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Subsequent Events
6 Months Ended
Jun. 30, 2017
Subsequent Events [Abstract]  
Subsequent Events

Note 9 — Subsequent Events

On July 24, 2017, we announced that we entered into a worldwide license agreement to co-develop NKTR-358 with Eli Lilly and Company (Lilly) that is subject to review by the U.S. government under the Hart-Scott-Rodino Act (HSR Act) and will not become effective until the expiration or early termination of the waiting period. NKTR-358 is a novel immunological therapy that was invented by us. Under the terms of the agreement and following government clearance of the license agreement under the HSR Act, we (i) will receive an initial payment of $150.0 million and be eligible for up to $250.0 million in additional development and regulatory milestones, (ii) will co-develop NKTR-358 with Lilly with Nektar responsible for completing Phase 1 clinical development, (iii) will share with Lilly Phase 2 development costs with 75 percent of those costs borne by Lilly and 25 percent of the costs borne by Nektar, (iv) will have the option to participate in Phase 3 development on an indication-by-indication basis, and (v) will have the opportunity to receive up to double-digit sales royalty rates that increase commensurate with our Phase 3 investment and 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.

On August 4, 2017, we entered into a Lease Agreement (Lease) with ARE-San Francisco No. 19, LLC (ARE) for 128,793 square feet of space located at 455 Mission Bay Boulevard, San Francisco, California (the “Mission Bay Facility”). The Lease will allow us to continue using the same site we currently use for our San Francisco-based R&D activities following the expiration of our current sublease with Pfizer Inc., which sublease is set to terminate no later than the end of January 2020.  

The term of the Lease will commence on February 1, 2020, and will expire January 31, 2030.  The monthly base rent for the Mission Bay Facility is $611,767, which is subject to an annual rent adjustment rate of 3%.  During the term of the Lease, Nektar is responsible for paying its share of operating expenses specified in the Lease, including insurance costs and taxes.  The Lease also provides Nektar with a potential to increase the space leased by us at the Mission Bay Facility location by approximately 24,000 square feet, in accordance with the terms of Lease.  The Lease includes various covenants, indemnities, defaults, termination rights, security deposits and other provisions customary for lease transactions of this nature.

The foregoing summary is qualified in its entirety by reference to the Lease, which will be filed as an exhibit to Nektar’s next Quarterly Report on Form 10-Q for the period ended September 30, 2017.