10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________________________________________________________

FORM 10-Q

_______________________________________________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

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: 0-24006

_______________________________________________________________________

NEKTAR THERAPEUTICS

(Exact name of registrant as specified in its charter)

_______________________________________________________________________

Delaware	94-3134940
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

455 Mission Bay Boulevard South

San Francisco, California 94158

(Address of principal executive offices)

415-482-5300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	NKTR	NASDAQ Global Select Market

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.  Yes x  No ☐

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).  Yes x  No ☐

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	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

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 187,404,772 on July 29, 2022.

NEKTAR THERAPEUTICS

INDEX

	Summary of Risks	4
PART I: FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements — Unaudited:	6
	Condensed Consolidated Balance Sheets — June 30, 2022 and December 31, 2021	6
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021	7
	Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2022 and 2021	8
	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II: OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	55
Signatures		57

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 strategic reorganization and cost restructuring plans, 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 our collaboration arrangements, commercialization activities and product sales levels by our collaboration partners 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 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 I, 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 Item IA in this Form 10-Q, which risks include, among others:

•Risks Related to our Research and Development Efforts:

◦clinical drug development is a lengthy and uncertain process and we may not be able to generate and develop successful drug candidates for commercial use;

◦we are highly dependent on the success of NKTR-358 and NKTR-255 and our business will be significantly harmed if either NKTR-358 or NKTR-255 do not continue to advance in clinical studies;

◦the outcomes from competitive oncology and immunology therapy clinical trials, and the discovery and development of new potential oncology and immunology therapies could have a material and adverse impact on the value of our pipeline;

◦significant competition for our polymer conjugate chemistry technology platforms and our products and drug candidates could make our technologies, drug products or drug candidates obsolete or uncompetitive;

◦preliminary and interim data from our clinical studies 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; and

◦clinical trials for any of our drug candidates could be delayed for a variety of reasons.

•Risks Related to our Financial Condition and Capital Requirements:

◦we are implementing a strategic reorganization plan focused on prioritizing key research and development efforts, as well as a cost restructuring plan, and our business will be significantly harmed if either of these plans is unsuccessful;

◦we have substantial future capital requirements and there is a risk we may not have access to sufficient capital to meet our current business plan;

◦our revenue is exclusively derived from our collaboration agreements. If we are unable to establish and maintain collaboration partnerships with attractive commercial terms, including significant development milestones and research and development cost-sharing, our business, results of operations and financial condition could suffer; and

◦we expect to continue to incur substantial net losses from operations and may not achieve or sustain profitability in the future.

•Risks Related to our Collaboration Partners:

◦we are highly dependent on Eli Lilly and Company, our collaboration partner for NKTR-358, our lead drug candidate, to initiate, properly conduct and prioritize clinical trials for NKTR-358 and to perform important additional development and commercialization activities, and our business will be significantly harmed if our partner’s actions deprioritize or otherwise harm the prospects of NKTR-358; and

◦the operations of our collaboration partners have been affected by the COVID-19 pandemic in the past, and it is possible that the COVID-19 pandemic will affect the operations of our collaboration partners in the future, which would cause delays in initiating or completing one or more clinical trials involving our drug candidates.

•Risks Related to the COVID-19 Pandemic:

4

◦our business could be adversely affected by the effects of health epidemics, including the ongoing COVID-19 pandemic. While the COVID-19 pandemic has not had a material adverse effect on our current operations, the ongoing challenges associated with the pandemic, including the emergence of new variants of the coronavirus and resurgences in the number and rates of infections, and shortages in raw materials and equipment and other supply chain disruptions, could have a material negative impact on our business and our clinical trial timelines.

•Risks Related to Supply and Manufacturing:

◦if we or our contract manufacturers are not able to manufacture drugs or drug substances in sufficient quantities that meet applicable quality standards, our business, financial condition and results of operations could be harmed; and

◦we purchase some of the starting material for drugs and drug candidates from a single source or a limited number of suppliers, and the partial or complete loss of one of these suppliers could cause delays, loss of revenue and contract liability.

•Risks Related to Intellectual Property, Litigation and Regulatory Concerns:

◦we or our partners may not obtain regulatory approval for our drug candidates on a timely basis, or at all;

◦patents may not issue from our patent applications for our drug candidates, patents that have issued may not be enforceable, or additional intellectual property licenses from third parties may be required, which may not be available to us on commercially reasonable terms; and

◦from time to time, we are involved in legal proceedings and may incur substantial litigation costs and liabilities that could adversely affect our business, financial condition and results of operations.

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 par value)

(Unaudited)

	June 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	77,545	$	25,218
Short-term investments	541,771		708,737
Accounts receivable	10,006		22,492
Inventory	16,969		15,801
Other current assets	19,245		23,333
Total current assets	665,536		795,581
Long-term investments	8,928		64,828
Property, plant and equipment, net	39,792		60,510
Operating lease right-of-use assets	68,996		117,025
Goodwill	76,501		76,501
Other assets	2,234		2,744
Total assets	$	861,987	$	1,117,189
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	12,346	$	9,747
Accrued compensation	30,323		15,735
Accrued clinical trial expenses	29,234		26,809
Other accrued expenses	13,035		15,468
Operating lease liabilities, current portion	20,047		17,441
Total current liabilities	104,985		85,200
Operating lease liabilities, less current portion	119,415		125,736
Development derivative liability	—		27,726
Liabilities related to the sales of future royalties, net	176,775		195,427
Other long-term liabilities	2,080		3,592
Total liabilities	403,255		437,681
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000 shares authorized; no shares designated or outstanding at June 30, 2022 or December 31, 2021, respectively	—		—
Common stock, $0.0001 par value; 300,000 shares authorized; 187,405 shares and 185,468 shares outstanding at June 30, 2022 and December 31, 2021, respectively	19		19
Capital in excess of par value	3,549,360		3,516,641
Accumulated other comprehensive loss	(8,191)		(4,157)
Accumulated deficit	(3,082,456)		(2,832,995)
Total stockholders’ equity	458,732		679,508
Total liabilities and stockholders’ equity	$	861,987	$	1,117,189

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 per share information)

(Unaudited)

	Three Months ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue:
Product sales	$	5,312	$	7,846	$	11,000	$	12,641
Non-cash royalty revenue related to the sales of future royalties	16,264		20,456		33,825		39,254
License, collaboration and other revenue	9		28		1,582		82
Total revenue	21,585		28,330		46,407		51,977
Operating costs and expenses:
Cost of goods sold	5,115		7,667		10,430		13,423
Research and development	42,740		101,313		149,993		196,917
General and administrative	20,521		29,555		47,860		61,234
Restructuring, impairment and other costs of terminated program	106,045		—		107,520		—
Total operating costs and expenses	174,421		138,535		315,803		271,574
Loss from operations	(152,836)		(110,205)		(269,396)		(219,597)
Non-operating income (expense):
Change in fair value of development derivative liability	—		(2,713)		33,427		(4,312)
Non-cash interest expense on liabilities related to the sales of future royalties	(7,228)		(13,089)		(14,757)		(26,385)
Interest income and other income (expense), net	1,096		845		1,491		2,257
Total non-operating income (expense), net	(6,132)		(14,957)		20,161		(28,440)
Loss before provision for income taxes	(158,968)		(125,162)		(249,235)		(248,037)
Provision for income taxes	100		357		226		449
Net loss	$	(159,068)	$	(125,519)	$	(249,461)	$	(248,486)
Basic and diluted net loss per share	$	(0.85)	$	(0.69)	$	(1.34)	$	(1.37)
Weighted average shares outstanding used in computing basic and diluted net loss per share	186,800		182,698		186,323		182,038

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)

	Three Months ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net loss	$	(159,068)	$	(125,519)	$	(249,461)	$	(248,486)
Other comprehensive income (loss):
Net unrealized gain (loss) on available-for-sale investments	(988)		(64)		(3,079)		(830)
Net foreign currency translation gain (loss)	(671)		(215)		(955)		(275)
Other comprehensive income (loss)	(1,659)		(279)		(4,034)		(1,105)
Comprehensive loss	$	(160,727)	$	(125,798)	$	(253,495)	$	(249,591)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Common Shares	Par Value		Capital in Excess of Par Value		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Balance at December 31, 2020	180,091	$	18	$	3,388,730	$	(2,295)	$	(2,309,158)	$	1,077,295
Shares issued under equity compensation plans	2,199	—		17,106		—		—		17,106
Stock-based compensation	—	—		23,898		—		—		23,898
Comprehensive income (loss)	—	—		—		(826)		(122,967)		(123,793)
Balance at March 31, 2021	182,290	$	18	$	3,429,734	$	(3,121)	$	(2,432,125)	$	994,506
Shares issued under equity compensation plans	1,483	—		12,553		—		—		12,553
Stock-based compensation	—	—		23,714		—		—		23,714
Comprehensive income (loss)	—	—		—		(279)		(125,519)		(125,798)
Balance at June 30, 2021	183,773	$	18	$	3,466,001	$	(3,400)	$	(2,557,644)	$	904,975

	Common Shares	Par Value		Capital in Excess of Par Value		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Balance at December 31, 2021	185,468	$	19	$	3,516,641	$	(4,157)	$	(2,832,995)	$	679,508
Shares issued under equity compensation plans	806	—		188		—		—		188
Stock-based compensation	—	—		20,961		—		—		20,961
Comprehensive income (loss)	—	—		—		(2,375)		(90,393)		(92,768)
Balance at March 31, 2022	186,274	$	19	$	3,537,790	$	(6,532)	$	(2,923,388)	$	607,889
Shares issued under equity compensation plans	1,131	—		467		—		—		467
Stock-based compensation	—	—		11,103		—		—		11,103
Comprehensive income (loss)	—	—		—		(1,659)		(159,068)		(160,727)
Balance at June 30, 2022	187,405	$	19	$	3,549,360	$	(8,191)	$	(3,082,456)	$	458,732

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

9

NEKTAR THERAPEUTICS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(249,461)	$	(248,486)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash royalty revenue related to the sales of future royalties	(33,825)		(39,254)
Non-cash interest expense on liabilities related to the sales of future royalties	14,757		26,385
Change in fair value of development derivative liability	(33,427)		4,312
Non-cash research and development expense	4,951		5,795
Stock-based compensation	32,064		47,612
Depreciation and amortization	7,171		7,090
Impairment of right-of-use assets and property, plant and equipment	57,321		—
Amortization of premiums (discounts), net and other non-cash transactions	700		4,090
Changes in operating assets and liabilities:
Accounts receivable	12,486		10,018
Inventory	(1,168)		676
Operating leases, net	1,486		2,260
Other assets	7,627		11,585
Accounts payable	2,833		(2,101)
Accrued compensation	14,588		14,133
Other accrued expenses	(1,520)		(4,101)
Net cash used in operating activities	(163,417)		(159,986)
Cash flows from investing activities:
Purchases of investments	(247,014)		(527,887)
Maturities of investments	466,423		612,419
Sales of investments	—		5,035
Purchases of property, plant and equipment	(4,983)		(6,157)
Net cash provided by investing activities	214,426		83,410
Cash flows from financing activities:
Proceeds from shares issued under equity compensation plans	655		28,523
Cash receipts from development derivative liability	750		1,500
Net cash provided by financing activities	1,405		30,023
Effect of foreign exchange rates on cash and cash equivalents	(87)		(57)
Net increase (decrease) in cash and cash equivalents	52,327		(46,610)
Cash and cash equivalents at beginning of period	25,218		198,955
Cash and cash equivalents at end of period	$	77,545	$	152,345
Supplemental disclosures of cash flow information:
Operating lease right-of-use asset recognized in exchange for lease liabilities	$	—	$	1,057

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

10

NEKTAR THERAPEUTICS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

Note 1 — Organization and Summary of Significant Accounting Policies

Organization

We are a research-based biopharmaceutical company headquartered in San Francisco, California and incorporated in Delaware. We (individually or with a partner) are developing a pipeline of drug candidates that utilize our advanced polymer conjugate technology platforms, which are designed to enable the development of new molecular entities that target known mechanisms of action. Our research and development pipeline of new investigational drugs includes investigational treatments in oncology and immunology.

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 cash generated from licensing, collaboration and manufacturing agreements and financing transactions. As of June 30, 2022, we had approximately $628.2 million in cash and investments in marketable securities.

Results of Bempegaldesleukin Program and the Restructuring Plan

In March and April 2022, we announced the unsuccessful results from our clinical trials studying bempegaldesleukin in combination with Opdivo® under our Strategic Collaboration Agreement with Bristol-Myers Squibb Company (BMS). Based on these results, we decided to discontinue all of our ongoing clinical trials of bempegaldesleukin in combination with checkpoint inhibitors and tyrosine kinase inhibitors. In April 2022, we also announced new strategic reorganization and cost restructuring plans for the Company’s future:

•On March 14, 2022, BMS and we announced that the registrational trial for bempegaldesleukin in combination with Opdivo® in metastatic melanoma did not meet its primary endpoints and that BMS and we decided to discontinue the registrational trials in metastatic melanoma and adjuvant melanoma. See Note 7 for additional information on our BMS Collaboration Agreement.

•On April 14, 2022, we announced that each of our registrational trials for bempegaldesleukin in combination with Opdivo® in renal cell carcinoma and in cisplatin-ineligible, locally advanced or metastatic urothelial cancer did not meet their respective primary endpoints. Due to these results, BMS and we decided to discontinue these studies and all other ongoing studies for bempegaldesleukin in combination with Opdivo®.

•On April 14, 2022, we announced that, in consultation with SFJ Pharmaceuticals and based upon a recommendation from an independent Data Monitoring Committee, we decided to discontinue our Phase 2/3 study in bempegaldesleukin in combination with Keytruda® in patients with metastatic or unresectable recurrent squamous cell cancer of the head and neck under our Co-Development Agreement with SFJ Pharmaceuticals. See Note 4 for additional information regarding our Co-Development Agreement with SFJ Pharmaceuticals.

•We also announced on April 14, 2022, the discontinuation of our Phase 1/2 PROPEL study of bempegaldesleukin in combination with Keytruda® in locally advanced or metastatic solid tumors, including non-small cell lung cancer. With these announcements on April 14, 2022, subject to activities required for an orderly wind down of the studies, there will be no ongoing clinical development activities of bempegaldesleukin.

•On April 25, 2022, we announced our strategic reorganization and cost restructuring plans (together, the Restructuring Plan), which were reviewed and approved by our Board of Directors on April 14, 2022. Pursuant to the Restructuring Plan, on April 26, 2022, our duly authorized officers implemented certain strategic, operational and organizational steps, including the prioritization of key Phase 2 development programs to advance our early stage research pipeline. In addition, we announced our plan to reduce our workforce by approximately 70% and to close our research facility in India.

We have incurred and expect to incur significant costs resulting from these decisions and plans. See Note 8 for additional information on the effect on our Condensed Consolidated Financial Statements.

11

Basis of Presentation and Principles of Consolidation

Our Condensed Consolidated Financial Statements include the financial position, results of operations and cash flows of Nektar Therapeutics and our wholly-owned subsidiaries. We have eliminated all intercompany accounts and transactions in consolidation.

We prepared our Condensed Consolidated Financial Statements following the requirements of the Securities and Exchange Commission (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. generally accepted accounting principles (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 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. We include translation gains and losses in accumulated other comprehensive loss in the stockholders’ equity section of our Condensed Consolidated Balance Sheets. To date, such cumulative currency translation adjustments have not been significant to our consolidated financial position.

Our comprehensive loss consists of our net loss plus our foreign currency translation gains and losses and unrealized gains and losses on available-for-sale securities. There were no significant reclassifications out of accumulated other comprehensive loss to the statements of operations during the three and six months ended June 30, 2022 and 2021.

The accompanying Condensed Consolidated Financial Statements are unaudited. The Condensed Consolidated Balance Sheet data as of December 31, 2021 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, 2021 filed with the SEC on March 1, 2022. 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. 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 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.

Significant Concentrations

Our customers are primarily pharmaceutical companies that are located in the U.S. and Europe and with whom we have multi-year arrangements. Our accounts receivable balance contains billed and unbilled trade receivables from product sales, milestones (to the extent that they have been achieved and are due from the counterparty), and other contingent payments, as well as reimbursable costs from collaborative research and development agreements. As of June 30, 2022 and December 31, 2021, our accounts receivable includes $7.4 million and $21.4 million, respectively, for unbilled net expense reimbursements from BMS. The remaining accounts receivable relate primarily to product sales. We generally do not require collateral from our customers. We perform a regular review of our customers’ credit risk and payment histories, including payments made after period end. Historically, we have not experienced credit losses from our accounts receivable. We have not recorded reserves for credit losses for the three and six months ended June 30, 2022 and 2021, nor have recorded such an allowance as of June 30, 2022 or December 31, 2021.

We are dependent on our suppliers and contract manufacturers to provide raw materials and drugs of appropriate quality and reliability and to meet applicable contract and regulatory requirements. In certain cases, we rely on single sources of supply of one or more critical materials. Consequently, in the event that supplies are delayed or interrupted for any reason, including as a result of the COVID-19 pandemic, our ability to develop and produce our drug candidates, our ability to supply comparator drugs for our clinical trials, or our ability to meet our supply obligations could be significantly impaired, which could have a material adverse effect on our business, financial condition and results of operations.

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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 only invest in highly-rated securities and limit our exposure to any single issuer, the COVID-19 pandemic or other 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 the COVID-19 pandemic or other 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.

Restructuring

We recognize restructuring charges related to reorganization plans that have been committed to by management when liabilities have been incurred. In connection with these activities, we record restructuring charges at fair value for:

•contractual employee termination benefits provided that the obligations result from services already rendered based on vested rights to such benefits when the payment of benefits becomes probable and the amount can be reasonably estimated,

•one-time employee termination benefits on the communication date from management to the employees provided that management has committed to a plan of termination, the plan identifies the employees and their expected termination dates, the details of termination benefits are complete, and it is unlikely that changes to the plan will be made or the plan will be withdrawn,

•contract termination costs when we cancel the contract in accordance with its terms, and

•costs to be incurred over the remaining contract term without economic benefit to us at the cease-use date.

For one-time employee terminations benefits, we recognize the liability in full on the communication date when future services are not required or amortize the liability ratably over the service period, if required. The fair value of termination benefits reflects our estimates of expected utilization of certain Company-funded post-employment benefits.

See Note 8 for additional information on the severance expense that we recognized for employees terminated in connection with our reduction-in-force.

Long-Lived Asset Impairment

We assess the impairment of long-lived assets whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable. In the case of property, plant and equipment and right-of-use assets for our leases, we determine whether there has been an impairment by comparing the carrying value of the asset to the anticipated undiscounted net cash flows associated with the asset. If such cash flows are less than the carrying value, we write down the asset to its fair value, which may be measured as anticipated net cash flows associated with the asset, discounted at a rate that we believe a market participant would utilize to reflect the risks associated with the cash flows, such as credit risk. See Note 8 for additional information regarding the impairment charge we recorded in connection with our leased facilities and certain property and equipment.

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
	June 30, 2022		December 31, 2021
Cash and cash equivalents	$	77,545	$	25,218
Short-term investments	541,771		708,737
Long-term investments	8,928		64,828
Total cash and investments in marketable securities	$	628,244	$	798,783

We invest in liquid, high quality debt securities which are subject to interest rate risk. To minimize the exposure due to an adverse shift in interest rates, we invest in securities with maturities of two years or less and maintain a weighted average maturity of one year or less. As of June 30, 2022 and December 31, 2021, all of our long-term investments had maturities between one and two years.

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Our portfolio of cash and investments in marketable securities includes (in thousands):

	Fair Value Hierarchy Level	June 30, 2022								December 31, 2021
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Fair Value
Corporate notes and bonds	2	$	141,416	$	—	$	(1,505)	$	139,911	$	278,121
Corporate commercial paper	2	415,106		—		(2,232)		412,874		478,629
Obligations of U.S. government agencies	2	4,880		—		(5)		4,875		5,875
Available-for-sale investments		$	561,402	$	—	$	(3,742)	$	557,660	$	762,625
Money market funds	1							42,342		23,968
Certificates of deposit	2							9,516		10,940
Cash	N/A							18,726		1,250
Total cash and investments in marketable securities								$	628,244	$	798,783

For the three and six months ended June 30, 2022 and 2021, there were no transfers between Level 1 and Level 2 of the fair value hierarchy. At December 31, 2021, our gross unrealized losses totaled $0.7 million, and our gross unrealized gains were insignificant.

Note 3 — Inventory

Inventory consists of the following (in thousands):

	June 30, 2022		December 31, 2021
Raw materials	$	2,099	$	3,166
Work-in-process	13,837		9,342
Finished goods	1,033		3,293
Total inventory	$	16,969	$	15,801

We manufacture finished goods inventory upon receipt of firm purchase orders, and we may manufacture certain intermediate work-in-process materials and purchase raw materials based on purchase forecasts from our collaboration partners. We include direct materials, direct labor, and manufacturing overhead in inventory and determine cost on a first-in, first-out basis for raw materials and on a specific identification basis for work-in-process and finished goods. We value inventory at the lower of cost or net realizable value, and we write down defective or excess inventory to net realizable value based on historical experience or projected usage. We expense inventory related to our research and development activities as manufactured by us or when purchased.

Note 4 — Co-Development Agreement with SFJ Pharmaceuticals and Development Derivative Liability

On February 12, 2021, we entered into a Co-Development Agreement (the SFJ Agreement) with SFJ Pharmaceuticals XII, L.P., a SFJ Pharmaceuticals Group company (SFJ), pursuant to which SFJ would pay up to $150.0 million in committed funding to support a Phase 2/3 study of bempegaldesleukin in combination with Keytruda® (pembrolizumab) for first-line treatment of patients with metastatic or unresectable recurrent squamous cell carcinoma of the head and neck (the SCCHN Clinical Trial) whose tumors express PD-L1 (the SCCHN Indication). SFJ has primary responsibility for the clinical trial management of the SCCHN Clinical Trial, and we are the sponsor of the SCCHN Clinical Trial. The SFJ Agreement provided for us to pay up to $637.5 million in Success Payments in the event of FDA approval of bempegaldesleukin for the metastatic melanoma, the SCCHN Indication, or both, and in the event of FDA approval of one additional bempegaldesleukin indication.

As of March 31, 2022, due to the negative results of the metastatic melanoma trial and initial discussions with SFJ, we concluded that it was remote that SFJ and we would continue the SCCHN Clinical Trial. Accordingly, the fair value of the development derivative liability was reduced to $0 as of March 31, 2022, and we recognized a corresponding gain in the Change in fair value of development derivative liability. As discussed in Note 1, on April 14, 2022, BMS and we decided to end the development for bempegaldesleukin in combination with Opdivo® and that all other ongoing studies in the bempegaldesleukin program would be discontinued. We also announced that SFJ and we agreed to discontinue the SCCHN Clinical Trial.

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Accordingly, SFJ will not be entitled to any Success Payments, and SFJ has the responsibility to wind down the SCCHN Clinical Trial at its sole cost. SFJ has no right to seek reimbursement from us for any costs incurred for the SCCHN Clinical Trial.

We presented the SFJ Agreement as a Development derivative liability in our Condensed Consolidated Balance Sheets, which we remeasured to fair value at each reporting date. As SFJ conducted the SCCHN Clinical Trial, we recorded non-cash research and development expense with a corresponding increase to the development derivative liability, and as SFJ remitted funding to us to support our internal costs of conducting the trial, we also recorded a corresponding increase to the development derivative liability. We presented the gain (loss) from the remeasurement as change in fair value of development derivative liability in our Condensed Consolidated Statements of Operations.

The following table presents the changes in the development derivative liability:

		Three months ended
	Fair Value Hierarchy Level	June 30, 2022		June 30, 2021
Fair value as of March 31, 2022 and 2021, respectively	3	$	—	$	4,597
Non-cash research and development expense		—		3,547
Cash receipts from SFJ		—		750
Change in the fair value of development derivative liability		—		2,713
Fair value at end of period	3	$	—	$	11,607

		Six months ended
	Fair Value Hierarchy Level	June 30, 2022			June 30, 2021
Fair value as of December 31, 2021 and February 12, 2021 (inception), respectively	3	$	27,726		$	—
Non-cash research and development expense		4,951			5,795
Cash receipts from SFJ		750			1,500
Change in the fair value of development derivative liability		(33,427)			4,312
Fair value at end of period	3	$	—	0	$	11,607

Note 5 — Liabilities Related to Sales of Future Royalties

In 2012 and 2020, we sold to RPI Finance Trust (RPI) and entities managed by Healthcare Royalty Management, LLC (collectively, HCR), respectively, our rights to receive royalties under our license and manufacturing agreements with certain pharmaceutical partners as summarized below under the 2012 Purchase and Sale Agreement and the 2020 Purchase and Sale Agreement, respectively:

Drug	Manufacturer	Counterparty under Purchase and Sale Agreement	Date Sold
ADYNOVATE® and ADYNOVI® (brand name for ADYNOVATE® in Europe)	Takeda Pharmaceutical Company Limited	Healthcare Royalty Management, LLC	December 16, 2020
MOVANTIK® (naloxegol tablets) and MOVENTIG® (brand name for MOVANTIK® in Europe)	AstraZeneca AB	Healthcare Royalty Management, LLC	December 16, 2020
REBINYN®	Novo Nordisk Inc., Novo Nordisk A/S and Novo Nordisk A/G	Healthcare Royalty Management, LLC	December 16, 2020
CIMZIA® (certolizumab pegol)	UCB Pharma	RPI Finance Trust	February 24, 2012
MIRCERA® (Continuous Erythropoietin Receptor Activator)	F. Hoffmann-La Roche Ltd	RPI Finance Trust	February 24, 2012

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Due to our ongoing manufacturing obligations in both arrangements, we account for the proceeds as imputed debt (Royalty Obligations) and therefore continue to recognize these non-cash royalties as revenue. As royalties are remitted to RPI and HCR by our licensees, the balances of the respective Royalty Obligations will be effectively repaid over the lives of the agreements. To determine the amortization of the Royalty Obligations, we are required to estimate the total amount of future royalty payments to be received by RPI and HCR, respectively. The sum of these amounts less the net proceeds we received will be recorded as non-cash interest expense over the lives of the respective Royalty Obligations. Additionally, to the extent that the amount or timing of the royalty payments is materially different from our original estimates, we will prospectively adjust the imputed interest rate and the related amortization of the applicable Royalty Obligation. As of June 30, 2022, our imputed interest rates for the arrangements with RPI and HCR were 16% and 15%, respectively.

The following table shows the activity within the liability account of each arrangement (in thousands):

	Period from inception to June 30, 2022
	2012 Purchase and Sale Agreement		2020 Purchase and Sale Agreement		Total
Royalty monetization proceeds	$	124,000	$	150,000	$	274,000
Non-cash royalty revenue	(297,507)		(69,770)		(367,277)
Non-cash interest expense	229,474		29,556		259,030
Payments to RPI	(10,000)		—		(10,000)
Loss on revaluation of liability related to the sale of future royalties (1)	23,522		—		23,522
Liabilities related to the sales of future royalties – ending balance	69,489		109,786		179,275
Less: unamortized transaction costs	—		(2,500)		(2,500)
Liabilities related to the sales of future royalties, net	$	69,489	$	107,286	$	176,775
(1) Loss recognized from Settlement Agreement to resolve UCB’s challenges to our patents, as agreed to by UCB, RPI and us, on October 13, 2021.

Note 6 — 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 least quarterly 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 October 2018, we and certain of our executives were named in a putative securities class action complaint filed in the U.S. District Court for the Northern District of California (Case No. 18-cv-06607, which we refer to as the Mulquin action). The Mulquin plaintiffs have challenged public statements Nektar made, between January 2017 and June 2018, about the clinical trials of bempegaldesleukin. The Mulquin complaint was amended in May 2019. The defendants moved to dismiss and the court granted the motion without prejudice in July 2020. The Mulquin plaintiffs again amended their complaint and the defendants again moved to dismiss. In December 2020, the court dismissed the action with prejudice. The plaintiffs filed a notice of appeal in January 2021 and appellate briefing in the U.S. Court of Appeals for the Ninth Circuit was completed in September 2021. Oral argument occurred on December 10, 2021. On May 19, 2022, the Ninth Circuit affirmed the district court's dismissal of all claims against the defendants.

A derivative action was also filed against certain of the Company’s current and former officers and directors, purportedly on the Company’s behalf. This derivative action is based on the allegations in the Mulquin action and on the premise that the Company’s officers and directors breached their fiduciary duties to the Company. The complaint for this derivative action was filed in February 2021 in the Court of Chancery of the State of Delaware (C.A. No. 2021-0118-PAF). Following a stay in the proceedings during the pendency of the appeal in the Mulquin action, the Company received an amended complaint on July 29, 2022, and the defendants will have until September 12, 2022 to respond to the amended complaint. Given the nature and status of the derivative action, we cannot reasonably estimate a potential future loss or a range of potential future losses. 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 these matters in our Consolidated Balance Sheets at either June 30, 2022 or December 31, 2021.

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Indemnifications in Connection with Commercial Agreements

    As part of our collaboration agreements with our partners related to the license, development, manufacture and supply of drugs and PEGylation materials based on our proprietary technologies and 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.

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 RPI and HCR transactions, however, the time limitation we have to indemnify RPI with respect to any breach of these intellectual property-based representations and warranties has passed. 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 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 are entitled to receive license fees, upfront payments, milestone and other contingent payments, royalties, sales milestone payments, and payments for the manufacture and supply of our proprietary PEGylation materials and/or reimbursement for research and development activities. We generally include our costs of performing these services in research and development expense, except for costs for product sales to our collaboration partners which we include in cost of goods sold. We analyze our agreements to determine whether we should account for the agreements within the scope of ASC 808, and, if so, we analyze whether we should account for any elements under ASC 606.

There have been no material changes to our collaboration agreements in the three and six months ended June 30, 2022, other than as described below for our Strategic Collaboration Agreement with BMS and Note 4 regarding SFJ.

Bristol-Myers Squibb Company (BMS): Bempegaldesleukin, also referred to as NKTR-214

On February 13, 2018, we entered into a Strategic Collaboration Agreement (the BMS Collaboration Agreement) and a Share Purchase Agreement with BMS, both of which became effective on April 3, 2018. Pursuant to the BMS Collaboration Agreement, we and BMS have jointly developed bempegaldesleukin in combination with BMS’s Opdivo®. The parties share the internal and external development costs for bempegaldesleukin in combination regimens based on each party’s relative ownership interest in the compounds included in the regimens. In accordance with the agreement, the parties share development costs for bempegaldesleukin in combination with Opdivo®, 67.5% of costs to BMS and 32.5% to Nektar. The parties share costs for the manufacturing and commercialization of bempegaldesleukin, 35% of the costs to BMS and 65% to Nektar.

Upon the effective date of the BMS Collaboration Agreement in April 2018, BMS paid us a non-refundable upfront cash payment of $1.0 billion and purchased 8,284,600 shares of our common stock pursuant to the Share Purchase Agreement for total additional cash consideration of $850.0 million. In 2020, we received non-refundable milestone payments of $50.0 million in aggregate for the first patient, first visit in the registrational trials in muscle-invasive bladder cancer and adjuvant melanoma.

As discussed in Note 1, on March 14, 2022, we announced our registrational trial in metastatic melanoma did not meet its primary endpoints and that BMS and we decided to discontinue the trials in metastatic melanoma and adjuvant melanoma. On April 14, 2022, we announced that our registrational trials in each of renal cell carcinoma and cisplatin-ineligible, locally advanced or metastatic urothelial cancer did not meet their respective primary endpoints. Due to these results, BMS and we decided that these studies and all other ongoing studies in the program will be discontinued. The decision to terminate the program does not affect the cost-sharing provisions under the BMS Collaboration Agreement. However, without further development of bempegaldesleukin, we will no longer be eligible for the development, regulatory and sales milestones under the arrangement.

We determined that the BMS Collaboration Agreement falls within the scope of ASC 808. As mentioned above, BMS shares certain percentages of development costs incurred by us and we share certain percentages of development costs incurred by

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BMS. We consider these activities to represent collaborative activities under ASC 808 and we recognize such cost sharing proportionately with the performance of the underlying services. We recognized BMS’ reimbursement of our expenses as a reduction of research and development expense and our reimbursement of BMS’ expenses as research and development expense. As discussed in Note 8, beginning in the three months ended June 30, 2022, we began reporting clinical trial, other third-party costs and employee costs for the bempegaldesleukin program in Restructuring, impairment and other costs of program. Accordingly, during the three months ended June 30, 2022, we recorded $7.6 million, as a reduction of such expense for the net reimbursement from BMS. During the six months ended June 30, 2022, we recorded $24.9 million as a reduction of research and development expense for the net reimbursement from BMS, reflecting the reimbursement recorded in the three months ended March 31, 2022. For the three and six months ended June 30, 2021, we recorded $24.8 million and $51.4 million, respectively, as a reduction of research and development expense for the net reimbursement from BMS. As of June 30, 2022, we have recorded an unbilled receivable of $7.4 million from BMS in accounts receivable in our Condensed Consolidated Balance Sheet.

Eli Lilly and Company (Lilly): NKTR-358

On July 23, 2017, we entered into a worldwide license agreement (the Lilly Agreement) with Eli Lilly and Company (Lilly) to co-develop NKTR-358, a novel immunological drug candidate that we invented, pursuant to which we received an initial payment of $150.0 million and are eligible for up to $250.0 million in additional development and regulatory milestones. We are currently in Phase 1B and Phase 2 development, where we share costs with 75% of the costs borne by Lilly and 25% of the costs borne by us. Lilly is responsible for the costs of Phase 3 development, but we retain the option to contribute up to 25% of the costs of Phase 3 development on an indication-by-indication basis in order for us to achieve the maximum royalty level under the Lilly Agreement, and further, if approved, we will have the opportunity to receive a royalty rate up to the low twenties based upon our Phase 3 development cost contribution and the level of annual global product sales. Lilly will be responsible for all costs of global commercialization, and we will have an option to co-promote in the U.S. under certain conditions. A portion of the development milestones may be reduced by 50% under certain conditions, related to the final formulation of the approved product and the timing of prior approval (if any) of competitive products with a similar mechanism of action, which could reduce these milestone payments by 75% if both conditions occur.

The Lilly Agreement will continue until Lilly no longer has any royalty payment obligations or, if earlier, the termination of the agreement in accordance with its terms. The Lilly Agreement may be terminated by Lilly for convenience, and may also be terminated under certain other circumstances, including material breach.

Although we are entitled to significant development milestones under this arrangement, through June 30, 2022, we have excluded such milestones from the transaction price due to the significant uncertainties involved with clinical development. We re-evaluate the transaction price at each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Other

We have other collaboration agreements that have resulted in commercialized products for our collaborations partners. Under these agreements, we may sell our proprietary PEGylation materials for use in these products, and we are entitled to receive royalties based on net sales of these products as well as sales milestones. As discussed in Note 5, we have sold our rights to receive royalties from these other collaboration agreements. Our non-cash royalty revenue which totaled $16.3 million and $33.8 million for the three and six months ended June 30, 2022 and totaled $20.5 million and $39.3 million for the three and six months ended June 30, 2021, respectively, represents revenue for granting licenses which we had satisfied in prior periods.

Additionally, we have a collaboration agreement for a product under development, under which we are entitled to up to a total of $40.0 million of regulatory milestones, as well as sales milestones upon achievement of annual sales targets and royalties based on net sales of commercialized products, if any. However, given the current phase of development of the potential product under this collaboration agreement, we cannot estimate the probability or timing of achieving these milestones, and, therefore, have excluded all development milestones from the transaction price for this agreement.

Note 8 — Restructuring, Impairment and Other Costs of Terminated Program

As discussed in Note 1, because our registrational trials in bempegaldesleukin did not meet their primary endpoints, we decided to discontinue all of our ongoing clinical trials of bempegaldesleukin in combination with checkpoint inhibitors and tyrosine kinase inhibitors, and, during April 2022, we announced the Restructuring Plan to prioritize key Phase 2 development programs, to advance our early stage research pipeline and to reduce our workforce by approximately 70% from approximately

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735 to approximately 225 employees. In connection with these events, we reported the following costs in Restructuring, impairment and other costs of terminated program in the three months ended June 30, 2022:

•Clinical trial expense, other third-party costs and employee costs for the wind down of the bempegaldesleukin program, net of the reimbursement from BMS;

•Severance and related benefit costs pursuant to the Restructuring Plan;

•Impairment of right-of-use assets and property, plant and equipment resulting from the Restructuring Plan, primarily reflecting excess office and laboratory leased spaces in San Francisco, CA; and

•Contract termination and other costs associated with these plans. Previously, during the three months ended March 31, 2022, we recognized an initial $1.5 million in cancellation fees related to certain manufacturing activities for bempegaldesleukin.

In prior periods, we reported the clinical trial costs, other third-party costs and employee costs related to the bempegaldesleukin primarily in research and development expense.

Restructuring, impairment and other costs of terminated program includes the following (in thousands):

	Three months ended		Six months ended
	June 30, 2022
Clinical trial expense, other third-party and employee costs for the wind down of the bempegaldesleukin program	$	20,408	$	20,408
Severance and benefit expense	27,750		27,750
Impairment of right-of-use assets and property, plant and equipment	57,321		57,321
Contract termination and other restructuring costs	566		2,041
Restructuring, impairment and other costs of terminated program	$	106,045	$	107,520

The clinical trial expense, other third-party and employee costs for the wind down of the bempegaldesleukin program for the three and six months ended June 30, 2022 includes a reduction of $7.6 million for the net reimbursement from BMS.

Severance and Benefit Expense

Employees affected by the reduction in force under our Restructuring Plan are entitled to receive severance payments and certain Company funded benefits. We recognized severance and benefit expense in full for employees who were notified of their termination in April 2022 and have no requirements for future service, and we are recognizing expense for employees who are required to render services to receive their severance and benefits over the service period ratably over the service period. This service period began in April 2022 and all will end during 2022. The following table provides details regarding the severance and other termination benefit expense and a reconciliation of such liability for the three months ended June 30, 2022, which we report within Accrued compensation on our Condensed Consolidated Balance Sheet (in thousands):

	For the three months ended June 30, 2022
	No service period		Service period required		Total
Total severance and other termination benefits, at fair value	$	23,588	$	8,829	$	32,417
Liability balance as of March 31, 2022	$	—	$	—	$	—
Expense recognized during the period	23,588		4,162		27,750
Payments during the period	(12,881)		—		(12,881)
Liability balance as of June 30, 2022	$	10,707	$	4,162	$	14,869

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The liability as of June 30, 2022 for employees terminated with no requirements for future service primarily relates to final severance paid in July 2022. We may record adjustments to severance and benefit expense in future periods as our estimates of the costs of benefits change or when an employee terminates before the end of their requisite service period. However, we do not expect that such adjustments will have a material effect on our results of operations or financial condition.

Impairment of Right-of-Use Assets and Property, Plant and Equipment

In connection with our Restructuring Plan, we have consolidated our operations by exiting all of the office space from our leased facility at 360 Third St. and certain laboratory and office spaces at our leased facility at 455 Mission Bay Blvd. South, both in San Francisco, CA. We are seeking to sublease these spaces, while still maintaining sufficient office and laboratory space to allow our team to develop our proprietary programs. We have also terminated all research and development activities at our owned facility in India, which we plan to sell.

As a result of these plans, we reviewed each of our excess spaces for impairment as of May 31, 2022, when management had determined which spaces we would retain and which spaces we may sublease. As part of our impairment evaluation of each excess space, we separately compared the estimated undiscounted income for each sublease to the net book value of the related long-term assets, which include right-of-use assets and certain property, plant and equipment, primarily for leasehold improvements (collectively, sublease assets). We estimated sublease income using market participant assumptions, including the length of time to enter into a sublease and lease payments, which we evaluated using current real estate trends and market conditions. If such income exceeded the net book value of the related assets, we did not record an impairment charge. Otherwise, we recorded an impairment charge by reducing the net book value of the assets to their estimated fair value, which we determined by discounting the estimated sublease income using the estimated borrowing rate of a market participant subtenant, which we estimated to be 6.4%. For our India site, we recorded no impairment charge because the estimated net proceeds from the sale exceed the net book value of the site. We have classified the India facility as an asset held for sale as of June 30, 2022 and report this in other current assets in our Condensed Consolidated Balance Sheet. Additionally, we recorded an impairment expense primarily for software which we plan to abandon and certain excess equipment based on the estimated income from selling such assets. We recorded impairment charges as follows (in thousands):

	Three months ended June 30, 2022
	Property, Plant and Equipment		Operating Lease Right-of-Use Assets		Total
Net book value of impaired facilities before write-off	$	16,348	$	70,920	$	87,268
Less: Fair value of impaired facilities — Level 3 of Fair Value Hierarchy	(6,976)		(28,091)		(35,067)
Impairment expense for facilities	9,372		42,829		52,201
Impairment of other property, plant and equipment	5,120		—		5,120
Total impairment of right-of-use assets and property, plant and equipment	$	14,492	$	42,829	$	57,321

The following table presents our property, plant and equipment as of June 30, 2022 and December 31, 2021, reflecting the effects of the impairment charges and held-for-sale reclassification.

	June 30, 2022		December 31, 2021
Building and leasehold improvements	$	83,158	$	97,385
Laboratory equipment	36,738		42,704
Computer equipment and software	28,391		28,829
Manufacturing equipment	23,743		22,374
Furniture, fixtures, and other	7,318		10,094
Depreciable property, plant and equipment at cost	179,348		201,386
Less: accumulated depreciation	(143,304)		(148,039)
Depreciable property, plant and equipment, net	36,044		53,347
Construction-in-progress	3,748		7,163
Property, plant and equipment, net	$	39,792	$	60,510

We may record adjustments to impairment expense in future periods as we enter into sublease or sale agreements or change our estimates when additional information becomes available to us.

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Note 9 — Stock-Based Compensation

On June 8, 2022, the stockholders of Nektar 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 5,000,000 shares.

In connection with our Restructuring Plan, we recorded the benefit for the forfeitures of stock awards from employees who were terminated as part of our reduction-in-force during the three months ended June 30, 2022. We recognized total stock-based compensation expense in our Condensed Consolidated Statements of Operations as follows (in thousands):

	Three Months Ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Cost of goods sold	$	649	$	716	$	1,317	$	1,443
Research and development	4,751		13,479		16,793		$	27,641
General and administrative	4,781		9,519		13,032		$	18,528
Restructuring, impairment and other costs of terminated program	922		$	—	922		$	—
Total stock-based compensation	$	11,103	$	23,714	$	32,064	$	47,612

We issued stock-based awards of our common stock as follows (shares in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Options granted	85		$	157	107		$	278
Weighted-average grant-date fair value of options granted	$	2.47	$	9.78	$	3.33	$	10.23
RSUs granted	626		520		1,031		887
Weighted-average grant-date fair value of RSUs granted	$	3.97	$	18.20	$	6.10	$	19.21
Shares issued under equity compensation plans	1,131		1,483		1,937		3,682

Note 10 — Net Loss Per Share

We calculate basic net loss per share based on the weighted-average number of common shares outstanding during the periods presented and calculate diluted net loss per share based on the weighted-average number of shares of common stock outstanding, including potentially dilutive securities. For all periods presented in the accompanying Condensed Consolidated Statements of Operations, our net loss available to common stockholders equals the reported net loss.

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. Potentially dilutive securities consisted of weighted-average common shares underlying outstanding stock options and RSUs as follows (in thousands):

	Three Months ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Potentially dilutive securities	20,543	18,352	21,435	18,870

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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 research-based biopharmaceutical company that discovers and develops innovative new medicines in areas of high unmet medical need. Our research and development pipeline of new investigational drugs includes potential therapies for oncology and immunology. We leverage our proprietary and proven chemistry platform to discover and design new drug candidates. These drug candidates utilize our advanced polymer conjugate technology platforms, which are designed to enable the development of new molecular entities that target known mechanisms of action. We continue to make significant investments in new drug discovery and advancing our pipeline of drug candidates as we believe that this is the best strategy to build long-term stockholder value.

In oncology, we focus on developing medicines in immuno-oncology (I-O), which is a therapeutic approach based on targeting biological pathways that stimulate and sustain the body’s immune response in order to fight cancer. In the I-O area, we executed a broad clinical development program to develop bempegaldesleukin (previously referred to as NKTR-214) in combination with Opdivo® (nivolumab) in collaboration with Bristol-Myers Squibb Company (BMS) under our Strategic Collaboration Agreement. We also conducted independent development work evaluating bempegaldesleukin in combination with other checkpoint inhibitors and agents with potential complementary mechanisms of action, including studies evaluating bempegaldesleukin combination with Keytruda® (pembrolizumab). In April 2022, we and BMS jointly announced that the companies would be ending the global clinical development program for bempegaldesleukin in combination with Opdivo® and discontinue all ongoing studies in our collaboration with BMS. We also decided to discontinue all studies of bempegaldesleukin in combination with Keytruda®, as well as our studies of NKTR-262, which was being evaluated in combination with bempegaldesleukin.

In April 2022, we announced new strategic reorganization and cost restructuring plans (together, the Restructuring Plan) focused on prioritizing key research and development efforts that will be most impactful to the Company’s future, including our NKTR-255 and NKTR-358 programs and several core research programs.

NKTR-255 is a biologic that targets the IL-15 pathway in order to activate the body’s innate and adaptive immunity. Activation of the IL-15 pathway enhances the survival and function of natural killer (NK) cells and induces survival of both effector and CD8+ memory T cells. Recombinant human IL-15 is rapidly cleared from the body and must be administered frequently and in high doses limiting its utility due to toxicity. 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. Preclinical findings suggest NKTR-255 has the potential to synergistically combine with antibody-dependent cellular cytotoxicity molecules as well as to enhance CAR-T therapies. We have initiated a Phase 1 dose escalation and expansion clinical study of NKTR-255 in adults with relapsed or refractory non-Hodgkin lymphoma or multiple myeloma, as well as a Phase 1/2 clinical study of NKTR-255 in patients with relapsed or refractory head and neck squamous cell carcinoma or colorectal cancer. We are also continuing our oncology clinical collaboration with Merck KGaA and Pfizer Inc. to evaluate the maintenance regimen of NKTR-255 in combination with avelumab, a PD-L1 inhibitor, in patients with locally advanced or metastatic urothelial carcinoma in the Phase II JAVELIN Bladder Medley study. We are also currently designing a Nektar-sponsored comparative study, which we aim to initiate in the second half of 2022.

In immunology, NKTR-358 targets the underlying immune system imbalance in the body that occurs in patients with autoimmune disease. NKTR-358 is designed to optimally target the IL-2 receptor complex in order to stimulate proliferation and growth of regulatory T cells. NKTR-358 is being developed as a once or twice monthly self-administered injection for a number of autoimmune diseases. In 2017, we entered into a worldwide license agreement with Eli Lilly and Company (Lilly) to develop and commercialize NKTR-358, pursuant to which we received an initial payment of $150.0 million and are eligible for up to an additional $250.0 million for development and regulatory milestones. We have completed our responsibilities for Phase 1 clinical development and certain drug product development and supply activities. We also share Phase 2 development costs with Lilly, with Lilly responsible for 75% and Nektar responsible for 25% of these costs. Lilly is responsible for the costs of Phase 3 development, but we retain the option to contribute up to 25% of the costs of Phase 3 development on an indication-by-indication basis in order for us to achieve the maximum royalty level under the Lilly Agreement, and further, if approved, we will have the opportunity to receive a royalty rate up to the low twenties based upon our Phase 3 development cost contribution and the level of annual global product sales.

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We have completed a Phase 1 dose-finding trial of NKTR-358 to evaluate single-ascending doses of NKTR-358 in approximately 100 healthy patients. We also completed treatment of a Phase 1 multiple-ascending dose trial to evaluate NKTR-358 in patients with systemic lupus erythematosus (SLE). Lilly is conducting two Phase 1b studies in patients with psoriasis and atopic dermatitis, and based on positive interim Phase 1b results in atopic dermatitis announced in December 2021, Lilly is planning to initiate a Phase 2 study in atopic dermatitis. Lilly also initiated a Phase 2 study in SLE in October 2020 and a Phase 2 study in ulcerative colitis in March 2021. In April 2022, we announced that Lilly had informed us that an interim analysis in the Phase 2 study in ulcerative colitis led to the discontinuation of further development in this indication. Lilly also plans to initiate another Phase 2 study in another immune-mediated disease to potentially start in 2023.

We have historically derived all of our revenue and substantial amounts of operating capital from our collaboration agreements. In addition to our collaborations with BMS and Lilly, we have received upfront and milestone payments under a number of other previous collaboration agreements, several of which have resulted in approved drugs, for which we may continue to manufacture the polymer reagents used in the production of the drug products and may be entitled to royalties for net sales of these approved drugs. As of December 31, 2020, however, we have sold the majority of our rights to receive royalties under these arrangements, including:

•2012 Purchase and Sale Agreement: In 2012, we sold all of our rights to receive royalties from CIMZIA® (for the treatment of Crohn’s disease and other autoimmune indications) and MIRCERA® (for the treatment of anemia associated with chronic kidney disease) under our collaborations with UCB Pharma and F. Hoffmann-La Roche Ltd, respectively, to RPI Finance Trust (RPI), an affiliate of Royalty Pharma for $124.0 million.

•2020 Purchase and Sale Agreement: In December 2020, we sold our rights, subject to a cap, to receive royalties from MOVANTIK® / MOEVNTIG® (for the treatment of opioid-induced constipation), ADYNOVATE® / ADYNOVI® (a half-life extension product of Factor VIII) and other hemophilia products, under our arrangements with AstraZeneca AB, Baxalta, Inc. (a wholly owned-subsidiary of Takeda Pharmaceutical Company Ltd.), and Novo Nordisk A/S, respectively, for $150.0 million to entities managed by HealthCare Royalty Management (HCR) under a capped sale arrangement, such that all future royalties return to Nektar if HCR receives $210.0 million in royalties by December 31, 2025 (the 2025 Threshold) or $240.0 million if the 2025 Threshold is not met.

While in the near-term we continue to expect to generate substantially all of our revenue from collaboration arrangements, our long-term plan is to generate significant commercial revenue from proprietary products. Over the next several years, we plan to continue to make significant investments to advance our early drug candidate pipeline. We have several drug candidates in earlier stage clinical development or are being explored in research and that we are preparing to advance into clinical trials in future years. We are cultivating several research programs, including a collaboration with Biolojic Design to develop a unique bivalent antibody targeting TNFR2, as well as two Nektar-developed research programs focused in the areas of oncology and auto-immune disease. We believe that our substantial investment in research and development has the potential to create significant value if one or more of our drug candidates demonstrates positive clinical results, receives regulatory approval in one or more major markets and achieves commercial success.

Our business is subject to significant risks, including the risks inherent in our development efforts, the results of our clinical trials, our dependence on the marketing efforts by our collaboration partners, uncertainties associated with obtaining and 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.”

Effects of the COVID-19 Pandemic

We continue to actively monitor the ongoing COVID-19 pandemic and applicable government recommendations in light of new developments. In particular, the emergence of new variants of the coronavirus and local resurgences in number and rates of infections, and the further spread of the virus may result in the return of prior restrictions or the institution of restrictions in the affected areas, which could have an adverse effect on our business, including our clinical trial timelines. Currently, our operations in research, manufacturing and maintenance that occur within our facilities are continuing in accordance with applicable guidelines and orders. Across all our locations, we have instituted a temporary work from home policy for office personnel who do not need to work on site to maintain productivity and we allow employees to voluntarily return to work on site with appropriate health and safety measures. The safety and well-being of our employees, and the patients and healthcare providers in our clinical trial programs, are of first and foremost importance to us. We believe that the safety measures we are taking and instructing our contractors to take in response to the COVID-19 pandemic meet or exceed the guidance and requirements issued from government and public health officials. We also continue to monitor our supply chains for any disruptions or constraints

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caused by the COVID-19 pandemic. To date, we have not experienced any significant impacts on our supply, but ongoing global shortages in labor, raw materials and equipment could limit our ability to manufacture our products or to supply drug candidates for our clinical trials, or delay our research and development efforts.

We and our partners are currently engaged in the clinical testing of our drug candidates and the COVID-19 pandemic introduces challenges to our clinical development programs which are central to our business. The evolving situation around the COVID-19 pandemic, along with the resulting public health guidance measures that have been put into place, have thus far had varying impacts on the clinical testing of our drug candidates depending on the therapeutic indication, geographic distribution of clinical trial sites, the clinical trial stage, and, in certain cases, our partners’ general corporate approach to the COVID-19 pandemic. Nektar’s Phase 1 clinical study of NKTR-255 in patients with relapsed/refractory hematologic malignancies has enrolled slower than anticipated due to the challenges caused by the COVID-19 pandemic. While we are not currently aware of significant delays by our partners and collaborators caused by the COVID-19 pandemic on clinical trials involving our drug candidates; however, the fluidity of the COVID-19 pandemic precludes any firm estimates as to the ultimate effect this disease will have on clinical trials. Any current assessments of the effects of the COVID-19 pandemic on our clinical programs are difficult to predict and subject to change and, with regard to individual clinical trial sites within these studies, will likely vary by the geographic region in which they are located.

In an effort to mitigate the negative effects of the COVID-19 pandemic on our clinical trials (both in terms of clinical trial timelines and integrity of clinical study data), we have taken steps to help our clinical trial investigators and their teams continue to provide care and uninterrupted access to their patients. Although these steps may have the benefit of mitigating some of the negative effects of the COVID-19 pandemic, these measures may be insufficient to fully address all of the challenges posed by the pandemic.

With respect to financing our near-term business needs, as set forth below in “Key Developments and Trends in Liquidity and Capital Resources,” we estimate we have working capital to fund our current business plans through at least the next twelve months.

Key Developments and Trends in Liquidity and Capital Resources

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. At June 30, 2022, we had approximately $628.2 million in cash and investments in marketable securities.

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Results of Operations

Three and Six Months Ended June 30, 2022 and 2021

Revenue (in thousands, except percentages)

	Three Months Ended June 30,				Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022		2021
Product sales	$	5,312	$	7,846	$	(2,534)	(32)	%
Non-cash royalty revenue related to sales of future royalties	16,264		20,456		(4,192)		(20)	%
License, collaboration and other revenue	9		28		(19)		(68)	%
Total revenue	$	21,585	$	28,330	$	(6,745)	(24)	%

	Six Months Ended June 30,				Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022		2021
Product sales	$	11,000	$	12,641	$	(1,641)	(13)	%
Non-cash royalty revenue related to sales of future royalties	33,825		39,254		(5,429)		(14)	%
License, collaboration and other revenue	1,582		82		1,500		>100%
Total revenue	$	46,407	$	51,977	$	(5,570)	(11)	%

Our revenue is 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. The amount of upfront fees received under our license and collaboration agreements allocated to continuing obligations, such as development or manufacturing and supply commitments, is generally recognized as we deliver products or provide development services. As a result, there may be significant variations in the timing of receipt of cash payments and our recognition of revenue. We make our best estimate of the timing and amount of products and services expected to be required to fulfill our performance obligations. Given the uncertainties in research and development collaborations, significant judgment is required to make these estimates.

Product Sales

Product sales include predominantly fixed price manufacturing and supply agreements with our collaboration partners and are the result of firm purchase orders from those partners. The timing of shipments is based solely on the demand and requirements of our collaboration partners and is not ratable throughout the year.

Product sales decreased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily due to a decrease in product demand from our collaboration partners. We expect product sales for the full year of 2022 to be marginally lower than 2021.

Non-cash Royalty Revenue Related to Sales of Future Royalties

For a discussion of our Non-cash royalty revenue, please see our discussion below in “Non-Cash Royalty Revenue and Non-Cash Interest Expense.”

License, Collaboration and Other Revenue

License, collaboration and other revenue includes the recognition of upfront payments, milestone and other contingent payments received in connection with our license and collaboration agreements and certain research and development activities. The level of license, collaboration and other revenue depends in part upon the estimated recognition period of the upfront payments allocated to continuing performance obligations, the achievement of milestones and other contingent events, the continuation of existing collaborations, the amount of research and development work, and entering into new collaboration agreements, if any. During the six months ended June 30, 2022, we recognized $1.5 million for a license agreement, under which

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we are entitled to no further consideration. As a result of the recognition of this revenue in the six months ended June 30, 2022, we expect license, collaboration and other revenue for 2022 to increase compared to 2021.

The timing and future success of our drug development programs and those of our collaboration partners are subject to a number of risks and uncertainties. See Item 1A. Risk Factors for a discussion of the risks associated with the complex nature of our collaboration agreements.

Cost of Goods Sold and Product Gross Margin (in thousands, except percentages)

	Three Months Ended June 30,						Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022			2021
Cost of goods sold	$	5,115		$	7,667		$	(2,552)	(33)	%
Product gross profit	197			179			18		10	%
Product gross margin	4		%	2		%

	Six Months Ended June 30,						Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022			2021
Cost of goods sold	$	10,430		$	13,423		$	(2,993)	(22)	%
Product gross profit (1)	570			(782)			1,352		>100%
Product gross margin	5		%	(6)		%
(1) Percentage change represents an improvement in the gross margin.

Our strategy is to manufacture and supply polymer reagents to support our proprietary drug candidates or our third-party collaborators where we have a strategic development and commercialization relationship or where we derive substantial economic benefit. We have elected to only enter into and maintain those manufacturing relationships associated with long-term collaboration agreements which include multiple sources of revenue, which we view holistically and in aggregate. We have a predominantly fixed cost base associated with our manufacturing activities. As a result, our product gross profit and margin are significantly impacted by the mix and volume of products sold in each period.

Our product gross margin improved from the three and six months ended June 30, 2021 to the three and six months ended June 30, 2022 due to the mix of manufacturing orders from our customers. Product gross margin was negative for the six months ended June 30, 2021. We have a manufacturing arrangement with a partner that includes a fixed price which is less than the fully burdened manufacturing cost for the reagent, and we expect this situation to continue with this partner in future years. In addition to product sales to this partner, we also receive royalty revenue from this collaboration. In the three and six months ended June 30, 2022 and 2021, the royalty revenue from this collaboration exceeded the related negative gross profit for this customer.

We expect product gross margin to continue to fluctuate in future periods depending on the level and mix of manufacturing orders from our customers. We expect product gross profit to be negative in 2022 as a result of the collaborative arrangement described above.

Research and Development Expense (in thousands, except percentages)

	Three Months Ended June 30,				Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022		2021
Research and development expense	$	42,740	$	101,313	$	(58,573)	(58)	%

	Six Months Ended June 30,				Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022		2021
Research and development expense	$	149,993	$	196,917	$	(46,924)	(24)	%

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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, and stock-based compensation). Research and development expense also includes certain overhead allocations consisting of support and facilities-related costs. Where we perform research and development activities under a joint development collaboration, such as our collaboration with BMS, we record the expense reimbursement from our partners as a reduction to research and development expense, and we record our share of our partners’ expenses as an increase to research and development expense. Under the BMS Collaboration Agreement, BMS generally bears 67.5% of development costs for bempegaldesleukin in combination with Opdivo® and 35% of costs for manufacturing bempegaldesleukin.

As discussed in Note 1, BMS and we have decided to discontinue development of bempegaldesleukin in combination with Opdivo® and will wind down the various clinical trials under the BMS Collaboration Agreement, and we have also decided to discontinue all other development of bempegaldesleukin. The cost sharing under the BMS Collaboration Agreement remains unchanged. Additionally, as discussed in Note 8 to our Condensed Consolidated Financial Statements, we have also implemented the Restructuring Plan to reduce our workforce by approximately 70%. As a result, beginning in the three months ended June 30, 2022, we report clinical trial expense, other third-party costs and employee costs for the bempegaldesleukin program, net of the reimbursement from BMS, within Restructuring, impairment and other costs of terminated program in our Condensed Consolidated Statement of Operations. Because we no longer report these expenses in research and development expense, research and development expense decreased significantly for the three and six months ended June 30, 2022 as compared to the three and six months ended June 30, 2021, respectively, and we expect this to continue for the remainder 2022 as compared to the same period in 2021. Additionally, during the three months ended June 30, 2022, we recorded $7.6 million, as a reduction of Restructuring, impairment and other costs of terminated program for the net reimbursement from BMS. During the six months ended June 30, we recorded $24.9 million as a reduction of research and development expense for the net reimbursement from BMS, reflecting the reimbursement we recorded in the three months ended March 31, 2022. For the three and six months ended June 30, 2021, we recorded $24.8 million and $51.4 million, respectively, as a reduction of research and development expense for the net reimbursement from BMS. Please see our discussion below in Restructuring, impairment and other costs of terminated program for additional information.

We incurred research and development expense in the three and six months ended June 30, 2022 and June 30, 2021 for development costs and manufacturing activities for NKTR-255 and development costs for NKTR-358 as Lilly conducts its Phase 1B and Phase 2 studies, for which we are responsible for 25% of costs and Lilly is responsible for 75% of costs. We expect research and development expense for the development of NKTR-255 and NKTR-358 to increase for 2022 as compared to 2021.

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 2022 and beyond, we believe it is vitally important to continue our substantial investment in a pipeline of new drug candidates to continue to build the value of our drug candidate pipeline and our business. Our discovery research organization is 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:

•the number of patients required for a given clinical study design;

•the length of time required to enroll clinical study participants;

•the number and location of sites included in the clinical studies;

•the clinical study designs required by the health authorities (i.e. primary and secondary endpoints as well as the size of the study population needed to demonstrate efficacy and safety outcomes);

•the potential for changing standards of care for the target patient population;

•the competition for patient recruitment from competitive drug candidates being studied in the same clinical setting;

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•the costs of producing supplies of the drug candidates needed for clinical trials and regulatory submissions;

•the safety and efficacy profile of the drug candidate;

•the use of clinical research organizations to assist with the management of the trials; and

•the costs and timing of, and the ability to secure, approvals from government health authorities.

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 such as the collaboration that we have already completed for NKTR-358, 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.

General and Administrative Expense (in thousands, except percentages)

	Three Months Ended June 30,				Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022		2021
General and administrative expense	$	20,521	$	29,555	$	(9,034)	(31)	%

	Six Months Ended June 30,				Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022		2021
General and administrative expense	$	47,860	$	61,234	$	(13,374)	(22)	%

General and administrative expense includes the cost of administrative staffing, commercial, finance and legal activities. As discussed in Note 8 to our Condensed Consolidated Financial Statements, we have implemented a Restructuring Plan to reduce our workforce by approximately 70%. As a result of our Restructuring Plan, the commercial organization was eliminated and all other bempegaldesleukin-related commercialization activities ceased. Accordingly, general and administrative expense decreased for the three and six months ended June 30, 2022 compared with the three and six months ended June 30, 2021, and we expect this trend to continue for the full year of 2022 as compared to 2021. Beginning in the three months ended June 30, 2022, we report third-party costs and employee compensation costs for the bempegaldesleukin program and severance and benefit costs in Restructuring, impairment and other costs for terminated program.

Restructuring, Impairment and Other Costs of Terminated Program (in thousands, except percentages)

	Three Months Ended June 30,				Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022		2021
Restructuring, impairment and other costs of terminated program	$	106,045	$	—	$	106,045	>100%

	Six Months Ended June 30,				Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022		2021
Restructuring, impairment and other costs of terminated program	$	107,520	$	—	$	107,520	>100%

As discussed in Note 8 to our Condensed Consolidated Financial Statements, following the announcements in March and April 2022 that our registrational trials in bempegaldesleukin failed to meet their primary endpoints, on April 25, 2022, we announced strategic reorganization and cost restructuring plans (together, the Restructuring Plan) to prioritize key Phase 2 development programs, to advance our early stage research pipeline and to reduce our workforce by approximately 70% from approximately 735 to approximately 225 employees. In connection with these events, we reported the following costs in Restructuring, impairment and other costs of terminated program:

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•Clinical trial expense, other third-party costs and employee costs for the wind down of the bempegaldesleukin program, net of the reimbursement from BMS;

•Severance and related benefit costs pursuant to the Restructuring Plan;

•Impairment of right-of-use assets and property, plant and equipment resulting from the Restructuring Plan, primarily reflecting excess office and laboratory leased spaces in San Francisco, CA; and

•Contract termination and other costs associated with these plans to discontinue development of bempegaldesleukin.

The following table presents the components of Restructuring, impairment and other costs of terminated program, as further described and disclosed in Note 8 to our Condensed Consolidated Financial Statements (in thousands):

	Three months ended		Six months ended
	June 30, 2022
Clinical trial expense, other third-party and employee costs for the wind down of the bempegaldesleukin program	$	20,408	$	20,408
Severance and benefit expense	27,750		27,750
Impairment of right-of-use assets and property, plant and equipment	57,321		57,321
Contract termination and other restructuring costs	566		2,041
Restructuring, impairment and other costs of terminated program	$	106,045	$	107,520

We will continue to recognize expenses in future periods for the winddown of the bempegaldesleukin program and related costs, of which we expect to recognize a significant portion in 2022. The ultimate amount of expense will be affected by the timing to complete the full wind down of the clinical trials run by BMS and us and whether or not we are able to enter into subleases and, if we do enter into subleases, the economic terms of those subleases. We will revise our estimates for the costs to wind down these studies for the bempegaldesleukin program, the amount of severance and benefits paid to employees, and our assessment of impairment charges as new information becomes available to us in future periods.

Change in fair value of development derivative liability

	Three Months Ended June 30,				Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022		2021
Change in fair value of development derivative liability (1)	$	—	$	(2,713)	$	2,713	100	%

	Six Months Ended June 30,				Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022		2021
Change in fair value of development derivative liability (1)	$	33,427	$	(4,312)	$	37,739	>100%
(1) Percentage change represents a reduction of the expense or change to income.

As discussed in Note 4 to our Condensed Consolidated Financial Statements, we remeasured the development derivative liability under our co-development agreement with SFJ to fair value at each reporting date. As discussed in Note 4, as of March 31, 2022, due to the results of the metastatic melanoma trial, we concluded that it was remote that SFJ and we would continue the clinical trial in head and neck cancer. Accordingly, we reduced the liability to $0 as of March 31, 2022 and recognized a corresponding gain in the change in fair value of development derivative liability. As a result of the decision to discontinue the clinical trial in head and neck cancer, we do not expect to record any future significant adjustments for the change in fair value.

The expense recorded for the change in fair value for the three and six months ended June 30, 2021 primarily reflected the accretion of our obligation to potentially pay Success Payments to SFJ using our imputed borrowing rate.

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Non-Cash Royalty Revenue and Non-Cash Interest Expense

	Three Months Ended June 30,				Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022		2021
Non-cash royalty revenue related to the sales of future royalties	$	16,264	$	20,456	$	(4,192)	(20)	%
					(Increase) / Decrease 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
Non-cash interest expense on liability related to the sales of future royalties	$	(7,228)	$	(13,089)	$	5,861	(45)	%

	Six Months Ended June 30,				Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022		2021
Non-cash royalty revenue related to the sales of future royalties	$	33,825	$	39,254	$	(5,429)	(14)	%
					(Increase) / Decrease 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
Non-cash interest expense on liability related to the sales of future royalties	$	(14,757)	$	(26,385)	$	11,628	(44)	%

As discussed in Note 5 to our Condensed Consolidated Financial Statements, we recognize non-cash royalty revenue for the 2012 Purchase and Sale Agreement and the 2020 Purchase and Sale Agreement.

Non-cash royalty revenue decreased for the three and six months ended June 30, 2022 as compared to the three and six months ended June 30, 2021. Non-cash interest expense decreased significantly for the three and six months ended June 30, 2022 as compared to the three and six months ended June 30, 2021

2012 Purchase and Sale Agreement

The decrease in the non-cash interest expense in 2022 resulted from the decrease in the interest rate from 48% in the three and six months ended June 30, 2021 to 16% for the three six months ended June 30, 2022 as a result of the revaluation of the liability, which we recognized in the three months ended December 31, 2021.

To resolve UCB’s challenges to our patents and their resulting obligation to pay us royalties on net sales of CIMZIA® which we had sold to RPI, RPI and UCB negotiated a reduction in the royalty term and decreased royalty rates over the remaining term, which was implemented through the Settlement Agreement between UCB and us. As a result of accounting for the Settlement Agreement as a debt modification during the three months ended December 31, 2021, we remeasured the liability to fair value using a discount rate of 16%. The Settlement Agreement and revaluation do not affect our cash flows, and the net income statement effect over the term of 2012 Purchase and Sale Agreement remains unchanged.

Over the term of this arrangement, the net proceeds of the transaction of $114.0 million, consisting of the original proceeds of $124.0 million, net of $10.0 million in payments from us to RPI, is amortized as the difference between the non-cash royalty revenue and the sum of the non-cash interest expense and the loss on the revaluation of the liability. To date, we have amortized $44.5 million of the net proceeds. We periodically assess future non-cash royalty revenues, and we may adjust the prospective effective interest rate based on our best estimates of future non-cash royalty revenue such that future non-cash interest expense will amortize the remaining $69.5 million of the net proceeds, since RPI receives all of the benefits of the increases in future royalties. There are a number of factors that could materially affect our estimated interest rate, in particular, the amount and timing of royalty payments from future net sales of CIMZIA® and MIRCERA®. As a result, future interest rates could differ significantly, and we will adjust any such change in our estimated interest rate prospectively.

2020 Purchase and Sale Agreement

To date, we have amortized $40.2 million of the proceeds. We periodically assess future non-cash royalty revenues, and we may adjust the prospective effective interest rate based on our best estimates of future non-cash royalty revenue such that future non-cash interest expense will amortize the remaining $109.8 million. Our current estimate of the imputed interest rate

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reflects that our estimates of sales of MOVANTIK®, ADYNOVATE® and REBINYN® will result in meeting the 2025 Threshold. Because the 2025 Threshold of $210.0 million and the increase in the threshold to $240.0 million (if the 2025 Threshold is not timely achieved) limit the amount of royalties payable to HCR, the potential for the implicit interest rate to vary is more limited. Instead, we will receive the benefit of net sales if they exceed the threshold, but do not bear risk of loss or payments to HCR if royalties are less than expected.

Interest Income and Other Income (Expense), net (in thousands, except percentages)

	Three Months Ended June 30,				Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022		2021
Interest income and other income (expense), net	$	1,096	$	845	$	251	30	%

	Six Months Ended June 30,		Increase/ (Decrease) 2022 vs. 2021		Percentage Increase/ (Decrease) 2022 vs. 2021
	2022	2021
Interest income and other income (expense), net	1,491	2,257	$	(766)	(34)	%

Interest income and other income (expense) increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2020 but decreased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. The year-to-date decrease was due to lower investment balances which have been utilized to fund our operations. We expect that our interest income and other income (expense), net will decrease for 2022 compared to 2021 for the same reason.

Liquidity and Capital Resources

We have financed our operations primarily through revenue from upfront and milestone payments under our strategic collaboration agreements, royalties and product sales, as well as public and private placements of debt and equity securities. As of June 30, 2022, we had approximately $628.2 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, which includes the payments for the winddown of the bempegaldesleukin program, as further disclosed in Note 8 to our Condensed Consolidated Financial Statements.

We expect the clinical development of our drug candidates, including NKTR-358 and NKTR-255, 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 the past, we have received a number of significant payments from collaboration agreements and other significant transactions, including $1.9 billion in total consideration received under our arrangement with BMS, development cost reimbursement from BMS, and a $150.0 million upfront payment from Lilly for our collaboration agreement for NKTR-358. In the future, we have the opportunity to receive up to $250.0 million in milestone payments under our collaboration with Lilly.

Our current business is subject to significant uncertainties and risks as a result of, among other factors, clinical and regulatory outcomes for NKTR-358 and NKTR-255, the sales levels for those products for which we are entitled to royalties, if and when they are approved, whether, when and on what terms we are able to enter into new collaboration transactions, expenses being higher than anticipated, unplanned expenses, cash receipts being lower than anticipated, and the need to satisfy contingent liabilities, including litigation matters and indemnification obligations.

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.

In the short term, we do not anticipate that the effects of the COVID-19 pandemic will have a material effect on our results of operations or financial position since we do not generate significant cash flows from recurring revenues and our revenues are generally less affected by regulatory restrictions and guidelines that have been implemented in response to the pandemic. However, if delays caused by the COVID-19 pandemic in commencing and enrolling patients in our clinical trials or

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those run by our partners result in a delay in completing these trials, our or our partner’s ability to file for regulatory approval and commercialize these products (if approved) and receive associated milestone payments may also be delayed.

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 the COVID-19 pandemic or other 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.

We currently have an effective shelf registration statement on Form S-3 (the 2021 Shelf Registration Statement) on file with the Securities and Exchange Commission, which expires in March 2024. The 2021 Shelf Registration Statement currently permits the offering, issuance and sale by us of up to an aggregate offering price of $300.0 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination, all of which may be offered, issued and sold in “at-the-market” sales pursuant to an equity distribution agreement with Cowen and Company, LLC (the Equity Distribution Agreement). No securities have been sold under the 2021 Shelf Registration Statement or the Equity Distribution Agreement.

Cash flows from operating activities

Cash flows used in operating activities for the six months ended June 30, 2022 and 2021 totaled $163.4 million and $160.0 million, respectively.

We expect that cash flows used in operating activities, excluding upfront, milestone and other contingent payments received, if any, will decrease for 2022 as compared to 2021 as a result of the various cost restructuring activities described above.

Cash flows from investing activities

During the six months ended June 30, 2022 and 2021, the maturities and sales of our investments, net of purchases, totaled $219.4 million and $89.6 million, respectively, which we used to fund our operations. Our maturities and sales of investments, net of purchases was lower during the six months ended June 30, 2021 as compared to the six months ended June 30, 2022, because we purchased securities in early 2021, utilizing the $150.0 million in proceeds from the 2020 Purchase and Sale Agreement that were included in cash equivalents at December 31, 2020.

We paid $5.0 million and $6.2 million for the purchase or construction of property, plant and equipment in the six months ended June 30, 2022 and 2021, respectively.

Cash flows from financing activities

We received proceeds from issuance of common stock related to our employee option and stock purchase plans of $0.7 million and $28.5 million in the six months ended June 30, 2022 and 2021, respectively. Additionally, during the six months ended June 30, 2022 and 2021, we received $0.8 million and $1.5 million, respectively, from SFJ pursuant to our co-development agreement.

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. See Note 1 and Note 8 to our Condensed Consolidated Financial Statements for our accounting policies and estimates related to the severance and benefits and the impairment of right-of-use assets and property, plant and equipment. Other than these accounting policies and estimates, there have been no material changes to our critical accounting policies and estimates discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our market risks at June 30, 2022 have not changed materially from those discussed in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2021 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. However, there was no change in our internal control over financial reporting that occurred in the three months ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Specifically, despite the fact that most of our office-based employees are working remotely due to the COVID-19 pandemic, we do not believe that our adjustments to how we work have materially impacted our internal controls over financial reporting. We continue to monitor and assess the potential impact of the COVID-19 pandemic, and the related regulatory and government guidance that have been issued in response to the pandemic, on our internal controls and strive to minimize the impact on our internal control design and operating effectiveness.

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 6 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, 2021.

Risks Related to our Business

We are highly dependent on the success of drug candidates, including NKTR-358 and NKTR-255. If these drug candidates fail in clinical development our business will be significantly harmed.

Our future success is highly dependent on the clinical success of our drug candidates, including NKTR-358 and NKTR-255. In general, most investigational drugs, including immunology and I-O drug candidates such as NKTR-358 and NKTR-255, respectively, 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. Further, if Lilly, our collaboration partner for NKTR-358, delays the initiation or completion of one or more clinical trials for reasons outside of our control, or is not successful, it would materially harm our market valuation, prospects, financial condition and results of operations. For example, under our collaboration agreement with Lilly, we are eligible for up to $250.0 million in additional development and regulatory milestones, and a royalty rate up to the low twenties based upon our Phase 3 development cost contribution and the level of annual global product sales. One or more clinical failures of our drug candidates would jeopardize and could result in reduced, delayed or eliminated revenue.

Additionally, promising results from earlier trials may not predict similarly favorable outcomes in subsequent trials. For example, several of our past, planned and ongoing clinical trials utilize an “open-label” trial design. An “open-label” clinical trial is one 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.

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 regulatory approvals and jeopardize the ability to proceed to commercialization.

We or our partners may experience delays in clinical trials of drug candidates. Our partner Lilly is conducting a Phase 2 study of NKTR-358 in patients with SLE as well as two Phase 1b studies in patients with psoriasis and atopic dermatitis.  In addition, we have initiated a Phase 1 clinical study of NKTR-255 in adults with relapsed or refractory non-Hodgkin lymphoma or multiple myeloma, as well as a Phase 1/2 clinical study of NKTR-255 in patients with relapsed or refractory head and neck

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squamous cell carcinoma or colorectal cancer. These and other 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:

•delays in obtaining regulatory authorization to commence a clinical study;

•delays in reaching agreement with applicable regulatory authorities on a clinical study design;

•for drug candidates (such as NKTR-358) partnered with other companies, delays caused by our partner;

•delays caused by the COVID-19 pandemic (see also the risk factor in this Item 1A titled “Our business could be adversely affected by the effects of health epidemics, including the recent COVID-19 pandemic”).

•imposition of a clinical hold by the FDA or other health authorities, which may occur at any time including after any inspection of clinical trial operations or trial sites;

•suspension or termination of a clinical study by us, our partners, the FDA or foreign regulatory authorities due to adverse side effects of a drug on subjects in the trial;

•delays in recruiting suitable patients to participate in a trial;

•delays in having patients complete participation in a trial or return for post-treatment follow-up;

•clinical sites dropping out of a trial due to the detriment of enrollment rates;

•delays in manufacturing and delivery of sufficient supply of clinical trial materials;

•changes in regulatory authorities policies or guidance applicable to our drug candidates; and

•delays caused by changing standards of care or new treatment options.

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 our 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.

The outcomes from competitive I-O and combination therapy clinical trials, and the discovery and development of new potential oncology therapies, could have a material and adverse impact on the value of our I-O research and development pipeline.

The research and development of I-O therapies 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 NKTR-255 and other I-O therapy drug candidates face substantial competition from other I-O combination regimens already approved, and many more combination therapies that are either ahead of or in parallel development in patient populations where we are studying our drug candidates. As I-O combination therapies are relatively new approaches in cancer treatment and few have successfully completed late stage development, I-O drug development entails substantial risks and uncertainties that include rapidly changing standards of care, identifying contribution of component therapies, patient enrollment competition, evolving regulatory frameworks to evaluate combination 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 I-O 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 product candidates will obtain regulatory approval.

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

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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 for our polymer conjugate chemistry technology platforms and our partnered and proprietary drugs and drug candidates could make our technologies, drugs or drug candidates obsolete or uncompetitive, which would negatively impact our business, results of operations and financial condition.

Our advanced polymer conjugate chemistry platforms and our partnered and proprietary products and drug candidates compete with various pharmaceutical and biotechnology companies. Competitors of our polymer conjugate chemistry technologies include Biogen Inc., Horizon Pharma, Dr. Reddy’s Laboratories Ltd., SunBio Corporation, Laysan Bio, Inc., Mountain View Pharmaceuticals, Inc., Novo Nordisk A/S (formerly assets held by Neose Technologies, Inc.), and NOF Corporation. Several other chemical, biotechnology and pharmaceutical companies may also be developing polymer conjugation technologies or technologies that have similar impact on target drug molecules. Some of these companies license or provide the technology to other companies, while others are developing the technology for internal use.

There are many competitors for our drug candidates currently in development. For NKTR-358, there are a number of competitors in various stages of clinical development that are working on programs which are designed to correct the underlying immune system imbalance in the body due to autoimmune disease. In particular, we expect to compete with therapies that could be cytokine-based therapies (Symbiotix, LLC, Janssen, AstraZeneca, and Tizona Therapeutics), regulatory T cell therapies (Targazyme, Inc., Caladrius BioSciences, Inc., and Tract Therapeutics, Inc.), or IL-2-based-therapies (Amgen Inc., Celgene Corporation, GentiBio, Inc., ILTOO Pharma, Kyverna Therapeutics, Merck & Co, through its acquisition of Pandion Therapeutics, and Roche). For NKTR-255, we believe companies that are currently researching and developing engineered IL-15 biologics and cell therapies that could compete with this drug candidate include Artiva Biotherapeutics, Fate Therapeutics, ImmunityBio, Inc., Nkarta therapeutics, NKMax America, and Roche/Genentech (through its partnership with Xencor, 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 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 uncompetitive 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 Collaboration Partners

We are highly dependent on our collaboration partner to initiate, properly conduct and prioritize clinical trials for NKTR-358 and to perform important additional development and commercialization activities, and our business will be significantly harmed if their actions deprioritize or otherwise harm the prospects of our drug candidates.

We rely on Lilly (through the Lilly Agreement) to initiate, properly conduct, and prioritize clinical trials and other development-related activities for NKTR-358. Furthermore, we will rely on Lilly to perform specified commercialization activities for NKTR-358, pursuant to our collaboration agreement. In the event Lilly fails to initiate, properly conduct and prioritize their obligations under their applicable agreement with us, our business will be significantly harmed. 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.

In addition, for reasons outside of our control, the operations of our collaboration partners may be affected by the COVID-19 pandemic more than our operations, or our collaboration partners may adopt more restrictive procedures for

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addressing the COVID-19 pandemic, either of which could delay initiating or completing one or more clinical trials involving our drug candidates.

Risks Related to our Financial Condition and Capital Requirement

Our strategic reorganization plan and cost restructuring plan may not be successful.

On April 25, 2022, we announced strategic reorganization and cost restructuring plans (together, the Restructuring Plan) to prioritize key research and development efforts that will impact the Company’s future business activities, including activities involving NKTR-358, NKTR-255 and several core research programs. In connection with the Restructuring Plan, we also announced cost restructuring measures aimed at ensuring we will have significant capital to fund key programs over a multi-year time horizon. There is no guarantee that the Restructuring Plan will achieve its intended benefits or that our post-restructuring focus will be sufficient for us to achieve success. For example, our cost restructuring efforts may not result in the anticipated savings or other economic benefits, or could result in total costs and expenses that are greater than expected, which would require us to seek potentially dilutive financing alternatives, disrupt or restrain the scope of our business activities, and would make it more difficult to attract and retain qualified personnel, each of which could have a material adverse effect on our business, financial condition and prospects.

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:

•designing and conducting large scale clinical studies;

•preparing and filing documents necessary to obtain government approvals to sell a given drug candidate; and/or

•marketing and selling the drugs when and if they are approved.

Our reliance on collaboration partners poses a number of significant risks to our business, including risks that:

•we have very little control over the timing and level of resources that our collaboration partners dedicate to commercial marketing efforts such as the amount of investment in sales and marketing personnel, general marketing campaigns, direct-to-consumer advertising, product sampling, pricing agreements and rebate strategies with government and private payers, manufacturing and supply of drug product, and other marketing and selling activities that need to be undertaken and well executed for a drug to have the potential to achieve commercial success;

•collaboration partners with commercial rights may choose to devote fewer resources to the development or marketing of our partnered drugs than they devote to their own drugs or other drugs that they have in-licensed;

•we have very little control over the timing and amount of resources our partners devote to development programs in one or more major markets;

•disagreements with partners could lead to delays in, or termination of, the research, development or commercialization of drug candidates or to litigation or arbitration proceedings;

•disputes may arise or escalate in the future with respect to the ownership of rights to technology or intellectual property developed with partners;

•we do not have the ability to unilaterally terminate agreements (or partners may have extension or renewal rights) that we believe are not on commercially reasonable terms or consistent with our current business strategy;

•partners may be unable to pay us as expected;

•partners may terminate their agreements with us unilaterally for any or no reason, in some cases with the payment of a termination fee penalty and in other cases with no termination fee penalty; and

•partners may respond to natural disasters or health epidemics, such as the COVID-19 pandemic, by ceasing all or some of their development responsibilities (including the responsibility to clinical develop our drug candidates).

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 drugs in development

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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 for our drug candidates. 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 do not receive substantial milestone or royalty payments from our existing collaboration agreements, execute new high value collaborations or other arrangements, or are unable to raise additional capital in one or more financing transactions, we would be unable to continue our current level of investment in research and development.

As of June 30, 2022, we had cash and investments in marketable securities valued at approximately $628.2 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:

•the cost, timing and outcomes of clinical studies and regulatory reviews of our drug candidates, particularly NKTR-358;

•if and when we receive potential milestone payments and royalties from our existing collaborations if the drug candidates subject to those collaborations achieve clinical, regulatory or commercial success;

•the progress, timing, cost and results of our clinical development programs;

•the success, progress, timing and costs of our efforts to implement new collaborations, licenses and other transactions that increase our current net cash, such as the sale of additional royalty interests held by us, term loan or other debt arrangements, and the issuance of securities;

•the number of patients, enrollment criteria, primary and secondary endpoints, and the number of clinical studies required by the regulatory authorities in order to consider for approval our drug candidates and those of our collaboration partners;

•our general and administrative expenses, capital expenditures and other uses of cash; and

•disputes concerning patents, proprietary rights, or license and collaboration agreements that could negatively impact our receipt of milestone payments or royalties or require us to make significant payments arising from licenses, settlements, adverse judgments or ongoing royalties.

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 achieve regulatory approval. In the event we do not enter into any new collaboration partnerships with significant upfront payments and we choose to continue to advance our drug candidates to later stage research and development, 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. 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, 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 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

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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 biologic 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. Further, due to the COVID-19 pandemic, millions of individuals have lost or will be losing employer-based insurance coverage, which may adversely affect our ability to commercialize our biologic candidates even if there is adequate coverage and reimbursement from third-party payers. It is unclear what effect, if any, the American Rescue Plan Act will have on the number of covered individuals.

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 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 product 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 potential 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

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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 product 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.

Recent federal legislation and actions by federal, state and local governments may permit reimportation of drugs from foreign countries into the United States, including foreign countries where the drugs are sold at lower prices than in the United States, which could materially adversely affect our operating results.

We may face competition in the United States for our development candidates and investigational medicines, if approved, from therapies sourced from foreign countries that have placed price controls on pharmaceutical products. In the United States, the Medicare Modernization Act (MMA), contains provisions that call for the promulgation of regulations that expand pharmacists’ and wholesalers’ ability to import cheaper versions of an approved drug and competing products from Canada, where there are government price controls. Further, the MMA provides that these changes to U.S. importation laws will not take effect, unless and until the U.S. Secretary of Health and Human Services (HHS) certifies that the changes will pose no additional risk to the public’s health and safety and will result in a significant reduction in the cost of products to consumers. On September 23, 2020, the U.S. Secretary of HHS made such certification to Congress, and on October 1, 2020, FDA published a final rule that allows for the importation of certain prescription drugs from Canada. Under the final rule, States and Indian Tribes, and in certain future circumstances pharmacists and wholesalers, may submit importation program proposals to the FDA for review and authorization. Since the issuance of the final rule, several industry groups have filed federal lawsuits challenging multiple aspects of the final rule, and authorities in Canada have passed rules designed to safeguard the Canadian drug supply from shortages. On September 25, 2020, CMS stated drugs imported by States under this rule will not be eligible for federal rebates under Section 1927 of the Social Security Act and manufacturers would not report these drugs for “best price” or Average Manufacturer Price purposes. Since these drugs are not considered covered outpatient drugs, CMS further stated it will not publish a National Average Drug Acquisition Cost for these drugs. Separately, the FDA also issued a final guidance document outlining a pathway for manufacturers to obtain an additional National Drug Code, or NDC, for an FDA-approved drug that was originally intended to be marketed in a foreign country and that was authorized for sale in that foreign country. The market implications of the final rule and guidance are unknown at this time. Proponents of drug reimportation may attempt to pass legislation that would directly allow reimportation under certain circumstances. Legislation or regulations allowing the reimportation of drugs, if enacted, could decrease the price we receive for any products that we may develop and adversely affect our future revenues and prospects for profitability.

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 biologic candidates or the licensing of our 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 is 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 is exclusively derived from our collaboration agreements, 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 biologic candidate under our collaboration agreement, our business, financial condition, and results of operations could be materially and adversely affected.

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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 six months ended June 30, 2022, we reported a net loss of $249.5 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 biologic candidates and the regulatory approval and market success of our biologic 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:

•develop drugs utilizing our technologies, either independently or in collaboration with other pharmaceutical or biotechnology companies;

•effectively estimate and manage clinical development costs, particularly the cost of the clinical studies for NKTR-358 and NKTR-255;

•receive necessary regulatory and marketing approvals;

•maintain or expand manufacturing at necessary levels;

•achieve market acceptance of our partnered products;

•receive revenue or royalties on products that have been approved, marketed or submitted for marketing approval with regulatory authorities; and

•maintain sufficient funds to finance our activities.

Risks Related to the COVID-19 Pandemic

Our business could be adversely affected by the effects of health epidemics, including the recent COVID-19 pandemic.

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 both our own manufacturing operations as well as the manufacturing operations of third parties upon whom we rely. With respect to the ongoing COVID-19 pandemic, national, state and local governments in regions affected by the COVID-19 pandemic have implemented, and may continue to implement or reinstate safety precautions, including quarantines, border closures, increased border controls, travel restrictions, business closures and other measures. These measures may disrupt normal business operations both in and outside areas affected by COVID-19 and may have significant negative impacts on our business. Even as these safety precautions are eased or reduced over time, there may be long lasting effects of these precautions on our business that may only be fully realized in the future.

We continue to monitor our operations and applicable government recommendations, and we have made modifications to our normal operations because of the COVID-19 pandemic. Throughout the pandemic we have modified our office policies to maintain productivity and safety of our employees. Although we believe these and the other safety measures we have taken in response to the COVID-19 pandemic have not substantially impacted our productivity, it is not certain that this will continue to be the case. Operating requirements may continually change due to the COVID-19 pandemic and we may experience unpredictability in our expenses, employee productivity and availability and employee work culture.

Certain of our clinical trials have been and may continue to be affected by the COVID-19 pandemic. Investigator recruitment, clinical site initiation, patient screening and patient enrollment may be delayed due to, for example, prioritization of hospital resources toward the COVID-19 pandemic. Some patients who are successfully enrolled in clinical trials involving our biologic candidates may not be able to comply with clinical trial protocols due to, for example, disrupted healthcare services, or health issues for suspected or confirmed COVID-19 status. Similarly, our ability to recruit and retain patients and principal investigators and site staff, all of whom may have heightened risk for COVID-19, could adversely impact our clinical trial operations.

Delays and disruptions experienced by our collaborators or other third parties due to the COVID-19 pandemic could adversely impact the ability of such parties to fulfill their obligations, which could affect clinical development or regulatory approvals of our biologic candidates. For example, due to recent supply chain disruptions, we have been monitoring our supply chains for any disruptions or constraints caused by the COVID-19 pandemic. To date, we have not experienced any supply impact. However, if we, our collaborators or any third parties which we rely on are adversely effected by any supply disruptions or shortages in raw materials and equipment caused by the COVID-19 pandemic, our ability to manufacture our products and to

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supply drug candidates for our clinical trials could be negatively impacted, which could harm our business prospects, results of operations and financial condition.

Although we are implementing measures to maintain the integrity of our clinical trials, there is no guarantee that we will prevent all study protocol violations, missed study treatment visits, and other influences that jeopardize reliability and validity of our clinical trial data. If a regulatory authority determines our clinical trial data lacks integrity, there is no guarantee that we will have a remedy to correct or otherwise address the deficiency. Even if such a remedy is identified, the cost for implementing the remedy could be prohibitively expensive, time consuming, or both. As a consequence, a clinical study of our biologic candidate in which the integrity of the clinical study is questioned or doubted may require lengthy and costly remediation measures (such as, for example, over-enrolling patients into the study or repeating the study), thereby causing substantial harm to our business.

Also, the COVID-19 pandemic could postpone necessary interactions with regulators regarding our drug candidates in development and could delay review or approval of our regulatory submissions.

The spread of COVID-19, which has caused a broad impact globally, may materially affect us economically. While the potential economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock.

The rapid development and fluidity of the COVID-19 pandemic results in a substantial number of individual variables that could cause a significant negative impact on our operations and our business, thereby precluding useful predictions as to how this pandemic will ultimately affect us. In particular, it is unclear how our business may be affected by the emergence of new variants of the coronavirus, such as the Delta and Omicron variants, and recent resurgences in number and rates of COVID-19 infections. Thus, any current assessment of the effects of the COVID-19 pandemic, including the impact of this disease on our clinical trial timelines, is subject to change. We do not yet know the full extent of potential impacts on our business, our clinical trials, healthcare systems or the global economy as a whole. However, these effects could have a material negative impact on our operations and our business. Furthermore, to the extent the ongoing COVID-19 pandemic adversely affects our operations and business, it may also heighten the other risks described in this “Risk Factors” section.

Risks Related to Supply and Manufacturing

If we or 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, result in reduced sales or constitute a breach of our contractual obligations, any of which could significantly harm our business, financial condition and results of operations.

If we or 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, which could in turn reduce the potential commercial sales of our or our collaboration partners’ products. As a result, we could incur substantial costs and damages and any product sales or royalty revenue that we would otherwise be entitled to receive could be reduced, delayed or eliminated. In most cases, we rely on CMOs to manufacture and supply drug product for our clinical studies and those of our collaboration partners. 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. These risks and uncertainties are compounded by the COVID-19 pandemic wherein the facilities and employees responsible for manufacturing biologics for use in clinical trials may be negatively impacted such that there is an insufficient supply of study biologic drugs. 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.

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in response to the COVID-19 pandemic. Throughout the COVID-19 outbreak, there has been public concern over the availability and accessibility of critical medical products, and the CARES Act enhances FDA’s existing authority with respect to drug shortage measures. Under the CARES Act, we must have in place a risk management plan that identifies and evaluates the risks to the supply of approved drugs for certain serious diseases or conditions for each establishment

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where the drug or API is manufactured. The risk management plan will be subject to FDA review during an inspection. If we experience shortages in the supply of our marketed products, our results could be materially impacted.

If any CMO with whom we contract fails to perform its obligations, we may be forced to manufacture the materials ourselves, for which we may not have the capabilities or resources, or enter into an agreement with a different CMO, which we may not be able to do on reasonable terms, if at all. In either scenario, 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 biologic 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, 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 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 could negatively affect our ability to develop biologic candidates or commercialize our products in a timely manner or within budget. Furthermore, a CMO may possess technology related to the manufacture of our biologic 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 biologic candidates. In addition, in the case of the CMOs that supply our biologic 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.

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, which may cause significant delays in clinical development. 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.

We purchase some of the starting material for biologics and biologic candidates from a single source or a limited number of suppliers, and the partial or complete loss of one of these suppliers could cause production delays, clinical trial delays, substantial loss of revenue and contract liability to third parties.

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, clinical trial delays, substantial lost revenue opportunities or contract liabilities to third parties. 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. Any interruption in supply, diminution in quality of raw materials supplied to us or failure to procure such raw materials on commercially feasible terms could harm our business by delaying our clinical trials, impeding commercialization of approved drugs or increasing our costs.

Our manufacturing operations and those 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.

We and 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 our drug manufacturing facilities and the manufacturing facilities of our CMOs for compliance with applicable regulatory requirements. Any failure to follow and document our or our CMOs’ adherence to such cGMP and other laws and governmental regulations or satisfy other manufacturing and product release regulatory requirements may disrupt our ability to meet our manufacturing obligations to our customers, 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

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substantial compliance with cGMP. Manufacturing delays, for us or 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 clinical trials for our biologic candidates and any failure of those parties to fulfill their obligations could harm our development and commercialization plans.

We depend on independent clinical investigators, contract research organizations and other third-party service providers to conduct clinical trials for our biologic candidates. We rely heavily on these parties for the successful execution of our clinical trials. Though we are ultimately responsible for the results of their activities, many aspects of their activities are beyond our control. For example, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trials, but the independent clinical investigators may prioritize other projects over ours or communicate issues regarding our biologic 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 or our stated protocols. 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 or the failure of third parties to properly conduct our clinical trials 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 and partnered biologic 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.

If we, or our partners through our collaborations, are not successful in recruiting sales and marketing personnel or in building a sales and marketing infrastructure, we will have difficulty commercializing our products, which would adversely affect our business, results of operations and financial condition.

To the extent we rely on other pharmaceutical or biotechnology companies with established sales, marketing and distribution systems to market our products, we will need to establish and maintain partnership arrangements, and we may not be able to enter into these arrangements on acceptable terms or at all. To the extent that we enter into co-promotion or other arrangements, any revenue we receive will depend upon the efforts of third parties, which may not be successful and over which we have little or no control. In the event that we market our products without a partner, we would be required to build, either internally or through third-party contracts, a sales and marketing organization and infrastructure, which would require a significant investment, and we may not be successful in building this organization and infrastructure in a timely or efficient manner. We would also incur substantial costs in building such capabilities before receiving regulatory approval of our products, which would have an adverse effect on our financial condition if our products are not ultimately approved.

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

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personnel. Furthermore, as a result of our Restructuring Plan, our employees may experience distractions or decreases in employee morale and we may experience increased levels of employee attrition and turnover, which would adversely affect our business. 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 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.

Rising inflation rates have increased our operating costs and could negatively impact our operations.

Inflation rates, particularly in the United States, have increased recently to levels not seen in decades. Increased inflation has resulted in increased operating costs. In addition, the United States Federal Reserve has raised, and is expected to again raise, interest rates in response to concerns about inflation. Increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may further increase economic uncertainty and heighten these risks.

Risks Related to Intellectual Property, Litigation and Regulatory Concerns

If we or our partners do not obtain regulatory approval for our biologic 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 biologic 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. Biologic 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 biologic 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. For example, AstraZeneca is conducting a post-marketing, observational epidemiological study comparing MOVANTIK® to other treatments of opioid-induced constipation in patients with chronic, non-cancer pain and the results of this study could at some point in the future negatively impact the labeling, regulatory status, and commercial potential of MOVANTIK®, which could reduce our future royalties from sales of MOVANTIK®.

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.

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.

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We currently derive, 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:

•clinical development and commercialization obligations that are based on certain commercial reasonableness performance standards that can often be difficult to enforce if disputes arise as to adequacy of our partner’s performance;

•research and development performance and reimbursement obligations for our personnel and other resources allocated to partnered biologic candidate development programs;

•clinical and commercial manufacturing agreements, some of which are priced on an actual cost basis for products supplied by us to our partners with complicated cost allocation formulas and methodologies;

•intellectual property ownership allocation between us and our partners for improvements and new inventions developed during the course of the collaboration;

•royalties on drug sales based on a number of complex variables, including net sales calculations, geography, scope of patent claim coverage, patent life, generic competitors, bundled pricing and other factors; and

•indemnity obligations for intellectual property infringement, product liability and certain other claims.

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 biologic 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 biologic 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 310 U.S. and 1,200 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 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 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 products.  In

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addition, our patents may be subject to post grant proceedings, such as or 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, and plan to file additional patent applications, covering various aspects of our PEGylation and advanced polymer conjugate technologies and our biologic candidates. 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 biologic 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 biologic candidates for which we obtain marketing approval. Our 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. Restrictions under applicable federal and state healthcare laws and regulations, include the following:

•the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering, or paying remuneration (a term interpreted broadly to include anything of value, including, for example, gifts, discounts, and credits), directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order, or recommendation of, an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation. On December 2, 2020, the Office of Inspector General, or OIG, published further modifications to the federal Anti-Kickback Statute. Under the final rules, OIG added safe harbor protections under the Anti-Kickback Statute for certain coordinated care and value-based arrangements among clinicians, providers, and others. This rule (with exceptions) became effective January 19, 2021. Implementation of this change and new

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safe harbors for point-of-sale reductions in price for prescription pharmaceutical products and pharmacy benefit manager service fees are currently under review by the Biden administration and may be amended or repealed. We continue to evaluate what effect, if any, the rule will have on our business;

•federal civil and criminal false claims laws and civil monetary penalty laws, such as the U.S. federal False Claims Act (FCA), which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment to Medicare, Medicaid, or other third-party payers that are false or fraudulent, or making a false statement or record material to payment of a false claim or avoiding, decreasing, or concealing an obligation to pay money owed to the federal government. In addition, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA. Manufacturers can be held liable under the federal False Claims Act even when they do not submit claims directly to government payers if they are deemed to “cause” the submission of false or fraudulent claims. The federal False Claims Act also permits a private individual acting as a “whistleblower” to bring actions on behalf of the federal government alleging violations of the federal False Claims Act and to share in any monetary recovery;

•provisions of the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), which created new federal criminal statutes, referred to as the “HIPAA All-Payer Fraud Prohibition,” that prohibit knowingly and willfully executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;

•the federal transparency laws, including the federal Physician Payment Sunshine Act, which require manufacturers of certain drugs and biologics to track and disclose payments and other transfers of value they make to U.S. physicians (currently defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals as well as physician ownership and investment interests in the manufacturer, and that such information is subsequently made publicly available in a searchable format on a CMS website, effective January 1, 2022, these reporting obligations will extend to include transfers of value made to certain non-physician assistants and nurse practitioners;

•provisions of HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information, and also includes the Final Omnibus Rule published in January 2013, which impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates, independent contractors or agents of covered entities, that perform services for them that involve the creation, maintenance, receipt, use, or disclosure of, individually identifiable health information relating to the privacy, security and transmission of individually identifiable health information. HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions. In addition, there may be additional federal, state and non-U.S. laws which govern the privacy and security of health and other personal information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts;

•federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs;

•federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and

•additionally, state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers, state transparency reporting and compliance laws; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and which may not have the same effect, thus complicating compliance efforts. These state-equivalent laws may also apply to our business practices, including, but not limited to, research, distribution, and sales or marketing arrangements. In addition, some states have passed laws that require pharmaceutical companies to comply with the April 2003 Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and/or the Pharmaceutical Research and Manufacturers of America’s Code on Interactions with Healthcare Professionals. Several states also impose other marketing restrictions or require pharmaceutical companies to make marketing or price disclosures to the state and require the registration of pharmaceutical sales.

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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.

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, and policy changes. For example, the current five-year authorization of the Prescription Drug User Fee Act (PDUFA) and other user free programs from which the FDA receives significant funding is set to expire on September 30, 2022, and a failure by Congress to reauthorize PDUFA and other user fee programs by this date may cause a reduction in the responsiveness of the FDA generally. In the past, average review times at the agency have fluctuated, and this may continue in the future. 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. Since March 2020 when foreign and domestic inspections of facilities were largely placed on hold due to the COVID-19 pandemic, the FDA has been working to resume routine surveillance, bioresearch monitoring and pre-approval inspections on a prioritized basis. The FDA has developed a rating system to assist in determining when and where it is safest to conduct prioritized domestic inspections. In April 2021, the FDA issued guidance for industry formally announcing plans to employ remote interactive evaluations, suing risk management methods, to meet user fee commitments and goal dates. Should FDA determine that an inspection is necessary for approval and an inspection cannot be completed during the review cycle due to restrictions on travel, and the FDA does not determine a remote interactive evaluation to be appropriate, FDA has stated that it generally intends to issue a complete response letter. Further, if there is inadequate information to make a determination on the acceptability of a facility, FDA may defer action on the application until an inspection can be completed. Regulatory authorities outside the U.S. may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic and may experience delays in their regulatory activities.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA and other government employees and stop critical activities. Additionally, as of June 23, 2020, the FDA noted it is continuing to ensure timely reviews of applications for medical products during the COVID-19 pandemic in line with its user fee performance goals. On July 16, 2020, the FDA noted that it is continuing to expedite oncology product development with its staff teleworking full-time. However, the FDA may not be able to continue its current pace and review timelines could be extended, including where a pre-approval inspection or an inspection of clinical sites is required and due to the COVID-19 pandemic and travel restrictions the FDA is unable to complete such required inspections during the review period. 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 shutdowns of other government agencies, such as the SEC, may also impact our business through review of our public filings and our ability to access the public markets.

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 our technology platform or biologic 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. For example, we are involved in ongoing litigation with Aether Therapeutics Inc., who in March 2020 filed a complaint against AstraZeneca, Nektar and Daiichi-Sanko, Inc. alleging that MOVANTIK® infringes U.S. Patent Nos. 6,713,488, 8,748,448, 8,883,817 and 9,061,024. 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

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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 biologic candidates and platform 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 biologics or biologic 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 are involved in legal proceedings other than those related to intellectual property. In October 2018, we and certain of our executives were named in a putative securities class action complaint filed in the U.S. District Court for the Northern District of California (Case No. 18-cv-06607, which we refer to as the Mulquin action). The Mulquin plaintiffs have challenged public statements Nektar made, between January 2017 and June 2018, about the clinical trials of bempegaldesleukin. The Mulquin complaint was amended in May 2019. The defendants moved to dismiss and the court granted the motion without prejudice in July 2020. The Mulquin plaintiffs again amended their complaint and the defendants again moved to dismiss. In December 2020, the court dismissed the action with prejudice. The plaintiffs filed a notice of appeal in January 2021 and appellate briefing in the U.S. Court of Appeals for the Ninth Circuit was completed in September 2021. Oral argument occurred on December 10, 2021. On May 19, 2022, the Ninth Circuit affirmed the district court's dismissal of all claims against the defendants.

A derivative action was also filed against certain of the Company’s current and former officers and directors, purportedly on the Company’s behalf. This derivative action is based on the allegations in the Mulquin action and on the premise that the Company’s officers and directors breached their fiduciary duties to the Company. The complaint for this derivative action was filed in February 2021 in the Court of Chancery of the State of Delaware (C.A. No. 2021-0118-PAF). Following a stay in the proceedings during the pendency of the appeal in the Mulquin action, the Company received an amended complaint on July 29, 2022, and the defendants will have until September 12, 2022 to respond to the amended complaint.

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 a litigation or the settlement thereof (including the Mulquin action and related shareholder derivative lawsuit) is sufficient, thereby resulting 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 are currently 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 these matters in our Consolidated Balance Sheets at June 30, 2022.

If we are found in violation of privacy and data protection laws, we may be required to pay penalties, be subjected to scrutiny by regulators or governmental entities, or be suspended from participation in government healthcare programs, which may adversely affect our business, financial condition and results of operations.

Our business is subject to many laws and regulations intended to protect the privacy and data of individuals participating in our clinical trials and our employees, among others. For example, with regard to individuals participating in our clinical trials, these laws and regulations govern the safeguarding the privacy, integrity, availability, security and transmission of individually identifiable health information. In addition to federal laws and regulations in the United States, such as the HIPAA requirements relating to the privacy, security and transmission of individually identifiable health information, many state and foreign laws also govern the privacy and security of health information. These laws often differ from each other in significant ways, thus complicating compliance efforts. The global data protection landscape is rapidly evolving, and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future.

In the United States, California recently enacted the California Consumer Privacy Act (CCPA), which took effect on January 1, 2020. The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, 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 data breaches that is expected to increase data breach litigation. The CCPA has increased our compliance costs and may increase our potential liability. The CCPA has prompted a number of proposals for new federal and state privacy legislation. If passed, these proposals could increase our potential liability, increase our compliance costs and adversely affect our business.

The European Regulation 2016/679, known as the General Data Protection Regulation (GDPR), and the implementing legislation of EU Member States, which became effective on May 25, 2018, apply to the collection and processing of personal data, including health-related information, by companies located in the EU, or in certain circumstances, by companies located

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outside of the EU and processing personal information of individuals located in the EU. 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) obtaining, in some situations, 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, and (iii) ensuring the security and confidentiality of the personal data. The GDPR prohibits the transfer of personal data to countries outside of the European Economic Area (EEA), such as the United States, which are not considered by the European Commission to provide an adequate level of data protection. Potential pecuniary fines for noncompliant companies may be up to the greater of €20 million or 4% of annual global revenue.

To the extent that we are found liable for the inappropriate collection, storage, use or disclosure of protected information of individuals (such as employees and or clinical patients protected by any privacy or data protection law), we could be subject to 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 biologic 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.

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 and manufacturing 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 and manufacturing activities 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 our 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.

Risk 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. During the three months ended June 30, 2022, based on closing prices on the NASDAQ Global Select Market, the closing price of our common stock ranged from $3.17 to $6.17 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 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:

•announcements of data from, or material developments in, our clinical studies and those of our collaboration partners, including data regarding efficacy and safety, delays in clinical development, regulatory approval or commercial launch – in particular, data from clinical studies of bempegaldesleukin has had a significant impact on our stock price;

•the timing of outcomes from our clinical trials which can be difficult to predict particularly for clinical studies that have event-driven end points such as progression-free survival and overall survival;

•announcements by collaboration partners as to their plans or expectations related to biologic candidates and approved biologics in which we have a substantial economic interest;

•announcements regarding terminations or disputes under our collaboration agreements;

•fluctuations in our results of operations;

•developments in patent or other proprietary rights, including intellectual property litigation or entering into intellectual property license agreements and the costs associated with those arrangements;

•announcements of technological innovations or new therapeutic products that may compete with our approved partnered products or products under development;

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•announcements of changes in governmental regulation affecting us or our competitors;

•litigation brought against us or third parties to whom we have indemnification obligations;

•public concern as to the safety of drug formulations developed by us or others;

•our financing needs and activities; and

•general market conditions.

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:

•establishment of a classified board of directors such that not all members of the board may be elected at one time;

•lack of a provision for cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates;

•the ability of our board to authorize the issuance of “blank check” preferred stock to increase the number of outstanding shares and thwart a takeover attempt;

•prohibition on stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of stockholders;

•establishment of advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and

•limitations on who may call a special meeting of stockholders.

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 any failure, inadequacy, interruption, breach, or security lapse of that technology within our internal computer systems, 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.

As part of our business, we collect, store and transmit large amounts of confidential information, proprietary data, intellectual property and personal data. Despite the implementation of security measures, our internal computer systems and those of our partners, vendors, contract research organizations (CROs), contract manufacturing organizations (CMOs) and other contractors and consultants are vulnerable to loss, damage, denial-of-service, unauthorized access, or misappropriation. Such cybersecurity breaches may be the result of unauthorized activity by our employees and contractors, as well as by third parties who use cyberattack techniques involving malware, hacking and phishing, among others. Additionally, the risk of cyber-attacks or other privacy or data security incidents may be heightened as a result of an increase in the number of employees adopting a remote working environment during the COVID-19 pandemic, which may be less secure and more susceptible to hacking attacks. Our information technology systems, and those of our partners, vendors, CROs, CMOs or other contractors or consultants are also vulnerable to natural disasters, terrorism, war and telecommunication and electrical failures. Any such compromise or disruption, no matter the origin, may cause an interruption of our operations. For instance, the loss of preclinical data or data from any clinical trial involving our biologic 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 of our trade secrets, personal data or other 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 and mitigate cybersecurity incidents could be significant.

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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. For example, on March 27, 2020, the CARES Act was signed into law and included certain changes in tax law intended to stimulate the U.S. economy in light of the COVID-19 pandemic, including temporary changes to the treatment of net operating losses, interest deductibility limitations and payroll tax matters. Future changes in tax laws could have a material adverse effect on our business, cash flow, financial condition or results of operations.

The United Kingdom’s withdrawal from the EU may have a negative effect on global economic conditions, access to patient markets, and regulatory certainty, which could adversely affect our operations.

Effective January 31, 2020, the U.K. ceased to be a member state of the EU, a process known as Brexit, and began a transition period, which expired on December 31, 2020.

In December 2020, the U.K. and the EU agreed on a trade and cooperation agreement, under which the EU and the U.K. will now form two separate markets governed by two distinct regulatory and legal regimes. The trade and cooperation agreement covers the general objectives and framework of the relationship between the U.K. and the EU, including as it relates to trade, transport and visas. Under the trade and cooperation agreement, U.K. service suppliers no longer benefit from automatic access to the entire EU single market, U.K. goods no longer benefit from the free movement of goods and there is no longer the free movement of people between the U.K. and the EU. Depending on the application of the terms of the trade and cooperation agreement, we, our collaboration partners and others could face new regulatory costs and challenges.

Global economic and political conditions may negatively affect us and may magnify certain risks that affect our business.

Our operations and performance have been, and may continue to be, affected by global economic conditions, including, for example, adverse global economic conditions resulting from the COVID-19 pandemic. See also the risk factor in this Item 1A titled “Our business could be adversely affected by the effects of health epidemics, including the recent COVID-19 pandemic.” In addition, our operations and performance may be affected by political or civil unrest or military action, terrorist activity, and unstable governments and legal systems. For example, in late February 2022, Russia commenced a military invasion of Ukraine, and the sustained conflict in Ukraine, including the potential effects of sanctions and retaliatory cyber-attacks on the world economy and markets, has contributed to increased market volatility and uncertainty. In particular, 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. As the conflict in Ukraine continues, there can be no certainty regarding whether the U.S., EU or other governments will impose additional sanctions, or other economic or military measured relating to Russia.

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 that 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 earthquakes or other catastrophic events strike, our business may be harmed.

Our corporate headquarters, including a substantial portion of our research and development operations, are located in the San Francisco Bay Area, a region known for seismic activity and a potential terrorist target. In addition, we own facilities for the manufacture of products using our advanced polymer conjugate technologies in Huntsville, Alabama and own and lease offices in Hyderabad, India. There are no backup facilities for our manufacturing operations located in Huntsville, Alabama. In the event of an earthquake or other natural disaster, political instability, or terrorist event in any of these locations, our ability to manufacture and supply materials for biologic candidates in development and our ability to meet our manufacturing obligations to our customers would be significantly disrupted and our business, results of operations and 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, 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.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

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 June 30, 2022.

Item 3.    Defaults Upon Senior Securities

None.

Item 4.    Mine Safety Disclosures

Not applicable.

Item 5.    Other Information

None.

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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.

Exhibit Number	Description of Documents
3.1(1)	Certificate of Incorporation of Inhale Therapeutic Systems (Delaware), Inc.
3.2(2)	Certificate of Amendment of the Amended Certificate of Incorporation of Inhale Therapeutic Systems, Inc.
3.3(3)	Certificate of Ownership and Merger of Nektar Therapeutics.
3.4(4)	Certificate of Ownership and Merger of Nektar Therapeutics AL, Corporation with and into Nektar Therapeutics.
3.5(5)	Amended and Restated Bylaws of Nektar Therapeutics.
10.1(6)	Nektar Therapeutics Amended and Restated 2017 Performance Incentive Plan, as amended++
10.2(6)	Employment Transition, Separation and Consultation Agreement, dated as of June 29, 2022, by and between Nektar Therapeutics and John Northcott.++
31.1(6)	Certification of Nektar Therapeutics’ principal executive officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2(6)	Certification of Nektar Therapeutics’ principal financial officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1*	Section 1350 Certifications.
101.SCH(6)	Inline XBRL Taxonomy Extension Schema Document.
101.CAL(6)	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB(6)	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE(6)	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF(6)	Inline XBRL Taxonomy Extension Definition Linkbase Document.
104(6)	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

_____________________

1.     Incorporated by reference to Exhibit 3.1 to Nektar Therapeutics’ Quarterly Report on Form 10-Q, for the quarter ended     

June 30, 1998.

2.     Incorporated by reference to Exhibit 3.3 to Nektar Therapeutics’ Quarterly Report on Form 10-Q, for the quarter ended     

June 30, 2000.

3. Incorporated by reference to Exhibit 3.1 to Nektar Therapeutics’ Current Report on Form 8-K, filed with the SEC on

January 23, 2003.

4.     Incorporated by reference to Exhibit 3.6 to Nektar Therapeutics’ Annual Report on Form 10-K, for the year ended

December 31, 2009.

5.     Incorporated by reference to Exhibit 3.1 to Nektar Therapeutics’ Current Report on Form 8-K, filed with the SEC on

December 21, 2020.

6. Filed herewith.

*    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.

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++    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.

By:	/s/ JILLIAN B. THOMSEN
	Jillian B. Thomsen Senior Vice President, Chief Financial Officer
	Date: August 4, 2022

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EX-10.1

Exhibit 10.1

NEKTAR THERAPEUTICS

AMENDED AND RESTATED 2017 PERFORMANCE INCENTIVE PLAN

1.PURPOSE OF PLAN

The purpose of this Nektar Therapeutics Amended and Restated 2017 Performance Incentive Plan (this “Plan”) of Nektar Therapeutics, a Delaware corporation (the “Corporation”), is to promote the success of the Corporation and to increase stockholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons.

2.ELIGIBILITY

The Administrator (as such term is defined in Section 3.1) may grant awards under this Plan only to those persons that the Administrator determines to be Eligible Persons. An “Eligible Person” is any person who is either: (a) an officer (whether or not a director) or employee of the Corporation or one of its Subsidiaries; (b) a director of the Corporation or one of its Subsidiaries; or (c) an individual consultant or advisor who renders or has rendered bona fide services (other than services in connection with the offering or sale of securities of the Corporation or one of its Subsidiaries in a capital-raising transaction or as a market maker or promoter of securities of the Corporation or one of its Subsidiaries) to the Corporation or one of its Subsidiaries and who is selected to participate in this Plan by the Administrator; provided, however, that a person who is otherwise an Eligible Person under clause (c) above may participate in this Plan only if such participation would not adversely affect either the Corporation’s eligibility to use Form S-8 to register under the Securities Act of 1933, as amended (the “Securities Act”), the offering and sale of shares issuable under this Plan by the Corporation or the Corporation’s compliance with any other applicable laws. An Eligible Person who has been granted an award (a “participant”) may, if otherwise eligible, be granted additional awards if the Administrator shall so determine. As used herein, “Subsidiary” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Corporation; and “Board” means the Board of Directors of the Corporation.

3.PLAN ADMINISTRATION

3.1.The Administrator. This Plan shall be administered by and all awards under this Plan shall be authorized by the Administrator. The “Administrator” means the Board or one or more committees appointed by the Board or another committee (within its delegated authority) to administer all or certain aspects of this Plan. Any such committee shall be comprised solely of one or more directors or such number of directors as may be required under applicable law. A committee may delegate some or all of its authority to another committee so constituted. The Board or a committee comprised solely of directors may also delegate, to the extent permitted by Section 157(c) of the Delaware General Corporation Law and any other applicable law, to one or more officers of the Corporation, its powers under this Plan (a) to designate the officers and employees of the Corporation and its Subsidiaries who will receive grants of awards under this Plan, and (b) to determine the number of shares subject to, and the other terms and conditions of, such awards. The Board may delegate different levels of authority to different committees with administrative and grant authority under this Plan. Unless otherwise provided in the Bylaws of the Corporation or the applicable charter of any Administrator: (a) a majority of the members of the acting Administrator shall constitute a quorum, and (b) the vote of a majority of the members present assuming the presence of a quorum or the unanimous written consent of the members of the Administrator shall constitute action by the acting Administrator.

With respect to awards previously intended to satisfy the requirements for performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), this Plan shall be administered by a committee consisting solely of two or more outside directors (as this requirement is applied under Section 162(m) of the Code); provided, however, that the failure to satisfy such requirement shall not affect the validity of the action of any committee otherwise duly authorized and acting in the matter. Award grants, and transactions in or involving awards, intended to be exempt under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), must be duly and timely authorized by the Board or a committee consisting solely of two or more non-employee directors (as this requirement is applied under Rule 16b-3 promulgated under the Exchange Act). To the extent required by any applicable listing agency, this Plan shall be administered by a committee composed entirely of independent directors (within the meaning of the applicable listing agency).

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3.2.Powers of the Administrator. Subject to the express provisions of this Plan, the Administrator is authorized and empowered to do all things necessary or desirable in connection with the authorization of awards and the administration of this Plan (in the case of a committee or delegation to one or more officers, within the authority delegated to that committee or person(s)), including, without limitation, the authority to:

(a)determine eligibility and, from among those persons determined to be eligible, the particular Eligible Persons who will receive an award under this Plan;

(b)grant awards to Eligible Persons, determine the price at which securities will be offered or awarded and the number of securities to be offered or awarded to any of such persons, determine the other specific terms and conditions of such awards consistent with the express limits of this Plan, establish the installments (if any) in which such awards shall become exercisable or shall vest (which may include, without limitation, performance and/or time-based schedules), or determine that no delayed exercisability or vesting is required, establish any applicable performance targets, and establish the events of termination or reversion of such awards;

(c)approve the forms of award agreements (which need not be identical either as to type of award or among participants);

(d)construe and interpret this Plan and any agreements defining the rights and obligations of the Corporation, its Subsidiaries, and participants under this Plan, further define the terms used in this Plan, and prescribe, amend and rescind rules and regulations relating to the administration of this Plan or the awards granted under this Plan;

(e)cancel, modify, or waive the Corporation’s rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding awards, subject to any required consent under Section 8.6.5;

(f)accelerate or extend the vesting or exercisability or extend the term of any or all such outstanding awards (in the case of options or stock appreciation rights, within the maximum ten-year term of such awards) in such circumstances as the Administrator may deem appropriate (including, without limitation, in connection with a termination of employment or services or other events of a personal nature) subject to any required consent under Section 8.6.5;

(g)adjust the number of shares of Common Stock subject to any award, adjust the price of any or all outstanding awards or otherwise change previously imposed terms and conditions, in such circumstances as the Administrator may deem appropriate, in each case subject to Sections 4 and 8.6 (and subject to the no repricing provision below);

(h)determine the date of grant of an award, which may be a designated date after but not before the date of the Administrator’s action (unless otherwise designated by the Administrator, the date of grant of an award shall be the date upon which the Administrator took the action granting an award);

(i)determine whether, and the extent to which, adjustments are required pursuant to Section 7 hereof and authorize the termination, conversion, substitution or succession of awards upon the occurrence of an event of the type described in Section 7;

(j)acquire or settle (subject to Sections 7 and 8.6) rights under awards in cash, stock of equivalent value, or other consideration (subject to the no repricing provision below); and

(k)determine the fair market value of the Common Stock or awards under this Plan from time to time and/or the manner in which such value will be determined.

Notwithstanding the foregoing and except for an adjustment pursuant to Section 7.1 or a repricing approved by stockholders, in no case may the Administrator (1) amend an outstanding stock option or stock appreciation right to reduce the exercise price or base price of the award, (2) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for cash or other awards for the purpose of repricing the award, or (3) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for an option or stock appreciation right with an exercise or base price that is less than the exercise or base price of the original award.

3.3.Binding Determinations. Any action taken by, or inaction of, the Corporation, any Subsidiary, or the Administrator relating or pursuant to this Plan and within its authority hereunder or under applicable law

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shall be within the absolute discretion of that entity or body and shall be conclusive and binding upon all persons. Neither the Board nor any Board committee, nor any member thereof or person acting at the direction thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with this Plan (or any award made under this Plan), and all such persons shall be entitled to indemnification and reimbursement by the Corporation in respect of any claim, loss, damage or expense (including, without limitation, attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors and officers liability insurance coverage that may be in effect from time to time.

3.4.Reliance on Experts. In making any determination or in taking or not taking any action under this Plan, the Administrator may obtain and may rely upon the advice of experts, including employees and professional advisors to the Corporation. No director, officer or agent of the Corporation or any of its Subsidiaries shall be liable for any such action or determination taken or made or omitted in good faith.

3.5.Delegation. The Administrator may delegate ministerial, non-discretionary functions to individuals who are officers or employees of the Corporation or any of its Subsidiaries or to third parties.

4.SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS

4.1.Shares Available. Subject to the provisions of Section 7.1, the capital stock that may be delivered under this Plan shall be shares of the Corporation’s authorized but unissued Common Stock and any shares of its Common Stock held as treasury shares. For purposes of this Plan, “Common Stock” shall mean the common stock of the Corporation and such other securities or property as may become the subject of awards under this Plan, or may become subject to such awards, pursuant to an adjustment made under Section 7.1.

4.2.Share Limits. Subject to Section 7.1, the maximum number of shares of Common Stock that may be delivered pursuant to awards granted to Eligible Persons under this Plan (the “Share Limit”) is equal to:

(1)39,200,000 shares of Common Stock, less 

(2)The number of any shares subject to awards granted under the Corporation’s 2012 Performance Incentive Plan (the “2012 Plan”) on or after March 31, 2017.

Shares issued in respect of any “Full-Value Award” granted under this Plan shall be counted against the foregoing Share Limit as 1.5 shares for every one share issued in connection with such award (the “Full-Value Award Ratio”). (For example, if a stock bonus of 100 shares of Common Stock is granted under this Plan, 150 shares shall be charged against the Share Limit in connection with that award.) For this purpose, a “Full-Value Award” means any award under this Plan that is not a stock option grant or a stock appreciation right grant.

The following limits also apply with respect to awards granted under this Plan:

(a) The maximum number of shares of Common Stock that may be delivered pursuant to options qualified as incentive stock options granted under this Plan is 39,200,000 shares.

(b)The maximum number of shares of Common Stock subject to options and stock appreciation rights that are granted during any calendar year to any individual under this Plan is 3,000,000 shares.

(c)Additional limits with respect to performance-based awards are set forth in Section 5.2.2.

(d)The aggregate value of cash compensation and the grant date fair value (computed in accordance with generally accepted accounting principles) of shares of Common Stock that may be paid or granted during any calendar year to any non-employee director shall not exceed $1,200,000 for existing non-employee directors and $2,200,000 for new non-employee directors.

Each of the foregoing numerical limits is subject to adjustment as contemplated by Section 4.3, Section 7.1, and Section 8.10.

4.1.Awards Settled in Cash, Reissue of Awards and Shares. Except as provided in the next sentence, shares that are subject to or underlie awards granted under this Plan or the 2012 Plan, the Corporation’s 2008 Equity Incentive Plan, the Corporation’s 2000 Non-Officer Equity Incentive Plan, or the Corporation’s

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2000 Equity Incentive Plan (collectively, the “Prior Plans”), which expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under this Plan or a Prior Plan shall again be available for subsequent awards under this Plan (with any such shares increasing the Share Limit based on the Full-Value Award Ratio specified in Section 4.2 or, with respect to awards granted under a Prior Plan, the Full-Value Award Ratio as specified in such Prior Plan). Shares that are exchanged by a participant or withheld by the Corporation as full or partial payment in connection with any award under this Plan, as well as any shares exchanged by a participant or withheld by the Corporation or one of its Subsidiaries to satisfy the tax withholding obligations related to any award, shall not be available for subsequent awards under this Plan. To the extent that an award granted under this Plan or a Prior Plan is settled in cash or a form other than shares of Common Stock, the shares that would have been delivered had there been no such cash or other settlement shall again be available for subsequent awards under this Plan (with any such shares increasing the Share Limit based on the Full-Value Award Ratio specified in Section 4.2 or, with respect to awards granted under a Prior Plan, the Full-Value Award Ratio as specified in such Prior Plan). In the event that shares of Common Stock are delivered in respect of a dividend equivalent right granted under this Plan, the number of shares delivered with respect to the award shall be counted against the share limits of this Plan (including, for purposes of clarity, the limits of Section 4.2 of this Plan). (For purposes of clarity, if 1,000 dividend equivalent rights are granted and outstanding when the Corporation pays a dividend, and 50 shares are delivered in payment of those rights with respect to that dividend, 75 shares (after giving effect to the Full-Value Award premium counting rules) shall be counted against the share limits of this Plan). To the extent that shares of Common Stock are delivered pursuant to the exercise of a stock appreciation right or stock option granted under this Plan, the number of underlying shares as to which the exercise related shall be counted against the applicable share limits under Section 4.2, as opposed to only counting the shares issued. (For purposes of clarity, if a stock appreciation right relates to 100,000 shares and is exercised at a time when the payment due to the participant is 15,000 shares, 100,000 shares shall be charged against the applicable share limits under Section 4.2 with respect to such exercise.) Refer to Section 8.10 for application of the foregoing share limits with respect to assumed awards.

4.2.Reservation of Shares; No Fractional Shares; Minimum Issue. The Corporation shall at all times reserve a number of shares of Common Stock sufficient to cover the Corporation’s obligations and contingent obligations to deliver shares with respect to awards then outstanding under this Plan (exclusive of any dividend equivalent obligations to the extent the Corporation has the right to settle such rights in cash). No fractional shares shall be delivered under this Plan. The Administrator may pay cash in lieu of any fractional shares in settlements of awards under this Plan. The Administrator may from time to time impose a limit (of not greater than 100 shares) on the minimum number of shares that may be purchased or exercised as to awards granted under this Plan unless (as to any particular award) the total number purchased or exercised is the total number at the time available for purchase or exercise under the award.

5.AWARDS

5.1.Type and Form of Awards. The Administrator shall determine the type or types of award(s) to be made to each selected Eligible Person. Awards may be granted singly, in combination or in tandem. Awards also may be made in combination or in tandem with, in replacement of, as alternatives to, or as the payment form for grants or rights under any other employee or compensation plan of the Corporation or one of its Subsidiaries. The types of awards that may be granted under this Plan are (subject, in each case, to the no repricing provisions of Section 3.2):

5.1.1.Stock Options. A stock option is the grant of a right to purchase a specified number of shares of Common Stock during a specified period as determined by the Administrator. An option may be intended as an incentive stock option within the meaning of Section 422 of the Code (an “ISO”) or a nonqualified stock option (an option not intended to be an ISO). The award agreement for an option will indicate if the option is intended as an ISO. Each option, or portion thereof, that is not an ISO, shall be a nonqualified stock option.    The maximum term of each option (ISO or nonqualified) shall be eight (8) years. The per share exercise price for each option shall be not less than 100% of the fair market value of a share of Common Stock on the date of grant of the option. When an option is exercised, the exercise price for the shares to be purchased shall be paid in full in cash or such other method permitted by the Administrator consistent with Section 5.5.

5.1.2.Additional Rules Applicable to ISOs. To the extent that the aggregate fair market value (determined at the time of grant of the applicable option) of stock with respect to which ISOs first become exercisable by a participant in any calendar year exceeds $100,000, taking into account both Common Stock subject to ISOs under this Plan and stock subject to ISOs under all other plans of the Corporation or one of its Subsidiaries (or any parent or predecessor corporation to the extent required by and within the meaning of Section 422 of the Code and the regulations promulgated thereunder),

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such options shall be treated as nonqualified stock options. In reducing the number of options treated as ISOs to meet the $100,000 limit, the most recently granted options shall be reduced first. To the extent a reduction of simultaneously granted options is necessary to meet the $100,000 limit, the Administrator may, in the manner and to the extent permitted by law, designate which shares of Common Stock are to be treated as shares acquired pursuant to the exercise of an ISO. ISOs may only be granted to employees of the Corporation or one of its subsidiaries (for this purpose, the term “subsidiary” is used as defined in Section 424(f) of the Code, which generally requires an unbroken chain of ownership of at least 50% of the total combined voting power of all classes of stock of each subsidiary in the chain beginning with the Corporation and ending with the subsidiary in question). There shall be imposed in any award agreement relating to ISOs such other terms and conditions as from time to time are required in order that the option be an “incentive stock option” as that term is defined in Section 422 of the Code. No ISO may be granted to any person who, at the time the option is granted, owns (or is deemed to own under Section 424(d) of the Code) shares of outstanding Common Stock possessing more than 10% of the total combined voting power of all classes of stock of the Corporation, unless the exercise price of such option is at least 110% of the fair market value of the stock subject to the option and such option by its terms is not exercisable after the expiration of five years from the date such option is granted.

5.1.3.Stock Appreciation Rights. A stock appreciation right or “SAR” is a right to receive a payment, in cash and/or Common Stock (as specified in the applicable award agreement), equal to the excess of the fair market value of a specified number of shares of Common Stock on the date the SAR is exercised over the “base price” of the award, which base price shall be set forth in the applicable award agreement and shall be not less than 100% of the fair market value of a share of Common Stock on the date of grant of the SAR. The maximum term of a SAR shall be eight (8) years.

5.1.4.Other Awards; Dividend Equivalent Rights. The other types of awards that may be granted under this Plan include: (a) stock bonuses, restricted stock, performance stock, stock units, phantom stock or similar rights to purchase or acquire shares, whether at a fixed or variable price or ratio related to the Common Stock, upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or any combination thereof; (b) any similar securities with a value derived from the value of or related to the Common Stock and/or returns thereon; or (c) cash awards. Dividend equivalent rights may be granted as a separate award or in connection with another award under this Plan; provided, however, that dividend equivalent rights may not be granted in connection with a stock option or SAR granted under this Plan. Notwithstanding anything in the Plan or an award agreement to the contrary, any dividends and/or dividend equivalents as to the unvested portion of an award (including, without limitation, a restricted stock award) will be subject to termination and forfeiture to the same extent as the corresponding portion of the award to which they relate.

5.1.Performance-Based Awards. The grant, vesting, exercisability or payment of performance-based awards shall depend on the degree of achievement of one or more performance goals relative to a pre-established targeted level or levels using one or more of the Business Criteria set forth below (on an absolute or relative (including, without limitation, relative to the performance of other companies or upon comparisons of any of the indicators of performance relative to other companies) basis) for the Corporation on a consolidated basis or for one or more of the Corporation’s subsidiaries, segments, divisions or business units, or any combination of the foregoing.

5.2.1.Performance Goals. The specific performance goals for performance-based awards may be, on an absolute or relative basis, established based on one or more of the following business criteria (“Business Criteria”) as selected by the Administrator in its sole discretion: earnings per share; cash flow (which means cash and cash equivalents derived from either net cash flow from operations or net cash flow from operations, financing and investing activities); working capital; stock price; total stockholder return; revenue; gross profit; operating income; net earnings (before or after interest, taxes, depreciation and/or amortization); gross margin; operating margin; net margin; return on equity or on assets or on net investment; cost containment or reduction; regulatory submissions or approvals; manufacturing production; completion of strategic partnerships; research milestones; any other measure selected by the Administrator or any combination thereof. As applicable, these terms are used as applied under generally accepted accounting principles or in the financial reporting of the Corporation or of its Subsidiaries. The applicable performance goals may be applied on a pre- or post-tax basis and may be adjusted to include or exclude determinable components of any performance goal, including, without limitation, foreign exchange gains and losses, asset write-downs, acquisitions and divestitures, change in fiscal year, unbudgeted capital expenditures, special charges such as restructuring or impairment charges, debt refinancing costs, extraordinary or noncash items, unusual, infrequently occurring, nonrecurring or one-time events affecting the Corporation or

5

its financial statements or changes in law or accounting principles (“Adjustment Events”). The applicable performance measurement period may not be less than three months nor more than 10 years.

5.2.2.Form of Payment; Maximum Performance-Based Award. Grants or awards under this Section 5.2 may be paid in cash or shares of Common Stock or any combination thereof. The maximum number of shares of Common Stock which may be subject to performance-based awards (including performance-based awards payable in shares of Common Stock and performance-based awards payable in cash where the amount of cash payable upon or following vesting of the award is determined with reference to the fair market value of a share of Common Stock at such time) that are granted to any one participant in any one calendar year shall not exceed 3,000,000 shares, either individually or in the aggregate, subject to adjustment as provided in Section 7.1; provided that this limit shall not apply to Options and SARs (which are covered by the limit of Section 4.2(b)). The aggregate amount of compensation to be paid to any one participant in respect of all performance-based awards payable only in cash (excluding cash awards covered by the preceding sentence where the cash payment is determined with reference to the fair market value of a share of Common Stock upon or following the vesting of the award) and granted to that participant in any one calendar year shall not exceed $5,000,000.

5.2.3.Certification of Payment. Before any performance-based award is paid under this Section 5.2, the Administrator must certify in writing that the performance target(s) and any other material terms of the Performance-Based Award were in fact timely satisfied.

5.2.4.Reservation of Discretion. The Administrator will have the discretion to determine the restrictions or other limitations of the individual awards granted under this Section 5.2 including the authority to reduce awards, payouts or vesting or to pay no awards, in its sole discretion, if the Administrator preserves such authority at the time of grant by language to this effect in its authorizing resolutions or otherwise.

5.2.Award Agreements. Each award shall be evidenced by either (1) a written award agreement in a form approved by the Administrator and executed by the Corporation by an officer duly authorized to act on its behalf, or (2) an electronic notice of award grant in a form approved by the Administrator and recorded by the Corporation (or its designee) in an electronic recordkeeping system used for the purpose of tracking award grants under this Plan generally (in each case, an “award agreement”), as the Administrator may provide and, in each case and if required by the Administrator, executed or otherwise electronically accepted by the recipient of the award in such form and manner as the Administrator may require. The Administrator may authorize any officer of the Corporation (other than the particular award recipient) to execute any or all award agreements on behalf of the Corporation. The award agreement shall set forth the material terms and conditions of the award as established by the Administrator consistent with the express limitations of this Plan. Notwithstanding anything contained herein to the contrary, the Administrator may approve an award agreement that, upon the termination of a participant’s employment or service, provides that, or may, in its sole discretion based on a review of all relevant facts and circumstances, otherwise take action regarding an award agreement such that (i) any or all outstanding stock options and SARs shall become exercisable in part or in full, (ii) all or a portion of the restriction or vesting period applicable to any outstanding award shall lapse, (iii) all or a portion of the performance measurement period applicable to any outstanding award shall lapse and (iv) the performance goals applicable to any outstanding award (if any) shall be deemed to be satisfied at the target, maximum or any other interim level.

5.3.Deferrals and Settlements. Payment of awards may be in the form of cash, Common Stock, other awards or combinations thereof as the Administrator shall determine, and with such restrictions as it may impose. The Administrator may also require or permit participants to elect to defer the issuance of shares or the settlement of awards in cash under such rules and procedures as it may establish under this Plan. The Administrator may also provide that deferred settlements include the payment or crediting of interest or other earnings on the deferral amounts, or the payment or crediting of dividend equivalents where the deferred amounts are denominated in shares.

5.4.Consideration for Common Stock or Awards. The purchase price for any award granted under this Plan or the Common Stock to be delivered pursuant to an award, as applicable, may be paid by means of any lawful consideration as determined by the Administrator, including, without limitation, one or a combination of the following methods:

services rendered by the recipient of such award;

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cash, check payable to the order of the Corporation, or electronic funds transfer;

notice and third party payment in such manner as may be authorized by the Administrator;

the delivery of previously owned shares of Common Stock;

 by a reduction in the number of shares otherwise deliverable pursuant to the award; or

subject to such procedures as the Administrator may adopt, pursuant to a “cashless exercise” with a third party who provides financing for the purposes of (or who otherwise facilitates) the purchase or exercise of awards.

In no event shall any shares newly-issued by the Corporation be issued for less than the minimum lawful consideration for such shares or for consideration other than consideration permitted by applicable state law. Shares of Common Stock used to satisfy the exercise price of an option shall be valued at their fair market value on the date of exercise. The Corporation will not be obligated to deliver any shares unless and until it receives full payment of the exercise or purchase price therefor and any related withholding obligations under Section 8.5 and any other conditions to exercise or purchase have been satisfied.

5.5.Definition of Fair Market Value. For purposes of this Plan, “fair market value” shall mean the closing price (in regular trading) for a share of Common Stock on the NASDAQ Stock Market (the “Market”) for the date in question or, if no sales of Common Stock were reported on the Market on that date, the closing price (in regular trading) for a share of Common Stock on the Market for the next preceding day on which sales of Common Stock were reported on the Market. The Administrator may, however, provide with respect to one or more awards that the fair market value shall equal the closing price (in regular trading) for a share of Common Stock on the Market on the last trading day preceding the date in question or the average of the high and low trading prices of a share of Common Stock on the Market for the date in question or the most recent trading day. If the Common Stock is no longer listed or is no longer actively traded on the Market as of the applicable date, the fair market value of the Common Stock shall be the value as reasonably determined by the Administrator for purposes of the award in the circumstances. The Administrator also may adopt a different methodology for determining fair market value with respect to one or more awards if a different methodology is necessary or advisable to secure any intended favorable tax, legal or other treatment for the particular award(s) (for example, and without limitation, the Administrator may provide that fair market value for purposes of one or more awards will be based on an average of closing prices (or the average of high and low daily trading prices) for a specified period preceding the relevant date).

5.6.Transfer Restrictions.

5.7.1.Limitations on Exercise and Transfer. Unless otherwise expressly provided in (or pursuant to) this Section 5.7 or required by applicable law: (a) all awards are non-transferable and shall not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge; (b) awards shall be exercised only by the participant; and (c) amounts payable or shares issuable pursuant to any award shall be delivered only to (or for the account of) the participant.

5.7.2.Exceptions. The Administrator may permit awards to be exercised by and paid to, or otherwise transferred to, other persons or entities pursuant to such conditions and procedures, including limitations on subsequent transfers, as the Administrator may, in its sole discretion, establish in writing. Any permitted transfer shall be subject to compliance with applicable federal and state securities laws and shall not be for value (other than nominal consideration, settlement of marital property rights, or for interests in an entity in which more than 50% of the voting interests are held by the Eligible Person or by the Eligible Person’s family members).

5.7.3.Further Exceptions to Limits on Transfer. The exercise and transfer restrictions in Section 5.7.1 shall not apply to:

(a)transfers to the Corporation (for example, in connection with the expiration or termination of the award);

(b)the designation of a beneficiary to receive benefits in the event of the participant’s death or, if the participant has died, transfers to or exercise by the participant’s beneficiary, or, in the absence of a validly designated beneficiary, transfers by will or the laws of descent and distribution;

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(c)subject to any applicable limitations on ISOs, transfers to a family member (or former family member) pursuant to a domestic relations order if approved or ratified by the Administrator;

(d)if the participant has suffered a disability, permitted transfers or exercises on behalf of the participant by his or her legal representative; or

(e)the authorization by the Administrator of “cashless exercise” procedures with third parties who provide financing for the purpose of (or who otherwise facilitate) the exercise of awards consistent with applicable laws and the express authorization of the Administrator.

5.1.International Awards. One or more awards may be granted to Eligible Persons who provide services to the Corporation or one of its Subsidiaries outside of the United States. Any awards granted to such persons may be granted pursuant to the terms and conditions of any applicable sub-plans, if any, appended to this Plan and approved by the Administrator.

6.EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE ON AWARDS

6.1.General. The Administrator shall establish the effect of a termination of employment or service on the rights and benefits under each award under this Plan and in so doing may make distinctions based upon, inter alia, the cause of termination and type of award. If the participant is not an employee of the Corporation or one of its Subsidiaries and provides other services to the Corporation or one of its Subsidiaries, the Administrator shall be the sole judge for purposes of this Plan (unless a contract or the award otherwise provides) of whether the participant continues to render services to the Corporation or one of its Subsidiaries and the date, if any, upon which such services shall be deemed to have terminated.

6.2.Events Not Deemed Terminations of Service. Unless the express policy of the Corporation or one of its Subsidiaries, or the Administrator, otherwise provides, the employment relationship shall not be considered terminated in the case of (a) sick leave, (b) military leave, or (c) any other leave of absence authorized by the Corporation or one of its Subsidiaries, or the Administrator; provided that, unless reemployment upon the expiration of such leave is guaranteed by contract or law or the Administrator otherwise provides, such leave is for a period of not more than three months (or such other period of time as required by applicable law). In the case of any employee of the Corporation or one of its Subsidiaries on an approved leave of absence, continued vesting of the award while on leave from the employ of the Corporation or one of its Subsidiaries may be suspended until the employee returns to service, unless the Administrator otherwise provides or applicable law (including Section 409A of the Code) otherwise requires. In no event shall an award be exercised after the expiration of the term set forth in the applicable award agreement.

6.3.Effect of Change of Subsidiary Status. For purposes of this Plan and any award, if an entity ceases to be a Subsidiary of the Corporation a termination of employment or service shall be deemed to have occurred with respect to each Eligible Person in respect of such Subsidiary who does not continue as an Eligible Person in respect of the Corporation or another Subsidiary that continues as such after giving effect to the transaction or other event giving rise to the change in status unless the Subsidiary that is sold, spun-off or otherwise divested (or its successor or a direct or indirect parent of such Subsidiary or successor) assumes the Eligible Person’s award(s) in connection with such transaction.

7.ADJUSTMENTS; ACCELERATION

7.1.Adjustments. Subject to Section 7.2, upon (or, as may be necessary to effect the adjustment, immediately prior to): any reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split; any merger, combination, consolidation, or other reorganization; any spin-off, split-up, or similar extraordinary dividend distribution in respect of the Common Stock; or any exchange of Common Stock or other securities of the Corporation, or any similar, unusual or extraordinary corporate transaction in respect of the Common Stock; then the Administrator shall equitably and proportionately adjust (1) the number and type of shares of Common Stock (or other securities) that thereafter may be made the subject of awards (including the specific share limits, maximums and numbers of shares set forth elsewhere in this Plan), (2) the number, amount and type of shares of Common Stock (or other securities or property) subject to any outstanding awards, (3) the grant, purchase, or exercise price (which term includes the base price of any SAR or similar right) of any outstanding awards, and/or (4) the securities, cash or other property deliverable upon exercise or payment of any outstanding awards, in each case to the extent necessary to preserve (but not increase) the level of incentives intended by this Plan and the then-outstanding awards.

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Unless otherwise expressly provided in the applicable award agreement, upon (or, as may be necessary to effect the adjustment, immediately prior to) any event or transaction described in the preceding paragraph or a sale of all or substantially all of the business or assets of the Corporation as an entirety, the Administrator shall equitably and proportionately adjust the performance standards applicable to any then-outstanding performance-based awards to the extent necessary to preserve (but not increase) the level of incentives intended by this Plan and the then-outstanding performance-based awards.

It is intended that, if possible, any adjustments contemplated by the preceding two paragraphs be made in a manner that satisfies applicable U.S. legal, tax (including, without limitation and as applicable in the circumstances, Section 424 of the Code and Section 409A of the Code) and accounting (so as to not trigger any charge to earnings with respect to such adjustment) requirements.

Without limiting the generality of Section 3.3, any good faith determination by the Administrator as to whether an adjustment is required in the circumstances pursuant to this Section 7.1, and the extent and nature of any such adjustment, shall be conclusive and binding on all persons.

7.2.Change in Control—Assumption and Termination of Awards. Upon the occurrence of a Change in Control, then the Administrator may make provision for a cash payment in settlement of, or for the termination, assumption, substitution or exchange of any or all outstanding share-based awards or the cash, securities or property deliverable to the holder of any or all outstanding share-based awards, based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Common Stock upon or in respect of such Change in Control. Upon the occurrence of a Change in Control, then, unless the Administrator has made a provision for the substitution, assumption, exchange or other continuation or settlement of the award or (unless the Administrator has provided for the termination of the award) the award would otherwise continue in accordance with its terms in the circumstances: (1) unless otherwise provided in the applicable award agreement, each then-outstanding option and SAR shall become fully vested, all shares of restricted stock then outstanding shall fully vest free of restrictions, and each other award granted under this Plan that is then outstanding shall become payable to the holder of such award; and (2) each award shall terminate upon the Change in Control; provided that the holder of an option or SAR shall be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise his or her outstanding vested options and SARs (after giving effect to any accelerated vesting required in the circumstances) in accordance with their terms before the termination of such awards (except that in no case shall more than ten days’ notice of the impending termination be required and any acceleration of vesting and any exercise of any portion of an award that is so accelerated may be made contingent upon the actual occurrence of the Change in Control).

The Administrator may adopt such valuation methodologies for outstanding awards as it deems reasonable in the event of a cash or property settlement and, in the case of options, SARs or similar rights, but without limitation on other methodologies, may base such settlement solely upon the excess (if any) of the per share amount payable upon or in respect of such Change in Control over the exercise or base price of the award.

Subject to applicable law, in the event of a Change in Control, the Administrator may take such action contemplated by this Section 7.2 prior to such Change in Control (as opposed to on the occurrence of such Change in Control) to the extent that the Administrator deems the action necessary to permit the participant to realize the benefits intended to be conveyed with respect to the underlying shares. Without limiting the generality of the foregoing, the Administrator may deem an acceleration to occur immediately prior to the Change in Control and, in such circumstances, will reinstate the original terms of the award if an event giving rise to an acceleration does not occur.

Without limiting the generality of Section 3.3, any good faith determination by the Administrator pursuant to its authority under this Section 7.2 shall be conclusive and binding on all persons.

7.3.Other Acceleration Rules. The Administrator may override the provisions of Section 7.2 by express provision in the award agreement and may accord any Eligible Person a right, subject to Section 409A of the Code, to refuse any acceleration, whether pursuant to the award agreement or otherwise, in such circumstances as the Administrator may approve. The portion of any ISO accelerated in connection with an event referred to in Section 7.2 (or such other circumstances as may trigger accelerated vesting of the award) shall remain exercisable as an ISO only to the extent the applicable $100,000 limitation on ISOs is not exceeded. To the extent exceeded, the accelerated portion of the option shall be exercisable as a nonqualified stock option under the Code.

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7.4.Definition of Change in Control. With respect to a particular award granted under this Plan, a “Change in Control” shall be deemed to have occurred as of the first day, after the date of grant of the particular award, that any one or more of the following conditions shall have been satisfied:

(a)The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 30% of either (1) the then-outstanding shares of common stock of the Corporation (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then-outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this clause (a), the following acquisitions shall not constitute a Change in Control Event; (A) any acquisition directly from the Corporation, (B) any acquisition by the Corporation, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any affiliate of the Corporation or a successor, or (D) any acquisition by any entity pursuant to a transaction that complies with Sections (c)(1), (2) and (3) below;

(b)Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Corporation’s stockholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board (including for these purposes, the new members whose election or nomination was so approved, without counting the member and his predecessor twice) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(c)Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Corporation or any of its Subsidiaries, a sale or other disposition of all or substantially all of the assets of the Corporation, or the acquisition of assets or stock of another entity by the Corporation or any of its Subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Corporation or all or substantially all of the Corporation’s assets directly or through one or more subsidiaries (a “Parent”)) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or a Parent or any employee benefit plan (or related trust) of the Corporation or such entity resulting from such Business Combination or Parent) beneficially owns, directly or indirectly, more than 30% of, respectively, the then-outstanding shares of common stock of the entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity, except to the extent that the ownership in excess of 30% existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors or trustees of the entity resulting from such Business Combination or a Parent were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

(d)Approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation other than in the context of a transaction that does not constitute a Change in Control under clause (c) above.

8.OTHER PROVISIONS

8.1.Compliance with Laws. This Plan, the granting and vesting of awards under this Plan, the offer, issuance and delivery of shares of Common Stock, and/or the payment of money under this Plan or under awards are subject to compliance with all applicable federal and state laws, rules and regulations (including but

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not limited to state and federal securities law and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Corporation, be necessary or advisable in connection therewith. The person acquiring any securities under this Plan will, if requested by the Corporation or one of its Subsidiaries, provide such assurances and representations to the Corporation or one of its Subsidiaries as the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements.

8.2.No Rights to Award. No person shall have any claim or rights to be granted an award (or additional awards, as the case may be) under this Plan, subject to any express contractual rights (set forth in a document other than this Plan) to the contrary.

8.3.No Employment/Service Contract. Nothing contained in this Plan (or in any other documents under this Plan or in any award) shall confer upon any Eligible Person or other participant any right to continue in the employ or other service of the Corporation or one of its Subsidiaries, constitute any contract or agreement of employment or other service or affect an employee’s status as an employee at will, nor shall interfere in any way with the right of the Corporation or one of its Subsidiaries to change a person’s compensation or other benefits, or to terminate his or her employment or other service, with or without cause. Nothing in this Section 8.3, however, is intended to adversely affect any express independent right of such person under a separate employment or service contract other than an award agreement.

8.4.Plan Not Funded. Awards payable under this Plan shall be payable in shares or from the general assets of the Corporation, and no special or separate reserve, fund or deposit shall be made to assure payment of such awards. No participant, beneficiary or other person shall have any right, title or interest in any fund or in any specific asset (including shares of Common Stock, except as expressly otherwise provided) of the Corporation or one of its Subsidiaries by reason of any award hereunder. Neither the provisions of this Plan (or of any related documents), nor the creation or adoption of this Plan, nor any action taken pursuant to the provisions of this Plan shall create, or be construed to create, a trust of any kind or a fiduciary relationship between the Corporation or one of its Subsidiaries and any participant, beneficiary or other person. To the extent that a participant, beneficiary or other person acquires a right to receive payment pursuant to any award hereunder, such right shall be no greater than the right of any unsecured general creditor of the Corporation.

8.5.Tax Withholding. Upon any exercise, vesting, or payment of any award, or upon the disposition of shares of Common Stock acquired pursuant to the exercise of an ISO prior to satisfaction of the holding period requirements of Section 422 of the Code, or upon any other tax withholding event with respect to any award, the Corporation or one of its Subsidiaries shall have the right at its option to:

(a)require the participant (or the participant’s personal representative or beneficiary, as the case may be) to pay or provide for payment of at least the minimum amount of any taxes which the Corporation or one of its Subsidiaries may be required to withhold with respect to such award event or payment; or

(b)deduct from any amount otherwise payable in cash (whether related to the award or otherwise) to the participant (or the participant’s personal representative or beneficiary, as the case may be) the minimum amount of any taxes which the Corporation or one of its Subsidiaries may be required to withhold with respect to such award event or payment.

In any case where a tax is required to be withheld in connection with the delivery of shares of Common Stock under this Plan, the Administrator may in its sole discretion (subject to Section 8.1) require or grant (either at the time of the award or thereafter) to the participant the right to elect, pursuant to such rules and subject to such conditions as the Administrator may establish, that the Corporation reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of shares, valued in a consistent manner at their fair market value or at the sales price in accordance with authorized procedures for cashless exercises, necessary to satisfy the applicable withholding obligation on exercise, vesting or payment. Shares of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate (or, if permitted by the Corporation, such other rate as will not cause adverse accounting consequences under generally accepted accounting principles then in effect). Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the holder.

8.6.Effective Date, Termination and Suspension, Amendments.

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8.6.1.Effective Date. This Plan is effective as of March 28, 2017, the date of its approval by the Board(the “Effective Date”). This Plan shall be submitted for and subject to stockholder approval no later than twelve months after the Effective Date. Upon such stockholder approval, no further awards shall be granted under any Prior Plan. Unless earlier terminated by the Board, this Plan shall terminate at the close of business on the day before the tenth anniversary of the Effective Date. After the termination of this Plan either upon such stated expiration date or its earlier termination by the Board, no additional awards may be granted under this Plan, but previously granted awards (and the authority of the Administrator with respect thereto, including the authority to amend such awards) shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of this Plan.

8.6.2.Board Authorization. The Board may, at any time, terminate or, from time to time, amend, modify or suspend this Plan, in whole or in part. No awards may be granted during any period that the Board suspends this Plan.

8.6.3.Stockholder Approval. To the extent then required by applicable law or any applicable listing agency or required under Sections 422 or 424 of the Code to preserve the intended tax consequences of this Plan, or deemed necessary or advisable by the Board, any amendment to this Plan shall be subject to stockholder approval.

8.6.4.Amendments to Awards. Without limiting any other express authority of the Administrator under (but subject to) the express limits of this Plan, the Administrator by agreement or resolution may waive conditions of or limitations on awards to participants that the Administrator in the prior exercise of its discretion has imposed, without the consent of a participant, and (subject to the requirements of Sections 3.2 and 8.6.5) may make other changes to the terms and conditions of awards. Any amendment or other action that would constitute a repricing of an award is subject to the limitations set forth in Section 3.2.

8.6.5.Limitations on Amendments to Plan and Awards. No amendment, suspension or termination of this Plan or amendment of any outstanding award agreement shall, without written consent of the participant, affect in any manner materially adverse to the participant any rights or benefits of the participant or obligations of the Corporation under any award granted under this Plan prior to the effective date of such change. Changes, settlements and other actions contemplated by Section 7 shall not be deemed to constitute changes or amendments for purposes of this Section 8.6.

8.1.Privileges of Stock Ownership. Except as otherwise expressly authorized by the Administrator, a participant shall not be entitled to any privilege of stock ownership as to any shares of Common Stock not actually delivered to and held of record by the participant (subject to the last sentence of Section 5.1.4). Except as expressly required by Section 7.1 or otherwise expressly provided by the Administrator, no adjustment will be made for dividends or other rights as a stockholder for which a record date is prior to such date of delivery.

8.2.Governing Law; Construction; Severability.

8.8.1.Choice of Law. This Plan, the awards, all documents evidencing awards and all other related documents shall be governed by, and construed in accordance with the laws of the State of Delaware.

8.8.2.Severability. If a court of competent jurisdiction holds any provision invalid and unenforceable, the remaining provisions of this Plan shall continue in effect.

8.8.3.Plan Construction.

(a)Rule 16b-3. It is the intent of the Corporation that the awards and transactions permitted by awards be interpreted in a manner that, in the case of participants who are or may be subject to Section 16 of the Exchange Act, qualify, to the maximum extent compatible with the express terms of the award, for exemption from matching liability under Rule 16b-3 promulgated under the Exchange Act. Notwithstanding the foregoing, the Corporation shall have no liability to any participant for Section 16 consequences of awards or events under awards if an award or event does not so qualify.

(b)Section 409A. It is intended that the provisions of the Plan comply with, or be exempt from, Section 409A of the Code, and all provisions of the Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the

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Code. If, at the time of a participant’s “separation from service” (within the meaning of Section 409A of the Code), (i) such participant shall be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the Corporation from time to time) and (ii) the Corporation shall make a good faith determination that an amount payable pursuant to an award constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Corporation shall not pay such amount on the otherwise scheduled payment date but shall instead pay it on the first business day after such six-month period. Such amount shall be paid without interest, unless otherwise determined by the Administrator, in its sole discretion, or as otherwise provided in any applicable award agreement between the Corporation and the relevant participant. Notwithstanding any provision of the Plan to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Corporation reserves the right to make amendments to any award as the Corporation deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code. In any case, a participant shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on such participant or for such participant’s account in connection with an award (including any taxes and penalties under Section 409A of the Code), and neither the Corporation nor any of its affiliates shall have any obligation to indemnify or otherwise hold such participant harmless from any or all of such taxes or penalties.

8.7.Captions. Captions and headings are given to the sections and subsections of this Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Plan or any provision thereof.

8.8.Stock-Based Awards in Substitution for Stock Options or Awards Granted by Other Corporation. Awards may be granted to Eligible Persons in substitution for or in connection with an assumption of employee stock options, SARs, restricted stock or other stock-based awards granted by other entities to persons who are or who will become Eligible Persons in respect of the Corporation or one of its Subsidiaries, in connection with a distribution, merger or other reorganization by or with the granting entity or an affiliated entity, or the acquisition by the Corporation or one of its Subsidiaries, directly or indirectly, of all or a substantial part of the stock or assets of the employing entity. The awards so granted need not comply with other specific terms of this Plan, provided the awards reflect only adjustments giving effect to the assumption or substitution consistent with the conversion applicable to the Common Stock in the transaction and any change in the issuer of the security. Any shares that are delivered and any awards that are granted by, or become obligations of, the Corporation, as a result of the assumption by the Corporation of, or in substitution for, outstanding awards previously granted by an acquired company (or previously granted by a predecessor employer (or direct or indirect parent thereof) in the case of persons that become employed by the Corporation or one of its Subsidiaries in connection with a business or asset acquisition or similar transaction) shall not be counted against the Share Limit or other limits on the number of shares available for issuance under this Plan.

8.9.Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to limit the authority of the Board or the Administrator to grant awards or authorize any other compensation, with or without reference to the Common Stock, under any other plan or authority.

8.10.No Corporate Action Restriction. The existence of this Plan, the award agreements and the awards granted hereunder shall not limit, affect or restrict in any way the right or power of the Board or the stockholders of the Corporation to make or authorize: (a) any adjustment, recapitalization, reorganization or other change in the capital structure or business of the Corporation or any Subsidiary, (b) any merger, amalgamation, consolidation or change in the ownership of the Corporation or any Subsidiary, (c) any issue of bonds, debentures, capital, preferred or prior preference stock ahead of or affecting the capital stock (or the rights thereof) of the Corporation or any Subsidiary, (d) any dissolution or liquidation of the Corporation or any Subsidiary, (e) any sale or transfer of all or any part of the assets or business of the Corporation or any Subsidiary, or (f) any other corporate act or proceeding by the Corporation or any Subsidiary. No participant, beneficiary or any other person shall have any claim under any award or award agreement against any member of the Board or the Administrator, or the Corporation or any employees, officers or agents of the Corporation or any Subsidiary, as a result of any such action.

8.11.Other Company Benefit and Compensation Programs. Payments and other benefits received by a participant under an award made pursuant to this Plan shall not be deemed a part of a participant’s compensation for purposes of the determination of benefits under any other employee welfare or benefit plans or arrangements, if any, provided by the Corporation or any Subsidiary, except where the Administrator expressly otherwise provides or authorizes in writing. Awards under this Plan may be made

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in addition to, in combination with, as alternatives to or in payment of grants, awards or commitments under any other plans or arrangements of the Corporation or its Subsidiaries.

8.12.Clawback Policy. The awards granted under this Plan are subject to the terms of the Corporation’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of awards or any shares of Common Stock or other cash or property received with respect to the awards (including any value received from a disposition of the shares acquired upon payment of the awards).

14

EX-10.2

Exhibit 10.2

EMPLOYMENT TRANSITION, SEPARATION AND CONSULTATION AGREEMENT

This Employment Transition, Separation and Consultation Agreement (this “Agreement”) is entered into between Nektar Therapeutics, a Delaware corporation, defined to include its affiliated companies (including subsidiaries), employees, officers, directors, managers, agents, and shareholders, successors, assigns, and representatives (collectively, the “Company”), and

JOHN NORTHCOTT

(hereafter “you,” “your,” “I” or “Employee”) (collectively with the Company, the “Parties”).

WHEREAS, on April 25, 2022 (your “Notice Date”), you were provided notice that your last day of employment with the Company will be June 30, 2022 (the “Separation Date”); and

WHEREAS, pursuant to the terms of this Agreement, the Parties intend to separate from their employment relationship, and further intend to have you provide consulting services to the Company for a limited time to ensure the orderly transition of your duties and for the Company to receive the benefit of your executive leadership in helping guide the Company in it restructuring efforts, which Agreement also contemplates the execution of a standard release to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that you may have against the Company and/or any of the Released Parties, as defined in the standard release, including, but not limited to, any and all claims arising out of or in any way related to your employment with or separation from the Company;

NOW, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1.    Transition Services and Compensation During the Transition Period.

(a)     Transition Services During the Transition Period. From the Notice Date through the Separation Date (the “Transition Period”), you will continue to carry out those duties assigned to you by your manager, with the understanding that those duties will include efforts to provide for the orderly transition of your duties and to help guide the Company in its restructuring efforts using your executive leadership. During the Transition Period, you shall continue to abide by that certain employment agreement, dated as of December 4, 2019, by and between you and the Company (the “Employment Agreement”), as well as all of the Company’s policies and procedures in effect from time to time, and continue to perform all employment duties requested by your manager in good faith to the best of your abilities. Your employment with the Company during the Transition Period will continue and the compensation and benefits you receive during the Transition Period are not dependent upon you signing this Agreement. Your employment during the Transition Period does not alter your status as an at-will employee and does not constitute a guarantee of employment for any duration. Either you or the Company

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may terminate your employment with the Company at any time, with or without advance notice, for any reason, provided, however, if you resign or otherwise terminate your employment with the Company prior to the Separation Date, you will not be eligible for the consideration set forth in Section 1 of the Standard Release (as defined below).

(b)    Compensation and Benefits During the Transition Period. During the Transition Period, you will be paid at your current semi-monthly base compensation in accordance with the Company’s normal payroll practices (which is subject to the usual, required deductions and withholdings). Accordingly, subject to the other provisions in this Agreement, you shall be entitled through the Separation Date to the same rights, benefits, equity, salary, and vesting of equity awards, under any employee benefit or compensation plan or program sponsored by Company or any of its parent, subsidiary or affiliated entities as (as such benefit, plan or program may be amended from time to time) that you were eligible for immediately prior to the Notice Date. You will not, however, be entitled to any cash bonuses (such as the annual bonus) or any further grants of performance equity awards (e.g., grants of stock options or restricted stock units) pursuant to the 2022 Performance Review Process (and any subsequent year’s performance review process) or other compensation or benefits following your Separation Date, except as provided by this Agreement.

2.    Separation from the Company.

        (a)    Date and Time of Separation. At 11:59 p.m. Pacific Time on the Separation Date your employment in any capacity for the Company will terminate. Following the Separation Date, you shall not be authorized to transact any business on behalf of the Company unless authorized to do so in writing by an officer of the Company.

(b)Payment of Salary and Expenses on Your Separation Date. On your Separation Date, the Company will pay you a total of (i) all accrued and unpaid salary through the Separation Date, and (ii) an amount equal to your effective hourly rate multiplied by the number of hours of accrued, but unused, paid time off (collectively, (i) and (ii), the “Accrued Obligations”). In the event that you have a negative paid time off balance, you agree that an amount (as calculated in the same manner used above in Section 2(b)(ii)) will be deducted from the Accrued Obligations, to the extent permitted by applicable law. You further agree that, by the Separation Date, you will submit your final documented expense reimbursement statement reflecting all business expenses you incurred through the Separation Date, if any, for which you seek reimbursement. The Company will reimburse you for these expenses pursuant to its regular business practice. In connection with the Separation Date, you and the Company will enter into a standard release (the “Standard Release,” the form of which shall be in substantial accordance with the “Standard Release” attached hereto as Exhibit A) which will include an acknowledgement and representation that, upon receiving the Accrued Obligations, you will have received all salary, wages, eligible bonuses, accrued vacation and paid time off, and all other benefits and compensation due to you through the Separation Date.

(c)     Older Worker Benefit Protection Act Disclosure. In accordance with the Older Worker Benefit Protection Act (OWBPA), the Company discloses to you the Company’s OWBPA Disclosure attached hereto and incorporated herein as Attachment A. You acknowledge and agree the Company provided you with the following: (i) information that describes the group of individuals to whom the Company is offering severance benefits in exchange for a release of claims; (ii) information regarding the

Confidential          2        JOHN NORTHCOTT

eligibility factors for inclusion in that group; (iii) information regarding the time limits applicable to that offer; (iv) information regarding the job titles and ages of all individuals to whom the Company is offering a severance payment in exchange for a release of claims; and (v) information regarding the ages of all individuals to whom the Company did not offer a severance payment in exchange for a release of claims but who were in the same job classifications or organizational unit as any individual covered in the group described in (iv) as required by the OWBPA.

3.    Employee Acknowledgements. You agree, acknowledge and affirm, as of and through the date of your signature to this Agreement (the “Signature Date”): (a) you received all earned salary, accrued paid time off, and all other earned compensation and benefits due to you through the Signature Date as a result of services you performed for the Company; (b) you reported to the Company any and all work-related injuries incurred during your employment; (c) the Company properly provided any leave of absence because of your or a family member’s health condition, and you have not been subjected to any improper treatment, conduct or actions due to a request for or taking such leave; (d) you provided the Company with written notice of any and all concerns regarding suspected ethical and compliance issues or violations on the part of the Company or any Released Party; (e) you have not solicited or assisted (except as provided in the Agreement or under applicable law) in any way an existing or former Company employee or shareholder in bringing an action or claim against the Company; (f) you have not filed and do not have pending any complaints, charges or lawsuits against any Released Party with any governmental agency or any court, and that you will not initiate or encourage any such actions in any manner contrary to the terms of this Agreement; and (g) you have not raised a claim, including but not limited to, unlawful discrimination; harassment; sexual harassment, abuse, assault, or other criminal conduct; failure to prevent an act of workplace harassment or discrimination; or retaliation in a court or government agency proceeding, in an alternative dispute resolution forum, or through the Company’s internal complaint process, involving any Released Party.

4.Consulting Services.

(a)     Consulting Services and Term. Immediately effective upon the Separation Date you will serve as an independent contractor to the Company to provide estimated and projected valuations of business and product opportunities, and to perform such other tasks as may be reasonably requested by the Company’s Chief Executive Officer or his designee (such services, the “Consulting Services”). You agree to begin providing the Consulting Services immediately following the Separation Date through December 31, 2022, or such earlier date as you or the Company determine (the “Consulting Services Term”). Generally, during the Consulting Services Term, you are expected to be available upon reasonable notice for consultation by phone and email during regular business hours. During the Consulting Services Term, you will have no authority to represent the Company to third parties or to bind the Company to any contractual obligations, whether written, oral or implied, or represent that you have such authority, unless authorized to do so in writing by an officer of the Company. During the Consulting Services Term, you shall continue to abide by all of the Company's policies and procedures in effect from time to time and perform duties requested of you in good faith to the best of your abilities.

(b)    Consideration and Fee Reimbursement during the Consulting Services Term. During the Consulting Services Term, the Company will compensate you with a monthly retainer of twenty thousand dollars ($20,000.00) per month (the “Monthly

Confidential          3        JOHN NORTHCOTT

Retainer”) regardless of the number of hours of Consulting Services you provide to the Company. You will record the hours of Consulting Services you provide to the Company in any given month against the Monthly Retainer at the rate of $335.00 per hour. The Parties agree that the total number of hours of Consulting Services you provide during the Consulting Services Term shall not exceed twenty percent (20%) of the total number of hours of services you provided in a thirty six-month period as an employee of the Company prior to the Separation Date (the “Consulting Services Ceiling”). So long as the Consulting Services Ceiling at the end of the Consulting Services Term will not be exceeded, for each hour of Consulting Services that you provide to the Company in excess of sixty (60) hours per calendar month (an “Excess Hour”), you will be compensated at an hourly rate of $335.00 per Excess Hour. You will also be reimbursed for reasonable out-of-pocket travel costs and other expenses that are approved in advance by email or writing by Company's Chief Operating Officer or his designee. Any approved air travel during the Consulting Services Term may be ticketed in business class. All required Company travel time during the Consulting Services Term shall be billed to the Company at $250.00 per hour calculated from portal-to-portal.

(c)    Invoices. After each complete calendar month during the Consulting Services Term, you shall provide to the Company on or before the seventh (7th) calendar day of the immediately following month an invoice for payment of (i) the Monthly Retainer, and (ii) your Excess Hours for such month, which shall be invoiced at $335.00 per Excess Hour (with the understanding that the Consulting Services Ceiling cannot be exceeded by the end of the Consulting Services Term). In addition, you shall provide to the Company within seven (7) days after the end of each calendar month during the Consulting Services Term a true and correct invoice for any pre-approved reasonable out-of-pocket travel costs and other expenses incurred during the prior month. The Company shall pay each invoice within thirty (30) business days of receiving such invoice from you. You shall submit each invoice and direct all communications to the Company’s Senior Vice President, Human Resources (or such other person as delegated by the Senior Vice President, Human Resources).

(d)    Independent Contractor Status. It is the express intention of you and the Company that, during the Consulting Services Term, you shall be an independent contractor, and shall be classified by the Company as such for all purposes, and shall not be an officer, employee, agent, joint venturer, or partner of the Company. Accordingly, you shall not be entitled to earn or accrue during the Consulting Services Term any bonus, salary, benefits sponsored by the Company or any of its parent, subsidiary or affiliated entities at any time, including, but not limited to health, dental, vision, 401(k), or other employee welfare benefits, and you shall be solely responsible for your insurance, taxes, fees, licenses, costs, equipment, expenses, and providing your own office space, if necessary, to perform your duties as a consultant. Nothing in this Agreement shall be interpreted or construed as creating or establishing an employment relationship between you and the Company at any time after the Separation Date. You will receive a Form 1099 for services performed for the Company during the Consulting Services Term.

(e)Equity Awards.

(i)    Equity and Change of Control From July 1, 2022 Through to December 31, 2022. Subject to this Section 4(e), after the Separation Date (including during the Consulting Services Term), you will not continue to vest in your equity awards, although your right to exercise vested and outstanding stock

Confidential          4        JOHN NORTHCOTT

options as of the Separation Date, pursuant to your equity award notices and agreements issued to you thereunder (collectively, the “Award Agreements”), will continue during the Consulting Services Term and the post-termination exercise period as set forth in further detail in Section 4(e)(ii) below. Notwithstanding anything to the contrary, with regard to the treatment of your outstanding and unvested equity awards (as those awards existed immediately prior to your Separation Date) from July 1, 2022, through to December 31, 2022, if (i) a “Change of Control” (as that term is defined in Section 3.5 of the Nektar Therapeutics Amended and Restated Change of Control Severance Benefit Plan, as amended from time to time (the “CIC Plan”)) occurs and such Change of Control transaction closes during the period commencing on July 1, 2022 through December 31, 2022, and (ii) at least two (2) “Officer Participants” (as that term is defined in the CIC Plan) who each report directly to the Company’s Chief Executive Officer and are each involuntarily terminated within three months following the closing of such Change of Control (not to exceed March 31, 2023) and such involuntary terminations each qualify as a Covered Termination (as that term is defined in the CIC Plan), then such outstanding and unvested equity awards (as those awards existed immediately prior to the Separation Date) shall be treated in the same manner as the outstanding and unvested equity awards held by those Officer Participants who were subject to the Covered Termination. For the avoidance of doubt, any termination or other forfeiture of the unvested portion of your equity awards that would otherwise occur upon the Separation Date will be delayed to effect the terms of this Section 4(e)(i) and such termination or forfeiture of such unvested equity awards will subsequently automatically occur if any vesting pursuant to this subsection does not occur, which in all cases cannot be later than March 31, 2023. Further, you acknowledge and agree that any unvested stock options and unvested restricted stock units held by you (after giving effect to any acceleration of vesting provided herein), shall be forfeited immediately and no later than April 1, 2023.

(ii)    Provisions Concerning Exercise Period After the Consulting Services Term. Notwithstanding anything to the contrary in the applicable equity incentive plan (collectively, the “Equity Plans”) and Award Agreements, your right immediately following the Consulting Services Term to exercise vested stock options shall end on the earlier of (i) June 30, 2023, or (ii) the expiration of the term of your stock options. Except as set forth in this Agreement, your stock options and restricted stock units (if any) continue to remain subject to all other terms and conditions of the applicable Equity Plans and Award Agreements.

(iii)    Equity and No Change of Control by January 1, 2023. In the event no Change of Control (and the closing of such Change of Control) has occurred by January 1, 2023, you acknowledge and agree that any unvested stock options and unvested restricted stock units held by you on December 31, 2022 shall be forfeited immediately effective as of January 1, 2023.

5.    Confidentiality of this Agreement. Except as permitted by the terms of this Agreement and applicable laws, the provisions of this Agreement shall be held in strictest confidence by you and shall not be publicized or disclosed in any manner whatsoever by you at any time to any person other than your lawyer or accountant, a governmental agency, or your immediate family without the prior written consent of an officer of the Company, except as necessary in any legal proceedings directly related to the provisions and terms of this

Confidential          5        JOHN NORTHCOTT

Agreement, to prepare and file income tax forms, or as required by court order after reasonable notice to the Company.

6.    Proprietary Information. You acknowledge access to and receipt of confidential business and proprietary information regarding the Company and its partners during the time of your employment with the Company. This information may be in a variety of paper and electronic forms. You agree not to make any such information known to any member of the public and to comply with all applicable ethical responsibilities related to client confidences and secrets. You further agree to maintain and not destroy any such information in your possession, and to return to the Company prior to the Separation Date all confidential and proprietary information and all other Company property (other than Personal IT Equipment so long as you sign the Standard Release and it becomes effective), as well as all copies or excerpts of any property, files or documents obtained as a result of employment with the Company, except those items that the Company specifically agrees in writing to permit you to retain.

7.    Return of Company Property. Other than your facility badge, any parking garage badges, and (so long as you sign the Standard Release and it becomes effective) Personal IT Equipment, you agree that, by the Separation Date, you will return to the Company all Company documents (and all copies thereof whether in physical or electronic format) and other Company property in your possession or control, including, but not limited to: Company files, email, electronic messages, notes, memoranda, correspondence, agreements, draft documents, notebooks, logs, drawings, records, plans, proposals, reports, forecasts, financial information, sales and marketing information, research and development information, personnel information, specifications, computer-recorded information, tangible property, credit cards, and keys; and any materials of any kind that contain or embody any proprietary or confidential information of the Company (and all reproductions thereof in whole or in part). If you have used any personal computer, server, or electronic system to receive, store, review, prepare or transmit any Company confidential or proprietary data, materials or information, you agree to provide the Company with a computer-useable copy of such information and then permanently delete and expunge such Company confidential or proprietary information from those systems. You agree to provide the Company access to your system as requested to verify that the necessary copying and/or deletion has been completed. You agree not to retain any paper or electronic copies of any Company documents or data (including but not limited to email and electronic messages) other than this Agreement and other documents evidencing your employment relationship with the Company.

8.     Non-Disparagement. Except as permitted by the terms of this Agreement and applicable laws, you agree not to make statements to clients, customers, partners, or suppliers of the Company that are any way disparaging or negative towards any of the Released Parties.

9.Entire Agreement; Modification. This Agreement is governed by California law. This Agreement constitutes the complete and only agreement between you and the Company on these subjects. In entering this Agreement, you are not relying on any promise or representation, written or oral, other than those expressly contained in this Agreement. Any prior agreements between or directly involving you and the Company are superseded by this Agreement, except for your Equity Plans, and Award Agreements. This Agreement may not be modified except in a writing signed by both you and a Senior Vice President of the Company (other than yourself). This Agreement shall bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Released Parties, their heirs, successors and assigns.

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Any determination that a provision of this Agreement is invalid or unenforceable, in whole or in part, will not affect any other provision of this Agreement, and the provision in question shall be modified by the court so as to be rendered enforceable in accordance with the intent of the parties to the extent possible.

10.    General. The headings in this Agreement are provided for reference only and shall not affect the substance of this Agreement. This Agreement may be signed in counterparts. This Agreement may be executed by electronic means and such signatures shall be deemed to bind each Party with the same force and effect as a handwritten signature.

[Remainder of Page Intentionally Left Blank]

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If this Agreement is acceptable to you, please sign below and return the original to Human Resources no later than Thursday, June 30, 2022. The Company’s offer to enter this Agreement will automatically expire if we do not receive your executed Agreement by the aforementioned time period.

I acknowledge and agree that I have read and understand this Agreement, am signing this Agreement knowing I could be waiving valuable rights, and acknowledge that this Agreement is final and binding.

JOHN NORTHCOTT        Position: SVP & Chief Commercial Officer

/s/ John Northcott        Dated (the “Signature Date”): 6/29/2022

Nektar Therapeutics

By: /s/ Howard W. Robin        Dated: 6/29/2022

Howard W. Robin
President and Chief Executive Officer

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EXHIBIT A

STANDARD RELEASE

This standard release (“Standard Release”) is entered into between Nektar Therapeutics, a Delaware corporation, defined to include its affiliated companies (including subsidiaries), employees, officers, directors, managers, agents, and shareholders, successors, assigns, and representatives (collectively, the “Company”), and

JOHN NORTHCOTT

(hereafter “you,” “your,” “I” or “Employee”) (collectively with the Company, the “Parties”), and is supplemental to that certain Employment Transition, Separation and Consultation Agreement (the “Agreement”) entered into by you and the Company on .

WHEREAS, You and the Company entered into an Employment Transition, Separation and Consultation Agreement, to, among other things, provide for the orderly transition of your duties;

WHEREAS, the Parties wish to provide for the releases as set forth herein with immediate effect upon the Separation Date (as that term is defined in the Agreement);

NOW, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1.Consideration. In exchange for your promises in this Standard Release, you understand the Company is offering you: (a) severance; (b) COBRA payments; (c) outplacement services; and any other consideration specifically set forth below. You acknowledge and agree that the consideration given under this Standard Release is in addition to anything of value to which you already were entitled and would not have been provided to you if you had not entered into this Standard Release. Although the Company will calculate any deductions and withholdings based on the Company’s understanding of applicable law using the information the Company has in its payroll system at the time of disbursing any consideration provided to you under this Standard Release, you acknowledge and agree that you are solely responsible for your personal tax liability associated with such consideration. 

(a)    Severance. Subject to applicable deductions and withholdings and so long as you have not resigned prior to the Separation Date and otherwise have successfully completed the Transition Period (as that term is defined in the Agreement), and within thirty (30) days of the Standard Release becoming effective (provided, that such date shall be no later than March 15, 2023), the Company will pay you, in a lump sum, the amount of $921,206.25 (the “Severance Payment”) calculated as the sum of (i) your annual base pay of $695,250.00 and (ii) $225,956.25, which corresponds to your bonus target of fifty percent (50%) of your annual base pay ($695,250.00) multiplied by the expected pay-out percentage used by the Company for its GAAP financial statements in the previous quarter, which was sixty-five percent (65%) for the first quarter of 2022.

(b)COBRA Payments. If you are eligible for and meet all requirements for timely election of COBRA coverage, the Company will pay for certain premiums for your group medical, dental, employee assistance program (EAP) and vision plan COBRA coverage from July 1, 2022 through June 30, 2023; provided, however, that the Company may cease paying the premiums for such continuation coverage at any time you become eligible for similar group coverage (medical, dental, or vision, as applicable) from another employer. No provision of the Agreement or this Standard Release will affect the continuation coverage rules under COBRA, except that the Company’s payment of COBRA premiums, if any, will be credited as payment by you for purposes of payments required for COBRA coverage. If the Company determines that it cannot pay such premiums to the group health plan provider or the COBRA provider (if applicable) without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then the Company shall convert such payments to payroll payments directly to you for the time period specified above, and such payments to you shall be subject to tax-related deductions and withholdings and paid on the Company’s regular payroll dates.

(c)    Career Transition Services. To assist you in your job search, the Company will pay for up to six (6)months of career transition services to be provided by the Company’s outplacement services provider, provided that you must initiate your request for these services no earlier than one (1) month before, and no later than three (3) months after, your Separation Date.

(d)     Transfer of Title to Personal Information Technology Equipment. Subject to the Company’s standard process for removing access to the Company’s electronic communications, applications and file storage systems, the Company will assign to you any Company-issued mobile phone, laptop computer, tablet, monitor, printer, keyboard, headset, speaker, desk, chair and mouse, in each case, currently in your possession at your residence (the “Personal IT Equipment”). In accepting the ownership of this Personal IT Equipment, you agree to remove and destroy (and otherwise not use) any Company confidential and proprietary content, as well as any third-party confidential and proprietary content. You further agree you are solely responsible for using any Personal IT Equipment in accordance with applicable laws and regulations, and you will dispose of any Personal IT Equipment in accordance with manufacturer recommendations, as well as local, state and federal regulations.

You understand that you are not entitled and will not be provided the above consideration if you do not enter into this Standard Release and the Standard Release becoming effective.

2.    Employee Acknowledgements. You agree and acknowledge that as of the Separation Date: (a) you received all earned salary, accrued paid time off, and all other earned compensation and benefits due to you through the Separation Date as a result of services you performed for the Company; (b) you reported to the Company any and all work-related injuries incurred during your employment; (c) the Company properly provided any leave of absence because of your or a family member’s health condition, and you have not been subjected to any improper treatment, conduct or actions due to a request for or taking such leave; (d) you provided the Company with written notice of any and all concerns regarding suspected ethical and compliance issues or violations on the part of the Company or any Released Party; (e) you have not solicited or assisted (except as provided in the Agreement, this Standard Release or under applicable law), in any way an existing or former Company employee or shareholder in bringing an action or claim against the Company; (f) you confirm that you have not filed and do not have pending any complaints, charges or lawsuits against any Released Party with any governmental agency or any court, and you agree that you will not initiate or encourage any such

actions in any manner contrary to the terms of this Standard Release; and (g) you affirm that you have not raised a claim, including but not limited to, unlawful discrimination; harassment; sexual harassment, abuse, assault, or other criminal conduct; failure to prevent an act of workplace harassment or discrimination; or retaliation in a court or government agency proceeding, in an alternative dispute resolution forum, or through the Company’s internal complaint process, involving the Released Parties.

3.    Confidential Information. You acknowledge your continued obligations to maintain as confidential all confidential and proprietary information of the Company under Section 4 of your Employee Agreement.

4.    Release.

(a)General Release. In exchange for the consideration recited in Section 1 of the Standard Release, you, personally and for your heirs, executors, administrators, successors and assigns, hereby agree to forever and fully release and discharge the Company and its subsidiaries, successors, predecessors and affiliates, and its and their respective current and former partners, members, directors, officers, employees, stockholders, shareholders, agents, attorneys, predecessors, insurers, affiliates and assigns (each, a “Released Party,” and together, the “Released Parties”), from any and all claims, demands, actions, causes of action, suits, damages, losses, expenses, liabilities, and obligations, in each case, of every kind and nature, and both known and unknown, individually or as part of a group action, that exist, can arise out of or are in any way related to events, acts, conduct, or omissions occurring at any time during your employment and/or separation of employment with the Company, through to and including the Standard Release Signature Date. This general release includes, but is not limited to, any rights or claims arising under the California Constitution; California statutory and common law (including contract law, employment law and tort law); the California Fair Employment and Housing Act; the California Labor Code (including Labor Code section 132A), the Age Discrimination in Employment Act (ADEA); Title VII of the of the Civil Rights Act of 1964; the Americans with Disabilities Act; the Employee Retirement Income Security Act (ERISA); the Worker Adjustment and Retraining Notification Act (WARN), federal and state family leave statutes; and any and all other federal, state and local laws, statutes, executive orders, regulations and common law; any claim for any loss, cost, damage or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by you as a result of this Standard Release; any and all claims for attorney’s fees and costs; and any and all claims relating to, or arising from your right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law. You and the Company agree that this is a compromise settlement of all such claims and therefore, this Standard Release does not constitute any admission of liability on the part of the Company.

You are releasing all rights under Section 1542 of the California Civil Code. Section 1542 provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.

You intend these consequences even as to claims for damages that may exist as of the date this Standard Release is executed that you do not know exist and which if known, would materially affect your decision to execute this Standard Release, regardless of

whether the lack of knowledge is the result of ignorance, oversight, error, negligence or any other cause.

(b)Exclusions from General Release. The above release does not waive claims: (i) for unemployment or workers’ compensation benefits, (ii) for vested rights under ERISA-covered employee benefit plans as applicable on the Standard Release Signature Date, (iii) that may arise after the Standard Release Signature Date, (iv) for indemnification under California Labor Code section 2802, or (v) which cannot be released by private agreement.

5.    Confidentiality of this Standard Release. Except as permitted by the terms of this Standard Release and applicable laws, the provisions of this Standard Release shall be held in strictest confidence by you and shall not be publicized or disclosed in any manner whatsoever by you at any time to any person other than your lawyer or accountant, a governmental agency, or your immediate family without the prior written consent of an officer of the Company, except as necessary in any legal proceedings directly related to the provisions and terms of this Standard Release, to prepare and file income tax forms, or as required by court order after reasonable notice to the Company.

6.No Retaliation.  Nevertheless, nothing in this Standard Release prohibits you from reporting an event that you reasonably and in good faith believes is a violation of law to the relevant law-enforcement agency (such as the SEC, EEOC, or DOL), from testifying truthfully under oath in any court, arbitration or administrative agency proceeding, from providing truthful information in the course of a government investigation or from cooperating in an investigation conducted by such a government agency.  This may include disclosure of trade secret or confidential information within the limitations permitted by the 2016 Defend Trade Secrets Act (DTSA).  You are hereby provided notice that under the DTSA, (1) no individual will be held criminally or civilly liable under federal or state trade secret law for the disclosure of a trade secret (as defined in the Economic Espionage Act) that (A) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and made solely for the purpose of reporting or investigating a suspected violation of law; or, (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal so that it is not made public; and, (2) an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.

7.    Voluntary Waiver and Release, Acknowledgement of Waiver of Claims, Advice of Counsel, Consideration, Revocation and Other Information. Youacknowledge you are waiving and releasing rights you have under the law and that this waiver and release is executed knowingly and voluntarily without any coercion, duress or undue influence. You acknowledge that the consideration given for this Standard Release is in addition to anything of value to which you were already entitled. You further acknowledge notice in writing that:

(a)     your waiver and release of rights under this Standard Release are voluntary and deliberate, and that you are acting of your own free will in executing this Standard Release and you had an opportunity to ask questions concerning this Standard Release;

(b)     through this Standard Release, you are releasing the Released Parties from any and all claims, that you may have against any of the Released Parties;

(c)     your waiver and release, as set forth in this Standard Release, do not apply to any rights or claims that may arise after the date you sign this Standard Release;

(d)     the Company hereby advises you that, before signing this Standard Release, you should consult with an attorney, although you may choose voluntarily not to do so;

(e)    you have had at least forty-five (45) days to consider whether to sign this Standard Release, although you may choose voluntarily to sign it earlier;

(f)     changes to this Standard Release, whether material or immaterial, do not restart the running of the forty-five (45) day consideration period;

(g)     you may challenge the knowing and voluntary nature of this release under any applicable federal, state, or local agency charged with the enforcement of any employment laws, such as under the Older Workers Benefit Protection Act and the ADEA before a court, the EEOC, the NLRB, or any other; and

(h)     you have seven (7) days following the date you sign this Standard Release to revoke it by delivering written notice to the Company’s General Counsel at the address below or by facsimile:

Mark A. Wilson, Senior Vice President & General Counsel

Nektar Therapeutics

455 Mission Bay Boulevard South

San Francisco, CA 94158

(415) 339-5322 (facsimile)

If the revocation period expires on a weekend or holiday, you will have until the end of the next business day to revoke it. This Standard Release will become effective on the eighth day after you sign this Standard Release, provided you do not revoke this Standard Release (“the Standard Release Effective Date”) prior to the expiration of the seven (7) day revocation period as provided above.

8.    Entire Agreement; Modification. This Standard Release is governed by California law. The Agreement, the Standard Release and your Employee Agreement, if any, constitute the complete and only agreement between you and the Company on these subjects. In entering this Standard Release, you are not relying on any promise or representation, written or oral, other than those expressly contained in the Agreement and this Standard Release. Any prior agreements between or directly involving you and the Company are superseded by the Agreement and this Standard Release, except for your Employee Agreement with the Company, the Equity Plans, and Award Agreements. This Standard Release may not be modified except in a writing signed by both you and a Senior Vice President of the Company. This Standard Release shall bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Released Parties, their heirs, successors and assigns. Any determination that a provision of this Standard Release is invalid or unenforceable, in whole or in part, will not affect any other provision of this Standard Release, and the provision in question shall be modified by the court so as to be rendered enforceable in accordance with the intent of the parties to the extent possible.

9.    General. The headings in this Standard Release are provided for reference only and shall not affect the substance of this Standard Release. This Standard Release may be signed in counterparts. This Standard Release may be executed by electronic means and such signatures shall be deemed to bind each Party with the same force and effect as a handwritten signature.

[Remainder of Page Intentionally Blank]

If this Standard Release is acceptable to you, please sign below and return the original to Human Resources no later than August 14, 2022. The Company’s offer to enter this Standard Release will automatically expire if we do not receive your executed Standard Release by the aforementioned time period.

PLEASE READ THIS STANDARD RELEASE AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS BEFORE SIGNING IT. THIS STANDARD RELEASE CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS, INCLUDING CLAIMS UNDER TITLE VII, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT AND OTHER FEDERAL, STATE AND LOCAL LAWS PROHIBITING DISCRIMINATION IN EMPLOYMENT, TO THE EXTENT PERMITTED BY LAW.

I acknowledge and agree that I have read and understand this Standard Release, am signing this Standard Release knowing I could be waiving valuable rights, and acknowledge that this Standard Release is final and binding.

JOHN NORTHCOTT        Position: SVP & Chief Commercial Officer

    Dated:

         the “Standard Release Signature Date”

Nektar Therapeutics

By:    Dated:

Howard W. Robin
President and Chief Executive Officer

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Howard W. Robin, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2022 of Nektar Therapeutics;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2022	/s/ HOWARD W. ROBIN
	Howard W. Robin Chief Executive Officer, President and Director

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Jillian B. Thomsen, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2022 of Nektar Therapeutics;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2022	/s/ JILLIAN B. THOMSEN
	Jillian B. Thomsen Senior Vice President, Chief Financial Officer

EX-32.1

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 Jillian B. Thomsen, Senior Vice President, Chief Financial Officer of the Company, each hereby certifies that, to the best of his or her knowledge:

1.The Company’s Quarterly Report on Form 10-Q for the three months ended June 30, 2022, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

2.The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 4, 2022
/s/ HOWARD W. ROBIN	/s/ JILLIAN B. THOMSEN
Howard W. Robin Chief Executive Officer, President and Director	Jillian B. Thomsen Senior Vice President, Chief Financial Officer

___________________________________________

*    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.

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2022	Jul. 29, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	0-24006
Entity Registrant Name	NEKTAR THERAPEUTICS
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	94-3134940
Entity Address, Address Line One	455 Mission Bay Boulevard South
Entity Address, City or Town	San Francisco
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94158
City Area Code	415
Local Phone Number	482-5300
Title of 12(b) Security	Common Stock, $0.0001 par value
Trading Symbol	NKTR
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		187,404,772
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Entity Central Index Key	0000906709
Current Fiscal Year End Date	--12-31

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 77,545	$ 25,218
Short-term investments	541,771	708,737
Accounts receivable	10,006	22,492
Inventory	16,969	15,801
Other current assets	19,245	23,333
Total current assets	665,536	795,581
Long-term investments	8,928	64,828
Property, plant and equipment, net	39,792	60,510
Operating lease right-of-use assets	68,996	117,025
Goodwill	76,501	76,501
Other assets	2,234	2,744
Total assets	861,987	1,117,189
Current liabilities:
Accounts payable	12,346	9,747
Accrued compensation	30,323	15,735
Accrued clinical trial expenses	29,234	26,809
Other accrued expenses	13,035	15,468
Operating lease liabilities, current portion	20,047	17,441
Total current liabilities	104,985	85,200
Operating lease liabilities, less current portion	119,415	125,736
Development derivative liability	0	27,726
Liabilities related to the sales of future royalties, net	176,775	195,427
Other long-term liabilities	2,080	3,592
Total liabilities	403,255	437,681
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000 shares authorized; no shares designated or outstanding at June 30, 2022 or December 31, 2021, respectively	0	0
Common stock, $0.0001 par value; 300,000 shares authorized; 187,405 shares and 185,468 shares outstanding at June 30, 2022 and December 31, 2021, respectively	19	19
Capital in excess of par value	3,549,360	3,516,641
Accumulated other comprehensive loss	(8,191)	(4,157)
Accumulated deficit	(3,082,456)	(2,832,995)
Total stockholders’ equity	458,732	679,508
Total liabilities and stockholders’ equity	$ 861,987	$ 1,117,189

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares designated (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	300,000,000	300,000,000
Common stock, shares outstanding (in shares)	187,405,000	185,468,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenue:
Total revenue	$ 21,585	$ 28,330	$ 46,407	$ 51,977
Operating costs and expenses:
Cost of goods sold	5,115	7,667	10,430	13,423
Research and development	42,740	101,313	149,993	196,917
General and administrative	20,521	29,555	47,860	61,234
Restructuring, impairment and other costs of terminated program	106,045	0	107,520	0
Total operating costs and expenses	174,421	138,535	315,803	271,574
Loss from operations	(152,836)	(110,205)	(269,396)	(219,597)
Non-operating income (expense):
Change in fair value of development derivative liability	0	(2,713)	33,427	(4,312)
Non-cash interest expense on liabilities related to the sales of future royalties	(7,228)	(13,089)	(14,757)	(26,385)
Interest income and other income (expense), net	1,096	845	1,491	2,257
Total non-operating income (expense), net	(6,132)	(14,957)	20,161	(28,440)
Loss before provision for income taxes	(158,968)	(125,162)	(249,235)	(248,037)
Provision for income taxes	100	357	226	449
Net loss	$ (159,068)	$ (125,519)	$ (249,461)	$ (248,486)
Basic net loss per share (in dollars per share)	$ (0.85)	$ (0.69)	$ (1.34)	$ (1.37)
Diluted net loss per share (in dollars per share)	$ (0.85)	$ (0.69)	$ (1.34)	$ (1.37)
Weighted average shares outstanding used in computing basic net loss per share (in shares)	186,800	182,698	186,323	182,038
Weighted average shares outstanding used in computing diluted net loss per share (in shares)	186,800	182,698	186,323	182,038
Product sales
Revenue:
Total revenue	$ 5,312	$ 7,846	$ 11,000	$ 12,641
Non-cash royalty revenue related to the sales of future royalties
Revenue:
Total revenue	16,264	20,456	33,825	39,254
License, collaboration and other revenue
Revenue:
Total revenue	$ 9	$ 28	$ 1,582	$ 82

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Net loss	$ (159,068)	$ (125,519)	$ (249,461)	$ (248,486)
Other comprehensive income (loss):
Net unrealized gain (loss) on available-for-sale investments	(988)	(64)	(3,079)	(830)
Net foreign currency translation gain (loss)	(671)	(215)	(955)	(275)
Other comprehensive income (loss)	(1,659)	(279)	(4,034)	(1,105)
Comprehensive loss	$ (160,727)	$ (125,798)	$ (253,495)	$ (249,591)

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Shares	Capital in Excess of Par Value	Accumulated Other Comprehensive Loss	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2020		180,091
Beginning balance at Dec. 31, 2020	$ 1,077,295	$ 18	$ 3,388,730	$ (2,295)	$ (2,309,158)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued under equity compensation plans (in shares)		2,199
Shares issued under equity compensation plans	17,106		17,106
Stock-based compensation	23,898		23,898
Comprehensive income (loss)	(123,793)			(826)	(122,967)
Ending balance (in shares) at Mar. 31, 2021		182,290
Ending balance at Mar. 31, 2021	994,506	$ 18	3,429,734	(3,121)	(2,432,125)
Beginning balance (in shares) at Dec. 31, 2020		180,091
Beginning balance at Dec. 31, 2020	$ 1,077,295	$ 18	3,388,730	(2,295)	(2,309,158)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued under equity compensation plans (in shares)	3,682
Comprehensive income (loss)	$ (249,591)
Ending balance (in shares) at Jun. 30, 2021		183,773
Ending balance at Jun. 30, 2021	904,975	$ 18	3,466,001	(3,400)	(2,557,644)
Beginning balance (in shares) at Mar. 31, 2021		182,290
Beginning balance at Mar. 31, 2021	$ 994,506	$ 18	3,429,734	(3,121)	(2,432,125)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued under equity compensation plans (in shares)	1,483	1,483
Shares issued under equity compensation plans	$ 12,553		12,553
Stock-based compensation	23,714		23,714
Comprehensive income (loss)	(125,798)			(279)	(125,519)
Ending balance (in shares) at Jun. 30, 2021		183,773
Ending balance at Jun. 30, 2021	904,975	$ 18	3,466,001	(3,400)	(2,557,644)
Beginning balance (in shares) at Dec. 31, 2021		185,468
Beginning balance at Dec. 31, 2021	679,508	$ 19	3,516,641	(4,157)	(2,832,995)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued under equity compensation plans (in shares)		806
Shares issued under equity compensation plans	188		188
Stock-based compensation	20,961		20,961
Comprehensive income (loss)	(92,768)			(2,375)	(90,393)
Ending balance (in shares) at Mar. 31, 2022		186,274
Ending balance at Mar. 31, 2022	607,889	$ 19	3,537,790	(6,532)	(2,923,388)
Beginning balance (in shares) at Dec. 31, 2021		185,468
Beginning balance at Dec. 31, 2021	$ 679,508	$ 19	3,516,641	(4,157)	(2,832,995)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued under equity compensation plans (in shares)	1,937
Comprehensive income (loss)	$ (253,495)
Ending balance (in shares) at Jun. 30, 2022		187,405
Ending balance at Jun. 30, 2022	458,732	$ 19	3,549,360	(8,191)	(3,082,456)
Beginning balance (in shares) at Mar. 31, 2022		186,274
Beginning balance at Mar. 31, 2022	$ 607,889	$ 19	3,537,790	(6,532)	(2,923,388)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued under equity compensation plans (in shares)	1,131	1,131
Shares issued under equity compensation plans	$ 467		467
Stock-based compensation	11,103		11,103
Comprehensive income (loss)	(160,727)			(1,659)	(159,068)
Ending balance (in shares) at Jun. 30, 2022		187,405
Ending balance at Jun. 30, 2022	$ 458,732	$ 19	$ 3,549,360	$ (8,191)	$ (3,082,456)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		126 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022
Cash flows from operating activities:
Net loss			$ (249,461)	$ (248,486)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash royalty revenue related to the sales of future royalties			(33,825)	(39,254)	$ 367,277
Non-cash interest expense on liabilities related to the sales of future royalties	$ 7,228	$ 13,089	14,757	26,385	259,030
Change in fair value of development derivative liability	0	2,713	(33,427)	4,312
Non-cash research and development expense			4,951	5,795
Stock-based compensation	11,103	23,714	32,064	47,612
Depreciation and amortization			7,171	7,090
Impairment of right-of-use assets and property, plant and equipment	57,321		57,321	0
Amortization of premiums (discounts), net and other non-cash transactions			700	4,090
Changes in operating assets and liabilities:
Accounts receivable			12,486	10,018
Inventory			(1,168)	676
Operating leases, net			1,486	2,260
Other assets			7,627	11,585
Accounts payable			2,833	(2,101)
Accrued compensation			14,588	14,133
Other accrued expenses			(1,520)	(4,101)
Net cash used in operating activities			(163,417)	(159,986)
Cash flows from investing activities:
Purchases of investments			(247,014)	(527,887)
Maturities of investments			466,423	612,419
Sales of investments			0	5,035
Purchases of property, plant and equipment			(4,983)	(6,157)
Net cash provided by investing activities			214,426	83,410
Cash flows from financing activities:
Proceeds from shares issued under equity compensation plans			655	28,523
Cash receipts from development derivative liability			750	1,500
Net cash provided by financing activities			1,405	30,023
Effect of foreign exchange rates on cash and cash equivalents			(87)	(57)
Net increase (decrease) in cash and cash equivalents			52,327	(46,610)
Cash and cash equivalents at beginning of period			25,218	198,955
Cash and cash equivalents at end of period	$ 77,545	$ 152,345	77,545	152,345	$ 77,545
Supplemental disclosures of cash flow information:
Operating lease right-of-use asset recognized in exchange for lease liabilities			$ 0	$ 1,057

XML

Organization and Summary of Significant Accounting Policies

3 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Summary of Significant Accounting Policies

Organization and Summary of Significant Accounting Policies

Organization

We are a research-based biopharmaceutical company headquartered in San Francisco, California and incorporated in Delaware. We (individually or with a partner) are developing a pipeline of drug candidates that utilize our advanced polymer conjugate technology platforms, which are designed to enable the development of new molecular entities that target known mechanisms of action. Our research and development pipeline of new investigational drugs includes investigational treatments in oncology and immunology.

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 cash generated from licensing, collaboration and manufacturing agreements and financing transactions. As of June 30, 2022, we had approximately $628.2 million in cash and investments in marketable securities.

Results of Bempegaldesleukin Program and the Restructuring Plan

In March and April 2022, we announced the unsuccessful results from our clinical trials studying bempegaldesleukin in combination with Opdivo® under our Strategic Collaboration Agreement with Bristol-Myers Squibb Company (BMS). Based on these results, we decided to discontinue all of our ongoing clinical trials of bempegaldesleukin in combination with checkpoint inhibitors and tyrosine kinase inhibitors. In April 2022, we also announced new strategic reorganization and cost restructuring plans for the Company’s future:

•On March 14, 2022, BMS and we announced that the registrational trial for bempegaldesleukin in combination with Opdivo® in metastatic melanoma did not meet its primary endpoints and that BMS and we decided to discontinue the registrational trials in metastatic melanoma and adjuvant melanoma. See Note 7 for additional information on our BMS Collaboration Agreement.

•On April 14, 2022, we announced that each of our registrational trials for bempegaldesleukin in combination with Opdivo® in renal cell carcinoma and in cisplatin-ineligible, locally advanced or metastatic urothelial cancer did not meet their respective primary endpoints. Due to these results, BMS and we decided to discontinue these studies and all other ongoing studies for bempegaldesleukin in combination with Opdivo®.

•On April 14, 2022, we announced that, in consultation with SFJ Pharmaceuticals and based upon a recommendation from an independent Data Monitoring Committee, we decided to discontinue our Phase 2/3 study in bempegaldesleukin in combination with Keytruda® in patients with metastatic or unresectable recurrent squamous cell cancer of the head and neck under our Co-Development Agreement with SFJ Pharmaceuticals. See Note 4 for additional information regarding our Co-Development Agreement with SFJ Pharmaceuticals.

•We also announced on April 14, 2022, the discontinuation of our Phase 1/2 PROPEL study of bempegaldesleukin in combination with Keytruda® in locally advanced or metastatic solid tumors, including non-small cell lung cancer. With these announcements on April 14, 2022, subject to activities required for an orderly wind down of the studies, there will be no ongoing clinical development activities of bempegaldesleukin.

•On April 25, 2022, we announced our strategic reorganization and cost restructuring plans (together, the Restructuring Plan), which were reviewed and approved by our Board of Directors on April 14, 2022. Pursuant to the Restructuring Plan, on April 26, 2022, our duly authorized officers implemented certain strategic, operational and organizational steps, including the prioritization of key Phase 2 development programs to advance our early stage research pipeline. In addition, we announced our plan to reduce our workforce by approximately 70% and to close our research facility in India.

We have incurred and expect to incur significant costs resulting from these decisions and plans. See Note 8 for additional information on the effect on our Condensed Consolidated Financial Statements.

Basis of Presentation and Principles of Consolidation

Our Condensed Consolidated Financial Statements include the financial position, results of operations and cash flows of Nektar Therapeutics and our wholly-owned subsidiaries. We have eliminated all intercompany accounts and transactions in consolidation.

We prepared our Condensed Consolidated Financial Statements following the requirements of the Securities and Exchange Commission (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. generally accepted accounting principles (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 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. We include translation gains and losses in accumulated other comprehensive loss in the stockholders’ equity section of our Condensed Consolidated Balance Sheets. To date, such cumulative currency translation adjustments have not been significant to our consolidated financial position.

Our comprehensive loss consists of our net loss plus our foreign currency translation gains and losses and unrealized gains and losses on available-for-sale securities. There were no significant reclassifications out of accumulated other comprehensive loss to the statements of operations during the three and six months ended June 30, 2022 and 2021.

The accompanying Condensed Consolidated Financial Statements are unaudited. The Condensed Consolidated Balance Sheet data as of December 31, 2021 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, 2021 filed with the SEC on March 1, 2022. 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. 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 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.

Significant Concentrations

Our customers are primarily pharmaceutical companies that are located in the U.S. and Europe and with whom we have multi-year arrangements. Our accounts receivable balance contains billed and unbilled trade receivables from product sales, milestones (to the extent that they have been achieved and are due from the counterparty), and other contingent payments, as well as reimbursable costs from collaborative research and development agreements. As of June 30, 2022 and December 31, 2021, our accounts receivable includes $7.4 million and $21.4 million, respectively, for unbilled net expense reimbursements from BMS. The remaining accounts receivable relate primarily to product sales. We generally do not require collateral from our customers. We perform a regular review of our customers’ credit risk and payment histories, including payments made after period end. Historically, we have not experienced credit losses from our accounts receivable. We have not recorded reserves for credit losses for the three and six months ended June 30, 2022 and 2021, nor have recorded such an allowance as of June 30, 2022 or December 31, 2021.

We are dependent on our suppliers and contract manufacturers to provide raw materials and drugs of appropriate quality and reliability and to meet applicable contract and regulatory requirements. In certain cases, we rely on single sources of supply of one or more critical materials. Consequently, in the event that supplies are delayed or interrupted for any reason, including as a result of the COVID-19 pandemic, our ability to develop and produce our drug candidates, our ability to supply comparator drugs for our clinical trials, or our ability to meet our supply obligations 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 only invest in highly-rated securities and limit our exposure to any single issuer, the COVID-19 pandemic or other 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 the COVID-19 pandemic or other 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.

Restructuring

We recognize restructuring charges related to reorganization plans that have been committed to by management when liabilities have been incurred. In connection with these activities, we record restructuring charges at fair value for:

•contractual employee termination benefits provided that the obligations result from services already rendered based on vested rights to such benefits when the payment of benefits becomes probable and the amount can be reasonably estimated,

•one-time employee termination benefits on the communication date from management to the employees provided that management has committed to a plan of termination, the plan identifies the employees and their expected termination dates, the details of termination benefits are complete, and it is unlikely that changes to the plan will be made or the plan will be withdrawn,

•contract termination costs when we cancel the contract in accordance with its terms, and

•costs to be incurred over the remaining contract term without economic benefit to us at the cease-use date.

For one-time employee terminations benefits, we recognize the liability in full on the communication date when future services are not required or amortize the liability ratably over the service period, if required. The fair value of termination benefits reflects our estimates of expected utilization of certain Company-funded post-employment benefits.

See Note 8 for additional information on the severance expense that we recognized for employees terminated in connection with our reduction-in-force.

Long-Lived Asset Impairment

We assess the impairment of long-lived assets whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable. In the case of property, plant and equipment and right-of-use assets for our leases, we determine whether there has been an impairment by comparing the carrying value of the asset to the anticipated undiscounted net cash flows associated with the asset. If such cash flows are less than the carrying value, we write down the asset to its fair value, which may be measured as anticipated net cash flows associated with the asset, discounted at a rate that we believe a market participant would utilize to reflect the risks associated with the cash flows, such as credit risk. See Note 8 for additional information regarding the impairment charge we recorded in connection with our leased facilities and certain property and equipment.

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Cash and Investments in Marketable Securities

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Cash and Investments in Marketable Securities

Cash and Investments in Marketable Securities

Cash and investments in marketable securities, including cash equivalents, are as follows (in thousands):

	Estimated Fair Value at
	June 30, 2022		December 31, 2021
Cash and cash equivalents	$	77,545	$	25,218
Short-term investments	541,771		708,737
Long-term investments	8,928		64,828
Total cash and investments in marketable securities	$	628,244	$	798,783

We invest in liquid, high quality debt securities which are subject to interest rate risk. To minimize the exposure due to an adverse shift in interest rates, we invest in securities with maturities of two years or less and maintain a weighted average maturity of one year or less. As of June 30, 2022 and December 31, 2021, all of our long-term investments had maturities between one and two years.

Our portfolio of cash and investments in marketable securities includes (in thousands):

	Fair Value Hierarchy Level	June 30, 2022								December 31, 2021
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Fair Value
Corporate notes and bonds	2	$	141,416	$	—	$	(1,505)	$	139,911	$	278,121
Corporate commercial paper	2	415,106		—		(2,232)		412,874		478,629
Obligations of U.S. government agencies	2	4,880		—		(5)		4,875		5,875
Available-for-sale investments		$	561,402	$	—	$	(3,742)	$	557,660	$	762,625
Money market funds	1							42,342		23,968
Certificates of deposit	2							9,516		10,940
Cash	N/A							18,726		1,250
Total cash and investments in marketable securities								$	628,244	$	798,783

For the three and six months ended June 30, 2022 and 2021, there were no transfers between Level 1 and Level 2 of the fair value hierarchy. At December 31, 2021, our gross unrealized losses totaled $0.7 million, and our gross unrealized gains were insignificant.

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Inventory

6 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

Inventory

Inventory

Inventory consists of the following (in thousands):

	June 30, 2022		December 31, 2021
Raw materials	$	2,099	$	3,166
Work-in-process	13,837		9,342
Finished goods	1,033		3,293
Total inventory	$	16,969	$	15,801

We manufacture finished goods inventory upon receipt of firm purchase orders, and we may manufacture certain intermediate work-in-process materials and purchase raw materials based on purchase forecasts from our collaboration partners. We include direct materials, direct labor, and manufacturing overhead in inventory and determine cost on a first-in, first-out basis for raw materials and on a specific identification basis for work-in-process and finished goods. We value inventory at the lower of cost or net realizable value, and we write down defective or excess inventory to net realizable value based on historical experience or projected usage. We expense inventory related to our research and development activities as manufactured by us or when purchased.

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Co-Development Agreement with SFJ Pharmaceuticals and Development Derivative Liability

6 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Co-Development Agreement with SFJ Pharmaceuticals and Development Derivative Liability

Co-Development Agreement with SFJ Pharmaceuticals and Development Derivative Liability

On February 12, 2021, we entered into a Co-Development Agreement (the SFJ Agreement) with SFJ Pharmaceuticals XII, L.P., a SFJ Pharmaceuticals Group company (SFJ), pursuant to which SFJ would pay up to $150.0 million in committed funding to support a Phase 2/3 study of bempegaldesleukin in combination with Keytruda® (pembrolizumab) for first-line treatment of patients with metastatic or unresectable recurrent squamous cell carcinoma of the head and neck (the SCCHN Clinical Trial) whose tumors express PD-L1 (the SCCHN Indication). SFJ has primary responsibility for the clinical trial management of the SCCHN Clinical Trial, and we are the sponsor of the SCCHN Clinical Trial. The SFJ Agreement provided for us to pay up to $637.5 million in Success Payments in the event of FDA approval of bempegaldesleukin for the metastatic melanoma, the SCCHN Indication, or both, and in the event of FDA approval of one additional bempegaldesleukin indication.

As of March 31, 2022, due to the negative results of the metastatic melanoma trial and initial discussions with SFJ, we concluded that it was remote that SFJ and we would continue the SCCHN Clinical Trial. Accordingly, the fair value of the development derivative liability was reduced to $0 as of March 31, 2022, and we recognized a corresponding gain in the Change in fair value of development derivative liability. As discussed in Note 1, on April 14, 2022, BMS and we decided to end the development for bempegaldesleukin in combination with Opdivo® and that all other ongoing studies in the bempegaldesleukin program would be discontinued. We also announced that SFJ and we agreed to discontinue the SCCHN Clinical Trial.

Accordingly, SFJ will not be entitled to any Success Payments, and SFJ has the responsibility to wind down the SCCHN Clinical Trial at its sole cost. SFJ has no right to seek reimbursement from us for any costs incurred for the SCCHN Clinical Trial.

We presented the SFJ Agreement as a Development derivative liability in our Condensed Consolidated Balance Sheets, which we remeasured to fair value at each reporting date. As SFJ conducted the SCCHN Clinical Trial, we recorded non-cash research and development expense with a corresponding increase to the development derivative liability, and as SFJ remitted funding to us to support our internal costs of conducting the trial, we also recorded a corresponding increase to the development derivative liability. We presented the gain (loss) from the remeasurement as change in fair value of development derivative liability in our Condensed Consolidated Statements of Operations.

The following table presents the changes in the development derivative liability:

		Three months ended
	Fair Value Hierarchy Level	June 30, 2022		June 30, 2021
Fair value as of March 31, 2022 and 2021, respectively	3	$	—	$	4,597
Non-cash research and development expense		—		3,547
Cash receipts from SFJ		—		750
Change in the fair value of development derivative liability		—		2,713
Fair value at end of period	3	$	—	$	11,607

		Six months ended
	Fair Value Hierarchy Level	June 30, 2022			June 30, 2021
Fair value as of December 31, 2021 and February 12, 2021 (inception), respectively	3	$	27,726		$	—
Non-cash research and development expense		4,951			5,795
Cash receipts from SFJ		750			1,500
Change in the fair value of development derivative liability		(33,427)			4,312
Fair value at end of period	3	$	—	0	$	11,607

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Liabilities Related to Sales of Future Royalties

6 Months Ended

Jun. 30, 2022

Other Liabilities Disclosure [Abstract]

Liabilities Related to Sales of Future Royalties

Liabilities Related to Sales of Future Royalties

In 2012 and 2020, we sold to RPI Finance Trust (RPI) and entities managed by Healthcare Royalty Management, LLC (collectively, HCR), respectively, our rights to receive royalties under our license and manufacturing agreements with certain pharmaceutical partners as summarized below under the 2012 Purchase and Sale Agreement and the 2020 Purchase and Sale Agreement, respectively:

Drug	Manufacturer	Counterparty under Purchase and Sale Agreement	Date Sold
ADYNOVATE® and ADYNOVI® (brand name for ADYNOVATE® in Europe)	Takeda Pharmaceutical Company Limited	Healthcare Royalty Management, LLC	December 16, 2020
MOVANTIK® (naloxegol tablets) and MOVENTIG® (brand name for MOVANTIK® in Europe)	AstraZeneca AB	Healthcare Royalty Management, LLC	December 16, 2020
REBINYN®	Novo Nordisk Inc., Novo Nordisk A/S and Novo Nordisk A/G	Healthcare Royalty Management, LLC	December 16, 2020
CIMZIA® (certolizumab pegol)	UCB Pharma	RPI Finance Trust	February 24, 2012
MIRCERA® (Continuous Erythropoietin Receptor Activator)	F. Hoffmann-La Roche Ltd	RPI Finance Trust	February 24, 2012

Due to our ongoing manufacturing obligations in both arrangements, we account for the proceeds as imputed debt (Royalty Obligations) and therefore continue to recognize these non-cash royalties as revenue. As royalties are remitted to RPI and HCR by our licensees, the balances of the respective Royalty Obligations will be effectively repaid over the lives of the agreements. To determine the amortization of the Royalty Obligations, we are required to estimate the total amount of future royalty payments to be received by RPI and HCR, respectively. The sum of these amounts less the net proceeds we received will be recorded as non-cash interest expense over the lives of the respective Royalty Obligations. Additionally, to the extent that the amount or timing of the royalty payments is materially different from our original estimates, we will prospectively adjust the imputed interest rate and the related amortization of the applicable Royalty Obligation. As of June 30, 2022, our imputed interest rates for the arrangements with RPI and HCR were 16% and 15%, respectively.

The following table shows the activity within the liability account of each arrangement (in thousands):

	Period from inception to June 30, 2022
	2012 Purchase and Sale Agreement		2020 Purchase and Sale Agreement		Total
Royalty monetization proceeds	$	124,000	$	150,000	$	274,000
Non-cash royalty revenue	(297,507)		(69,770)		(367,277)
Non-cash interest expense	229,474		29,556		259,030
Payments to RPI	(10,000)		—		(10,000)
Loss on revaluation of liability related to the sale of future royalties (1)	23,522		—		23,522
Liabilities related to the sales of future royalties – ending balance	69,489		109,786		179,275
Less: unamortized transaction costs	—		(2,500)		(2,500)
Liabilities related to the sales of future royalties, net	$	69,489	$	107,286	$	176,775
(1) Loss recognized from Settlement Agreement to resolve UCB’s challenges to our patents, as agreed to by UCB, RPI and us, on October 13, 2021.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

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 least quarterly 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 October 2018, we and certain of our executives were named in a putative securities class action complaint filed in the U.S. District Court for the Northern District of California (Case No. 18-cv-06607, which we refer to as the Mulquin action). The Mulquin plaintiffs have challenged public statements Nektar made, between January 2017 and June 2018, about the clinical trials of bempegaldesleukin. The Mulquin complaint was amended in May 2019. The defendants moved to dismiss and the court granted the motion without prejudice in July 2020. The Mulquin plaintiffs again amended their complaint and the defendants again moved to dismiss. In December 2020, the court dismissed the action with prejudice. The plaintiffs filed a notice of appeal in January 2021 and appellate briefing in the U.S. Court of Appeals for the Ninth Circuit was completed in September 2021. Oral argument occurred on December 10, 2021. On May 19, 2022, the Ninth Circuit affirmed the district court's dismissal of all claims against the defendants.

A derivative action was also filed against certain of the Company’s current and former officers and directors, purportedly on the Company’s behalf. This derivative action is based on the allegations in the Mulquin action and on the premise that the Company’s officers and directors breached their fiduciary duties to the Company. The complaint for this derivative action was filed in February 2021 in the Court of Chancery of the State of Delaware (C.A. No. 2021-0118-PAF). Following a stay in the proceedings during the pendency of the appeal in the Mulquin action, the Company received an amended complaint on July 29, 2022, and the defendants will have until September 12, 2022 to respond to the amended complaint. Given the nature and status of the derivative action, we cannot reasonably estimate a potential future loss or a range of potential future losses. 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 these matters in our Consolidated Balance Sheets at either June 30, 2022 or December 31, 2021.

Indemnifications in Connection with Commercial Agreements

    As part of our collaboration agreements with our partners related to the license, development, manufacture and supply of drugs and PEGylation materials based on our proprietary technologies and 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.

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 RPI and HCR transactions, however, the time limitation we have to indemnify RPI with respect to any breach of these intellectual property-based representations and warranties has passed. 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.

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License and Collaboration Agreements

6 Months Ended

Jun. 30, 2022

License And Collaboration Agreements [Abstract]

License and Collaboration Agreements

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 are entitled to receive license fees, upfront payments, milestone and other contingent payments, royalties, sales milestone payments, and payments for the manufacture and supply of our proprietary PEGylation materials and/or reimbursement for research and development activities. We generally include our costs of performing these services in research and development expense, except for costs for product sales to our collaboration partners which we include in cost of goods sold. We analyze our agreements to determine whether we should account for the agreements within the scope of ASC 808, and, if so, we analyze whether we should account for any elements under ASC 606.

There have been no material changes to our collaboration agreements in the three and six months ended June 30, 2022, other than as described below for our Strategic Collaboration Agreement with BMS and Note 4 regarding SFJ.

Bristol-Myers Squibb Company (BMS): Bempegaldesleukin, also referred to as NKTR-214

On February 13, 2018, we entered into a Strategic Collaboration Agreement (the BMS Collaboration Agreement) and a Share Purchase Agreement with BMS, both of which became effective on April 3, 2018. Pursuant to the BMS Collaboration Agreement, we and BMS have jointly developed bempegaldesleukin in combination with BMS’s Opdivo®. The parties share the internal and external development costs for bempegaldesleukin in combination regimens based on each party’s relative ownership interest in the compounds included in the regimens. In accordance with the agreement, the parties share development costs for bempegaldesleukin in combination with Opdivo®, 67.5% of costs to BMS and 32.5% to Nektar. The parties share costs for the manufacturing and commercialization of bempegaldesleukin, 35% of the costs to BMS and 65% to Nektar.

Upon the effective date of the BMS Collaboration Agreement in April 2018, BMS paid us a non-refundable upfront cash payment of $1.0 billion and purchased 8,284,600 shares of our common stock pursuant to the Share Purchase Agreement for total additional cash consideration of $850.0 million. In 2020, we received non-refundable milestone payments of $50.0 million in aggregate for the first patient, first visit in the registrational trials in muscle-invasive bladder cancer and adjuvant melanoma.

As discussed in Note 1, on March 14, 2022, we announced our registrational trial in metastatic melanoma did not meet its primary endpoints and that BMS and we decided to discontinue the trials in metastatic melanoma and adjuvant melanoma. On April 14, 2022, we announced that our registrational trials in each of renal cell carcinoma and cisplatin-ineligible, locally advanced or metastatic urothelial cancer did not meet their respective primary endpoints. Due to these results, BMS and we decided that these studies and all other ongoing studies in the program will be discontinued. The decision to terminate the program does not affect the cost-sharing provisions under the BMS Collaboration Agreement. However, without further development of bempegaldesleukin, we will no longer be eligible for the development, regulatory and sales milestones under the arrangement.

We determined that the BMS Collaboration Agreement falls within the scope of ASC 808. As mentioned above, BMS shares certain percentages of development costs incurred by us and we share certain percentages of development costs incurred by

BMS. We consider these activities to represent collaborative activities under ASC 808 and we recognize such cost sharing proportionately with the performance of the underlying services. We recognized BMS’ reimbursement of our expenses as a reduction of research and development expense and our reimbursement of BMS’ expenses as research and development expense. As discussed in Note 8, beginning in the three months ended June 30, 2022, we began reporting clinical trial, other third-party costs and employee costs for the bempegaldesleukin program in Restructuring, impairment and other costs of program. Accordingly, during the three months ended June 30, 2022, we recorded $7.6 million, as a reduction of such expense for the net reimbursement from BMS. During the six months ended June 30, 2022, we recorded $24.9 million as a reduction of research and development expense for the net reimbursement from BMS, reflecting the reimbursement recorded in the three months ended March 31, 2022. For the three and six months ended June 30, 2021, we recorded $24.8 million and $51.4 million, respectively, as a reduction of research and development expense for the net reimbursement from BMS. As of June 30, 2022, we have recorded an unbilled receivable of $7.4 million from BMS in accounts receivable in our Condensed Consolidated Balance Sheet.

Eli Lilly and Company (Lilly): NKTR-358

On July 23, 2017, we entered into a worldwide license agreement (the Lilly Agreement) with Eli Lilly and Company (Lilly) to co-develop NKTR-358, a novel immunological drug candidate that we invented, pursuant to which we received an initial payment of $150.0 million and are eligible for up to $250.0 million in additional development and regulatory milestones. We are currently in Phase 1B and Phase 2 development, where we share costs with 75% of the costs borne by Lilly and 25% of the costs borne by us. Lilly is responsible for the costs of Phase 3 development, but we retain the option to contribute up to 25% of the costs of Phase 3 development on an indication-by-indication basis in order for us to achieve the maximum royalty level under the Lilly Agreement, and further, if approved, we will have the opportunity to receive a royalty rate up to the low twenties based upon our Phase 3 development cost contribution and the level of annual global product sales. Lilly will be responsible for all costs of global commercialization, and we will have an option to co-promote in the U.S. under certain conditions. A portion of the development milestones may be reduced by 50% under certain conditions, related to the final formulation of the approved product and the timing of prior approval (if any) of competitive products with a similar mechanism of action, which could reduce these milestone payments by 75% if both conditions occur.

The Lilly Agreement will continue until Lilly no longer has any royalty payment obligations or, if earlier, the termination of the agreement in accordance with its terms. The Lilly Agreement may be terminated by Lilly for convenience, and may also be terminated under certain other circumstances, including material breach.

Although we are entitled to significant development milestones under this arrangement, through June 30, 2022, we have excluded such milestones from the transaction price due to the significant uncertainties involved with clinical development. We re-evaluate the transaction price at each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Other

We have other collaboration agreements that have resulted in commercialized products for our collaborations partners. Under these agreements, we may sell our proprietary PEGylation materials for use in these products, and we are entitled to receive royalties based on net sales of these products as well as sales milestones. As discussed in Note 5, we have sold our rights to receive royalties from these other collaboration agreements. Our non-cash royalty revenue which totaled $16.3 million and $33.8 million for the three and six months ended June 30, 2022 and totaled $20.5 million and $39.3 million for the three and six months ended June 30, 2021, respectively, represents revenue for granting licenses which we had satisfied in prior periods.

Additionally, we have a collaboration agreement for a product under development, under which we are entitled to up to a total of $40.0 million of regulatory milestones, as well as sales milestones upon achievement of annual sales targets and royalties based on net sales of commercialized products, if any. However, given the current phase of development of the potential product under this collaboration agreement, we cannot estimate the probability or timing of achieving these milestones, and, therefore, have excluded all development milestones from the transaction price for this agreement.

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Restructuring, Impairment and Other Costs of Terminated Program

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

Restructuring, Impairment and Other Costs of Terminated Program

Restructuring, Impairment and Other Costs of Terminated ProgramAs discussed in Note 1, because our registrational trials in bempegaldesleukin did not meet their primary endpoints, we decided to discontinue all of our ongoing clinical trials of bempegaldesleukin in combination with checkpoint inhibitors and tyrosine kinase inhibitors, and, during April 2022, we announced the Restructuring Plan to prioritize key Phase 2 development programs, to advance our early stage research pipeline and to reduce our workforce by approximately 70% from approximately

735 to approximately 225 employees. In connection with these events, we reported the following costs in Restructuring, impairment and other costs of terminated program in the three months ended June 30, 2022:

•Clinical trial expense, other third-party costs and employee costs for the wind down of the bempegaldesleukin program, net of the reimbursement from BMS;

•Severance and related benefit costs pursuant to the Restructuring Plan;

•Impairment of right-of-use assets and property, plant and equipment resulting from the Restructuring Plan, primarily reflecting excess office and laboratory leased spaces in San Francisco, CA; and

•Contract termination and other costs associated with these plans. Previously, during the three months ended March 31, 2022, we recognized an initial $1.5 million in cancellation fees related to certain manufacturing activities for bempegaldesleukin.

In prior periods, we reported the clinical trial costs, other third-party costs and employee costs related to the bempegaldesleukin primarily in research and development expense.

Restructuring, impairment and other costs of terminated program includes the following (in thousands):

	Three months ended		Six months ended
	June 30, 2022
Clinical trial expense, other third-party and employee costs for the wind down of the bempegaldesleukin program	$	20,408	$	20,408
Severance and benefit expense	27,750		27,750
Impairment of right-of-use assets and property, plant and equipment	57,321		57,321
Contract termination and other restructuring costs	566		2,041
Restructuring, impairment and other costs of terminated program	$	106,045	$	107,520

The clinical trial expense, other third-party and employee costs for the wind down of the bempegaldesleukin program for the three and six months ended June 30, 2022 includes a reduction of $7.6 million for the net reimbursement from BMS.

Severance and Benefit Expense

Employees affected by the reduction in force under our Restructuring Plan are entitled to receive severance payments and certain Company funded benefits. We recognized severance and benefit expense in full for employees who were notified of their termination in April 2022 and have no requirements for future service, and we are recognizing expense for employees who are required to render services to receive their severance and benefits over the service period ratably over the service period. This service period began in April 2022 and all will end during 2022. The following table provides details regarding the severance and other termination benefit expense and a reconciliation of such liability for the three months ended June 30, 2022, which we report within Accrued compensation on our Condensed Consolidated Balance Sheet (in thousands):

	For the three months ended June 30, 2022
	No service period		Service period required		Total
Total severance and other termination benefits, at fair value	$	23,588	$	8,829	$	32,417
Liability balance as of March 31, 2022	$	—	$	—	$	—
Expense recognized during the period	23,588		4,162		27,750
Payments during the period	(12,881)		—		(12,881)
Liability balance as of June 30, 2022	$	10,707	$	4,162	$	14,869

The liability as of June 30, 2022 for employees terminated with no requirements for future service primarily relates to final severance paid in July 2022. We may record adjustments to severance and benefit expense in future periods as our estimates of the costs of benefits change or when an employee terminates before the end of their requisite service period. However, we do not expect that such adjustments will have a material effect on our results of operations or financial condition.

Impairment of Right-of-Use Assets and Property, Plant and Equipment

In connection with our Restructuring Plan, we have consolidated our operations by exiting all of the office space from our leased facility at 360 Third St. and certain laboratory and office spaces at our leased facility at 455 Mission Bay Blvd. South, both in San Francisco, CA. We are seeking to sublease these spaces, while still maintaining sufficient office and laboratory space to allow our team to develop our proprietary programs. We have also terminated all research and development activities at our owned facility in India, which we plan to sell.

As a result of these plans, we reviewed each of our excess spaces for impairment as of May 31, 2022, when management had determined which spaces we would retain and which spaces we may sublease. As part of our impairment evaluation of each excess space, we separately compared the estimated undiscounted income for each sublease to the net book value of the related long-term assets, which include right-of-use assets and certain property, plant and equipment, primarily for leasehold improvements (collectively, sublease assets). We estimated sublease income using market participant assumptions, including the length of time to enter into a sublease and lease payments, which we evaluated using current real estate trends and market conditions. If such income exceeded the net book value of the related assets, we did not record an impairment charge. Otherwise, we recorded an impairment charge by reducing the net book value of the assets to their estimated fair value, which we determined by discounting the estimated sublease income using the estimated borrowing rate of a market participant subtenant, which we estimated to be 6.4%. For our India site, we recorded no impairment charge because the estimated net proceeds from the sale exceed the net book value of the site. We have classified the India facility as an asset held for sale as of June 30, 2022 and report this in other current assets in our Condensed Consolidated Balance Sheet. Additionally, we recorded an impairment expense primarily for software which we plan to abandon and certain excess equipment based on the estimated income from selling such assets. We recorded impairment charges as follows (in thousands):

	Three months ended June 30, 2022
	Property, Plant and Equipment		Operating Lease Right-of-Use Assets		Total
Net book value of impaired facilities before write-off	$	16,348	$	70,920	$	87,268
Less: Fair value of impaired facilities — Level 3 of Fair Value Hierarchy	(6,976)		(28,091)		(35,067)
Impairment expense for facilities	9,372		42,829		52,201
Impairment of other property, plant and equipment	5,120		—		5,120
Total impairment of right-of-use assets and property, plant and equipment	$	14,492	$	42,829	$	57,321

The following table presents our property, plant and equipment as of June 30, 2022 and December 31, 2021, reflecting the effects of the impairment charges and held-for-sale reclassification.

	June 30, 2022		December 31, 2021
Building and leasehold improvements	$	83,158	$	97,385
Laboratory equipment	36,738		42,704
Computer equipment and software	28,391		28,829
Manufacturing equipment	23,743		22,374
Furniture, fixtures, and other	7,318		10,094
Depreciable property, plant and equipment at cost	179,348		201,386
Less: accumulated depreciation	(143,304)		(148,039)
Depreciable property, plant and equipment, net	36,044		53,347
Construction-in-progress	3,748		7,163
Property, plant and equipment, net	$	39,792	$	60,510

We may record adjustments to impairment expense in future periods as we enter into sublease or sale agreements or change our estimates when additional information becomes available to us.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

On June 8, 2022, the stockholders of Nektar 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 5,000,000 shares.

In connection with our Restructuring Plan, we recorded the benefit for the forfeitures of stock awards from employees who were terminated as part of our reduction-in-force during the three months ended June 30, 2022. We recognized total stock-based compensation expense in our Condensed Consolidated Statements of Operations as follows (in thousands):

	Three Months Ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Cost of goods sold	$	649	$	716	$	1,317	$	1,443
Research and development	4,751		13,479		16,793		$	27,641
General and administrative	4,781		9,519		13,032		$	18,528
Restructuring, impairment and other costs of terminated program	922		$	—	922		$	—
Total stock-based compensation	$	11,103	$	23,714	$	32,064	$	47,612

We issued stock-based awards of our common stock as follows (shares in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Options granted	85		$	157	107		$	278
Weighted-average grant-date fair value of options granted	$	2.47	$	9.78	$	3.33	$	10.23
RSUs granted	626		520		1,031		887
Weighted-average grant-date fair value of RSUs granted	$	3.97	$	18.20	$	6.10	$	19.21
Shares issued under equity compensation plans	1,131		1,483		1,937		3,682

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Net Loss Per Share

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss Per Share

We calculate basic net loss per share based on the weighted-average number of common shares outstanding during the periods presented and calculate diluted net loss per share based on the weighted-average number of shares of common stock outstanding, including potentially dilutive securities. For all periods presented in the accompanying Condensed Consolidated Statements of Operations, our net loss available to common stockholders equals the reported net loss.

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. Potentially dilutive securities consisted of weighted-average common shares underlying outstanding stock options and RSUs as follows (in thousands):

	Three Months ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Potentially dilutive securities	20,543	18,352	21,435	18,870

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Organization and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

We are a research-based biopharmaceutical company headquartered in San Francisco, California and incorporated in Delaware. We (individually or with a partner) are developing a pipeline of drug candidates that utilize our advanced polymer conjugate technology platforms, which are designed to enable the development of new molecular entities that target known mechanisms of action. Our research and development pipeline of new investigational drugs includes investigational treatments in oncology and immunology.

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 cash generated from licensing, collaboration and manufacturing agreements and financing transactions.

Results of Bempegaldesleukin Program and Reorganization and Restructuring Plans

Results of Bempegaldesleukin Program and the Restructuring Plan

In March and April 2022, we announced the unsuccessful results from our clinical trials studying bempegaldesleukin in combination with Opdivo® under our Strategic Collaboration Agreement with Bristol-Myers Squibb Company (BMS). Based on these results, we decided to discontinue all of our ongoing clinical trials of bempegaldesleukin in combination with checkpoint inhibitors and tyrosine kinase inhibitors. In April 2022, we also announced new strategic reorganization and cost restructuring plans for the Company’s future:

•On March 14, 2022, BMS and we announced that the registrational trial for bempegaldesleukin in combination with Opdivo® in metastatic melanoma did not meet its primary endpoints and that BMS and we decided to discontinue the registrational trials in metastatic melanoma and adjuvant melanoma. See Note 7 for additional information on our BMS Collaboration Agreement.

•On April 14, 2022, we announced that each of our registrational trials for bempegaldesleukin in combination with Opdivo® in renal cell carcinoma and in cisplatin-ineligible, locally advanced or metastatic urothelial cancer did not meet their respective primary endpoints. Due to these results, BMS and we decided to discontinue these studies and all other ongoing studies for bempegaldesleukin in combination with Opdivo®.

•On April 14, 2022, we announced that, in consultation with SFJ Pharmaceuticals and based upon a recommendation from an independent Data Monitoring Committee, we decided to discontinue our Phase 2/3 study in bempegaldesleukin in combination with Keytruda® in patients with metastatic or unresectable recurrent squamous cell cancer of the head and neck under our Co-Development Agreement with SFJ Pharmaceuticals. See Note 4 for additional information regarding our Co-Development Agreement with SFJ Pharmaceuticals.

•We also announced on April 14, 2022, the discontinuation of our Phase 1/2 PROPEL study of bempegaldesleukin in combination with Keytruda® in locally advanced or metastatic solid tumors, including non-small cell lung cancer. With these announcements on April 14, 2022, subject to activities required for an orderly wind down of the studies, there will be no ongoing clinical development activities of bempegaldesleukin.

•On April 25, 2022, we announced our strategic reorganization and cost restructuring plans (together, the Restructuring Plan), which were reviewed and approved by our Board of Directors on April 14, 2022. Pursuant to the Restructuring Plan, on April 26, 2022, our duly authorized officers implemented certain strategic, operational and organizational steps, including the prioritization of key Phase 2 development programs to advance our early stage research pipeline. In addition, we announced our plan to reduce our workforce by approximately 70% and to close our research facility in India.

We have incurred and expect to incur significant costs resulting from these decisions and plans. See Note 8 for additional information on the effect on our Condensed Consolidated Financial Statements.

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

Our Condensed Consolidated Financial Statements include the financial position, results of operations and cash flows of Nektar Therapeutics and our wholly-owned subsidiaries. We have eliminated all intercompany accounts and transactions in consolidation.

We prepared our Condensed Consolidated Financial Statements following the requirements of the Securities and Exchange Commission (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. generally accepted accounting principles (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 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. We include translation gains and losses in accumulated other comprehensive loss in the stockholders’ equity section of our Condensed Consolidated Balance Sheets. To date, such cumulative currency translation adjustments have not been significant to our consolidated financial position.

Our comprehensive loss consists of our net loss plus our foreign currency translation gains and losses and unrealized gains and losses on available-for-sale securities. There were no significant reclassifications out of accumulated other comprehensive loss to the statements of operations during the three and six months ended June 30, 2022 and 2021.

The accompanying Condensed Consolidated Financial Statements are unaudited. The Condensed Consolidated Balance Sheet data as of December 31, 2021 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, 2021 filed with the SEC on March 1, 2022. 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

Use of Estimates

The preparation of consolidated 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 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.

Significant Concentrations

Significant ConcentrationsOur customers are primarily pharmaceutical companies that are located in the U.S. and Europe and with whom we have multi-year arrangements. Our accounts receivable balance contains billed and unbilled trade receivables from product sales, milestones (to the extent that they have been achieved and are due from the counterparty), and other contingent payments, as well as reimbursable costs from collaborative research and development agreements.We are dependent on our suppliers and contract manufacturers to provide raw materials and drugs of appropriate quality and reliability and to meet applicable contract and regulatory requirements. In certain cases, we rely on single sources of supply of one or more critical materials. Consequently, in the event that supplies are delayed or interrupted for any reason, including as a result of the COVID-19 pandemic, our ability to develop and produce our drug candidates, our ability to supply comparator drugs for our clinical trials, or our ability to meet our supply obligations 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 only invest in highly-rated securities and limit our exposure to any single issuer, the COVID-19 pandemic or other 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 the COVID-19 pandemic or other 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.

Restructuring

Restructuring

We recognize restructuring charges related to reorganization plans that have been committed to by management when liabilities have been incurred. In connection with these activities, we record restructuring charges at fair value for:

•contractual employee termination benefits provided that the obligations result from services already rendered based on vested rights to such benefits when the payment of benefits becomes probable and the amount can be reasonably estimated,

•one-time employee termination benefits on the communication date from management to the employees provided that management has committed to a plan of termination, the plan identifies the employees and their expected termination dates, the details of termination benefits are complete, and it is unlikely that changes to the plan will be made or the plan will be withdrawn,

•contract termination costs when we cancel the contract in accordance with its terms, and

•costs to be incurred over the remaining contract term without economic benefit to us at the cease-use date.

For one-time employee terminations benefits, we recognize the liability in full on the communication date when future services are not required or amortize the liability ratably over the service period, if required. The fair value of termination benefits reflects our estimates of expected utilization of certain Company-funded post-employment benefits.

See Note 8 for additional information on the severance expense that we recognized for employees terminated in connection with our reduction-in-force.

Long-Lived Asset Impairment

Long-Lived Asset Impairment

We assess the impairment of long-lived assets whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable. In the case of property, plant and equipment and right-of-use assets for our leases, we determine whether there has been an impairment by comparing the carrying value of the asset to the anticipated undiscounted net cash flows associated with the asset. If such cash flows are less than the carrying value, we write down the asset to its fair value, which may be measured as anticipated net cash flows associated with the asset, discounted at a rate that we believe a market participant would utilize to reflect the risks associated with the cash flows, such as credit risk. See Note 8 for additional information regarding the impairment charge we recorded in connection with our leased facilities and certain property and equipment.

Inventory

We value inventory at the lower of cost or net realizable value, and we write down defective or excess inventory to net realizable value based on historical experience or projected usage. We expense inventory related to our research and development activities as manufactured by us or when purchased.

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Cash and Investments in Marketable Securities (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Cash and Investments in Marketable Securities, Including Cash Equivalents

Cash and investments in marketable securities, including cash equivalents, are as follows (in thousands):

	Estimated Fair Value at
	June 30, 2022		December 31, 2021
Cash and cash equivalents	$	77,545	$	25,218
Short-term investments	541,771		708,737
Long-term investments	8,928		64,828
Total cash and investments in marketable securities	$	628,244	$	798,783

Schedule of Portfolio of Cash and Investments in Marketable Securities

Our portfolio of cash and investments in marketable securities includes (in thousands):

	Fair Value Hierarchy Level	June 30, 2022								December 31, 2021
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Fair Value
Corporate notes and bonds	2	$	141,416	$	—	$	(1,505)	$	139,911	$	278,121
Corporate commercial paper	2	415,106		—		(2,232)		412,874		478,629
Obligations of U.S. government agencies	2	4,880		—		(5)		4,875		5,875
Available-for-sale investments		$	561,402	$	—	$	(3,742)	$	557,660	$	762,625
Money market funds	1							42,342		23,968
Certificates of deposit	2							9,516		10,940
Cash	N/A							18,726		1,250
Total cash and investments in marketable securities								$	628,244	$	798,783

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Inventory (Tables)

6 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

Inventory

Inventory consists of the following (in thousands):

	June 30, 2022		December 31, 2021
Raw materials	$	2,099	$	3,166
Work-in-process	13,837		9,342
Finished goods	1,033		3,293
Total inventory	$	16,969	$	15,801

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Co-Development Agreement with SFJ Pharmaceuticals and Development Derivative Liability (Tables)

6 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Liabilities at Fair Value

The following table presents the changes in the development derivative liability:

		Three months ended
	Fair Value Hierarchy Level	June 30, 2022		June 30, 2021
Fair value as of March 31, 2022 and 2021, respectively	3	$	—	$	4,597
Non-cash research and development expense		—		3,547
Cash receipts from SFJ		—		750
Change in the fair value of development derivative liability		—		2,713
Fair value at end of period	3	$	—	$	11,607

		Six months ended
	Fair Value Hierarchy Level	June 30, 2022			June 30, 2021
Fair value as of December 31, 2021 and February 12, 2021 (inception), respectively	3	$	27,726		$	—
Non-cash research and development expense		4,951			5,795
Cash receipts from SFJ		750			1,500
Change in the fair value of development derivative liability		(33,427)			4,312
Fair value at end of period	3	$	—	0	$	11,607

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Liabilities Related to Sales of Future Royalties (Tables)

6 Months Ended

Jun. 30, 2022

Other Liabilities Disclosure [Abstract]

Schedule of Purchase and Sale Agreement

In 2012 and 2020, we sold to RPI Finance Trust (RPI) and entities managed by Healthcare Royalty Management, LLC (collectively, HCR), respectively, our rights to receive royalties under our license and manufacturing agreements with certain pharmaceutical partners as summarized below under the 2012 Purchase and Sale Agreement and the 2020 Purchase and Sale Agreement, respectively:

Drug	Manufacturer	Counterparty under Purchase and Sale Agreement	Date Sold
ADYNOVATE® and ADYNOVI® (brand name for ADYNOVATE® in Europe)	Takeda Pharmaceutical Company Limited	Healthcare Royalty Management, LLC	December 16, 2020
MOVANTIK® (naloxegol tablets) and MOVENTIG® (brand name for MOVANTIK® in Europe)	AstraZeneca AB	Healthcare Royalty Management, LLC	December 16, 2020
REBINYN®	Novo Nordisk Inc., Novo Nordisk A/S and Novo Nordisk A/G	Healthcare Royalty Management, LLC	December 16, 2020
CIMZIA® (certolizumab pegol)	UCB Pharma	RPI Finance Trust	February 24, 2012
MIRCERA® (Continuous Erythropoietin Receptor Activator)	F. Hoffmann-La Roche Ltd	RPI Finance Trust	February 24, 2012

Schedule Of Liability Related To Sale Of Potential Future Royalties

The following table shows the activity within the liability account of each arrangement (in thousands):

	Period from inception to June 30, 2022
	2012 Purchase and Sale Agreement		2020 Purchase and Sale Agreement		Total
Royalty monetization proceeds	$	124,000	$	150,000	$	274,000
Non-cash royalty revenue	(297,507)		(69,770)		(367,277)
Non-cash interest expense	229,474		29,556		259,030
Payments to RPI	(10,000)		—		(10,000)
Loss on revaluation of liability related to the sale of future royalties (1)	23,522		—		23,522
Liabilities related to the sales of future royalties – ending balance	69,489		109,786		179,275
Less: unamortized transaction costs	—		(2,500)		(2,500)
Liabilities related to the sales of future royalties, net	$	69,489	$	107,286	$	176,775
(1) Loss recognized from Settlement Agreement to resolve UCB’s challenges to our patents, as agreed to by UCB, RPI and us, on October 13, 2021.

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Restructuring, Impairment and Other Costs of Terminated Program (Tables)

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

Schedule of Restructuring, Impairment and Other Costs of Terminated Program

Restructuring, impairment and other costs of terminated program includes the following (in thousands):

	Three months ended		Six months ended
	June 30, 2022
Clinical trial expense, other third-party and employee costs for the wind down of the bempegaldesleukin program	$	20,408	$	20,408
Severance and benefit expense	27,750		27,750
Impairment of right-of-use assets and property, plant and equipment	57,321		57,321
Contract termination and other restructuring costs	566		2,041
Restructuring, impairment and other costs of terminated program	$	106,045	$	107,520

The following table provides details regarding the severance and other termination benefit expense and a reconciliation of such liability for the three months ended June 30, 2022, which we report within Accrued compensation on our Condensed Consolidated Balance Sheet (in thousands):

	For the three months ended June 30, 2022
	No service period		Service period required		Total
Total severance and other termination benefits, at fair value	$	23,588	$	8,829	$	32,417
Liability balance as of March 31, 2022	$	—	$	—	$	—
Expense recognized during the period	23,588		4,162		27,750
Payments during the period	(12,881)		—		(12,881)
Liability balance as of June 30, 2022	$	10,707	$	4,162	$	14,869

Additionally, we recorded an impairment expense primarily for software which we plan to abandon and certain excess equipment based on the estimated income from selling such assets. We recorded impairment charges as follows (in thousands):

	Three months ended June 30, 2022
	Property, Plant and Equipment		Operating Lease Right-of-Use Assets		Total
Net book value of impaired facilities before write-off	$	16,348	$	70,920	$	87,268
Less: Fair value of impaired facilities — Level 3 of Fair Value Hierarchy	(6,976)		(28,091)		(35,067)
Impairment expense for facilities	9,372		42,829		52,201
Impairment of other property, plant and equipment	5,120		—		5,120
Total impairment of right-of-use assets and property, plant and equipment	$	14,492	$	42,829	$	57,321

Property, Plant and Equipment

The following table presents our property, plant and equipment as of June 30, 2022 and December 31, 2021, reflecting the effects of the impairment charges and held-for-sale reclassification.

	June 30, 2022		December 31, 2021
Building and leasehold improvements	$	83,158	$	97,385
Laboratory equipment	36,738		42,704
Computer equipment and software	28,391		28,829
Manufacturing equipment	23,743		22,374
Furniture, fixtures, and other	7,318		10,094
Depreciable property, plant and equipment at cost	179,348		201,386
Less: accumulated depreciation	(143,304)		(148,039)
Depreciable property, plant and equipment, net	36,044		53,347
Construction-in-progress	3,748		7,163
Property, plant and equipment, net	$	39,792	$	60,510

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Stock-Based Compensation Expense

We recognized total stock-based compensation expense in our Condensed Consolidated Statements of Operations as follows (in thousands):

	Three Months Ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Cost of goods sold	$	649	$	716	$	1,317	$	1,443
Research and development	4,751		13,479		16,793		$	27,641
General and administrative	4,781		9,519		13,032		$	18,528
Restructuring, impairment and other costs of terminated program	922		$	—	922		$	—
Total stock-based compensation	$	11,103	$	23,714	$	32,064	$	47,612

Schedule of Share-based Compensation, Activity

We issued stock-based awards of our common stock as follows (shares in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Options granted	85		$	157	107		$	278
Weighted-average grant-date fair value of options granted	$	2.47	$	9.78	$	3.33	$	10.23
RSUs granted	626		520		1,031		887
Weighted-average grant-date fair value of RSUs granted	$	3.97	$	18.20	$	6.10	$	19.21
Shares issued under equity compensation plans	1,131		1,483		1,937		3,682

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Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

Potentially dilutive securities consisted of weighted-average common shares underlying outstanding stock options and RSUs as follows (in thousands):

	Three Months ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Potentially dilutive securities	20,543	18,352	21,435	18,870

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Organization and Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 30, 2022	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Organization And Summary Of Significant Accounting Policies [Line Items]
Cash and investments in marketable securities		$ 628,244,000		$ 628,244,000		$ 798,783,000
Accounts receivable		10,006,000		10,006,000		22,492,000
Accounts receivable, credit loss expense (reversal)		0	$ 0	0	$ 0
Employee Severance
Organization And Summary Of Significant Accounting Policies [Line Items]
Workforce termination, percentage	70.00%
Bristol Myers Squibb Collaboration Agreement
Organization And Summary Of Significant Accounting Policies [Line Items]
Accounts receivable		$ 7,400,000		$ 7,400,000		$ 21,400,000

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Cash and Investments in Marketable Securities - Cash and Investments in Marketable Securities, Including Cash Equivalents (Detail) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Cash and cash equivalents	$ 77,545	$ 25,218
Short-term investments	541,771	708,737
Long-term investments	8,928	64,828
Total cash and investments in marketable securities	$ 628,244	$ 798,783

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Cash and Investments in Marketable Securities - Additional Information (Detail) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Cash and Investments in Marketable Securities [Line Items]
Maximum maturity term for debt securities investment	2 years
Weighted average maturity term for debt securities investment (or less)	1 year
Debt securities, available-for-sale accumulated gross unrealized loss, before tax		$ 0.7
Minimum
Cash and Investments in Marketable Securities [Line Items]
Long term investment maturity period	1 year	1 year
Maximum
Cash and Investments in Marketable Securities [Line Items]
Long term investment maturity period	2 years	2 years

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Cash and Investments in Marketable Securities - Portfolio of Cash and Investments in Marketable Securities (Detail) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gross Unrealized Losses		$ (700)
Cash	$ 18,726	1,250
Total cash and investments in marketable securities	628,244	798,783
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	561,402
Gross Unrealized Gains	0
Gross Unrealized Losses	(3,742)
Fair Value	557,660	762,625
Level 2 | Corporate notes and bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	141,416
Gross Unrealized Gains	0
Gross Unrealized Losses	(1,505)
Fair Value	139,911	278,121
Level 2 | Corporate commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	415,106
Gross Unrealized Gains	0
Gross Unrealized Losses	(2,232)
Fair Value	412,874	478,629
Level 2 | Obligations of U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	4,880
Gross Unrealized Gains	0
Gross Unrealized Losses	(5)
Fair Value	4,875	5,875
Level 2 | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, fair value disclosure	9,516	10,940
Level 1 | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, fair value disclosure	$ 42,342	$ 23,968

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Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 2,099	$ 3,166
Work-in-process	13,837	9,342
Finished goods	1,033	3,293
Total inventory	$ 16,969	$ 15,801

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Co-Development Agreement with SFJ Pharmaceuticals and Development Derivative Liability - Additional Information (Details) - USD ($)	Feb. 12, 2021	Mar. 31, 2022
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Derivative liability		$ 0
SFJ
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Committed funding (up to)	$ 150,000,000
Success payments (up to)	$ 637,500,000

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Co-Development Agreement with SFJ Pharmaceuticals and Development Derivative Liability - Fair Value of Derivative Liability (Details) - Development Derivative Liability - Fair Value, Level 3 - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value at beginning of period	$ 0	$ 4,597	$ 27,726	$ 0
Non-cash research and development expense	0	3,547	4,951	5,795
Cash receipts from SFJ	0	750	750	1,500
Change in the fair value of development derivative liability	0	2,713	(33,427)	4,312
Fair value at end of period	$ 0	$ 11,607	$ 0	$ 11,607

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Liabilities Related to Sales of Future Royalties - Activity Within the Liability Account (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		126 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Dec. 31, 2021
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty monetization proceeds					$ 274,000
Non-cash royalty revenue			$ 33,825	$ 39,254	(367,277)
Non-cash interest expense	$ 7,228	$ 13,089	14,757	$ 26,385	259,030
Payments to RPI					(10,000)
Loss on revaluation of liability related to the sale of future royalties					23,522
Liabilities related to the sales of future royalties – ending balance	179,275		179,275		179,275
Less: unamortized transaction costs	(2,500)		(2,500)		(2,500)
Liabilities related to the sales of future royalties, net	176,775		176,775		176,775	$ 195,427
2012 Purchase and Sale Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty monetization proceeds					124,000
Non-cash royalty revenue					(297,507)
Non-cash interest expense					229,474
Payments to RPI					(10,000)
Loss on revaluation of liability related to the sale of future royalties					23,522
Liabilities related to the sales of future royalties – ending balance	69,489		69,489		69,489
Less: unamortized transaction costs	0		0		0
Liabilities related to the sales of future royalties, net	69,489		69,489		69,489
2020 Purchase and Sale Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty monetization proceeds			150,000
Non-cash royalty revenue			(69,770)
Non-cash interest expense			29,556
Payments to RPI			0
Loss on revaluation of liability related to the sale of future royalties			0
Liabilities related to the sales of future royalties – ending balance	109,786		109,786		109,786
Less: unamortized transaction costs	(2,500)		(2,500)		(2,500)
Liabilities related to the sales of future royalties, net	$ 107,286		$ 107,286		$ 107,286

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Liabilities Related to Sales of Future Royalties - Additional Information (Details)	Jun. 30, 2022
2012 Purchase and Sale Agreement
Liability Related to Sale of Future Royalties [Line Items]
Royalties liability discount rate	0.16
2020 Purchase and Sale Agreement
Liability Related to Sale of Future Royalties [Line Items]
Royalties liability discount rate	0.15

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Commitments and Contingencies - Additional Information (Detail) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Legal Matters
Loss Contingencies [Line Items]
Litigation matters, liabilities	$ 0	$ 0

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License and Collaboration Agreements - Additional Information (Details) - USD ($)			1 Months Ended	3 Months Ended			6 Months Ended
	Feb. 13, 2018	Jul. 23, 2017	Apr. 30, 2018	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Dec. 31, 2020
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Accounts receivable				$ 10,006,000			$ 10,006,000		$ 22,492,000
Revenue, excluding assessed tax				21,585,000		$ 28,330,000	46,407,000	$ 51,977,000
Bristol Myers Squibb Collaboration Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Accounts receivable				7,400,000			7,400,000		$ 21,400,000
Bristol Myers Squibb Company | Purchase Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Shares issued (in shares)			8,284,600
Sale of stock consideration received			$ 850,000,000
Other Partner
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future additional payments for development milestones (up to)				40,000,000			40,000,000
Nektar-358 | Nektar's
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Received upfront and milestone payment		$ 150,000,000
Percentage of sharing in Phase 2 development costs		25.00%
Nektar-358 | Eli Lilly And Company | Maximum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future additional development and regulatory milestones (up to)		$ 250,000,000
Nektar-358 | Eli Lilly And Company | Nektar's
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percentage of regulatory milestones payments will be reduced under certain conditions		50.00%
Percentage of regulatory milestones payments will be reduced if conditions occur		75.00%
Nektar-358 | Eli Lilly And Company | Nektar's | Maximum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percentage of funding phase 3 development costs on an indication by indication basis borne		25.00%
Nektar-358 | Eli Lilly
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percentage of sharing in Phase 2 development costs		75.00%
Nektar 214 | Bristol Myers Squibb Company | Research and Development Expense
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Reimbursement of expenses				7,600,000	$ 24,900,000	24,800,000	7,600,000	51,400,000
Nektar 214 | Bristol Myers Squibb Collaboration Agreement | Nektar's
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percentage of sharing production costs	65.00%
Upfront and milestone payments received from license agreements			$ 1,000,000,000
Nektar 214 | Bristol Myers Squibb Collaboration Agreement | Nektar's | Milestone One
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future additional payments for development milestones (up to)										$ 50,000,000
Nektar 214 | Bristol Myers Squibb Collaboration Agreement | Bristol Myers Squibb Company
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percentage of sharing production costs	35.00%
Nektar 214 | Opdivo | Bristol Myers Squibb Collaboration Agreement | Nektar's
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percentage of sharing development costs	32.50%
Nektar 214 | Opdivo | Bristol Myers Squibb Collaboration Agreement | Bristol Myers Squibb Company
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percentage of sharing development costs	67.50%
Non-cash royalty revenue related to the sales of future royalties
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue, excluding assessed tax				$ 16,264,000		$ 20,456,000	$ 33,825,000	$ 39,254,000

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Restructuring, Impairment and Other Costs of Terminated Program - Narrative (Details) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 30, 2022 employee	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($) employee	Jun. 30, 2022 USD ($)
Restructuring Cost and Reserve [Line Items]
Contract termination and other restructuring costs | $		$ 566	$ 1,500	$ 2,041
Employee Severance
Restructuring Cost and Reserve [Line Items]
Number of employees | employee	225		735
Workforce termination, percentage	70.00%

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Restructuring, Impairment and Other Costs of Terminated Program - Summary of Restructuring Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2022	Jun. 30, 2021
Restructuring and Related Activities [Abstract]
Clinical trial expense, other third-party and employee costs for the wind down of the bempegaldesleukin program	$ 20,408		$ 20,408
Severance and benefit expense	27,750		27,750
Impairment of right-of-use assets and property, plant and equipment	57,321		57,321	$ 0
Contract termination and other restructuring costs	566	$ 1,500	2,041
Restructuring, impairment and other costs of terminated program	$ 106,045		$ 107,520

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Restructuring, Impairment and Other Costs of Terminated Program - Restructuring Reserve Rollforward (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Mar. 31, 2022
Restructuring Reserve [Roll Forward]
Restructuring, impairment and other costs of terminated program	$ 106,045	$ 0	$ 107,520	$ 0
Employee Severance
Restructuring Cost and Reserve [Line Items]
Total severance and other termination benefits, at fair value					$ 32,417
Restructuring Reserve [Roll Forward]
Liability balance as of March 31, 2022	0
Restructuring, impairment and other costs of terminated program	27,750
Payments during the period	(12,881)
Liability balance as of June 30, 2022	14,869		14,869
No service period
Restructuring Cost and Reserve [Line Items]
Total severance and other termination benefits, at fair value					23,588
Restructuring Reserve [Roll Forward]
Liability balance as of March 31, 2022	0
Restructuring, impairment and other costs of terminated program	23,588
Payments during the period	(12,881)
Liability balance as of June 30, 2022	10,707		10,707
Service period required
Restructuring Cost and Reserve [Line Items]
Total severance and other termination benefits, at fair value					$ 8,829
Restructuring Reserve [Roll Forward]
Liability balance as of March 31, 2022	0
Restructuring, impairment and other costs of terminated program	4,162
Payments during the period	0
Liability balance as of June 30, 2022	$ 4,162		$ 4,162

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Restructuring, Impairment and Other Costs of Terminated Program - Sublease Information (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022	Jun. 30, 2021
Restructuring Cost and Reserve [Line Items]
Impairment expense for facilities		$ 52,201
Impairment of other property, plant and equipment		5,120
Impairment of right-of-use assets and property, plant and equipment	$ 57,321	57,321	$ 0
Reported Value Measurement
Restructuring Cost and Reserve [Line Items]
Property, plant and equipment and Operating lease right-of-use assets	87,268	87,268
Property, Plant and Equipment
Restructuring Cost and Reserve [Line Items]
Impairment expense for facilities		9,372
Impairment of other property, plant and equipment		5,120
Impairment of right-of-use assets and property, plant and equipment		14,492
Property, Plant and Equipment | Reported Value Measurement
Restructuring Cost and Reserve [Line Items]
Property, plant and equipment and Operating lease right-of-use assets	16,348	16,348
Operating Lease Right-of-Use Assets
Restructuring Cost and Reserve [Line Items]
Impairment expense for facilities		42,829
Impairment of right-of-use assets and property, plant and equipment		42,829
Operating Lease Right-of-Use Assets | Reported Value Measurement
Restructuring Cost and Reserve [Line Items]
Property, plant and equipment and Operating lease right-of-use assets	70,920	70,920
Fair Value, Level 3 | Estimate of Fair Value Measurement
Restructuring Cost and Reserve [Line Items]
Property, plant and equipment and Operating lease right-of-use assets	35,067	35,067
Fair Value, Level 3 | Property, Plant and Equipment | Estimate of Fair Value Measurement
Restructuring Cost and Reserve [Line Items]
Property, plant and equipment and Operating lease right-of-use assets	6,976	6,976
Fair Value, Level 3 | Operating Lease Right-of-Use Assets | Estimate of Fair Value Measurement
Restructuring Cost and Reserve [Line Items]
Property, plant and equipment and Operating lease right-of-use assets	$ 28,091	$ 28,091

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Restructuring, Impairment and Other Costs of Terminated Program - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property, plant and equipment, net	$ 39,792	$ 60,510
Building and leasehold improvements
Property, Plant and Equipment [Line Items]
Depreciable property, plant and equipment at cost	83,158	97,385
Laboratory equipment
Property, Plant and Equipment [Line Items]
Depreciable property, plant and equipment at cost	36,738	42,704
Computer equipment and software
Property, Plant and Equipment [Line Items]
Depreciable property, plant and equipment at cost	28,391	28,829
Manufacturing equipment
Property, Plant and Equipment [Line Items]
Depreciable property, plant and equipment at cost	23,743	22,374
Furniture, fixtures, and other
Property, Plant and Equipment [Line Items]
Depreciable property, plant and equipment at cost	7,318	10,094
Depreciable property, plant and equipment, net
Property, Plant and Equipment [Line Items]
Depreciable property, plant and equipment at cost	179,348	201,386
Less: accumulated depreciation	(143,304)	(148,039)
Property, plant and equipment, net	36,044	53,347
Construction-in-progress
Property, Plant and Equipment [Line Items]
Property, plant and equipment, net	$ 3,748	$ 7,163

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Stock-Based Compensation - Additional Information (Detail)	Jun. 08, 2022 shares
2017 Performance Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate number of shares authorized (in shares)	5,000,000

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Stock-Based Compensation - Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	$ 11,103	$ 23,714	$ 32,064	$ 47,612
Cost of goods sold
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	649	716	1,317	1,443
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	4,751	13,479	16,793	27,641
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	4,781	9,519	13,032	18,528
Restructuring, impairment and other costs of terminated program
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	$ 922	$ 0	$ 922	$ 0

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Stock-Based Compensation - Activity (Detail) - $ / shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)	85	157	107	278
Weighted average grant-date fair value of options granted (in dollars per share)	$ 2.47	$ 9.78	$ 3.33	$ 10.23
Shares issued under equity compensation plans (in shares)	1,131	1,483	1,937	3,682
Restricted Stock Units (RSU)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted (in shares)	626	520	1,031	887
Weighted average grant-date fair value, of RSUs granted (in dollars per share)	$ 3.97	$ 18.20	$ 6.10	$ 19.21

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Net Loss Per Share (Detail) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Earnings Per Share [Abstract]
Potentially dilutive securities (in shares)	20,543	18,352	21,435	18,870