“2008 was a transformational year for Nektar,” said Howard W. Robin, president and chief executive officer of Nektar. “Using our unique polymer conjugation chemistry platform, we advanced numerous proprietary drug candidates into clinical and preclinical development. Further, we significantly strengthened our financial position with the sale of pulmonary delivery assets and the buy-back of $100 million of convertible debt at a substantial discount. Nektar is exceptionally well-positioned as we enter 2009.”

Fourth quarter and year-end 2008 financial results

Nektar completed two significant transactions during the fourth quarter of 2008:

The company repurchased $100.0 million of its 3.25% convertible subordinated notes for $47.8 million. As a result, the company recognized a gain of $50.1 million in the fourth quarter, net of transaction costs of $1.0 million and accelerated amortization of our deferred financing costs of $1.1 million.

Nektar completed the divestiture of certain of its pulmonary delivery assets to Novartis for $115.0 million on December 31, 2008. As a result of the completion of this transaction, the company recognized a gain of $69.6 million in the fourth quarter of 2008.

Cash, cash equivalents, and short-term investments at December 31, 2008 were $379.0 million.

Revenue for the three month period ended December 31, 2008 was $28.4 million against revenue of $65.8 million in the fourth quarter of 2007. For the year ended of 2008, revenue was $90.2 million as against $273.0 million in the same period of 2007. This decrease in revenue is primarily the result of lower product manufacturing revenues due to the termination of the company’s inhaled insulin collaboration with Pfizer in late 2007.

Research and development expense was $154.4 million in 2008 as against $153.6 million for 2007. Included in the $154.4 million of overall research and development spending is approximately $82.0 million of new investments in Nektar preclinical and clinical development programs.

Nektar has also continued to make improvements to its operating efficiencies as against a year ago. For the year ended December 31, 2008, the company’s general and administrative expense was $51.5 million as against $57.3 million for the same period a year ago.

Net income for the quarter ended December 31, 2008 was $76.8 million or $0.83 per share, against net income of $39.0 million or $0.42 per share in the fourth quarter of 2007.