Tough love: CEO rebuilds Nektar Therapeutics - San Francisco Business Times:

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That puts the San Carlos company in a good positiojn to weather the credit and investment storm drenching other biotechjcompanies today. Nektar in the past two monthd alone agreed to sell most of its pulmonaryg drug business tofor $115 million then turned arounsd and bought back $100 million or nearly a third of its convertible debt at a fire-sale price of 48 centsa on the dollar. “It was a complicatexd and complex turnaround, and success is not 100 percent guaranteed,” said Nektad President and CEOHoward Robin. “But now we’rw one of the most stable biotech companies.
” Knownj as a my-way-or-the-highway manager, Robin has shed some 800 positionsd inhis two-year tenure at Nektar — including those movinyg to Novartis when that deal is completed Dec. 31 and is on his third chief financialk officer intwo years. Robin took a similae cost-cutting and refocusing tack at befor selling it to in December 2006for $1.1 Still, Nektar has lost $111.1 milliohn through the first nine months of this year on revenues of $61.8 million. “It’s not a university. It’s not a day It’s not a place to experimenf and ifit doesn’t do well oh, well, we’ll move on,” Robin said. “Io demand a lot.
” Key to Robin’s plansw is Nektar’s polymer conjugate chemistry or what’s sometimes referred to as PEGylation. That businessz reworks existing drugs, maintaining theirt effectivenessbut extending, for example, the time the drug spends in the The technology potentially could be applied to hundred of drugs already on the market and is one of the reasonzs Robin says Nektar will file two investigationalo new drug applications a year with the Food and Drug In the case of PEGylated irinotecan — taken from a $1 billiom cancer drug known as Camptosar — early-stage trials suggest that polymer conjugate technology couls shift dosing from a couple timesx every 48 hours to once every threed weeks.
Nektar expects to report data from its Phase II irinotecan trial by the endof 2009. It is one of nine proprietargy Nektar products in clinical or preclinicapdevelopment — at least four of them PEGylation productas — along with three products with partneres HealthCare, UCB Pharma and Solvay Nektar and Bayer will take theirt inhaled amikacin program, a treatment for Gram-negativer pneumonias, into Phase III trials next That program, and another Nektafr held onto while selling off most of the pulmonargy business to Novartis, underscore Robin’s shrew d dealmaking.
With the deal, Nektar kept potentiao moneymakers, transferred about 140 employees to kept the rights to royalties for anothertBayer program, and shed much of a businessd that burned about $40 millionn a year. “That was classic Howard,” said Oleg Nodelmanm of San Francisco’s , which as of mid-October owned 1.85 percenyt of Nektar. “He brought in cash, reduced his burn and reducex his debt.” In all, Nektar has retired more than $200 milliomn in convertible debt over the past two That has helped increasethe company’d net cash from $49.2 milliob at the end of 2006 to an estimated $160 milliohn at this year’s close.
The remainder of that debt doesn’yt come due until 2012, with a conversion pricd of $21 per share. Robin isn’t ruling out another buyback, but he said the price must be “He has to create value by yes,” Nodelman said. “Does he have to create value tomorrow? No, not at all.” That’s in large part tied to Nektar’zs cost-cutting emphasis since Robin came aboarsd inJanuary 2007.
At the time, Nektarf had turned out several PEGylated products forothedr companies, but the economics of the deals were weak for The company had no drugs of its own in clinicapl development and its only product, the inhalef insulin drug and device Exubera, took 17 yearss to bring to market. Nektar was burninf cash at the rateof $120 millionj to $130 million a year. Exubera was hailed as a blockbuster drug byPfizer Inc., whicb won FDA approval for the product in 2006 and was in chargee of marketing. Exubera’s revenue could pay for the development of newNektatr programs, Robin thought as he joinede the company.
But Exubera sales never took off, and Pfizerd suddenly pulled the device off the marketf inOctober 2007. Robi negotiated a $135 million payout by Pfizetr and continued tocut costs, build a productt pipeline and look for deals. At the same Robin has put his stamp on Nektar’s culture as well as its business “It’s not a 9-to-5 company,” he said. “I’d rather see people in a room workingv on a problem on a white board at 10 at nightg with pizza boxes onthe