NKTR (2019 - Q1)

Good day, ladies and gentlemen, and welcome to the Nektar Therapeutics First Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, Ms. Jennifer Ruddock, Head of Investor Relations. Ma'am, you may begin. Jennifer

Thank you, Crystal. Good afternoon, everyone, and thank you for joining us today. With us are Howard Robin, our President and CEO; Gil Labrucherie, our Chief Financial Officer; Dr. Steven Doberstein, our Head of R&D; Dr. Jonathan Zalevsky, our Chief Scientific Officer and Dr. Mary Tagliaferri, our Chief Medical Officer. On today's call, we expect to make Forward-Looking Statements regarding our business, including the timing of future clinical trials and clinical trial results; clinical development plans, including the plans to start future clinical trials; the therapeutic potential of certain drugs and drug candidates as well as those of our partners; our financial guidance for 2019 and certain other statements regarding the future of our business. Because these 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. Important risks and uncertainties are set forth in the Form 10-Q that we filed on March 1, 2019 and which is available at www.sec.gov. We undertake no obligation to update any of these statements whether as a result of new information, future developments or otherwise. A webcast of this call will be available on the Investor Relations page at Nektar's website at nektar.com. With that, I will now turn the call over to our President and CEO, Howard Robin. Howard.

Thank you, Jennifer, and thank you to everyone for joining us on the call today. On today's call, we will review our planned milestones over the coming months including the continued trial starts for the registrational program for bempeg, additional trials with other bempeg collaborators. New study is being initiated for NKTR-358 with our partner Lilly. And the advancement of NKTR-255, our IL-15 agonist program and next IO candidate. We will also provide guidance on clinical data presentation plan throughout the year and reiterate our financial guidance for 2019. Starting first with chronic pain and an update on NKTR-181. The opioid crises continues to be front page news in our country. We continue to believe that a significant and necessary building block to addressing the opioid crisis is providing new pain medications that don't carry the same profiles as the existing opioid mechanisms on the market. And to this end, we remain confident that NKTR-181 can be an important building block in addressing the crisis and potentially helping patients new to opioid therapy suffering from chronic low back pain. We continue to work closely with the FDA during the review of NKTR-181, as we have done throughout its development and the PDUFA is August 29th. We remain confident in the entire data package supporting our NDA submission and the FDA has informed us that, they plan to hold an advisory committee meeting to review our NDA, a general timeline of August has been suggested but no firm date has been set. As I stated last quarter, we have established a separate subsidiary company to launch NKTR-181, we expect to announce the new company and management team members within the next several weeks. As we had to a potential approval, our objective is to finalize the capital structure with one or more potential capital partners to support commercial launch. We believe a launch to be done efficiently with a specialized medical liaison team and a small sales force. To prepare for launch, we are completing the production of launch inventory as well as market access preparation and distribution arrangements. We continue to be very excited about the future for NKTR-181. Moving now to immuno-oncology. We continue to execute on our strategy to develop a full pipeline of new potential medicines that address the key components of the immune cycle in order to restore immune surveillance and properly harness the body's immune system to fight cancer. Starting with bempeg, and our collaboration with Bristol-Myers Squibb, we have initiated a number of registrational trials for the bempeg and nivo doublet combination in first line metastatic melanoma, renal cell carcinoma and bladder cancer and we added a new expansion arm to PIVOT focused on enrolling second line non-small cell lung cancer patients, following treatment and relapse in first line with chemo in checkpoint therapy. The joint development plan with Bristol includes many registrational trials across multiple tumor types. DNS and Nektar are currently working on the designs for the next wave of trials in lung, breast, gastric and colorectal cancers as well as sarcoma. Our two teams that have been working very closely together on trial designs in a changing competitive landscape. we are developing a comprehensive registrational strategy and one that positions competitively the doublet of bempeg and nivo as well as the triplet of bempeg and nivo and ipi across various tumor types in our collaboration. As you know from the start of our collaboration we were targeting early June for the submission of INDs for the studies in our joint development plan. Given the scope and complexity of the program Nektar has agreed to extend the target date by four months for registrational trials in the joint development program that have not yet been started. As we stated earlier in the year, the data from additional PIVOT cohorts and other tumor types mature over the next 12 months. Nektar and Bristol are planning to present the data at various medical meetings including tumor specific conferences. Now let me start with our plans for ASCO this year. We have several presentations accepted for this meeting first on Saturday June 1st Dr. Michael Horowitz of the Euro Cancer Center will be presenting additional translational data from PIVOT. Although not in the abstract, during this presentation we plan to provide 12 month follow-up from the first line melanoma cohort in the PIVOT study. This will be a follow-up to Dr. Diab [Citi] (Ph) 2018 presentation which at that time had a median 7.2 months follow-up for patients in that cohort. This presentation will include an update on the ongoing deepening of responses from the cohort in order to further illustrate the continued benefit of the combination of bempeg and nivo overtime. Now at the 12 month median follow-up time the data are still too early to calculate medium PFS. Second, on Monday June 3rd there will be an oral presentation showing preliminary activity, observed in patients with late line rapidly progressing and rare sarcoma subtypes enrolled in an investigator sponsored exploratory study of bempeg and nivo conducted by Dr. Sandra Deangelo from Memorial Sloan Catering Cancer Center. As we stated last quarter, we are also currently targeting several presentations of specific data in 2019, including lung cancer data at this year’s ESMO meeting. Nektar and BMS are also currently planning to submit data from the triple negative breast cancer cohorts for presentation at the Quadruplet CRI meeting in September and for RCC we are targeting the 18th International Kidney Cancer Symposium in November. For RCC we plan to present data from two cohorts in PIVOT the doublet of bempeg and nivo and the triplet of bempeg, nivo and ipi. Pfizer and Nektar are currently finalizing the Phase 1b 2 study and had a neck cancer and castration-resistant prostate cancer. Pfizer plans to initiate this study in the middle of Q3. The study will evaluate various doublet and triplet combinations with bempeg and Pfizer and [indiscernible] anti-PD-L1 agent avelumab. Pfizer’s PARP inhibitor and Pfizer and Astellas anti-androgen agent. We are very excited to work with Pfizer on this because of the Operator and these two solid tumor setting for bempeg particularly in patients with PD-L1 negative tumors. We also have an ongoing study with Takeda to combine bempeg with Takeda’s TAK-659 which is a dual SYK FLT inhibitor in liquid tumors. We know that the three mechanisms together IL-2 SYKL and FLT showed a dramatic effect in our preclinical model. So, we are excited about the first study, which is always started in advanced NHL patients. Moving on to updates for NKTR-255 our IL-15 agonist cytokine which is currently in IND enabling studies. We know that the activation of the IL-15 pathway in addition to creating memory T-cells also strongly promotes the expansion, activation and survival of natural killer cells. NKTR-255 has applications in both liquid and solid tumors where this mechanism could greatly enhance ADCC anti-bodies, such as daratumumab. We are targeting completion of the IND enabling work for NKTR-255 in the second half of this year, and we are currently designing our first clinical trials in both liquid and solid tumor settings. We also have a preclinical collaboration with the Fred Hutch Cancer Center evaluating the use of NKTR-255 to enhance CAR-T persistence and improve overall responses following CAR-T. Fred Hutch is planning the first presentation of this preclinical data at the European Hematology Association, Congress, held June 13th to 16th in Amsterdam. Based on the preclinical data, we are also planning, a clinical trial in combination with CD19 CAR-T cells as one of our NKTR-255 development programs. In the fourth quarter of last year, we entered into a research collaboration with Gilead to explore NKTR-255 with different Gilead molecules and their portfolio in the area of urology. These preclinical studies in non-human primate models started earlier this year and the program is proceeding nicely. I would like to move on to discuss the great progress we're making with our partner Eli Lilly on the advancement of NKTR-358 our T-Reg cell stimulator candidate being developed to address various autoimmune conditions. As you know, we have an ongoing Phase 1b multiple ascending dose study in lupus patients that is proceeding nicely through dose escalation phase and we expect that the study will complete later this year. We are very pleased that our first in human data from the Phase 1a study was accepted from oral presentation at the European Congress of Rheumatology to be held June 12th to 15th in Madrid. The oral presentation will be on June 13th and the Genetics, epigenetics and immunity session. The presentation will include data from our completed single ascending dose study of NKTR-358 in healthy volunteers and we will also host an Investor Call to review the data presentation for those unable to attend EUR. Lilly is currently designing a Phase 2 lupus study, which will start following the completion of our Phase 1b study at the end of this year. In addition, Lilly is also designing two additional Phase 1b studies in two new autoimmune indications that will start in the second half of this year. We remain very excited about NKTR-358, emerging as a potential resolution therapeutic in the treatment of autoimmune disease. And with that, I'll turn the call over to Gil for a review of our financials.

Thank you Howard and good afternoon, everyone. I will start with a brief review of highlights from our first quarter 2019 financial results and then I'll review our 2019 financial guidance. We entered the first quarter with $1.8 billion of cash and investments. Total revenue was $28.2 million for the quarter, compared to $38 million for the first quarter of 2018. R&D expense was $118.5 million in the first quarter of 2019, as compared to $99.4 million for the first quarter of 2018. The increase in R&D expense in 2019 as compared to the same quarter of 2018 is a result of the expanded clinical development of bempeg, NKTR-358, NKTR-262, and NKTR-255. In Q1 2019 bempeg R&D expense included registrational studies in RCC, melanoma, bladder, non-small cell lung cancer and manufacturing cost to supply the future of broad bempeg clinical development program. G&A expense was $25 million in the first quarter of 2019 as compared to $18.7 million in the first quarter of 2018. G&A expense increased primarily due to commercialization readiness activities for NKTR-181 and increased non-cash stock compensation expense. We have recognized a net loss of a $118.5 million for the first quarter of 2019 or $0.68 loss per share as compared to a net loss of $95.8 million or $0.60 loss per share in the first quarter of 2018. Now let’s turn to our 2019 financial guidance, which is unchanged from our last call. Starting with our cash position, we continue to anticipate ending 2019 with approximately $1.5 billion with a receivable balance of approximately $65 million to $75 million due from BMS at the end of 2019. As a reminder, our R&D expense is accounted for a net of BMS’s share of bempeg development cost and our annual R&D expense obligation with BMS is subject to a $125 million annual cap that will not limit our annual GAAP R&D expense, but will limit our annual cash spending obligation prior to the commercialization of bempeg. Our full-year GAAP revenue guidance remains at between a $100 million and $110 million in 2019. We continue to expect revenue to be fairly ratable on a quarterly basis. Our GAAP expense guidance is also unchanged, we still anticipate 2019 GAAP R&D expenses will range between $500 million and $525 million which includes approximately $80 million of non-cash depreciation and stock compensation expense. As we complete a number of bempeg manufacturing batches in Q2, we do expect R&D expense to be relatively higher in Q2 as compared to the other quarters of 2019. As a component of our R&D expense we expect our bempeg manufacturing investment to be significant in 2019 as we build our drug supply to support the multiyear clinical development plan for bempeg. Under our collaboration, BMS generally shares an approximately 35% of bempeg manufacturing and supply cost. Beyond bempeg our R&D investment is funding the advancement of a broad clinical development pipeline including NKTR-358, NKTR-262, NKTR-255 as well as future IND candidate currently in the research stage. In 2019, we will complete the manufacturing of NKTR-181 commercial launch supplies that are included in R&D expense and not capitalized into inventory prior to regulatory approval. G&A expense for 2019 is still projected to be between a $110 million and a $120 million. We continue to invest in activities necessary to support regulatory approval of NKTR-181 and we are carefully staging our investment in commercial readiness for NKTR-181 as we approach a potential approval later this year. And with that, I'll open the call for questions. Operator.

Thank you. [Operator Instructions] And our first question comes from Chris Shibutani form Cowen. Your line is open.

Great. Thank you very much. I appreciate the update across all the programs. If I could just get to in particular relating to bempeg and Bristol relationship, you commented that there is not an extension in the timeline, I believe that was - years in terms of requiring to meet the commitments of beginning of the different trials and indications. Can you comment about what the genesis of that is? Are there any issues at all enrolling or is this only just a strategy that would be helpful. Secondly, the list of all the different incremental readouts is much appreciated, but then if we were to trying to think about what indications might get a across or approach the finish line first, to the extent that that also kind of the first one through the fire so to speak. Can you help us with how we should think about it? I remember that melanoma started first, et cetera, but when we think about crossing or approaching the finish line, can you help us with how the sequencing of that could be as we think about certain moments of truth to get to next key stages? Thank you.

Sure. Thanks Chris. Look, in regard to the four month extension, these are very, very complex programs. As you know, we already have six INDs field. We're preparing the next five, six, seven INDs. We're working very closely with BMS. We have a great relationship with them. And this is a tremendous amount of work and a lot of thinking must go into these studies to get them right. It's a rapidly evolving competitive landscape and we want to make sure that we are successful with these trials. I think an extension of four months is something that we think is perfectly reasonable in terms of this such a complex development plan. And maybe we were a little aggressive on the initial timelines, but in any case, I think we are moving forward rapidly and we have a definite focus between the two companies to get this done. Regarding what you might see in terms of readouts. I'm going to let Mary take that question. Mary go ahead.

Yes. Thanks. Hi, Chris. Yes, in terms of incremental readouts, as you know we have four registrational trials ongoing now and we're actively recruiting and that includes our first line metastatic urothelial carcinoma or bladder cancer study. Our first line melanoma Phase 3 trial. We also have our PIVOT-02 expansion cohort for relapse refractory lung cancer cohort actually these patients are patients who are relapse to first-line treatment with chemotherapy plus a check point inhibitor and then fourth Phase 3 clinical trial we have is our first line RCC study. And in terms of the sequence of the readout, we expect that the bladder cancer trial would readout first. The melanoma expansion cohort from PIVOT-02 could be the second and third trials and the fourth trial would be Phase 3 trial in RCC where we are comparing bempeg Placebo versus TKI.

Great. In terms of mindset, then if bladder is coming first and I think there has been something impressive data there would your and Bristol’s mindset be to press forward with that as an individual indication into perhaps regulatory filings or would there be a sense of meaning to or wanting to cluster with other readouts that maybe in some wants proximate to give you I don't know multiple steps on go. Could bladder go firstly to fire so to speak?

Yes it’s possible that bladder to go first and as we shared before we have had conversations with the FDA about the potential of this trial being used for an accelerated approval and we have also shared with you that we have a confirmatory trial agreed upon with the FDA which is muscle our muscle invasive bladder cancer Phase 3 trial. So it’s possible that could be the first filing for the company.

Great. Thank you, that is helpful. I will go back into the queue.

Thank you. Our next question comes from Paul Choi from Goldman Sachs. Your line is open. Please check that your line is not on mute. And we will move on to our next question from Jessica Fye from JP Morgan. Your line is open.

Hey guys good afternoon thanks for taking my questions. Just a few, first just following upon Chris’s question. Sorry if I missed this. What was the prior deadline for the PIVOTAL studies and what is the new deadline under the Bristol collaboration then to confirm the - sorry you can go ahead.

Hi Jessica. You finish and I’ll go after that.

Yes, okay. the melanoma update you mentioned at ASCO did you say that will not have data any abstract and just to confirm did you also say that there has been further deepening of responses since the Citi update and then lastly on the sarcoma IFP data at ASCO should we expect data from sarcoma patients in that abstract?

Okay, thanks. well first of all let me take the first question. The contract and the agreement in the collaboration was to have the trials running by June by next month and we have moved that to end of September, so we moved that four months. So the new date is end of September and as I said we did that recognizing the complexity of all the work that has to be done and also potentially a little ambitious in any case. I did talk about the presentation of melanoma data at ASCO where we will talk about it deepening responses and I'm going to let Mary cover that a bit go ahead Mary.

Yes. So as you know Jess over 5000 abstracts are submitted to ASCO and it was accepted for an oral presentation and Dr. Sandra Deangelo who will be presenting data on multiple different sarcoma histology, some that are very rare and she will be breaking out responses based on these various cohorts by histology moving mild sarcoma and differentiated sarcoma and chondro sarcoma. The patients who have been enrolled to her study were advanced patients who were refractory to multiple agents. It is possible that Dr. Deangelo will be adding more patients to the roughly 50 that she included in her abstracts.

And Mary you also covered what the - some discussions on the melanoma because we talked about that a bit.

Yes. Sure, so in terms of melanoma you will remember Jess that we provided an update at SIFI last year and at that time we had roughly a follow-up of 7.2 months and you will remember that we had confirmed responses by independent radiology to 53% with a CR rate of 24% and so we will be providing an update on the deepening of responses as Howard mentioned at our presentation at ASCO.

And will patient data be in abstract for melanoma?

No, we won’t have patient data in the abstract.

Got it. Can I just ask one more for Howard. In the beginning when you were talking about 181 and I think you mentioned a potential adcom did you say it could be in August timeframe i.e. very close to the PDUFA date?

Yes. The FDA has told us that they want to have an adcom to likely in August. We don't have a day yet. Steve, would you like to comment further on that?

Yes. Sure. Thanks Jess. The adcom date as we tried to get it scheduled in August that is when FDA has indicated they are shooting for. That may seem a little bit close to the PDUFA date, but in fact, with this particular division there is a pretty good precedent for rapid turnaround after and adcom to potential approval decision that almost afterwards. For example, the most recent example I can think of is was [Dsuvia] (Ph) where there was an adcom and then approval happened about three weeks later. So, they can turnaround pretty quickly in this particular division. So, I’m not particularly concerned about the closeness in time of the potential adcom to the PDUFA date.

Great. Thank you.

Thank you. Our next question comes from George Farmer from BMO Capital Market. Your line is open.

Hi. Thanks for taking my questions. I want to dig into a bit more on the melanoma data that we will be seeing at ASCO. Did you say that you have not hit the median PFS as of 12 months or as of today?

Yes. Hi. So, we have a 12 month follow-up and we will be presenting data from our 12 month meeting follow-up for this cohort and to-date the data are too immature to calculate a median PFS.

Okay. Great. And can you comment as to how many patients are remaining treatment as of today?

Not as of today, but as of 50, in 2018 we did have seven patients that could have had deepening of responses on treatment that had not reached a CR. And so we will be able to provide an update on how these patients have progressed now at 12 months median follow-up.

Okay. And also, getting back to previous question about 181, it does seem a little tight to have panel so close to the PDUFA. I mean is it possible that the PDUFA could be extended again?

Hi. This is Steve Doberstein. From a regulatory standpoint, it's actually not correct for the agency to formally move the PDUFA. However, it is possible for them to miss their PDUFA date, they really don't like to do that and we don't expected them to.

Okay. Great. Thanks very much.

Thank you. Our next question comes from Bert Hazlett from BTIG. Your line is open.

Yes, thanks. Just following up on 181. Have you had any interactions with regard to scheduling of 181? Any color would be helpful. And then just with regard to Takeda collaboration and your comments there, when might we expect some data coming from that collaboration? Thank you.

Yes. So, hi, with respect to 181, we make a recommendation for scheduling during the process, but of course that discussion happens between FDA, who makes recommendations to DEA post-approval, and so we wouldn't expect that kind of scheduling decision or advance discussion to happen until after the PDUFA date.

Hey Bert. This is J.Z. In response to your question about the Takeda collaboration, the trial really just got underway and so it's in a very earliest stages. So, we expect it may take at least a year or so to enroll the patients. So we would probably be looking something that is reasonable is a timeframe next year, where we would be looking at data from that trial.

Good. Thank you.

Thank you. Our next question comes from Difei Yang from Mizuho Securities. Your line is open.

Hi good afternoon and thanks for taking my questions. Just a couple. The first one is NKTR-181 how did you think about the potential sales force and potential burn to launch NKTR-181? And then secondarily with regards to the four months delay on BMS collaboration, in between that four months delay is it just a tactical delay that they need more time, you need more time to prepare for the IND or is there any data readout that you are expecting maybe perhaps that will help to inform the decision?

Okay great questions. I think - and the latter question, no, there is no data readout that we are waiting for, it is purely the work that has to get done and making sure that we get everything right and making sure that we are extremely competitive in how we manage and how we design our study. So there is no data being looked for the here. Regarding your first question on NKTR-181 I think this is a unique opioid molecule, the goal is to market it and put IT forward in a way that it really helps patients who have chronic lower back pain and we are making a benefit from hopefully a less abusable opioid. I think we are seeking equity partners for this, we expect to have capital coming into fund the subsidiary that we have created and I think it’s a fairly small sales organization. I don’t think this is a mass marketing concept. I think what we are doing here is looking for a small sales organization maybe medically scientifically liaison. This is a very technical scientific story behind NKTR-181. This is not your average opioid, it’s a very different molecules, probably the first new opioid molecule in 50 years and I expect that it will be launched in a very, very high science focused way with a fairly small sales organization.

Just a quick follow-up on the partnership for NKTR-181. Do you expect to think off this operation or will the operations on the Nektar and [indiscernible].

Well it’s a good question. At this point it’s not a partnership, it’s a wholly owned subsidiary of course we do expect outside funding in that. I think at some point that could very well happen, at some time it could very well be a spun off entity and it think it’s the set up to potentially do that. Let’s see how well the drug does. I think the drug solves or at least that goes a long way to solving some of the problems that we currently face in this opioid crisis. And if we are successful there, then there is no reason to believe this can’t be an entity on to itself one day.

Okay. Thanks for taking my questions.

Thank you. Our next question comes from Tyler Van Buren from Piper Jaffray. Your line is open.

Hey good afternoon guys looking forward to the rest of the year. There is a lot of clinical updates. I had a couple of follow-ups with respect to the ASCO data presentation. So my understanding I think is with nivo mono-therapy median progression free survival is 6.9 months if I recall that correctly. And so if median PFS if it’s too early to be calculated with 12 months of follow-up, obviously it’s going to be important to see disease control rates and response rates, but isn’t that did disclosure alone meaningful and suggest that its tracking well ahead of that and also secondarily could you remind of what appropriate median PFS comp is for nivo, ipi combination therapy?

Yes. Thanks for the great wise question Tyler and we are definitely very pleased with the fact that the data is still too immature to calculate median PFS. And as you know even with ipi plus nivo which showed a statistically significant difference in PFS that was less than 12 months as a median PFS. So, already been published. Likewise, even with our CR rate at 24% at just the seven month median follow-up we also had a much higher almost double CR rate, compared to ipi plus nivo and its more than that compared to nivo alone. So, the one last comment I will make is about AEs, when you look at the four year survival data. There is almost a 60% agreed 3AE rate with high dropout rate and when we presented the data at Citi this year, we had less than 20% patients having a grade 3AEs and with few patients who have to grow of treatment to any adverse events. So, the totality of all this data, patients been able to tolerate treatment, high disease control rate, high CR rate and very good objective response rate, by independent radiology which will be the [indiscernible] course in our Phase 3 trial. We are very pleased moving into pivotal registrational study. So, thanks for the question.

Great. That is very helpful color. Just one last question on sarcoma, clearly it's a difficult indication and especially in refractory patients with limited options, I have got to imagine the bar is relatively low. But can you help set expectations on if you throw whatever there is available at these patients what response rate you would expect in this patients population?

Yes. It's a great question Tyler. You know the nice part is, this is Dr. Sandra Deangelo is an expert not only in sarcoma at one of the largest cancer centers Memorial Sloan Catering that focuses on sarcoma, but she also is an expert on the treatment of sarcoma with IO agent. So published on the treatment of sarcoma with both single agent nivo and ipi plus nivo and she intends to put color and that into perspective during her presentation at the podium at ASCO.

Okay, understood. Thanks for taking the questions.

Thank you. And our next question comes from Andy Hsieh from William Blair. Your line is open.

Great. Thanks for taking my questions. Just is a follow-up to Tyler's question earlier. The 12 months follow that is obviously very intriguing. Could you remind me how big that population is currently that allows you to calculate the median?

Well I will just said that total cohort is 38 patients and we will certainly provide more color at ASCO. We look forward to seeing you there Andy at our presentation.

Okay. And in terms of the RCC field, obviously that is rapidly evolving with different modalities being approved, just curious on your thoughts you know from a commercial perspective is PFS alone sufficient from a market positioning perspective now?

Yes. So, we designed our first RCC set Phase 3 study to have the primary readout to the overall survival and we give have guidance that will take us about 27 months to reach that endpoint. So we will be filing our first Phase 3 trial study results in RCC on an overall survival endpoint.

Okay that is super helpful and one last one in terms of the deadline, I just want to understand that is there any sort of liability to Bristol if the deadline is pushed back again or just help me understand or it’s just a goal from both parties to get all the trials started. Just curious about kind of the function of that deadline is?

Yes the deadline is basically - if the deadline is missed, on any particular clinical trial that just being that Nektar has the right to work in that indication or that line with another checkpoint inhibitor at another company. So it means that we could work with one of the other checkpoint inhibitors and not with nivo if the deadline is missed. That is the consequence of missing the deadline. I think like I said these are complex studies, this is a complex landscape and we wanted to make sure we get it right. So we extended the deadline four months, I think I wouldn’t read into it much more than that.

Great thanks for taking my questions.

Thank you. Our next question comes from Paul Choi from Goldman Sachs. Your line is open.

Hi thank you good afternoon and thanks for taking our questions. Maybe with regard to 255 and the CD19 program I guess can you either Mary or JZ maybe clarify to us in terms of early stage program what you are thinking about the hurdle rate is versus some of the CAR-T programs in terms of what you would want to see early or potentially some of the early data we have seeing from the biospecific antibody programs?

Yes, hey Paul this is JZ. So one of the things that is coming this summer is that early preclinical presentation from our collaborators at the Fred Hutchinson Cancer Center and so they will be showing data where we have conducted preclinical studies using human CD19 CAR-T. And the kinds of sort of categories of the effects that we would like to see are ways that we can use NKTR-255 to improve the persistence of the CAR-T cells, to improve their long ranging activity to then for example minimize any differentiation that can happen to the cells when they go inside of the organism. Of course we use preclinical mice, but it was the same kind of things that you are dealing with in patients. And then ultimately even more than that is also using and IO-15 mechanism NKTR-255 right to maintain homeostasis for the cells their long-term survival. So those are like the kind of categories of activity that you would like to achieve when considering combination in the CAR-T space. In the setting of say biospecific or then setting of ADCC antibody, there you are actually looking for a different kind of biology, right so for example in ADCC setting we are looking to activate an increase the natural killer cell compartment maintaining those cells going for a long, long periods of time. So that then when the patients are co-administered the ADCC antibody they have the best chance of having that kind of synergies of the two mechanisms coming together. So there are different goals in the different use settings.

Okay great thanks for that and with regards to the 358 data that you will have at Euler. I guess how do you think about potentially segmenting that data going forward in the steroid experience or steroid refractory population and then in terms of the two new Phase Is, that you mentioned that are coming up, have those been posted or disclosed publicly with regard to the population or the indication.

Yes. So for the first question we are going to be presenting data from a single ascending dose study so this is a study in healthy volunteers. So this is a data set that is our first human experience with NKTR-358. So there isn't a steroid population, or so forth you know to segment, there we are going to be presenting data on the overall safety profile pharmacokinetic profile of 358 and importantly, we are going to show data on its effect on the pharmacodynamic setting. Its effect on mobilizing the regulatory T-Cell compartment and the specificity and selectivity of targeting to T-REG and not engaging any of the other T-cell components that kind of T-REG to T-CON ratio. So we will be very, very excited to show that data and we are also very excited because this is such an early field and there are very few agents that have the T-REG targeting and a T-REG expansion mechanism of action and NKTR-358 is just right up there one of the most advanced clinical stage molecules that has this kind of mechanism of action. And then to your second question. So yes with Eli Lilly we are very excited, we are expanding the program and so this year we will be initiating additional Phase 1b clinical trials. Now we mentioned that we already have the Phase 1b running in lupus and these two additional studies are in two different autoimmune disease indications. So we will be really expanding the program, and all that is happening as we move into the Phase 2 studies that will begin after the Phase 1b ends in lupus.

Great. Thanks for that. I will jump in the queue and let others go.

Thank you. Our next question comes from David Steinberg from Jefferies. Your line is open.

Thanks. I want to loop back to NKTR-181 with a couple questions. There is a train of thought among some of the top KOLs and [indiscernible] that with more abuse deterrent products or less abusable severe pain drugs at some point you have to renew all the not generic opiods or non-ADS from the market so with each successive approval the likelihood that that could happen. Do you have a view on that and if so any thoughts and when it might. And then secondly to the extent Nektar is involved with the new JV that is going to sell NKTR-181, assuming approval. Do you envision it being a one product company or will there be other products down the road brought in to leverage the sales force. Thanks.

Sure. Look I think it's certainly difficult to comment about what might happen in the future with the opioid market, hopefully NKTR-181 develops data over time that demonstrates that it is a potent analgesic as well as a product that is less abusable and can't readily be converted into a more abusable form of opioid and hopefully at some point that market will be satisfied with a drug like NKTR-181, but it's obviously very difficult to predict what the FDA may do in the future with that. The second part of your question was?

It's, will this just be a one product company or you know to the extent that you are involved what do you think they can bring in additional products to leverage the sales force along with NKTR-181?

Okay that is right. I remember that David thank you, good question. Look at this point we have created the subsidiary to market NKTR-181. It is entirely possible that there could be other products potentially that are highly, highly synergies with the drug like NKTR-181 and something we would certainly take a look at and we are always exploring those possibilities. And I would expect the new management team of that subsidiary to look at that very carefully. Obviously whatever we do in that new subsidiary has to be cost efficient and cost effective and have a good return to Nektar and the investors. So while I wouldn’t say that is the immediate focus of that subsidiary and its certainly something that I would expect them to consider if it makes sense.

Thank you. Our next question comes from Arlinda Lee from Canaccord. Your line is open.

Hey guys thanks for taking my questions. Yes I was pretty intrigued about conversion of PD-L1 patient that in are earlier comp this year. I was wondering if we might see a broader additional information to that effect on any of our data presentation that you have highlighted that are coming out later this? Secondly, I would be curious picture about the triple negative breast cancer data set and what the scope data set might look like?

Hey Arlinda this is JZ. Let me answer the first question. So first of all at ASCO, so the poster that we will be presenting is on translational data that we have been accumulating today and so we are going to present more summary information and among those we will be highlighting the PD-L1 the effect of both PD-L1 levels at base line as well the conversion that we have seen so far. And so that ASCO presentation will summarize that data to-date and then in future presentations that we are doing this year, we will always be adding translational components of our mechanism of action and those would be provided in as appropriate for those tumor specific updates.

Yes and Arlinda, this is Mary on triple negative breast cancer. I hope you like to travel to Paris, because if you do you could meet us in the end of September for the Fifth Quadruple International Immunotherapy Conference where we will be presenting the data on the triple negative breast cancer cohort. Remember the benchmark data for single agent checkpoint inhibitor in this patient population is very low its 5%. We will show the data and be able to contextualize it in relationship to the data in single agent checkpoint inhibitors in the first and second line population.

Great. Thanks very much.

Thank you. Our next question comes from Asthika Goonewardene from Bloomberg Intelligence. Your line is now open.

Hi guys thanks for taking my questions. Howard I wonder it’s been asked already, but I want to maybe focus on if you could give us an update on some of the other patient groups that were on PIVOT such as second, third line melanoma, RCC, et cetera. Previously you said you had about 50% 60% of those arms recruited, but where are we on those today and when can we see some from that data this year? And then just to follow-up Arlinda’s question the trends on the pre-closed therapy the PD-L1 stated, the poster is going to be presented the translational data, will that have this the PD-L1 conversion for just melanoma or will it for other tumor types as well? Thank you.

Yes, so I will take the first question and I will punt the second one to JZ. You know as Howard stated in his presentation, we are working with Bristol on when to present data for all of these cohorts and we have gone on record this year to state that we will be presenting data at three different meetings. We will present the lung data at ESMO, the triple negative breast cancer data at the Quadruple meeting that I just responded to Arlinda and we will provide an RCC update at the 18th International Kidney Cancer Symposium and we will continue to work very closely with Bristol on where and when to present those data. And JZ, I will let you answer the second question.

Yes, thank you Mary, and yes just very quickly. So at ASCO we will be focusing on melanoma and bladder as we are extending the data that we presented earlier, but focusing on translational elements and then later this year we will be covering as I mentioned earlier, the additional tumor types and that will be including the translational data, including PD-L1 data as appropriate in those presentations.

Thank you. Our next question comes from Daina Graybosch from SVB Leerink. Your line is open.

Hi, thank you for the question. A couple ones, going back to the deadline delay with BMS you mentioned the changing competitive landscape and those designs. I think somebody previously asked you a question if you are waiting for any particular readout and you said no. I wonder if you could give more color on the particular competitive dynamics that you are working through in those trial designs?

Yes, look, it's a good question. I wasn't being overly specific, but let me ask Mary to step in and give you some flavor for that.

Yes. You know I know Dan you and probably several other people on this call are closely following what is happening in the IO landscape and just one example that we can give you is in first line non-small cell lung cancer for example, the pembrolizumab label as a single agent for first-line non-small cell lung cancer was just expanded in April to include patients that are not only greater than 50% PD-L1 positive at baseline, but now it is expanded to the 1% to 49% population as well. And that certainly gives us pause to talk about our strategy in first-line lung, we have always said we are going with a chemo combination and a chemo sparing approach and this has brought us back to the drawing board to talk to our partner about the best path forward and that is just you know one example.

Got it. one more question on the deadline. Let's we passed the deadline and hopefully you start most of these registration trials. Thinking forward if you don't end up starting some, let just pick one, maybe sarcoma based in that data we see at ASCO depending on how difficult it is. Should we assume that maybe there wasn’t enough potential in that particular indication or is it possible that you would go on and collaborate with other checkpoints and company?

Yes, you know, I want to mention again, we have the broadest clinical development program ever known to man in a short period of time and really this delay is a factor of going forward with 18 registrational trials in a short period of time. we were very aspirational, we thought we would hit these 18 in a 14 month timeframe and I think what we realized is we need a few more extra months to file all those IND design studies and get the first patient in. Dr. Deangelo is going to provide a frame of reference for the data on rare sarcoma subtypes and she will be able to benchmark that too and nivo and if you put nivo, I can tell you that she calls me frequently about her desire to move this forward for this patient population that really doesn’t have good therapies to prolong survival.

That is great. One last question. It’s exciting that your IL-15 is moving forward, is it pretty competitive field with a lot of permutations of ISS teams some in the clinic and preclinic. Could you remind us how your asset is differentiated or how you will differentiate it in the development?

Yes sure great question Daina and so one of the most important things that we felt was critical was to maintain all of the different biological functions of IL-15 and so in this case what that means for this particular cytokine is that it can interact with multiple receptor subunits and a lot of those subunits signal in cell contact. When one cell expresses IL-15 down to an IL-15 receptor also and it engages a neighboring cell that expresses two other receptor sub forms, which are the beta and gamma receptors of the IL-2 receptor class. And this is what we call trans-presentation. And all of the competing molecules that are in the clinic, they are actually the IL-15 molecule in complex with the Alfa receptor and so they really act only in the soluble fashion bound to those diametric receptors they can’t reproduce that trans-presentation cell, cell contact and signaling. NKTR-255 that we made here at Nektar can completely maintain all of the biological functions of IL-15 including trans-presentation as well as signaling as a soluble form. And importantly, we did not have to introduce any immunoacid mutations into our IL-15 molecule to create NKTR-255 which is also completely different than all of the competing pipeline and some of which carry a large number of mutations in IL-15 which can limit the long-term ability to use such a molecule due to the risk of anti-drug antibodies. So those are some of the key features that go into how NKTR-255 is differentiated from a competition and then we are very, very excited because in some of our preclinical studies what we have been able to demonstrate is a repeated administration of NKTR-255 into non-human primates maintained biological activity with each dose administration cycle. We don’t see any kind of tacky prophylaxis or limiting or loss of biological effect on repeat administration. This is something very important, because there is clinical data out there with IL-15 molecules from other companies that show that repeat administration in the clinic can lead to a loss of biological effect overtime. We don’t see any of that in our non-human primate study. So we have a number of points of differentiation that make us very, very excited about that program and we are really looking forward to getting it into the clinic very soon.

Thank you. That concludes our conference call for today. Thank you and I will hand it back to Howard Robin for any closing remarks.

Well thank you everyone for joining us this evening and I want to as usual thank all the employees of Nektar for doing a spectacular job and moving forward with what I think is one of the best immuno-oncology and immunology pipelines in our industry and I'm very proud of what they have done. So thank you and we will see you at ASCO. Thanks.

Ladies and gentlemen thank you for participating in today’s conference. This does conclude the program you may all disconnect. Everyone have a wonderful day.