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?

If you could please advance to slide three. Thank you, Howard. As Vivian mentioned earlier, and I'd like to just remind everyone, our chief medical officer, Dr. Brian Kotzen, is on the call today. However, Brian is under the weather, and as such, I will be making the data presentation today. and Brian will be available and answer questions in the Q&A session. So I'd first like to review the study design for the phase two study of RESPEG in lupus. 291 patients were randomized to one of three dose levels of RESPEG versus placebo and received 24 weeks of treatment. Patients also had to have active lupus that was not adequately treated by standard of care They had to have serologically positive disease as well as active arthritis and or rash be eligible for the study. We studied three dose levels of RESPEC, 300 micrograms, 900 micrograms, or 1,800 micrograms. Each arm had a target enrollment of 70 and was compared to the placebo arm in separate analyses. The study was powered for statistical significance on the primary endpoint only. RESPEG was administered once every two weeks for a 24-week treatment period. The primary endpoint of the study was the percentage of the patients who achieved a four-point or greater reduction in their SLDI2K index score for the modified intent-to-treat population. The study looked at a number of secondary clinical and exploratory endpoints, including SRI-4, BCLA, LLDA-S, as well as other measures such as Class E50. And today, I will be walking you through the top line results from this phase two study, including the safety and efficacy data. Slide four. As Howard stated, Lilly has told us They do not plan to advance to phase three. On this slide, we are showing the criteria that Lilly used to make that decision. The primary endpoint of SLEDI2K was not chosen as a critical success factor. It's important to note that this endpoint has not been used as a basis for approval of other drugs of lupus. The SRI-4 and BCLA endpoints have been used for approval in this disease area. And each dose level's efficacy was considered independently, and as I stated earlier, the study was not statistically powered for these secondary endpoints. You can see the low range here for SRI-4 was 17% to 22%, and the low range for BCLA was 10% to 16%. Greater than 22% for SRI-4 and greater than 16% for BCLA were considered the high threshold for these success factors. On the right-hand of the slide, as a frame of reference, you can see the placebo-adjusted rates for SRI-4 and BCLA for the two approved standard-of-care agents in lupus today, Benlista and Safnello, also known as Belimumab and Anafrolimab. The success criteria for advancing to Phase III required reaching these ranges from both endpoints. And these ranges were chosen based upon Lilly's experience and development with other agents and lupus in their pipeline. Slide five. This slide outlines the definition of the endpoints, including the ones I just mentioned, that were used in this phase two study. These are relatively standard and recent contemporary studies being conducted in lupus patients. I'm not going to touch on all of these, but each instrument uses different measures to score the disease in lupus patients. Next slide. The Phase II protocol included several patient populations which were predefined for analysis. These included the modified intent to treat and per-protocol populations. The modified intent to treat included patients who received at least one dose of study medications. The per-protocol population was a pre-specified subset of patients in the MITT, which excluded patients that experienced an important protocol deviation that could compromise efficacy results. These protocol deviations were prospectively defined in the protocol. Also, within both of these patient subsets, there was a BCLA-evaluable population. This is a subset of the MITT population and per-protocol that includes only patients that have active bilag scores of at least one A category and or two B categories at baseline.

Slide seven.

Here is a breakdown of these study populations. I will note that there is roughly a 24% reduction in the per protocol population from the MITT. The second I want to point out The BCLA evaluable population was approximately 80% of the MITT population. Slide 8. Shown here are the baseline demographics for the patient populations enrolled in this study. And these demographics look quite comparable to other studies in this space. Slide 9 shows the country enrollment and the breakdown of the patients enrolled in this global study. The top five enrolling countries were Argentina, the U.S., India, the Ukraine, and Mexico. Slide 10 shows the baseline disease characteristics for the study, and these are typical measurements of disease patients in lupus. And you can see the different baseline disease characteristics across the different dose levels as well as the placebo group in this study. Slide 11. So first, I will review some safety results. Here is the breakdown of treatment discontinuations that occurred in each dose arm. Of note, the highest number of discontinuations occurred in the 1800 or high dose arm. And you will see in a moment that this dose level was less well-tolerated and associated with more adverse events. Next slide, please. And continuing with safety, this slide shows the treatment emergent adverse events reported in at least 5% of the patients in the safety population. In general, we saw a dose-dependent increase in adverse events, and the most common AEs for drug-related were fever, fatigue, and injection site reactions, also known as ISRs. There was one death attributed to COVID-19, and this was not related to study medication. The protocol also included a thorough independent ISR assessment. The outcome of this assessment showed ISRs were dose-dependent and were highest following the first dose in the study and then declined over the 24-week treatment period. The majority of ISRs were mild, and six patients randomized to the high dose level discontinued due to an ISR. Next slide. With respect to the pharmacokinetic and pharmacodynamic measurements, these were very consistent with what we observed in our prior clinical studies. The pharmacokinetic and pharmacodynamic results obtained in this study in lupus patients clearly demonstrated target engagement and the mechanism of action of RESPEC to increase the numbers and reduce the activation of regulatory T cells. The pharmacokinetic profile across the doses was dose proportional, and activated regulatory T cell increases were also dose dependent. There were no changes to CD4 and CD8 T cells, and there were also NK cell increases that also were consistent with those observed in prior studies. Next slide, slide 14. Now, shifting over to the primary endpoint of the study. Shown here are the data at all doses for the SLEDI2K endpoint in the modified intent to treat and the per-protocol study population. The primary endpoint of SLEDI2K was the percent of patients that achieved a four-point or greater reduction in their SLEDI scores in the MITT population. The primary endpoint was not met in the study. As you can see, the 900, or the middle dose, had the most significant delta over placebo as compared to the other dose levels studied. This placebo-adjusted delta was 8.8% for the MITT population with a p-value of 0.309 and 13.9% for the per-protocol population with a p-value of 0.06. As you can see, the efficacy at the 1800 dose level was lower than that observed for the 900 dose level. Nectar's hypothesis is that the level of treatment discontinuations and the overall tolerability observed at this dose level impacted the efficacy of this dose level in patients with moderate to severe lupus.

Next slide, slide 15.

Shown here are the data for the BCLA evaluable patients. We were quite pleased to see, as I mentioned earlier, that the 900 dose level achieved a delta of 16.4% and 19.1% for the MITT population and the per protocol population, respectively. And as Howard mentioned earlier, this result met the high threshold level for the success criteria set on the BCLA secondary endpoint for this study. The next slide, slide 16, shows shifting over for the results for the SRI-4 secondary endpoint. This slide presents the results for this measurement across all of the dose levels. At the middle dose level, 900, we observed a placebo-adjusted SRI-4 response rate of 8.9% and 14.9% for the MITT and the per-protocol population, respectively. Next slide, slide 17. So as we mentioned earlier, Lilly has told us they do not plan to advance to Phase III. Now, while each dose level is considered independently, the criteria for Phase III decision-making required reaching the success threshold on both the SRI-4 and the BCLA endpoints. While we did meet the high threshold for BCLA at the middle or 900 dose level, we did not meet that endpoint on SRI-4. Next slide. Moving on to the final secondary endpoint for the study, here are the results for the three dose levels for the LL-DAS endpoint at week 24. This is a rigorous endpoint that requires the patient achieve a substantial reduction in disease in order to achieve the low disease activity state, which is defined by this instrument. The 900 dose level showed placebo-adjusted deltas of 12.2% and 15.1% for the MITT and the per-protocol populations, respectively. Next slide. To give some final perspective, shown here are a range of placebo-adjusted measurements for the 900 dose level, including the endpoints I just shared. We observed an improvement in responses in various components of the BILAG and SLEDI scoring systems, including those which measure elements of joint and skin involvement. Also shown on this graph is the placebo-adjusted class E50 response. In this class E50 measurement, includes only patients who had a baseline score of 10 or higher and experienced at least a 50% reduction in their score. The totality of these data demonstrate a positive impact of RESPAG on multiple measures of disease activity. So in conclusion, we have learned a lot from this study about the profile of RESPAG in patients with moderate to severe lupus. Firstly, at the 900 dose, The placebo-adjusted responder rate for BCLA is a similar rate to other agents that have advanced to phase three registrational studies, including belimumab and anaphylumab. Combined with the other supportive evidence, we believe RESPEC has demonstrated activity in lupus. We are eager to determine the path forward to advance RESPEC in the clinic in atopic dermatitis and in other autoimmune diseases. And with that, I'll now open up the call for questions. Operator.

Thank you. As a reminder, to ask a question, please press star 11 on your touchtone telephone. If you would like to remove yourself from the queue, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question will come from Mara Goldstein from Mizuho. Your line is open.

Hi, this is support for Mara. I have a quick question on the data on slide 10. I know the SLEDI mean score seems roughly similar across different dose groups, but it seems like the 900 MCG seems to have a little bit higher percentage of the SLEDI 2K less than 10. I'm just curious if that means anything.

Yeah, thank you for the question. Yeah, that's a very good observation. We did look at all these parameters as well as this particular parameter, which was one of the stratification rules for the study. We did note some small differences between some of the dose levels, and you can see that a little bit for the 900. You can also see that a little bit in the other direction for the placebo. So it's a good observation, and we'll continue, you know, evaluating this data along with our partner, Lilly, to determine any of those kind of elements that could have an impact on the results.

Got it. And let me screen in one more question. So when do you expect a clarity from Lilly whether, you know, what's their opinions on the other programs? And if you were to take the loop of trial forward through other means, what would you adjust, you know, in a phase three study? Thank you.

Yeah, hi, this is Howard. Well, look, we're having discussions with Lilly about how to proceed forward in other indications. They have said they do not plan to move forward in lupus. And like I said, I think that's very disappointing, but that's their decision. We are having discussions with them regarding how we move forward in ectopic dermatitis and other indications. And I don't think we will be seeing lupus move forward at this point. So we will, of course, let everybody know how we intend to proceed with ectopic dermatitis.

Thanks, Howard. And your other question actually had a lot to do with what we learned from this study and how you would use this information with future development plans, particularly in this indication. And I'll open and then turn over to Brian to add more color. But I could definitely tell you that this study, as I just mentioned, really taught us a lot. about the activity of RESPEG in patients with moderate to severe lupus. And we learned information about the dose levels that we studied. We learned the relationship between activity. We also learned a lot about the endpoints, including the most contemporary endpoints used for the most recent approvals. And I think with that preamble, Brian, maybe if you could add color on how you would use that information for next steps in lupus.

So, hi. If if we were to proceed to the next study in lupus, we first need to understand the dose, you know, and the optimal dose and the fact that we experience these systemic tolerability issues at the highest dose. And I think that's the most important thing that we need to understand better to move this forward. you know, the 900 dose showed clear evidence of efficacy. We think that it's in terms of adverse events and systemic toxicity at the 900 dose, we believe that it's definitely tolerable and the benefit risk is is appropriate at that dose level. But I do think that we need to best understand why we have a bell-shaped curve here. And I think that would be most important in terms of moving forward to the next step. Thank you.

Got it.

Thank you so much for taking our questions.

Yeah, let me, I just want to add to what Brian said. The purpose of a phase two study is to inform phase three and to give you an understanding of how you move forward into phase three. Clearly, the drug was active in lupus. As Brian and Jay-Z said, there's a lot to be learned and a lot that could be used in designing an appropriate phase three study, although we won't be doing that. Lily is not moving it forward in phase three, and nectar is not going to be moving it forward in phase three either at this point. So we have to focus on the resources we have, and we have to focus on the best prospects we have and the best development of our pipeline. And I don't believe we'll be moving forward in lupus. That said, it's very disappointing because there's, as was clearly elucidated, there's a lot of information that was learned from this phase two study that could have easily informed the successful phase three study. And I think there's a real great opportunity. We're very sorry about the technical difficulty we just experienced. We had a the system dropped offline. So if anybody would like to continue with questions, that would be great.

Thank you. One moment for our next question, please. Our next question will come from Roger Song from Jefferies. Your line is open. Great.

Thanks for taking the question. Understanding you're probably not going to move the RUPES interface by ourselves or the partner, but just in terms of the discussion with Eli Lilly, How does this data will reach through to the AD, the criteria to move forward? Do they change the, you know, the hurdle to move forward or any kind of facts going to impact the design of the Phase II or the potential kind of outcome from Phase II? Thank you.

Yeah. Thanks, Roger. This is Jay Z. Yeah, so one of the things that we've been very, very clear of and highly aligned with Lilly is that the different indications, they really represent different kinds of disease states and immunological states, right? So in a condition like atopic dermatitis, patients have atopy, and it's atopy of their dermis, right? So it's a skin-focused anatomical disease. In a disease like lupus, you have a systemic inflammation. and you have a clear overall inflammatory response. And in other indications like psoriasis, where we also saw activity, you have a dermal disease. And even in ulcerative colitis, which was the study that we were running, you have a mucosal inflammatory disease. We fully understand and expect that there are differences underlying the kind of immune dysfunction in these patients that have diseases in those anatomic regions, and also the effect of Tregs at helping to control those. So what we learned in this study is definitely we learned that we had a dose response in patients with lupus across the first two dose levels. It flattened at the higher dose. And we also saw quite a lot of activity, as we've been discussing on the call, particularly at that middle dose level where we saw the Bickler response and others. So when we think about atopic dermatitis, which is the next phase two study, we already have proof of concept in our phase one B trial that Eli Lilly ran. where we saw activity that was right in the range of Dupixen, and also we saw a durability of response in that patient population. And so definitely learnings from this study will help to inform elements of the design of that study. And we're working with Lilly and very actively discussing that indication, that study. the next steps for that study, both in terms of any kind of modifications to a design that we've already agreed upon, as well as its conduct.

Great. Thank you.

Thank you.

One moment for our next question. Our next question comes from Kang Li from OPCWCO. Your line is open.

Hi, this is Chen on the line for Jay. Thanks for taking the question. Maybe a couple from us. First, maybe just a follow-up question from the previous one. Just wondering if you see any differences in activity, maybe in different patient subgroups. For example, maybe for patients with cell that 2K score over 10 versus less than 10. And maybe a second one is the biomarker, especially for T-reg and So do you see the highest level of TREC expansion in the 900-dose cohort? And also, what is the meaningfulness to see the NK cell expansion in this context, especially with the highest group? Thank you.

Sure. So I'll answer your second question first, but then I think I might need to ask you to repeat your first question afterwards because I wasn't sure I caught it. But let me answer the second question first. So you had a question about the pharmacodynamic response for both Tregs as well as other measures. So we saw a dose-dependent increase in regulatory T cell elevations, and the level and magnitude of those changes were very, very similar to what we've seen in all of the other studies of RESPEC, which included even the healthy volunteer studies that we ran the lupus study that we ran, as well as the dermatology studies that Eli Lilly ran. So those were dose proportional. The magnitude and the duration and range of increase were also very consistent across the studies. And that was also very important because this study had a six-month treatment duration, which is longer than the 12-week treatment duration, which in our derm studies prior to this study was the longest duration, 12 weeks, as opposed to this one, which was 24 weeks. Now, we also saw no change in traditional conventional CD4 and CD8 T cells, which is right online with the mechanism of the drug. And also, we saw dose-dependent increases in NK cells. We've seen those, you know, from the beginning of the program, again, from the single ascending dose studies through all of the other studies. You know, they're an observation. I mean, we did note that in lupus patients, the higher dose level had a different tolerability. That's something that we learned in this study. That's not something that we saw in other studies at the same high level of RESPEC treatment. What the underlying reasons for that are, we'd still have to understand. But right now, based on the fact that we've seen the same kind of cellular elevations, including NK cells, across all the different studies, we don't think that was the reason for the different tolerability profiles. think more likely due to the underlying disease and inflammation that patients with moderate to severe lupus have relative to other patients and other diseases. Now, do you mind repeating your first question?

Yes, sure. Thanks for the color. The first question is more on the EPC activity or different level of activity in patients with different baseline character. For example, for patients without that 2K score over 10 versus those less than 10? Do you see, like, differences in activity?

Yeah, so I think that, you know, that's a good question. And you're asking a question, again, about the kind of potential imbalance in those groups, you know, between both the placebo and the RESPEG and the distribution of patients at the less than 10 and greater than 10. Those kind of analyses, along with subgroups and other stratification factors, are all still ongoing. But that's a good question you had and a good observation.

So if I could add, you know, we just haven't had, I think what you'd like to hear is, you know, an analysis of the different subgroups and how the different subgroups responded to, you know, therapy. And we just, we've only had these data for a few days. And it's going to take some time to analyze different subgroups, for example, different disease activity and how that related to responses. So, but we're definitely interested to do that.

Okay, thank you. Thanks again.

Thank you. And as a reminder, to ask a question, please press star 11. And our next question. We'll come from Greg Harrison from Bank of America. Your line is open.

Hi there. This is Mary Keaton for Greg. Thanks for taking our question. I guess, could you add any additional color to the adverse events and discontinuation scene? And then maybe, do you think this could potentially read through into other indications, such as atopic derm? Thank you.

Yeah, certainly. So the treatment discontinuations that we saw in the study. They were dose dependent, as we presented on slide 11. And at the high dose level, they were much higher than what we've seen in any other study. And then when we overall looked at the reasons of discontinuation being attributed to drug, which we showed on slide 12, they were lower than the overall discontinuation rate for sure. The tolerability profile, particularly at the higher dose level, demonstrated more systemic toxicity. And you saw that we presented data for fever, for pyrexia, for elevations in fatigue and injection site reaction. And they were really most pronounced at the highest dose level. Now, in our experience studying RESPEG multiple dose levels across all the other studies, including atopic dermatitis, where we studied RESPEG for 12 weeks in patients with atopic dermatitis, we really didn't see that kind of level of systemic toxicities, particularly the level of systemic toxicities we observed at the highest dose level. Now, I do want to point out that the majority of these were mild to moderate, even at the highest dose level. And as I mentioned, the rate of discontinuation due to drug treatment was lower, still lower than the overall tolerability profile. So that establishes what we learned in this study. And then to your second question about read-through to other indications, I mean, really all of these conditions are different. And the indication of atopic dermatitis, the indication of, say, psoriasis, say, lupus, these are different underlying immune conditions. When we looked at our data, even in comparison to other agents that are also being studied in lupus, we saw very similar rates of discontinuation as well as adverse events, even at the higher dose level and that same level of comparability. So while we have learned from this study, you know, we would take the learnings, you know, in context of the indication that they were studied in, and we don't think it has a negative read-through on studying the drug and other indications such as atopic dermatitis.

Great.

Thank you so much.

Thank you. One moment for our next question.

And our next question will come from Benjamin Burnett from CIFL. Your line is open.

Good afternoon. This is Neil Carnahan on for Ben. On tolerability, how early on did discontinuation generally occur? Did you see any trends across the doses? And then was there anything in the tolerability profile That will give you learnings that you can incorporate into the DOES schema for the atopic derm study. Thank you.

Sure. Yeah, so you're asking about the timing of discontinuations, like did they all happen at the beginning, for example. And so we did have an opportunity to look at that, and the discontinuations were pretty consistent throughout the duration of the study. They didn't all just happen at once. They kind of happened throughout. And there was no dose dependency to those, only the frequency. But the timing of them was pretty consistent throughout the 24-week period. And then your next question was about the read-through of this profile. Like I just described, all of these indications are different. We even know of many instances where different dose levels of drug are used in different indications as well. Clearly, in patients with moderate to severe lupus, the 900 dose level is the most appropriate dose level to study in these patients. In other indications, there will be other dose levels that we can study. And as I mentioned earlier, with the underlying differences in the immune system between these patients, what we've learned about the study from RESPEG is something that we can learn and advance from. But it doesn't have a negative or other kind of connotation toward studying the drug, another indication. And we have the opportunity to evaluate all of these dose levels, as well as the dose levels that we previously studied in these same indications. And the last thing that I'd like to reiterate, which is that when you compare the tolerability rate of RESPEC at the 900 dose level, this AE rate is highly comparable for overall as well as discontinuations compared to other agents that are studied in the same patient population. including drugs that have been studied in Phase 2 and advanced to Phase 3.

Great. Thank you.

Thank you. And our last question comes from Dana Graybosh from SVB Securities. Your line is open.

Hi. Thank you. Two questions for me. One, I wonder if you have any hypotheses mechanistically why you may have seen a better difference to placebo on Blis-Bicla versus the other scores? And then the second question, I think somebody asked you early, very first. I want to ask again, because I'm not sure I fully understood your answer. And that is, you seem in the 900 microgram dose on every endpoint to have a pretty high placebo effect. And I wonder whether you have any hypotheses for this relatively higher placebo effect and if that could be whatever is driving that could be driving the bigger difference at 900 rather than 900 being the best dose. Thanks.

Sure. Okay. So, your first question, Dana, was about the different endpoints, say, SRI-4 or SLEDI relative to BICLUB. So, you know, these are different measurements, right? So, in the SRI, which primarily requires a four-pointer grader reduction in SLEDI, as well as the other composite parameters, is a very categorical endpoint, right? You basically score the presence or the absence of any of the disease manifestations over the last 30 days. And then depending on which particular manifestation you're scoring and it's weighting, you can achieve a four-point reduction essentially by binary presence or absence of any of those manifestations. Now, in contrast, BCLA is a categorical endpoint. that actually has, it scores the disease with more dimension than just presence or absence, right? So as you know, a category A by lag is a physician's assessment of requiring a high dose of drug intervention for the patient. And a category B requires a kind of a lower level drug intervention. Category C is mild and category D is absent. And so to get a bilag improvement response, you have to drive category A's down to C and B's down to C. So basically driving active disease to mild or all the way to absent actually scores you as an improvement. So we think that one of the differences between these two measurements, and clearly what we learned about RASPEG and maybe also the T-RAG mechanism, is that the BICLA endpoint may be more sensitive. than the SRI or SLEDI endpoints, especially at this week 24 time point, where this is a six-month duration study. So we think it's really some of the differences between these instruments, and particularly the ability to get a BILAG improvement as opposed to a categorical response in the SLEDI. And that's something that we're evaluating as we'll be diving deeper and deeper into the data and the different components of the different instruments on the efficacy. Now, in regards to your other question, I mean, we looked at the placebo response rate, which ranges between 30% and 35%, you know, around BCLA, LEAD-I, or SRI-4. I mean, we do note that this placebo rate is a little bit lower than other studies. That is true. But, I mean, it doesn't really seem that different to us compared to what we've seen for other contemporary published studies. And we even looked at both the MITT and the protocol, right, and compared the two to each other, you know, in order to just, you know, for the sake of completeness to make sure that we're not missing anything. So it seems like the placebo rate is pretty reasonable. Am I understanding your question?

Well, I guess it just looks in these charts like the 900 is a higher placebo than the other doses. It's 30%.

The placebo is on the left. Yeah, the placebo is on the far left.

Got it.

Yeah, see the placebo for the MITT and the PROTOCOL.

Oh, I understand. I understand. I misread the chart, so thank you for that clarification. I see. So then one more question is you mentioned a 24-week readout. Did you take readouts of all these endpoints at earlier time points, and was that consistent with the final readout?

That's a really great question. So actually, yeah, we looked at the separation with time. And some of these endpoints, particularly BCLA and LLDAs, they separate from placebo at a very early time point. That was a very, very dramatic and very fast response that you could see from the time dependence of the data.

That's great. Thank you.

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

Thank you. I want to thank everyone for joining us today. I think the most important takeaway from this Phase II study in lupus is that Red Spag as a single agent clearly showed important clinical activity and a difficult-to-treat patient population across many measurements. and the Phase II study results could have informed a well-designed Phase III study in lupus. So while we're very disappointed in Lilly's decision not to proceed in lupus, as I said earlier, RESPEG has shown promising efficacy in ectopic dermatitis, and we strongly believe that RESPEG should be advanced quickly in ectopic dermatitis and potentially other indications. Lastly, I want to thank the Nectar Research Team, who's worked diligently in inventing a novel and active therapeutic candidate that could potentially help lupus patients with this very devastating disease. Thank you everyone for joining us today.

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.