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Nektar Therapeutics Announces Fourth Quarter and Year-End 2007 Financial Results

SAN CARLOS, Calif., Feb. 27, 2008 /PRNewswire-FirstCall/ -- Nektar Therapeutics (Nasdaq: NKTR) announced today the company's financial results for the fourth quarter and year ended December 31, 2007.

Revenue totaled $65.8 million in the fourth quarter of 2007 compared to $69.9 million in the fourth quarter of 2006. For the year ended December 31, 2007, Nektar reported total revenue of $273.0 million compared to $217.7 million in 2006.

Cash, cash equivalents, and short-term investments were $482.4 million at December 31, 2007 compared to $452.6 million at September 30, 2007.

Nektar reported a net income of $39.0 million or $0.42 per share in the fourth quarter of 2007 compared to a net loss of $38.9 million or $0.43 per share in the same period of 2006.

For the twelve months ended December 31, 2007, our net loss was $32.8 million or $0.36 per share compared to a net loss of $154.8 million or $1.72 per share in the same period in 2006.

"We have built a focused, efficient and driven company with an impressive and growing proprietary pipeline," said Howard W. Robin, President and CEO of the company. "We have moved multiple programs into Phase 2 clinical development, entered into valuable new collaborations, and ended the year in a solid financial position. We expect to build on this momentum in 2008."

Mr. Robin will host a conference call today for analysts and investors beginning at 2:00 p.m. Pacific time to discuss the company's performance. This conference call will be available via webcast and can be accessed through a link that is posted on the Investor Relations section of the Nektar website, The web broadcast of the conference call will be available for replay through March 12, 2008.

To access the conference call, follow these instructions:

Dial: (866) 314-5232 (U.S.); (617) 213-8052 (international)

Passcode: 94561493 (Howard Robin is the host)

Audio replay dial-in and passcode:

Dial: (888) 286-8010 (U.S.) ;(617) 801-6888 (international)

Passcode: 92959414

About Nektar

Nektar Therapeutics is a biopharmaceutical company with a mission to develop and enable differentiated therapeutics with its industry-leading pulmonary and PEGylation technology platforms. Nektar pulmonary and PEGylation technology, expertise, manufacturing capabilities and know-how have enabled ten approved products for partners, which include the world's leading pharmaceutical and biotechnology companies. Nektar also develops its own products by applying its pulmonary and PEGylation technology platforms to existing medicines with the objective to enhance performance, such as improving efficacy, safety and compliance.

This press release contains forward-looking statements that reflect the company's current views as to the value of its technology platforms and clinical pipeline of product candidates and overall prospects for the company's business. These forward-looking statements involve risks and uncertainties, including but not limited to: (i) the company's proprietary product candidates and those of certain of its partners are in the early phases of clinical development and the risk of failure is high and can occur at any stage prior to regulatory approval, (ii) the timing or success of the commencement or end of clinical trials is subject to a number of uncertainties including but not limited to patient enrollment, clinical drug manufacturing, regulatory requirements and clinical outcomes, and (iii) the company's or its partner's success in obtaining regulatory approvals for product candidates. Other important risks and uncertainties are detailed in the company's reports and other filings with the Securities and Exchange Commission, including its most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Actual results could differ materially from the forward-looking statements contained in this press release. The company undertakes no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise.

Tim Warner, 650-283-4915 (investors)

Stephan Herrera, 415-488-7699 (investors)

Jennifer Ruddock, 650-631-4954 (media)



(In thousands, except per share information)


Three-Months Ended Twelve-Months Ended

December 31, December 31,

2007 2006 2007 2006


Product sales and royalties $26,702 $55,551 $180,755 $153,556

Contract research 38,489 12,053 85,925 56,303

Exubera commercialization

readiness 582 2,300 6,347 7,859

Total revenue 65,773 69,904 273,027 217,718

Operating costs and expenses:

Cost of goods sold 17,387 40,100 137,696 113,921

Cost of idle Exubera

manufacturing capacity 6,314 - 6,314 -

Exubera commercialization

readiness costs 347 1,042 3,507 4,168

Research and development 39,310 42,521 153,575 149,381

General and administrative 13,997 17,441 56,336 78,319

Impairment of long lived

assets(1) 28,396 8,254 28,396 9,410

Litigation Settlement 1,583 - 1,583 17,710

Amortization of other intangible

assets 236 708 946 4,039

Gain on termination of

collaborative agreements,

net (2) (79,178) - (79,178) -

Total operating costs and expenses 28,392 110,066 309,175 376,948

Income (Loss) from operations 37,381 (40,162) (36,148) (159,230)

Interest income 5,757 6,330 22,201 23,646

Interest expense (4,230) (5,458) (18,638) (20,793)

Other Income 944 1,263 1,133 2,444

Income (Loss) before provision for

income taxes 39,852 (38,027) (31,452) (153,933)

Provision for income taxes 809 828 1,309 828

Net income (loss) $39,043 $(38,855) $(32,761) $(154,761)

Basic and diluted net earnings

(loss) per share $0.42 $(0.43) $(0.36) $(1.72)

Shares used in computing basic and

diluted net earnings (loss) per

share (3) 92,211 90,499 91,876 89,789

Notes to Consolidated Statements of Operations

(1) In Q4, the company conducted an evaluation and determined that

uncertainties exist regarding the use of certain equipment and

facilities related to Exubera manufacturing. As a result, Nektar

recorded a non-cash impairment charge in Q4 of $28.4 million related

to the write-down of these assets.

(2) Gain on termination of collaborative agreement, net, is comprised of

the following (in thousands):

Three and Twelve-Months

Ended December 31, 2007

Pfizer termination settlement

payment received 135,000

Exubera Inhaler Manufacturing and

Supply Agreement Termination

Tech Group (13,765)

Bespak (18,598)


Settlement of assets and

liabilities related to Pfizer (23,459)

Gain on termination of

collaborative agreements, net 79,178

(3) For the three-months ended December 31, 2007, there were

approximately 578 dilutive shares which did not change earnings per




(In thousands)


ASSETS December 31, 2007 December 31, 2006(1)

Current assets:

Cash and cash equivalents $76,293 $63,760

Short-term investments 406,060 394,880

Accounts receivable, net of

allowance 21,637 47,148

Inventory 12,187 14,656

Other current assets 7,106 14,595

Total current assets 523,283 535,039

Long-term investments - 8,337

Property and equipment, net 114,420 133,812

Goodwill 78,431 78,431

Other intangible assets, net 2,680 3,626

Other assets 6,289 8,932

Total assets $725,103 $768,177


Current liabilities:

Accounts payable $3,589 $7,205

Accrued compensation 14,680 12,994

Accrued expenses to contract

manufacturers 40,444 -

Accrued expenses 12,446 17,942

Interest payable 2,638 3,814

Capital lease obligations, current

portion 2,335 711

Deferred revenue, current portion 19,620 16,409

Convertible subordinated notes,

current portion - 102,653

Other current liabilities 2,340 3,854

Total current liabilities 98,092 165,582

Convertible subordinated notes 315,000 315,000

Capital lease obligations 21,632 19,759

Deferred revenue 61,349 23,697

Other long-term liabilities 14,591 17,079

Total liabilites 510,664 541,117

Commitments and contingencies

Stockholders' equity:

Preferred stock - -

Common stock 9 9

Capital in excess of par value 1,302,541 1,283,982

Accumulated other comprehensive

income 1,643 62

Accumulated deficit (1,089,754) (1,056,993)

Total stockholders' equity 214,439 227,060

Total liabilities and

stockholders' equity $725,103 $768,177

(1) The consolidated balance sheet at December 31, 2006 has been derived

from the audited financial statements at that date but does not

include all of the information and notes required by generally

accepted accounting principles in the United States for complete

financial statements. Certain 2006 amounts have been reclassified

between line items to conform with the 2007 presentation.



(In thousands, except per share information)


Twelve-Months Ended December 31,

2007 2006

Cash flows provided by (used in)

operating activities:

Net loss $(32,761) $(154,761)

Adjustments to reconcile net loss to

net cash provided by (used in)

operating activities:

Depreciation and amortization 29,028 33,509

Stock-based compensation 14,779 30,982

Impairment of long lived assets 28,396 9,410

Amortization of gain related to sale

of building (874) (874)

Gain on disposal of investment (860) (2,252)

Loss on sale or disposal of assets 1,843 123

Changes in assets and liabilities:

Decrease (increase) in trade accounts

receivable 24,318 (34,654)

Decrease (increase) in inventories 1,503 3,971

Decrease (increase) in other assets 7,443 1,095

Increase (decrease) in accounts

payable (3,147) (8,926)

Increase (decrease) in accrued

compensation 986 3,581

Increase (decrease) in accrued

expenses 36,151 5,503

Increase (decrease) in interest

payable (1,176) 23

Increase (decrease) in deferred

revenue 40,863 16,245

Increase (decrease) in other

liabilities (190) 4,310

Net cash provided by (used in)

operating activities 146,302 (92,715)

Cash flows from investing activities:

Purchases of property and equipment (32,796) (22,524)

Purchases of investments (593,118) (502,230)

Sales of investments 2,057 2,252

Maturities of investments 591,202 405,622

Net cash provided by (used in)

investing activities (32,655) (116,880)

Cash flows from financing activities:

Issuance of common stock, net of

issuance costs 3,780 22,259

Payments of loan and capital lease

obligations (2,895) (10,488)

Repayments of convertible

subordinated notes (102,653) -

Net cash provided by (used in)

financing activities (101,768) 11,771

Effect of exchange rates on cash and

cash equivalents 654 311

Net increase (decrease) in cash and

cash equivalents 12,533 (197,513)

Cash and cash equivalents at

beginning of year 63,760 261,273

Cash and cash equivalents at end of

year 76,293 63,760

SOURCE Nektar Therapeutics
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