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NUCRYST Pharmaceuticals announces year-end results
Date:2/14/2008

WAKEFIELD, Massachusetts, Feb. 14 /PRNewswire-FirstCall/ - NUCRYST Pharmaceuticals Corp. (NASDAQ: NCST; TSX: NCS) today announced results for the year ended December 31, 2007. Net loss narrowed to $4.0 million, or 22 cents per share, on revenues of $30.1 million. This compares to a net loss of $10.5 million, or 58 cents per share, on revenues of $24.4 million in the previous year. The lower net loss for 2007 is primarily attributable to the combined impact of the $5 million milestone earned from Smith & Nephew in the third quarter together with an additional $5 million milestone earned in the fourth quarter. The impact of these milestones was partially offset by the $4.5 million manufacturing cost rebate paid to Smith & Nephew in 2007 under our supply agreement. No milestone payments were earned in 2006.

For the three months ended December 31, 2007, the company posted net income of $3.2 million, or 17 cents per share, on revenues of $11.2 million. This compares to a net loss of $1.6 million in the fourth quarter of 2006, or 9 cents per share on revenues of $4.5 million.

At December 31, 2007, NUCRYST had $17.8 million in cash and cash equivalents.

"While the fourth quarter of 2007 saw us continue to explore opportunities to rebuild our new products pipeline, following the fourth quarter 2006 cancellation of our clinical program in atopic dermatitis, the principal focus of our Board and Management in late-2007 was on extracting value from our advanced wound care assets," said Thomas E. Gardner, President, CEO and Chairman of NUCRYST. "I am pleased with the improved results generated in the fourth quarter of 2007, and believe they reflect in large part our reinvigorated relationship with Smith & Nephew plc following a Se/p>

Effect of exchange

rate changes on cash

and cash equivalents 207 (826) 2,762 (95)

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Net decrease in cash

and cash equivalents (2,588) (2,249) (1,085) (16,975)

Cash and cash

equivalents at

beginning of year 20,429 21,175 18,926 35,901

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Cash and cash

equivalents at end

of year $ 17,841 $ 18,926 $ 17,841 $ 18,926

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NUCRYST Pharmaceuticals Corp.

Consolidated Statements of Shareholders' Equity

(unaudited)

-------------------------------------------------------------------------

Common Shares Accumulated

(thousands of --------------------------- Additional Other

U.S. dollars, Stated Paid-in Comprehensive

except share data) Number Amount Capital Income (Loss)

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December 31, 2005 14,227,500 42,629 - (5,281)

Issuance of common

shares upon

conversion of

indebtedness to

related party

(note 9) 3,964,200 39,642 - -

Issuance of common

shares in connection

with restricted

shares and exercises

of stock options

and share

appreciation rights 117,913 401 - -

Stock-based

compensation - - 482 -

Foreign currency

translation

adjustments - - - (209)

Net loss - - - -

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December 31, 2006 18,309,613 82,672 482 (5,490) (34,078)

Issuance of common

shares in connection

with restricted

shares and exercises

of stock options 57,950 104 - -

Stock-based

compensation - - 1,029 -

Foreign currency

translation

adjustments - - - 6,047

Net loss - - - -

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December 31, 2007 18,367,563 $ 82,776 $ 1,511 $ 557

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-------------------------------------------------------------

(thousands of Total Total

U.S. dollars, Accumulated Comprehensive Shareholders'

except share data) Deficit Loss Equity

-------------------------------------------------------------

December 31, 2005 (23,579) (3,742) 13,769

Issuance of common

shares upon

conversion of

indebtedness to

related party

(note 9) - - 39,642

Issuance of common

shares in connection

with restricted

shares and exercises

of stock options

and share

appreciation rights - - 401

Stock-based

compensation - - 482

Foreign currency

translation

adjustments - (209) (209)

Net loss (10,499) (10,499) (10,499)

-------------------------------------------------------------

December 31, 2006 (34,078) (10,708) 43,586

Issuance of common

shares in connection

with restricted

shares and exercises

of stock options - - 104

Stock-based

compensation - - 1,029

Foreign currency

translation

adjustments - 6,047 6,047

Net loss (4,021) (4,021) (4,021)

-------------------------------------------------------------

December 31, 2007 $ (38,099) $ 2,026 $ 46,745

-------------------------------------------------------------

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ptember 30, 2007 revision of our basic agreements."

NUCRYST continues to seek partners for its two development projects, use of NPI 32101 as an antimicrobial barrier cream and use of NPI 32101 in inflammatory bowel disease. The company has already received a 510(k)regulatory approval from the FDA for the antimicrobial barrier cream.

NUCRYST Pharmaceuticals (NASDAQ: NCST; TSX: NCS) develops, manufactures and commercializes medical products that fight infection and inflammation using its patented atomically disordered nanocrystalline silver technology. Smith & Nephew plc sell a range of advanced wound care products under their Acticoat(TM) trade mark. Acticoat(TM) products incorporate NUCRYST's SILCRYST(TM) coatings and are sold in over 30 countries. NUCRYST is also developing pharmaceutical products to address medical conditions that are characterized by both infection and inflammation. The Company has developed its proprietary nanocrystalline silver in a powder form, referred to as NPI 32101 for use in medical devices and as an active pharmaceutical ingredient.

A more detailed discussion of NUCRYST's 2007 year end results can be found in the 2007 Consolidated Financial Statements and Management's Discussion and Analysis, which will be available at http://www.sec.gov and http://www.sedar.com. NUCRYST filings are also available at http://www.nucryst.com/Regulatory_Filings.htm.

Eliot M. Lurier, Vice President, Finance and Administration and CFO NUCRYST Pharmaceuticals Corp., (781) 224-1444, info@nucryst.com, http://www.nucryst.com

All amounts in US dollars

SILCRYST(TM) is a trademark of NUCRYST Pharmaceuticals Corp.

Acticoat(TM) is a trademark of Smith & Nephew plc

The financial results in this news release are unaudited, and are not a complete disclosure of our quarterly or annual financial results.

Some of the statements above may constitute forward-looking statements within the meaning of securities legislation in the United States and Canada (collectively "forward looking statements"). The words "efforts", "seek", "explore" and "continue" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements in this news release include, but are not limited to, statements about: prospects and plans for the development of future products containing our nanocrystalline silver, plans for our gastrointestinal program, regulatory approval of our barrier cream, and plans and prospects for our barrier cream. With respect to the forward-looking statements contained in this news release, readers are cautioned that numerous risks, uncertainties and other factors could cause our actual results to differ materially from those indicated in these statements including, but not limited to: difficulties or delays in the initiation, timing, progress and results of our preclinical trials and research and development programs; we may not be able to obtain and retain regulatory approval for our barrier cream and any future products; our ability to maintain our collaboration with Smith & Nephew; our reliance on sales of Acticoat(TM) products with our SILCRYST(TM) coatings by Smith & Nephew; we may not be able to establish or maintain sales and marketing collaborations for our barrier cream and other new products; we may not be able to attract and retain collaborations relating to the development and commercialization of future products; our cost reduction plans may not be sufficient to conserve cash and control expenses; competition from other silver-based pharmaceutical or medical device companies; our ability to raise additional financing required to fund further research and development, clinical studies and obtain regulatory approvals, on commercially acceptable terms or at all; our ability to protect our intellectual property rights and to not infringe on the intellectual property rights of others; our ability to comply with governmental regulations and standards; changes in general economic conditions; other risks and uncertainties unidentified at this time; management's response to these factors; and other factors described under "Risk Factors" in our Quarterly Report on 10-Q for the quarter ended September 30, 2007 and our Annual Report on Form 10-K for the year ended December 31, 2006, both of which have been filed with the U.S. Securities and Exchange Commission at http://www.sec.gov and with securities authorities in Canada at http://www.sedar.com. All forward-looking statements are expressly qualified in their entirety by this cautionary statement and NUCRYST disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future developments or otherwise after the date hereof.

NUCRYST Pharmaceuticals Corp.

Consolidated Statements of Operations

(unaudited)

-------------------------------------------------------------------------

(thousands of U.S. Three Months Ended Twelve Months Ended

dollars except December 31 December 31

share and per ------------------------- -------------------------

share data) 2007 2006 2007 2006

-------------------------------------------------------------------------

Revenue

Wound care product

revenue $ 6,235 $ 4,539 $ 20,092 $ 24,369

Milestone revenue 5,000 - 10,000 -

-------------------------------------------------------------------------

11,235 4,539 30,092 24,369

Costs

Manufacturing 3,502 2,750 14,477 16,053

Research and

development 1,454 1,862 6,303 11,162

General and

administrative 2,685 1,812 9,067 6,723

Depreciation and

amortization 94 86 355 430

Write down of

capital assets - 1,049 1,173 1,049

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Income (loss) from

operations 3,500 (3,020) (1,283) (11,048)

Foreign exchange

(loss) gain (281) 1,109 (3,283) (298)

Interest income 109 242 685 1,123

Interest expense - - - (310)

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Income (loss) before

income taxes and

cumulative effect of

a change in

accounting principle 3,328 (1,669) (3,881) (10,533)

Current income tax

(expense) recovery (140) 69 (140) 41

-------------------------------------------------------------------------

Income (loss) before

cumulative effect of

a change in

accounting principle 3,188 (1,600) (4,021) (10,492)

Cumulative effect of

a change in

accounting principle - - - (7)

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Net income (loss) $ 3,188 $ (1,600) $ (4,021) $ (10,499)

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Income (loss) per

common share

Net income (loss)

- basic $ 0.17 $ (0.09) $ (0.22) $ (0.58)

Net income (loss)

- diluted 0.17 (0.09) (0.22) (0.58)

Weighted average

number of common

shares outstanding:

- basic 18,363,552 18,301,264 18,333,810 17,964,332

- diluted 18,413,248 18,301,264 18,333,810 17,964,332

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NUCRYST Pharmaceuticals Corp.

Consolidated Balance Sheets

(unaudited)

-------------------------------------------------------------------------

(thousands of U.S. dollars, except share December 31 December 31

data) 2007 2006

-------------------------------------------------------------------------

ASSETS

Current

Cash and cash equivalents $ 17,841 $ 18,926

Accounts receivable - net 14,924 7,041

Inventories 4,426 7,297

Other 427 327

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37,618 33,591

Restricted cash 140 135

Capital assets - net 12,734 11,350

Intangible assets - net 807 816

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$ 51,299 $ 45,892

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LIABILITIES AND SHAREHOLDERS' EQUITY

Current

Accounts payable and accrued liabilities $ 3,650 $ 2,261

Accounts payable and accrued liabilities to

related party 67 45

Deferred lease inducement 111 -

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3,828 2,306

Long term deferred lease inducement 726 -

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4,554 2,306

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Guarantees

Commitments

Shareholders' equity

Common shares no par value, unlimited shares

authorized: issued and outstanding -

18,367,563 and 18,309,613 shares at

December 31, 2007 and 2006, respectively 82,776 82,672

Additional paid-in capital 1,511 482

Accumulated other comprehensive income (loss) 557 (5,490)

Accumulated deficit (38,099) (34,078)

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Total shareholders' equity 46,745 43,586

-------------------------------------------------------------------------

Total $ 51,299 $ 45,892

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NUCRYST Pharmaceuticals Corp.

Consolidated Cash Flow Statements

(unaudited)

-------------------------------------------------------------------------

Three Months Ended Twelve Months Ended

December 31 December 31

(thousands of U.S. ------------------------- -------------------------

dollars) 2007 2006 2007 2006

-------------------------------------------------------------------------

Operating activities

Net income (loss) $ 3,188 $ (1,600) $ (4,021) $ (10,499)

Items not affecting

cash

Depreciation and

amortization 408 396 1,638 1,656

Stock-based

compensation

expense 588 147 1,121 496

Amortized lease

inducement (28) - (71) -

Write down of

capital assets - 1,049 1,173 1,049

Foreign exchange

loss - - - (356)

Cumulative effect

of a change in

accounting

principle - - - 7

Changes in non cash

working capital

Accounts

receivable (4,139) 1,269 (7,009) (606)

Inventories 1,516 (534) 4,001 (777)

Other 1,189 71 (13) (212)

Accounts payable

and accrued

liabilities (5,095) (1,079) 668 (2,376)

Accounts payable

and accrued

liabilities to

related party (72) (513) (177) (969)

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Cash used in operating

activities (2,445) (794) (2,690) (12,587)

-------------------------------------------------------------------------

Investing activities

Restricted cash (4) (1) (5) (5)

Purchase of

short-term

investments - - - (22,191)

Maturity of

short-term

investments - - - 22,748

Capital

expenditures (336) (632) (1,920) (4,978)

Intangible assets (10) (32) (66) (153)

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Cash used in

investing activities (350) (665) (1,991) (4,579)

-------------------------------------------------------------------------

Financing activities

Issuance of common

shares, net of

share issuance

costs - 36 12 286

Deferred lease

inducement - - 822 -

-------------------------------------------------------------------------

Cash provided from

financing activities - 36 834 286

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SOURCE NUCRYST Pharmaceuticals Corp.
Copyright©2008 PR Newswire.
All rights reserved

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