Nektar Therapeutics

powerful translation of the scientific discoveries that led to an understanding of the importance of Tregs and to the first demonstration of their clear clinical efficacy in autoimmune disease. The Nobel Prize in Physiology or Medicine was recently awarded for these discoveries that established FOXP3 positive Tregs as key enforcers of immune tolerance. We're very humbled that the Nobel Committee included the publication of the Phase 1b data for RESPEG in ectopic dermatitis and psoriasis as support in the background documents for this award. The recognition of RESPEG was truly an honor and speaks to the journey that our nectar scientists and clinicians have traveled over the years to turn important scientific discoveries into real potential medicines for patients. Our approach with RESPEG and stimulation of Tregs is highly differentiated in the field. We believe this is why we've been able to uniquely generate meaningful and robust clinical data that clearly support continued development of this novel modality. Respeg was designed to closely mimic the way Tregs in our own immune system work to resolve inflammation. Its construct gets closest to emulating natural human biology, achieving this through IL-2 agonism, with native sequence IL-2 receptor interactions and a validated chemistry approach, PEGylation, that has led to over two dozen approved biologics. At the 2025 EADV Congress in September, we presented compelling results from the 16-week induction period of the 400-patient resolved AD study of RESPEG in moderate to severe ectopic dermatitis. These data showcased the clinical differentiation that could be achieved with this novel MOA, and Jay-Z will touch on this later in the call. And this weekend, at the 2025 American College of Allergy, Asthma, and Immunology Annual Scientific Meeting, we will present data from a pre-planned analysis of ectopic dermatitis patients from the RESOLVE-AD study who also had a history of asthma. These data provide further basis for differentiation of RESPEC. Recently approved and in development IL-13 selective pathway blockers and OX40 pathway blockers have shown limited potential to help the asthma symptoms in patients with both ectopic dermatitis and asthma, which is a comorbidity in 25% of all ectopic dermatitis patients. And so we're very excited about these new data. In Q1, we will present 52-week maintenance and escape arm data from the RESOLVE-AD study in ectopic dermatitis. The maintenance arm data in particular will be an important look at continued treatment with RESPEG in patients who have established an easy 50 response at the end of 16 weeks of induction treatment. There remains a need for novel mechanisms beyond those available currently in the treatment landscape for ectopic dermatitis patients. In the U.S., there are over 15 million people with moderate to severe ectopic dermatitis, and fewer than 10% are receiving biologic treatments for this chronic skin disorder, with many patients not responding well to the existing agents. We believe that this market will grow with the adoption of novel mechanisms, as was seen with the induction of new mechanisms in the evolution of the psoriasis market. We expect to hold an end-of-Phase II meeting with the FDA before the end of this year to review our Phase III plans for RESPEG in moderate to severe ectopic dermatitis. Importantly, in December, we plan to present the top-line results from the Phase IIb Resolve AA study in patients with alopecia areata. This study enrolled approximately 90 patients with severe to very severe ectopic alopecia areata, With strong phase two results in the dermatological setting of ectopic dermatitis, we're optimistic about the second dermatological setting for RESPEG. Nearly 7 million people in the U.S. have or will develop alopecia areata, and over a million of these patients have severe to very severe disease, according to the 2023 population-based cohort study. Patients with severe to very severe disease alopecia have limited treatment options. The only FDA-approved systemic treatments for alopecia areata are JAK inhibitors, which carry multiple well-known black box warnings and are associated with high relapse rates upon discontinuation. In a 2024 survey of 131 US-based board-certified dermatologists, a majority of physicians said they were uncomfortable prescribing a JAK inhibitor And more than half of these physicians reported they would try alternative therapies prior to prescribing a JAK inhibitor. With this backdrop, RESPEG could be introduced as the first biologic in the setting of alopecia areata, representing an additional billion-dollar market opportunity. And so we look forward to these upcoming results from the 36-week treatment period of the RESOLVE-AA study expected in December of this year. In immunology, our partner TrialNet recently initiated the phase two study of RESPEG in type one diabetes. This study, which is funded and sponsored by TrialNet, will evaluate RESPEG in new onset stage three type one diabetes patients. Jay-Z will update you on our other programs as well as our lead pipeline antibody, a TNFR2 agonist that has a unique tissue-specific Treg and Breg stimulator profile. Because of its monomeric activity, we're now building a bispecific program based upon this mechanism, which combines it with validated antibody targets in immunology. Our goal is to advance one of these antibody programs into the clinic next year. And with that, I'd like to turn the call over to Jay Z to review more details on RESPEC's ongoing Phase IIb studies and our early pipeline programs.

Jay Z. Jay Z. Thanks, Howard. And thank you, everyone, on the call for joining us today. To begin, I'll remind you that earlier this year, the Resolve AD Phase IIb results demonstrated the promise of Nectar's novel approach to the IL-2 pathway. The global study randomized 393 patients with moderate to severe atopic dermatitis to receive subcutaneous treatment with three doses of Respec, a high dose of 24 microgram per kilogram every two weeks, a middle dose of 18 microgram per kilogram every two weeks, and a low dose of 24 microgram per kilogram every four weeks, or placebo every two weeks, for an induction period of 16 weeks. Following week 16, RESPEC-treated patients who achieved easy reductions of 50% or greater were re-randomized to continue at the same dose level on a Q4 week or Q12 week regimen for an additional 36-week maintenance period. In our June data disclosure, we reported that the study achieved statistical significance on the primary endpoint at week 16 for mean percent change in EZ score from baseline for all RESPEC arms versus placebo. And the study achieved statistical significance for key secondary endpoints at week 16 of disease reduction including EZ-75, EZ-90, HNRS, the VIGA-AD, and BSA. we have yet to see a plateau in the efficacy response in the RESPEG treatment arms. This study is currently ongoing with two additional upcoming data readouts that Howard mentioned. The first will be the 36-week maintenance study results, which compare treatment with RESPEG at either one-month or three-month dosing intervals out to a full year, which would be the intended maintenance-based dosing regimens following the 16-week induction period. And the second readout will be the one-year off-treatment data expected in the beginning of 2027, which will measure the potential remittive effect of RESPEC in atopic dermatitis. In the meantime, we continue to add to the compelling data set from the RESOLVE-AD study, including the data we shared from the escape arm of the trial at this year's EADV Congress. As a reminder, the study design allowed for patients who originally received placebo in the 16-week induction period and achieved less than easy 50 at week 16 to enter into an open-label treatment escape arm to receive the high-dose RESPEG regimen for a treatment period of up to 36 weeks. The data presented at EADV demonstrated a deepening of responses in these patients with continuous treatment with RESPEG and support a 24-week induction period for our Phase III program. As Howard stated earlier, we are presenting additional data in patients with asthma from ResolveAB in the late-breaking oral presentation at the ACAAI meeting being held in Orlando, Florida, this weekend. In addition to the asthma data that I'll discuss in a moment, that presentation will also give an update on the placebo crossover data We're now all but one patient have crossed 24 weeks of treatment with 24 microgram per kilogram RESPEG Q2 weeks. We will also cover additional endpoints such as EZ90 and itchNRS. In addition, the presentation will show a forest plot demonstrating the consistency of RESPEG efficacy across multiple subgroups. This important finding prepares us for phase three. Given that one in four patients with atopic dermatitis also have asthma, we designed the study in advance to evaluate its effect on symptoms of asthma using the validated five-point asthma control questionnaire, also known as the ACQ-5. These data include a pre-specified exploratory endpoint for the subset of patients in Resolve AD that also had asthma, including those with moderate and uncontrolled asthma. at baseline. The ability to improve comorbid conditions is a substantial factor in clinical treatment decisions for atopic dermatitis and could expand the potential market opportunity for RESPEC in this setting. We know that beyond dupixent, neither trelekinumab nor lebrekizumab has been able to show an improvement in asthma symptoms in patients with atopic dermatitis. And this extends to the OX40 programs and late-stage development as well. And now turning to alopecia areata, we are on track and look forward to reporting data from the Phase IIb study in December of this year. A positive outcome here would reinforce the potential of RESPEG to provide a completely new treatment paradigm for patients with chronic dermatological diseases. The RESOLVE AA trial was initiated in March 2024. A total of 94 patients with severe to very severe alopecia areata who have not received the JAK inhibitor or other biologic, were randomized to two different dose regimens of RESPEC, 24 microgram per kilogram every two weeks and 18 microgram per kilogram every two weeks, or placebo. Patients were recruited across approximately 30 sites globally, with two-thirds of patients enrolled in Europe and the rest from North America. As a reminder, patient eligibility for this study was determined using the SALT score, both screening and randomization. Patients who experienced an unstable course of alopecia areata over the last six months per investigator assessment were excluded from the study, and patients with diffuse alopecia and other forms of alopecia were also excluded. The primary efficacy endpoint of this study will evaluate mean percent change in the severity of alopecia tool or SALT score at the end of the 36-week induction period. Secondary endpoints include proportion of patients achieving SALT20 which is an absolute SALT score of less than or equal to 20, mean percent improvement in SALT score at other assessed time points, and proportion of participants with greater than or equal to 50% reduction in SALT score at week 36 and other assessed time points. Importantly, SALT 20, the responder analysis, is also the established regulatory endpoint for Phase III trials. As Howard mentioned, the only available systemic therapies that are FDA approved for the treatment of alopecia areata are JAK inhibitors, which contain a number of black box warnings, and many patients experience hair loss after treatment cessation. With the limited treatment options available in alopecia areata, we believe there's opportunity for a novel mechanism like RESPEC, especially when the therapeutic is shown to be safe and well-tolerated. When comparing the outcomes from Resolve AA to the approved JAKs, we see low-dose solumiant as the appropriate benchmark. In its two Phase III trials, the approved 2-mig dose of solumiant showed that 15% to 16% of patients achieved SALT20 on the placebo-adjusted basis at week 36, and the mean improvement in SALT scores from baseline was 24% to 26% on a placebo-adjusted basis. Note that the placebo response rate in these trials is relatively low at 3% to 5% for the SOLVE20 endpoint and 4% to 9% on the mean reduction endpoint. Because of our differentiated mechanism of action compared to the JAK inhibitors and our safety profile, we see a very clear market opportunity for RESPEG and alopecia areata if RESPEG achieves these benchmarks. We look forward to sharing the top-line data from the 36-week treatment period of the RESOLVE-AA study in December and defining the potential for RESPEC in this new indication. Similar to atopic dermatitis, with positive results from Phase 2b, we would move very quickly into Phase 3 preparations, taking advantage of our fast-track designation in the alopecia areata indication. A quick few words on type 1 diabetes another autoimmune disease where RESPEC has great potential as a T regulatory mechanism. We believe RESPEC can potentially slow the progressive loss of insulin-producing beta cells, which are the target of the patient's overactive immune cells in this disease. As Howard mentioned, TrialNet has initiated and is funding an investigator-sponsored Phase II clinical trial evaluating RESPEC in 66 patients with new-onset type 1 diabetes. Lastly, On our pipeline progression, NECTAR-0165, our TNFR2 agonist, remains on track. This molecule has very high specificity for signaling through TNFR2 on Tregs to enhance and optimize their ability to regulate the immune system. NECTAR-0165 has also shown that a strong signal can be generated through a single-arm monobalance antibody, making it a perfect candidate for inclusion in bispecific and trispecific constructs. is to advance one of these antibody programs into the clinic next year. We look forward to sharing more on these sophisticated antibody engineering programs in future earnings calls. And I'll now turn it over to Sandy for the financials. Sandy?

Thank you, Jay-Z, and good afternoon, everyone. On today's call, I'll briefly review our quarterly financials and share updates to our financial guidance for 2025. We ended the third quarter of 2025 with $270.2 million in cash and investments and with no debt on our balance sheet. As discussed in our Q2 earnings call, this end of third quarter cash balance includes the completion of the secondary public offering in July with net proceeds of approximately $107 million. It also includes additional net proceeds of $34.3 million we raised in September from our existing ATM facility. We now expect to end the year with approximately $240 million in cash and investments, up from our prior guidance of 100 to 185 million. This increased year-end guidance also includes $38.3 million of net proceeds from additional sales of our ATM facility in October. Based upon our higher year-end cash balance, we are extending our cash runway guidance into the second quarter of 2027. Now turning to the income statement. Our non-cash royalty revenue was $11.5 million for the third quarter of 2025. We still expect our non-cash royalty revenue to total approximately $40 million for the full year. Our R&D expense was $27.3 million for the third quarter of 2025, and we still anticipate full-year R&D expense to range between $125 and $130 million, including approximately $5 to $10 million of non-cash depreciation and stock-based compensation expense. Our G&A expense was $16.1 million for the third quarter. We still expect G&A for the full year of 2025 to be between 70 and 75 million, including approximately 5 to 10 million of non-cash depreciation and stock-based compensation expense. Non-cash interest expense for the third quarter was $6 million, and we still expect non-cash interest expense for the full year to total approximately $20 million. Our non-cash loss from equity method investment was half a million dollars in the third quarter of 2025, and we still expect non-cash loss of approximately $10 million for the full year 2025. As an equity investor in Gannett Biochem, we have no commitment to contribute cash to Gannett. Our net loss for the third quarter was $35.5 million, or $1.87, basic and diluted net loss per share. And as I stated earlier, we now expect to end the year with approximately $240 million in cash and investments, with our cash runway extending into the second quarter of 2027. Finally, as we head into our December data reporting, we intend to enter into a quiet period for the month of December until we report the top line results for the RESPEG alopecia study. And with that, we'll now open the call for questions. Operator?