<SEC-DOCUMENT>0001193125-18-344163.txt : 20190308
<SEC-HEADER>0001193125-18-344163.hdr.sgml : 20190308
<ACCEPTANCE-DATETIME>20181207060604
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-18-344163
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20181207

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NEKTAR THERAPEUTICS
		CENTRAL INDEX KEY:			0000906709
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				943134940
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		455 MISSION BAY BOULEVARD SOUTH
		CITY:			SAN FRANCISCO
		STATE:			CA
		ZIP:			94158
		BUSINESS PHONE:		4154825300

	MAIL ADDRESS:	
		STREET 1:		455 MISSION BAY BOULEVARD SOUTH
		CITY:			SAN FRANCISCO
		STATE:			CA
		ZIP:			94158

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	INHALE THERAPEUTIC SYSTEMS INC
		DATE OF NAME CHANGE:	19980723

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	INHALE THERAPEUTIC SYSTEMS
		DATE OF NAME CHANGE:	19940303
</SEC-HEADER>
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<TYPE>CORRESP
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 </P> <P STYLE="margin-top:4pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Nektar Therapeutics </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">455 Mission Bay Boulevard South </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">San Francisco, California 94158-2117 </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">December&nbsp;7, 2018 </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>VIA EDGAR </U></B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Office of Healthcare and Insurance </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">United States Securities and
Exchange Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Corporation Finance </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">100 F
Street, N.E. </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Washington, D.C. 20549 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Attention: Mary Mast
</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>Re:</B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B>Nektar Therapeutics </B></P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B>Form <FONT STYLE="white-space:nowrap">10-K</FONT> for the Fiscal Year Ended December&nbsp;31, 2017
</B></P></TD></TR></TABLE>
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<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B>Filed March&nbsp;1, 2018 </B></P></TD></TR></TABLE>
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<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B>File <FONT STYLE="white-space:nowrap">No.&nbsp;000-24006</FONT> </B></P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear Ms.&nbsp;Mast: </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We are in receipt of the
letter from the staff (the &#147;<B>Staff</B>&#148;) of the Securities and Exchange Commission (the &#147;<B>Commission</B>&#148;) dated November&nbsp;19, 2018, regarding the Annual Report on Form <FONT STYLE="white-space:nowrap">10-K</FONT> for the
fiscal year ended December&nbsp;31, 2017 (File <FONT STYLE="white-space:nowrap">No.&nbsp;000-24006)</FONT> and the Quarterly Report on Form <FONT STYLE="white-space:nowrap">10-Q</FONT> for the quarterly period ended September&nbsp;30, 2018 (File <FONT
STYLE="white-space:nowrap">No.&nbsp;000-24006)</FONT> filed by Nektar Therapeutics, a Delaware corporation (the &#147;<B>Company</B>&#148; or &#147;<B>we</B>&#148;), on March&nbsp;1, 2018 and November&nbsp;8, 2018, respectively. Set forth below is
the Company&#146;s response to the Staff&#146;s comment set forth in the letter. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We respectfully request, pursuant to
17&nbsp;C.F.R.&nbsp;&#167;200.83, that the Commission accord confidential treatment to the portions of this letter that are redacted and marked &#147;[***]&#148; in the EDGAR-filed copy of this response letter and not disclose such provisions to any
person who is not an employee of the Commission unless otherwise required to do so by law. Confidential treatment is requested to protect confidential financial or commercial information the publication of which would result in competitive
disadvantages. Along with its redacted EDGAR-filed copy, the Company is concurrently delivering an unredacted hard copy of its response to the Commission. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Staff Comment: </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Form
<FONT STYLE="white-space:nowrap">10-Q</FONT> for the nine months ended September&nbsp;30, 2018 </U></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Note 6 &#150; License and Collaboration Agreements
</U></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Bristol-Meyers Squibb (BMS), page 15 </U></P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>***
Information omitted and provided under separate cover to the Staff pursuant to 17&nbsp;C.F.R. &#167;200.83 </B></P>
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<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><I>On February</I><I></I><I>&nbsp;13, 2018 you entered into the BMS collaboration agreement to jointly develop
and commercialize <FONT STYLE="white-space:nowrap">NKTR-214.</FONT> You state that you identified two performance obligations, consisting of the delivery of the licenses and your participation on joint steering and other collaboration committees.
Your accounting policy on page 9 states that for collaboration arrangements with multiple performance obligations, such as granting a license </I><I><U>and</U></I><I> performing research and development activities, you allocate the upfront and
milestone payments under a relative standalone selling price method. It is not clear why amounts for research and development in the BMS agreement are not considered a performance obligation nor why, as you state on page 15, that you record cost
reimbursement payments to you from BMS as a reduction of research and development expense rather than as revenue. It appears to us that your separation, measurement, allocation and classification of amounts related to the BMS agreement is
inconsistent with your accounting policy on page 9 and with your accounting for your agreement with Lilly. Please provide us an analysis with reference to authoritative literature supporting your accounting for the BMS agreement. Also, provide us
proposed revised accounting policy disclosure to be included in future filings addressing this inconsistency or tell us why revised disclosure is not necessary</I>. </P></TD></TR></TABLE>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Response: </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In regards to the Staff&#146;s
comment on our treatment of the BMS collaboration agreement, we respectfully advise the Staff that BMS and we have agreed to jointly develop <FONT STYLE="white-space:nowrap">NKTR-214</FONT> in oncology indications, primarily in combination with
BMS&#146; Opdivo and Yervoy. If <FONT STYLE="white-space:nowrap">NKTR-214</FONT> receives regulatory approval, BMS and we will jointly commercialize it. BMS agreed to purchase licenses for the development and commercialization of <FONT
STYLE="white-space:nowrap">NKTR-214</FONT> along with a 35% economic interest in <FONT STYLE="white-space:nowrap">NKTR-214.</FONT> As a result, BMS is responsible for 35% of the development costs of <FONT STYLE="white-space:nowrap">NKTR-214</FONT>
and, if <FONT STYLE="white-space:nowrap">NKTR-214</FONT> is approved by regulatory authorities, will receive 35% of the net commercialization profits. Likewise, we have retained our 65% economic interest in
<FONT STYLE="white-space:nowrap">NKTR-214</FONT> and are responsible for 65% of the development costs and, if <FONT STYLE="white-space:nowrap">NKTR-214</FONT> is approved by regulatory authorities, will retain 65% of the net commercialization
profits. However, we have no economic interest in either of the BMS compounds described above, and BMS has no ownership rights in <FONT STYLE="white-space:nowrap">NKTR-214</FONT> to independently commercialize the compound. This is fundamentally
different than other arrangements we have entered into with other collaboration partners. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">With respect to the development activities
under the collaboration, BMS and we are jointly developing <FONT STYLE="white-space:nowrap">NKTR-214</FONT> in combination therapies. In this development program, we are responsible for conducting certain of the studies planned to be performed under
the agreement, and BMS is responsible for conducting the remaining studies. The benefits from these studies accrue to NKTR-214 development and are not services rendered on BMS&#146; behalf. In accordance with the agreement, BMS and we reimburse each
other for each party&#146;s share of the counterparty&#146;s costs incurred. Furthermore, under the agreement, the parties can change which party leads a particular study or increase the number of studies. Accordingly, the costs ultimately borne by
BMS and us are based on each party&#146;s respective economic interest in the compound and are not based on which party incurs the costs. As such, and as further explained below, we do not have a vendor-customer relationship with BMS with respect to
development activities and do not view our execution of development services as performing services on BMS&#146; behalf. Rather, each party is contributing both personnel and financial resources at the level required to maintain the cost sharing
percentages consistent with its economic interests. Therefore, we do not consider BMS&#146; reimbursements of our costs to be revenue. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>*** Information
omitted and provided under separate cover to the Staff pursuant to 17&nbsp;C.F.R. &#167;200.83 </B></P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">2 </P>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">With respect to the cost-sharing aspect of the arrangement, we respectfully advise the Staff
that the development and commercialization cost sharing percentages under the agreement are consistent with each party&#146;s economic interests in the compounds, as described above. For example, for the costs of production of <FONT
STYLE="white-space:nowrap">NKTR-214,</FONT> we bear 65% of the costs, and BMS bears 35%, and for the costs of production of BMS&#146; Opdivo, BMS bears all costs. [***] </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">[***] </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">This underlying cost-sharing arrangement
is consistent throughout the agreement, and, as a result, BMS bears 35% of the development costs of <FONT STYLE="white-space:nowrap">NKTR-214</FONT> and, if commercialized, will receive 35% of the net profits of
<FONT STYLE="white-space:nowrap">NKTR-214.</FONT> We are also studying <FONT STYLE="white-space:nowrap">NKTR-214</FONT> in combination with compounds other than Opdivo, including other Nektar and other third-party compounds. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Given the terms of the BMS collaboration agreement, we concluded that it is within the scope of ASC
<FONT STYLE="white-space:nowrap">808-10</FONT> <I>Collaborative Arrangements </I>(ASC 808) because the development and potential commercialization of <FONT STYLE="white-space:nowrap">NKTR-214</FONT> represent a joint operating activity, wherein both
parties meet the requirements of active participation provided in ASC <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">808-10-15-8,</FONT></FONT></FONT> and both parties are exposed to significant
risks and rewards. More importantly, we believe that this is a collaboration arrangement at its most fundamental level. Both parties have rights in the decision-making process for further development of
<FONT STYLE="white-space:nowrap">NKTR-214,</FONT> and, even if the parties change responsibilities, e.g. the parties agree to change the lead party for a given study as described above, the economics of the cost sharing do not change. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">To determine the appropriate presentation of payments from BMS to us, we considered ASC <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">808-10-45-4,</FONT></FONT></FONT> which states: </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I>An entity shall evaluate
the income statement classification of payments between participants pursuant to a collaborative arrangement based on the nature of the arrangement, the nature of its business operations, the contractual terms of the arrangement, and whether those
payments are within the scope of other authoritative accounting literature on income statement classification. If the payments are within the scope of other authoritative accounting literature, then the entity shall apply the relevant provisions of
that literature. To the extent that these payments are not within the scope of other authoritative accounting literature, the income statement classification for the payments shall be based on an analogy to authoritative accounting literature or if
there is no appropriate analogy, a reasonable, rational, and consistently applied accounting policy election. For example, if one party to an arrangement is required to make a payment to the other party to reimburse a portion of that party&#146;s
research and development cost, that portion of the net payment may be classified as research and development expense in the payor&#146;s financial statements pursuant to Topic 730</I>. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>*** Information omitted and provided under separate cover to the Staff pursuant to 17&nbsp;C.F.R. &#167;200.83 </B></P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">3 </P>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Accordingly, we would only account for payments from BMS to us under ASC <FONT
STYLE="white-space:nowrap">606-10</FONT> <I>Revenue from Contracts with Customers </I>(ASC 606) to the extent that such payments fall within the scope of ASC 606. We note that ASC
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">808-10-55</FONT></FONT> provides for reimbursement payments that are not accounted for as revenue to be recorded as a reduction of research and development expense. ASC <FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">808-10-55-8</FONT></FONT></FONT> illustrates the guidance in ASC <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">808-10-45</FONT></FONT>
with an example and states, in part: </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I>Pharma has concluded that other authoritative accounting literature does not apply to these
payments, either directly or by analogy, and, accordingly, its accounting policy is to evaluate the income statement classification for amounts due from or owed to other participants associated with multiple activities in a collaborative arrangement
based on the nature of each separate activity. As a result, Pharma disaggregates the $13.75&nbsp;million net payable to Biotech in accordance with the nature of the individual components of the payable and characterizes the portion of the payable
related to 50&nbsp;percent of the commercialization activities (sales to third parties less associated manufacturing and marketing costs) as cost of sales ($16.25 million). Pharma characterizes the portion of the net payable related to research and
development activities as a reduction of its research and development expenses ($2.5 million), because performing contract research and development services is not part of its ongoing major or central operations. </I></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Additionally, the example in ASC
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">808-10-55-13</FONT></FONT></FONT> states, in part: </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I>Little Pharma has concluded that other authoritative accounting literature does not apply to these payments, either directly or by analogy,
and, accordingly, its accounting policy is to evaluate the income statement classification for payments associated with each separate activity. As a result, Little Pharma disaggregates its $4.75&nbsp;million net payable to Big Pharma in accordance
with the nature of the individual item and characterizes a portion of the net payable related to 35&nbsp;percent of the profit related to the sales in the United States as expenses from collaborative arrangement ($22.75 million) and characterizes
the portion of the net payable to Big Pharma for research and development activities as research and development expenses. Little Pharma concludes that the portion of the net payable related to profit sharing from Big Pharma&#146;s sales in Europe
and Asia is analogous to a royalty and therefore should characterize the $10.5&nbsp;million as revenue similar to a royalty. Little Pharma also concludes that any payment from Big Pharma for research and development activities will be characterized
as a reduction of its research and development costs ($7.5 million) because performing contract research and development services is not part of its ongoing major or central operations. </I></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In considering whether and which payments from BMS to us fall under ASC 606, we note that ASC <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">606-10-15-3</FONT></FONT></FONT> requires that the counterparty be a customer and the ASC Master Glossary defines customer as &#147;a party that has contracted with an entity to obtain
goods or services that are an output of the entity&#146;s ordinary activities in exchange for consideration.&#148; We also considered the definition of revenues in Statement of Financial Accounting Concepts No.&nbsp;6, paragraph 78, which states:
</P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>*** Information omitted and provided under separate cover to the Staff pursuant to 17&nbsp;C.F.R. &#167;200.83 </B></P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">4 </P>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I>Revenues are inflows or other enhancements of assets of an entity or settlements of its
liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity&#146;s ongoing major or central operations. </I></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In considering the above definitions of customer and revenues, we consider our ongoing central operations to be the research and development
of our drug candidates for potential commercialization. We may, at times, enter into <FONT STYLE="white-space:nowrap">out-license</FONT> arrangements for our drug candidates, wherein we may perform contracted development services and the licensee
will use the output of these services for its future development of the drug candidate. If there is a vendor-customer relationship for both the license and the contracted development services, we analogize to the revenue literature for both
elements. However, as discussed further below, we concluded that BMS does not obtain the output of our development activities of <FONT STYLE="white-space:nowrap">NKTR-214</FONT> and therefore does not represent a customer for these activities.
Accordingly, we do not analogize to the revenue literature for the related development cost reimbursement payments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">With respect to
granting licenses, we concluded that granting licenses to BMS for the development and commercialization of <FONT STYLE="white-space:nowrap">NKTR-214</FONT> represented a performance obligation since we grant licenses in the ordinary course of
business and BMS&#146; 35% interest in the net profits of <FONT STYLE="white-space:nowrap">NKTR-214</FONT> provided BMS an ability to monetize the value of the licenses. [***] We also note that the BMS treatment of its upfront payment to us is
consistent: BMS expensed its payment to us for its rights, rather than recognizing any portion of the upfront payment as prepaid research and development expense.<SUP STYLE="font-size:85%; vertical-align:top">1</SUP> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">With respect to this arrangement&#146;s cost-sharing reimbursements for research and development activities, we do not believe that the
arrangement is consistent with a vendor-customer relationship where the vendor agrees to perform specific development activities for the primary benefit of the customer, considering that we would only be reimbursed for 35% of our costs for any
incremental activities that we incur. Furthermore, the development activities performed by both BMS and us benefit the development of <FONT STYLE="white-space:nowrap">NKTR-214</FONT> for which we continue to have full rights to the underlying
intellectual property as well as full rights to manufacture, develop and sell. As such, BMS is not directly obtaining the output of our development activities as there has been no transfer of a good or service to BMS, and, therefore, BMS does not
represent a customer for such activities. Furthermore, BMS has full economic exposure for 35% of the costs incurred for the development of <FONT STYLE="white-space:nowrap">NKTR-214,</FONT> which is consistent with their economic interest. As a
result, we concluded that we should continue to account for the development activities as collaborative activities under ASC 808. We also believe that the consistent sharing of costs and profits for <FONT STYLE="white-space:nowrap">NKTR-214</FONT>
further supports this conclusion in that a vendor-customer relationship does not exist between two parties with partnership-like interests in <FONT STYLE="white-space:nowrap">NKTR-214.</FONT> Accordingly, we considered ASC <FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">808-10-45-4,</FONT></FONT></FONT> as quoted above, and concluded that it is appropriate to present the payments from BMS to us for development activities as
a reduction of research and development costs, which is consistent with the implementation guidance in ASC <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">808-10-55-8</FONT></FONT></FONT> and <FONT
STYLE="white-space:nowrap">55-13,</FONT> quoted above, and the treatment of gains in paragraph 87 of Statement of Financial Accounting Concepts No.&nbsp;6. We also note that the net presentation of research and development costs results in the
presentation of our 65% share of such costs, which is consistent with our financial commitment and economic interest in the compound. We believe that the resulting 65% net share of costs is consistent with the nature and terms of the BMS
collaboration agreement. </P> <P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">1</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Please refer to pages <FONT STYLE="white-space:nowrap">11-12</FONT> of BMS&#146;s Quarterly Report on Form <FONT
STYLE="white-space:nowrap">10-Q</FONT> for the quarter ended June&nbsp;30, 2018 at <FONT STYLE="white-space:nowrap">https://www.sec.gov/Archives/edgar/data/14272/000001427218000160/bmy-20180630x10q.htm</FONT> </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>*** Information omitted and provided under separate cover to the Staff pursuant to 17&nbsp;C.F.R. &#167;200.83 </B></P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">5 </P>

</DIV></Center>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


<Center><DIV STYLE="width:8.5in" align="left">
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In regards to the Staff&#146;s noting the difference in our treatment of development
activities between our BMS collaboration agreement and our collaboration agreement with Eli Lilly and Company (&#147;Lilly&#148;), we respectfully advise the Staff that, under our Lilly collaboration agreement, Lilly has a license to develop and
commercialize the <FONT STYLE="white-space:nowrap">NKTR-358</FONT> compound. Upon entering into this arrangement, we also took responsibility for completing Phase 1 clinical trials and certain drug development activities. After the completion of our
activities, Lilly is responsible for all further development and commercialization of <FONT STYLE="white-space:nowrap">NKTR-358</FONT> without our involvement. Accordingly, we concluded that Lilly represents a customer in that arrangement, since it
will use its license and the output of our contracted development services for its continued development of <FONT STYLE="white-space:nowrap">NKTR-358,</FONT> and therefore we concluded that these development activities represent a customer
relationship and associated performance obligations. As noted above, this is different from our arrangement with BMS. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Based on the
analysis above, we concluded that the development activities under our BMS collaboration agreement represent collaborative activities under ASC 808 and our development activities under our Lilly collaboration agreement represent performance
obligations under ASC 606. The apparent difference in the accounting treatment is driven by the different nature and terms of the collaboration agreements for the appropriate application of the scope of ASC 606. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In regards to the Staff&#146;s comment on our revenue recognition policy disclosure, we respectfully advise the Staff that we believe that our
policy disclosure is consistent with our BMS and Lilly collaboration agreements to the extent that an element in the agreement represents a performance obligation under ASC 606. [***] </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">[***] </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">*&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;* </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company hereby acknowledges that: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">the Company is responsible for the adequacy and accuracy of the disclosure in the filings; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking
any action with respect to the filing; and </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any
person under the federal securities laws of the United States. </P></TD></TR></TABLE> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>*** Information omitted and provided under separate cover to the
Staff pursuant to 17&nbsp;C.F.R. &#167;200.83 </B></P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">6 </P>

</DIV></Center>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


<Center><DIV STYLE="width:8.5in" align="left">
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">If you have additional questions, please do not hesitate to contact the undersigned at (415)
<FONT STYLE="white-space:nowrap">482-5570</FONT> or Jillian B. Thomsen, Senior Vice President, Finance and Chief Accounting Officer, at (415) <FONT STYLE="white-space:nowrap">482-5555.</FONT> </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><DIV ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt">


<TR>
<TD WIDTH="100%"></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Sincerely,</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ Gil M. Labrucherie</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Gil M. Labrucherie</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Senior Vice President and Chief Financial Officer</TD></TR>
</TABLE></DIV> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">cc:</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Jillian B. Thomsen, Senior Vice President, Finance and Chief Accounting Officer of Nektar Therapeutics
</P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Mark A. Wilson, Senior Vice President and General Counsel of Nektar Therapeutics </P></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Sam Zucker, Esq., Sidley Austin LLP </P></TD></TR></TABLE>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>*** Information omitted and provided under separate cover to the Staff pursuant to 17&nbsp;C.F.R. &#167;200.83 </B></P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">7 </P>

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