Okay, let's get started with our next session. Thank you for joining us. My name is Chris Shibutani, member of the Goldman Sachs Healthcare Equity Research Team. We are very pleased to have Nektar Therapeutics join us once again for our conference. I think you guys go back with me just many years, and I think what's always interesting is to think about the resilience of the effort and, you know, the focus. The company is different from when we first met several years ago, and we'll go into that a little bit, in terms of the shift in the focus. There actually seems to be a lot of progress points that have happened, with REZPEG in immunology, that there is a path forward. And so hopefully this is a conversation that we can have that will remind people, A, of the resilience, and B, that there is a path forward. And I think when folks are looking for ideas that are not necessarily at the epicenter of something like obesity, they should be looking at other areas. And you guys have been in really doing work in very relevant areas, oncology, immunology, et cetera. So very pleased to be joined by two members of the C-suite here, Jen Ruddock, and your official CB, the B is Chief- Business Business Officer, and Jonathan Zalevsky, who is Chief? Research and Development Officer. Oh, really? Okay. Yeah. Well, I don't even know what the acronym for that is, but okay. You've been wearing quite a few hats, and you bring to bear a lot of experience, so it's great to see you again, J.Z., and to be here. Thank you for having us, Chris. Absolutely. So let's talk about, particularly where we're at, t he center of gravity here is REZPEG. Maybe JZ, what is REZPEG? Sure. Rezpegaldesleukin is a polymer form of Interleukin-2, and it shows really great ability to selectively stimulate regulatory T cells, which are a unique population of cells in our bodies that control unwanted autoimmune and autoinflammatory reactions. What is the history of the clinical development path? What do we know? And just tell us a little bit about this journey, because it's actually got an interesting development stewardship history. Went with Lilly, and we'll get into that a little bit just because I think it's helpful context to think about now in your hands, what you're doing with it. But just remind us from the outset, what's the profile? What's the deal? Sure. Yeah, so, so we invented it several years ago when we understood that it would be a way to create a kind of like a growth factor to access these regulatory T cells in the body, and that that could have a, a potential to be a therapeutic avenue to explore for a wide variety of autoimmune diseases, systemic diseases, skin diseases, all manner of different forms of, of indications. And after we invented it, in order to help sort of maximize and expand its development, we formed a collaboration with our former partner, Eli Lilly. And under the, the umbrella of that collaboration, we completed all of the non-clinical development work. Mm-hmm. We published that a few years ago. Then we also opened the phase I-A and the first phase I-B clinical studies. We conducted all those as Nektar, and then we handed the program over to our partner, Eli Lilly, who then ran seven additional studies. That was a combination of studies in healthy volunteers, so assess various kinds of clinical pharmacology, you know, features of the molecule. Mm-hmm. And also, they ran studies in psoriasis, atopic dermatitis, lupus, ulcerative colitis, and so on. So in total, there have been nine clinical studies run o ver the program, over the years. And then most recently, Nektar and Lilly have terminated our collaboration, and Nektar has fully regained the full rights of REZPEG. And we're continuing its development because during the time of the collaboration, and particularly in one indication, atopic dermatitis- Mm-hmm -there was some very exciting data collected in an investigational study where REZPEG showed a dose-dependent efficacy in patients with moderate to severe atopic dermatitis, and the efficacy was really compelling. It really pushed the envelope in terms of time of effect, very rapidly efficacious. It pushed the magnitude of response and actually achieved an 83% change from baseline in EASI score, which is a level of efficacy that is really only touched maybe by JAK inhibitors. Mm-hmm. Even rarely, not all of JAK inhibitors can achieve that. As a biologic, to have that kind of cross of the 80% mark was quite notable. Then we also saw a very important property, which is really related to the mechanism of the drug which is when we withdrew dosing patients maintained efficacy for up to 36 additional weeks. As we followed people all the way through, after a 12-week dosing period, all the way through week 48 in that study, and we saw vIGA responses maintained in 80% of the people, and EASI-75 responses maintained in about 75% of the people. Those were very notable things that we learned during the collaboration with Eli Lilly. Afterwards, now that the drug is fully in our rebirth, re-stewardship, resilience era, it's now fully within our hands and we're really aggressively advancing its development in a very large phase II study in atopic dermatitis, which I'm sure we'll talk more about. Mm-hmm. Right. Yeah, I think a lot about immunology-directed assets, the construct is that there's a pipeline within the product, and so the extensive number of indications that were being prosecuted earlier totally makes sense. I always think of the skin indications as being more competitive from the efficacy standpoint. When you hear someone say, "EASI" or PASI score, you're expecting a number that kinda has to start at least with a five handle on it and go higher, right? Whereas if someone says, "Oh, we're going after UC and Crohn's," and someone says that they did 20% response, went into induction remission, it's high fives all around- You know, which actually sort of speaks to how complex those patients and the diseases are, et cetera. So AD is pretty competitive, right? Mm-hmm. We have a dominant franchise product that is the golden goose there. Where do you envision the white space or the opportunity set? Because one of the other wonderful things a bout the immunology market is that we're still not great at picking who gets what, and patients try stuff, and the phrase "cycling on and off therapies" means multiple players get to play, which is theoretically where I think REZPEG could come in. But frame for me what the you know, what the mapping out of where you see this could go if things continue to go well. Sure. Yeah, well, well, we started off in our phase I-B study. We ran that study in biologic naive. Mm-hmm You know, patients. So that is the same patient population, the Dupixent, for example, right? Right. We did get a number in that efficacy category that really is indicative of pushing the bar on efficacy. So, as I mentioned, we had an 83% change from baseline, whereas Dupixent has a change from baseline in phase II studies in the low-to-mid-60s. So that was one kind of difference that we're looking at. But of course, that was a phase I-B, little bit of a smaller data set. Now, the thing is, we know that only a small proportion of patients that are eligible to take biologics are actually treated with biologics. Right. I think one of the estimates that we saw from epidemiological analysis is about 8%. Mm-hmm. So there is, firstly, a much larger patient population altogether with atopic dermatitis. And for the folks that are not controlled by topicals, you know, there's about 90% of those people are still untreated with the biologic. So there is an addressable patient population. And in addition, as we've seen in fields like rheumatoid arthritis that grew with multiple TNF entrants, in fields like psoriasis, that grew when the efficacy bar was pushed by agents like Stelara and then the IL-17 inhibitors, then IL-23 inhibitors, and convenience was pushed, most recently with Skyrizi which both pushes efficacy and convenience. Right. There are multiple sort of vectors of trajectory, you know, that allow you to really establish a very competitive product that has a lot of differentiating potential. So we see in REZPEG, a totally novel mechanism, a mechanism that you would use effectively, right? You wouldn't cycle through another IL-13 if you failed one. Mm-hmm. So you need other mechanisms. We see the ability to have a durability in response, and in our phase II, we're already exploring Q-12 week dosing. Mm-hmm. Possibly it could be even less frequent, right? So you have the convenience, and we have hints that we're pushing the bar on efficacy. So we really think REZPEG represents a very competitive opportunity, and we feel very confident, you know, moving it into this biologic-naive patient population. And then, when you think about the mechanism, even if you're refractory to other therapies, it's not a Treg mechanism. Mm-hmm. So you have the opportunity to consider its use in additional lines. And the last part to just touch on is, we know that in children, this disease, like atopic dermatitis, is really atopic, it's really Th2 dominant. But in adults, presentation of the disease is really mixed. So we have much more of a Th1 infiltrate in some patients, more Th17 in others. Mm-hmm. If you have asthma, you might have Th9, so you really start mixing, you know, the kinds of presentation. The standard of care right now is really focused on Th2. They're either IL-4, IL-13, or direct IL-13 inhibitors. You're not really gonna have the ability to directly engage with anything other than a Th2 inflammatory pathway, b ecause the cytokines they block are Th2 only. One of the benefits of a Treg therapy is we know Tregs take subtypes that are skewed to the same helper subtype that the autoinflammatory cell has. A Th1-driven inflammation has a Th1 Treg. A Th2 inflammation has a Th2 Treg, Th17 Tregs, and so on. Mm-hmm. There's also the opportunity to provide more broad, you know, biological control for patients that have different kinds of subtypes. Mm-hmm. I wanna ask a little bit more about the phase IIb design because you have multiple doses and cohorts of patients, but you did mention something earlier that I'm hoping to get a little bit better biological understanding, and that is that durability, the response was sustained. What's going on there? Yeah. How are you navigating that information into - It's like, okay, what should the periodicity of dosing be? Yeah. You know, we did see in our preclinical studies that if we gave a mouse, you know, like a dermatitis induced to a protein antigen like we use this protein called KLH for keyhole limpet hemocyanin as a common one. If we treat with REZPEG while we're doing the dermatitis, of course, you can suppress dermatitis, as you'd expect. But then what we saw is we can put the animals back in the vivarium, wait months, bring them out of the vivarium, give them no additional drug treatment, but if you re-challenge them with that antigen, they remain suppressed. If you give them an irrelevant antigen, they form a massive inflammatory response. Mm-hmm. But the original antigen from before is blunted, right? So we did see that with REZPEG treatment, we could create a lasting kind of immunity, right? And the animals maintained with that kind of suppressed state, with repeat challenges without no further treatment. So then we saw the results of phase I-B study. Now, those were, those were, you know, amazing, right? And certainly, you never know if a mouse model can predict anything like that. We were extremely excited to see that result, and we were encouraged that it had similarities, right, with some of the preclinical modeling that we had done. And there are theories about memory T regs. There are theories about, the fact that you could continue to prime T regs to, recall antigen, and you could continue to get an inflammatory response. It's possible that something like that is happening, but that would take a lot more, you know, translational investigation to investigate this. But right now, we're very obviously excited for the patients and excited for this phenomenon of the drug, and we're leveraging that in the phase I-B in multiple—phase II-B study in multiple ways. Mm-hmm. The first is we're including a 12-week treatment regimen, and we feel confident to dose once every 3 months because we know we can withdraw. And as I said, 80% of the patients maintained their response. So we know that we can reduce the frequency dramatically. We also want to keep dosing in maintenance because we think we might have not even mapped out the maximal efficacy for the drug, 'cause we've only dosed for 12 weeks and stopped. Of course, many people achieve an EASI 100 over that period, but others could have clearly been treated and dosed longer. We also are excited to map out the full extent of efficacy with the extended dosing, and we know we can step back to low frequency, Q 12 weeks. As we see results from the study that are positive with that, we can explore even lower frequency regimens in phase 3. Remind me, this is IV that we're testing at this stage, or subQ? This is a subcutaneous. Okay. And then just in terms of thinking about the volume of the injectate across the doses, what are we talking here? Yeah. So- As we think about, we're already phase II-B here s o we have to have an eye and a lens towards the commercial profile and context. Yeah, exactly. Yeah, the TPP for the drug is obviously a patient's self-administered product, and you would imagine it would be a device, like an auto-injector or a pen, that delivers the dose, right? The dose volumes and the needle and all of the things are standard and typical as you'd find for drugs in this field. A little bit about the history of your experiences and partnerships with big pharma, obviously with Bristol on the oncology side and then with Lilly there. At the time that you're kind of dating, there's a lot of engagement and opportunity and optimism. There's opportunities for you to sort of see how the sausage gets made once you're sort of in some of those, you know, special war rooms, et cetera. What does that make you think about with REZPEG now? Where are you? Maybe this is one for you, Jen, on the strategy side, about is there a critical juncture at which you'd be willing to put yourself out there again, so to speak. Yeah. And that you would need the capabilities of one of these, you know, larger, you know, "Oh, yeah, we've got the commercial regulatory people and well-oiled and feet on the ground," et cetera, and all that. Yeah. So obviously, we, as a company, are much smaller now. I'll comment a little on the BMS partnership, and BMS was a great partner. We were really unfortunate that that drug did not work, right? So, I think they were sad, we were sad, but they were very committed to the program during the time that we pushed it forward. They ran a lot of phase III studies, and they invested heavily into it. So, that, I think, was a great experience. I think as we look at REZPEG and we're going into this phase II -B, we have the resources and the capital to fund the phase II-B in both, atopic dermatitis as well as alopecia. Mm-hmm. So, you know, I think it's very important for us to get to that data. We have optionality once we get there, to consider the path forward for phase III development and approval. So we have been approached about the asset. I think right now, we're, we're fully committed to funding it through the phase II-B data points, and then we can consider sort of the path forward for that. So, you know, I think as a smaller company, you have to consider that optionality. Mm-hmm. Mm-hmm For sure. Okay. No, and then that's very helpful because, again, going back to this pipeline within a product, remind me what happened to the Lupus effort. I remember years back that was doing KOL calls where people were were actually pretty jazzed and some of the initial data, but that's obviously extreme, tremendously difficult disease area. Yeah. Patient selection, identification, the chronology, et cetera. Mm-hmm. Yeah. So, any prospects or learnings from Lupus, and would you ever go back there? And then we will turn to alopecia, but I just wanna touch upon lupus. Yeah. So there were a lot of learnings from the Lupus study, for sure. The first thing that we saw was that we had a kind of a bell-shaped dose response curve in terms of the clinical activity of the drug. Now, the study was designed with SLEDAI- 4 as the primary endpoint. Mm-hmm. So not a composite endpoint, but just the people that reached a 4-point reduction in SLEDAI. And there was a bell-shaped curve. None of the doses reached a p- value in the study, but the middle dose was the most active. And then, when we looked at other endpoints, we saw other endpoints that were much more sensitive to the mechanism of action. Mm-hmm. In particular, BICLA is the other kind of contemporary composite endpoint in lupus. Yep. That's based on this other scale called the BILAG. The main difference between BICLA and SLEDAI is SLEDAI is completely categorical. You only score presence or absence. But in BILAG, you score the degree of disease, so better or going from severe to mild, right, is considered a treatment benefit. Mm-hmm. Whereas in SLEDAI, that would still be no change. Now, what we saw is that when we looked at BICLA, which was the most contemporary endpoint that Saphnelo improved on, we actually saw the mid-dose level met the, the pre-specified success factor or the, the green criteria, like in the study. It had, just about a 16.4% separation from the placebo. So that was something that was notable, and the LLDAS, which is the highest metric of efficacy, also showed a separation from placebo at the mid-dose level. So what we learned from that study is we learned about the dose response. Right. We also learned a lot about the endpoints. So should we move to studying lupus in the future, we know the key endpoints that we would design as the primary endpoint, and we know that they're registrational endpoints, as BICLA is a well-approved and accepted registrational endpoint if we were to ever go forward. The other thing that we learned is that from the full safety analysis, you know, we did learn that the high dose showed a little bit worse tolerability in that patient segment. Mm-hmm. That's something we have to be aware of for that kind of different immunological presentation. But we also saw there was no increase in infection risk with REZPEG treatment, and that we thought was really notable because it's not an immunosuppressive mechanism, right? These are patients that are at risk of opportunistic infection. Treating with REZPEG did not exacerbate or increase that risk at all relative to placebo. And then I think the last thing to say is that really, as Jennifer said, I mean, we're really focused on what we're doing. We're focused on our resources. We're focused on being the smaller company, really prioritizing the work in atopic dermatitis and alopecia areata. We saw really positive data in phase I, and our intention is to really focus on replicating that kind of data in the phase II-B, in the larger studying of the phase II-B. There might be a version in the future where we might revisit lupus, but right now, we're really focused on those two dermatological. So that makes sense. So alopecia areata, tell us a bit about that data so that we have some context. Sure, yeah. So this is really based on, like, the kind of well-known mechanistic studies and translational studies about the role of Tregs in maintaining the immune privilege of the hair follicle. So in all of us, we grow hair our whole lives because our immune system does not think that our hair stem cells are tumors, right? So the immune system is excluded from our hair follicles, and we grow hair, and we don't go bald. But unfortunately, for some people, the immune system gets confused, infiltrates the hair follicle, starts to kill the stem cells in the bud, and starts to actually erode the actual base of the follicle that holds the hair in place. And so that's alopecia areata, and Tregs are critical for maintaining that immune privileged state. We know that if you take a JAK inhibitor and you blunt the inflammation, you can grow hair, right? But we also know that if you discontinue the JAK inhibitor, because that immune privilege isn't fixed by JAK inhibitor treatment, it just palliated, it blocks the inflammation, the patient still loses their hair when they go off of the treatment. But we think that REZPEG could have an effect in alopecia that's very similar to what we saw in atopic dermatitis. So if inducing Tregs sort of pushes back the immune system and rebuilds that immune privileged state, then when the patient goes off of REZPEG, they'll keep their hair, and it won't fall out. So that study is designed very much in that way. It's a two-period design. Mm-hmm. The first period has a 36-week induction, where we're taking placebo or two dose levels of REZPEG. Mm-hmm. At the end of 36 weeks, we'll be assessing the primary endpoint, which is a change in SALT score from baseline, and then there's a 24-week off-drug period, where we'll be monitoring the durability of the efficacy. So it will be very transformational if we achieve a result that patients keep their hair. Are there some numbers out there that give us some sort of benchmarks for - everybody wants to know, is this good? Is this, you know, w hat, what should we expect from an efficacy standpoint? And then just put on the ecosystem some ranges of numbers of, you know, this would be a positive signal for you to continue to, to move further into development. Yeah, I would just guide, there are two approved JAK inhibitors, one from Pfizer and one from Lilly, so we use their phase 3 data as our- And remind, for the listeners here, maybe just exactly what those thresholds were in the range of, in terms of for the alopecia areata, what is the particular endpoint that matters and, and just a range of numbers that would work there? Yeah For SALT score? So, in phase III, you use SALT 20. Mm-hmm. So they published the results for patients that achieve the SALT 20. In our study, because it's a phase II-B, we're focusing on the pecent change from baseline in SALT. Mm-hmm. Okay. So we're using the continuous endpoint, and then SALT 20 is, like, the secondary endpoint that we're using. And whenever we think about JAK inhibitors, we often think about pretty rapid onset of some sort of clinical benefit or symptomatology, et cetera. What are the kinetics that you think make sense as we think about REZPEG from all the work that you've done in other indications so far? What do you think? Yeah. So it's really indication-specific, right? So in alopecia, these drugs do not work quickly, right? So JAK inhibitors. In fact, they've shown that dosing beyond 36 weeks continues to show benefit. Hmm. It's, it's for a number of reasons. One is it takes time to stop the inflammation, but then the other is, depending on how far gone the hair stem cells are, some recover more quickly, some recover more slowly, and then there's the rate of growing hair, right? Because your endpoint is a visual endpoint, inspecting your hair, right, and so that takes its own chronology. In alopecia, it's generally slower. 36 weeks is the endpoint that was used in the phase III studies, but even continued treatment with JAK inhibitors can give you more efficacy. In contrast, atopic dermatitis, you're looking for really rapid. You're looking for changes within a week. Right. Right? In fact, that was, for us, why we looked at the two-week time point, which is two weeks after the first dose. We were already looking at people that had a 50% improvement in baseline EASI. Mm-hmm. In fact, even if you look at the average of the high dose in phase I-B, it's about 50% for all patients. So there you're looking for really rapid onset. Some drugs like Adbry, right? Like, it just has, like, a slower onset. It still gets there. You know, it's not quite as good as Dupixent, but it gets there. But I think the fact that it takes longer to work is a disadvantage you know, for a drug like that. So we want a really, really rapid onset for a disease like atopic. With AD, I think when we talk to doctors and scientists, they look at some of the metrics, and then when you look at more research that's done among patients, you get much more of a characterization of what is the bothersome symptom that they care about. Often it's itch, right, primarily. Yeah. Can you comment about what some of the patient benefit clinical features that appear to be, you know, part of the potential profile? Yeah, and so, when Jonathan Silverberg presented the results of phase I-B last year at EADV, he showed the itch NRS results, and one of the things that was really striking about that was how fast patients reached a four point or better. That's the clinical benefit. And so, in fact, in the dataset, about 40% of patients reached their itch score within one to two doses. So either from week two to week four, week two would have been after one dose, week four after two doses. So the curve is really steep, and then it hits this, like, nice plateau. So that was something that was very notable because the patients felt an itch relief very, very rapidly. I agree with you, I think that's really important because itch, besides being annoying, it impacts sleep, and when you measure the patient-reported outcomes actually, quality of sleep, sleep benefit- Yeah -And uninterrupted, is a huge component of getting a PRO result. And so, yeah, working on is a really key feature for our drug. Right. A vicious cycle with these patients. Exactly, yeah And that's what they end up really caring about, especially if you're not a first-line agent. It's like, okay, I'm one of the maybe 8% or 9% who are getting... patients who are, "My symptoms are...," doc. And so I think that there's an opportunity in subsequent minds with products that address specific symptomatology. So, let's close out here with a discussion about sort of strategy, resources. Jennifer, you did a financing recently. Talk to us about how that supports your plan up until a certain time point. I think we actually have a pretty good runway now. Yeah, we do. So in the first quarter, we actually did two different transactions. We did a finance with the TCGX, and they actually came to us. So it was pre-funded warrants at an 80% premium. So, you know, we were able to reduce the dilution of that financing. We raised $30 million with that. We also fixed an amendment that we had with Healthcare Royalty. We sold that back to them for an additional $15 million. So with those two transactions, we're able to exit this year with between $200 million and $225 million in cash. And that puts us in really a very strong position going into the data catalyst. Mm-hmm. Right? So atopic dermatitis data will come first. That's the phase II-B study that JZ has been going over. That'll come in the first half. We haven't narrowed that timeline at all. First half of 2025. Yeah, first half of 2025. Mm-hmm. And then about three to four months after that, we'll have the alopecia data. So, and we wanted to make sure we had that strength of financial position to so we had strategic optionality when the data came. So. Okay. So we're in a great position for that. The other thing that we're doing is we're funding our TNF-R2 program, and I think it's worthwhile to talk about that for just a minute. Yeah. That is, going into the clinic next year. It's a bivalent antibody. We're actually presenting data two days- Two days ... at EULAR, the first preclinical data for that. I think it's an interesting program because, you know, we've really pivoted into INI. Mm-hmm. It's our first antibody program. JZ has a very deep background in antibodies. Mm-hmm V ery successful background in antibodies. And what we're building now with that is really a pipeline in that program. So because of the specific nature of the antibody, we're gonna be able to start crafting out a bispecific antibody program from it. So that's exciting, and as we look at the next year and a half through the cash runway into the third quarter of 2026, we're also investing in that program. So we have two areas of investment that are heavily I and I. So that runway that you project includes investment in the TNF? Correct. Or to, Yeah, in through the data- Initial clinical To the data, yes. A little bit more beyond the preclinical data, because that goal of translating into the clinic is four, so. Well, well, the first thing is, as Jennifer said, in two days, EULAR on Wednesday, we'll be presenting the first information from that program. So that, that's a preclinical data set, but it really highlights the unique differentiating elements of that antibody. And, and what's really interesting about it is that it was designed by de novo. It was designed, computational approach to find very novel binding specificities to TNFR2, ones that wouldn't normally appear through a traditional immunization. So it's a really novel set of properties, novel selectivity profile, and then a lot of novel uses, as Jennifer said, creating other kind of plug-and-play components of that, bispecifics and other kinds of opportunities, so. But then the advancement of the program would enter into the clinic around the middle of next year. Okay. So that would be the time that we would start presenting and assessing the first set of clinical studies. I think you have one other preclinical program, PEG CSF-1? Yeah, we do. If not proper. Mm-hmm. Yeah, exactly. So that's a way of trying to target a M2 kind of macrophage populations, right? So the goal with that program is to skew the population of monocytes that could turn into anti-inflammatory macrophages, the ones that specialize in eating and kind of removing debris, removing damage, and then eating things in a non-inflammatory way right, but in an immunoregulatory and suppressive way. Yeah, we're continuing that program in the preclinical stage. Okay. So I think actually this was a really timely conversation, 'cause it feels as if a lot more has become settled, and a lot more of the arrows are pointing in a very clear forward direction. You have assets in the clinic. We have timelines for data. There's money in the bank. There's plan, there's optionality. So, I really appreciate this opportunity to have this conversation. I think hopefully it'll be a really helpful update for the investor community, to turn some attention here and, and to keep an eye on you guys. Yeah. Appreciate you being here. Thank you, Chris, for having us. Thank you, Chris. Okay. Appreciate it. Thanks.