Chiron and Nektar Announce Initiation of Phase III Clinical Program Evaluating Tobramycin Inhalation Powder in Cystic Fibrosis Patients — First of Two Pivotal Trials Begins, Second Planned for 2006

Chiron Corporation (Nasdaq:CHIR) and Nektar Therapeutics (Nasdaq:NKTR) today announced the initiation of clinical testing in the Phase III program evaluating tobramycin inhalation powder (TIP), an investigational inhaled antibiotic. The TIP Phase III program includes two clinical trials and will evaluate the efficacy and safety of TIP in the treatment of lung infections caused by Pseudomonas aeruginosa in patients living with cystic fibrosis (CF). The first trial, called ASPIRE I, is now underway.

“TIP therapy is designed to provide the first dry-powder, high-payload delivery of an antibiotic directly to the airways,” said Stephen Dilly, M.D., chief medical officer, Chiron BioPharmaceuticals. “The speed and convenience of TIP therapy could be an important advance in treating common lung infections associated with CF, and the ASPIRE trials underscore Chiron’s ongoing commitment to and investment in exploring new treatment options for patients living with CF.”

“Delivering an anti-infective drug like tobramycin quickly and directly into an infected lung is a logical way to treat CF patients,” said John Patton, Ph.D., Nektar co-founder and chief scientific officer. “Our unique powder formulation and advanced inhaleable technologies may enable innovative therapeutics, such as TIP, to target local lung infections.”

TIP is used with a pocket-size, capsule-based inhaler, developed in collaboration with Nektar Therapeutics, that is designed to provide a fully portable, quick and convenient inhalation system. Clinical data from a Phase I trial of TIP suggests that TIP may significantly reduce the treatment burden for CF patients by offering a short administration time and full portability.

About the ASPIRE Trials

The ASPIRE trials are two Phase III clinical trials intended to determine the efficacy and safety of tobramycin inhalation powder (TIP). TIP is an investigational product and has not yet been approved by the U.S. Food and Drug Administration (FDA). TIP is being evaluated for the management of cystic fibrosis (CF) patients with Pseudomonas aeruginosa lung infection. ASPIRE I is a randomized, double-blind, multicenter, multinational, placebo-controlled trial to assess the efficacy and safety of TIP in CF patients. During the first 28 days only, subjects will be randomized to either the investigational drug or placebo. This will be followed by two treatment cycles with the active drug. The ASPIRE I trial began in October 2005. ASPIRE II is a randomized, open-label, multicenter, multinational trial to assess the safety of TIP versus TOBI(R) (tobramycin inhalation solution, USP) in CF patients. The ASPIRE II trial is expected to begin in 2006. TOBI is an approved antibiotic, which is inhaled directly into the lungs and is used to treat Pseudomonas aeruginosa lung infections in CF patients. For more information, please visit www.aspire-trials.com.

About Cystic Fibrosis

Cystic fibrosis (CF) is a genetic disease that primarily affects people of Caucasian origin. About 30,000 people in the United States and about 70,000 people worldwide have CF. Patients with CF have abnormal movement of salt in and out of the cells lining their lungs, which leads to secretion of thick, sticky mucus that supports bacteria growth. Pseudomonas aeruginosa (Pa) is the most common bacterium causing lung infections in people with CF. By the age of 17, nearly 70 percent of people with CF have Pa in their lungs. Pa infections cause lung inflammation and — through cycles of inflammation, obstruction and infection — deterioration of lung function, at an estimated average rate of 1.4 percent to 4 percent per year. Treatment of CF lung disease is aimed at controlling infection, reducing lung obstruction and decreasing inflammation.

Background Material

For free images and video of TIP, please visit www.thenewsmarket.com/chiron. You can download print-quality images and receive broadcast-standard video digitally or by tape from this site. Registration and video is free to the media.

About Chiron

Chiron delivers innovative and valuable products to protect human health by advancing pioneering science across the landscape of biotechnology. The company works to deliver on the limitless promise of science and make a positive difference in people’s lives. For more information, please visit www.chiron.com.

About Nektar

Nektar Therapeutics enables high-value, differentiated therapeutics with its industry-leading drug delivery technologies, expertise and manufacturing capabilities. The world’s top biotechnology and pharmaceutical companies are developing new and better therapeutics using Nektar’s advanced technologies and know-how. Nektar also develops its own products by applying its drug delivery technologies and its expertise to existing medicines to enhance performance, such as improving efficacy, safety and compliance. Nektar Advanced Pulmonary Technology uses innovative molecular formulations and novel delivery devices to improve or enable administration of medicines to and through the lungs for both lung diseases and systemic conditions.

Chiron Forward-Looking Statement

This news release contains forward-looking statements, including statements regarding the development of TIP, results from the ASPIRE clinical trials, marketing approval for TIP and the market for CF products, that involve risks and uncertainties and are subject to change. Forward-looking statements often address our expected future performance and often contain words such as “expects,”"anticipates,”"intends,”"plans,”"believes,”"seeks” or “will.” A discussion of the company’s operations and financial condition, including factors that may affect its business and future prospects that could cause actual results and developments to differ materially from those expressed or implied by forward-looking statements, is contained in documents the company has filed with the SEC, including the Form 10-K for the year ended December 31, 2004, and the Form 10-Q for the quarter ended June 30, 2005, and will be contained in all subsequent periodic filings made with the SEC. These documents identify important factors that could cause the company’s actual performance to differ from current expectations, including, among others, the outcome of clinical trials, regulatory review and approvals, manufacturing capabilities, intellectual property protections and defenses, litigation, and marketing effectiveness. In addition, the company may engage in business opportunities, the successful completion of which is subject to certain risks, including approval by Novartis AG, regulatory approvals, and the integration of operations.

Chiron does not undertake an obligation to update the forward-looking information the company is giving today.

Nektar Forward-Looking Statement

This release contains forward-looking statements that reflect management’s current views as to Nektar’s business strategy, product and technology development plans and funding, collaborative arrangements, clinical trials, and other future events and operations. These forward-looking statements involve uncertainties and other risks that are detailed in Nektar’s reports and other filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 2004, as amended, and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2005. Actual results could differ materially from these forward-looking statements.

Note: TOBI is a trademark of Chiron.