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Nektar Therapeutics Reports Second Quarter 2009 Financial Results

SAN CARLOS, Calif., Aug. 4 /PRNewswire-FirstCall/ -- Nektar Therapeutics (Nasdaq: NKTR) today reported its financial results for the second quarter ended June 30, 2009.

Net loss for the quarter ended June 30, 2009 was $32.1 million or $0.35 per share, compared to net loss of $33.4 million or $0.36 per share in the second quarter of 2008.

Nektar made improvements to its operating efficiencies as compared to a year ago. Total operating costs and expenses were down 19% to $43.5 million in the second quarter of 2009 as compared to $53.8 million in the second quarter of 2008. For the first half of 2009, total operating costs and expenses were down 28% to $83.5 million as compared to $115.6 million in the first half of 2008.

"In the first half of 2009, we made a strong commitment to advancing our clinical pipeline," stated Howard W. Robin, President and Chief Executive Officer of Nektar. "We completed our Phase 2 clinical program for NKTR-118, and we are poised to report Phase 2 data for NKTR-102 and Phase 1 data for NKTR-105 by year-end. These achievements underscore the strength of Nektar's drug development organization and our successful strategy to focus on developing proprietary drugs with our advanced polymer conjugate technology."

Research and development expense was $24.2 million in the second quarter of 2009 as compared to $33.5 million for the same quarter in 2008. For the first half of 2009, research and development expense was $48.0 million as compared to $70.9 million for the first half of 2008. Included in the $48.0 million of overall research and development expense in the first half of 2009 is approximately $27.4 million of investment in Nektar preclinical and clinical development programs.

Revenue for the three month period ended June 30, 2009 was $13.0 million compared to revenue of $20.4 million in the second quarter of 2008. Revenue for the first half of 2009 was $22.7 million as compared to revenue of $40.4 million in the first half of 2008. This decrease in revenue is primarily the result of lower contract research and manufacturing revenues resulting from the sale of certain of the company's pulmonary assets to Novartis which occurred on December 31, 2008.

Cash, cash equivalents, and short-term investments at June 30, 2009 were $294.3 million.

Conference Call to Discuss Second Quarter 2009 Financial Results

A conference call to review results will be held on August 4, 2009 at 2 PM Pacific Time.

Details are below:

Howard Robin, president and chief executive officer, and John Nicholson, chief financial officer, will host a conference call beginning at 5:00 p.m. Eastern Time (ET)/2:00 p.m. Pacific Time (PT) on Tuesday, August 4, 2009.

        To access the conference call, follow these instructions:

        Dial: (866) 831-6270 (U.S.); (617) 213-8858 (international)
        Passcode: 25099763 (Howard Robin is the host)

An audio replay will also be available shortly following the call through Wednesday, August 19, 2009 and can be accessed by dialing (888) 286-8010 (U.S.); or (617) 801-6888 (international) with a passcode of 26851386.

About Nektar

Nektar Therapeutics is a biopharmaceutical company developing novel therapeutics based on its PEGylation and advanced polymer conjugation technology platforms. Nektar's technology and drug development expertise have enabled nine approved products for partners, which include leading biopharmaceutical companies. Nektar is also developing a robust pipeline of its own potentially high-value therapeutics to address unmet medical needs by leveraging and expanding its technology platforms to improve and enable molecules.

The company recently announced positive Phase 2 results for Oral NKTR-118, its proprietary novel peripheral opioid antagonist that combines Nektar's advanced small molecule polymer conjugate technology platform with naloxol, a derivative of the opioid-antagonist drug, naloxone. Nektar's technology has been shown to increase oral bioavailability and inhibit penetration across the blood-brain barrier, an important potential advance for small molecule therapies. The product is being developed to treat opioid-induced constipation (OIC).

NKTR-102, PEGylated irinotecan, is currently in Phase 2 clinical studies in ovarian, breast and colorectal cancer. NKTR-105, PEGylated docetaxel, is currently in a Phase 1 study in patients with refractory solid tumors.

Nektar technology is used in nine approved partnered products in the U.S. or Europe today, including UCB's Cimzia(R), Roche's PEGASYS(R) for hepatitis C and Amgen's Neulasta(R) for neutropenia.

Nektar is headquartered in San Carlos, California, with additional R&D operations in Huntsville, Alabama and Hyderabad, India.

This press release contains forward-looking statements that reflect management's current views regarding the progress and potential of the company's pipeline of proprietary drug candidates, the value and potential of the company's technology platform, and the company's position to enter into new strategic collaborations with third parties. These forward-looking statements involve numerous risks and uncertainties, including but not limited to: (i) the company's proprietary product candidates and those of its collaboration partners are in various stages of clinical development and the risk of failure is high and can unexpectedly occur at any stage of development prior to regulatory approval for numerous reasons including, without limitation, safety and efficacy findings; (ii) the timing or success of the commencement or end of clinical trials and commercial launch of partnered products may be delayed or unsuccessful due to slower than anticipated patient enrollment, drug manufacturing challenges, changing standards of care, clinical trial design, clinical outcomes, or delay or failure in obtaining regulatory approval in one or more important markets; (iii) the company's patent applications for its proprietary or partner product candidates may not issue, patents that have issued may not be enforceable, or intellectual property licenses from third parties may be required in the future; (iv) the outcome of any future intellectual property or other litigation related to the company's proprietary product candidates or complex commercial agreements; (v) if the company is unable to establish and maintain collaboration partnerships on attractive commercial terms, or that cover all major markets, our business, results of operations and financial condition could suffer; (vi) advances by competitors, particularly if unanticipated; and (vii) certain other important risks and uncertainties set forth in the company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 6, 2009, the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 filed with the Securities and Exchange Commission on May 8, 2009, and the company's most recent Quarterly Report on Form 10-Q to be filed on or about August 5, 2009. 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.

    Jennifer Ruddock
    Nektar Therapeutics

    Susan Noonan
    The SAN Group

                       NEKTAR THERAPEUTICS
           (In thousands, except per share information)

                      Three Months Ended   Six Months Ended
                           June 30,            June 30,
                           ---------           --------
                         2009      2008      2009      2008
                         ----      ----      ----      ----
      Product sales
       and royalties   $10,525    $9,010   $16,995   $19,381
       and other         2,463    11,391     5,704    21,012
                         -----    ------     -----    ------
    Total revenue       12,988    20,401    22,699    40,393

    Operating costs and expenses:
      Cost of goods
       sold             10,231     5,444    15,330    12,671
      Other cost of
       revenue               -     1,487         -     6,821
      Research and
       development      24,150    33,500    48,040    70,873
      General and
       administrative    9,087    13,328    20,107    25,275
                         -----    ------    ------    ------
    Total operating
     costs and
     expenses           43,468    53,759    83,477   115,640
                        ------    ------    ------   -------

    Loss from
     operations        (30,480)  (33,358)  (60,778)  (75,247)

     income (expense):
       income              950     3,190     2,600     8,203
       expense          (2,948)   (3,929)   (6,285)   (7,847)
      Other income,
       net                 203       769       248     1,071
                           ---       ---       ---     -----
    Total non-
     operating income
     (expense)          (1,795)       30    (3,437)    1,427

    Loss before
     provision for
     income taxes      (32,275)  (33,328)  (64,215)  (73,820)

     provision for
     income taxes         (206)       47      (339)      260
                          ----       ---      ----       ---

    Net loss          $(32,069) $(33,375) $(63,876) $(74,080)
                      ========  ========  ========  ========

    Basic and
     diluted net loss
     per share          $(0.35)   $(0.36)   $(0.69)   $(0.80)

    Shares used in
     computing basic
     and diluted
     net loss per
     share              92,556    92,400    92,536    92,365

                            NEKTAR THERAPEUTICS
                               (In thousands)

                ASSETS              June 30, 2009    December 31, 2008(1)
                                    -------------    -----------------
    Current assets:
      Cash and cash equivalents        $114,992           $155,584
      Short-term investments            179,311            223,410
      Accounts receivable, net
       of allowance                       8,473             11,161
      Inventory                          10,110              9,319
      Other current assets                5,317              6,746
                                          -----              -----
        Total current assets           $318,203           $406,220

    Property and equipment, net          75,024             73,578
    Goodwill                             76,501             76,501
    Other assets                          3,270              4,237
                                          -----              -----
      Total  assets                    $472,998           $560,536
                                       ========           ========


    Current liabilities:
      Accounts payable                   $4,931            $13,832
      Accrued compensation                6,883             11,570
      Accrued clinical trial
       expenses                          12,110             17,622
      Accrued expenses                    7,201              9,923
      Deferred revenue, current
       portion                            8,770             10,010
      Other current liabilities           5,421              5,417
                                          -----              -----
        Total current liabilities       $45,316            $68,374

    Convertible subordinated
     notes                              214,955            214,955
    Capital lease obligations            19,616             20,347
    Deferred revenue                     52,696             55,567
    Deferred gain                         5,463              5,901
    Other long-term liabilities           4,354              5,238
                                          -----              -----
        Total liabilities              $342,400           $370,382

    Commitments and contingencies

    Stockholders' equity:
      Preferred stock                        $-                 $-
      Common stock                            9                  9
      Capital in excess of par
       value                          1,317,577          1,312,796
      Accumulated other
       comprehensive income                 978              1,439
      Accumulated deficit            (1,187,966)        (1,124,090)
                                     ----------         ----------
        Total stockholders'
         equity                        $130,598           $190,154
                                       --------           --------
      Total liabilities and
       stockholders' equity            $472,998           $560,536
                                       ========           ========

    (1) The consolidated balance sheet at December 31, 2008 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.

                              NEKTAR THERAPEUTICS
                                (In thousands)

                                                        Six Months Ended
                                                             June 30,
                                                           2009      2008
                                                           ----      ----
    Cash flows from operating activities:
      Net loss                                         $(63,876) $(74,080)
      Adjustments to reconcile net loss to net cash
       used in operating activities:
          Depreciation and amortization                   7,359    11,820
          Stock-based compensation                        4,691     3,863
          Other non-cash transactions                        56      (309)
      Changes in assets and liabilities:
          Decrease (increase) in trade accounts
           receivable                                     2,362     9,570
          Decrease (increase) in inventory                 (791)    2,021
          Decrease (increase) in other assets             1,284    (6,026)
          Increase (decrease) in accounts payable        (5,513)   (1,727)
          Increase (decrease) in accrued compensation    (4,687)   (3,676)
          Increase (decrease) in accrued clinical
           trial expenses                                (5,512)   10,160
          Increase (decrease) in accrued expenses        (1,344)   (1,061)
          Increase (decrease) in accrued expenses to
           contract manufacturers                             -   (40,444)
          Increase (decrease) in deferred revenue        (4,111)   (5,321)
          Increase (decrease) in other liabilities         (995)   (1,215)
                                                           ----    ------
      Net cash used in operating activities            $(71,077) $(96,425)

    Cash flows from investing activities:
          Purchases of investments                     (186,016) (334,685)
          Sales of investments                            7,627    28,590
          Maturities of investments                     221,948   369,337
          Transaction costs from Novartis pulmonary
           asset sale                                    (4,440)
          Purchases of property and equipment            (7,999)  (10,349)
                                                         ------   -------
      Net cash provided by investing activities         $31,120   $52,893

    Cash flows from financing activities:
          Payments of loan and capital lease
           obligations                                     (616)   (1,151)
          Proceeds from issuances of common stock            90       383
                                                            ---       ---
      Net cash used in financing activities               $(526)    $(768)
                                                          -----     -----
      Effect of exchange rates on cash and cash
       equivalents                                         (109)     (164)
                                                           ----      ----
      Net decrease in cash and cash equivalents        $(40,592) $(44,464)
      Cash and cash equivalents at beginning of period  155,584    76,293
                                                        -------    ------
      Cash and cash equivalents at end of period       $114,992   $31,829
                                                       ========   =======

SOURCE Nektar Therapeutics
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All rights reserved

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