On December 2, 2024, we completed the sale of the Facility and certain other manufacturing assets related thereto, including the assignment of our existing manufacturing and supply obligations, to Gannet BioChem, an affiliate of Ampersand, via the APA, for consideration of $64.7 million in cash, net of transaction costs, and an approximate 20% equity interest at the time of close in Gannet BioChem. The net cash proceeds reflect the base purchase price of $70.0 million, net of

transaction costs totaling $6.2 million, and adjustments based on closing net working capital, totaling $0.9 million in incremental proceeds. We determined that the sale of the Facility meets the definition of a deconsolidation of a business.

At closing of the sale of the Facility and at December 31, 2024, we own 20.0 million common units at $1.00 per unit, representing 100% of the common units outstanding, and Ampersand owns 81.5 million preferred units at $1.00 per unit, representing 100% of the preferred units outstanding. In the event of a distribution, to the extent available, the preferred unitholders have priority rights to a cumulative preferred dividend and a return of their investment before any distributions to common unitholders. After such priority distribution to the preferred unitholders, to the extent available, common unitholders are to receive a distribution of both a cumulative dividend at the same rate as the preferred unitholders’ dividend and a return of their investment. Any distributions in excess of both of these distributions, if available, are distributed to preferred and common unitholders pro rata.

We have significant influence, but do not control, Gannet BioChem through our noncontrolling representation on Gannet BioChem’s board of directors and our equity interests in Gannet BioChem. Accordingly, we do not consolidate Gannet BioChem and account for our investment in Gannet BioChem using the equity method of accounting. We recorded our investment in Gannet BioChem at its fair value upon the sale of the Facility. The fair value of the equity method investment was determined using an option pricing method (OPM) based on the consideration paid for the preferred units. The OPM allows for the allocation of a company’s equity value among the various equity capital owners (preferred and common unitholders) and estimates the implied equity value of Gannet BioChem. The OPM uses the unitholders’ liquidation preferences to determine how proceeds from a liquidity event shall be distributed among the various ownership classes with an expected term to a liquidity event commensurate with a private equity investment. The following table lists the other Black-Scholes option-pricing model assumptions used to calculate the fair value of the equity method investment.

At closing of the Transaction, we estimated the fair value of our investment in Gannet BioChem to be $12.2 million, and we recorded a gain of $40.4 million on the sale of the Facility. The gain was computed as follows (in thousands):


Cash proceeds at closing	$	71,167
Net working capital adjustment		(322	)
Fair value of equity method investment in Gannet BioChem - Level 3 of Fair Value Hierarchy		12,218
Gross cash and non-cash proceeds		83,063
Transaction costs		(6,155	)
Net proceeds	$	76,908


Accounts receivable	$	4,250
Inventory		14,655
Other current assets		864
Current liabilities		(1,354	)
Net working capital		18,415
Property, plant and equipment, net		11,569
Contract asset, net		6,534
Net assets sold	$	36,518


Net proceeds	$	76,908
Net assets sold		(36,518	)
Gain on asset sale	$	40,390

Gannet BioChem is considered a related party to Nektar. Concurrently with the closing of the transaction, we entered into certain ancillary agreements with Gannet BioChem, including supply agreements for rezpegaldesleukin and NKTR-255, and certain services agreements.

Under the terms of the supply agreements, Gannet BioChem has agreed to manufacture and supply the PEG reagents for use in clinical trials of these drug candidates at prices defined within the agreements. There are no minimum purchase commitments and Nektar can terminate the agreement for convenience upon prior written notice. After the sale of the Facility through December 31, 2024, we did not make any purchases from Gannet BioChem.

Pursuant to a transition services agreement and full-time employee equivalent agreement, Nektar is performing certain transition services for the benefit of Gannet BioChem, primarily related to information technology and accounting, and Gannet BioChem is performing certain transition services for the benefit of Nektar, primarily to support research and development activities. The terms of these agreements are no more than two years, subject to certain termination provisions. For the year ended December 31, 2024, we recorded $0.3 million as research and development expenses for services provided by Gannet BioChem to us and $0.1 million as other income for services provided by us to Gannet BioChem in our Consolidated Statements of Operations.

As of December 31, 2024, we recorded a net payable of $3.4 million to Gannet BioChem, consisting of $2.9 million for the collection of receivables from Gannet BioChem’s customers, net of payments to Gannet BioChem’s vendors, under the transition services agreement, $0.3 million for the final net working capital adjustment, and $0.2 million, net, under the services agreements. We report this amount in accrued expenses in our Consolidated Balance Sheets.