Let's start it. Good morning, everyone. Thanks for joining us today. My name is Arthur He, a Senior Biotech Analyst at H.C. Wainwright. Thanks for joining us to have a conversation with Dr. Jonathan Zalevsky, Chief R&D Officer. 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. JZ, welcome.
Thank you, Arthur. Nice to be here today.
JZ, so for those less familiar with the new Nektar, but not the old one, could you give us a quick overview?
Sure. Yeah. So at Nektar, we really focus on immune science and targeting pathways that have the potential to be transformational in helping to address autoimmune and chronic inflammatory diseases. We're really organized over a central biological principle and cell type, which are regulatory T cells, which are important cells in all of our bodies and all mammalian immune systems that help us control unwanted autoimmune reactions. Particularly, they control peripheral tolerance, and they're really at the heart of many autoimmune and inflammatory diseases, and our pipeline addresses those in multiple ways. Our lead program is called RezPEG, rezpegaldesleukin, and that is based on the IL-2 receptor pathway, and it's an agonist of the receptor.
In its function, it actually controls Treg cells in your bodies and patients and all of us, and it can expand that population, increasing their levels well above baseline and keep those levels elevated for extended periods of time. And we've shown activity in multiple clinical settings that I'm sure we'll talk about later today. And that represents the thymic component of the Treg population addressed by that agent. We also have a preclinical program that's focused on TNFR2 agonism, and that addresses another kind of Treg, which is called an inducible regulatory T cell that particularly is secondarily differentiating in certain tissues when a non-differentiated T cell arrives and has the choice to become a tissue resident regulatory T cell that can support blocking inflammation in tissue and wound repair and healing and tissue regeneration.
That program is an antibody-based program, and we're targeting clinical activity in 2026 to begin for that molecule.
Thank you, JZ. Congrats on the positive readout from the AD study. So, for the audience, could you help walk us through the key takeaways from that readout?
Sure. Yeah, so previously, we had conducted a very small, roughly 40-patient Phase 1 study that showed that RezPEG dose-dependently had a really profound effect on controlling the disease activity in patients with moderate to severe atopic dermatitis. We followed that up with a 400-patient Phase 2b study that you just referenced that we had the pleasure of reporting the top line results for in June of this year. What we saw in that study was that RezPEG showed a very rapid onset of efficacy, separating from placebo from the very earliest assessments after dose administration. We saw a dose-dependent reduction in the primary endpoint, which is the percent baseline change in EASI score, achieving over 30% placebo-adjusted delta. Then we saw that the high dose, the 24 microgram per kilogram dosed subcutaneously twice a month, met all of the other secondary endpoints.
That included activity on EASI 50, EASI 75, EASI 90, the proportional reductions from baseline in each of those endpoints, particularly notable EASI 90 being the highest standard of efficacy measured. That effect also carried on into the IgA response, which is the key regulatory endpoint in the U.S. for approval. This is the Investigator's Global Assessment of Disease, where we also saw a very clear and statistically significant separation from placebo. One of the other really important elements is that we saw a very strong effect on itch control. The itch NRS response as a single agent was really, really rapid in its onset and also with an effect size that was very, very impressive and at least as good as what is the common standard of care that are treated. Besides the efficacy endpoints, the itch is quite important.
It's one of the main impacts of the quality of life the patient feels with the disease is very itchy. And having a drug that can very quickly resolve the itch has a very, very positive effect on the total manifestations of the disease that patients feel. And you see these in the patient-reported outcomes in particular.
Speaking of the global study, as we know, Sanofi just shared the results from the Congress last week. So maybe from an efficacy point of view, could you help compare the RezPEG to the biologics already approved and as well those that are in the latest stages of development? How does that stand out?
Sure. Yeah. So the main approved drugs right now to treat atopic dermatitis that are in the biologic space after the patient is no longer responsive to topical corticosteroids are three examples of the IL-4, IL-13 class, which are Dupixent, Adbry, as well as lebrikizumab. And all of them target that same IL-4 or IL-13 pathways. They're antibodies that work in slightly different ways, but they're all on that same Th2 dominant anti-inflammatory pathway. And they've sort of set the standard of care for efficacy. The next drugs that were being developed behind was the OX40 class of agents. And there are two examples in Phase 3. So the Sanofi antibody amlitelimab that you mentioned targets OX40 ligand, which just reported its first Phase 3 results.
And before them, rocatinlimab, which Amgen and Kyowa Kirin are developing together, that is an OX40 targeting antibody that depletes T cells that express the OX40 receptor. So both of them are in the immunomodulatory class, and they were really considered the second wave of molecules to enter. And the Phase 2 results for both of those looked quite interesting, but the Phase 3 has been positive for all those antibodies, but the efficacy, as you mentioned, is less than what was observed in the Phase 2 program, which was not the case for the IL-13 class. They maintained about the same effect size between Phase 2 to Phase 3. I think that started to maybe ask some of the competitive positioning around the OX40 class. I still think we're going to see these agents approved. T hose were positive studies.
This is such a large market. There's an opportunity for multiple mechanisms for sure. But I do think the Phase 3 results have maybe made people start to sort of adjust the rank ordering potential of the agents. In terms of what this all means for RezPEG, I think that was really important because what we've reported so far are the results of the 16-week induction data. That's the final analysis for the induction. But if you recall from our event, one of our KOLs, Dr. Jonathan Silverberg, when he opined on the data, in his opinion, he said, "I don't really know where the efficacy of RezPEG ends up," because we know that with the IL-13 class, over a 16-week induction, those therapies plateau, meaning the patients that were to respond, they do respond over that induction window.
And then afterwards, you're really maintaining a response with ongoing dosing. But in our data set, our curve was still going at week 16. And so his is, "Well, if you dose longer and when you dose longer, where does this end up?" And so one of the things that we're very excited about, and we guided to this at our last earnings call, is that we have a very unique patient population within our 400-patient Phase 2 study, which we call the crossover cohort. These are the people that were on placebo over the 16-week induction.
In our trial design, if people did not achieve an EASI 50 or better at week 16, they were allowed to enter into a crossover escape arm where they would take the high dose RezPEG with 24 microgram per kilogram given twice a month subcutaneously, which is the same as the high dose that we read out that I mentioned a few minutes ago. So this is a very interesting pure crossover cohort, and they go on to therapy for 36 weeks Q2 W. One of the things that we're looking forward to update on at EADV next week is what happens when you treat longer than 16 weeks, right? Because in accordance with what Dr. Silverberg said, there's the potential of responses accumulating and deepening with extended dosing. That's something that we're very excited to give an update on next week.
We really see that our week 16 data that was reported is a very important data set, but it's just one of many more data sets to come that you'll see.
I see. I can't wait to ask you that question because for the EADV, for those particular escape arm, how many patients, what's the size of data we could be looking for, and besides those data, what other data you think we should pay attention to at that presentation next week?
Yeah, certainly. So when we gave the top line results in June, we showed the patient disposition of the people that completed induction, how many of them moved into maintenance that had a better than EASI 50 response, and how many moved into the escape that had a worse than EASI 50 response. And there were 42 people from the placebo group, which is roughly 70% of the placebo patients, as expected, did not have an EASI 50 response. So of the ones that completed, 70% moved into the escape. And then in terms of maturity, because it's an ongoing study, we know that at this point, half of the patients have crossed study week 40, which means they have received 24 weeks of treatment with RezPEG since they crossed over from placebo week 16 onto drug.
Okay. I'm looking forward to that. For the internal regulatory-wise, you got a meeting with the FDA by the end of the year to discuss further the study design and the regulatory pathway. Can you give us some flavor on what's the design for potential for the registration trial?
Sure. Yeah, so our goal is to have an end of Phase 2 meeting before the end of the year. And we know that to begin our Phase 3 program, we don't need to wait for all of the components of the Phase 2 study to read out. For example, the maintenance is still an ongoing part of that study. We don't need that to read out, nor is the follow-up one year, which goes for an additional year. We know that the 16-week data is more than sufficient for the end of Phase 2 meeting and the design. One of the things that we really put a lot of time and thought into is the patient population, so we now have two examples in the biologic-naive patient population in the Phase 1 and the Phase 2 of a clear, highly reproducible dose-dependent effect.
We definitely know that the biologic- naive population is going to be a big component of our Phase 3. But we also know that to get the most kind of exciting and diverse label, we want to also have biologic as well as JAK experienced patients. Our goal also will be to explore having a population in our Phase 3 study as well. That's an approach that we're taking. That's an approach that Amgen took with Roca by combining the patients. We think that's a very efficient approach to consider for Phase 3. That's one of the ways that we're approaching that. We also know from the dose level that the 24 microgram per kilogram dosed twice a month, the q2 week cohort really performed very, very well in the Phase 2.
To support end of Phase 2, you do all these additional things like population PK modeling, as well as exposure response analysis that really supports the use of the Q2W regimen and the 24 microgram per kilogram dose level that we'll take forward, and certainly, the duration of the induction is the other key question, and we'll give a little bit of information about that at EADV next week, but that really starts to give you the impression of the nature of the study design. Of course, it's not up to us, right, so we have to have the meeting with the FDA, and the FDA really guides not only in those sort of big principles like the patient population dose and duration, but also on the statistical elements of the design.
We'll give more color about that after we have the end-of-Phase 2 meeting, and then we actually clarify the final study protocol.
Gotcha. Thanks very much for that information. And so for the AD part, fast forward, when if assuming it's got approved, what you see these drugs fit into the current treatment landscape?
Yeah. We've had the opportunity to do market research to ask the question about atopic dermatitis and RezPEG because it really brings a lot of differentiating features to the table. It's a completely novel mechanism, right? Like I described, it's an agonist, whereas all the other drugs are antagonists. It's not targeting a specific pathway like OX40 or IL-13 classes are. It's actually inducing cell populations that are quite resilient in our bodies and designed to overcome unwanted inflammation. So it has the potential to have a broad activity. In addition, we have data in the biologic naive population, but there's no reason to believe that this mechanism would not be effective in biologic experience or JAK experience. Because remember, even if you fail an IL-13, maybe you have less of a Th2 dominant disease, a regulatory T cell doesn't care.
It polarizes to whatever type of inflammation the patient has. It can co-express FOXP3 with other transcription factors that might dominate Th1 or Th17 or others. So we have the ability to act very broadly and have the ability to be effective in both the first, the second, and even the third line according to that market research. The other thing that we showed in Phase 1 that's highly differentiating is that RezPEG has a remissive effect to its treatment. In Phase 1, we treated patients for 12 weeks and then withdrew the drug completely. But we saw at least six months of disease control with about 80% of people maintaining an IGA, about 72% of people maintaining an EASI 75, and people that had an EASI 90 had 100% maintenance of their activity.
So we already know that that's a feature of RezPEG's mechanism, and that's not shared by any of the approved agents or any of the other classes. So that also is a further differentiating element, which we think gives RezPEG all sorts of opportunity when we reach the market.
Awesome. And let's take a pause on the AD part. So for the RezPEG, you also studied that drug in Alopecia Areata, and the data is coming December. So before we get into the details, could you tell me or tell us what's the rationale for you guys choose the alopecia as a second indication for RezPEG?
Yeah. So we saw through the development program that multiple skin diseases and skin inflammatory dermatological conditions could be treated with RezPEG. So the very first Phase 1b that we did was in patients with mild to moderate lupus. And we saw that all the people that had cutaneous manifestations of the disease clear their skin very rapidly in a dose-dependent fashion. When we saw that, we followed up with the psoriasis and an atopic dermatitis Phase 1b study, and both of them showed clinical effect. And in atopic dermatitis, it was especially apparent. We then, of course, followed that up with the Phase 2 atopic dermatitis study we just discussed. So when you consider alopecia, it's another dermatological disease. It happens to be focused to the scalp. And it's focused to the hair follicle, but it's still a very similar skin pathology.
Tregs from the translational studies, especially in human disease, have been shown to play a really major part in the disease. That presents itself in two main elements. The first is that normal hair follicles in all of us have this state of what we call immune privilege. There's no immune system inside of the hair follicle. That's critical. It allows you to continue to maintain stem cells and grow hair the rest of your life and not have your immune system get confused and think your stem cells are tumors, which would make you lose all of your hair. Immune privilege is an important state, and that state is actually an active, not a passive state. In healthy hair follicles, Tregs line up on the edges, and they kind of beat back the immune system, making sure there's no immune activity in the follicle.
The second thing that they do is they provide the Notch Delta ligand access to hair stem cells. So for a hair stem cell to move into anagen, which is the growth Phase of the hair cycle, it's actually fundamentally required that a Treg signal to the hair stem cell. And we've shown studies in mice that if you knock that out, mice lose their hair. You actually need Tregs to grow hair. So we have two really strong mechanistic rationale for why RezPEG for the treatment of alopecia could be very supportive. There's the restoration of the Treg compartment, the potential to restore immune privilege, and the general fact that we may be able to help people grow hair just altogether faster. And so all of that led to our decision to prioritize alopecia as the next indication.
We've now enrolled over 90 patients in a Phase 2b study design. In December of this year, we'll read out the results of the 36-week treatment. The primary endpoint in that study is the percent change in SALT score, which is basically how much of your scalp is affected by alopecia. If your SALT score is 100, you're 100% impacted. If it's 0, you have 0%. Our goal is to improve that. The other key registrational endpoints are SALT 20 for the FDA and SALT 10 for Europe. We'll also be reading out the results on those two binary endpoints as well.
Sure. Commercially, how big is the market for alopecia?
Yeah. So right now, it's dominated by JAK inhibitors. And we just saw very impressive data from AbbVie with Rinvoq in that class, which is probably starting to set a new standard in that field. But this is a growing market. It's not as large as atopic dermatitis in terms of patients, but it's definitely blockbuster size. And there are no biologics approved. And we're very excited that with the RezPEG profile, like we described, with the mechanism, also with the potential of an off-drug effect like we saw in atopic derm where there was a remissive potential. If we see that same kind of remissive potential in alopecia, it's completely transformational because the JAK inhibitors can't provide that. They can't restore immune privilege as the underlying pathology. So really, potentially, great blockbuster opportunity as well for RezPEG.
Sure. Let's get up to speed on. So what are the main catalysts for Nektar in the next 12-18 months? And what's your cash position now?
Sure. So our main catalysts are we'll have a data update at EADV, like I described. That will be the atopic dermatitis induction data. In December, we'll report the top-line results of the alopecia areata study. And in the Q1 of next year, we'll report the maintenance results from atopic dermatitis, which will cover patients through treatment up to 52 weeks. And then we have a year-end cash position of $185 million.
Awesome. Thank you. Thank you, JZ. Thank you coming down for talking to us today.
Thanks, everyone. Thank you.