NKTR - NASDAQ

Welcome to the Nektar Therapeutics Second Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Korin Franklin from Nektar Therapeutics Investor Relations to kick things off. Please go ahead.

Thank you, and good afternoon, everyone. Thank you for joining us today. On the call today are Howard Robin, our President and Chief Executive Officer; Dr. Jonathan

Thank you, Korin. Good afternoon, everyone. The second quarter of 2025 was transformative for Nektar. In June, we reported highly compelling initial data in atopic dermatitis for our lead clinical program, rezpegaldesleukin, also known as RE

Thanks, Howard, and thank you to everyone on the call for joining us today. To start, I'd like to remind you of the key takeaways from our June 24th webcast where we announced top line 16-week induction data from the ongoing Phase IIb study known as RE

Thank you, J

[Operator Instructions] And our first question will come from Jay Olson from [ OpCo ].

This is Cheng on the line for Jay. And just want to congratulations again on the very impressive results you shared recently. Just wondering, first, have you maybe started to engage with regulators with the 16-week data? And since you started some activity to prepare for the Phase III initiation, any color you can share on how are you thinking about the trial design and also maybe the number of trials you are planning for the Phase III program? And maybe separately, just like wondering your thoughts on partnership opportunity for RE

I'll let -- this is Howard. I'll let J

Yes. So in terms of your first question was have we began to engage with the regulators. So that's ongoing. So our plan, as I mentioned earlier, is an end of Phase II meeting that we intend to hold before the end of the year. And so at this time, we're basically putting together the meeting request and the briefing package that will go in. And the substrate of what we'll be discussing there is indeed the trial design. And so our basic concept in the trial design is we expect to have 2 monotherapy studies that are basically identical in design as well as a long-term extension study, which enables you to collect long- term safety data. And then for this division, there are a number of additional studies that are required that are typical for every single BLA submission for a new molecule. In terms of the studies, as we mentioned earlier in the call, we understand that there is a significant opportunity for RE

Yes, sure. Look, as we said on the call, we hope to end the year with $180 million to $185 million and we will be prepared to put RE

Our next question will come from Yasmeen Rahimi from Piper Sandler.

Congrats on all the updates and all the great commentary. I guess my question is as the next near-term data catalyst is the upcoming AA readout, J

Yes, sure. So it's a great question. One of the things that's really important to consider about alopecia is that there are currently no approved biologics for alopecia areata. And there's really no therapy that's demonstrated a sustained treatment effect. So JAKs are efficacious and even most recently, Rinvoq posted probably class-leading JAK inhibitor data in the space in the first of their Phase III studies that read out a few weeks ago. And it still has a profile that's well-known. So it's a mechanism that requires continuous dosing. If you stop dosing with the JAK inhibitor, the patients lose the hair that they may have grown. And then also you have to carry the additional safety liability. And it's particularly challenging in this disease as many patients are younger. They have their disease for their entire life and the concept of chronically taking a JAK inhibitor for many, many years is difficult. For us, the way we designed the study for this Phase II is a primary endpoint based on percent change from baseline in SALT scores. And while we don't need to necessarily sort of hit some of the JAK metrics, we still use the JAK metrics. They're very useful as frames of reference as we put together the TPP that we're considering for this indication. And so just as like some kind of benchmarks to keep an eye on for that endpoint, SALT percent change from baseline, low-dose JAK achieves about a 30% reduction in SALT score and high-dose JAK about a 40% reduction in SALT score. So we're looking to be in that range. And ideally, if RE

Our next question will come from Julian Harrison from BTIG.

Congrats on all the recent progress. It's great to hear that you plan to include biologic experience atopic derm in your first registrational program for RE

Yes. Certainly. It's interesting. I mean, we're tending to see that multiple agents are showing activity in bioexperience, right? We've seen that now for a few examples. Lowry had that example. Roca seems to be also having that example. But for us, we have this basic understanding that our mechanism is in no way overlapping or canceled out or contra to any of the post- IL-13 kind of biology. For example, if a patient has a disease that's more mixed in presentation, say, Th2, but additional T helper endotypes that are driving the inflammation, I mean, obviously, if you take a Th2 inhibitory mechanism like an IL-4, IL-13, you leave other parts of the immune system kind of untouched. But we know that we have a breadth of ability to block multiple kinds of polarized T cell inflammation. And there's also really no additional kind of a priori knowledge or scientific reason why there wouldn't be an effect. Also, because we're an agonist and not an antagonist agent and we're a cellular agonist, it gives us confidence that RE

Our next question will come from Arthur He from HCW.

Congrats on the progress during the quarter. So I just had a quick question on the potential pivotal study for the RE

Yes. That's a great question. So our goal is to begin our first Phase III study in the first half of next year. At that time, the major approved mechanisms would be the IL-4 and IL-13 class, right? So that would be DUPIXENT, lebrikizumab, right, Adbry tralokinumab as well. And then nemolizumab is also approved as IL-31 antagonist. That would also be bio-experienced. In our case, while the OX40 class will not yet be approved likely by the time we begin, likely the first entrant will probably reach approval during. Obviously, there aren't as many people that have taken those drugs yet. But again, that would also represent a biologic experienced patient population. I hope that answers your question.

Our next question comes from Mayank Mamtani from B. Riley Securities.

Congrats on a very productive second quarter. As part of the Phase III, I was wondering what your expectation for the induction efficacy primary endpoint duration of therapy would be knowing that you're not getting to the peak EASI and efficacy at 16 weeks? And also the thought you might be putting in to get the relative efficacy signal? And obviously, is there anything to learn from the OX40 trials that are sort of trying to get to a comparable goal? And then I have a couple of follow-ups.

Yes, sure. So one of the things that our Phase IIb study, we think really gave us clear understanding of is the dose level and the regimen that we want to take forward into our Phase III studies. And we've already used since our top line, the results of the study to create a population PK model as well as an exposure response model. As you know, both of those are key components of the end of Phase II meeting package that are used to defend the dose level for the Phase III. So we feel very confident with that. We did mention earlier, right, that the way our study is designed is we have multiple portions of the study where patients are ongoing longer duration of treatment beyond week 16. We're very excited about the data cut that we talked about earlier in our call because that really starts to really sort of drill down, right, into what are those effects and the potential of deepening responses when patients are treated beyond 16 weeks. For example, we know for some contemporary Phase III studies, there's been a trend to move to longer induction endpoints. We also feel like we haven't quite even yet reached or seen the maximum efficacy of RE

Very helpful, J

J

Yes, sure. Yes, I'll start with the alopecia. So firstly, remember, we have a 36-week endpoint in alopecia. And remember, we just discussed about longer duration of dosing beyond week 16. So I urge you to keep those 2 things in mind. We think there's an opportunity for a very exciting outcome for us in alopecia areata. And we use the JAK inhibitor as benchmarks. But again, there's really not been a biologic that has established itself in this space and we're very excited with our mechanism to do that. And so we think that, if anything, the read-through that we have from atopic derm is a positive read-through on to alopecia. And Howard, I'll turn it over to you.

Okay. Yes. Let me -- obviously, we're not going to -- we certainly can't comment on the Lilly lawsuit. I think we are very committed to pursuing it. Based upon the RE

Our next question will come from Cha Cha Yang from Jefferies.

This is Cha Cha on for Roger Song. I was hoping that you could give us any updates on your studies being done to better understand the ISRs, whether that's from a mechanistic perspective or if you could give us any updates in regards to developing strategies for mitigating them upon commercialization?

Sure. Yes. So in our studies, we have been assessing the biology of ISR using various methods. One that's been quite useful for us is using a primary skin organoid cultures using skin that's obtained from tummy tuck surgery. It's very useful because that's abdominal skin and we inject the abdomen, right? So one of the things that we've learned so far is that this is really, as we've known for a long time, an IL-2 effect. So IL-2 is known to cause injection site reactions and that was discovered in the late '80s and early '90s when subcutaneous studies started being done with the molecule. And so the pathways that we see induced are related to IL-2. And that's actually a great observation for us to be able to model those in the organoid culture. We can study them at the mRNA level and the pathway level. And then that gives us opportunities to be very specific with the kind of mitigation approaches that we can use because we know which pathways are firing and we can even identify the cells that are signaling the most. Another important element for us is that we've been operating the program basically using drug in a vial. And then the drug is drawn up at the study sites and administered to the patient subcutaneously by the health care practitioner. But we'll be launching with product presentation in a prefilled syringe packaged into an auto-injector. And we know that will have a positive effect because that will really standardize the drug administration, the needle depth, the rate, the needle itself will be dry, plus all the things that we're learning from these biological approaches. We'll be doing all of those things while the Phase III program is ongoing and we look to incorporate those into the auto-injector that we'll have at the time of launch.

Yes. Let me also add to that. I think -- look, I think from a marketing point of view, it's not a barrier at all. The patient -- we had, I think, 2 patients drop out of the trial for injection site reactions. Most patients, they were mild to moderate. They self-resolved. They did not stop taking the drug because of them. And while we did have a lot of patients that had an injection site reaction, they may have only had 1 or 2 and they didn't have any further injection site reaction. Sometimes patients went months before they had one and then they had one and then they didn't have any more. So you have to really understand what happened here with injection site reactions. It's not that a large percentage of patients get them on every injection. That is not the case at all. And in any case, they were -- most of them were mild and the patients didn't seem to care. So I think when you look at the problems associated with IL-13 drugs such as conjunctivitis, infections, I think that's actually much more concerning than mild to moderate, self-resolving injection site reactions. And I think J

Our next question comes from Alex Ramsey from William Blair.

This is Alex Ramsey on for Andy Hsieh at William Blair. So just going back to the potential remittive effect of RE

Yes. Those are great questions. So starting with the first one, so with remittive effect, the data in this part of the Phase IIb RE

And our next question comes from Jessica Fye from JPMorgan.

For RE

Sure. Yes. So firstly, as we reported in June, we had 190 people that moved into the maintenance arm. So we think that's a good population. It's actually right in line with what we've modeled that will cross over. And that modeling was based on other Phase II studies and similar Phase II patient populations, similar statistical methods used during induction. And then, of course, heavily driven by our Phase I data and our Phase I results. So we're pretty happy with the number of people that moved into the maintenance portion. And very much to your point, because we wanted to assess 2 regimens, right? You're basically randomizing them 1:1. The people that were on placebo, and there was a handful, right? It was less than 30%. Those stay on placebo, but everyone else is on RE

And I am showing no further questions from our phone lines. I'd now like to pass it back to Howard Robin for any closing remarks.

Well, thank you, Crystal. Before we close, I want to thank the new and existing investors that supported our recent capital raise and we are truly grateful for your support as shareholders. I also want to thank our employees for their dedication and extremely hard work and we look forward to delivering additional data updates later this year and engaging with regulators on our Phase III program. So thank you for joining us today, and please stay tuned.