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NUCRYST Announces First Quarter 2008 Financial Results
Date:5/6/2008

ped to Smith & Nephew. The increase was offset by the recognition during the quarter of $1.1 million of a $4.5 million manufacturing cost rebate payable to Smith & Nephew under our supply agreement.

Net loss for the first quarter of 2008 was $2.2 million, or $0.12 per share, compared to a net loss of $1.9 million, or $0.10 per share, reported for the first quarter of 2007.

Gross margin on revenues was 21% and 40% for the first quarters of 2008 and 2007, respectively, with the decrease attributable primarily to the $1.1 million manufacturing cost rebate recognized as a reduction to wound care product revenue as compared to no such amount being recognized in the first quarter of 2007. Gross margin excluding the manufacturing cost rebate was 35% and 40% for the first quarters of 2008 and 2007, respectively. We recognize manufacturing revenue when we ship product to Smith & Nephew and recognize royalty income when Smith & Nephew sells our products to its customers. Consequently, our gross margin percent may vary from period to period due to differences in timing of when we ship product to Smith & Nephew and when Smith & Nephew sells product to its customers. In the three months ended March 31, 2008, we shipped higher volumes of Acticoat(TM) products to Smith & Nephew as compared to the three months ended March 31, 2007.

Manufacturing costs for the first quarter of 2008 totaled $4.1 million, up $1.0 million from the same period in 2007, which reflects increased shipments of wound care products to Smith & Nephew.

Research and development spending for the first quarter of 2008 totaled $1.5 million compared to $2.0 million for the comparable period in 2007. The decrease is primarily the result of reductions that the Company has made to its research operations and staff to conserve cash and control expenses.

General and administrative expenses totaled $2.4 million for the first quarter of 2008, compared with $1.8 million in the same period
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SOURCE NUCRYST Pharmaceuticals Corp.
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