and commercialization of pharmaceutical products can be subject to substantial delays, patents may expire prior to
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the commercialization of the biologic. Moreover, even if a patent encompassing a biologic has not expired prior to the biologic’s commercialization, the patent may only provide a short period of protection following the commercialization of the covered product. In addition, our patents may be subject to post grant proceedings, such as inter partes review and re-examinations, before the U.S. Patent and Trademark Office (or equivalent proceedings in other jurisdictions), which could result in a loss of the patent and/or substantial cost to us.
We have filed patent applications covering our drug candidates, and plan to file additional patent applications as we deem appropriate. There can be no assurance that the patent applications for which we apply will actually issue as patents, or do so with commercially relevant and/or broad coverage. The coverage claimed in a patent application can be significantly reduced before the patent is issued. The scope of our claim coverage can be critical to our ability to enter into licensing transactions with third parties and our right to receive royalties from our collaboration partnerships. 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. In addition, there is no guarantee that we will be the first to file a patent application directed to an invention.
An adverse outcome in any judicial proceeding involving intellectual property, including patents, 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. In those instances where we seek an intellectual property license from another, we may not be able to obtain the license on a commercially reasonable basis, if at all, thereby raising concerns on our ability to freely commercialize our technologies or products.
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 and other unpatented proprietary rights 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.
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 (or if we cannot secure product liability insurance), 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.
If we or current or future collaborators or service providers fail to comply with healthcare laws and regulations, we or they could be subject to enforcement actions and civil or criminal penalties.
Although we do not currently have any products on the market, once we begin commercializing our drug candidates, if approved, we will be subject to additional healthcare statutory and regulatory requirements and enforcement by the federal and state governments of the jurisdictions in which we conduct our business. Healthcare providers, physicians and third party payers play a primary role in the recommendation and prescription of any drug candidates for which we obtain marketing approval. Our current and future arrangements with third party payers and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute our therapeutic candidates for which we obtain marketing approval. For more information, see
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“Business – Government Regulation - Other Healthcare Laws and Regulations” section in our Annual Report on Form 10-K for the year ended December 31, 2025.
Ensuring that our future business arrangements with third parties comply with applicable healthcare laws and regulations could involve substantial costs. If our operations are found to be in violation of any such requirements, we may be subject to penalties, including administrative, civil or criminal penalties, imprisonment, monetary damages, the curtailment or restructuring of our operations, or exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid, any of which could adversely affect financial results. Although effective compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, these risks cannot be entirely eliminated. Any action against us for an alleged or suspected violation could cause us to incur significant legal expenses and could divert our management’s attention from the operation of our business, even if our defense is successful. In addition, achieving and sustaining compliance with applicable laws and regulations may be costly to us in terms of money, time and resources.
Healthcare legislative or regulatory reform measures may have a negative impact on our business and results of operations.
The U.S. and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system. The U.S. government, state legislatures and foreign governments also have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs. Governmental policy can also change the commercial potential of our product candidates, including efforts to increase patient access to lower-cost generic and biosimilar drugs. Additional changes that may affect our business include those governing enrollment in federal healthcare programs, reimbursement changes, rules regarding prescription drug benefits under the health insurance exchanges and fraud and abuse and enforcement. Continued implementation of the Affordable Care Act and the passage of additional laws and regulations may result in the expansion of new programs such as Medicare payment for performance initiatives, and may impact existing government healthcare programs, such as by improving the physician quality reporting system and feedback program. For more information regarding the risks related to recently enacted and future legislation please see “Business – Government Regulation – Legislative and Regulatory Landscape” section in our Annual Report on Form 10-K for the year ended December 31, 2025.
We cannot predict the initiatives that may be adopted in the future. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may adversely affect:
We expect that additional U.S. federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that the U.S. federal government will pay for healthcare drugs and services, which could result in reduced demand for our drug candidates or additional pricing pressures. Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain drug access and marketing cost disclosure and transparency measures, and designed to encourage importation from other countries and bulk purchasing. Legally mandated price controls on payment amounts by third party payors or other restrictions could harm our business, financial condition, results of operations and prospects. Recent CMS Innovation Center drug pricing models that tie Medicare and Medicaid payment for certain drugs to international reference prices, including the GLOBE Model (finalized in October 2026), the proposed GUARD Model and the voluntary GENEROUS Model, could also adversely affect the pricing of and reimbursement for our drug candidates, if approved. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to
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determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our drugs or put pressure on our drug pricing, which could negatively affect our business, financial condition, results of operations and prospects.
Disruptions to the normal functioning of the FDA and other government agencies could hinder their ability to perform and carry out important roles and activities on which the operation of our business relies, which could negatively impact our business.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, leadership and policy changes. Average review times at the agency have fluctuated in recent years as a result. For example, in 2025, changes and cuts in FDA staffing have been reported as resulting in delays in the FDA’s responsiveness or in its ability to review IND submissions or marketing applications. In addition, government funding of other agencies on which our operations may rely is subject to the political process, which is inherently fluid and unpredictable.
Over the last several years, the U.S. government has shut down several times, including from October 2025 through November 2025, and from January 2026 through February 2026. Government shutdowns, if prolonged, could significantly impact the ability of government agencies upon which we rely (such as the FDA and SEC) to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Disruptions at the FDA and other agencies may slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
We are involved in legal proceedings and may incur substantial litigation costs and liabilities that will adversely affect our business, financial condition and results of operations.
From time to time, we are involved in legal proceedings where we or other third parties are enforcing or seeking intellectual property rights, invalidating or limiting patent rights that have already been allowed or issued, or otherwise asserting proprietary rights through one or more potential legal remedies. 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. A third party often bases its assertions on a claim that its patents cover the technology we use or our drug candidates 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 collaboration partners from intellectual property infringement, product liability and certain other claims, which could cause us to incur substantial costs and liability if we are called upon to defend ourselves and our partners against any claims. We are also regularly involved in opposition proceedings at the European Patent Office and in inter partes review and re-examination proceedings at the U.S. Patent and Trademark Office where third parties seek to invalidate or limit the scope of our allowed patent applications or issued patents covering (among other things) our drug candidates and technologies. 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 drugs or drug candidates in the U.S. and abroad. Costs associated with litigation, substantial damage claims, indemnification claims or royalties paid for licenses from third parties could have a material adverse effect on our business, financial condition and results of operations.
From time to time, we may also be involved in legal proceedings other than those related to intellectual property, including securities actions or derivative actions or other complaints.
In August 2023, we filed a complaint in the United States District Court for the Northern District of California (the Court) against Lilly alleging, among other claims, breach of contract and breach of implied covenant of good faith and fair dealing in connection with our collaboration with Lilly. A jury trial commenced in September 2026, and later that month, the jury returned a
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verdict finding that Lilly breached the implied covenant of good faith and fair dealing in the License Agreement. The jury awarded us $90.0 million in damages plus interest to be determined by the Court. The jury’s verdict remains subject to post-trial proceedings, and any resulting judgment may be subject to appeal. As of September 30, 2026, we have not recorded any amounts related to the damages awarded by the jury.
After previously authorizing goods and services tax (GST) refunds of approximately $3.3 million for the period of July 2017 to September 2019, the Indian GST authorities issued a show cause notice in October 2023 seeking to recover this refund, plus penalties and interest, for which we have subsequently received a demand in September 2025 seeking payment to Indian GST authorities. We have not paid the demand in view of an appeal we filed with the Indian authorities, and believe that we have meritorious defenses against the demand.
In March 2026, a putative class action complaint was filed in the U.S. District Court for the Northern District of California (and amended in August 2026) against the Company, our CEO, Chief Medical Officer and our Chief Research and Development Officer, captioned Schramke v. Nektar Therapeutics, et al. The complaint asserts claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act and SEC rules promulgated thereunder, seeks damages, attorneys’ fees and other relief, and alleges, among other things, that from February 2025 through December 2025, the defendants made misleading statements and/or failed to disclose material information regarding the REZOLVE-AA trial. The Company denies the claims, believes they are without merit, and intends to defend vigorously against this litigation. The Company filed a motion to dismiss in October 2026. This case is in the early stages.
The cost to us in initiating or defending any litigation or other proceeding, even if resolved in our favor, could be substantial, and litigation would divert our management’s attention. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could delay our research and development efforts or result in financial implications either in terms of seeking license arrangements or payment of damages or royalties. There is no guarantee that our insurance coverage for damages resulting from any litigation or the settlement would be sufficient and could result in substantial financial risk to the Company.
Given the nature of lawsuits and complaints, we cannot reasonably estimate a potential future loss or a range of potential future losses for any of the legal proceedings we may be involved in. However, an unfavorable resolution could potentially have a material adverse effect on our business, financial condition, and results of operations or prospects, and potentially result in paying monetary damages. We have recorded no liability for any litigation matters in our Condensed Consolidated Balance Sheet at September 30, 2026.
Any actual or alleged failure to comply with privacy and data protection laws, could subject us to fines, penalties, increased regulatory scrutiny, or suspension or exclusion from participation in government healthcare programs. Any of these outcomes could adversely affect our business, financial condition and results of operations.
Our business is subject to many federal, state and foreign privacy and data protection laws and regulations governing the collection, use, disclosure and security of personal information, including information we collect from individuals participating in our clinical trials and our employees, among others. In the U.S., in addition to federal laws such as the HIPAA (as amended by HITECH) and Section 5 of the FTC Act, that may apply to our business, numerous states have passed comprehensive privacy laws relating to the privacy and security of personal information, including health information. Legal requirements often vary across jurisdictions in significant ways, complicating compliance efforts. The global data protection landscape continues to rapidly evolve, and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future.
For example, the California Consumer Privacy Act (CCPA) grants California consumers expanded rights regarding their personal information, including the right to access, correct, delete, and limit the sharing, use and disclosure of personal information, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that may increase the risk of data breach litigation and compliance costs. Similarly comprehensive state privacy laws have become effective in more than a dozen other U.S. states. In addition, certain states have passed laws specifically regulating consumer health information. For example, Washington’s My Health My Data Act (MHMDA) requires regulated entities to obtain consent to collect health information, grants consumers
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certain rights, including to request deletion, and provides for robust enforcement mechanisms, including a private right of action for consumer claims. At the federal level, the FTC has used its authority over “unfair or deceptive acts or practices” to impose stringent requirements on the collection and disclosure of sensitive categories of personal information, including health information, which may increase our potential liability and compliance costs and adversely affect our business. Moreover, the FTC’s expanded interpretation of a “breach” under its Health Breach Notification Rule could impose new disclosure obligations that would apply in the event of a qualifying breach.
The European Regulation 2016/679, known as the General Data Protection Regulation (EU GDPR), the implementing legislation of EU Member States, which became effective in May 2018, and the EU GDPR as incorporated into the laws of the United Kingdom (UK GDPR) (together with the EU GDPR, the GDPR) apply to the collection and processing of personal data, including health-related information, by companies located in the EU and UK, or in certain circumstances, by companies located outside of the EU or UK and processing personal information of individuals located in the EU or UK. The GDPR is wide-ranging in scope and imposes strict obligations on the ability to process personal data, including health-related information, in particular in relation to their collection, use, disclosure and transfer. These include several requirements relating to, for example, (i) ensuring a legal basis or condition applies to the processing of personal data and, in some situations where required, obtaining the consent of the individuals to whom the personal data relates, (ii) the information provided to the individuals about how their personal information is used, (iii) responding to data subject requests, (iv) imposing requirements to notify the competent national data protection authorities and data subjects of personal data breaches, (v) implementing safeguards in connection with the security and confidentiality of the personal data, (vi) accountability requirements and (vii) taking certain measures when engaging third party processors. The GDPR prohibits the transfer of personal data to countries outside of the European Economic Area (EEA) and UK, such as the United States, which are not considered by the European Commission to provide an adequate level of data protection. The GDPR also permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million (£17.5 million under the UK GDPR) or 4% of annual global revenues, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR.
Regulators and legislators in the U.S. are increasingly scrutinizing and restricting certain personal data transfers and transactions involving foreign countries. For example, the Department of Justice’s January 8, 2025, Rule on Preventing Access to U.S. Sensitive Personal Data and Government-Related Data by Countries of Concern or Covered Persons, 24, prohibits transfers of data, including health data, genetic data, and biospecimens, to countries of concern, including China. The rule also prohibits covered businesses from granting access to certain investment agreements, employment agreements and vendor agreements involving such data to countries of concern, absent specified cybersecurity controls. Actual or alleged violations of these regulations may be punishable by criminal and/or civil sanctions, may result in exclusion from participation in federal and state programs and may restrict our ability to use certain vendors, sites, investigators, or service providers in global clinical trials.
Any actual or alleged failure to comply with data protection laws, including with respect to information relating to our employees and/or clinical patients, could result in reputational harm, monetary fines (such as those imposed by the GDPR and CCPA), civil suits, civil penalties or criminal sanctions and requirements to disclose the breach, and the development of our drug candidates could be delayed. In addition, we continue to be subject to new and evolving data protection laws and regulations from a variety of jurisdictions, and there is a risk that our systems and processes for managing and protecting data may be found to be inadequate, which could materially adversely affect our business, financial condition and results of operations.
Like many companies, we may use artificial intelligence (AI) technologies, including generative AI, which presents risks and challenges that can impact our business, including by posing cybersecurity risks to our confidential information, proprietary information, and personal data.
We use AI technologies, including generative AI and commercially available tools, in the operation of our business. The use of new and evolving technologies, such as AI, may present risks and challenges that can adversely impact our business and reputation, including cybersecurity, data privacy, information technology, confidentiality, regulatory, legal, operational, competitive, intellectual property, and other risks. Specifically, risks related to accuracy, bias, AI hallucinations, discrimination, harmful content, misinformation, fraud, scams, targeted attacks (including model poisoning or data poisoning), surveillance, data leakage, bias and inequality, environmental and other harms may flow from our development or use of AI technologies. Certain
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AI tools may increase the risk of unauthorized disclosure of confidential information, compromise of proprietary intellectual property, or inadvertent inclusion of third-party intellectual property or other protected material, which could result in disputes or claims of infringement.
Government and supranational regulation related to AI is evolving as new laws and regulations are implemented globally and could significantly increase the burden and operational cost of compliance in this area, including through requirements related to transparency, accountability, risk management, human oversight, and data governance. We expect to see increasing regulation related to AI governance, use and ethics, which may also increase the burden and cost of research, development and compliance. For example, the EU’s Artificial Intelligence Act (AI Act) entered into force in August 2024 and its requirements are being phased-in through 2028; certain transparency and general-purpose AI obligations began to apply in August 2026 and, following amendments adopted in July 2026, obligations for high-risk AI systems are currently scheduled to apply beginning in December 2027 and August 2028. As currently enacted, the AI Act imposes significant obligations on providers and deployers of high-risk AI systems and general purpose AI models, and encourages providers and deployers of AI systems to account for EU ethical principles when developing and using AI technology. If we develop or deploy AI systems that are governed by the AI Act, we may be required to adopt higher standards of data quality, transparency and human oversight, and adhere to specific and potentially burdensome and costly ethical, accountability and administrative requirements.
In the U.S., the regulatory environment for AI is complex and uncertain. Over the past year, states have advanced, and in some cases passed, dozens of laws focusing on AI governance and regulation, including on deployment of AI in healthcare settings. At the federal level, the current administration has endorsed a federal moratorium on the enforcement of state AI laws, including through a December 11, 2025, executive order on “Ensuring a National Policy Framework for Artificial Intelligence.” So far, these efforts have not been successful at curtailing state action on AI regulation, contributing to a complicated legislative patchwork, which may be litigated in state and federal courts. In addition, there is continued uncertainty regarding the application of existing federal and state legal frameworks to uses and development of AI, and legal norms and market standards regarding AI continue to evolve. The FDA, for example, issued draft guidance on the use of AI in regulatory decision-making for drug and biological products that centers on the context of use while establishing a credibility assessment framework for establishing and evaluating artificial intelligence model outputs intended to support regulatory decision-making. If we develop or use AI systems governed by such laws or regulations, including as informed by regulatory guidance, we will need to meet higher standards of data quality, transparency, monitoring and human oversight, and we would need to adhere to specific and potentially burdensome and costly ethical, accountability, and administrative requirements, with the potential for significant enforcement or litigation in the event of any perceived non-compliance.
Our operations may involve hazardous materials and are subject to environmental, health, and safety laws and regulations. Compliance with these laws and regulations is costly, and we may incur substantial liability arising from our activities involving the use of hazardous materials.
As a research-based biopharmaceutical company with significant research and development operations, we are subject to extensive environmental, health, and safety laws and regulations, including those governing the use of hazardous materials. Our research and development activities and those who conduct these activities on our behalf involve the controlled use of chemicals, radioactive compounds, and other hazardous materials. The cost of compliance with environmental, health, and safety regulations (including, but not limited to, the handling and disposal of both hazardous and non-hazardous waste) is substantial. If an accident involving these materials or an environmental discharge were to occur, we could be held liable for any resulting damages, or face regulatory actions, which could exceed our resources or insurance coverage.
Risks Related to Investment and Securities
The price of our common stock has, and may continue to fluctuate significantly, which could result in substantial losses for investors and securities class action and shareholder derivative litigation.
Our stock price is volatile. From January 1, 2025 through September 30, 2026, based on closing prices on the Nasdaq Capital Market, the closing price of our common stock ranged from $7.36 to $100.35 per share. In response to volatility in the price of our common stock in the past, plaintiffs’ securities litigation firms have sought information from us and/or shareholders
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as part of their investigation into alleged securities violations and breaches of duties (among other corporate misconduct allegations). Following their investigations, plaintiffs’ securities litigation firms have often initiated legal action, including the filing of class action lawsuits, derivative lawsuits, and other forms of redress. We expect our stock price to remain volatile and we continue to expect the initiation of legal actions by plaintiffs’ securities litigation firms following share price fluctuations. A variety of factors may have a significant effect on the market price of our common stock, including the risks described in this section titled “Risk Factors” and the following:
At times, our stock price has been volatile even in the absence of significant news or developments. The stock prices of biotechnology companies and securities markets generally have been subject to dramatic price swings in recent years.
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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Further, 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 benefit 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.
General Risk Factors
We significantly rely on information technology systems and infrastructure, and any failure, inadequacy, damage, interruption, compromise, incident or breach, or security lapse of that technology within our internal computer systems and infrastructure, or those of our partners, vendors, CROs, CMOs or other contractors or consultants, may result in a material disruption of our development programs and our operations and financial condition.
As part of our business, we collect, store and transmit large amounts of confidential information, proprietary or other sensitive information, including intellectual property and personal data. Despite the implementation of security measures, our internal computer systems and infrastructure or those of our partners, vendors, contract research organizations (CROs), contract manufacturing organizations (CMOs) and other contractors and consultants are vulnerable to loss, damage, compromise, interruption, denial-of-service, unauthorized access, or misappropriation.
Like other companies in our industry, we, and our third party vendors, have experienced threats and cybersecurity incidents relating to our information technology systems and infrastructure. Cybersecurity incidents and data breaches have been increasing in frequency, levels of persistence, sophistication and intensity, and can include unauthorized activity by our employees, contractors and other third parties, as well as by third parties who use cyberattack techniques involving malware, ransomware, hacking and social engineering fraud (including phishing attacks) and business email compromises, among others. Additionally, the risk of data breaches, cybersecurity incidents, cyber-attacks or other security events may be heightened as a result of new technologies, including artificial intelligence, and an increase in the number of employees who adopted a remote working environment, which may be less secure and more susceptible to hacking attacks or other security compromises or breaches. Our information technology systems and infrastructure, and those of our partners, vendors, CROs, CMOs or other contractors or consultants are also vulnerable to intentional or inadvertent wrongful conduct by employees and vendors, natural disasters, terrorism, war, telecommunication and electrical failures and the types of interruption, compromise and damage described above. Any such compromise or disruption, no matter the origin, may cause an interruption of our operations. For instance, the loss or misappropriation of preclinical data or data from any clinical trial involving our drug candidates could result in delays in our development and regulatory filing efforts and significantly increase our costs. In addition, the loss, corruption or unauthorized disclosure or misuse of our trade secrets, personal data or other confidential and/or proprietary or sensitive information could compromise the commercial viability of one or more of our programs, which would negatively affect our business. Also, the costs to us to investigate, mitigate and remediate cybersecurity incidents or compromises and comply with applicable legal obligations, including breach notification obligations to individuals, regulators, partners and others, could be significant and our reputation could be materially damaged. We could also be exposed to litigation or regulatory investigations or actions by state and federal governmental authorities and non-U.S. authorities, including fines, penalties, and other legal and
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financial exposure and liabilities. Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our privacy and data security obligations. Further, although we maintain cyber liability insurance, this insurance may not provide adequate coverage against potential liabilities related to any experienced cybersecurity incident or breach.
Changes in tax law could adversely affect our business and financial condition.
Our business is subject to numerous international, federal, state, and other governmental laws, rules, and regulations that may adversely affect our operating results, including, taxation and tax policy changes, tax rate changes, new tax laws, or revised tax law interpretations, which individually or in combination may cause our effective tax rate to increase. In the U.S., the rules dealing with federal, state, and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our common stock. In recent years, such changes have been made and changes are likely to continue to occur in the future. Future changes in tax laws could have a material adverse effect on our business, cash flow, financial condition or results of operations.
Global economic and political conditions may negatively affect us and may magnify certain risks that affect our business.
Our operations and performance may be affected by global economic and political conditions. The global economy has recently experienced volatility and disruptions. Adverse macroeconomic conditions, including inflation, economic recession, volatility in the financial markets, supply chain shortages, changes to fiscal and monetary policy or government budget dynamics, promulgations of new executive orders under the Trump administration, and other challenges in the global economy may adversely affect our business and those of our partners. Our operations and performance (or the operations and performance of our partners and service providers) may be negatively affected by war, political or civil unrest or military action, terrorist activity, and unstable governments and legal systems. Sanctions imposed by the U.S., EU and other countries in response to the conflict between Russia and Ukraine and the potential response to such sanctions may have an adverse impact on our business, including our clinical trials, the financial markets and the global economy. Conflicts in Israel, Gaza, Iran and the Middle East may lead to further sanctions, retaliatory attacks, market volatility and uncertainty, any of which could have a material adverse effect on our business.
As a result of global economic and political conditions, some third party payers may delay or be unable to satisfy their reimbursement obligations. Job losses or other economic hardships may also affect patients’ ability to afford healthcare as a result of increased co-pay or deductible obligations, greater cost sensitivity to existing co-pay or deductible obligations, lost healthcare insurance coverage or for other reasons. Our ability to conduct clinical trials in regions experiencing political or civil unrest could negatively affect clinical trial enrollment or the timely completion of a clinical trial. We believe the aforementioned economic conditions have led and could continue to lead to reduced demand for our and our collaboration partners’ drug products, which could have a material adverse effect on our product sales, business and results of operations.
Further, with rising international trade tensions or sanctions, our business may be adversely affected following new or increased tariffs. For example, since 2025 the United States has imposed, modified and in some cases paused or withdrawn tariffs on imports from a number of countries, and other countries have responded with retaliatory measures. Tariffs could result in increased global clinical trial costs as a result of international transportation of clinical drug supplies, as well as the costs of materials and products imported into the U.S. Tariffs, trade restrictions or sanctions imposed by the U.S. or other countries could increase the prices of our and our collaboration partners’ drug products, affect our and our collaboration partners’ ability to commercialize such drug products, or create adverse tax consequences in the U.S. or other countries. As a result, changes in international trade policy, changes in trade agreements and the imposition of tariffs or sanctions by the U.S. or other countries could materially adversely affect our results of operations and financial condition.
Our business could be negatively impacted by corporate citizenship and sustainability matters.
There is an increased focus from certain investors, employees, and other stakeholders concerning corporate citizenship and sustainability matters, which include environmental concerns and social investments. We could fail to meet, or be perceived
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to fail to meet, the expectations of these certain investors, employees and other stakeholders concerning corporate citizenship and sustainability matters, thereby resulting in a negative impact to our business.
If natural disasters or other catastrophic events strike, our business may be harmed.
Our corporate headquarters, where the majority of our operations are based, are located in the San Francisco Bay Area, a region known for seismic activity and a potential terrorist target. In the event of an earthquake or other natural disaster, catastrophic event caused by climate change, political instability, civil unrest, or terrorist event in the region, our business operations would be significantly disrupted and our financial condition would be harmed. Our collaboration partners and important vendors and suppliers to us or our collaboration partners may also be subject to catastrophic events, such as earthquakes, floods, wild fires, hurricanes, tornadoes and pandemics any of which could harm our business (including, for example, by disrupting supply chains important to the success of 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.
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Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities
None, including no purchases of any class of our equity securities by us or any affiliate pursuant to any publicly announced repurchase plan in the three months ended September 30, 2026.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(c) Director and Section 16 Officer Trading Arrangements and Policies
In the fiscal quarter ended September 30, 2026,
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Item 6. Exhibits
Except as so indicated in Exhibit 32.1, the following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
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Description of Documents |
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3.1(1) |
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Certificate of Incorporation of Inhale Therapeutic Systems (Delaware), Inc. |
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3.5(5) |
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Certificate of Amendment to the Amended Certificate of Incorporation of Nektar Therapeutics |
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3.6(6) |
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Certificate of Amendment to the Amended Certificate of Incorporation of Nektar Therapeutics |
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3.7(7) |
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10.1(8) |
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31.1(9) |
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31.2(9) |
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32.1* |
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101.SCH(9) |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
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101.INS(9) |
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Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document. |
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104(9) |
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Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). |
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* Exhibit 32.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall such exhibit be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Securities Exchange Act, except as otherwise stated in such filing.
++ Management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements 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.
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By: |
/s/ LINDA RUBINSTEIN |
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Linda Rubinstein Interim Chief Financial Officer (Principal Financial Officer) |
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Date: November 12, 2026 |
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Exhibit 31.1
CERTIFICATIONS
I, Howard W. Robin, certify that:
Date: November 12, 2026 |
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/s/ HOWARD W. ROBIN |
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Howard W. Robin Chief Executive Officer, President and Director |
Exhibit 31.2
CERTIFICATIONS
I, Linda Rubinstein, certify that:
Date:November 12, 2026 |
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/s/ LINDA RUBINSTEIN |
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Linda Rubinstein Interim Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
SECTION 1350 CERTIFICATIONS*
Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Howard W. Robin, Chief Executive Officer, President and Director of Nektar Therapeutics (the “Company”), and Linda Rubinstein, Interim Chief Financial Officer (Principal Financial Officer) of the Company, each hereby certifies that, to the best of his or her knowledge:
Date: November 12, 2026 |
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/s/ HOWARD W. ROBIN |
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/s/ LINDA RUBINSTEIN |
Howard W. Robin Chief Executive Officer, President and Director |
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Linda Rubinstein Interim Chief Financial Officer (Principal Financial Officer) |
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* This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.