Nektar Results

Nektar Results

This afternoon after the market closed Nektar Therapeutics (NASDAQ:NKTR) released 2006 second quarter results. During the quarter product sales and royalty revenue was $44.2, this includes three months of Exubera product sales to Pfizer (NYSE:PFE). Scheduled to be launched next month Exubera is the first inhaled insulin product to be approved by the Food and Drug Administration (FDA). For the full year 2006 the company expects $70 to $90 million of Exubera manufacturing and royalty revenue, with most of the Exubera revenue being generated by manufacturing sales to Pfizer.

While there were no surprises in today’s announcement, future announcements could be a different story. Diabetic Investor has learned that there are manufacturing issues with Exubera’s delivery device and full rollout of the product may not happen until late January or early February of next year. Both Pfizer and Nektar have a lot riding on Exubera and neither company has dampened the aggressive sales estimates put out by the Street. While both companies have made clear that the product would be rolled out in phases, the general impression among analysts has been that the product would be widely available next month. During Pfizer’s call last month they went to great lengths to explain the roll out strategy touting the fact that nearly 2300 Pfizer sales reps would be devoted to the product. What they didn’t explain is only a handful of the 2300 will actually get the product.

According to sources in the field, Pfizer’s initial sales efforts will be targeted at high insulin prescribing endocrinologists. Those reps who do get the product are supposed to contact 4 endo’s and ask them to prescribe Exubera to 5 patients each. Interestingly Pfizer has not scaled back sales quotas for the other products carried by these reps, Celeberx® or Lyrica®. It also interesting to note that Pfizer sales reps do not know when in September initial supplies of Exubera will be available. Nothing would be more embarrassing then to get a patient on Exubera only to have that patient not be able to get the product.

Unfortunately during Nektar’s amazingly short call this afternoon, the entire call lasted less than 30 minutes with just three questions being asked, little light was shed on what could be a major issue. It should be noted that Nektar officials appear more enthusiastic over Exubera than Pfizer officials.

Given the reports we have received from the field and our interviews with physicians and potential patients Diabetic Investor remains firm in our belief that Exubera is no more than a niche product.

David Kliff
Diabetic Investor
847-634-4646 fax
224-715-3761 mobile