Good afternoon, everyone. My name is [Dee]. Right now, rezpegaldesleukin is definitely the topic for Nektar. Before we dive into the real business, I'm just curious, could you give us a quick overview of the rezpegaldesleukin history? How did it transition from a collaborative program with Lilly back to your hands?
Sure. Yeah, so we invented rezpegaldesleukin, which uses the IL-2 protein sequence, and it's the native sequence with no amino acid substitutions. It's conjugated with our core competency of our company, which is polymer chemistry. It's an IL-2 that's covalently conjugated with polymer, and it's done in a way that makes it Treg specific and Treg selective. We invented that molecule, and we entered into a partnership with Eli Lilly in 2017 to develop that molecule. We were actually just dosing patients in the first in-human single ascending dose study when we signed the actual agreement to work with Lilly. Through that partnership between the two companies, we completed nine clinical studies treating approximately 600 patients with rezpegaldesleukin, about 200 patients with placebo across four different autoimmune disease types of patients, as well as healthy volunteers.
In April of 2023, Nektar and Eli Lilly terminated the collaboration. Now rezpegaldesleukin is a wholly owned asset for us at Nektar, and we're developing it in multiple clinical trials that we'll talk about later today.
Sure. So I guess, so obviously we know a little bit about your story between you and Eli Lilly, right? So, but can you walk us through the phase I-B data and highlight where they really messed up with, I guess?
Sure. One of the nine completed studies that I mentioned was a phase I-B study in patients with moderate to severe atopic dermatitis. In that study, 43 people were treated either to receive the high dose of rezpegaldesleukin, 24 mcg/ kg, the low dose of rezpegaldesleukin at 12 mcg/ kg , or placebo. That study showed a couple of really important elements. Firstly, there was dose-dependent efficacy that was clear to observe with the increasing doses of rezpegaldesleukin. We also saw a very rapid onset of efficacy. Basically, within one dose of treatment, people were already starting to see skin clearance, much faster than what you see with other biologic therapies. We saw a remissive potential, whereas even though we only treated for 12 weeks, patients maintained their efficacy through 36 additional weeks after stopping dosing.
Those were key takeaways that we saw during the time of the collaboration. After we terminated the collaboration, that was the first time that we had the chance to look at raw data from that study. When we received the raw data and we performed some additional follow-up analysis, we noticed that there was an error made in the calculation of the EASI score. EASI stands for Eczema Area and Severity Index, and it is the principal efficacy readout for eczema or atopic dermatitis studies. All of that led us to correct the data with the correct calculation of the EASI score. In this case, it actually significantly improved the data because the error that was made decreased the dynamic range of the measurement.
When the error was corrected to the correct EASI score, it improved the dynamic range, and it showed that there was an even bigger drug effect than we had observed before. As we've sort of moved further to delineate this, Eli Lilly had hired a third-party CRO to conduct the statistical analysis of that study. That CRO made an error. The error was made under Eli Lilly's supervision of that CRO. Now that the data that we just published in October of last year in Nature Communications and first presented at EADV 2023 in Dr. Silverberg's presentation, that is the correct data. Eli Lilly also agrees, of course, that that is the correct data.
I see. I guess for what you touched upon a little bit on the data-wise for the phase I-B , I just wonder, from your point of view, is there any data point you're getting from phase I-B you can tie into the mechanism of action of rezpegaldesleukin, especially compared to the other drugs focused on the atopic dermatitis space?
Yeah, so the mechanism of rezpegaldesleukin is completely different from the other drugs being developed. Firstly, rezpegaldesleukin is an agonist agent. Pretty much the entire AD pipeline are antagonist agents, whether they're IL-13 inhibitors, IL-31 inhibitors, JAK inhibitors, even most recently an ITK inhibitor from a company, Corvus. All of those are designed to block some arm of activation of the immune system. The way rezpegaldesleukin works is it actually stimulates regulatory T cells, and regulatory T cells are the body's natural inflammation dampening mechanism, right? They give us peripheral tolerance, they turn off normal inflammatory reactions that are happening inside of us all the time, and they help us maintain homeostasis of T- cell responses. The way rezpegaldesleukin works is it's really trying to restore the balance that's underlyingly broken in patients that have a disease like atopic dermatitis.
We think that's one of the reasons why we see a six-month duration of efficacy after we stop dosing, because at the end of the day, if you fix at least one of the underlying problems of the disease, that should give lasting relief to the patients. We know a Treg can do that biologically.
I see. That's looking forward. I think obviously you guys have a readout next month. Could you tell us a little bit about how the phase two is designed and what's your expectation for the data readout?
Yeah, so we wanted to build off of the phase I-B results that I mentioned earlier. In that study, we focused on a biologic naive patient population. We also did a really, I think, helpful job in mapping out the dose response because we used two dose levels in that study, 24 mcg/ kg, 12 mcg/ kg, each dosed twice a month subcutaneously, on a Q2 week regimen. We saw a clear dose response as well as those other endpoints. When we launched into the phase II-B study, we wanted to firstly upsize the study. We are running a very large phase II, at least double the size of typical phase two studies done in this space. Our study enrolled 400 patients with moderate to severe atopic dermatitis. The inclusion criteria that we are using is identical to the phase I-B.
Patients had to have a 16 or higher baseline EASI score, an IgA of 3 or higher, and at least 10% body surface area involvement. They needed to be no longer controlled by topical corticosteroids, as well as having at least a six-month diagnosis of atopic dermatitis. The same exact patient population in the phase II-B, as we already demonstrated proof of concept in the phase I-B. The other thing that we did was we extended the duration of dosing because while it was very exciting that 12 weeks of dosing with the complete drug withdrawal had such a profound effect, in reality, you would not treat patients that way, right? Especially patients that are responding, you would keep treating them longer. In the phase II study, we have extended the induction period to 16 weeks.
For example, on a two-week, Q2 week regimen, two extra doses following from the week 12 that we tested in phase I. We also put in a maintenance arm into the phase II-B study as well. In the maintenance arm, we're evaluating a once a month and a once every three months dosing regimen. All of those things give us a lot of confidence in the phase II-B study. It's really built on the success we've demonstrated in phase one, and it's built leveraging every single thing that we've learned. To that last point as to the dose selection in that study, we saw that 24 mcg/ kg dose given on an every two-week regimen was the most efficacious dose level in phase I . We're replicating that exact same dose level in the phase II-B.
We also are testing an 18 mcg twice a month regimen as well, Q2 weeks. That's halfway between the 12 and the 24 doses that we used in phase I. Lastly, we wanted to keep the overall AUC or exposure that we saw at the 12 mcg/kg Q2 week dose in phase I-B, but with a different Cmax. To achieve that, we're also testing 24 mcg/kg once a month, which matches the exposure, but does it by giving you a much higher Cmax because you're giving twice the dose, but with half the frequency. Between those three dose levels, we expect that we should see a nice dose response in the phase II-B trial.
For that matter, what's your expectation or your goal for the dose response for the EASI score reduction?
Yeah. We definitely want to see statistical power. The first thing is it's not a 40 patient, it's a 400 patient study. What we'd like to do is to be in that ballpark of replicating our phase Is. We saw an 83% change from baseline at the high dose of rezpegaldesleukin, which meant the statistical significance. Even though that study wasn't designed statistically, it was such a large effect size, right, that it demonstrated statistical power in that study. We'd like to see if we can replicate that trial with that kind of a result. We also know that our mechanism is so differentiated from the standard of care. It's not an antagonist. It's not an IL-13 or an IL-31 blocker. We've already demonstrated a remissive potential and a rapid onset of effect, at least two points of differentiation.
We know that even if our efficacy is in line with standard of care, that would be a success.
I see. Just one more question regarding the study design-wise. Obviously there's a lot of discussion about the placebo effect in the AD study. What kind of mitigation effort did you guys do to try to make sure the placebo effect is not an impact for your statistical analysis?
Yeah, one of the things that our steering committee helped us with in 2023 when we were designing the study was they gave us a lot of very practical advice about what's happening, particularly around placebo. If you just look at a recent cross-section of atopic dermatitis studies that have read out within the last five or so years, the placebo effect is steadily going up. One of the big culprits of that actually is the U.S. In the U.S., there's such a great access to medicine, particularly drugs like Dupixent, that severe patients are much more likely to be prescribed Dupixent as opposed to be entered into a clinical trial where they might get placebo.
Doctors are tending to sort of focus on moderate, in some cases moderate to mild patients that are the kind of patient population that they're comfortable with advancing into a clinical trial. What we've seen historically is if you look at mild, moderate, and severe, the placebo rate is by far highest in mild, intermediate, and moderate, and the placebo rate is very low in severe. The combination of access to medicine in the U.S. was one. The second thing that we learned is that having consistency in the rating of the endpoint was paramountly important from an execution of an atopic dermatitis study, meaning we want board-certified dermatologists to conduct the rating of the disease in the study.
One of the pitfalls is many companies have used trial sites in the U.S. that are not led by board-certified dermatologists, but more generalists, or kind of general clinical trial sites that can do multiple kinds of clinical studies. You get inconsistent rating as well. The second thing we did besides minimizing the U.S. footprint was the vast majority of our sites were led by board-certified derms that have successfully participated in phase II or phase III studies as well. The third thing that we did was we measured the baseline disease more than once. Most studies just measure it at screening, use that at baseline, and then assess the patient. Many people might be in the midst of a flare, and that flare might be naturally resolving. You would not know it if you just measured the baseline disease one time.
We looked for people that had disease that was highly fluctuating between screening and baseline, and we would look to screen fail people like that. That was another key element. In applying all those plans, we actually only enrolled 17% of our trial population in the U.S., and the rest of the population was enrolled rest of world, again, in vast majority of board-certified derm sites.
Got you. Let's switch gears a little bit to alopecia. I guess the first obvious question is why alopecia up there?
Yeah. Great question. One of the things that we noticed in the development program for rezpegaldesleukin is that multiple skin biologies were positively impacted by rezpegaldesleukin treatment. The first thing we noticed is we were treating patients with lupus in only the second clinical trial. It was a very short treatment, just six weeks, which is not long enough to really see a lot of change in major lupus endpoints. We saw patients that had cutaneous manifestations of disease clear their skin very rapidly and in a dose-dependent fashion. That was very eye-opening and led us to conduct both the psoriasis and atopic dermatitis studies, and the drug was efficacious in both of those as well.
Alopecia, which is a skin disease primarily localized to the scalp, as well as eyelashes, eyebrows, and facial hair in men, was always a disease that was of high interest. It was not really as strategic to our former collaborator because they were developing Olumiant, right, in that indication. We really wanted to advance that because the biology of a normal hair follicle is a biology of a tissue that is completely immune excluded. We call it an immune privileged state. If you look at the histopathology of that, there is a whole row of Tregs on the outside of every hair follicle that are actually like fighting back the immune system. Our hypothesis was always that if we could restore Tregs in people with alopecia, we should block the inflammation in the follicle, restore immune privilege, which would be fixing the disease.
A, then the patient might potentially regrow hair, but then when they stop the drug, they would keep their hair, which does not happen with the JAK inhibitor because all people that regrow their hair essentially lose it if they have to discontinue the JAK. Those were a lot of the key scientific and translational reasons why we wanted to launch into that. That is the second phase II-B study that we are running now. It is about a 90-patient trial. Here we are evaluating two dose levels of rezpegaldesleukin, 24 mcg/kg twice a month and 18 mcg/kg twice a month. Here it is a nine-month induction because it may take longer to grow hair.
You have to fix the inflammation, and then the hair follicle needs to go back into the hair growth cycle, and then you have to measure the actual hair growing. We are doing a nine-month endpoint, and we intend to present the top line results of that study in December of this year. Of course, the atopic dermatitis top line is coming in June, just next month for us.
I guess for the alopecia side, I think compared different from the AD space, there's only JAK inhibitor approved for the alopecia, right? From your point of view, assuming rezpegaldesleukin success, succeeding the alopecia, what's kind of a position for the treatment paradigm, you think, for the rezpegaldesleukin?
I think you've hit the nail on the head. No pun intended. I mean, there's no biologic approved, right, in this space. We've seen traditionally when a biologic enters an autoimmune or immunology condition, it causes a massive growth, right, of that market. We saw it first when Remicade and then Enbrel and then Humira, right, came into RA, grew to a $20 billion market. We saw it again in psoriasis as first to TNF, then Stelara, then IL-17, then IL-23s, and each of those created massive growth. I think we're seeing that happen now in atopic dermatitis, and I wouldn't be surprised if alopecia is the next kind of frontier.
We love the fact that we have a really compelling mechanism to test for this indication, and we know it would be really transformational if you could create an agent that gave you durability of hair that was regrown. We are very excited at the chance to potentially be a leader there.
Definitely. For the sake of time, I know you guys recently struck a deal with TrialNet in the T1D. That's quite interesting. Could you tell us more about the story behind that partnership?
Yeah, we've been talking with TrialNet for a while because in the understanding of type 1 diabetes, the role of Tregs has always been really paramountly important because this is a classical self-reactive disease, right? T cells are reacting to the islets and the beta cells in the pancreas. We know that that's driven by thymic antigens and thymic antigen presentation, and then basically a complete confusion of the immune system. Tregs have always been sought after, right, as a key way of controlling the peripheral tolerance that's lost in people with type 1 diabetes. TrialNet and Nektar have been in discussions for many years. We've made it through a very daunting, let's say, scientific process, many, many meetings, many kind of key presentations of data, and they have a significant and robust deliberation process to win an award, the study.
We are very excited that they picked our agent because it was really the most robust and reliable way of inducing a Treg pharmacological response. They are very interested in ultimately applying that to their goal of prevention of the disease.
Got you. Thanks for that. Because you're a scientist, I just threw an easy financial question to you. Could you remind us of your cash position and what's the runway?
Yeah, we just had our earnings call recently. We had about $221 million that we ended the fourth quarter with. We currently have runway until the fourth quarter of 2026 with our existing company. Obviously, on phase II success, eyeing future growth or future phase III, we would do some additional business work to bolster that position.
Awesome. Thank you for your insight today.
Thank you.