Good afternoon and thank you for joining us for the Nektar Therapeutics conference call. My name is Madge [ph], and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be conducting a question-and-answer session toward the end of this conference. (Operator instructions) As a reminder, this conference is being recorded for replay purposes. I would now hand the call over to Nektar Investor Relations. Please proceed.

Thank you. Good afternoon and thank you for joining us for Nektar Therapeutics third quarter 2008 financial results conference call. Before we get started, please note that the following presentation contains forward-looking statements that reflect our current views as to the Company's business strategy, the value and potential of our technology platform, the clinical prospects of our proprietary and partnered products, future revenue potential of our partnered programs, our financial guidance for 2008, the anticipated closing of the Novartis transaction, and other future events relating to the Company. These forward-looking statements involve uncertainties and other risks that are detailed in Nektar's reports and other filings with the SEC, including our quarterly report on Form 10-Q filed with the SEC on August 8, 2008 and the report on Form 8-K filed today which included our third quarter financial results press release. Actual events could differ materially from these forward-looking statements. We assume no obligation to update any forward-looking statements as a result of new information, future events or developments. A web cast of this conference call will be available for replay on the Investor Relations page at Nektar's website at www.nektar.com. In the event that any non-GAAP financial measure financial measure is discussed on this conference call that is not described during the call, related information will be made available on the Investor Relations page of our website as soon as practical after the conclusion of the call. With that, I'm pleased to hand the call over to our President and CEO, Howard Robin.

Thank you, Jennifer, and thanks to everyone for joining us. Today we'll update you on the important progress we have made with Nektar’s business and our proprietary and partnered drug development programs, as well as review our financial results for the third quarter and year-to-date. On October 21st, we took an exceptionally important step with the announcement of our sale of certain pulmonary delivery assets to Novartis for $115 million in cash. Under the asset purchase agreement Nektar retains ownership of our lead anti-infective programs, the Bayer partnered program, NKTR-061 inhaled amikacin entering Phase 3 next month and our proprietary program, NKTR-063 inhaled vancomycin, which is planned to begin Phase 2 in the first half of 2009. Additionally, we retained our rights to royalties on sales of inherited Cipro, which is also partnered with Bayer. These anti-infective programs represent the potential for significant revenue streams to Nektar. Additionally, we retained all rights to our dominant inhaled insulin intellectual property. The Novartis transaction underscores our ability to monetize assets that are no longer strategic to Nektar’s future. More importantly it also highlights the extraordinary value of the rest of the company when you consider that these assets represent only a mere fraction of the company and were sold for $115 million. We can know place our strategic focus squarely on the development of novel therapeutics using our advanced polymer conjugate technology platform or continuing to advance our inhaled amikacin and vancomycin programs. This focus will allow us to rapidly and efficiently advance valuable product candidates into clinical development. The Novartis transaction also significantly increases our operating efficiencies and builds on the great progress we have made in this area. The transaction will effectively eliminate $45 million of P&L expenses resulting in a reduction of $30 million of cash usage associated with…

Thank you, Howard, and good afternoon. Our third quarter GAAP cash used in operations was $18.6 million. Our non-GAAP cash used in operations was $18.5 million, an improvement from $18.7 million in the second quarter and $25.1 in the first quarter. Our non-GAAP cash used in the third quarter excludes $100,000 related to workforce reductions. At September 30, we had a cash balance of $344.5 million compared to $373.9 million at June 30. In addition to our cash used in operations during the third quarter, we had capital expenditures of $4.7 million, and we had capital lease costs and other net uses of cash of $6.1 million. Revenue was $21.4 million in the third quarter and $61.8 million year-to-date. For the full year 2008 we expect our revenue to be approximately $90 million compared to our prior projection of $95 million. This was primarily because of that less than expected (inaudible) manufacturing requirements by UCB and less than expected some of the manufacturing requirements by Pfizer. This lower manufacturing revenue is offset by an improvement in operating expenses and efficiencies for our ongoing business. Other than the timing of the Bayer amikacin milestone that Howard mentioned earlier and a drop in our interest earned as a result of the current credit crisis, we would have a non-GAAP cash used in operations of $72 million, which is in line with our target of $75 million. Since we now have to receive the $10 million amikacin milestone payment by early February of 2008, our non-GAAP cash used in operations will be approximately $88 million. Let me break it down for you, the $72 million I just mentioned less than $10 million Bayer milestone that we now receive early next year and the change in the interest spread of $6 million. Our GAAP…

Thank you, John. I want to close now with a key message for our investors and analysts alike. I told you that we would chart new course and as you can clearly see we have done just that. The turnaround at Nektar is now largely complete. We have created one of the robust pipelines in biotech, dramatically improved the company’s financial strength, assembled a new management team with a solid track record, and refocused the business around our powerful polymer and conjugate chemistry development platforms. With that, I'd like to open up the call to questions.

(Operator instructions) And your first question comes from the line of Sa'ar Yaniv from JP Morgan. Please proceed.

Do you have a question?

Your line is open.

Let us go to the next question please, Madge.

And your next question comes from the line of Ian Sanderson from Cowen & Company. Please proceed. Ian Sanderson – Cowen & Company: Hi, good afternoon. Thanks for taking the questions it is Ian Sanderson. A couple of pipeline updates that I don’t think were addressed on the call. NKTR-125, any update there and then PEGylated factor 8 program with Bayer?

Well, thank you. Yes, the 125 program is still in development. We strongly support it. We haven’t said yet when we will file an IND, this is for PEGylated diphenhydramine using the same basic technology platform as NKTR-118 where we keep diphenhydramine from crossing the blood brain barrier and therefore have a antihistamine without sedation. That is still in our early preclinical stage. We are doing further work on that and we haven’t said yet when we expect to file an IND. With regard to our Bayer programs, excuse me our Baxter programs, they are moving forward with Baxter. I think we’re not in a position to comment specifically on the status of those programs but at this point I can imagine that it is very likely that these programs move forward in a very expeditious way and we’re very happy to continue our collaboration with Baxter. Ian Sanderson – Cowen & Company: And you may have given this on the call and I missed it, but was there a reason that the Phase 3 – start of Phase 3 for inhaled amikacin got shifted into early next year?

Ian Sanderson – Cowen & Company: Okay, that then clears my confusion. And one last question on the balance sheet as of September 30, the $43 million of assets held for sale. Should I presume that is the pulmonary assets sold to Novartis?

Yes, that is correct. Ian Sanderson – Cowen & Company: Okay, thank you.

Thanks.

And your next question comes from the line of Sa'ar Yaniv from JP Morgan. Please proceed. Sa'ar Yaniv – JP Morgan: Hi guys would afternoon. Thank you for taking my questions. I had a couple of questions. The first one is in regards to timing for the Phase 2 data for irinotecan and PEG-naloxol.

Okay, maybe I’m going to turn it over to Randall Moreadith, our Chief Development Officer, to take those specific questions. Sa'ar Yaniv – JP Morgan: Okay, great thanks.

Yes, we remain on track for the NKTR-118 program to release that data on the Phase 2 trial in the first half of 2009. Sa'ar Yaniv – JP Morgan: Okay, and the 102.

Sa'ar Yaniv – JP Morgan: Okay and the Phase 2a.

Yes. The Phase 2a program is still on track. We intend to complete enrollment in that study in the fourth quarter of this year with the anticipation of publishing those results and presenting those results in early 2009. Sa'ar Yaniv – JP Morgan: Okay, great. Also how are you going to disclose the Phase 2a data with (inaudible), do you have any idea, have you decided on that?

We haven’t decided how we will present the data. That will be a discussion once we complete the enrollment in the trial. Sa'ar Yaniv – JP Morgan: Great. Thank you so much.

And your next question comes from the line of Richard Meseri [ph] from DCM Fund [ph]. Please proceed. Richard Meseri – DCM Fund: Hi, yes. Thank you. I just wanted to say firstly though it is truly heartening Howard to see your management team taking such a prudent and creative approach to managing its cash and its liabilities. I mean you guys have basically reduced your debt and effectively increased your net cash by 50 million bucks. I mean it is great to see a management team that has concern for all its stakeholders. My question is have you given any thought in terms of the rank order of the compounds that you have got in development. As far as partnering are there any that you have thought about more likely that you want to partner.

Yes, that’s a good question. And I think I have said in prior calls and I’ve talked to investors about this publicly a number of times is that we are always – we have the luxury of having an enormous amount of clinical opportunities because our platform lends itself to improving both large and small molecules. So, we’re always making the decision what do we want to carry through to the clinic ourselves. What do you want to partner early or mid-stage? At that point at this point I would say if you ask the question where are my priorities. I think the most likely compound for partnering at this stage is NKTR-118 and NKTR-119 and the reason I say that is because there are a number of very important companies out there who find the concept of NKTR-119, which is a combination opioid with NKTR-118 to make an analgesic that doesn’t cause constipation. A very, very attractive product opportunity if you look at the opioid market and imagine having a product that gets rid of the most debilitating side effects of new sites of therapy, you can imagine there are number of pain companies who would find this very interesting. And it also is a clinical design and a clinical expense that is probably is best suited at least in a Phase 3 setting to a large pain oriented company. So while I’m not suggesting that we’re going to license it out that is if you ask me where are my first priorities in finding a partner, I would say it is NKTR-118 and NKTR-119. Richard Meseri – DCM Fund: Got it. All right, again I appreciate it.

Thanks. Thank you very much.

Rich Silver – Barclays and Co.: Thanks. Hi, Howard.

Hi, Rich. Rich Silver – Barclays and Co.: UCB Cimzia understand of course it is their product in terms of regulatory but can you give us any update on the status for RA as far as PDUFAs in both in US and also Europe?

Look, unfortunately based on our contractual obligations with them, we really can’t discuss that product. You saw that we had a little bit of reduction in revenues as a result of less manufacturing requirements for Cimzia. Most of those revenues by the way are offset by a reduction in related cost of goods. So it doesn’t have that reduction in that revenue base. It didn’t have much of an impact on Nektar this year, but unfortunately Rich I am not allowed to discuss in any kind of detail the status of that program. Rich Silver – Barclays and Co.: Does the reduction have anything to do with assumptions on the regulatory side?

You know, I couldn’t tell you he even if I knew all the details behind it. I will only tell you that that reduction is not terribly relevant to Nektar. I mean, it is certainly important in that we want to be successful with a partner but in the scheme of Nektar’s broad opportunities it is only a small piece right. Rich Silver – Barclays and Co.: Okay. And then just on, a couple of line items on contract research and SG&A and we saw this quarter those good run rates, should we see them higher or lower, just any kind of sense on a go forward basis.

Well, look what we have done this year I think is very impressive. We – our operating cash burn about $72 million and I know it’ll be somewhat higher than that because of the timing on the Bayer payment but that is an issue of whether it is December 31st or January 2nd, right. But our operating cash burn of $72 million leaving out the Bayer and leaving out the interest issue is rather remarkable considering we spent over $50 million in outside clinical costs. So we have gotten down – we have gotten Nektar down to fairly low numbers in terms of how we operate our company. If you take out the clinical costs of approximately $50 million, you are talking about a remainder of about $22 million net expense to operate his company. Now that doesn’t mean that is what will happen in future years because we are moving more and more programs into Phase 2. We are moving – will be moving programs either with partners or potentially by ourselves at some point in to Phase 3. And as we build this clinical pipeline, which I think is rather impressive there will be more costs incurred. So I can’t predict today. We’re not going to give out guidance today on what next year’s cash burn will look like but rest assured we’re very, very cautious on how we spend our money. We won’t be kids in a candy store and walk on every possible opportunity because that burns through cash at too rapid a rate. We have lots of opportunities. It is a true problem of luxury to say to be able to say what things we’re going to work on and here is five things we’re just not going to work on at the moment. And that is all driven by how we want to spend our cash. So I think we have done a great job in really being quiet injudicious on how we use our cash. In next year’s cash burn rate, I would project will be reasonable and something that everybody will clearly understand but also understand that we are moving more and more programs to the clinic and that does take money. Rich Silver – Barclays and Co.: Okay, thank you.

And your next question is a follow up question from Ian Sanderson from Cowen & Company. Please proceed. Ian Sanderson – Cowen & Company: Thanks for taking the follow ups and these may be unanswerable. But just to follow up Howard on the next year’s cash burn should we assume that it should be greater than the burn this year?

Sorry go ahead. Ian Sanderson – Cowen & Company: And the second question is probably also unanswerable, but just looking forward to next week, should we anticipate new pipeline programs being presented or is it mostly an update on the existing pipelines.

So I think. Okay, let me answer the latter question first. I think next week at R&D Day you will hear – you will hear about our protease inhibitor NKTR-140, which I think we’re very excited about. You are going to see some early data and early discussion on that molecule. So I think that will be fun to talk about. With regard to your first question, look we haven’t finalized our budgets for next year. We’re looking at all of our critical opportunities. We’re looking at a number of things. I think it is important to point out that while I can’t give you the kind of guidance today. I think if you look at a net burn of $70 million, $75 million, $80 million, I mean $60 million you should expect that we will be in that range somewhere. And you know, we’re going to move towards a number that allows us to optimize our opportunities in the clinic, our opportunities in developing – in our research efforts, new and novel methods of applying our polymer conjugates, and because we have more opportunities than anyone could possibly handle and again a true problem of luxury. I think we would be very, very careful in how much we spend next year. So I think if you look at next Nektar’s spending this year and Nektar’s spending next year it is probably going to be just about the same although I’m not going to provide guidance of this point. One thing you should remember is when I talk about that number for this year, we talk about that number for next year that doesn’t include any opportunities we have for partnering, right. So that is –anytime we – if we do any partner deals this year or next year that would only bring that external or that net burn rate number down. Ian Sanderson – Cowen & Company: Okay, and also does include the, presumably the capital savings from the divestiture of the inhalation business?

Yes as I said there is probably about a $30 million a year cash burn that we’ve eliminated by divesting a large portion of these pulmonary assets but of course I would also expect to see our clinical programs grow, which is a good thing and that money may very well get used by clinical operations. And I think that is the great opportunity to reinvest. I mean the ability to take spending away from an area that was producing modest results and moving into an area where we can put many, many programs into the pipeline I think it is something very positive for investors. Ian Sanderson – Cowen & Company: Okay, thank you very much.

And you have no questions at this time sir. And I would now like to turn the call over to Howard Robin for closing remarks.

Well, thank you for your questions. Thank you everyone for joining us today. And I look forward to seeing hopefully all of you at next week on November 12th, at our R&D Day in New York City. Thanks very much.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.