Nektar Therapeutics announced that Novartis AG has agreed to acquire from Nektar specific pulmonary delivery assets, technology, and intellectual property for $115 million in cash.

This agreement will allow us to focus our efforts on the development of novel therapeutics using our PEGylation and conjugate chemistry-based drug development platforms," said Nektar President and CEO Howard W. Robin. "The transaction also strengthens our balance sheet and significantly reduces expenses. It is a perfect example of our ability to monetize assets that had little future value for Nektar."

Novartis will assume ownership of certain dry powder and liquid pulmonary formulation and manufacturing assets, including capital equipment and manufacturing facility capital lease obligations. The agreement also transfers to Novartis approximately 140 Nektar personnel, as well as certain intellectual property and manufacturing methods. Additionally, Nektar will transfer manufacturing and royalty rights to the Tobramycin inhalation powder (TIP) program, already partnered with Novartis.

Nektar will retain ownership of its Bayer HealthCare-partnered program NKTR-061 (Amikacin Inhale), scheduled to enter Phase 3 clinical trials by year-end, and royalties to Ciprofloxacin inhaled powder (CIP), also partnered with Bayer HealthCare. Likewise, Nektar will retain NKTR-063 (inhaled vancomycin), a proprietary program scheduled to enter Phase 2 development in the U.S. early next year, as well as all intellectual property specific to inhaled insulin.

The transaction is subject to customary closing and regulatory conditions, including expiration of the 30-day waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Novartis and Nektar expect to complete the transaction on December 31, 2008. Nektar's financial guidance for 2008 will remain unchanged, excluding the positive effects of this transaction. JPMorgan acted as exclusive financial advisor to Nektar.