Nektar Therapeutics to cut San Francisco staff to 55 in major reorganization

The company was an early investor in San Francisco's Mission Bay biotech enclave.

Nektar Therapeutics to cut San Francisco staff to 55 in major reorganization

Nektar Therapeutics Inc., one of the pioneering companies in Mission Bay's biotech boom, will reduce its San Francisco workforce to just 55 employees as part of the second major restructuring the company has undergone in the last year.

The company (NASDAQ : NKTR), also stated that it would focus on immunology and prioritize drugs spun out from its relationship with Eli Lilly and Co.

The restructuring of last year saw Nektar lose more than 500 employees, bringing its total to just 225. It also announced that it would lease out the 135,936 sq. ft. at 360 Third St. with Kilroy Realty Corp. The company moved to its 455 Mission Bay Boulevard headquarters, which is 155 215 square feet. South, two blocks south of Chase Center. It moved there in 2009, as one of the first biotech companies to move into the area around UCSF.

Alexandria Real Estate Equities Inc., NYSE: ARE, has the lease for Mission Bay Boulevard, which runs until January 2030.

Howard Robin, CEO of Nektar, said that the restructuring on Monday, which will save Nektar about $30 million per year, will extend Nektar’s cash runway until mid-2026.

The majority of the company's restructuring, which will be complete by June, is expected to take place after the company has completed its cash, equivalents, and marketable securities of $456 million at the end March.

Nektar's shares rose 3 cents to $1.01 in Monday's after-hours trading. The 52-week range of the stock's price is 60 cents up to $5.18, but its opening price last year was $13.58.

Over the last year, several Bay Area biotech firms have reduced staff or projects. Investors who were attracted to the Covid-19 pandemic early on in the hope of discovering the next big thing have mostly pulled back. This has left companies looking for ways to reduce costs.

Nektar has a number of problems, but they are not all systemic. The restructuring announced in April was a result of clinical trial failures, and the termination of Bristol-Myers Squibb Co's cancer-fighting initiative. The $3.6 billion BMS partnership was based on combining BMS's Opdivo with the Nektar bempegaldesleukin. However, the combinations failed in multiple clinical trials. Nektar also ended a collaboration with SFJ Pharmaceuticals Inc., Pleasanton, around the same drug.

Nektar pinned its hopes on the Lilly partnership and NKTR-255. Lilly's deal promised $250 million in milestone payments and included late-stage and mid-stage programs for lupus, atopic skin conditions and atopic asthma. The lupus drug rezpegaldesleukin or "rezpeg" failed a Phase 2 study in lupus last February. Nektar, on Monday, sounded more conservative, saying that it intended to work with Lilly in order to continue the development of rezpeg under the current deal or if Nektar gained rights to the medication.

NKTR-255, Nektar’s lead cancer drug is currently in a phase II study with Merck KGaA. However, Nektar has said that it will look for a strategic partner to develop the drug.

Nektar reiterated the importance of immunology to its company. It will progress two preclinical pipeline candidate in autoimmune disease and plans to submit an investigational new drugs application to the Food and Drug Administration next year for one of these programs.

Mary Tagliaferri, the current Chief Development officer of the company, will replace Dr. Brian Kotzin as Chief Medical Officer. The company's CFO Jillian Thomsen will also leave in June. Sandra Gardiner is a partner with FLG Partners and has been appointed as the acting CFO.

Ken Franke, current Vice President of Biologics Development and Manufacturing, replaces Kevin Brodbeck as Senior Vice President of Technical Operations.