Nektar Therapeutics 2026 Q2 Earnings Call

Please go ahead. 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 Zalevsky, our Chief Research and Development Officer, and Linda Rubinstein, 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 trial, clinical data presentations, and regulatory submissions, regulatory interactions, our 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 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 relation section of our website at nektar.com. With that, I will hand the call over to Howard.

Thank you, Vivian. Thank you to everyone for joining us this afternoon. In July, we achieved yet another important milestone in Nektar with the initiation of the global ZENITH AD program, phase III AD program for rezpegaldesleukin, also known as REZPEG, in moderate to severe atopic dermatitis. Following our end of phase II meeting with the FDA, we also finalized the design of a single registrational phase III 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 have generated in the first half of this year in patients with atopic dermatitis and alopecia areata, and also reflects input from our completed regulatory meetings.

JZ will talk more about these designs later on during the call. Importantly, with the first phase III 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 different by acting upstream of multiple inflammatory pathways to restore immune balance. To that end, we continue to evaluate new indications for expansion of REZPEG's development in the future. Through TrialNet, we are evaluating its potential in type 1 diabetes in an ongoing phase II 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 and 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 U.S. 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 do not 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 U.S. 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 REZOLVE-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 IIb REZOLVE-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-naïve and experienced patients. Turning to the opportunity in alopecia areata, nearly 6.7 million people in the U.S. 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. 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 III atopic dermatitis data readouts in mid-2028. Our team is laser-focused on successful execution of our phase III programs and advancing REZPEG to BLA submission as quickly as possible. With that, I'll turn the call over to JZ.

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 in 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 II-B program. In our first phase I 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 III 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 aged 12 and older, randomized 2 to 1 to REZPEG at 24 micrograms per kilogram every 2 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 III 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.