A month has gone by since the last earnings report for Nektar Therapeutics (NKTR Quick QuoteNKTR - Free Report) . Shares have lost about 12% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Nektar due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Nektar Q2 Earnings & Revenues Top Estimates

Nektar Therapeutics reported a loss of 45 cents per share for the second quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of 69 cents and the year-ago loss of 63 cents.

Quarterly revenues were up 109.4% year over year to $48.8 million owing to the recognition of a milestone payment from its collaboration partner, Bristol-Myers, during the quarter. Revenues also beat the Zacks Consensus Estimate of $22.84 million.

Quarter in Detail

In the second quarter, product sales increased 26.2% from the year-ago period to $5.5 million.  Non-cash royalty revenues were down 15.5% to $7.7 million.

Nektar’s royalty revenues increased 28.1% year over year to $9.4 million in the quarter.

License, collaboration and other revenues were $26.3 million in the quarter compared with $2.5 million in the year-ago quarter. The increase was due to the recognition of a $25-million milestone payment from Bristol-Myers, triggered by the initiation of the registrational study of bempegaldesleukin plus Opdivo in adjuvant melanoma.

Research and development expenses decreased 9.6% to $96.4 million. Notably, the company had recorded pre-commercial manufacturing costs for NKTR-181 in the year-ago quarter, which were not present in the reported quarter and led to the decline in expenses. The company discontinued the development of NKTR-181 in January.

General and administrative expenses rose 7.8% to $24.3 million in the reported quarter.

Pipeline Update

On the earnings call, Nektar cautioned that uncertainties related to COVID-19 may impact clinical study timelines. The company will continue to assess timelines throughout the year to get more visibility into the timing and extent of the COVID-19 impact.

The company is primarily focusing on development of five clinical studies in immuno-oncology including first-line bladder cancer and renal cell carcinoma studies of bempegaldesleukin plus Opdivo, the PROPEL study of bempegaldesleukin plus Keytruda, and NKTR-262 REVEAL study with bempegaldesleukin and the NKTR-255 studies.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -28.57% due to these changes.

VGM Scores

Currently, Nektar has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Nektar has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.