Nektar Therapeutics (NASDAQ:NKTR) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call.

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Summary

Nektar Therapeutics initiated the global ZENITH-AD Phase 3 program for rezpegaldesleukin (Rezpeg) in atopic dermatitis and plans to start a Phase 3 study for alopecia areata in early 2027.

The company expects top-line data for atopic dermatitis in mid-2028, with a potential BLA submission in 2029, and aims for alopecia areata data by the second half of 2029.

Nektar ended Q2 2026 with over $1 billion in cash, projecting a year-end cash position of $815-840 million, supporting continued investment in key programs.

Market research indicates strong physician enthusiasm for Rezpeg's novel mechanism, particularly due to its safety profile and differentiated dosing regimen.

Nektar's financials show a Q2 net loss of $40.6 million, with full-year revenue expected to be $40-45 million, and R&D expenses projected at $210-230 million for 2026.

Full Transcript

Crystal, Operator

Hello and thank you for standing by. Welcome to the Nektar Therapeutics Second Quarter 2026 Financial Results conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Vivian Wu from Nektar Investor Relations to kick things off. Please go ahead.

Vivian Wu, Investor Relations

Thank you, Crystal, and good afternoon, everyone. Thank you for joining us today. On today's call you will hear from Howard Robin, our President and Chief Executive Officer, Dr. Jonathan Zaleski, our Chief Research and Development Officer, and Linda Rubenstein, our Chief Financial Officer. Dr. Mary Tagliaferri, our Chief Medical Officer, will also be available during the Q&A. Before we begin, I would like to remind you that we will be making forward-looking statements regarding our business, including statements related to therapeutic and commercial potential and development plans for rezpegaldesleukin, the timing and expectations for clinical data presentations and regulatory submissions, regulatory interactions as expected, cash runway, and other statements regarding the future of our business. Because forward-looking statements relate to the future, they are subject to uncertainties and risks that are difficult to predict and many of which are outside of our control. For a discussion of these risks and uncertainties, please refer to our filings with the SEC, including our most recent Form 10-K and subsequent filings.

We undertake no obligation to update these forward-looking statements except as required by law. A live webcast and replay of this call will be available on the Investor Relations section of our website at nektar.com. With that, I will hand the call over to Howard.

Howard Robin, President and Chief Executive Officer

Thank you, Vivian. Thank you to everyone for joining us this afternoon. In July, we achieved yet another important milestone at Nektar with the initiation of the global ZENITH-AD Phase 3 program for rezpegaldesleukin, also known as Rezpeg, in moderate to severe atopic dermatitis. We're excited to be advancing this very important novel medicine towards registration in the first of several potential indications. Following our end-of-Phase 2 meeting with the FDA, we also finalized the design of a single registrational Phase 3 study for Rezpeg in alopecia areata, which we plan to initiate in early 2027.

The registrational study designs for Rezpeg build on the positive clinical data we've generated in the first half of this year in patients with atopic dermatitis and alopecia areata, and also reflect input from our completed regulatory meetings. JZ will talk more about these designs later on during the call. Importantly, with the first Phase 3 studies in atopic dermatitis now underway, we expect top-line data from these studies in mid-2028 and, if positive, expect to submit a BLA in 2029.

As a novel Treg agonist mechanism, Rezpeg works fundamentally differently by acting upstream of multiple inflammatory pathways to restore immune balance, and to that end we continue to evaluate new indications for expansion of Rezpeg's development in the future. Through TrialNet, we're evaluating its potential in type 1 diabetes in an ongoing Phase 2 study. We also believe there are other autoimmune conditions where a Treg mechanism could benefit patients, and we therefore view Rezpeg as a potential pipeline-in-a-product.

Importantly, the market opportunity and patient need in each of our two lead indications are substantial. More than 15 million people in the United States have moderate to severe atopic dermatitis, and currently fewer than 10% are treated with a systemic therapy. We believe that this market will grow with the introduction of novel mechanisms of action, as was the case in the psoriasis market, and that Rezpeg is highly differentiated from the other novel MOAs approved or in development.

We know that roughly half of the patients on currently available IL-13–based agents, including Dupixent, either don't respond to therapy or lose their response over time. This leaves a large unmet need for a new therapeutic option. We believe Rezpeg has the potential to alter the treatment paradigm in this indication by offering a differentiated efficacy and safety profile with a long-term, highly attractive monthly or quarterly maintenance dosing regimen.

We recently completed extensive market research which included our 52-week maintenance data for Rezpeg. The research reinforces our commercial thesis in atopic dermatitis. We interviewed and surveyed 151 high-volume prescribers and key opinion leaders in the United States and Europe. A recurrent theme that came up in the research was physician enthusiasm for a novel mechanism of action as compared to overlapping mechanisms of action in the IL-13 class.

The RESOLVE-AD data was viewed highly positively, including EASI-75 and itch NRS responses. The quarterly dosing schedule for maintenance and the EASI-100 rates were called out as notable and differentiating. The data in comorbid asthma was also cited as a key differentiator, as physicians see patients with a range of other autoimmune and allergic comorbidities which could benefit from a Treg therapeutic approach. Notably, safety was viewed as a key differentiator, with no increased risk for infection and no conjunctivitis observed in the Rezpeg treatment arms in our Phase 2b RESOLVE-AD study.

Importantly, 150 out of the 151 physicians interviewed said that injection-site reactions were not a hindrance to prescribing or a barrier for patients, and actually preferred a self-resolving, short-lived ISR over managing longer-duration conjunctivitis. It was clear that physicians would welcome a novel immune-modulating mechanism like Rezpeg in the treatment paradigm and that Rezpeg would likely be prescribed across first-, second-, and third-line populations.

The research supports our decision to pursue a label with our registrational program in atopic dermatitis that captures both treatment-naive and experienced patients. Turning to the opportunity in alopecia areata, nearly 6.7 million people in the United States are affected by the disease, and the large majority currently go untreated. There are well-known safety challenges associated with JAK inhibitors, which is the only approved class to treat severe patients, and that has limited their use.

In spite of that, the market for agents currently approved for alopecia areata is still projected to grow to $5 billion in 2033, but more than half of dermatologists are not comfortable prescribing these agents given their boxed warnings and an ongoing monitoring burden. Our Rezpeg market research with physicians in alopecia areata reaffirms this hesitation to prescribe JAK inhibitors. In addition to Rezpeg's safety profile observed to date and its novel MOA, physicians and patients in our research cited Rezpeg's twice-monthly dosing for alopecia areata patients as more attractive than once-daily oral dosing.

Physicians also noted the ability to ensure patient compliance with treatment is much higher with an injectable twice-monthly regimen. The research reaffirms our belief that Rezpeg has the potential to become a preferred first-line treatment option for patients with severe to very severe alopecia areata. Before I hand the call to JZ, I will note that we ended the quarter in a strong financial position with over $1 billion in cash and investments, and our cash runway extends into the third quarter of 2028, past the initial Phase 3 atopic dermatitis data readouts in mid-2028.

Our team is laser-focused on successful execution of our Phase 3 programs and advancing Rezpeg to BLA submission as quickly as possible. With that, I'll turn the call over to JZ.

Mary Tagliaferri, M.D., Chief Medical Officer

Thank you, Howard, and good afternoon, everyone. Everything we have learned about REZPEG from the data from the clinical programs to date points to a consistent and, we believe, differentiated clinical profile: meaningful efficacy, a favorable safety profile with dosing as infrequent as once a quarter, and responses that continue to deepen over time. As Howard stated, REZPEG works upstream of the currently approved agents and the diseases we are targeting.

It stimulates regulatory T cells and gets closest to natural causal biology to restore the immune balance that is disrupted in autoimmune and inflammatory disease. Rather than blocking a single target, or even multiple targets downstream, REZPEG is able to correct TH1, TH2, TH17 and other upstream inflammatory dysfunctions that can drive disease pathology across atopic dermatitis, alopecia areata and other autoimmune diseases. Because regulatory T cells target the underlying immune imbalance of inflammatory and autoimmune diseases, we have seen REZPEG produce very high durability over time.

This was our key hypothesis when we developed REZPEG, and it is supported by the data we reported from our monthly and quarterly dosing regimens in our Phase 2b program. In our first Phase 1 study following a 12-week treatment cycle, we observed durability of clinical responses for approximately nine months off treatment, which we have previously published. As Howard mentioned, Zenith AD, our global Phase 3 program in atopic dermatitis, is now up and running.

The first two studies, both in biologic- and JAK inhibitor–naïve patients, were initiated, and we started randomizing patients back in July. The planned study in treatment-experienced patients is set to start by the end of September. As a reminder, each of the two pivotal biologic‑naïve studies will enroll 510 adolescent and adult patients age 12 and older, randomized 2:1 to REZPEG at 24 micrograms per kilogram every two weeks or placebo. There is a 24‑week induction period followed by a 28‑week maintenance period through week 52, during which we will evaluate both monthly and quarterly dosing.

The third Phase 3 study in treatment‑experienced patients has the same design and is expected to support a second‑line and later usage in the label. Taken together, the studies are designed to support a potential label in this patient population that captures both naïve and experienced patients spanning first‑line, second‑line and later‑line usage. The studies are designed to support U.S. and global registration, with an IGA‑related primary endpoint for the U.S. and co‑primary endpoints of EASI‑75 and IGA for significant territories outside the U.S., along with multiplicity‑protected secondary endpoints for key patient‑reported outcomes such as itch numerical rating scale, or NRS, skin pain NRS, and Atopic Dermatitis Sleep Scale, or ADSS. As you know, many patients with atopic dermatitis also have other comorbidities, including asthma and allergic rhinitis. As a Treg‑based mechanism, REZPEG is designed to work upstream of targeted pathways.

REZPEG is uniquely positioned to simultaneously address multiple autoimmune and inflammatory manifestations at once, and to that end we also include a number of multiplicity‑protected secondary endpoints that will help us explore this benefit, the first being ACQ‑5, which measures improvements in patient‑reported asthma symptoms. Approximately 25% of patients with moderate to severe atopic dermatitis also have asthma, and in our Phase 2b study REZPEG produced statistically significant improvements in ACQ‑5 versus placebo, including in patients with uncontrolled asthma at baseline.

A second endpoint we've included is the Sino‑Nasal Outcome Test‑22. This is referred to with the acronym SNOT‑22, a validated patient‑reported measure of sinonasal symptoms. Rhinitis is a type 2 inflammatory comorbidity found in patients with atopic dermatitis, and up to 30% of patients with atopic dermatitis also have a comorbidity of allergic rhinitis. On this endpoint in our Phase 2b study, we measured SNOT‑22 for patients with self‑reported symptoms, and which extended also into patients who had self‑reported asthma with rhinitis.

We are including SNOT‑22 as a secondary endpoint in our Phase 3 studies, and we are excited to share with you that we plan to present the SNOT‑22 data from the Resolve AD study at a future medical meeting. Our strong Resolve AD Phase 2b data underlies the design of our Phase 3 program. In Resolve AD, we saw rapid onset of skin clearance and itch relief early in treatment, and we saw those responses deepen over time rather than plateau with less frequent monthly and quarterly maintenance dosing.

We achieved high rates of complete skin clearance, including up to a five‑fold increase in EASI‑100 rates during the 36‑week maintenance treatment period, a level of response rarely achieved. As Howard said, we expect the first data from the Phase 3 program in mid‑2028 and, if positive, expect to submit a BLA in 2029. Turning to alopecia areata, we recently held our end‑of‑Phase 2 meeting with the FDA, and we received alignment to conduct a single registrational Phase 3 study, which we are calling Zenith AA.

In the pivotal study we have finalized, 850 adolescent and adult patients age 12 and older will be randomized to receive REZPEG at 24 micrograms per kilogram every two weeks or placebo, with treatment continuing through 52 weeks. The study will include patients that have a current episode of alopecia areata of up to eight years. This was the inclusion criterion for all of the JAK inhibitor Phase 3 trials as well as our Phase 2b randomized, placebo‑controlled study.

We will include both patients who are naïve to systemic treatment, including biologics and JAK inhibitors, as well as those who have been treated with a prior systemic agent, provided they have undergone an extended washout period. The primary endpoint will be a SALT score of 20 or less at week 52, which corresponds to 80% or more scalp hair coverage. This is the established registrational endpoint for patients with severe to very severe alopecia areata at baseline.

Key secondary endpoints include SALT scores of 10 or less and 30 or less, along with 50%, 75% and 90% SALT reductions from baseline, which capture increasing degrees of hair regrowth. You'll recall that we observed improvement with REZPEG treatment across all these endpoints in our Phase 2b trial. Patients from the study will also have the ability to roll over into a long‑term extension, which will allow us to characterize durability of response on treatment and long‑term safety.

We plan to initiate the Phase 3 alopecia areata study in early 2027, and we expect data in the second half of 2029 and, if positive, would expect to seek approval in alopecia areata as the second indication shortly following our planned submission in atopic dermatitis. We expect to have data from the 24‑week off‑treatment period of the Phase 2b RESOLVE AA study in alopecia areata in the fourth quarter of this year. Our objective for measuring patients in the off‑treatment period is to determine a maintenance dosing regimen beyond 52 weeks, whether we continue to dose twice monthly or offer an additional once‑a‑month regimen.

As you know, we already have an advantageous dosing schedule of twice monthly as compared to a daily JAK inhibitor. As Howard pointed out earlier, our market research has reinforced for us that both physicians and patients would prefer a less frequent injectable regimen as opposed to daily oral administration. When you couple this dosing regimen advantage with the safety profile observed to date, we believe REZPEG has the potential to become an important first‑line treatment for this indication.

In addition, data sets from both our lead programs in atopic dermatitis and alopecia areata have been accepted for oral presentations at the European Academy of Dermatology and Venereology, or EADV, Congress to take place in Vienna in October. These presentations will feature the Resolve AD maintenance data covering both the patients who maintain their response and those who develop new and deepening responses over time, including complete clearance, as well as the Resolve AA Week 52 data.

We're grateful for the opportunity to present these data at this important meeting. Beyond our two lead indications, the Phase 2 study of REZPEG in new‑onset type 1 diabetes, sponsored and funded by TrialNet, is ongoing. As a reminder, this is the same consortium that ran the foundational studies for teplizumab, the only approved therapy in this setting, and they bring expertise and a deep commitment to finding better options for patients with this disease.

We're looking forward to the data from the first cohort of patients in this type 1 diabetes study in 2027. As this program matures, we continue to evaluate additional opportunities for REZPEG in other potential indications. And as I mentioned earlier, REZPEG is fundamentally different from therapies that block a single downstream inflammatory mediator. REZPEG acts upstream by expanding regulatory T cells and enhancing their suppressive function, thereby restoring immune tolerance and re‑establishing regulatory control over pathogenic immune responses.

Our objective is to start a clinical study prior to year‑end, which would allow us to evaluate REZPEG's activity in a new indication. Turning to our earlier pipeline programs, we are continuing our development of our TNFR2 programs. NKTR‑0165 is our bivalent TNFR2 agonist antibody, a molecule with very high specificity for signaling through TNFR2 on Tregs to enhance their ability to regulate the immune system. We believe this mechanism has potential across a range of indications, including MS, ulcerative colitis and vitiligo.

Because NKTR‑0165 demonstrated strong monomeric activity, we realized the TNFR2 molecule could be incorporated in the design of bispecific and trispecific constructs in combination with validated targets. Therefore, we are designing a pipeline of TNFR2‑containing bispecific molecules that pair TNFR2 agonism with other antibody targets. The first of these programs, NKTR‑0166, is a bispecific molecule that combines a TNFR2 agonist epitope with an antagonist epitope previously validated in rheumatology.

This dual mechanism gives NKTR‑0166 the potential to modify disease pathogenesis across multiple autoimmune. We are continuing our research in both TNFR2 programs and we'll share more as they progress. With that, I will turn the call over to Linda to review our financial results.

Linda Rubenstein, Chief Financial Officer

Thank you, Daisy, and good afternoon, everyone. On today's call, I'll review our quarterly financials for the second quarter of 2026 and our 2026 financial guidance. We ended the second quarter of 2026 with $1.02 billion in cash and investments with no debt on our balance sheet. In April, we completed an underwritten public offering resulting in approximately $350 million in net proceeds. We are increasing our cash guidance for year-end 2026, and we now expect to end 2026 with approximately $815 to $840 million in cash and investments.

Turning to the income statement, our second quarter 2026 non-cash royalty revenue totaled $10.1 million. Full-year revenue for 2026 is still expected to total $40 to $45 million. Our R&D expenses were $39.1 million for the second quarter of 2026, and we now anticipate full-year R&D expense to range between $210 and $230 million, including approximately $5 to $10 million of non-cash depreciation and stock-based compensation expense. As a reminder, we expect R&D expense to increase on a quarterly basis in 2026 as our Phase 3 clinical studies and supporting CMC activities progress.

Our G&A expenses were $12.8 million for the second quarter. We continue to expect G&A expenses for the full year 2026 to be between $60 and $65 million, including approximately $5 million of non-cash depreciation and stock-based compensation expense. Non-cash interest expense for the second quarter was $7.2 million, and we expect non-cash interest expense to total approximately $30 to $35 million for 2026. Our net loss for the second quarter was $40.6 million, or $1.23 basic and diluted net loss per share, and as I stated earlier, we now expect to end 2026 with between $815 and $840 million in cash and investments.

Our financial position is strong, enabling us to continue investing in our REZPEG atopic dermatitis and alopecia areata programs as well as advancing our TNFR2 agonist antibody program, which includes NKTR-0165 and NKTR-0166. I'll now turn it over to the operator for Q&A.

Crystal, Operator

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11. Again, in the interest of time, we do ask that you please limit yourself to one question at this time. And our first question will come from Yasmin Rahimi from Piper Sandler. Your line is open.

Yasmin Rahimi, Analyst at Piper Sandler

Good afternoon, team. Congrats on getting the alignment of the ZENITH AA setting, kicking that off. So congrats and great updates. You guys do always a wonderful job helping us think about the next catalyst in terms of, you know, thinking about timing, the type of data we will get and the expectation. And I would love to do that ahead of the next important data readout, which will be the withdrawal data that is going to come in the fourth quarter.

Could you maybe talk about what your expectations are in terms of what is the size of the cohort, what do you expect to see, and whether any of that off-treatment AA data inform in any way, sort of the data collection that will be ongoing in your Phase 3 study?

Howard Robin, President and Chief Executive Officer

Yeah, thank you. That's a great question. I'll let Mary take that question.

Mary Tagliaferri, M.D., Chief Medical Officer

Great. Hi, Yasmin, and thank you so much for congratulating us on having our Phase 3 program in atopic dermatitis kick off. We're very excited about that as well. So as you know, we have a 24-week follow-up off-treatment period in the RESOLVE AA study. This is an ongoing part of our trial, and in the fourth quarter we will have the data. We enrolled 92 patients total in the trial, and then of those 92, 31 went on into our 16-week extension. We do follow every patient who was enrolled into the study for that 24-week off-treatment.

With respect to the Phase 3, the most important for us is after 52 weeks of treatment on the Phase 3 alopecia areata registrational study, we will continue to follow those patients in a long-term extension study, and these data will really help to instruct: should treatment continue to be on an every-two-week basis, or can we extend that frequency in a maintenance period to a longer time point, such as dosing once a month? So we're really excited to look at those data so we can have more clarity on treatment after 52 weeks in our Phase 3 program.

Likewise, in the first quarter of next year we will have 52-week off-treatment data for our atopic dermatitis Phase 2b study. In that, again, we're really looking to instruct what should the dosing be after 52 weeks of treatment, and are there patients that experience durability of responses beyond, say, a dosing interval that we evaluated in the Phase 2b, such as Q monthly and every three monthly. We did see, of course, in our Phase 2b that patients experienced great durability and many experienced a deepening of response.

Now we want to look at, in this 52-week off-treatment, how those responses are maintained and the durability of those responses to see if it's feasible to extend that dosing interval beyond quarterly.

Yasmin Rahimi, Analyst at Piper Sandler

Thank you so much, Mary, for the thoughtful color.

Mary Tagliaferri, M.D., Chief Medical Officer

Thanks, Yaz.

Crystal, Operator

Thank you. Our next question comes from Samantha Simenco from Citi. Your line is open.

Samantha Simenco, Analyst at Citi

Hi, good afternoon. Thanks very much for taking the question, and thank you for all of the details in the recent market research that you shared in atopic derm. I'm just wondering if you can elaborate a bit more on how physicians are thinking about prescribing REZPEG in the first-line setting. Is there a certain patient population or patient characteristics that physicians are identifying that are best suited for REZPEG? And did your market research give any indication on the breakdown of proportion that would be candidates, say, for first line versus second line or later?

Thanks very much.

Howard Robin, President and Chief Executive Officer

Yeah, very good question. Look, the market research that we did was extensive, and we wanted to understand how to position our drug because at some point it is a completely novel mechanism, and everybody thinks that there's going to have to be a step-through through IL-13 to ultimately get to something like a Treg mechanism, and we don't find that to be the case. I think overall, as I said earlier, there's only about 10% of the population with atopic dermatitis that's being treated with systemic therapies.

So it's an enormous upside market potential. And even the patients that are getting IL-13s, which is sort of the gold standard right now, I think those patients, about half of those patients, either don't respond or fail after a year or so. So there's lots of opportunity for REZPEG as a first-line indication. Clearly as a second-line indication it fits that definition perfectly, since we know how many patients fail IL-13, and with a quarterly maintenance dosing regimen it makes it a very, very easy drug to take for those patients.

But I do think we'll get a significant share of the first-line market as well once patients get experience. Remember, it doesn't cause any infection, it doesn't cause conjunctivitis, and those problems, those side effects, are potentially much more serious than mild to moderate self-resolving ISRs. So overall we're pretty happy about getting our first-line market share.

Samantha Simenco, Analyst at Citi

Thanks very much.

Crystal, Operator

Thank you. Our next question comes from Jay Olson from Oppenheimer, your line is open.

Jay Olson, Analyst at Oppenheimer

Thinking about eventually moving into the first-line setting. Thank you.

Howard Robin, President and Chief Executive Officer

I'm sorry, I barely heard that question. Could you say it again louder?

Crystal, Operator

Thank you. And we'll take our next question. Our next question comes from Chacha Yang from Jefferies. Your line is open.

Chacha Yang, Analyst at Jefferies

Hi team, this is Chacha on for Roger. Thank you so much for the updates. As always, very informative and very colorful. I was wondering if you could give us some comments on the pre-trial that happened last week. Any color that you can give on the outcomes of that, and then what impact you expect those outcomes to have on your upcoming September trial. Thank you.

Howard Robin, President and Chief Executive Officer

Yeah, look, always a good question, but of course we can't really comment on an ongoing litigation. I can tell you that the trial is scheduled, a jury trial is scheduled in federal court in San Francisco for September 8th. And, you know, we believe we have a very strong position and that's unfortunately all I can tell you about it at this point. So I'd love to give you more, but it's difficult to comment on ongoing litigation.

Crystal, Operator

Thank you. Our next question comes from Arthur Hay from H.C. Wainwright. Your line is open.

Arthur Hay, Analyst at H.C. Wainwright

Hey Howard and team, congrats on progress, and Mary, congrats getting the single trial for the AA study sign-off. So for that part, I just wonder, for the off-drug data in the fourth quarter, for the patients who only finished the 36 weeks, are we also looking to the data from that part of patients there?

Mary Tagliaferri, M.D., Chief Medical Officer

Yeah. Hi, Arthur. Yes, we will be looking at those patients as well as those patients that completed the 52 weeks of treatment. Obviously, I think what will be most instructive and valuable to our decision-making will be those patients—there were 31 of them—that went into the long-term extension, went into the 16-week extension. But we will be looking at all the 92 patients that we randomized into the study and providing an update on the totality of the findings.

Arthur Hay, Analyst at H.C. Wainwright

Okay, thanks. So just one quick squeezing. So when you're talking to the FDA, do they put some requirements for a medium or minimal duration for the current episode?

Mary Tagliaferri, M.D., Chief Medical Officer

Yeah, thank you for asking. We will be following the same convention as JAK inhibitors. And our study design did provide for patients that have up to eight years of their current episode. We do know that there are some other people who've looked at a more enriched patient population that only have a current episode of up to four years' duration of their current episode. However, we don't think that reflects the actual population of patients with alopecia areata, and we want to have a very broad label.

So we did design a study that will include both patients who are JAK inhibitor–naive and JAK inhibitor–experienced. We'll have adolescent patients as well as adult patients, and we will be looking at patients who have a duration of their current episode less than four years and four to eight years. We think having the broadest label has the greatest commercial potential as well as serving the broadest proportion of patients, and certainly a study that's in line with the prior JAK inhibitor studies.

Arthur Hay, Analyst at H.C. Wainwright

Awesome. Thanks, Mary.

Mary Tagliaferri, M.D., Chief Medical Officer

Thanks, Arthur.

Crystal, Operator

Thank you. Our next question comes from Mayank Mumtani from B. Riley Securities. Your line is open.

Mayank Mumtani, Analyst at B. Riley Securities

Yes, thanks for taking our questions and appreciate all the level of detail. Two-parted question on the EADV: what's the incremental data set that we should expect, and is there a chance off-treatment RESOLVE AA data could also be presented because it's 10/1—technically fourth quarter—and also could help with the enthusiasm for enrollment in your global alopecia Phase 3? And on the maintenance atopic derm data, just based on your Phase 1b where we got EASI-75 up to 9 months, can you just highlight what are the differences in this off-treatment versus what we saw in your Phase 1b, and should we also expect to see some of the EASI-100 responders keep that off-treatment remission?

Mary Tagliaferri, M.D., Chief Medical Officer

Great. Thanks, Mayank, for your questions. Certainly. As JZ mentioned, we're really pleased to have the two oral presentations accepted at EADV. I think this really highlights the promise of our novel mechanism of action and, of course, the strength of our clinical data. When we submitted the abstracts, we did not have the 24-week follow-up data and therefore our abstract doesn't include this portion of our study. The study is still ongoing and blinded.

That being said, it is possible that we could include the 24-week data. As you mentioned, this could be very valuable and of significant interest. We cannot make that decision today. If we do have the data readout in time and we are ready, we would love to include those data as well in our oral presentation by Dr. David Rosemore at EADV. But again, at this point in time we can't make that commitment because the trial is still ongoing and we haven't even locked that part of the database.

But thank you for asking, it is a possibility. But again, it's not in our abstract. With respect to your second question about the maintenance data and the data 52 weeks off treatment for the Phase 2b in atopic dermatitis, you're correct. We did show off-treatment data from our Phase 1b for nine months. The difference here is now we'll have three additional months of follow-up post withdrawal from drug. And we think that this is extremely important to look at again—that durability of those responses.

And again we'll be able to look at the EASI-75 and, as you mentioned, the EASI-100 and the EASI-90. We did see consistently that patients continued to improve with ongoing rezpeg treatment and we did see this deepening of response. Now we want to look at these patients being off treatment, and we will be able to look at the nine-month time mark like we did in the Phase 1b as well as 52 weeks' treatment. And this will be extremely valuable to look at the optimal dosing.

And after 52 weeks of treatment, can patients have less frequent maintenance dosing, and for some patients that could be longer than every three months. So we're really excited to look at those data and really closely examine the durability of those responses. So thank you for asking those two questions.

Mayank Mumtani, Analyst at B. Riley Securities

Very helpful and comprehensive. Thank you.

Crystal, Operator

Thank you. Our next question comes from Julian Harrison from BTIG. Your line is open.

Julian Harrison, Analyst at BTIG

Hi. Thank you for taking the questions and congrats on all the recent progress. First, I'm wondering if you have any updated views on rezpeg's competitive positioning in alopecia areata in light of a recent dataset last month from another non-JAK treatment option in development in the broader space. And then taking a step back, keeping in mind rezpeg's pipeline and product potential, I'm wondering if you've thought at all about supporting any signal-seeking efforts on an IIT basis.

I'm sure you've gotten some investigative requests. Is that something you're open to, or for future trials, best to keep full control at Nektar Therapeutics? Thank you.

Howard Robin, President and Chief Executive Officer

Yeah, two very good questions. So first of all regarding competition in alopecia areata—look, the study that was just released, and I'll let Mary comment a little more on this, is very difficult to interpret. It was also a single-arm study, so it wasn't a blinded study. A little difficult to interpret and, quite frankly, it had a patient population that was much less severe or much earlier on in their disease than what we're planning. I think Mary did talk about the difference between four years and eight years, and I'll let her comment on that in a moment.

And to your second question about looking at other indications—yeah, we are in the process of considering which indications we would like to do some pilot studies to get some proof-of-concept studies. Look, we were very successful in the lupus study when we looked at the data on a weight-based dosing rather than a fixed-based dosing, and I think there's a potential for working in cutaneous lupus as well. And there's a number of other indications, just as we're doing in type 1 diabetes, that could warrant a—whether it's an investigator-sponsored trial—you lose a little bit of control there, perhaps—or it's our own pilot studies.

I do think that to support the value of a Treg mechanism, there are other indications that we will be looking at. I'll let Mary come back to your first question for some more insights.

Mary Tagliaferri, M.D., Chief Medical Officer

Yeah, sure. Hi, Julian. Howard mentioned this in our prepared remarks. We view the alopecia areata market as—certainly these patients are underserved by JAK inhibitors. So I think as seasoned biotech executives, clinicians, and scientists, we love innovation, and we love to see innovation in a space where there's huge potential for growth. That being said, as Howard mentioned, the Q32 results are really difficult to interpret. It was small—only 33 patients—open-label study with no placebo.

And, as we've mentioned now twice, enrolling a selective patient population and restricting eligibility really skews results in favor of any drug that's being tested. By contrast, our Phase 2b study was randomized, placebo-controlled. We looked at more than one dose. We allowed a broad patient population that was consistent with JAK inhibitor studies, so the generalizability has greater potential. And we had a very standard Phase 2b trial that then was recognized by the FDA as being sufficient to move forward into a Phase 3 study.

Ultimately, we remain very encouraged by our efficacy and safety profile. And I know the dermatology community at large is really looking forward to beginning enrollment in our study in the first quarter of next year for these reasons. So thanks for asking.

Crystal, Operator

Thank you. Our next question will come from Mark Fromm from TD Cowen. Line is open.

Mark Fromm, Analyst at TD Cowen

Hi, thanks for taking my questions and congrats on all the progress and getting the Phase 3 up and running. Maybe just, Howard, you touched a little bit about the different unmet needs in the AD market, particularly as you think about treatment-naive versus experienced patients. How do you guys view that as likely to impact the relative enrollment pace for the Phase 3s and the two different flavors of Phase 3—different patient sizes, but also different levels of unmet need?

Howard Robin, President and Chief Executive Officer

Yeah, good question. I certainly think with the absence of OX40s, it limits the opportunities for new mechanisms of action. And I think rezpeg is obviously unique in that sense. So I don't think patient enrollment will be an issue there. I think it'll actually go fairly quickly. I can't tell you exactly what it will look like—we just started the studies—but I'm hopeful that it goes fairly quickly, recognizing that as a new mechanism goes, there's really nothing else at the moment.

We'll see what the STAT6 data looks like—upcoming data—but I don't think that's as complete a mechanism as rezpeg. I can let JZ comment on that a little bit if he'd like. But overall, I don't think people understand how large this market is. Let's assume the market by 2033 is probably $35 billion, and that's 10% of the patients getting treated. So I think, look, there are other good drugs out there. I mean, Apogee's drug is certainly a good drug.

I think STAT6 could be a very important mechanism. But the fact of the matter is the market is enormous. And if you have a novel mechanism, you should be able to get a reasonable market share of a market that—at 10% of the patients being treated—is already planned to be $35 billion. I'll let JZ comment a little bit on why we think rezpeg is probably one of the best opportunities in treating a disease like AD.

Jonathan Zalevsky, Ph.D., Chief Research & Development Officer

Yeah. Hey, Mark, and thanks, Howard. One of the things that our market research showed us is that we would have good first-line penetration. And that's really because pretty much the entirety of the available approaches that physicians have—and even the pipelines, including agents like STAT6—they're really all targeting the same pathway, right? They're in a very TH2-dominant inhibitory state. They may be acting on more than one node, but they're acting really on the singular pathway.

And our market research really showed us that a new MOA was extremely important for physicians. Many indicated they would use a new MOA first. And so we think this will really help position rezpeg nicely. As you heard about our Phase 3 study designs, they're really taking advantage of not just what we learned but really even strengthening where we saw the greatest differentiation in our Phase 2 data, and they're pushing that even more to give rezpeg a really big opportunity for a very highly differentiated label at the end of the registration program.

Thanks for the question.

Crystal, Operator

Thank you. Our next question comes from Jessica Fye from J.P. Morgan. Your line is open.

Jessica Fye, Analyst at J.P. Morgan

Hey, guys, good afternoon. Thanks for taking my questions. Can you expand a little bit on your expectations for rezpeg's effect size in biologic-experienced patients compared to biologic-naive patients in AD? And how should we think about benchmarking the biologic-experienced AD Phase 3 trial that you're running? Is Ebglyss a good comp there, or if not, what should we think about? Thank you.

Howard Robin, President and Chief Executive Officer

Okay. Thank you for the question. It's a very good question. I'll let either JZ or Mary answer it in a little more detail, but I can tell you that we looked very closely at whether there's any biological reason—any mechanistic reason—why a patient who fails IL-13 would not respond to a completely different mechanism, and we couldn't find one. So I think we should be successful in treating experienced patients. I'm going to let JZ and Mary comment a little more on that.

Mary Tagliaferri, M.D., Chief Medical Officer

Yeah, I could just start and JZ can finish. Jessica, I think you're bringing up a very important point. Lebrikizumab was studied in the ADAPT study, and these were patients treated with lebrikizumab after Dupixent, and there was no diminution of efficacy. Fifty-seven percent of the Dupixent-exposed patients who were treated with lebrikizumab had an EASI-75 at week 16. And in the lebrikizumab Phase 3 studies, the Advocate 1 and the Advocate 2, the EASI-75 at week 16 was 52% and 59% in that naive population.

And the ADAPT study did include patients who also had an inadequate response to Dupixent. So given this precedence, this trial data, and the rezpeg mechanism of action that augments the regulatory networks rather than just blocking a single downstream inflammatory mediator, we do expect the efficacy in the biologic- and JAK inhibitor–experienced patients to be very similar to the naive patients. And I'll let JZ expand further if you want on the mechanism of action.

JZ—no, thank you.

Jonathan Zalevsky, Ph.D., Chief Research & Development Officer

And I think you touched on a lot of the key points — that our mechanism with the Treg induction, if anything, is meant to really help patients for whom inhibition of IL-13 or IL-4 and -13 is no longer adequate to control their disease. This is one of the greatest features of a Treg approach: it acts upstream of all of those factors, and we look forward to continuing to elaborate on this. You raised a very important point, which is that while the ADAPT study is useful, as Mary explained, it's an open-label single-arm study, and so there hasn't really been a true benchmark published, for example, for placebo in this patient population.

So these are all things that are going to be components of some potential data to be reported. If Sanofi reports the results of their litlimab study in this patient population that was designed as a randomized controlled trial, that will create one important piece of information from the placebo. But overall, we're extremely excited to have this third study as part of our registrational program. We expect Rezpeg has a very, very good opportunity to be efficacious in this patient population for all the reasons we've explained.

And with a study like that under Rezpeg's belt as part of our BLA, it really allows us to have a much more differentiated label for Rezpeg.

Crystal, Operator

Thank you. Thank you. And our next question will come from Andy Shea, from William Blair. Your line is open.

Andy Shea, Analyst at William Blair

Oh, great. Thanks for taking our question. So, Howard, you mentioned about the physician survey that you did is super helpful for you to share with us. I'm curious if you have probed the group about durability as a means for differentiation. Is there a time that these physicians are looking at, either the 3-month or 6-month timeframe? And my second question has to do with the type 1 diabetes trial that you're running with TrialNet. It seems like Rezpeg is being treated for six months, but the primary endpoint is measured at 12 months.

So can we infer from that that there is a little bit of off-treatment effect that we can extrapolate from the trial? Thank you.

Howard Robin, President and Chief Executive Officer

Sure. Very good, very good questions. I'll let Mary answer the question regarding the TrialNet type 1 diabetes study. I can tell you from our market research, time duration for onset of action was important, but the most important thing is long-term durability, and you can see that if you look at our maintenance data — the results keep getting stronger and stronger, and I expect that they'll continue. I think one of the other things that was very important to physicians was a manageable side-effect profile, and as I said, ISRs didn't concern them at all.

They were actually much more concerned about infections and conjunctivitis than they were ISRs. But overall, a durability of response that continues to improve was very important to the physicians. Mary, do you want to take the question on the type 1 diabetes trial?

Mary Tagliaferri, M.D., Chief Medical Officer

Yeah, thanks, Howard. I'll actually do that. So, yes, I want to describe a little bit about how that study is designed. If you recall, the teplizumab studies — the CD3 antibody — the way that works is it's a very short treatment course, just a few cycles at the very beginning, but that actually is enough to alter the whole trajectory of the disease. So TrialNet was very excited that they could dose longer with Rezpeg than they did with teplizumab, so that was exciting for them, and so they selected a six-month course.

The mixed-meal tolerance test and C-peptide levels, they're measured throughout through a year — so they're measured both during the treatment as well as the six months after the treatment. But again, the whole theory and understanding of the disease, its progression, and the worsening that people have is well understood — that a course of intervention will change the whole slope of the disease and provide the therapeutic benefit that we're looking for.

So that's why the study was designed this way. It's very much right in the sweet spot of how these kinds of type 1 diabetes centers are done.

Andy Shea, Analyst at William Blair

Thank you. That's helpful.

Crystal, Operator

Thank you. Thank you. And I'm showing no further questions from our phone line. I'd now like to pass it back to Howard Robin for any closing remarks.

Howard Robin, President and Chief Executive Officer

Well, thank you everyone for joining us today. It's not often that a company develops a new MOA that has the potential to greatly help patients in need, and I want to thank our employees for their diligence and commitment and also our shareholders for their continued support. So stay tuned, and thank you very much again. Good afternoon.

Crystal, Operator

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

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