Nektar Therapeutics

Good day, and thank you for standing by. Welcome to the Nectar Therapeutics Analyst and Investor 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 11 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 11 again. 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. Please go ahead.

Thank you, Crystal, and good afternoon, everyone. With us on the call are Howard Robin, our President and CEO, Jill Thompson, our CFO, Dr. Jonathan Zalewski, our Chief Research and Development Officer, Dr. Brian Codson, our Chief Medical Officer, and Mary Tagliaferri, our Chief Development Drug 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 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 our Form 10-K that was filed on November 4, 2022, 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 IR page of Nectar's website at Nectar.com. Please note that you will be able to advance the slides on the webcast today as the call proceeds. With that said, we'd like to hand the call over to our President and CEO, Howard Robin. Howard?

Thank you, Vivian, and good afternoon, everyone. Thank you for joining us to discuss the press release that we issued this afternoon on the top-line data for RESPEG Phase II study conducted by our partner, Eli Lilly, in patients with lupus. JZ will review more detailed data from the study in a moment, and although the primary endpoint was not met, the study did show that RESPEC demonstrated clinically meaningful activity as compared to PASLEBO, including for the primary endpoint metric of SLEDI. Importantly, we saw meaningful activity for all of the secondary clinical endpoints that were measured in the study, which included key endpoints that are used to measure disease activity in lupus patients. Most notably, The results for the very important secondary BCLA endpoint from this study were impressive and comparable to the results for the BCLA endpoints that supported the 2021 approval for Cefnello in lupus. Lupus has historically been a challenging area for development because of the use of differing composite endpoints and including a wide range of factors in a variable patient population. Because of this, there are agents that did not meet primary endpoints in Phase II that actually advanced to Phase III. And for example, Ben-Lista did not meet their endpoints in phase two, but did advance to multiple phase three studies and then was approved in 2011. Ben-Lista then became the standard of care and was the only approved agent for 10 years. Recently, DAPI-PEGOL did not meet its primary endpoint in phase two and was advanced into phase three studies. Cefnello also faced challenges in their development. The first phase three study of Cefnello was unsuccessful, and after it was unblinded, The primary endpoint was changed to BICLA in the second Phase III study. Ultimately, the agent was approved on data from two Phase III studies with successful BICLA outcomes and differing activity on the SRI-4 outcomes between the studies. I think the most important takeaway from this Phase II study is that RESPEG as a single agent clearly showed clinical activity in a difficult-to-treat patient population across many measurements. This is quite unique in lupus. Before Jay Z reviews the actual data detail, as you saw in the press release, Lilly has already informed us they do not plan to move RESPEG into Phase III in lupus. We believe the data supporting advancing into Phase III, and our belief is based upon the totality of the data, contemporary regulatory approvals, and the current developments in this field. Lilly told us that their decision on advancement to Phase III in lupus is based upon their need for the study to have reached very high bars in this phase two study for both SRI-4 and for BCLA in the modified intent to treat population. While the study did achieve the high bar for BCLA, it did not for SRI-4. The short of it is that we're extremely disappointed in Lilly's decision. Lilly has informed us they are now evaluating moving forward in ectopic dermatitis and other indications in the context of the data from this study. They have also told us that each disease state being studied evaluates different clinical hypotheses. RESPEG has shown promising efficacy in a Phase Ib study as a single agent in ectopic dermatitis, including a long durability of effects in patients. We also now have good evidence of clinical activity for RESPEG as a single agent from the lupus study. We strongly believe that RESPEG should be advanced quickly in ectopic dermatitis and potentially other indications. If Lilly chooses not to move forward, we'd be very happy to take ownership of ResPeg back from Lilly. In my experience, this program could be very interesting to other companies focused on the area of immunology. In 2021, biologic sales for ectopic dermatitis were close to $5 billion and sales continue to grow. We believe that based upon the growth of biologic usage in ectopic dermatitis, ResPeg, as a novel Treg mechanism, could provide benefit in multiple patient populations, including biologic experienced patients. We ended 2022 with cash and investments of $505 million as compared to our prior guidance of ending 2022 with $440 to $450 million of cash and investments. We remain committed to ensuring that our existing cash provides Nectar with a runway sufficient to advance our current pipeline to value enhancing milestones for the next several years through at least the middle of 2025. As you know, Nectar was entitled to phase three milestones associated with the lupus study over the next couple of years. Consequently, we plan to make additional changes at Nectar to significantly reduce operating costs. While this is a tough decision and very disappointing, it is absolutely the right one to make at this time. And we will be moving forward quickly with these changes in the next several weeks. And with that, I'll ask Jay-Z to review the phase two data in more detail. Jay-Z?