906709--3/16/2006--NEKTAR

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Our revenue and results of operations will depend on the successful commercial launch of Exubera . If we are not able to manufacture and supply sufficient quantities of powder formulated drugs to meet market demand it would negatively impact our revenue and results of operations. We depend on two contract manufacturers to manufacture the Exubera inhaler devices and the failure to manufacture sufficient quantities of inhalers to meet market demand would negatively impact our revenues and results of operations. If Pfizer Inc is not able to manufacture or fill the bulk insulin powder in sufficient quantities to meet market demand it would negatively impact our revenues and results of operations. The discovery of any new or more severe side effects or negative efficacy findings for Exubera could significantly harm our business. If government and private insurance programs do not pay for our products they will not be widely accepted and it would have a negative impact on our revenue and results of operations. If product liability lawsuits are brought against us, we may incur substantial liabilities. If we are not successful in designing and developing new and next generation pulmonary inhaler devices it would negatively impact our revenue and results of operations. If our competitors develop and sell better drug delivery and formulation technologies, then our products or technologies may be uncompetitive or obsolete and it would negatively impact our revenues and results of operations. If the collaborative partners we depend on to obtain regulatory approvals for and commercialize our partner products are not successful, or if such collaborations fail, then the product development or commercialization of our partner products may be delayed or unsuccessful. If we are not able to manufacture our dry powder inhaler device in commercially feasible quantities or at commercially feasible costs, then our Pulmonary Technology products may not be successfully commercialized. Our increasing investment in the development and commercialization of our proprietary products prior to seeking partnering arrangements may be unsuccessful and adversely impact our financial condition and liquidity. If we fail to establish future successful collaborative relationships, then our financial results may suffer and our product development efforts may be delayed or unsuccessful. If our technologies are not commercially feasible, then it would negatively impact our revenues and results of operations. If our pre-clinical or clinical testing trials are delayed or unsuccessful, then we will experience delay or be unsuccessful in having our products commercialized, and our business will be significantly harmed. If our technologies do not satisfy certain basic feasibility requirements such as total system efficiency and the ability to efficiently attached PEG polymer chains, then our products may not be commercially feasible or competitive. If our drug formulations are not stable, then we will not be able to develop or commercialize products. If our drug delivery technologies are not safe, then regulatory approval of our (or our partners) products may not be obtained, or our (or our partners) products may not be developed or marketed of our (or our partners) products may be suspended following commercialization. If the products using Nektar Pulmonary Technology do not provide consistent doses of medicine, then we will not be able to develop, and we or our partners will not be able to obtain regulatory approval for and commercialize products. If we or our partners do not obtain regulatory approval for our products on a timely basis, then our revenues and results of operations may be affected negatively. If our technologies cannot be integrated successfully to bring products to market, then our or our partners ability to develop, obtain approval for, or market products, may be delayed or unsuccessful. If we are not able to manufacture products using Nektar Advanced PEGylation Technology in commercially feasible quantities or at commercially feasible costs, then our products will not be successfully commercialized. If the market does not accept products based on our technologies, then our revenues and results of operations will be adversely affected. If any of our pending patent applications do not issue or following issuance are deemed invalid or if any of our patents are deemed invalid, we may lose valuable intellectual property protection. If any of our products infringe third-party intellectual property rights, we may suffer adverse effects to our ability to develop and commercialize products and to our revenues and results from operations. We may incur material litigation costs, which may adversely affect our business and results of operations. If earthquakes, tornadoes, hurricanes and other catastrophic events strike, our business may be negatively affected. Investors should be aware of industry-wide risks, which are applicable to us and may affect our revenues and results of operations. If we do not generate sufficient cash flow through increased revenues or raising additional capital, then we may not be able to meet our substantial debt obligations. If we cannot raise additional capital our financial condition may suffer. If we fail to manage our growth effectively, our business may suffer. If we fail to manage our executive officer transitions, our business may suffer. If we acquire additional companies, products or technologies, we may not be able to effectively integrate personnel and operations and such failure may disrupt our business and results of operations. We expect to continue to lose money for the next few years and may not reach profitability if our products do not generate sufficient revenue. Anti-takeover provisions in our charter documents and under Delaware law may make it more difficult to acquire us, even though such acquisitions may be beneficial to our stockholders. We expect our stock price to remain volatile. New and potential new accounting pronouncements may impact our future financial position and results of operations. Our business is subject to changing regulation of corporate governance and public disclosure that has increased both our costs and the risk of noncompliance.

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906709--3/16/2006--NEKTAR_THERAPEUTICS