8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 3, 2006

NASTECH PHARMACEUTICAL COMPANY INC.

(Exact name of registrant as specified in charter)

DELAWARE
(State or other jurisdiction
of incorporation) 0-13789
(Commission
File Number) 11-2658569
(IRS Employer
Identification No.)

3450 Monte Villa Parkway
Bothell, Washington
(Address of principal executive offices) 98021
(Zip Code)

425-908-3600
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On May 3, 2006, Nastech Pharmaceutical Company Inc. (the “Registrant”) reported its financial results for its first quarter of fiscal year 2006 ended March 31, 2006. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

The information contained herein and in the accompanying exhibit is being furnished pursuant to “Item 2.02 Results of Operations and Financial Condition.” The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

In connection with the foregoing, Nastech hereby furnishes the following exhibit:

Item 9.01 Financial Statements and Exhibits

( c )  Exhibits.

Exhibit Number	Description
99.1	Press Release of Nastech Pharmaceutical Company Inc. dated May 3, 2006.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Nastech Pharmaceutical Company Inc. (Registrant)

	By:	/s/ Philip C. Ranker
	Name:	Philip C. Ranker
	Title:	Chief Financial Officer
Dated:
May 3, 2006

Exhibit Index

Exhibit Number	Description
99.1	Press Release of Nastech Pharmaceutical Company Inc. dated May 3, 2006.

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Nastech Announces First Quarter 2006 Financial Results

Bothell, Wash., May 3, 2006 — Nastech Pharmaceutical Company Inc. (Nasdaq: NSTK) today reported financial results for the quarter ended March 31, 2006.

Revenue for the three months ended March 31, 2006 was $6.7 million, compared to $3.3 million for the three months ended March 31, 2005. The 2006 period included recognition of approximately $3.7 million in previously deferred revenue related to our Merck collaboration that was terminated on March 1, 2006, reimbursement revenue related to our Parathyroid Hormone (PTH_1-34) nasal spray development agreement with Procter & Gamble Pharmaceuticals, Inc. (“P&G”), revenue from our four other collaborative agreements and approximately $0.4 million in Nascobal® product sales. The prior year period included recognition of a $2.0 million milestone payment received from Questcor related to Nascobal®.

The net loss for the current quarter was $7.8 million or $0.38 per share, compared to a net loss of $6.1 million or $0.34 per share for the prior year period. The change in the net loss from the prior year period is due to higher spending due to headcount growth and the timing of research and development projects and clinical trials, offset by a combination of increases in operating revenue and interest income. The net loss for the current quarter includes a cumulative benefit from the accounting change of adopting SFAS123R on January 1, 2006 of approximately $0.3 million reflecting the net cumulative impact of estimating future forfeitures in the determination of period expense for restricted stock awards, rather than recording forfeitures when they occur as previously permitted.

Research and development expenses increased $4.6 million to approximately $11.8 million for the current quarter compared to the prior year period, due to in-process R&D expenses related to our acquisition of RNAi intellectual property from Galenea Corp., timing of clinical program activities for products under development, and increases in the number of research and development employees.

Selling, general and administrative expenses increased $0.9 million to approximately $3.3 million for the current quarter compared to the prior year period primarily due to increases in amortization of non-cash stock compensation expense.

We ended the first quarter of 2006 with approximately $63.0 million in cash, cash equivalents and short-term investments compared to $59.9 million at December 31, 2005. The increase in our cash balance was driven by the initial $10.0 million payment from P&G and approximately $7.8 million from the exercise of stock options and warrants.

RECENT CORPORATE HIGHLIGHTS

• Executed a product development and commercialization agreement with P&G for PTH_1-34 nasal spray for the treatment of osteoporosis with the potential for $577 million in development and

	commercialization milestones in addition to product sales royalties, and research and development reimbursement revenue
•	Presented positive Phase I pharmacokinetic study results for PTH1-34 nasal spray
•	Acquired the RNAi intellectual property from Galenea for the development of RNAi therapeutics against viral respiratory infections, including influenza, rhinovirus and other respiratory diseases
•	Successfully demonstrated effectiveness of Nastech’s small interfering RNA (siRNA) therapeutics both in vitro and in vivo to broadly target and inhibit influenza viral production

Conference Call and Webcast Information

Management will host a conference call to review our financial results for the period ended March 31, 2006 and recent business developments. The call is scheduled for today, May 3, 2006, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). To participate in the live conference call, U.S. residents should dial (800) 901-5259 and international callers should dial (617) 786-4514. The access code for the live conference call is 86896145. To access the 24-hour telephone replay, U.S. residents should dial (888) 286-8010 and international callers should dial (617) 801-6888. The access code for the replay is 18949096.

Alternatively, log on to http://www.nastech.com to access a live webcast or the subsequent 30-day archive. Please connect to the Investor section of Nastech’s website several minutes prior to the start of the live conference call to ensure adequate time for any software download that may be necessary.

ABOUT NASTECH

We are a pharmaceutical company developing innovative products based on proprietary molecular biology-based drug delivery technologies. We and our collaboration partners are developing products for multiple therapeutic areas including inflammatory conditions, obesity and osteoporosis. Additional information about Nastech is available at www.nastech.com.

Nastech Forward-Looking Statements

Statements made in this press release may be forward-looking statements within the meaning of Federal Securities laws that are subject to certain risks and uncertainties and involve factors that may cause actual results to differ materially from those projected or suggested. Factors that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to: (i) the ability of Nastech to obtain additional funding; (ii) the ability of Nastech to attract and/or maintain manufacturing, research, development and commercialization partners; (iii) Nastech’s and/or a partner’s ability to successfully complete product research and development, including preclinical and clinical studies and commercialization; (iv) Nastech’s and/or a partner’s ability to obtain required governmental approvals; and (v) Nastech’s and/or a partner’s ability to develop and commercialize products that can compete favorably with those of competitors. Additional factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements are contained in Nastech’s most recent periodic reports on Form 10-K and Form 10-Q that are filed with the Securities and Exchange Commission. Nastech assumes no obligation to update and supplement forward-looking statements because of subsequent events.

Contacts:
Nastech
Ed Bell
Senior Investor Relations Manager
(425) 908-3639
ir@nastech.com
Noonan Russo
Matthew Haines (Investors/Media)
(212) 845-4235

NASTECH PHARMACEUTICAL COMPANY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)

	Three Months
	Ended
	March 31,
	2005			2006
Revenues
Product revenue, net		—		$	419
License and research fees	$	3,330			6,299
Total revenue	$	3,330		$	6,718
Operating expenses:
Cost of product revenue		—			239
Research and development		7,231			11,801
Selling, general and administrative		2,485			3,346
Total operating expenses		9,716			15,386
Loss from operations		(6,386	)		(8,668	)
Other income (expense):
Interest income		409			638
Interest expense		(120	)		(118	)
Other income and expense, net		10			10
Loss before change in accounting principle	$	(6,087	)	$	(8,138	)
Cumulative effect of change in accounting principle		—			291
Net Loss	$	(6,087	)	$	(7,847	)
Basic and diluted net loss per share:
Prior to cumulative effect of change in accounting principle	$	(0.34	)	$	(0.39	)
Cumulative effect of change in accounting principle		—			0.01
Net loss per common share — basic and diluted	$	(0.34	)	$	(0.38	)
Shares used in computing net loss per share — basic and diluted		17,751			20,689

	December 31,			March 31,
Selected Balance Sheet Data	2005			2006
Cash, cash equivalents and investments (includes restricted cash of $998 and $1,498 respectively)	$	59,909		$	62,959
Accounts receivable		189			1,548
Property, intangibles and other assets		12,855			13,803
Total assets		72,953			78,310
Working capital		55,198			57,690
Accumulated deficit		(115,616	)		(123,463	)
Stockholders’ equity		55,567			56,443