TERMINATION AGREEMENT AND MUTUAL RELEASE

EXHIBIT 10.32

FOIA CONFIDENTIAL TREATMENT REQUESTED

TERMINATION AGREEMENT AND MUTUAL RELEASE

This Termination and Release Agreement (the “Termination Agreement”) is made as of November 9, 2007 (the “Effective Date”), by and among Nektar Therapeutics (“Nektar”) and Pfizer Inc. (“Pfizer”) (together, Nektar and Pfizer are referred to herein as the “Parties”).

RECITALS

WHEREAS, the Parties have engaged in a commercial relationship related to the development, funding, licensing, making, using, marketing and selling of inhalable insulin (the “Relationship”);

WHEREAS, Nektar and Pfizer are party to a Collaborative Development and Licensing Agreement [***];

WHEREAS, Pfizer has given notice of termination of the Agreements to Nektar by letter dated October 18, 2007;

WHEREAS, the Parties desire to agree upon an aggregate payment of monies owing relating to the Agreements and the Parties’ performance of their respective rights and obligations arising thereunder;

WHEREAS, the Parties desire to [***];

WHEREAS, the Parties desire to agree upon a transition plan for Exubera and the second generation inhaled insulin product candidate (collectively referred to as the “Product”) that were the subject of the Agreements;

NOW, THEREFORE, in consideration of the recitals above, which are made a part of this Termination Agreement, and the mutual covenants and obligations contained herein, the sufficiency of which is hereby acknowledged, [***], the Parties hereby agree as follows:

TERMS OF TERMINATION

Within seven (7) days of the Effective Date, Pfizer agrees to pay Nektar the sum of $135,000,000 (“the Termination Payment”), by wire transfer to:

[***]

The Parties acknowledge and agree that [***].

The Parties acknowledge and agree that the Agreements are terminated and further agree that the [***] pursuant to the provisions of Exhibit N.

The Parties each agree to the following releases effective immediately following payment of the Termination Payment:

(a) Release by Nektar . [***], Nektar hereby [***] releases [***] all claims [***], which Nektar [***], shall or may have against Pfizer, [***]. Nothing set forth in this Termination Agreement shall [***].

(b) Release by Pfizer . [***], Pfizer hereby [***] releases [***] all claims [***], which Pfizer [***] shall or may have against Nektar [***]. Nothing set forth in this Termination Agreement shall [***].

This Termination Agreement and attached Exhibits, and all documents executed pursuant hereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof, and supersedes any prior written or oral agreements, representations, warranties or statements.

This Termination Agreement may not be altered, modified or amended except by written instrument signed by the Parties hereto. [***].

(a) This Termination Agreement shall be governed by and construed in accordance with the laws of the [***] applicable to agreements made and to be performed entirely within such state, without regard to the conflicts of law principles thereof.

(b) Each party [***] submits to the jurisdiction and venue of the [***]: the Parties shall submit the dispute to Alternative Dispute Resolution [***].

(c) Each party agrees that [***].

2

All notices, requests, demands and other communications required or permitted to be given under the terms of this Termination Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three Business Days after they have been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the other party as set forth below:

The Parties may change the address to which notices or other communications under this Termination Agreement shall be sent by providing written notice to the other in the manner specified above. For purposes of this paragraph, the term “ Business Day ” shall mean a day that is not a Saturday, a Sunday or a day on which banking institutions are legally permitted to be closed in the [***].

This Termination Agreement shall [***].

This Termination Agreement shall [***].

(a) Each of the Parties represents and warrants that it is authorized to execute, deliver, and perform this Termination Agreement and that this Termination Agreement constitutes a legal, valid and binding