Good afternoon, everyone, and welcome to the H.C. Wainwright 26th Annual Global Investment Conference. My name is Arthur He, Senior Biotech Analyst with the firm. Thanks for joining us to have a conversation with the management of Nektar Therapeutics. A little bit about Nektar. Nektar is a global biopharmaceutical company focused on developing novel therapies that selectively modulate the immune system to treat autoimmune disorders by leveraging the company's expertise in polymer chemistry. Joining me here are Ms. Jennifer Ruddock, Chief Business Officer, and Dr. Mario Marcondes, VP of Clinical Development. Jennifer and Mario, welcome.
Thank you.
Thank you.
Um-
Thanks for having us.
I guess for those in the audience who are not so familiar with the company, could you give us an overview about Nektar's pipeline?
Sure. I'll go ahead and start. As Arthur said, we are an immunology-focused company. We currently have a number of clinical trials going on that are in phase II. They are for a key immunology asset in our pipeline. That asset is being developed in two atopic indications. One is atopic dermatitis, and the other is alopecia areata. We specialize in biologics, so everything that we're doing in our pipeline are biologics, not even the lead phase II asset is as well. We do use polymer chemistry as a technique called PEGylation for the lead asset REZPEG that we have in the phase II clinical trials right now.
We use the same technique in PEGylation with a cytokine called IL-2 that was used in ADYNOVATE, which is actually a drug for hemophilia A patients that is approved and marketed by Takeda, so we're using a tried-and-true PEGylation method to create that drug. We have two phase II trials going on, as I mentioned. It's a biologic, so in atopic dermatitis, you can consider that it will compete with drugs like Dupixent, which is a very well-known and was the first biologic introduced for moderate to severe atopic dermatitis patients. We have another immunology asset, a couple more actually, but another one that's going into the clinic next year, which is an antibody. It does not use the PEGylation technology. That is a TNFR2 agonist antibody, so both of the assets that we have are agonists.
That will be moving into the clinic next year in different autoimmune indications than we're developing REZPEG. So the company is very well capitalized right now. We have a cash runway that goes into the Q3 of 2026 . That is to enable us to fund these two phase II trials. And our upcoming phase II catalysts are pretty soon. They're happening in the H1 of 2025. So the atopic dermatitis study, again, the one in moderate to severe atopic dermatitis patients, should read out in the H1 , and the alopecia study should come a few months after that. So the mechanism, and we're gonna talk a little bit more about that, I think, today, and Mario can add some additional color on that, but the mechanism for REZPEG is a T- regulatory cell mechanism.
The T- regulatory cell is critically important in the immune system. It is an immunomodulating cell, and what we do with REZPEG is we proliferate T- regulatory cells. So that cell then can act on a number of different inflammatory pathways, so we believe it could be developed across multiple inflammatory diseases: so Th1-driven, Th2-driven, Th17-driven, and dendritic cell-driven pathways. The first two we're picking are atopic dermatitis and alopecia. We had very good phase Ib data, which we'll talk about a little bit later in the session. In atopic dermatitis, we showed an 83% drop in EASI score for patients with moderate to severe biologic-naive, so never been treated with a biologic before. To give you a sense of how that compares.
Now, again, that's a phase Ib study, very small, but it is a good, strong signal for us to start to fund the phase II. If you look at Dupixent, you're looking in the seventies for your EASI drop. So we're really hopeful that we can introduce a brand-new mechanism into atopic dermatitis and potentially alopecia, which is currently treated with JAK inhibitors, that could really transform the landscape.
Oh, thanks. Thanks, Jennifer. And Mario, maybe could you tell us a little bit more about the rationale for you guys to develop REZPEG for a dermal autoimmune disease?
Sure. So, my background is an oncologist. I'm a transplanter, and one of the things that we observed in the 1990s was, like, for the patients who could tolerate IL-2, we had to dose-reduce IL-2. So we also, when we did dose-reduce IL-2, which is aldesleukin, we were able to see for these patients this effect that was Treg expansion. So this is something that we learned in the 1990s, this dates back also from some ancillary work that was done in Boston when people were trying to treat graft-versus-host disease. So this massive established immunotolerance, which is one of the things that we observed on the phase Ib trial that Jennifer was mentioning, too.
We saw these patients coming off REZPEG and actually don't having any flare, and this is a big thing that we have with JAK inhibitor. If a patient stops the JAK inhibitor or stops Dupi, lo and behold, 70%-80% of these patients actually is going to experience a flare of this atopy that's, that is well-validated, and everybody's seen. This was one of the things that actually the physicians out there in the field, when they saw the phase Ib data, say, "Well, guys, you have something very unique, because you could have a finite regimen for, for that, for both atopic dermatitis and that." That was like the starting point. I think the inception came from these observations that aldesleukin had, this massive Treg expansion.
But the problem with all those cytokines is all the, the PK, which is very short, right? So, you know, the IL-2 has a half-life in a minute, if you look at the half-life, so it would require a very convoluted way of administering this drug, and that's where polymer conjugation techniques can come to, to like, to help us. But anyway, so this is a big thing for rezpegaldesleukin to actually modulate the exposure and being very convenient for the patient as well.
I see. So, speaking of the Treg mechanism.
So what's the potential advantage when compared targeting Tregs, as you did t o current approved the drugs for the, especially for the atopic dermatitis?
Yes, I think, you know, you really need to focus in on the clinical profile for that. We do know that there is a high demand for new mechanisms to treat atopic dermatitis. The evolution of that market is really in the biologic sense, in the biologic landscape, is really quite early compared to something like psoriasis, right? So psoriasis biologics were introduced to TNF inhibitors, and then what grew from there were multiple mechanisms, and that really grew the number of patients that were willing to take those medicines. What we see in atopic dermatitis is that the similar phenomenon early on is you have these IL-13-based mechanisms that have gotten approvals. They've driven that market. It's quite large. It actually is probably relative to psoriasis. The patients with moderate to severe atopic dermatitis, probably three times as many patients.
Even with the biologics and Dupixent being doing so well in that population right now, we still believe that it's only about 10% penetrated.
So there is much room for growth. Most notably, the reason for that growth should be differentiation on a clinical profile. So there are some side effects with the current IL-13 antagonist therapies.
There's a lot of me-too antagonist therapies being developed as well. But what we see are things like conjunctivitis and other side effects that we hear from physicians that are treaters in the field, that it would, you know, that it causes very long-term effects for patients. If you look at our AE side effect as compared to theirs, we are highly differentiated. We have seen no evidence of any conjunctivitis. Our most common side effect is ISRs, which is very common with biologics, and we do find patients adapt to those. You know, we also see a clinical profile, as Mario said, that will emerge with the phase IIb data, and we're going to continue to develop that.
But a very interesting phenomenon that we saw in the phase Ib is we treated for twelve weeks, we removed the therapy, and a degree of patients kept the effect.
If you are looking at patients who take Dupixent, typically within four to six months, the disease will rebound. If you're looking at patients who are taking JAK inhibitors, which is an oral therapy, that's a small molecule for atopic dermatitis, the rebound is almost immediate, so the depth of the eczema maintenance is very good on a JAK inhibitor. However, you come off of it, there's a big rebound, and of course, they have, you know, an issue with AEs related to cardiovascular effects in their labels, so we do think we're well-positioned from that perspective, but I think also our drop in EASI score that we saw in phase Ib was an 83%. That's highly competitive, and a very strong signal for us to go into that phase II trial.
The other mechanisms being worked on are delivering reasonable EASI scores, very comparable to Dupixent, but we believe the next wave of therapies a re going to be ones that can either deliver that level of efficacy with less dosing or more dosing intervals, so that you don't have to, you can give the patients their lives back, or they're gonna have better EASI drops, and they're gonna push efficacy, or maybe both. So we are striving to do that with REZPEG, and we're hopeful that we'll see that in the data. We've designed the study in such a way to capture all of the things I just mentioned. We have a sixteen-week induction period. We're looking at Q2W, four-week dosing during that induction period, and then we'll do a measurement on the induction effect, and then we're gonna treat patients for another thirty-six weeks out to fifty-two weeks on an every four-week or an every twelve-week regimen.
And that will enable us to be able to understand how frequently patients should be dosed. And then we're going to follow them a year after that, after drug is removed completely, to see whether or not their disease rebounds. Because this is a T- regulatory cell mechanism, and we're sort of resetting the immune system in a different way. It's an agonist. It's not an antagonist. We do believe there's a potential for that. So we're going to have to show that in the data, but the early data had an interesting, promising signal there.
Yeah. So you mentioned you're currently ongoing phase IIb study. So could you give us some update regarding the enrollment status for the trial?
Sure. We actually just updated that on our last conference call. We, as I said, expect the data in the H1 of 2025. We started the study. It's a 400-patient study. We started it in October 2023. To give you just a brief history without going into it too much, but we regained the rights to this asset from Eli Lilly. They had a competitive asset, and we felt strongly that it wasn't going to be possible for us to develop those two assets together. We asked for the drug back, and we regained the rights to the drug. We started the phase IIb in October of last year, a 400 patient study, data in H1 of 2025.
That is a very standard enrollment for these types of large phase II trials, and we are completely on track, so the data is still within that timeline, and we have over 100, I think it's 108 now, investigator sites in the U.S., Eastern Europe, Australia, and Canada that are on board, and our enrollment is tracking exactly where we want it to be, and we're pretty grateful for that. We know it's a competitive clinical trial environment, but we've done quite well with the trial, so we're looking forward to the data in the H1 of 2025. We haven't narrowed it any more than the H1 of 2025. I'm sure we'll be asked to at some point.
Yeah. I noticed that you guys take a little bit tweak on the study protocol recently. So, could you tell us more about the rationale behind that decision?
Yeah, so this goes to the rationale of having a 52-week treatment period-
Mm, yeah.
which gives us a full year of exposure for the patients in that trial, and that helps us with the safety database for the phase III registrational program.
I see.
So we wanna be able to have a well-characterized safety profile going into the phase III. And so it was. We were 10 weeks shorter than that originally, so it was a minor change, but an important one for the fact that making sure that we're, you know, we're seeing that 52-week exposure that we wanna get-
I see
O ut of the phase II. That's the main reason for it, but the other little tweak we made that we had not done before was the concept of saying, after that year of treatment, can we follow the patients for another year to see how they do, and if their disease rebounds? And we know that, through our market research, that that would make this a highly competitive medicine if we were able to see that. Particularly because with the other antagonist mechanisms, you do not see that phenomenon. They saw a little bit of that with the OX40, so it's starting to go a little bit in that direction, but we're really hopeful that this mechanism and, you know, based on the early signals, needs to be verified with the phase II data, could have that promise.
Gotcha.
Yeah.
So regarding the data readout for the H1 of next year, what would a positive data set look like in your opinion?
Yeah, so we're gonna be reading out on the 16-week induction.
Yeah.
And if you look across the phase II studies that have been done in atopic dermatitis, it gives you your best indication of where we need to be. So I think some of the newer assets, like the IL-31s and the OX40s, are in the 60 to high 60% EASI drops. Dupixent's in the low 70s, lebrikizumab in the mid-70s. So we really wanna be in that range with a new mechanism and a differentiated safety profile. Of course, if we're better than that, it's great. We also wanna maybe see other attributes, like tolerability. We need that to be very good, and we would like that to be the case. But certainly, we'll be heavily focused on the phase II EASI score and how that c ompares to the field.
So bear in mind that all the mechanisms I just mentioned, the IL-13-based ones that are in that high 60s, low 70s, as well as the IL-31 and the OX40s that were in the 60s, they're all being advanced into phase III, Sanofi, Amgen, Lilly, by major companies. So we do think that is the sweet spot of the band that we wanna be in.
And I think, you know, our phase Ia signal, again, was very strong. Let's see where we end up. We are dosing a little bit longer in the phase Ib than we did in the phase Ia. So we dosed for twelve weeks in the phase Ia and saw an 83% drop in EASI. We will be dosing for 16 weeks, and the reason for that is that when we analyzed the phase Ia data, there were some patients who didn't quite make it to EASI 75 in that 83% arm, and we're hoping that two more additional rounds of therapy will get them there.
Yeah.
So, we think it's a really well-designed trial, and we're looking forward to the data next year.
Yeah, same here. I'm looking forward to that data update. Let's move on to the alopecia part for the REZPEG. I guess the first question is, why this indication? What's the rationale for REZPEG to you guys confident for alopecia?
I'm gonna ask Mario-
Yeah, yeah
T o jump in a little bit in the science there.
So-
That's awesome. So yeah, so you know, the pathophysiology in alopecia actually involves something that's called immune privilege. You know, in the hair follicles, there is usually. You're not supposed to have any lymphocytes or any cytotoxic cells, and we know that patients who have flares of alopecia areata, in the biopsy of these hair follicles, there is actually a lot of lymphocytes or cytotoxic lymphocytes and a depletion of T-regulatory cells. So, and other things that we're seeing from the other trials that Lilly conducted is that we have a pronounced effect in Th17 responses in this the pathophysiology of alopecia areata.
So, since this immune privilege is lost in alopecia areata, why not to give it back the T-regulatory cells that would in turn actually avoid that actually the cell killing or the crypt or the hair follicle to get vanished, right? So this is the pathophysiology, is the rationale of why we went there.
Yeah. Thanks. Thanks, Mario. And speak about the study design for the alopecia, the phase IIb study. Could you give us a brief overview about the study design? Yeah.
I can definitely touch on that. So we actually, very recently, we had an amendment to have a bigger trial. So it was a small-powered study, and now we're gonna have 80 patients actually being enrolled in. It's an all induction, so there is no maintenance, so we're treating this for a longer period of time as well. And we are following. So this is basically the tool that we use. This is a tool that actually you're visualizing, so it's a validated tool to actually assess responses and growth. And we, because we're following these patients longer, because, as you guys can expect, it takes time for hair to grow.
So we are actually, we believe, since we are seeing all this effect of establishing immunotolerance, the trial is well-positioned, is well-powered to actually assess if you follow these patients longer.
Yeah, speaking of the amendment, I noticed that you kind of add a lower dose cohort for the study compared to the original you kind of put out, the design.
So what's the consideration behind that?
Yeah, I mean, I think we just-
Yeah
W anted to evaluate two doses. There's nothing fancy going on there. I do think that-
It's better
I t's a six-month treatment period.
Yeah.
We're using a SALT endpoint, which is what Mario mentioned.
Yeah.
That's, you know, consistent with what the baricitinib studies were. And the other JAKs, and really, JAKs are the one area that was being developed. The problem with JAK inhibitors in with alopecia patients is that they're forever. So patients have to stay on them forever, . Otherwise, their hair falls out. So I think we are really excited about-
Yeah
T he potential there. It's a relatively small trial. It's 86 patients.
A nd a relatively small investment from Nektar to try to give something that could be quite transformative for the patient. So-
I see
E ven though we didn't have the clinical work there, we decided scientifically the rationale was there.
There was merit.
Small investment for us, we're gonna go ahead and do that.
Gotcha.
That study will read out. It started in late March of this year. It won't read out until after atopic dermatitis, several months after atopic dermatitis.
Sure. Yeah.
Just an FYI.
Speaking of that readout, what's the bar for their readout to advance these into the phase III study?
Yeah, so I think for atopic dermatitis, I mentioned the bars already-
Yeah
Y ou know, in terms of competitive-
Alopecia.
I think for alopecia, it's the same, and the follow-up period, obviously, you don't want to see patients rebound.
I see.
So I think we'll be looking at both of that. If we saw similar to JAK inhibitor type responses, and then we were able to see the lack of rebound, it would be a great potential breakthrough, so for the patients.
Sure, yeah. Thanks, Jennifer. And, so I guess to close our conversation, so could you remind us, I guess, that's the two big events next year for the catalyst. Anything else beyond it?
Yeah, right, those two catalysts I just spoke about, we do have, we have a cancer drug. We shifted to focus only on immunology because the development planning there is a lot more straightforward, and the resources needed were a lot less than cancer. But we do have an IL-15 program. IL-15 mechanism was recently just validated. ImmunityBio got an approval in bladder cancer in that area. All of that work right now is being funded by collaborators. So we own it 100%, but the collaborators are funding that work. We will have some data readouts. We did some work ourselves in combination with Yescarta and Breyanzi, which are autologous CD19-directed therapies. Those are, t hat was in DLBCL.
The idea of that cytokine is that we're basically a growth factor for cells, and we give it with cell therapy to cause a second Cmax. Those data we're gonna have towards the end of this year, in about 15 patients, is comparative data. There's a placebo arm from those in that study. We have another study going on at Fred Hutch, where we should have some data next year. Then we have the bladder cancer study with Merck KGaA, that they're primarily funding and running, and that should come around the end of this year as well, and that's a comparative PFS study for that agent. In the long term, we'd love to be able to find a really good partner that's interested in developing across those tumor types.
But right now, we're waiting for all the data to mature as we evaluate the partnering options.
Sounds great.
Yeah.
Thank you. Thanks, Jennifer, and Mario, coming down to talk to our audience.
Thank you for hosting us, Arthur.
Thank you.
Thank you.
Great to be here. Thank you, everyone.