Nektar Therapeutics Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 7, 2023

There are 8 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Nektar Therapeutics Third Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Vivian Wu.

Operator

Please go ahead.

Speaker 1

Thank you, Crystal, and good afternoon, everyone. Thank you for joining us today. With us on the call are Howard Robin, our President and CEO Doctor. Jonathan Zalevsky, our Chief of Research and Development Doctor. Mary Tagliaferi, our Chief Medical Officer and Jennifer Brodek, our Chief Business Officer.

Speaker 1

Unfortunately, Sandra Gardner, our acting Chief Financial Officer, was not able to make it on today's call due to Unexpected Family Emergency. On today's call, we expect to make forward looking statements regarding our business, including statements regarding the therapeutic potential of and future development the timing and plans for future clinical data presentations the formation, future development plans or success of our collaboration arrangements The expectations following our corporate restructuring and reorganization, financial guidance and certain other statements regarding the future of our business. Because forward looking statements relate to the future, they are subject to uncertainties and risks that are difficult to predict, many of which are outside of our control. Our actual results may differ materially from these statements. Important risks and uncertainties are set forth in our Form 10 Q that was filed on August 9, 2023, which is available at sec.gov.

Speaker 1

We undertake no obligation to update any of these forward looking statements, whether as a result of new information, future developments or will be available on the IR page of Nektar's website at nektar.com. With that said, I would like to hand the call over to our President and CEO, are Robin.

Speaker 2

Howard? Thank you, Vivian, and thank you all for joining us today. In the Q3, we made substantial progress in advancing our development programs. First on ResBag, we're pleased to say that we began initiating our first clinical sites in October for the Phase 2b trial of ResBag in patients with atopic dermatitis. We expect the first data from this study on the primary endpoint of easy reduction over the 16 week induction period sometime in the first half of twenty twenty five.

Speaker 2

The strength of our data from the randomized Phase 1b study gives us much optimism that we will be successful in the Phase 2b study. These data were recently presented at the 2023 EADV meeting in an oral late breaking news plenary session. And JZ will summarize some of the new data presented later on in this call. But importantly, we observed a consistent benefit With monotherapy ResBag across multiple clinical efficacy endpoints and patient reported outcomes. As Doctor.

Speaker 2

Silverberg mentioned in his plenary talk, the Phase 1b trial of Respegg is the 1st randomized placebo controlled study to offer an exciting proof of concept for the important role of T regulatory cells in treating autoimmune disease. And it was exciting to see that this benefit was maintained for many patients through 36 weeks after treatment ended. This substantial benefit observed with Respegg could eliminate the need for frequent maintenance dosing for patients with atopic dermatitis And it positions Respegg with its novelty regulatory cell mechanism as a potential new treatment option, which could be highly disruptive and the biologic treatment landscape for atopic dermatitis. The biologic market for atopic dermatitis is a multibillion dollar market and growing. This landscape includes many IL-thirteen based mechanisms, which overlap with one another and Respek offers the unique promise of a new mechanism In this landscape in a new treatment paradigm that is well tolerated.

Speaker 2

This is why we're so optimistic about Respects potential. Our goal is to ensure enrollment proceeds on track to deliver data from the randomized Phase 2b trial on our planned timeline in the first half of 2025. This past quarter, we expanded our plan for a second study in alopecia areata From its original randomized Phase 2a study design in approximately 40 patients to a randomized Phase 2b study design in approximately 80 patients. This is consistent with standard studies in this area and the incremental cost of this study is still within our projected budget. Importantly, this study will read out around the same time as the atopic dermatitis study.

Speaker 2

We believe there's an opportunity for ResBag to become a novel biologic mechanism in alopecia, which has no currently approved biologic treatments and JAK inhibitors are the primary treatment mechanism. We know JAK inhibitors have cardiac safety concerns and patients experience a rebound after discontinuing therapy. So there's a high unmet medical need for those patients for a new treatment option. With the collective data we've generated to date on ResBag in atopic dermatitis And also in other autoimmune diseases, we believe there's a strong scientific rationale for Respegg with its Treg mechanism in action to be able to address the underlying pathogenesis of alopecia and JZ will discuss the scientific rationale for this study in a moment. We plan to submit the IND for this study to the FDA by year end and we expect to initiate the study shortly thereafter.

Speaker 2

We're also continuing to advance our preclinical programs in immunology including our TNFR2 agonist antibody that offers a promising mechanism for multiple sclerosis, ulcerative colitis and other autoimmune indications as well. Our goal is to submit an IND for this antibody program in 2024. Moving on to NKTR-two fifty five, We're pleased to have recently announced our new clinical study collaboration with Cellular Biomedicine Group also known as CBMG To evaluate NKTR-two fifty five in combination with CBMG's Till therapy in lung cancer patients that don't respond to anti PD-one therapy. CBMG is adding NKTR-two fifty five to its ongoing Phase 1 study being conducted at Duke University Cancer Institute and other investigator sites in the U. S.

Speaker 2

We're also continuing our other clinical work with NKTR-two fifty five while we evaluate additional strategic partnership pathways We ended the quarter in a strong financial position with $373,000,000 in cash. And as I stated earlier, we are well positioned to be able to advance our planned clinical studies while maintaining a cash runway into the middle of 2026. The goal is to reach multiple value enhancing Phase 2 milestones for Respegg in the first half of twenty twenty five and we believe we are well positioned to execute on this. Since many of you have been asking about the status of our litigation with Lilly, I'll make a brief comment that we continue to actively pursue the litigation and remain confident in our legal position. With that, I'll hand the call over to JZ for an R and D discussion.

Speaker 2

JZ?

Speaker 3

Thank you, Howard. Starting off with our lead immunology program, Respek. As Howard stated earlier, this program is uniquely positioned As the most advanced IL-two based Treg mechanism in the clinic and has potential in multiple autoimmune diseases, including our current focus areas of atopic dermatitis and alopecia areata. Last month, Doctor. Jonathan Silverberg presented compelling data for ResBeck from the Phase 1b trial in atopic dermatitis during the late breaking abstract session at the 2023 EADV Congress.

Speaker 3

This presentation of the final study results for that trial highlighted the potential of Respegg for the treatment of atopic dermatitis. Through the 12 week induction period, Respac demonstrated dose dependent efficacy across both physician assessed and patient reported efficacy measurements, reaching statistical significance across many of these measures. Importantly, we are encouraged by the Extended durability seen for ResPag long after the completion of the 12 week induction period. Many patients maintain durable disease control for an additional 36 weeks after the end of dosing. And this type of extended disease control after the end of dosing Time to response was rapid with over 40% of atopic dermatitis patients Achieving EASI-seventy 5 by week 3 after only 2 doses of Respegg at the highest dose level.

Speaker 3

Respegg's rapid onset of action rivals that of JAK inhibitors, which have outperformed dupilumab in head to head studies to date in this regard. Durability of the EZ75 response was also observed with approximately 70% The VZ 75 responders maintaining their response for 36 weeks after the end of the 12 week induction period. This is a very exciting result and suggests that Respegg has the potential to be the 1st remit of therapy for atopic dermatitis. Additionally, Respegg was well tolerated and treatment with Respegg did not induce antidrug antibodies in patients, which has been reported with some examples in the IL-two mutine class. Compared with placebo, There were sustained increases in absolute numbers of circulating total and CD25 Bright Tregs in the Respegg treatment arms.

Speaker 3

The peak increase in CD25 Bright Treg number was 10 fold above baseline at the highest Respeck dose group. Despite a shorter than typical induction period of 12 weeks as compared with a 16 to There were clear improvements for all efficacy endpoints, including EASI scores, These improvements begin as early as weeks 2 to 4 and continue through week 12 of treatment. To give you some perspective, With historical studies in atopic dermatitis at the lower dose level of Respegg, the improvements we saw were similar to those observed for biologic therapies. And at the higher dose level, Respegg demonstrated a comparable activity to those reported with JAK inhibitors. The 83% improvement in EASI score from baseline observed that only 12 weeks of induction with Respek was superior to what was seen in the dupilumab studies after 16 weeks.

Speaker 3

These promising data have us and KOLs Very enthusiastic about the potential for long lasting responses and a frequent maintenance dosing with Respegg in the setting of atopic dermatitis. The results that we have obtained so far with Respegg are significant for a number of reasons. Firstly, before this work was conducted, Relatively little was known about the ability to restore Treg function to reverse immunological pathogenesis And improve the severity of dermal or cutaneous diseases. Now with ResPag and its Treg mechanism, We have demonstrated clinical efficacy against the cutaneous manifestations of lupus, psoriasis and atopic dermatitis. These results begin to validate the Treg mechanism for the treatment of multiple pathologies of the skin.

Speaker 3

Respegs' attractive mechanism employs the body's own immune system to restore tolerance by inducing the Treg pathway and presents a novel approach differing from the available broad or targeted strategies to block inflammatory pathways in dermal diseases such as atopic dermatitis. Secondly, our hypothesis is that administration of the agonist drug Respek Induces Treg expansion and engages multiple immunoregulatory mechanisms to facilitate immune tolerance and regulation by attenuating Th1, Th2 and Th17 effector T cells, suppressing antigen presenting cell activity and fostering tolerogenic dendritic cells. We believe this science translates to the durability of response we observed in the atopic dermatitis trial and is the differentiating element that allows us to pursue an every 3 month dosing regimen in our ongoing Phase 2b atopic dermatitis study. Biologically speaking, Respegg through its central pathway of Treg rescue is uniquely poised To address the diversity of immune pathologies, giving a broad potential for targeting multiple dermal diseases, including atopic dermatitis, alopecia areata and others. In October, We initiated the Phase 2b study of ResMed in biologic naive atopic dermatitis patients.

Speaker 3

Our goal is to enroll roughly 400 patients with 3 different regiments of ResBag versus placebo evaluated over a 16 week induction period. After the induction period, patients that meet a threshold to advance from induction to maintenance will be re randomized into 1 of 2 maintenance regimens at different dosages at either once a month or once every 3 month dosing schedule that will continue for another 28 weeks. We expect the study will take approximately 54 weeks to conduct and we expect data in the first half of twenty twenty five. We also plan to initiate a Phase 2b study of Respeg in alopecia areata later and early next year. Alopecia areata is an indication with a high clinical unmet need for a biologic As the only approved agents are JAK inhibitors, which come with a black box warning and lack durability after cessation of dosing.

Speaker 3

For these reasons, we believe there's an opportunity for Respek to become a novel biologic therapy in alopecia areata. And as I just mentioned, we believe that Respag and its key reg mechanism of action has great potential for addressing this indication, which is essentially a dermal disease of the scalp. Across all of our studies with nearly 600 people treated, Respeg demonstrates a consistent and highly predictable Treg cell pharmacodynamic profile Different autoimmune disease pathologies and even in healthy volunteers. Taken together, we believe there's strong rationale for Respek for the treatment of alopecia. The Phase 2b study plans to recruit roughly 80 patients with moderate to severe alopecia that will be randomized to Respegg or placebo.

Speaker 3

As Howard mentioned, while it was previously our plan to run a Phase 2a trial With roughly 40 patients, after reviewing historical trials in this indication, we decided to increase the size of our study To achieve a Phase 2b design at minimal incremental cost, patients will be treated for a period of 36 weeks and observed up to 48 weeks in total. Our primary endpoint for this study is mean percent improvement in SALT for the severity of alopecia tool at week 36, which is very standard in the future. We will also be looking at a number of other secondary endpoints, including proportion of patients who saw a reduction in SALT. Now turning to our lead immunology research program and TNFr2 agonist antibody program. TNFR2 is highly expressed on Tregs, neuronal cells and others and TNFR2 agonism has been shown to potentiate the Depressive effect and overall functional properties of Tregs.

Speaker 3

If TNFR2 is absent, it is associated with autoimmunity and other genetic conditions resembling FOXP3 loss of function. In contrast, its presence has been associated with immunoregulatory function and protective effects from multiple cell populations of tissues in the body. Building upon what we know the potential of regulatory T cell mechanisms, this makes this program incredibly exciting to us. Nektar has identified 2 lead antibodies that we have now validated for selected TNFR2 binding, Cell Type Specificity in TNFR2 Agonism Primary Human Cell Based Assay. We believe that a selective TNFR2 Agonist holds great promise And now I'd like to turn the call over to Mary to provide a brief update on our NKTR-two fifty five program in oncology and our recent collaboration with CBMG.

Speaker 3

Mary?

Speaker 4

Thank you, JZ. Moving to NKTR-two fifty five, We are continuing our work with NKTR-two fifty five while we evaluate strategic partnering pathways. We believe there is a potential broad application And to that end, as Howard mentioned earlier, We are pleased to have recently announced our new clinical study collaboration with a leading cell therapy company, Cellular Biomedicine Group, to evaluate NKTR-two fifty five in combination with their Till therapy known as CTIL-fifty 1. The study, which is being conducted by and fully funded by CBMG, is in advanced non small cell lung cancer patients who do not respond to anti PD-one therapy. With few treatment options for these individuals, We are excited about the potential for this regimen to help patients.

Speaker 4

Preclinical and early clinical data suggest that IL-fifteen can improve The first investigator site is at Duke University with a leader in the lung cancer research field, Doctor. Scott Antonia. Positive data from this study could lead to exploration of a pathway for accelerated approval by our partner, CBMG. Our other studies are continuing in cell therapy and we expect that we could see data reported next year from these trials, including the Phase 2 Javelin bladder medley study, which is being conducted and funded by our partner Merck KGaA. Because of its unique potential as a combination agent with cell therapies and other mechanisms, we are exploring the best Partnering and development path for continued development of NKTR-two fifty five.

Speaker 4

And with that, I will turn the call over to Jennifer for a review of our financial guidance. Jennifer?

Speaker 5

Thank you, Mary, and good afternoon, everyone. We ended the 3rd quarter with 3 with at least $320,000,000 in cash and investments, slightly higher than our prior projection of $315,000,000 As we had previously announced earlier this year, we reduced our San Francisco based workforce by approximately 60%, and this personnel reduction represents approximately a $30,000,000 a year in operating expense reduction. The costs related to the restructuring were substantially paid in June. We will fully realize annual savings in 2024 as a result of this restructuring. And our financial position remains strong with a cash runway that extends into the middle of 2026.

Speaker 5

Importantly, this runway will take us through several key value generating milestones for our pipeline. In Q3, we recorded a $10,000,000 non cash impairment charge for real estate leased assets in San Francisco, which contributed $0.05 to our net loss per share in the quarter. As a result, for the full year, we now expect to recognize restructuring impairment and cost of terminated programs of approximately $50,000,000 to $55,000,000 which includes $37,000,000 of non cash impairment charges recognized through the 1st 9 months of 2023. There is more detail on this in our Form 10 Q, which is being filed this afternoon. We now expect G and A operating expense for the full year of 2023 to be between $80,000,000 $85,000,000 which includes approximately $15,000,000 to $20,000,000 of non cash depreciation and stock comp expense.

Speaker 5

Our GAAP revenue for full year 2023 is still expected to be between $80,000,000 $90,000,000 This revenue includes $65,000,000 to $70,000,000 in non cash royalties and $15,000,000 to $20,000,000 in product sales. We anticipate full year GAAP R and D operating expenses will range between $105,000,000 $115,000,000 which includes approximately $15,000,000 to $20,000,000 of non cash depreciation and stock comp expense. Our full year non cash interest expense is expected to be between $20,000,000 $25,000,000 As I stated earlier, we expect to end this year with at least $320,000,000 in cash and investments. And with that, we will now open the call for questions. Crystal?

Operator

Thank you. And our first question will come from Jay Olson from Oppenheimer. Your line is open.

Speaker 6

Hey, congrats on the progress and thanks for providing this update. Can you Talk about the Phase 2b trial in atopic dermatitis and congrats on the initiation of that study. Can you just Talk about the feedback you're hearing from investigators. When do you expect to provide some guidance on enrollment rates? And when do you expect to complete recruiting for that study?

Speaker 5

Yes. Thanks, Jay. I'm going to ask Mary, as She's been meeting with a lot of these investigators over the past couple of months to comment on that. Mary?

Speaker 4

Thank you, Jennifer, and thank you, Jay, for asking the question. We recently attended EADV in Berlin and we were able to meet with 30 different investigators, mostly from Europe. And we're going to recruit this trial at 100 different clinical sites in the United States, Canada, Europe and Australia, and I could tell you that the investigators are very excited about Respeg, the mechanism of action and It's application in atopic dermatitis. The presentation that Doctor. Jonathan Zilberberg made It was very well attended and very well received.

Speaker 4

And Jonathan Silverberg mentioned that For many years, we've known the importance of T regulatory cells, but we had never seen any data from a drug that actually expands T regulatory cells To improve dermal indications such as atopic dermatitis and with 83% reduction in The mean EASI score from baseline, this was what he calls best in industry. So there is a widespread enthusiasm from the investigators. I will tell you that a couple other things that are very compelling about our clinical trial are the following. Number 1, We have a very good safety profile. Our drug is highly tolerable and we've now shown that in roughly 600 patients.

Speaker 4

Number 2, they really like the idea in the maintenance setting that we're going to evaluate monthly and a 3 monthly maintenance regimen. And number 3, the fact that their patients are going to be able to continue to receive Respeg beyond the induction period of 16 Weeds is very attractive to their patients and to the investigators as well. So, we Feel that we will absolutely be able to deliver this trial on track and on time with data, top line data available in the first half of twenty twenty five. Hope that answers your question.

Speaker 6

Yes, that's super helpful. Thank you so much for the details and we'll look forward to future updates. On the Phase 2b study of Respegg in alopecia areata. Can you just talk about how you're thinking about dosing? And then what's the bar there to initiate a Phase 3 study?

Speaker 6

And how will you compare the performance of Respegg with recently approved oral drugs in alopecia?

Speaker 5

Mary or JZ, would you like to take that?

Speaker 4

Sure. I'm happy to address that. So the JAK inhibitors, as you know, are efficacious. We see in effect after roughly 36 weeks of treatment. There are, as you know, many problems with JAK inhibitors.

Speaker 4

1, when you stop taking the JAK inhibitors, patients very rapidly Lose their hair and of course you're well aware that there are black box warnings with the JAK inhibitors. We very closely looked at the baricitinib data And we believe if we had efficacy similar to baricitinib, but don't accompany 2 things. 1, a rapid Loss of hair after cessation of treatment or the ability to have again just like we're looking at in atopic Dermatitis, a maintenance regimen that is far more convenient and favorable for the patient, we believe that a biologic We have great appeal in the area of alopecia areata. We are going to look at 2 different doses versus placebo and we will evaluate this At 36 weeks and again, I think analogous or better efficacy than has been seen with the JAK inhibitors with an improved Safety profile, tolerability profile and without accompanying black box warnings would make Respegg

Speaker 6

Great. Thank you for the super comprehensive responses and congrats again on all the progress.

Speaker 4

Thank you very much, Jay.

Operator

Thank you. And our next question will come from Chris Shibutani from Goldman Sachs. Your line is open.

Speaker 7

Hi, everyone. This is Charlie on for Chris. Thanks so much for taking our questions and congrats on the progress as well. Just Couple of quick ones from us. First on the 255 plans for strategic partnership, wondering if there's any update on the expected timeline for that partnership.

Speaker 7

I know Year end 'twenty three was the previous target, wondering if that was still the case or if we had a new timeline in mind at this point. And then on the

Speaker 5

So I'm going to have Howard take the first part of that question on 255. And then JZ, will you take the question on the preclinical program?

Speaker 2

So yes, sure. Good question. Look NKTR-two fifty five It is a potentially very exciting program. We're talking to a number of companies. You see that we just completed a collaboration with CPMG In combination with Till therapy, we have a collaboration with Merck KGaA in bladder cancer.

Speaker 2

So there's a lot going on with 255. We also have our own study running at the Fred Hutchinson Cancer Center in cell therapy. So There are companies that are interested. I think as a we would like to complete a strategic collaboration for NKTR-two fifty five. Our focus as a company is in immunology now, although I think this is a very exciting asset and I can't give you specifics As to when and how a collaboration will get done, but we're making great progress there.

Speaker 2

And as you can see by the with the CBMG collaboration, we've just added Another exciting potential application for NKTR-two fifty five. So we'll keep you posted. I don't know that it's going to be end of this year, next year, can't say for sure. But clearly, we're focused on that and I do think it will get done. JZ, would you handle the PEG CFS-one question?

Speaker 3

Certainly. Yes, thanks for the question. So at this time, we've really prioritized our efforts on the TNFR2 program And that's really for a couple of reasons. The first is that TNFR2 builds on a complementary pathway Around Treg targeting that's distinct from the IL-two pathway that Respegg engages. So for example, you know that TNFR2 is a TNF superfamily member is really one of the strongest signals that induces NF kappa B in cells like Tregs.

Speaker 3

And it's also one of the strongest signals for controlling FOXP3 expression, which is a critical enzyme For both suppressive and differentiated and strong Treg responses, right. You know that loss of FOXP3 The key differentiation of T Rex. So it's really a target that's very, very hot at this time. It's really built off of what we know and have learned through our deep experience with Respeg and the Treg field. And it also lets us leverage all that knowledge and advance our prioritized efforts into TNFR2.

Speaker 3

And so that's where we're really focused at this time. The PEG CSF program, we will work on in the future, but it's really TNFR2 where we're focused on right now. I'll also say that as we've had the opportunity to discuss that program with some other outside entities, we have received a lot of interest around the program. We're finding many companies like pharmas and large biotechs and others that have Really allocated time for TNFR2 into their strategy. So much is known around TNF inhibition, The drugs like Humira, gilimumab, efliximab, Enbrel and so on that have had such a profound effect on rheumatology.

Speaker 3

And through that period of time, we've understood about the TNFR1, TNFR2 receptor access and what's missing. Would you just block all TNF alpha signaling, which includes also blocking the TNFR2 pathway? So this is something that we're very excited about. We like all of the interest and where we're really prioritizing our energy. We're very excited that we're on track.

Speaker 3

We're moving into our cell line stage, aiming into the manufacturing setting, And we're on track to be submitting our IND next year in 2024 for that program.

Speaker 7

Great. That's helpful. Thank you all so much.

Operator

Thank you. And I am showing no further questions from our phone lines. I'd now like to turn the conference back over to Howard Robin for any closing remarks.

Speaker 2

Well, thank you everyone for joining us today and we remain focused on executing on the development of Respeg in our immunology focused Research programs and I think we have a clearly defined path forward. I'd like to thank all of our employees for their efforts and their hard work I want to thank our shareholders for their continued support. So we look forward to providing you with updates on our progress. Stay tuned and thanks for joining us today.

Powered by Quartr
Earnings Conference Call
Nektar Therapeutics Q3 2023
00:00 / 00:00