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spk08: Please stand by. Your conference call will begin momentarily. Once again, please remain on the line. Your conference call will begin momentarily. Thank you. Thank you. Thank you. Thank you. Good day and thank you for standing by. Welcome to the Nexra Therapeutics fourth quarter 2021 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and then one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star and then zero. I would now like to hand the conference over to your speaker today. Jennifer Ruddick, Head of Corporate Affairs. Please go ahead.
spk01: Jennifer Ruddick 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, Gil Laboucherie, our COO and CFO, Dr. Jonathan Zaleski, our Chief of Research and Development, and Dr. Dimitri Naughton, our Chief Medical Officer. On today's call, we expect to make forward-looking statements regarding our business, including clinical trial enrollments and clinical trial results, timing and plans for future clinical trials, timing and plans for future clinical data presentations, the therapeutic potential of our drug candidates, outcomes and plans for health authority regulatory actions and decisions, financial guidance, and certain other statements regarding the future of our business. Because these forward-looking statements relate to the future, they are subject to inherent uncertainties and risks that are difficult to predict, and 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 the Form 10-Q that we filed on November 5th, 2021, which is available at sec.gov. We undertake no obligation to update any of these forward-looking statements, whether as a result of new information, future developments, or otherwise. A webcast of this call will be available on the investor relations page of Nectar's website at Nectar.com. Before turning the call over to Howard, I'd like to remind you that since we're calling in from different locations, I will moderate the Q&A session for our team so we can avoid technical issues during the session. We appreciate your patience during this time. With that said, I would like to hand the call over to our president and CEO, Howard Robin. Howard?
spk15: Thanks, Jennifer. Thank you all for joining us today. 2021 was highlighted by advancement and execution across many areas of our business, and we continue to establish Nectar's leadership position in the development of cytokine therapeutics for the treatment of cancer and autoimmune disease. And we are excitedly awaiting three late-stage registrational study readouts in the first half of this year from our FEMPEG program. If successful, these studies will put us on a path to regulatory approvals and global commercialization in multiple large frontline cancer settings in melanoma, renal cell carcinoma, and bladder cancer. Our organization is preparing for potential regulatory filings and the commercialization of FEMPEG And moreover, with a breakthrough designation in first-line melanoma, we believe that positive phase three data will enable us to expedite the U.S. regulatory filing for BEMPEG in this setting. And this means we could potentially make BEMPEG available to cancer patients beginning in the latter part of this year or early 2023. Beyond the three studies reading out in the first half of this year, we have several additional registrational studies underway with nivolumab in the adjuvant setting of melanoma and the periadjuvant setting of bladder cancer, and with pembrolizumab in first-line head and neck cancer. A broad global registrational program for BEMPEG was designed to capture the most significant cancer types where we believe BEMPEG in combination with a checkpoint inhibitor has the potential to demonstrate significant clinical benefit for a large number of patients. Current sales of checkpoint inhibitors in these settings are in excess of $6 billion, and we believe we have positioned BEMPEG as a first-in-class IL-2 therapeutic with a development strategy to establish BEMPEG in first-line settings targeting a large number of patients. BEMPEG is the only IL-2 agent in development that possesses three key differentiated attributes in one therapeutic candidate. So first, BEMPEG is designed to allow preferential signaling to the beta gamma portion of the IL-2 pathway with some retained transient binding to the alpha receptor, which is necessary for T-cell priming in the lymph nodes. Second, we leveraged full-lymph IL-2 to avoid treatment challenges that could arise in the mutain structures. And third, MPEG has a prodrug design, which allows us to maintain sustained pathway signaling and mitigate the toxicities associated with high-dose IL-2 and achieve an antibody-like dosing schedule that could be combined easily with a checkpoint inhibitor regimen. These attributes in our first-line registrational clinical program are important competitive advantages and make the development path in these indications very difficult for all other IL-2 programs being pursued by others that are in much earlier stages of research and development. As a leader in cytokine therapeutic development, our next program, Nectar 255, targets the IL-15 pathway, enabling us to stimulate the immune system with natural killer cell proliferation, which we believe has broad therapeutic potential, not just in solid tumors, but also in liquid tumors. And Jay Z will share our progress with that program later in the call. In the area of autoimmune disease, our NECTAR-358 program, partnered with Eli Lilly, is also advancing very rapidly. We're pursuing significant settings for Nectar 358, lupus, ulcerative colitis, and ectopic dermatitis, where sales of current agents range from $12 to $15 billion. So this key program has very significant value to Nectar. And our agreement with Lilly has significant double-digit royalties in the mid-teens and low-20s. And we have the option to co-promote as well. With the broad manufacturing process, the mechanism of Nectar 358 and its potential in a number of autoimmune and inflammatory conditions, we're truly excited about how large the opportunity could be. Nectar 358 is designed to be a monotherapy biologic therapeutic that is administered subcutaneously to treat a range of autoimmune conditions. In December, we were pleased to see our partner Eli Lilly announce at their annual investor meeting the first proof of concept data for Nectar 358 in the setting of ectopic dermatitis. These data underscore the great promise that Lilly and Nectar see in this potential resolution therapeutic. Lilly now has three phase two studies announced for the development program for Nectar 358 in lupus, ulcerative colitis, and ectopic dermatitis, with a fourth phase two study planned as well. Nectar 358 is the clear leader in capitalizing on the novel T regulatory cell top biology with respect to both our scope and our stage of development. And again, Jaydee will spend some time later in the call highlighting the tremendous progress we've made in 2021 for NECTA-358. Now, as this is front of mind for many of you, I'll spend some time now on BEMPEG, which is being developed in combination with checkpoint inhibitors, nivolumab and prembrolizumab. As I mentioned earlier, three studies are on track for top-line data readouts in the first half of this year, beginning first with the Phase III melanoma data, followed by renal cell carcinoma, and then bladder cancer data. Positive results from these studies would support a series of regulatory registrational filings for BEMPEG plus NEVO, followed by commercial launches for the doublet regimen, beginning as early as late 2022 or early 2023. NECDA will lead all distribution, pricing, and market access activities for BEMPEG, Nectar and BMS will share in promotional activities. We look forward to working closely with BMS as we advance towards regulatory filings and launch. And as a reminder, Nectar will book all revenue for BEMPEG and retain 65% of the profit. We estimate the patent protection for the BEMPEG combination with an anti-PD-1 antibody extends to at least February 2035. As I stated at the J.P. Morgan conference in January, BMS and Nectar have guided to top-line results from the Phase III melanoma study before the end of April, and we expect shortly thereafter to have the results from the two studies Nectar is running in renal cell carcinoma and bladder cancer. BMS and Nectar are not providing any additional detail on the timing of these top-line data. As in most late-stage studies conducted in partnership, our companies plan to make a joint announcement. As a reminder, and as we've previously stated, we expect to report top line results for the first two co-primary endpoints of ORR and PFS. With positive PFS results from the melanoma study, we plan to submit regulatory approval filings virtually simultaneously in both U.S. and Europe. The potential European approval and country launches would, of course, follow potential U.S. approval and launch as the process for European regulatory review and approval is typically longer. Now, as a reminder, Nectar is entitled to receive a total of up to $1.4 billion in milestones for BEMPEC filings and first commercial sales following approvals, and Gil will provide more granularity on the timing and triggers for these milestones in a moment when he reviews our 2022 financial guidance. As I mentioned earlier, Jaydee will discuss the Nectar 255 program later in the call, but I'd like to highlight a few key accomplishments for this program in 2021. So first, we generated some important early data in combination with cetuximab and solid tumors in the early dose escalation work in our Phase I clinical study of Nectar-255, and this led to an exciting new collaboration for Nectar-255 with Merck KGA and Pfizer. The collaboration will combine Nectar-255 with Avilamab as part of Merck's Phase II javelin bladder medley umbrella trial. Merck will sponsor and conduct the study, and we will provide supply of Nectar 255. It is a relatively large Phase II comparative study, which has an Avelimab comparator arm and will evaluate treatment in the maintenance setting of bladder cancer, which is a label unique to Avelimab. We're highly encouraged that Merck shares our enthusiasm for Nectar-255 and its potential to combine with a velumab, which has shown an ADCC mechanism in preclinical studies. Also, we recently presented data at ASH highlighting the potential role for Nectar-255 to serve as a CAR-T potentiator, with Nectar-255 eliciting a several-fold increase over baseline CAR-T cells even a year past the patient's CAR-T regimen. We're excited to announce today that we just received FDA clearance for the IND related to a study to evaluate Nectar 255 in the setting of CAR T therapies, specifically CD19 CAR T. The study will be initiated as an investigator-sponsored study at the Fred Hutchinson Cancer Center. From an operational perspective, we have an exceptionally strong balance sheet and ended the year with approximately $800 million in cash This cash position, together with the support of our strategic collaborations and potential for up to $1.4 billion in regulatory filings and first commercial sales milestones, or BEDPEG, provides us with a strong financial foundation to execute our robust development strategy. And with that, I'd like to turn the call over to our Chief Medical Officer, Dr. Dimitri Knighton, to continue. Thank you. Dimitri?
spk00: Thank you, Howard. Before I dive into an update on our BAMPAC trials, let me take a moment to remind you of its mechanism and its approach. Our goal when we started the development of BAMPAC was to create a new and novel molecule that captured the positive attributes of IL-2 and also addresses the historical problems with high-dose IL-2. Leveraging our technology platform, we were able to engineer a product candidate that we believe is best in class. Let me highlight some of the differentiating aspects of BAMPAC. First, we preferentially signal to the beta-gamma IL-2 receptors, which stimulates the growth of cytotoxic T cells. We do this without overactivating the cell populations, which can lead to downregulation of the immune system. And unlike mutated forms of IL-2 that only bind to the beta-gamma receptors, we retain some transient binding to the alpha receptor. And by doing so, we can enhance the priming of T cells in lymph nodes, enabling T-cell proliferation and infiltration of those T-cells into tumors when the new tumor antigen is presented. Second, we used the full-length IL-2 molecule with no amino acid substitutions rather than a mutated version. This ensures that we do not see any tachyphylaxis on the receptor or issues that mutant versions can exhibit over time in vivo, including anti-drug antibodies, leading to diminished efficacy over time. Third, As a prodrug, BAMPAC avoids the risk of a cytokine storm that you may see with a non-prodrug approach. Certainly, this is something you really want to avoid in a medicine that could potentially be used in so many cancer patients. And finally, we have achieved an antibody-like dosing schedule in an outpatient setting that easily combines with checkpoint inhibitors versus the intense and dense regimen for high-dose IL-2 usually given in an intensive care unit. We are combining BAMPACK with checkpoint inhibitors, and the combination here is really quite simple and elegant. We know that targeting the PD-1 pathway may strengthen the immune response by reactivating cytotoxic T cells that have been stopped by the PD-L1 and PD-1 signaling axis. We think of this as removing breaks of the immune system, an effective approach on its own. By preferentially targeting the IL-2 pathway to significantly increase the number of cytotoxic immune cells in the tumor microenvironment, we put our foot on the gas. In our previous clinical studies, we've shown two important things. First, that treatment with BAMPAC upregulates PD-1 on these new immune cells, and secondly, that this ultimately leads to upregulation of PD-L1 in the tumor microenvironment. Both of these are expected biological outcomes after BAMPAC treatment, And the end result is that the two together, BMPAC plus nivolumab, could potentially drive deeper and more durable responses in patients. Let me now provide a brief update of the timing for our registrational studies, which are tracking in line with our prior guidance. First, for the 760-patient phase 3 first-line metastatic melanoma study, which is being conducted by our partner, BMS. We in BMS are very much looking forward to reporting top-line data in the near term. As a reminder, this will include top-line results for the two co-primary endpoints. We plan to present the full data and potentially subset analyses at a medical meeting later this year. We are not yet providing details at which meeting we plan to present, but we will target a significant oncology meeting. As a reminder, the Phase III study is a well-powered and well-designed study and has three co-primary endpoints. overall response rate, progression-free survival, and overall survival. As I just stated, the first analysis will include the two co-primary endpoints of overall response rate and progression-free survival. For registrational purposes, we only need to meet the progression-free survival endpoint in order to submit an application to the regulatory authorities. Many of you have asked for specific details on the statistical analysis plan for this study, and as most companies do, we have not provided full details on this for the study prior to full data publication. In the past, we have provided the design of the Checkmate 67 study as an example for reference. In our Phase II melanoma cohort, we saw a median PFS of 30.9 months for our doublet. We know that the current IO doublet treatments available for first-line melanoma patients in Phase III studies have reported a median PFS in the 10 to 11-month range and the still commonly used global standard of care comparator in our Phase III study, nivolumab, has reported a median PFS between four to six months in different studies. Headed into our top-line results, we are very enthusiastic, based on our previously reported Phase II results, that BEMPEC plus nivolumab could potentially deliver results that position it well in the current treatment landscape. We envision a unique opportunity for BEMPEC plus nivolumab doublet if we are able to emerge as new standard of care in this setting. The next study, which NECTAR is running, is a 620-patient phase 3 first-line renal cell carcinoma study comparing BEMPEC plus nivolumab versus a TKI of physician choice, which can be either senitinib or cabocentinib. We expect that we could reach our first interim analysis for the co-primary endpoint of overall survival sometime in the second quarter of 2022. At that time, we could also conduct a final ORR analysis for the co-primary endpoint. If we do not pass the preset threshold for statistical significance in the first interim analysis, the data monitoring committee will recommend a resizing of events for the final analysis for overall survival. BMS and NECTAR are taking a comprehensive approach to the development of BAMPAC plus nivolumab in this particular tumor type. Additionally, BMS is conducting a 250-patient randomized Phase II study in RCC that combines BMPAC plus nivolumab with X-Alexis' cabocentinib, which allows us to compare it to the doublet regimen of nivolumab and cabocentinib to pave the way for a TKI-inclusive regimen in RCC with BMPAC and nivolumab. Last year, BMS and NECTAR expanded the strategy in RCC to include a new collaboration with X-Alexis who will be conducting a study evaluating BEMPEC plus nivolumab with their novel generation TKI, known as EXCEL92. And this study will also include other GU cancers, including urothelial cancer. With respect to the Phase II study in first-line cisplatinum-ineligible urothelial carcinoma, which NECTA is running, the study is designed to serve as the basis for a potential filing for accelerated approval. This study includes about 110 cisplatinum ineligible urothelial carcinoma patients who have a baseline CPS score of 10 or lower as a measure of PD-L1 expression. And this is the group of patients with the highest unmet medical needs as they are not able to receive the most effective chemotherapy regimen available for bladder cancer and checkpoint inhibitors have shown most of their benefit in patients with PD-L1 high tumors. The primary endpoints for this trial are overall response and duration of response, as determined by central radiology review. In order to have a robust and mature data set, we are looking to achieve a minimum follow-up of 18 months measuring the duration of response, and we expect our first data from this study to come out in the first half of 2022 as well. As Howard noted earlier, the BEMPEC Novolumab program also has two large Phase III studies one in muscle-invasive bladder cancer and one in adjuvant melanoma. The phase 3 peri-adjuvant muscle-invasive bladder cancer trial is being run by our partner BMS. It has a target enrollment of approximately 540 patients who are cisplatinum ineligible and who will receive BEMPEG plus nivolumab or nivolumab monotherapy, first in a neoadjuvant setting prior to radical cystectomy and then in the adjuvant setting for a period of 12 months following surgery. The study has also a third reference arm where patients are receiving a cystectomy alone and no further neoadjuvant or adjuvant treatment. We expect the first data readout to be in 2024 or 2025. This study is also designed to serve as a confirmatory study for our planned potential accelerated approval in metastatic cis-ineligible urotelial carcinoma. The Phase III adjuvant melanoma trial is being run by NECTAR. This study is enrolling a total of approximately 950 patients for a 12-month treatment period post-surgery with an endpoint of recurrence-free survival by blinded independent central review. Enrollment in this study has exceeded our timeline projections, and we are now expected to complete enrollment of the 950 patients study around the middle of the year. The adjuvant study is designed to build upon the recent approval of nivolumab in this setting and broaden the role for BEMPEG in the adjuvant setting. Initial data from the study is estimated to be available in 2024. For our combination studies with pembrolizumab, we are enrolling patients in our 500-plus patient phase 2-3 trial designed to support registration in first-line head and neck cancer. We have collaborations in place with both Merck and SFJ Pharmaceuticals for this study, and we are very excited about this opportunity to address a large patient population in the frontline setting. It includes an interim analysis of overall response rate after 200 patients are enrolled. And if overall response rate passes a pre-specified fertility boundary, the study will continue and the remaining 300 patients will be enrolled to the phase three portion of the study. Given the favorable competitive landscape, we see this as a unique opportunity for us to establish BAMPAC as first IL-2 mechanism for the treatment of head and neck cancer. And then finally, we are continuing to advance our PROPEL study, with the addition of chemotherapy to BEMPEC plus pembrolizumab treatment regimen in both squamous and non-squamous non-small cell lung cancer patients with PD-L1 expression levels under 50%. The combination with chemotherapy here allows us to consider a broad registrational strategy for BEMPEC in non-small cell lung cancer patients in these populations of patients with negative to low and medium PD-L1 expression in their tumors who are currently having the highest on the need for better therapeutic options. We are very much looking forward to providing future updates on our progress with BEMPEG in the future. And let me now turn over the call to JC.
spk06: Thank you, Dimitri. As Dimitri said, we are all very excited about the upcoming milestones for BEMPEG, and the opportunity for this important IL-2-based therapeutic to treat a large number of patients battling cancer. As you know, Nectar has built a very strong and well-diversified clinical pipeline, and we've established ourselves as the leader in cytokine therapeutics. Our focus is on targeting significant opportunities in cancer, in solid and liquid tumors, and even beyond cancer in a broad range of autoimmune disorders. We are advancing clinical studies to capitalize on these significant opportunities with two large clinical programs, Nectar 255 and Nectar 358. And in addition, we have a robust research pipeline looking at immune-based agents in cancer and autoimmune diseases as well. So let me start with Nectar 255, an agent that engages the full biology of the IL-15 pathway. to provide functional activation and homeostatic control of IL-15 responses of immune cells, namely natural killer cells, CD8 T cells, and immune memory subsets. Now, as a full agonist of the IL-15 pathway, Nectar-255 can thus be combined with multiple mechanisms, ranging from targeted agents to cell therapies, including CAR-Ts, and even immunological checkpoints, in total to potentially improve the efficacy of these agents. In our early dose escalation work, we have observed a consistent increase of natural killer cells, as well as CEAT cells, across multiple tumor types, including multiple myeloma, non-Hodgkin's lymphoma, colorectal cancer, and head and neck cancer. We have seen up to a nine-fold increase in NK cells, and our pharmacokinetic profile is highly predictable, allowing us to dose Nectar 255 every three or four weeks. And importantly, we see increases in NK and CD8 T-cells in even the toughest patients, including multiple myeloma patients with compromised bone marrow. And this is a very important attribute of Nectar 255, and this should allow Nectar 255 to be given as a monotherapy and in combination with targeted antibodies. We also see potential in enhancing CAR-T persistence. So at ASH, we shared data from a set of four patients enrolled in our Nectar 255 study with highly relapsed and refractory NHL, who also had CAR T as one of their prior therapies. Three of these patients were well over a year past their CAR T infusion, and all of them had minimal levels of detectable CAR T at baseline prior to entering the Nectar 255 clinical study. We were very encouraged to see that in all four of these patients with detectable CAR T at baseline, there was a substantial increase in these cells after treatment with Nectar 255. And these initial data highlight the potential role of Nectar 255 as a CAR T potentiator. And our next steps in the clinic will be to evaluate dosing of Nectar 255 shortly after CAR T infusion. And we are doing a study with Dr. Cameron Turtle at the Fred Hutchinson Cancer Center to see if we can generate even more durable responses for patients. And as we announced earlier on this call, we just received FDA clearance for this study to proceed. Now, this study will evaluate various dose regimens of Nectar 255 given close to the time of CD19 CAR T-cell therapy. Now, of course, our initial strategy has focused on combining with antibodies that function through an ADCC mechanism of action. and we have a robust clinical program in place in both liquid and solid tumors. For our Phase I-II study of Nectar-255 plus cetuximab in patients with relapsed or refractory head and neck cancer and colorectal cancer, we are still in the dose escalation portion of the trial with successive cohorts of patients being treated with ascending doses of Nectar-255 every 21 days plus cetuximab weekly until we reach the maximum tolerated dose or the recommended dose to go forward into the expansion cohorts. For our study in relapsed refractory hematological lignancies, the agent has been very well tolerated as monotherapy. Now, we expect to complete the dose escalation phase of the study in the first part of 2022, and then move into the expansion phase in combination with rituximab or Darzalex Baspro. Now, the first arm in the study will evaluate NECTAR255 as monotherapy, or in combination with rituximab in third-line or later follicular lymphoma or low-grade non-Hodgkin's lymphoma. The second arm will evaluate Nectar 255 as a monotherapy and in combination with Darzalex Faspro in third-line or greater multiple myeloma. And finally, the third arm will evaluate Nectar 255 as a monotherapy for non-Hodgkin's lymphoma patients who have previously progressed following approved CD19 CAR T-cell therapy. Now, we recently expanded our program through a collaboration agreement with Merck KGA to evaluate Nectar 255 in combination with the Velumab in the urethelial carcinoma maintenance setting post-chemotherapy as part of the javelin bladder medley study. The foundation of this collaboration is the unique scientific rationale of the combination of Nectar 255 with the Velumab, which, to remind you, is a PD-L1 inhibitor with an ADCC-active IgG1 FC region. The Nectar 255 combination arm of the study plans to recruit 72 patients and will be compared to an Avelumab control arm. Findings from this trial will help determine whether there is a registrational pathway for Nectar 255 in this setting where Avelumab is already approved. And the Avelumab Alliance of Merck and Pfizer is sponsoring the trial with Merck running the study. And they are on track to initiate the study next quarter. And now, let's turn to our immunology program, Nectar 358. As Howard said earlier, we are very pleased with the broad scope of development and overall advancement of the Nectar 358 program being executed by our partner, Eli Lilly. Many autoimmune and inflammatory disorders, including systemic lupus and ulcerative colitis, are associated with decreased Treg numbers, reduced Treg function, and or reduced production of IL-2. With Nectar 358, we've utilized a completely different approach with our pegylation chemistry to capture the immune-regulating potential of IL-2 by specifically stimulating Tregs. Thus, our goal with Nectar 358 is to address the underlying Treg abnormalities in autoimmune disease and to develop an IL-2-like molecule that could selectively stimulate Tregs in a more effective manner than low-dose IL-2. The data emerging from the program has really reinforced our conviction in this approach. In our multiple ascending dose study in lupus patients, Nectar 358 led to a dose-dependent reduction in lupus skin disease activity as measured by the CLASI activity score in the subset of 18 patients with a baseline score greater than or equal to 4. Now, this data, along with the PK, PD, and safety information we collected in this Phase 1B lupus trial led to Lilly launching a Phase 2B dose range-finding study in 280 lupus patients, which is well underway and recruiting nicely. Late last year, Lilly announced exciting proof-of-concept data in a second dermal disease pathology, moderate to severe atopic dermatitis. The 12-week study tested two doses of Nectar 358 compared to placebo and then followed patients for quite a while after the last dose of the therapy. Treatment with Nectar 358 showed a dose-dependent reduction in eczema area and severity index scores in patients, with approximately a 70% maximum reduction in scores of week 12 at the highest dose tested. And the efficacy that was seen in this study is well in line with the current standard of care of Dupixent. which requires 16 weeks of treatment with the agent. But clearly the most fascinating observation from the study was that when we looked at patients 36 weeks after we stopped dosing Nectar 358 therapy, their skin scores remained very low and, in fact, even dropped further during this extended period. And this has us and Lily very excited about the potential for durability with Nectar 358. And, you know, these data really underscore our hypothesis that if you increase the function of regulatory T cells, that you might, in fact, address the underlying immune pathology in the disease and see a durable clinical signal like we see here in atopic dermatitis well after the treatment ends. Nectar 358 is a first-in-class mechanism. And as we understood when we started this development program, Nectar 358 has the potential to treat the underlying disease pathology and provide disease-modifying effects. This means that if we are successful, Nectar 358 could truly transform the treatment of autoimmune diseases. The Phase II program for Nectar 358 includes the ongoing 280-patient Phase II study in lupus, a second ongoing Phase II study in 200 patients with ulcerative colitis, a third phase two study planned in atopic dermatitis, and a fourth phase two study in a yet to be announced autoimmune indication expected to start later this year. With these trials making great progress, we are expecting a steady stream of data coming from these Lilly studies over the next 12 to 18 months. And with that, I will turn the call over to Gil.
spk03: Thank you, Jonathan, and good afternoon, everyone. This afternoon, we announced our full-year financial results for 2021 in our earnings press release. On this call, I will provide our annual financial guidance for 2022. Starting with our cash position, we finished 2021 with a very strong balance sheet with approximately $800 million in cash and investments and no debt. In addition, under our collaboration with BMS, there are very significant near-term regulatory and commercial launch milestones associated with successful outcomes from the registrational studies for BEMPEG. Let me provide you with some more detail on how these milestones break down. For the first indication, there are 60 million of milestones associated with health authority filings for BEMPEG in the U.S. and EU, 500 million in commercial launch milestones split equally between the first commercial sale in the U.S. and the first commercial sale in the EU, and 65 million in milestones associated with regulatory submissions and commercial launch in Japan. For each of the next three indications, there are 30 million of milestones associated with health authority filings in the U.S. and EU, 200 million in commercial launch milestones, split equally between the first commercial sale in the US and the first commercial sale in the EU, and $30 million in milestones associated with regulatory approval submissions and commercial launch in Japan. Before I get into the line item projections for our 2022 financial guidance, I wanted to review a few key assumptions that we made in formulating this guidance. If one or more of our registrational studies for BEMPEG are successful in the first half of 2022, it is possible that BEMPEG could be approved and launched as early as late 2022, dependent upon regulatory filing and review timelines. However, in our financial guidance for this year, we have included only regulatory filing milestones for 2022 in our revenue and cash position estimates, with any revenue and cash receipts for the potential commercial launch milestones coming in 2023. We will, of course, update this guidance as appropriate based on additional information we receive during the year. Now, turning to our 2022 financial guidance, with respect to our cash position, we expect to end the year with approximately $400 million in cash and investments with net cash usage in 2022 relatively consistent with 2021. Our projected 2022 cash position includes $100 million in BMS collaboration milestones associated with regulatory filings for BEMPEG. Our gap revenue is expected to be between $185 and $195 million in 2022. including the 100 million of BMS collaboration milestones related to BEMPEG regulatory filings. We currently expect approximately 70 million of these milestones would be recognized in Q3, with a balance of 30 million being recognized in Q4. Excluding these milestones, we expect to recognize the remaining 85 to 95 million of GAAP revenue fairly ratably over the four quarters of 2022. The non-milestone portion of our revenue includes $70 to $75 million in non-cash royalty revenue and $15 to $20 million in product sales. We anticipate 2022 GAAP R&D expense will range between $500 and $525 million, which includes approximately $65 to $70 million of non-cash depreciation and stock compensation expense and 30 to 35 million of non-cash development expense for our head and neck program being funded by SFJ Pharmaceuticals. Our 2022 R&D investment will further advance our deep pipeline of immune modulating medicines and prepare BEMPEG for commercial launch. We and our partners are funding six registrational studies for BEMPEG. This year, we expect to complete enrollment of approximately 950 patients in the PIVOT-12 adjuvant melanoma study by approximately mid-year, and also to significantly ramp enrollment in the head and neck study. We are continuing to manufacture BEMPEG for commercial launch, and these expenses will continue to be reflected in R&D until approval of BEMPEG is achieved, in which case we will then capitalize our commercial manufacturing into inventory and expense through cost of goods sold. For Nectar 358, we will be funding our 25 percent share of development costs for four Phase II Lilly clinical studies in lupus, ulcerative colitis, atopic dermatitis, and one additional immune indication. We are completing the dose escalation studies for Nectar 255 in both hematologic and solid tumor settings. and will be starting enrollment in multiple expansion cohorts this year in combination with ADCC antibodies. Additionally, we will continue our research efforts to enable new programs to add to our clinical pipeline in the coming years. G&A expense for 2022 is projected to be between $175 and $195 million. which includes approximately 35 to 40 million of non-cash depreciation and stock compensation expense. As I mentioned earlier, we are currently building our commercial capabilities in a carefully staged fashion with a focus on distribution and market access to prepare for BenPay commercial launch as early as the end of 2022. We continue to carefully gate our commercial investments in the first half of 2022 prior to the receipt of positive top-line data from our registrational studies to support regulatory approval filings. As a result, we do not expect GNA will be ratable through 2022 as commercial activities will increase in the second half of the year following positive top-line data from the BEMPEG registrational studies. Our non-cash interest expense related to our royalty monetizations is expected to be between 25 and 30 million. Additionally, I want to note that our non-operating expense includes the change in fair value of our development derivative liability, which may change significantly this year based on the results of the metastatic melanoma study. And with that, we will now open the call to questions. Operator?
spk08: Thank you. As a reminder, to ask a question, you will need to press star and then one on your telephone. To withdraw your question, please press the pound key. And in the interest of time, we do ask that you please limit yourself to one question at this time. And our first question comes from Peter Lawson from Barclays. Your line is open.
spk09: Thank you. Thanks for taking the question. Thanks for all the detail, Nicole. Just maybe as we think about the three phase three readouts, just kind of your level of read-through that we should be taking from melanoma to RCC to bladder for the BEMPEC trials.
spk01: Yeah, thank you, Peter. I'm going to ask Dimitri to take that one. Dimitri?
spk00: Yeah, thank you for the question. I think these are, as I like to call them, independent short-term goals. On one hand, of course, the indications have been carefully selected based on Let's say IL-2 validation specifically for melanoma and for renal cell carcinoma. Bladder cancer is a different indication. We built, let's say, strong early data across the different indications. However, if you think about read-through, they're very different tumor types. The studies are different in design. Specifically, if you think about melanoma, we are building upon standard of care combining with nivolumab, comparing it to nivolumab alone. However, in renal cell, we have a double IO approach versus a TKI approach. So I would overall say there's limited read-through, and these are truly independent shots on goal.
spk08: Thank you. Our next question comes from Chris Chabutani from Goldman Sachs. Your line is open.
spk02: Hi, good evening. This is CJ Zafon for Chris this evening. Obviously, we are all waiting on tenterhooks to see the phase three readouts coming up this half. Gil, thanks so much for helping us think through what the spend might look like under the assumptions that you gave. In the unfortunate event that the trials are not positive, how should we be thinking about any potential spend trajectory changes?
spk01: Yeah, Gil, do you want to take that?
spk03: Yeah. So, of course, as we outlined our assumptions and our guidance, we're expecting positive results out of the BEMPEG trials. As I'm sure you can imagine, we have contingency plans in the unlikely event we were not to have success, but I think it's way too early to even be contemplating or talking about those plans. So we're certainly planning for success and ready to make any adjustments as we go forward.
spk08: Thank you. Our next question comes from Jay Olson from Oppenheimer. Your line is open.
spk13: Oh, thank you. This is Chong on the line for Jay. Thanks for taking the question. Maybe just one for 255. I'm just wondering how are you thinking about the collaboration opportunity for 255 with cell therapy? And separately, I'm just curious about the newly initiated study with CAR-T When will you dose the 255 following the CAR-T, and if you're going to dose, like, just for one time, or you will be dosing periodically? Thank you.
spk01: Yeah, thank you for that. Jay-Z, do you want to talk about our approach in cell therapy as well as the CAR-T study a little bit more? Thank you.
spk06: Yeah, absolutely. Thank you for the question. So one of the things that we observed when we started our collaboration with Cameron Turtle at the Hutch is that we ran a number of preclinical studies with him And, of course, remember, he's really one of the founding fathers of this whole field. And we were really following on the understanding that patients that have the highest levels of IL-15 post-conditioning seem to have some of the best outcomes following CAR-T cell therapy transplant. So the opportunity here is, you know, really providing an exogenous IL-15 pathway source to help anesthetics. So what we first really were excited about is that when we saw the early preclinical studies, we saw that administration of Nectar 255 could actually rescue subclinical doses of CAR T cells applied in a preclinical model. So these are levels of CAR T that are so low that they hardly provide any tumor control. But in the combination with 255, not only do they kill the tumors, the animals maintain long-term persistence of effect. You could keep re-challenging them with the same tumors, and they continue to be completely tumor-free, you know, for many, many months after treatment. So the study that then that extended to that is also being run by Cameron Turtle at the Hutch is really now kind of leveraging forward from those early preclinical studies to the ASH data that I summarized in patients long since their prior transplant into the setting where we're going to be administering Nectar 255 much more contemporaneously with the CAR-T therapy. So very much like you pointed out, Nectar 255 will be given very close in time to the CAR-T administration. And as you pointed out, you have this ability to continue treatment. So we will be continuing to treat with Nectar 255 for an extended period of time after the original CAR-T transplant with the opportunity in all these cases to increase the persistence of the CAR-T cells and ultimately and hopefully improve the efficacy and durability seen with these therapies. Thanks for the question.
spk08: Thank you. Our next question comes from Jessica Five from J.P. Morgan. Your line is open.
spk10: Hey, guys. Good evening. Thanks for taking my questions. When do you expect to have mature overall survival data from the frontline melanoma trial, and what's the minimum PFS hazard ratio you could detect in that study? Thanks.
spk01: Hi, Jess. Thanks. Dimitri, I'm going to ask you to take those two.
spk00: Yeah, sure. Thanks for the question. I'll start with the PFS hazard ratio. As we stated before, we haven't given additional guidance or detailed guidance on our statistical analysis plan. I would say this is fairly atypical for companies to disclose those details until a full publication is available. We've talked about clinical relevance before, and I've emphasized two things. First of all, as a benchmark or as a reference trial, the Checkmate 67 study can be looked at for a lot of details. and our study is well designed to detect a clinically relevant, let's say, hazard ratio. When it comes to the survival analysis, that's also something we haven't commented on. We're not providing any guidance on the number of events and the timing. I can only say that it's one of the three co-primary endpoints. We don't need the survival data for a regulatory path. PFS by itself is a registrational endpoint, and survival data as I think is known for many other trials in melanoma, lags significantly behind, which of course is a good thing for patients. They're living a lot longer than they live without disease progression. So that's something we'll give, let's say, updates on in the future, but not at this time.
spk08: Thank you. Our next question comes from Greg Harrison from Bank of America. Your line is open.
spk05: Hey, good afternoon, and thanks for taking the question. If the melanoma data are positive, but either maybe inline or just not clearly superior to ipinivo and Checkmate 67, how would this change your path forward for commercialization? In other words, are there other aspects of BEMPEG that you would expect to be differentiated and help you gain some share there?
spk01: Thanks, Craig. I'm going to ask Dimitri to take that one as well.
spk00: Thanks, Dimitri. Thank you for the question. I think it's complicated. I've said a few times in earlier calls before, the median PFS, of course, is one of many things to look at. I think the hazard ratio is one thing to look at. If we would assume your question about being similar hazard ratios, then there's a lot of other, let's say, differentiating elements in our clinical trial that we can read out and we can emphasize for the patient's value One thing, as we've shown in the PIVOT-02 data, is our very impressive CR rate. That's something that obviously is, let's say, an early readout for potentially long-term benefit. And the CR rate, of course, provides benefit to a substantial number of patients, but perhaps not half the patients. So it might not capture the median PFS, but it might capture a very significant minority of patients. who has very long-term benefits. So that's one important differentiator that we will be looking at. And based on the safety data we have presented, that's another what we think is potentially very strong differentiator, specifically for ipinivo with an over 50% grade 3, 4 AE rate.
spk08: Thank you. Our next question comes from Bert Haslett from BTIG. Your line is open.
spk14: Thanks, and thanks for taking the question, and thanks for the additional detail on the milestones upcoming. Just two quick ones I'm going to slide in. First, could you remind us again of any differences or similarities in patient population enrolled between Phase II and Phase III in the first-line metastatic melanoma studies? And then secondly, unfortunately, there is a war on, as we know, The sanctions have been mostly financial against the Russian Federation, but not all of them. You have some centers there. Do you foresee any challenges in accessing any of the data for any of your trials upcoming? Thanks.
spk01: So I'm going to start with the first part of that question for Dmitry related to the patients involved in the Phase III versus the Phase II. And the second part of the study I'll ask Howard to comment on with respect to the evolving situation in Ukraine.
spk00: Sure, thank you for the question. So until we have a full publication of our data set, the exact patient characteristics will not be known or disclosed. So the percentage of patients with certain characteristics, we can't comment on right now. As you know, it's a blinded trial. Overall, the inclusion criteria are very similar, and we've made sure that we have, let's say, a good representation of the different risk factors And also, as we have talked about before, we stratify for a number of important risk factors to make sure that the patients with the different risk factors are distributed equally between the two arms. So we're confident that the phase three trial, which is a global phase three trial, will capture, let's say, the broad array of different prognostic and predictive factors for patients with metastatic melanoma.
spk01: Thank you, Dimitri. Howard, do you want to talk about the evolving situation in Ukraine? Sure.
spk15: Yeah, of course. Look, obviously the whole situation is devastating to watch, and our hearts go out to the Ukrainian people, and it's very difficult to watch what's going on. I think we would all agree. I can tell you that Nectar does not have any vendors, testing labs, raw material supply chain, or clinical sites in the Ukraine. So none of these studies were conducted there. We've looked at this very carefully, of course, and it's an excellent question, but we don't anticipate any risk to database locks, any plans to analyze top-line data, or any planned study results for BEMPEG as a result of what's going on in the Ukraine-Russian conflict. And we don't see any filing risks either at this point. We're obviously going to continue to monitor this situation. We will determine if there is any problem. But at this point, there doesn't appear to be anything that puts these trials or the database locks at risk. And, again, we have no sites in the Ukraine at all. I hope that answers it for you.
spk08: Thank you. Our next question comes from Mara Goldstein from Mizuho. Your line is open.
spk07: Oh, great. Thanks for taking the question. I wanted to ask about 358 and the decision to opt in, and what are the sort of potential timing and gating factors for that, and would it be, is the timeframe consistent with this year where you're expecting clinical data from, you know, potentially registrational studies?
spk01: Thank you, Mara. I'm going to ask Gil to take that question. Gil?
spk03: Yeah, Mara, so the way our collaboration is structured with Lilly, when they make the determination to go in phase three, we have a certain amount of time to elect to co-develop and co-fund the phase three program up to 25%. And that entitles us to the highest tier of royalties, which as Howard mentioned earlier, is in the mid teens to low 20s, very quickly into the low 20s. And while we haven't crossed that bridge yet, I can say as we look out and we look at the size of these indications, And we look at the results that we've seen already for Nectar 358, which are extraordinarily encouraging. You know, we would expect to fund our portion to get the maximum royalties. But, of course, we'll have to make the decision at that time or when Lilly begins to take different indications into Phase 3 based on the Phase 2 data.
spk08: Thank you. Our next question comes from Andy Shea from William Blair. Your line is open.
spk04: Great. Thanks for taking my question. So I have a question for Dimitri. Dimitri, you mentioned the RCC trial in the second quarter that could potentially undergo this resizing based on the recommendation of DSMB. I'm curious about how that decision will be made. Is that based on overall survival response rate? And also, are you looking at the entire population or specifically just in the intermediate high-risk population? The second part of my question is also kind of related to RCC. You mentioned about the 250 triplet study. Is that ongoing? I'm just curious about the status of that trial. Thank you.
spk00: Sure. Thanks for the question. So to start with the second part, that's relatively easy. Yeah, that trial is ongoing. So that's on its way. We haven't given any guidance for data readout, but it's ongoing. The first part of your question, just to, let's say, emphasize for everyone, it's not a resizing of the trial. So it's not a sample size re-estimation. It's an event size re-estimation for OS events. And it's based on, let's say, modeling that has been provided to the DMC by our statistical group before the trial started to optimize the, let's say, event rate for survival in the intermediate and poor risk patients in the trial. I hope that answers the question.
spk08: Thank you. And I am showing no further questions from our phone line. I'd now like to turn the conference back over to Howard Robin for any closing remarks.
spk15: Well, thank you, everyone. Thank you for joining us today and When you consider the range of therapeutic areas where we are working and the sheer breadth of our pipeline, I'm really very proud of our company that's built such a strong and extensive clinical pipeline from a platform of immune science. And we have 17 clinical trials running in the area of immuno-oncology and immunology. And each of these programs we're pursuing, BEMPAG, NECRA 255, NECRA 358, represent on their own at a distinct value in our pipeline, and each addressed significant patient populations. Of course, we have additional research programs which we're preparing for the clinic in the areas of cancer and autoimmune disease. And remember something important about BEMPEG IL-2. IL-2 is a well-understood mechanism. And using our technology, and we invented a much better IL-2, And that's why we're looking forward to the BEMPEG melanoma results in the very near future. So we're certainly approaching a busy and exciting time for Nectar. I would like to thank our employees and their efforts and their hard work. And I want to thank our shareholders for their continued support. And we look forward to providing you with updates on our progress in the very near future. So please stay tuned. Thank you very much.
spk08: Thank you. This concludes today's conference call. Thank you for your participation, and you may now disconnect. Everyone, have a wonderful day.
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