Nektar Therapeutics Stock

Hello, and thank you for standing by. Welcome to the Nektar Therapeutics Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] 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.

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 the therapeutic and commercial potential and development plans for rezpegaldesleukin, the timing and expectations for clinical trials, 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 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. 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.

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. 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 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've 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. And 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 T-reg agonist mechanism, REZPEG works fundamentally different 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 are evaluating its potential in type 1 diabetes in an ongoing Phase II study. We also believe there are other autoimmune conditions where a T-reg 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 2 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 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 T-reg 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-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 box warnings and an ongoing monitoring burden.

Our REZPEG market research with physicians in alopecia areata reaffirms this hesitation to prescribe JAK inhibitors. And 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 IIb program. In our first Phase I study, following a 12-week treatment cycle, we observed durability of clinical responses for approximately 9 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 2 studies, both in biologic and JAK inhibitor naive 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 2 pivotal biologic naive studies will enroll 510 adolescent and adult patients aged 12 and older randomized 2:1 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 naive 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 T-reg-based mechanism, REZPEG is designed to work upstream of targeted -- 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 improvement in patient-reported asthma symptoms. Approximately 25% of patients with moderate to severe atopic dermatitis also have asthma. And in our Phase IIb setting, 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 Sino-Nasal 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 IIb 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 III studies, and we are excited to share with you that we plan to present the SNOT-22 data from the REZOLVE-AD study at a future medical meeting.

Our strong REZOLVE-AD Phase IIb data underlies the design of our Phase III program. In REZOLVE-AD, we saw a 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 fivefold 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 III 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 II meeting with the FDA, and we received alignment to conduct a single registrational Phase III study, which we are calling ZENITH-AA.

In the pivotal study, we have finalized, 850 adolescent and adult patients aged 12 and older will be randomized to receive REZPEG at 24 micrograms per kilogram every 2 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 8 years. This was the inclusion criteria for all of the JAK inhibitor Phase III trials as well as our Phase IIb randomized placebo-controlled study.

We will include both patients who are naive 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 IIb 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 III 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 IIb REZOLVE-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 it twice-monthly or offer 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 REZOLVE-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 REZOLVE-AA week 52 data. We're grateful for the opportunity to present these data at this important meeting.

Beyond our 2 lead indications, the Phase II 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 reestablishing 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 for TNFR2 on T-regs 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 settings. 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?

Thank you, JZ, 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 million to $840 million in cash and investments.

Turning to the income statement. Our second quarter 2026 noncash royalty revenue totaled $10.1 million. Full year revenue for 2026 is still expected to total $40 million 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 million and $230 million, including approximately $5 million to $10 million of noncash 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 III 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 million and $65 million, including approximately $5 million of noncash depreciation and stock-based compensation expense.

Noncash interest expense for the second quarter was $7.2 million, and we expect noncash interest expense to total approximately $30 million 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 million 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.

[Operator Instructions] And our first question will come from Yasmeen Rahimi from Piper Sandler.

Congrats on getting the alignment of the ZENITH-AA study and 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 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 that would be 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 III study?

Yes. Thank you. That's a great question. I'll let Mary take that question.

Great. Yasmeen, thank you so much for congratulating us on having our Phase III 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 REZOLVE-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 into 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. And with respect to the Phase III, the most important for us is after 52 weeks of treatment on the Phase III 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 2-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 III program.

Likewise, in the first quarter of next year, we will have 52-week off-treatment data for our atopic dermatitis Phase IIb study. And in that, again, we're really looking to instruct what should the dosing be after 52 weeks of treatment. And should -- or are there patients that experience durability of responses beyond, say, a dosing interval that we evaluated in the Phase IIb such as 2 monthly and every 3 monthly.

We did see, of course, in our Phase IIb 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.

Our next question comes from Samantha Semenkow from Citi.

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 could elaborate a bit more on how physicians are thinking about prescribing REZPEG in the first-line setting. Are there 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 the portion that would be candidates, say, for first line versus second line or later?

Yes, very good question. Look, the market research that we did was extensive, and we want 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 be -- have to be a step-through through IL-13 to ultimately get to something like a T-reg 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 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.

Our next question comes from Jay Olson from Oppenheimer.

Thinking about eventually moving into the first-line setting.

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

Our next question comes from Cha Cha Yang from Jefferies.

This is Cha Cha 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 pretrial 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?

Yes. Look, always a good question. But of course, it's -- you can't really -- 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 8. And 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.

Our next question comes from Arthur He from H.C. Wainwright.

Congrats on the progress. And Mary, congrats to get 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 finished the -- only finished the 36 week, are we also looking to the data from that part of patients there?

Arthur, yes, we will be looking at both 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.

Okay. So just one quick squeezing. So when you were talking to the FDA, did they put some requirement for a medium or minimal duration for the current episode for the alopecia patient?

Yes. 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 8 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 4 years duration of their current episode. And 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 4 years and 4 to 8 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.

Our next question comes from Mayank Mamtani from B. Riley Securities.

I appreciate the level of detail. Two-parter question. On the EADV, what's the incremental data set that we should expect? And if there's a chance off-treatment REZOLVE-AA data could also be presented because it's October 1, technically fourth quarter? And I also could help with the enthusiasm for enrollment in your global alopecia Phase III.

And on the maintenance atopic derm data, should -- just based on your Phase Ib 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 Ib? And should we also expect to see some of the EASI-100 responders keep that off-treatment remission?

Great. Thanks, Mayank, for your questions. Certainly, as JZ mentioned, we're really pleased to have the 2 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. We -- when we submitted the abstracts, of course, we did not have the 24-week follow-up data. And therefore, of course, our abstract doesn't include this portion of our study. The study is still ongoing and blinded.

Now -- that being said, we -- 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 Rosmarin at EADV. But again, at this 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 of 52 weeks off treatment for the Phase IIb in atopic dermatitis, you're correct, -- we did show off-treatment data from our Phase Ib for 9 months. The difference here is now we'll have 3 additional months of follow-up post withdrawal from drug.

And we think that this is extremely important to us 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 continue 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 9-month time mark like we did in the Phase Ib as well as 52 weeks off 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 some patients -- for some patients that could be longer than every 3 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 2 questions.

Our next question comes from Julian Harrison from BTIG.

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 data set 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 the product potential, I'm wondering if you thought at all about supporting any signal-seeking efforts on an IIT basis. I'm sure you've done some investigator requests. Is that something you're open to? Or are future trials best to keep full control of at Nektar?

Yes, 2 very good questions. So first of all, regarding competition in alopecia areata, look, the study that was just released data that was just released, and I'll let Mary comment a little more on this, very little difficult to interpret. And it was also a single-arm study. So it wasn't a blinded study. It's 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 4 years and 8 years. And I'll let her comment on that in a moment.

And to your second question about looking at other indications, yes, we are in the process of considering which indications we would like to do some pilot studies to get some proof-of-concept studies. I think -- 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 T-reg mechanism, I do think there's other indications that we will be looking at.

I'll let Mary come back to your first question for some more insight.

Yes, sure. Julians, Howard mentioned this in our prepared remarks. We view the alopecia areata market as very large. And 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.

Now that being said, as Howard mentioned, the Q32 results are really difficult to interpret. It was a 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 the favor of any drug that's being tested.

By contrast, our Phase IIb study was randomized, it was 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 IIb trial that then was recognized by the FDA as being sufficient to move forward into a Phase III study.

So 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.

Our next question will come from Marc Frahm from TD Cowen.

Congrats on all the progress in getting the Phase III up and running. Maybe just, Howard, you touched a little bit about kind of the different unmet needs in the AD market, particularly as you think about treatment naive versus experienced patients. Just how do you guys view that as likely to kind of impact the relative enrollment pace for these Phase IIIs in the 2 different kind of flavors of Phase III, different patient sizes, but also different levels of unmet need?

Yes. Good question. I certainly think -- look, with the absence of OX40s, it certainly 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 will 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 you'd like. But overall, I think the market -- 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's other good drugs out there. I'm not -- 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.

Yes. Marc, thanks, Howard. Yes, I mean I think that this point was touched on briefly, okay, first. I mean one of the things that our market research showed us is that we would have good first-line penetration. And that's really because the -- 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 shows that a new MOA was extremely important for physicians. And 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 III study design, they're really taking advantage of not just what we've learned, but really even strengthening on where we saw the greatest differentiation in our Phase II 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 this registrational program.

Our next question comes from Jessica Fye from JPMorgan.

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 III trial that you're running, is Ebglyss a good comp there? Or if not, what should we think about?

Okay. That's -- 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 don't -- I think we should be successful in treating experienced patients. I'm going to let JZ and Mary comment a little more on that.

Yes, I can just start and JZ can finish. Yes, 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. 57% of the Dupi exposed patients who were treated with lebrikizumab had an EASI-75 at week 16.

And in the lebri Phase III studies, the ADvocate-1 and the ADvocate-2, the EASI-75 at week 16 was 52% and 59% in that naive population. So we -- and the ADAPT study did include patients who also had an inadequate response to dupi. So given this precedent, 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. And I think you touched on a lot of the key points that our mechanism with the T-reg induction, if anything, is meant to really help patients for whom inhibition of IL-13 or IL-4 and 13 is no longer adequate, right, to control their disease. This is one of the greatest features, right, of the T-reg approach is 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 all of these are all things that are going to be components of some potential data to be reported if Sanofi reports the results of their amlitelimab study in this patient population. That was designed as a randomized controlled trial. That will create one important piece of information for 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 the 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.

And our next question will come from Andy Hsieh from William Blair.

So Howard, you mentioned about the physician survey that you did. It's 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 time frame?

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 6 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?

Sure. 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 or onset of action was important, but the most important thing is long-term durability. And you could see that if you look at our maintenance data, the drug -- the results keep getting stronger and stronger, and I expect that they'll continue that way.

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 much more -- 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.

Thanks, Howard. I'll actually -- I'll do that. So yes, I want to describe a little bit about how that study is designed. So if you recall the teplizumab studies, the CD3 antibody. So the way that works is it's a very short treatment course, right? It's 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 that they did with teplizumab. So that was exciting for them. And so they selected a 6-month course. The mixed meal tolerance test C-peptide levels, they're measured throughout through a year. So they're measured both during the treatment as well as the 6 months after the treatment. But again, the whole theory and understanding of the disease, its progression and the worsening that people have is it's 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 in the -- right in the sweet spot of how these kinds of type 1 diabetes studies are done.

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

Well, thank you, everyone, for joining us today. And 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.

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

Hello and thank you for standing by. Welcome to the Nektar Therapeutics First Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference call 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.

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 Sandra Gardiner, our Chief Financial Officer. Dr. Mary Tagliaferri, our Chief Medical Officer, will also be available during the Q&A.

Before I begin, I would like to remind you that we will be making forward-looking statements regarding our business, including statements related to the therapy potential and development plans for rezpegaldesleukin, the timing and expectations for clinical data presentations, regulatory interactions 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 turn the call over to Howard.

Thank you, Vivian, and good afternoon, everyone. We are exceptionally proud of the progress we've made at the company. The data we've reported over the last year from our Phase IIb studies in atopic dermatitis and alopecia areata demonstrate that REZPEG could produce clinically meaningful outcomes in 2 distinct autoimmune and inflammatory disease settings. And importantly, the data sets reported in February and April of this year highlight the potential for REZPEG to offer further improvement for patients over time.

In February of this year, we reported the long-term monthly and quarterly dosing results from the 36-week maintenance portion of REZOLVE-AD in patients with atopic dermatitis. These data showed a significant durability and further deepening of efficacy and established a highly differentiated profile for REZPEG as a novel regulatory T cell mechanism. Supported by these results, we're moving quickly to initiate the ZENITH-AD Phase III program in patients with moderate to severe atopic dermatitis by July of this year.

We have completed our meetings with regulatory authorities on the Phase III program and JZ will discuss the elements of the program later in the call. We expect to have the first data from the Phase III program in mid-2028 and this will support our goal of submitting a BLA in 2029. There remains a need for novel mechanisms in atopic dermatitis beyond those currently available in the treatment landscape. In the U.S., there are over 15 million people with moderate to severe atopic dermatitis and fewer than 10% are receiving biologic treatments for this chronic skin disorder with many patients not responding well to the existing agents.

Roughly half of patients on existing approved agents, which includes Dupixent and other IL-13 based mechanisms, failed to respond or lose treatment effect over time. This leaves a significant opportunity for REZPEG to enter the treatment paradigm in a lead position as a novel immune modulating mechanism that could offer in both naive and experienced patients a differentiated efficacy and safety profile and monthly or quarterly long-term maintenance dosing.

Turning to alopecia areata. In April, we announced positive 52-week top line results from the blinded treatment extension period in the Phase II REZOLVE-AA study. These data also demonstrated a deepening of efficacy and clinically meaningful improvement across numerous SALT measurements with twice monthly dosing of REZPEG. We believe REZPEG can now be advanced as a compelling first-in-class biologic candidate that can change the treatment paradigm for patients with this condition. Nearly 6.7 million people in the U.S. have alopecia areata and the vast majority are untreated.

More than half of dermatologists have been reluctant to prescribe the only approved systemic therapies, JAK inhibitors, because of box warnings and ongoing clinical monitoring challenges. We know there remains an unmet need for an efficacious and safe biologic with a better safety, efficacy and dosing profile. Based on our KOL enthusiasm and market research, we believe there's a strong opportunity for REZPEG to capture frontline share in this indication. We plan to initiate the Phase III program in alopecia areata in the first part of 2027 to add a second potential indication to Nektar's BLA submission for REZPEG.

The global markets for atopic dermatitis and alopecia areata combined are expected to reach close to $40 billion over the next 5 years. And we believe that this market has the potential to grow even further with the adoption of novel mechanisms like REZPEG. We've seen this with the introduction of new mechanisms in the psoriasis market over time where the number of patients served grew tenfold over the span of 15 years and now supports 7 blockbuster products. That growth was not only driven by drugs competing for the same patients. Each new mechanism brought in new adopting treatment physicians who were not yet prescribing systemic therapies.

We believe atopic dermatitis and alopecia areata could be at a similar inflection point today and as a truly novel MOA, we believe REZPEG can transform the treatment paradigm in both these indications. And importantly, we believe that Treg biology and REZPEG has potential application beyond atopic dermatitis and alopecia areata. Nektar is now in a very strong financial position to support the advancement of REZPEG. Since year-end, we've raised approximately $783 million in net proceeds through 2 financings.

We ended the first quarter of 2026 with $731 million in cash and this does not include our April financing, which adds another $350 million to our balance sheet bringing total cash and investments today to over $1 billion. With this financial strength, we could advance into Phase III in both indications with a cash runway that brings us into the third quarter of 2028, well past anticipated data readouts.

I'll now turn the call over to JZ to go over our clinical programs in more detail. JZ?

Thank you, Howard. Good afternoon, everyone. As Howard said, over the past year, our clinical data generated from the REZOLVE-AD and REZOLVE-AA studies have confirmed that our approach with REZPEG to stimulate regulatory T cells translates into a differentiated clinical profile; compelling efficacy, a favorable safety profile, extended dosing frequency and responses that deepen over time. Unlike therapies that block a single inflammatory pathway downstream, REZPEG acts upstream restoring the fundamental immune balance that is disrupted in autoimmune and inflammatory diseases.

Last June, we reported the 16-week induction period in the REZOLVE-AD study, in which REZPEG demonstrated a rapid onset of efficacy on key metrics of EASI-75 and itch. REZPEG also achieved statistical significance on the primary endpoint of mean percent change in EASI score and for the high dose, met statistical significance on all key secondary endpoints at week 16. In the 24-week crossover data of patients originally assigned to placebo and crossover to treatment with high dose REZPEG Q2 week, we saw further deepening of response with no sign of plateau. These data bolstered our decision to advance a 24-week induction period into Phase III.

In the 36-week maintenance phase where patients continued on to less frequent monthly and quarterly dosing of REZPEG, we continued to see durability of the induction responses and observed increased responses for EASI-75, 90, vIGA and itch over time. This also included up to a fivefold increase in EASI-100 rates, which represents complete skin clearance, a level of response rarely achieved for patients. A key differentiating finding from our REZOLVE-AD study was the improvement in patient-reported comorbid asthma.

Approximately 25% of patients with moderate to severe atopic dermatitis also have asthma and most approved therapies do not address this comorbidity. REZPEG produced statistically significant improvements in the asthma control questionnaire or ACQ-5 scores at week 16 versus placebo, including in patients with uncontrolled asthma at baseline. Outside of Dupixent, no other approved agent or late-stage candidate has demonstrated this. We are including ACQ-5 as a secondary endpoint in the Phase III program with the goal of potentially including this in the label.

In Q1 of 2027, we expect to report 52-week off-treatment data from REZOLVE-AD. These data will allow us to assess the remittent potential of REZPEG beyond 52 weeks and we are looking forward to those data. We have completed the end of Phase II meeting with the FDA and the scientific advice process with the EMA and we will initiate the first trial in the global Phase III program by July of this year. Our planned registrational program called ZENITH-AD is expected to include 3 trials in total, 2 global monotherapy studies with 510 biologic-naive patients 12 years and older in each study along with a separate study in 510 treatment-experienced patients 12 years and older.

For the 2 pivotal biologic naive studies, patients will be randomized 2:1 to receive 24 micrograms per kilogram every 2 weeks or placebo during a 24-week induction phase to be followed by a 28-week maintenance period and evaluating monthly and quarterly dosing regimens through week 52. The overall design is intended to be consistent with prior registrational studies supporting approval of biologics in atopic dermatitis. The first 2 studies in biologic naive patients will begin first starting in July of this year and the third study in biologic experience will initiate a few months after that.

Our market research supports usage of REZPEG as a first-line and second-line biologic therapy and we have designed the program to capture this in the potential label. In addition to these 3 pivotal Phase III studies, the program will also contain other studies to support registration. These will also include a 200-patient open-label adolescent study and a long-term extension study. Additionally, we plan to launch REZPEG with an auto-injector and the BLA submission will also include a PK bridging study to support this. The agency is not requiring a vaccine study that has been done in some prior Phase III programs in this indication.

The Phase III studies are designed to support both U.S. and EU registration with an IGA-related primary endpoint for U.S. registration and an EASI-75 coprimary endpoint to support European approval. A series of multiplicity protected endpoints for itch and other important patient reported outcome measures such as sleep, quality of life and asthma control are designed into the studies as well. We expect a similar country distribution as Phase II with the addition of other selected countries in Asia to reflect the global footprint. As Howard stated, we expect the first data readout from the Phase III program in the middle of 2028.

Moving now to alopecia areata. We recently reported the 52-week top line results from the blinded 16-week treatment extension of our Phase IIb REZOLVE-AA study. As a reminder, our Phase IIb REZOLVE-AA trial enrolled 92 adult patients with severe to very severe alopecia areata. Patients received subcutaneous REZPEG in 24 micrograms per kilogram every 2 weeks, 18 micrograms per kilogram every 2 weeks or placebo. The primary and key secondary endpoints were assessed at the end of the 36-week induction period, which we reported last December.

These data demonstrated a proof of concept in alopecia areata and showed that REZPEG met the target product profile of standard of care low-dose JAK inhibitor. The extension phase was specifically designed to evaluate whether continued treatment with REZPEG beyond week 36 could drive additional patients to achieve a SALT Score 20 response. SALT Score 20 represents a patient achieving 80% or more scalp hair coverage, which is the established registrational endpoint in alopecia areata. This was an important question in order to determine if our Phase III program in alopecia areata should have a 36-week or 52-week primary endpoint treatment period.

The data in April showed that continued treatment with REZPEG drove meaningful new responses in patients who had not yet reached SALT Score 20 at 36 weeks. 29% and 31% of the 31 patients in the 18 and 24 microgram per kilogram dose arms who entered the blinded treatment extension, respectively, achieved new SALT Score 20 responses between weeks 36 and 52 with no new responses in placebo. Across other SALT measurements we looked at, increasing proportions of patients achieved clinically meaningful hair growth thresholds. And importantly, REZPEG achieved the target product profile with 52 weeks of twice monthly dosing.

Of note, nearly all of the patients or 94% who entered the blinded 16-week extension period completed treatment to week 52. And this demonstrates that when patients understand the promise of REZPEG to grow hair, they will continue on twice monthly treatment. As Howard stated, our plan is to hold an end of Phase II meeting with the FDA this quarter with the EMA scientific advice coming later this year to align on the global registrational path forward in alopecia areata. Our ongoing Phase IIb REZOLVE-AA study also has a 24-week off-treatment observation period for all patients. This data is expected in Q4 2026.

These data will give us an opportunity to understand what dosing regimens of REZPEG to use beyond 52 weeks in alopecia areata patients and whether we include a less frequent dosing regimen in the registrational program. We believe the 52-week data for REZPEG is well positioned to address several key unmet needs. First, the long-term safety profile is differentiated, including the suitability for chronic use without the safety and monitoring limitations associated with the JAK inhibitor class. Second, the twice monthly dosing profile enables better potential compliance. And third, the opportunity for more durable and deepening efficacy over time.

Beyond our 2 lead indications, we are pursuing the broader potential of the Treg mechanism. In type 1 diabetes, the ongoing Phase II study of REZPEG is being sponsored and funded by TrialNet, evaluating REZPEG in patients with new onset Stage 3 type 1 diabetes. TrialNet, as a reminder, 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 diagnosis.

In the study, patients are randomized 2:1 to REZPEG or placebo and receive treatment every 2 weeks for 6 months across 3 sequential age cohorts starting with adults 18 to 45 and stepping down to patients as young as 12 and then 8 years of age. The primary endpoint is the change in C-peptide levels after a mixed meal tolerance test at 12 months of treatment. We expect initial data from the study in 2027. Given the challenges with administration and safety of Teplizumab, REZPEG could be well positioned for new onset type 1 diabetes. We are also planning to initiate a proof-of-concept study in at least one new indication in the second half of 2026 with initial data expected in 2027.

We are analyzing the disease settings where a T regulatory mechanism has demonstrated clinical activity and this will help inform our decision on which indication to prioritize with the goal of achieving an additional data catalyst for REZPEG in 2027. And turning to our earlier pipeline programs, NKTR-0165 and NKTR-0166. NKTR-0165 is our 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.

In Q1, we announced an academic research collaboration with Dr. Stephen Hauser at UCSF to explore the role of TNFR2 agonism in neurodegeneration, neuroprotection and cell repair with a focus on patient-derived B-cell models of MS. We look forward to working with Dr. Hauser to inform the future development of this program. We expect to present preclinical data from NKTR-0165 at a scientific conference in the second half of this year. Building on the learnings from NKTR-0165, we have designed NKTR-0166, 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 settings and we are planning IND submissions for at least one of these programs in 2027.

With that, I'll turn it over to Sandy to review our financial results for Q1 2026.

Thank you, JZ, and good afternoon, everyone. On today's call, I'll review our quarterly financials for the first quarter of 2026 and provide updated cash guidance. We ended the first quarter of 2026 with $731.6 million in cash and investments with no debt on our balance sheet. In the first quarter, we completed an underwritten public offering in sales under our existing ATM facility resulting in approximately $525 million in net cash proceeds. This does not include an additional $351 million in net proceeds from our April financing.

As Howard mentioned earlier, our current cash balance exceeds $1 billion and we expect to end 2026 with approximately $800 million to $825 million in cash and investments. Now turning to the income statement. Our first quarter 2026 noncash royalty revenue totaled $10.9 million. Full year revenue for 2026 is still expected to total $40 million to $45 million. Our R&D expenses were $35.7 million for the first quarter of 2026 and we still anticipate full year R&D expense to range between $200 million and $250 million, including approximately $5 million to $10 million of noncash depreciation and stock-based compensation expense.

As we discussed on our March call, we are still completing the planning and budgeting activities for the REZPEG Phase III program. We do, however, expect R&D expense to increase on a quarterly basis in 2026 as these Phase III clinical studies are initiated. Our G&A expenses were $13.4 million for the first quarter. We continue to expect G&A expenses for the full year of 2026 to be between $60 million and $65 million, including approximately $5 million of noncash depreciation and stock-based compensation expense.

Noncash interest expense for the first quarter was $7.9 million and is expected to remain at a similar level for the remaining 3 quarters totaling approximately $30 million to $35 million in 2026. Our net loss for the first quarter was $44.9 million or $1.82 basic and diluted net loss per share. And as I stated earlier, we now expect to end 2026 with between $800 million and $825 million in cash and investments.

I'll now turn it over to the operator for Q&A.

[Operator Instructions] And our first question will come from Yasmeen Rahimi from Piper Sandler.

This is Dominic on for Yasmeen Rahimi. Congrats on a great quarter and appreciate all the updates. So we're excited for you to be kicking off the Phase III AD program soon. Could you just remind us of what are some of the rate-limiting steps left for those -- I guess you have the 2 trials that are starting here shortly? And then could you walk us through some nuggets of detail? I know you said there will be some sites similar to the Phase IIb. So what would the site overlap I guess look like for that? Do you have any nuggets of detail on the CRO selection? Anything like that would be very helpful.

Dominic, this is Mary. Thank you for your question. We too are very excited to move forward with the Phase III study. We right now are activating sites and we have the final protocol written. In terms of sites, remember in the REZOLVE-AD Phase II, we enrolled 17% of the patients from the United States and 28% from North America and we had 67% of the patients came from Europe and 5% from Australia. In the Phase III program, we're going to have a larger footprint particularly in the APAC region or the Asian Pacific region.

We in general expect to enroll roughly 15% to 25% of patients from North America with a similar proportion of patients specifically from the United States as in our Phase IIb trial and then approximately 40% to 55% of patients will come from Europe and roughly 20% to 30% from APAC. We will have a number of clinical sites that participated in our Phase IIb program participating in the Phase III as well. We had roughly 130 sites that were activated for the Phase IIb trial and we'll have roughly 150 sites activated for each one of the Phase III studies. Thanks for your question.

Our next question comes from Julian Harrison from BTIG.

Congratulations on all the progress. On your Phase III plan in atopic dermatitis, I'm wondering if you could talk more about the decision to have a separate biologic experience study versus maybe mixing both naive and experienced patients across 2 larger studies?

Yes. Thank you, Julian, for that question. Obviously the cytokine blocking agents that came before us enrolled patients that were biologic naive. And we do feel it is important to be able to compare the results of the REZPEG study on the EASI-75, the IGA and other secondary endpoints directly to those cytokine blocking agents and for that reason, we do want to have just a naive patient population. In terms of the experienced patients, we do believe that we'll have similar efficacy in that population and that's certainly what has been seen in the lebrikizumab trial that evaluated patients who had previously been treated with Dupixent.

The EASI-75 and the IGA score was similar to what we've seen with lebrikizumab in the naive patient population. However, we have not yet studied the biologic experience in the JAK inhibitor experienced patients yet. Likewise, there may be different clinical sites that has a larger patient population with the biologic experienced patients and it will be easier for us to find the footprint and enroll those and activate those sites for the experienced study. So we think operationally, there are advantages to do it. And likewise again having the ability to compare directly to Dupixent and lebrikizumab and trilkizumab that just enrolled the naive patients, we believe will be an advantage. So thanks for the question.

Our next question will come from Jay Olson from Oppenheimer.

I'll add my congrats on all the progress, including getting ZENITH-AD up and running in the near term. We had a question on alopecia areata. Can you please provide some updates on your thinking around the Phase III study design for REZPEG in AA and especially in terms of the enrollment criteria in terms of age of patients and baseline SALT Score and then whether or not you think a single Phase III study is sufficient?

Jay, thank you for your question. We are having our end of Phase II meeting with the FDA this quarter. So we will have more information following the regulatory meeting that we're having. That being said, the Phase III study design will be 52 weeks. We will evaluate REZPEG 24 micrograms per kilogram versus placebo. We think a study roughly the size of 600 patients and 1 single study should be accepted by the FDA. The reason we believe this is that Pfizer did run 1 Phase III study for Litfulo, their JAK inhibitor, and the FDA did accept 1 single Phase III study. So we have asked the FDA to confirm this precedent would also be applied to our program.

In terms of age, patients would be 12 years and older. And in terms of baseline SALT Score, we will enroll patients with severe and very severe alopecia areata, which is a SALT Score of 50 or above. Many people have asked us could we develop REZPEG for patients with moderate alopecia areata and we do think the answer to that question is yes. However, that would come after we have an approval for the severe and very severe population. And of course JAK inhibitors are not appropriate for that patient population given the black box warnings that Howard referred to and the difficulty in managing patients on JAK inhibitors. However, we think there's a huge opportunity for REZPEG in that patient population as well.

Our next question comes from Cha Cha Yang from Jefferies.

This is Cha Cha on for Roger Song. So I have a question about your earlier pipeline program, especially in T1D. Can you just tell us more about the collaboration with TrialNet and what that looks like and particularly what rights that Nektar has about data into future development rights? And then my second question related to that is can you tell us more about the baseline characteristics for the T1D study and how they might compare to the PROTECT study?

Sure. So in that collaboration with TrialNet, which is part of the NIH and the NIDDK, TrialNet and the TrialNet consortium besides funding is also executing the study. So we work together on the design of the study protocol. It leverages all of their expertise, including the really large data set that they have on the change in C-peptide levels in patients that are newly diagnosed, really this patient population. We also work closely with the lead investigators. And even on our call when we announced the start of the collaboration, the 2 lead PIs joined that call with us to present the study and the concept behind REZPEG in this indication.

So we'll be working with them, but they're responsible for really driving the execution of the study. The patient population is very, very typical in these studies. So there are patients that are within 100 days of their first diagnosis of type 1 diabetes. So these are patients that have really just had their first clinical episode of disease and they're enrolled into the study within 100 days. So a very typical patient population for these kind of new onset Stage III type 1 studies. And in terms of the rights, Nektar maintains the rights to REZPEG and the future development in type 1 diabetes that would come subsequent to this if this study is possible.

Our next question comes from Samantha Semenkow from Citi.

I just have 1 on the upcoming off-treatment data sets that we're expecting for both atopic derm and alopecia areata. How should we be thinking about what good data would look like in these readouts? Is there a bar for easy maintenance for example or a SALT Score maintenance that you would like to see from each of these or some other metrics that you're tracking closely?

Sam, so I think I'll start with alopecia areata first. We continue to dose those 27 patients for an additional 16 weeks and we just shared those data. And as you saw, there were 8 new SALT Score -- 8 new patients that reached a SALT Score less than or equal to 20. The big question that we have is what type of maintenance dosing will be best suited for these patients that have achieved a SALT Score less than 20 or have 80% of their hair regrowth. We figured that out in our atopic dermatitis program, the ideal maintenance dosing after a 16- or 24-week induction period should be 1 month and 3 months.

In terms of alopecia areata, after 52 weeks of treatment, we don't yet know what the maintenance dosing should be. And so for that off-treatment data that we're going to have at the end of this year, it's going to be highly informative to us to understand how we should continue to dose patients in the alopecia areata program after 52 weeks of treatment given 24 micrograms per kilogram every 2 weeks. In terms of the data from the REZOLVE-AD study, you're absolutely right. We'll continue to follow the durability of those patients' responses in those patients who achieved an EASI-75 and EASI-90 and IGA 0 and 1 and we'll continue to look at the durability of those responses.

As we saw with Q monthly dosing and Q 3 months dosing, we had exceptional durability and we also saw deepening of responses. Now with the off-treatment, we'll be able to determine are patients able to maintain those EASI-100 responses, the 30% of patients that achieved that and the IGA 0 and 1 responses. And remember, we had roughly 60% of patients who had an EASI-75 or vIGA at the time of rerandomization achieving an IGA of 0 and 1. So we'll be very eager to see the durability of maintaining the EASI-75, the EASI -100 and vIGA-01.

I think this will be highly informative again to understand the dosing frequency for these patients after they're treated with 52 weeks of treatment. So you're absolutely right. The standard endpoints that we use for clinical trials will also be the endpoints that we'll look at in the off-treatment time frame. Thanks for the question.

Our next question comes from Marc Frahm from TD Cowen.

Congrats on all the progress getting the trials designed. Maybe just on that bio-experienced patient study in atopic dermatitis. Can you just walk through kind of how you're defining bio-experience there? Will patients be required to have overtly failed therapy or could they have discontinued for any other reason? Just how long do they have to have been off therapy, things like that? And will that include JAK experienced patients or just focused on the IL-413 pathway?

Thanks, Marc, for the question. So all the candidates have to require systemic therapy. So they have to have a history of atopic dermatitis for at least 12 months and they had to have had an inadequate response to topical medications. And then in addition to that, these patients have to have then had either a biologic or a JAK inhibitor. So we will be enrolling patients that have also been on JAK inhibitors.

In terms of washouts for biologic, patients will have to have been off treatment for 12 weeks or 5 half-lives, whichever is longer. And then for JAK inhibitors, there will be a washout of 4 weeks. The eligibility criteria for moderate to severe atopic dermatitis is very similar for both studies, of course patients have to have an EASI score of 16 or higher, a body surface area of 10% or more and have an entry of an IGA of 3 or 4.

Okay. That's very helpful. Do you think you need to be successful in all 3 trials to get approved or is 2 out of 3 enough for approval do you think?

Yes. I think that this is a great regulatory question. And as we unblind the data and have conversations with our regulatory advisers, I do believe that showing efficacy in 2 well-controlled randomized trials would be sufficient for regulatory approval. But we again will have to have those conversations with the FDA at the time of our BLA submission.

Our next question comes from Mayank Mamtani from B. Riley.

Congrats on the progress. Just on the prior comment on the AD off-therapy durability data. Just curious how do you expect an endpoint like EASI-100 to sort of evolve over time there? And then on the earlier stage pipeline, the 0165 specific program, JZ, just was curious how you're thinking of developing that maybe relative to 0165? And maybe just remind us what are the key milestones to watch out for those 2 programs?

I can start with the last question first, Mayank. So for 0166, so as we mentioned, that it's a bispecific, right? That contains a TNFR2 agonist on 1 arm and then a validated target for rheumatology indications on the other arm. So our indications are definitely in the rheumatology setting. And then we have the opportunity to have basically multiple mechanisms, right, that we bring forward on the cell as well as adding a TNFR2 second component for a potential differentiating novel approach to treating rheumatology diseases. In terms of the main milestones that we have across that program is we have IND-enabling studies around 0165 and then the 0166 program is a little bit further behind, but it's also undergoing those same IND-enabling studies as well. And I'll turn it over to you, Mary, for the other question.

Yes. So as you know, we did publish data from our Phase Ib in Nature Communications and this was published in 2024. And what we did show is that patients were dosed with the highest dose of REZPEG 24 micrograms per kilogram and then those patients after 12 weeks of treatment were off therapy for a total of 9 months. And we did see that these patients were able to maintain their EASI-75 and there was remarkable durability and you can see that in the publication. So if we replicate the data from the early Phase I, we would see durability for potentially 9 to 12 months off therapy.

Again I think the goal here is to find a treatment regimen that's highly differentiating from the current available therapies. And as you know with Dupixent, patients have to take an injection every 2 weeks indefinitely. And so we really believe if we can get to a dosing regimen of REZPEG that's monthly or every quarterly just like SKYRIZI 4 times a year, this will be a huge advantage for patients and quite a transformation in this field.

Hopefully, the data will also show durability off treatment. And therefore, if patients go for longer than 3 months without dosing especially if they get to an EASI-100 complete clearance of disease and have this level of durability, this will be a huge advantage for patients. I think we're all eager to see the data and to see the length of time that patients can maintain their IGA 0 or the EASI-75, EASI-90 and EASI-100. So we really look forward to having those data in the first quarter of next year. Thank you for the question.

Our next question comes from Arthur He from H.C. Wainwright.

Congrats on the progress. So I had 2 quick questions on alopecia areata program. So first, could you remind us how you picked the 24-week treatment period at the first place, why not longer? And also for the Phase III study, are you guys contemplating to include JAK inhibitor experienced or refractory patients in the Phase III study for alopecia areata?

So we chose the 24-week off-treatment period because you may know with JAK inhibitors, patients start to lose hair relatively quickly and so we felt like that was a sufficient amount of time to potentially see a differentiation between JAK inhibitors and REZPEG. And in terms of the Phase III, we are going to go with patients who are JAK inhibitor naive. However, there are multiple other ways to evaluate REZPEG in a patient population that is JAK inhibitor experienced. We do believe that in this particular indication, REZPEG could be a first-line therapy.

And for those of you who were able to listen to our presentation for the 52-week data in alopecia areata, all of our KOLs said that the vast majority of patients and in fact Jonathan Silverberg said 90% of his patients would use REZPEG in the first-line setting. So we do and we are positioning REZPEG in the first-line setting for alopecia areata. And we do believe the drug will be effective as well in patients who have already experienced a JAK inhibitor and we'll find another pathway to explore REZPEG and evaluate REZPEG in that patient population as well. So thanks for the question, Arthur.

Our next question comes from Andy Hsieh from William Blair.

Just follow up on Jay's question previously. Mary, you mentioned about having to basically conduct a Phase III trial in alopecia and getting a label before conducting a trial in a moderate population. So I'm curious, one, do you have to go back to a Phase II or you can start a Phase III after that? And then the other one is really about understanding FDA's pushback. Is it -- are they not comfortable with the safety database especially now you have hundreds of patients in safety database? So just I'm curious about why there's such a regulatory pushback in a moderate population.

So we do have to speak to the agency about the moderate population. But after speaking with our steering committee members, the placebo effect for alopecia areata for patients who have severe and very severe disease is very low. For SALT 20, it's single digits between 2% and 5%. So running a clinical trial where the placebo effect for your primary efficacy endpoint is low and testing the same population as in our Phase IIb AA study gives us a high probability of technical success for our registrational program.

Now that being said, in the moderate patient population per our KOLs and our steering committee, the placebo effect could be higher in the population of patients that have, say, a SALT Score that's actually less than 50 so in the 30 to 50 range. So we believe that the best path forward is to go with the clear regulatory precedent where there is a clear endpoint for the patient population that's with a SALT 50 or above. And we will have a conversation with the FDA about the moderate patient population. We have not gotten feedback yet through our end of Phase II or regarding the moderate population. So we have not received any pushback. We just haven't had the conversation yet, Andy.

And our next question comes from Jessica Fye from JPMorgan.

This is for Joseph for Jess. It seems like you have much of the plan in place for the Phase III in alopecia. So I just wondering if you can -- what are the points that you can hammer you want to hammer out with FDA at the end of Phase II meeting?

Yes. Of course a lot has come up about can you run 1 Phase III clinical trial versus 2 and again there's precedent for 1 Phase III clinical trial for this indication. As we mentioned, Pfizer was able to have their JAK inhibitor approved with 1 Phase III. So I would say that's probably the most important question and answer that we want to have from the FDA after our end of Phase II meeting. In addition, we have submitted our study design and we want to make sure that the FDA agrees with the powering of our trial and the eligibility criteria.

And I think the third and also important point is the totality of our safety data. As Andy Hsieh just brought up, we do have a very large safety database with over 1,000 patients dosed in an inflammatory skin disease. And so we also want alignment with the agency over the safety database for alopecia areata when we file our BLA. So those are 3 of the most important topics that we want to have clarity and alignment with the agency. Thanks for the question.

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

Well, before I end the call today, I want to comment that Sandy, our current interim CFO, will be retiring on May 15. And as our interim Chief Financial Officer, Sandy has played an instrumental role in supporting Nektar over the last 3 years and we're very grateful for her contributions and we'll miss her. For continuity, we're bringing in another partner from FLG Partners, Linda Rubinstein, who will take over Sandy's role as interim CFO. Linda has 35 years of experience and has served as interim or permanent CFO leading finance and financial reporting at a number of biotechnology companies including Solexa, Five Prime, True North and most recently, Adverum. Her early career was in M&A banking. And all of us do wish Sandy the very best in her retirement.

I want to thank everyone today for joining us and for your continued support. We really appreciate it. I also want to thank our employees who have worked tirelessly to advance our research in pursuit of novel treatment options for patients and together, we've transformed our scientific hypothesis into real and potentially meaningful therapeutic options. We look forward to initiating our Phase III studies in atopic dermatitis in the coming months and advancing alopecia areata into Phase III as well. And we will also be exploring other REZPEG potential in T-cell-mediated diseases. So we thank you very much for joining us today and stay tuned.

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

Ladies and gentlemen, thank you for joining us, and welcome to the Nektar Therapeutics Analyst and Investor event to discuss REZOLVE-AA 52-week top line results from the extension treatment period. [Operator Instructions]

I will now hand the conference over to Vivian Wu, Investor Relations and Corporate Affairs. Vivian, please go ahead.

Thank you, and good morning, everyone. Thank you for joining us today. Today, you will hear from Howard Robin, our President and Chief Executive Officer; Dr. Jonathan Suski, our Chief Research and Development Officer; and Dr. Mary Tagliaferri, our Chief Medical Officer. We're also joined today by our panel of experts in dermatology and alopecia areata, who will join us in Q&A. Dr. Jonathan Silverberg, Dr. David Rosmarin and Dr. Benjamin Ungar.

On today's call, we expect to make forward-looking statements regarding our business, including statements regarding the potential of and future development plans for rezpegaldesleukin. The timing and plans for future clinical data presentations 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, many of which are outside of our control. Our actual results may differ materially from these statements.

Important risks and uncertainties are set forth in our most recent annual report on Form 10-K available at sec.gov. We undertake no obligation to update any of these forward-looking statements, whether as a result of new information, future developments or otherwise. A webcast of this call will be available on the IR page of Nektar's website at nektar.com.

With that said, I would like to hand the call over to our President and CEO, Howard Robin. Howard?

Thank you, Vivian, and good morning, everyone. We're very pleased this morning to share the exciting top line results from the 16-week extension period of our ongoing REZOLVE-AA Phase IIb study, which is evaluating rezpegaldesleukin in patients with severe to very severe alopecia areata. At Nektar, our strategy has been to advance a first-in-class regulatory T cell or Treg mechanism to address the underlying biology of autoimmune and inflammatory diseases. Rezpegaldesleukin, also known as REZPEG is a first-in-class IL-2 pathway biologic designed to selectively expand regulatory T cells, also known as Tregs, to address the underlying biology of immune and inflammatory disease. Our Phase II program currently spans 3 indications, each of which could offer significant commercial opportunity for REZPEG, atopic dermatitis, alopecia areata and type 1 diabetes. With the transformative data today, we have now demonstrated that REZPEG can offer a truly meaningful clinical benefit in 2 different and distinct immune-mediated diseases and we will be initiating the Phase III ZENITH-AD studies in atopic dermatitis around the middle of this year. If we're successful in Phase III, we expect to report our first pivotal data in mid-2028 and to submit the first BLA filing for the program by the end of 2029.

In February, we announced very strong 52-week data for REZPEG, including 36 weeks of once a month and once quarterly maintenance therapy in patients with moderate to severe atopic dermatitis. And today, we will show the potential for REZPEG in patients with alopecia areata at 52 weeks of twice monthly dosing. We believe a novel mechanism of action, which is distinct from the existing approved classes of IL-13 and JAK inhibitor medicines is greatly needed by physicians and patients in both of these disease settings. Importantly, these 2 global markets alone are expected to reach close to $40 billion over the next 5 years.

Finally, through our collaboration with TrialNet's type 1 diabetes consortium, REZPEG is also being evaluated in new onset Stage III type 1 diabetes, further extending the reach of this mechanism into another autoimmune disease setting. The Phase II study is sponsored and funded by TrialNet, and we expect initial data from this trial in 2027.

The TrialNet study is evaluating REZPEG's ability to preserve beta cell function in patients with Stage 3 new onset type 1 diabetes. Currently, Tzield is the only agent approved to treat new onset type 1 diabetes. And although it represented a breakthrough for patients at the time of its approval, it carries a risk of cytokine release syndrome and infections and requires daily intravenous administration challenges. We're hopeful that REZPEG could offer a potentially better option for these patients and look forward to seeing the results from this trial.

Look, as I said earlier, we have now demonstrated REZPEG has shown meaningful clinical efficacy in atopic dermatitis and alopecia areata, and this sets the stage for the use of this novel Treg mechanism in other immune and inflammatory disease settings. And with that, I'm going to turn the call over to JZ. JZ?

Thank you, Howard. I'd like to spend a few minutes talking about the opportunity to help patients with alopecia areata and reviewing the mechanism of Treg biology in this disease setting. Alopecia areata affects roughly 160 million people worldwide with approximately 30 million new cases diagnosed every year. The only class of systemic medicines approved our oral daily JAK inhibitors, and as a result, there remains a major unmet need in this indication for safe and durable therapeutic options. These agents carry multiple boxed warnings and they're also associated with high relapse rates after patients stop treatment. In spite of that because of the patient need, the sales of JAK inhibitors are expected to grow significantly by 2033. We believe this opens a significant opportunity for Nektar to advance REZPEG as the first biologic to be approved to treat these patients, offering potentially better safety and efficacy, which could improve over time with continued treatment. We know many physicians and patients are seeking alternative first-line treatment options for patients with alopecia areata. And here, we present the scientific perspective of how we believe Tregs are addressing the disease pathology behind alopecia areata. In healthy individuals, the hair follicles are in an immune-privileged state, meaning that they suppress immune responses, thereby protecting themselves. In alopecia, however, this immune privilege is lost, leading to an immune-mediated attack on the hair follicle and ultimately resulting in hair loss. REZPEG targets and proliferates Tregs, which play a central role in maintaining immune tolerance. By enhancing Treg function, REZPEG can help restore the immune balance to once again protect the hair follicle from immune attack, halting hair loss and supporting hair growth.

This slide shows published results from an anonymous survey of 131 Board-certified dermatologists and underscores that the majority of doctors would consider alternative therapies for alopecia areata before initiating a JAK inhibitor. They cited primary factors, including boxed warnings, routine safety monitoring, extensive testing and high rebound rates upon cessation of therapy. Taken together, these findings highlight a clear need for additional therapeutic options, particularly those that can offer differentiated safety profiles and improved durability of response.

Shown here are findings presented at AAD from an external analysis of [ Symphony ] claims data, evaluating treatment patterns of patients treated with approved JAK inhibitors. These results demonstrate that most patients are initiated and treated with low-dose 2-milligram baricitinib, and the data also demonstrate poor persistence on therapy with most patients discontinuing treatment within the first 6 months. The persistence was even shorter among patients who stayed on baricitinib 2-milligram treatment with median duration of time on therapy approximately 3.7 months. This poor persistence tells us that there remains a significant unmet need for effective treatment options. And we believe there are several factors that lead to the challenges with JAK inhibitors being used more widely. We've already mentioned the safety concerns in the boxed warnings that limit JAK inhibitor use, and additionally, JAK inhibitors are taken orally once daily, which can present challenges for long-term drug adherence. A treatment with less frequent dosing could improve persistence on therapy.

Beyond adherence, a therapeutic option, which has an extended biologic pharmacodynamic effect can offer durable and stable efficacy, even in the setting of imperfect compliance. There also remains an opportunity for our therapy that reduces or eliminates routine laboratory monitoring that comes with prescribing JAK inhibitors. Finally, an option that offers a more straightforward market access with broader eligibility can greatly benefit patients. These parameters, if met, could provide physicians with an alternative to JAK inhibitors and redefine first-line systemic treatment in alopecia areata. And we believe that REZPEG's novel Treg mechanism has the potential to address these major unmet needs.

And with that, I'll now turn the call over to Mary to discuss our findings from the Phase IIb REZOLVE-AA 16-week treatment extension. Mary?

Thank you, JZ. Before we dive into the findings, I'd like to briefly review the clinical trial design. As a reminder, our Phase IIb REZOLVE-AA trial enrolled 92 adult patients with severe to very severe alopecia areata. Patients receive treatment every 2 weeks with subcutaneous REZPEG 24 micrograms per kilogram, 18 micrograms per kilogram or placebo. The primary and key secondary endpoints shown here were assessed at the end of the 36-week induction period. We reported on these data in December of last year.

Now let me explain the purpose of the blinded 16-week treatment extension. Unlike a traditional maintenance phase of an atopic dermatitis trial where responders advance to additional weeks of treatment, the alopecia areata study selected for the nonresponders to continue treatment. The sole purpose of the extension was to determine if continued treatment with REZPEG beyond 36 weeks could yield a higher proportion of patients achieving sALT 20, which is the FDA registrational endpoint. This was an important question to ask to determine if our Phase III trial should have a 36-week or 52-week treatment interval. To this end, patients with a SALT score greater than 20 at week 36 of treatment who also demonstrated hair growth had the opportunity to enter the blinded 16-week treatment extension. All nonresponding patients who crossed over to the extension period continued on their original dose assigned at randomization. Patients who achieved a SALT score 20 or better in the first 36 weeks of treatment were not eligible for treatment extension, and therefore, completed dosing at week 36. Grasping this design element is essential to understanding why the trial is focused on the SALT 20 end point.

From a statistical standpoint, when we're looking at week 52 endpoints today, we are carrying forward the patient data from the 36-weeks of induction for the patients who did not enter the extension. And one last comment on this slide. Later this year, we will have the blinded data for all patients observed for an additional 24 weeks of treatment, a period of time, which will help us understand the maintenance dosing regimen for REZPEG beyond 52 weeks.

So as shown here, a total of 31 patients with a SALT score greater than 20 at week 36 entered into the blinded treatment extension period to receive 16 weeks of twice monthly dosing of REZPEG. Today's presentation will review data from these patients who completed the full 52-week treatment regimen and then analyze the entire 52-week patient population. Again, the exploratory treatment extension was specifically designed to assess whether additional dosing beyond 36 weeks would enable more nonresponding patients to achieve a SALT score of 20 or less. Remember, a patient with a SALT score of less than or equal to 20 has 80% or more hair coverage on their scalp. This is an important measurement because this is the registrational end point used in the U.S. for Phase III approvals in alopecia areata. Now recall, as I just mentioned, we did not permit the best responders at week 36, those who achieved SALT 20 or better to continue on treatment. That said, there was 1 placebo patient with the SALT 20 who advanced to the extension because the investigator asked for special dispensation. When the decision was made, everyone was blinded to the patient's treatment arm.

One other important point, given that SALT 20 responders did not continue on treatment, this study was not designed to evaluate deepening of responses as we did in our maintenance phase of the atopic dermatitis Phase IIb study that we presented earlier this year. Ultimately, the extension period allowed us to confidently select the optimal dosing interval, 36 weeks or 52 weeks, for the Phase III as well as evaluate the safety for twice monthly dosing over 52 weeks.

Now drilling down into the extension phase of REZOLVE-AA, 13 patients continued on the 24-microgram per kilogram dose every 2 weeks, 14 patients continued on 18-micrograms per kilogram dose and 4 patients continued on placebo. Consistent with our primary goal for the extension period, we are presenting SALT score 20 results as well as other dichotomous endpoints. Because not all patients who completed dosing at week 36 continued treatment, we are not presenting the continuous endpoint of mean percent change.

With that introduction, the exploratory endpoints at week 52 that will be presented today include new SALT score 20 responders between weeks 36 and 52 for only those patients who entered extension. For the complete patient population presented in December, we will also report the overall SALT score of 20 or less at week 52 and the overall SALT score of 30 or less at week 52, which correlates to 70% or more hair coverage on a patient's scalp. In addition, we will look at the overall SALT subscript 30 at week 52, which is a 30% improvement from a patient's baseline SALT and overall SALT subscript 50 at week 52, which is a 50% improvement in the baseline SALT score.

Now moving to our findings. Let me first start by showing a waterfall plot that illustrates the overall deepening of response from all 31 patients who entered the blinded 16-week treatment extension period. On the left is the best SALT percent reduction for the 36-week treatment period and on the right is the improvement seen for the same patients during the treatment extension out to 52 weeks of total treatment. These data unequivocally show that REZPEG-treated patients in the extension period achieved deepening of responses. At the end of 36 weeks of treatment, 4% of responders achieved a 75% or greater reduction in their baseline SALT score. After 52 weeks of treatment, 26% of patients achieved a 75% or greater reduction in their baseline SALT score. It's important to note that 94% of the patients who entered the blinded 16-week extension period completed treatment to week 52. This demonstrates that when patients understand the promise of REZPEG to grow hair, they will continue on twice monthly treatment.

Now looking at new SALT 20 responses in the 16-week extension. We're excited to share a total of 8 new SALT 20 responses were seen in the 27 patients on the REZPEG arms, 4 in each treatment group. The low dose of 18 micrograms per kilogram had 29% of the patients in that arm achieve a new SALT 20 response. And in the high dose of 24 micrograms per kilogram, 31% of patients achieved SALT 20 responses. There were no new SALT 20 responses in the placebo arm.

Now let's see how the 16-week results look across the entire study population. Shown here on the left are the data reported in December at 36 weeks of treatment and shown on the right are the 52-week data. When we compare the SALT 20 response rates at week 36 and week 52, you can see that the percentage of responders increases from 15.6% to 27.6% with the additional 16 weeks of treatment. And this rate for the high dose of REZPEG compared to placebo reaches statistical significance with a p-value of 0.049. Also note, no patient who achieved a SALT 20 score or better in the 36-week induction period relapsed while on treatment. You can see the slope of the curve has an upward trajectory without a plateau, so it is plausible that REZPEG-treated patients will continue to achieve benefit after a year of dosing.

These data strongly support a 52-week induction interval for Phase III and suggest that patients who stay on treatment can continue to do better and better over time.

Now shown here are the 52-week time points for REZPEG and the results for low-dose Olumiant from the BRAVE registrational studies. Our goal was to achieve a similar response rate compared to Olumiant 2 milligrams at 52 weeks for the key SALT 20 registrational endpoint. These data show that REZPEG met the target product profile that we prespecified at the outset of the study. With comparable clinical benefit to a low-dose JAK inhibitor, plus twice monthly dosing and a more favorable safety profile, it is easy to see how REZPEG could become the first biologic used as first-line therapy for alopecia areata.

Now moving on to review a few additional exploratory endpoints. Here, we present the proportion of patients achieving a SALT score of 30 or less, which represents 70% or more hair coverage on the scalp, as I mentioned earlier. On the left are the SALT 30 response rates from week 36, and on the right, you can see the improvement at week 52 across both cohorts. The high-dose 24-microgram per kilogram cohort saw response rates increase from 29% at week 36 to 35% at week 52, and this was statistically significant compared to placebo.

Now shown here are the 52-week observations for SALT score 30 seen with DUPIXENT on the right, which is from a single-site investigator-sponsored study with a similar number of patients enrolled as in REZOLVE-AA. As you can see, DUPIXENT has shown some promise in alopecia areata and even has a new Delphi consensus guideline recommendation to be used in patients with a history of atopic dermatitis and alopecia areata. Not surprising in contrast to the SALT score 20 graph where the slope of the curve continues in an upward trajectory, you can see on this slide, with a lower threshold of efficacy, there is a plateau in the curve that begins around on week 36. It is possible that with greater retention in the Phase III trial, even this endpoint can reach a higher proportion of patients attaining at least a 30% reduction in their baseline SALT score. All in all, as clearly demonstrated, REZPEG has a very attractive profile.

Here, we are showing patients with a 50% reduction in SALT score from their baseline value compared to the same data for DUPIXENT. Again, the comparison highlights the promise of REZPEG as a potential first-line biologic for alopecia areata.

So in summary, given the major unmet need for a safe biologic as an alternative treatment to JAK inhibitors, the totality of the data presented today support that REZPEG could be a real breakthrough therapy for patients with AA.

Now moving to safety. Overall, the safety profile observed in REZOLVE-AA is consistent with previously reported studies. Patients in this study received every 2-week treatment with a proportion of them receiving treatment out to 52 weeks. This represents the longest twice monthly dosing duration study in the REZPEG program, and we are pleased to say that the safety profile remains very favorable, and there were no new safety findings. No patients discontinued treatment during the 16-week extension due to an adverse event and nearly all AEs were mild to moderate in severity and self-resolve. The placebo-adjusted ISR rate was consistent with prior studies and no patient discontinued due to an ISR after 52 weeks of treatment. There was also a lower frequency of ISRs observed over the longer dosing duration in the extension period, similar to what we saw in the atopic dermatitis 52-week treatment data. Importantly, the median time to ISR resolution was 5 days. Now as a point of differentiation, there were no indications of increased risk associated with oral herpes, conjunctivitis, facial swelling, erythema, oral ulcers, myocardial infarction, pulmonary embolism, deep vein thrombosis or malignancy. Importantly, the known AE profile of REZPEG should not require the extensive laboratory testing or monitoring typically associated with JAK inhibitors.

Now I'd like to move on to case study so you can see the significant hair growth patients experienced during the trial. Here, we have a 40-year-old man who experienced improved efficacy with extended treatment. This was a case we presented in December in a patient who entered into the extension period and achieved a SALT score of 20 at week 40. At the top of the photos, you can see this patient had a shaved head, and he went on to benefit from a 63% improvement in SALT score over the 16-week extension period. Cases like this further support the importance of a 52-week induction period for the Phase III program.

Here is another case of a 20-year-old female who entered into our treatment extension on the 24-microgram per kilogram dose. She demonstrated consistent hair growth and achieved a SALT score of 20 by week 48. This patient also achieved substantial improvement over the 16 weeks of additional dosing. It's really not hard to imagine how a young woman's self-esteem, confidence and quality of life would be dramatically improved when you go from an appearance shown in the photo is on the top of the slide to the ones on the bottom.

Here is a new patient case of a 64-year-old white female who entered into extension on 24 micrograms per kilogram dose. This patient demonstrated consistent hair growth and achieved a SALT score of 20 by week 52. It is important to note that patients in their 60s may be poor candidates for initiating a JAK inhibitor due to comorbidities that increase cardiac risks such as high cholesterol, hypertension, obesity and/or diabetes.

Here's a 50-year-old woman who entered into the extension on 18 micrograms per kilogram dose. You can see that her SALT score improved rapidly after roughly 20 weeks of treatment and ultimately, she has achieved a SALT score of 20 by week 48. This case and the next one highlight the need to set clear expectations with patients that visible hair growth may take 6 to 9 months on treatment.

Finally, we have a 64-year-old white female. This patient's SALT score improved tremendously after the 36-week treatment period and she achieved a staggering 82% reduction over the 16-week treatment extension.

Now with all that, let me summarize the key takeaways from the REZOLVE-AA study. Most importantly, the study results demonstrate proof-of-concept for REZPEG as a first-in-class biologic for the treatment of alopecia areata. We are very pleased that REZPEG achieved our target product profile for favorable clinical efficacy and tolerability, along with a differentiated safety profile. Our target product profile was designed to meet the significant unmet need for a safe alternative to low-dose JAK inhibitor class for alopecia areata. And the results reported today from the 16-week extension period support the decision to advance a 52-week treatment interval into our Phase III program.

Now turning to our next steps for the REZPEG program. In the second quarter, we plan to conduct an end of Phase II meeting with the FDA to align on the Phase III registrational strategy. And in Q4, we will report the blinded 24-week off-treatment data from REZOLVE-AA. These results will include data from patients who achieved a SALT score 20 by 36 weeks and how they performed off therapy. Importantly, these off-treatment data will help inform the design of the Phase III program, including elements of a long-term extension and the appropriate dosing frequency to administer in that trial.

Turning to atopic dermatitis. I am proud to announce that we have alignment with the FDA on our Phase III program, and we plan to share the full design of our pivotal studies over the coming months. We plan to initiate the ZENITH-AD Phase III program in June or July of this year. In the first quarter of next year, we also plan to report additional data from the 52-week off treatment data from the Phase IIb REZOLVE-AD study. In type 1 diabetes, we expect to share initial data together with our partner TrialNet in 2027. Finally, as mentioned at the beginning of this call, we are actively exploring other indications for REZPEG and expect to initiate a proof-of-concept study for a potential new indication in the second half of this year.

I'll briefly mention the possibilities. Given REZPEG's mechanism of action, we believe it could have potential across a number of other autoimmune disease settings. REZPEG acts upstream of multiple inflammatory pathways through Treg biology, and this could be applicable across a broad range of autoimmune and inflammatory diseases where immune dysregulation is a key driver. Many of these indications represent large markets with a significant unmet need, particularly for therapies like REZPEG with a novel mechanism of action that can provide durable disease control with a favorable safety profile. We are actively evaluating opportunities for REZPEG across these indications, and our goal is to target the start of a small proof-of-concept study in a potential new indication later this year to generate data in 2027.

To that end, we've already initiated a Phase II study in new onset Stage II type 1 diabetes, a trial sponsored and funded by TrialNet, a consortium of type 1 diabetes doctors in the United States.

One of the indications we are exploring is an area where we know REZPEG has already demonstrated some promise. Shown here are the data from a Phase I multiple ascending dose study that Nektar ran in patients with mild systemic lupus. 22 patients in the study were enrolled who had cutaneous symptoms with CLASI-A scores of 4 or higher at baseline. These patients received 3 doses in the study at day 1, day 15 and finally at day 29. A clear dose-dependent effect was observed in reduction of CLASI-A scores in this 22 patient subset. We have already seen good results now in 2 other inflammatory skin disease settings and cutaneous lupus will be an area where we potentially can move quickly to understand whether REZPEG can help patients battling this disorder.

And with that summary, I will introduce you to our KOL panel and renowned experts in both dermatology and alopecia areata; Dr. Jonathan Silverberg, Dr. David Rosmarin and Dr. Benjamin Ungar.

Before we take questions, we would like to ask each of our KOLs to provide their assessment in the data -- of the data. Dr. Silverberg, can you please go first? Then we'll ask Dr. Rosmarin and Dr. Ungar to comment. After that, we will open the Q&A to our KOL panel as well. So Dr. Silverberg, floor is yours.

Thank you very much, Mary. Good morning, good afternoon, everyone. I'm excited. I mean I've been excited about this for a while. I think we -- we've had some conversations over the past year looking initially at the 36-week data and, of course, the atopic dermatitis data. And I think these data really just reinforce the efficacy, I think the potential commercial competitiveness. I think it's particularly impressive that even at week 52, where we're seeing nice demonstrable efficacy and competitive efficacy that there is no clear indication of plateau suggesting that there's even more efficacy to be gained over time. And I think that's a big deal. I've long said in -- I'm not here to knock JAK inhibitors or anything else, but we -- I think all the market research is clear from both a patient perspective, from a provider perspective, that in a scenario where one has a clean biologic to choose from, the vast majority of the time that will become the first-line approach. And so I think REZPEG really has that potential as a clean and effective biologic in alopecia areata to become that preferred first-line approach.

I think there still will be a role for the JAK inhibitors, but I suspect that they will end up getting shifted markedly towards second or third-line use in alopecia areata once REZPEG on the market.

Thanks, Jonathan. David, can you go next, please?

So I agree with my colleague, with Jonathan. And also congratulations on this data. I think it's convincing that REZPEG does work for alopecia areata and I have very high confidence that a Phase III program is going to be successful. Like Jonathan said, dermatologists like myself, when I speak to other colleagues, we would love to have a targeted medication that has a more favorable safety profile. That is the greatest need in alopecia areata right now. And there are many people who have alopecia areata who are not being treated with JAK inhibitors that I think would be willing to go on to REZPEG. Further, it expands the market for patients who have more moderate disease as well. So I think a strategy, as Jonathan said, is that the vast majority of patients will go on REZPEG first. And if -- I think many will respond, but if there are those that don't then they can always go on to a JAK inhibitor like upadacitinib subsequently. So I think that this is a big deal that will change the way we treat the disease.

Thanks, David. And Benji.

Good morning, everyone. So yes, I completely agree with what both Jonathan and David said. So I'm not going to necessarily repeat that part of things. when we saw the 36-week data, I think many of us who understand the mechanism, the kind of kinetics of alopecia areata treatment responses, there is maybe a hypothesis or expectation that we would see continued improvement beyond that time point just because of the nature of the disease. And really, I think this trajectory exactly match my most optimistic hopes for how this would continue to improve. That's sort of what I maybe in a sense expected, but actually seeing the data are quite convincing. I think it's just worthwhile noting thinking about a Phase III program that this disease is not really associated with those kinds of placebo responses. And so seeing that tremendous separation really gives me a ton of confidence, and David said this, but I'll just echo this, that this will show success in a Phase III program. As both my colleagues have said, there is very much an appetite for additional MOAs to help treat patients without alopecia areata, and that's a conversation that we could go on at length about. But there's a huge need still for alternative approaches. And the fact that we're seeing these results in a small study is incredibly encouraging for what a large study can show us.

Thanks, Benji. And now we'll open to questions.

[Operator Instructions] Your question comes from the line of Julian Harrison with BTIG.

Congrats on this data update. First, for the dermatologists on the call, if these results were replicated in Phase III, I'm wondering what percentage of your alopecia areata patients you would envision ultimately utilizing REZPEG, assuming the choice continues to be just REZPEG versus JAK inhibitors?

And then for management, I'm wondering if you could talk more about your confidence around prior SALT 20 responders by week 36, likely maintaining response through 52 weeks if they continue to be followed?

Sure. Julian, thank you for the questions. I can take your second part first. We do know that all patients that achieved a SALT 20 prior to week 36, maintained their SALT 20 through to treatment. We are going to follow those patients now off treatment. It's a blinded 24-week period, and we will have the data for the durability of those SALT 20 responses in the fourth quarter of this year.

And then with respect to your first question, what proportion of patients would use REZPEG, I'd like to turn it over to Jonathan first on maybe in addition, the 3 if you can address how many of your colleagues are willing even to prescribe a JAK inhibitor today?

So Jonathan, if you can go first.

Sure. I mean the latter question, we have clear data. I mean the vast -- actually majority of dermatologists will not touch a JAK inhibitor with a 10-foot pole and not -- and certainly not on-label when there are clean biologics to choose from. In other words, there'll be docs who might turn to a JAK inhibitor that's approved in atopic dermatitis, but they won't use it in atopic dermatitis so turn to off-label out of desperation because there's nothing else to use in some other indication. And I think that just illustrates the point why here I have such a high degree of confidence that it will get taken up first line. From my own personal practice, I mean I'm sure there's going to be a handful of patients here or there who are truly needle phobic, but putting aside a [ teen of ] minority, I would assume realistically, 90% or more of my patients. And that's -- I'm just being conservative because it might be 100% of my patients that I'm going to be encouraging to use this first line before going to that JAK inhibitor. And again, I think there's going to be a role for the JAK inhibitors. But I really do think there's going to be a paradigm shift in the same way that the FDA has positioned the JAK inhibitors as second-line options in the world of atopic dermatitis and rheumatoid arthritis. I think once you've got a clean biologic, I don't see them necessarily rewriting the label of the JAK inhibitors, but I think that conceptually, there will be that frame shift where providers will turn to the clean biologic first. And so certainly, in my practice, that is what I expect. If I have a patient who has grandfathered in and doing fantastic on a JAK inhibitor, will I necessarily take them off and fight with them and change it? No. But for any of the new starts, I would expect almost certainly, they would be REZPEG patients. And for so many patients who are on JAK inhibitors now where they may be doing okay, but what else do we have to offer them, I think there will be a lot of switching and openness to trying REZPEG in those situations as well. So I think both first and second line, there's going to be a very high rate of use.

Thanks, Jonathan. David, can you go next?

Yes, I agree. Actually, the number that I was going to give as well as 90% of my patients. So I would put on REZPEG first for new starts. If I have a patient who is -- has alopecia totalis, who is getting married in 6 months. That might be an exception for me to use a JAK inhibitor, but the vast majority of patients I plan to give REZPEG first. And I think in terms of my colleagues, more than half of them will not prescribe oral JAK inhibitors. So I think it will be closer to 100% of their prescriptions. So again, I think it's pretty clear that this will be a paradigm shift, as Jonathan said, and will be used first. We are hungry for a medication that doesn't have these boxed warnings.

Thank you, David. And Benji?

Yes. So I'm going to start with the second part, which is my colleagues, and so I couldn't agree more. We know through tremendous amount of data that people are not prescribing it. Even in alopecia areata, where there are no approved alternatives or really demonstrated great other options for many people, they're just not getting treated. It's not that they're -- so there's a huge population of untreated patients that I believe would now be treated with a drug that has this profile. I myself, I'm not representative of most of my colleagues because I do use JAK inhibitors, and I use them frequently because patients are coming in, wanting to get treated, and very often, that's after seeing someone who has not treated them. And so these are very motivated people trying to get treated. I think if we were to fast forward, yes, a very high proportion of my patients would be -- started on this treatment. And I think that one of the very kind of interesting potential aspects about this mechanism that is going to be elucidated with kind of longer-term trials is what the maintenance of response and dosing interval and all that means. And I think we have the reason for optimism based on the biology that this drug potentially has a unique characteristic of perhaps producing long kind of sustained responses. And I'll just give 1 example of how that really impacts things. Very often there're women who are considering becoming pregnant and because of that are not really great candidates for JAK inhibitors because we know if we -- you stop treatment, there's a high likelihood of loss of response, and because it takes time to work, if they're planning pregnancy in the next year, there just may not be an option. Now envision a treatment where we can induce regrowth and then potentially stop for an extended period can become pregnant and deliver. This is potentially a very big shift in the way we think about treating things.

Can I build on that point, just briefly? Because I think it's -- I hear almost -- I don't want to say an irrational conversation, but sort of an incomplete conversation around the value of orals. Because when you do this market research, patients always like conceptually, it sounds like great. They want an oral over injection until they do it. And patients who have had even miraculous responses with JAK inhibitors, let's say, in atopic dermatitis, whatever it might be, that same patient comes back to me 6 months later complaining, they hate the drug. I'm like what do you mean hate the drug? It stopped working? No, it didn't stop working. But if I missed 1 day, right, or I missed a few days, I'm right back to where I was. I start feeling the itch again. In the case of alopecia areata, when they start losing hair again because they missed a few doses, oh, boy, are they not happy. And so I think this is a real issue. We need more forgiving medications on dosing, right, ones that we understand patients are human and they miss a day or 2. You can't just blame the patient that they're supposed to take once daily for the rest of their life. But that's what we're asking them with these pills. And that is a very -- I mean, pun intended, tough pill to swallow for patients, right? So I think that it's -- from an adherence perspective and from a patient friendliness perspective, from a simplicity perspective of not having to think about their disease every day, it is a big deal to have this kind of shift in dosing.

Thanks. Great points.

Your next question comes from the line of Samantha Semenkow with Citi.

Just 1 for the physicians. We -- I've got a couple of questions in about this data, maybe not reaching the upper bar what [indiscernible] can do, call it, north of 50%. I just want to give your perspective on if that's not relevant at all given the data that we've seen today.

And then just for the company, clarifying question, are you able to share whether we have any patients, whether in the 36 weeks or post into the extension that's addressed in their hair growth?

Great. So I'll just start with your second one, Sam. In terms of the off treatment, right now, that's a blinded period. And so we have not looked at any of the data off treatment. Again, as I just mentioned to Julian, on treatment, we know that no patient relapsed who achieved a SALT 20. So we will have those data in the fourth quarter of this year. And then we'll start in the other order, Benjie, if you could address the first question about the upper value of SALT 20 for higher doses of JAK inhibitors.

Absolutely, happy to. So I think the first point that I think is really important. I believe it was Jonathan, who brought this up earlier, we actually don't know yet what the maximal efficacy is. I think there's a reason to believe based on the trajectory that people continue to improve beyond 52 weeks, which is, on the one hand, may seem like it's kind of a long period. But given that they are improving before then, patients, I think, have the willingness to kind of wait if they're seeing regrowth. And so even if the maximal effect is several weeks after that, even months, they'll be very happy with this. I think that there are 2 points I want to add. Number 1 is, I mentioned this, but I'll keep saying this. There's a huge pool of untreated patients, and one big reason for that is that dermatologists and providers are not even offering JAK inhibitor treatment. So you can imagine now coming in with a safe treatment that's easyto use, that's going to be much more effective than no treatment at all. So I think it's important to keep in mind what we're comparing this treatment to. And then the last point I'll just make is we have an analogy that I think we all raised before, but it's really worth highlighting again, which is in the psoriasis landscape that is populated by very safe, extremely effective and frankly "easy-to-use" treatments, Otezla remains a very common use drug. And the reason is not because it is extremely efficacious in terms of PASI scores. The primary reason is that it's safe and easy to use. People feel comfortable getting someone started on a treatment for their psoriasis and it's not the most effective. And this, again, is in a world -- in a very saturated market of alternative treatments. Now you can imagine a drug like REZPEG that actually has good efficacy that we expect to continue working ahead potential, all sorts of other benefits that we've talked about, dosing intervals and things like that, this efficacy, in my mind, clearly exceeds the bar will make people interested. So I'll kind of pause there and those are my thoughts, yes.

Yes, David, it would be great if you could address this question, too.

To me, safety trumps efficacy, and that is the -- not only my own sentiment, it is the general feeling within dermatology that we care about safety first, do no harm, and that is even more true in a disease like alopecia areata, which doesn't have physical symptoms to it. I would easily try a medicine that may have slightly lower efficacy or takes a little bit longer to work before one that has more risk, especially when we're going to commit somebody to decades and decades of treatment. So to me, I think it's not even a question. I think it's very clear. I'm very confident that people will choose the safer option almost every time.

Further, in terms of the efficacy, this is achieving -- so baricitinib 2 milligrams is the dominant dose of Olumiant. And yet -- and this efficacy is comparable to that as I would say, within that time frame. But what may happen is over time, REZPEG may actually have superior efficacy to Olumiant. And I think that, that really may be the case. Plus, I think you would find in a Phase III study that not only would the data be replicated from the Phase II data that was just presented, but I'm actually optimistic we could even see a boost in efficacy because for multiple reasons. One is ideally adolescent would be included and they are more responsive; two, I expect fewer dropouts in the study as well because now we know it's proven to work; and two (sic) [ three ] there will hopefully be a crossover as well. So patients are motivated to stay in knowing that they'll get medicine after the induction phase for a year. So there's many reasons to be very optimistic in the data.

Thanks, David. And Jonathan, we'll save you for the next question in the queue.

Your next question comes from the line of Yasmeen Rahimi with Piper Sandler.

Question to our 3 experts, the Nektar team did a very nice job on the Phase IIb design. Maybe now that the data is on hand, what would your recommendation be on patient selection for Phase III that they could further optimize? Are there certain patients that you think could benefit more from REZPEG that we could enroll in the study? And then also, would love to get your thoughts on -- we're very much looking forward to see the off-treatment data from REZPEG. Any color on what that data and how important that response could be for you in the utility of REZPEG in AA?

Jonathan, can you take these question?

Sure. I guess I can start with the second 1 first because to me, I think that's easy. It's always the more data, the better. And I think it would potentially build a very interesting story around concepts of remission is modification. But in truth, I don't think it's going to change anything in terms of my prescribing habits in the sense that what I said earlier about 90% or more of my patients going on REZPEG as new starts would be true with or without any kind of off-drug effects because what I need is clean drugs with clean safety profiles while they're on it and knowing full well that probably the majority of patients or at least a large subset are going to need to be on drug for a really long period of time. I need to know they're going to be on safe drugs. And I think that's always been the biggest issue that we've had with the JAK inhibitors. It's not like if you treat with a JAK inhibitor, we expect them to be cured. We know that's not the case. And so there's just -- they can never get off it, and now you've got potentially cumulative exposures over time and cumulative risk that comes. So for me, even if patients need to be on drug, as long as the safety looks as good as it does, to David's point earlier, to Benji's point earlier, this is going to still be that first approach. Sorry, I lost track of what the first question was.

And the eligibility criteria for the Phase III.

I think the reality in the world of the real-world of alopecia areata out there, I think it's going to be used across probably all subsets of patients and clinicians will figure out how to optimize in different subsets. But I think right now, we've learned a lot of lessons and I would say that stable patient has worked well in terms of balancing placebo responses, et cetera. So I think I would actually try to recapitulate with almost identical inclusion criteria in the future studies because I think they did a great job of -- on the operations of that and just in terms of that placebo-adjusted deltas.

We'll go to the next question, but 1 more comment, as David said, we will include as long as we're compliant with the FDA, the adolescent patient population in the Phase III that population, we believe will respond even better than the adult population. So that's an exciting change, Yasmeen, mean that we foresee in our Phase III trial.

Your next question comes from the line of Jay Olson with OpCo.

Congrats on these impressive results. What are -- first, we have a question for the KOLs. What are the baseline characteristics of the AA patient population in your clinical practice who may benefit most from REZPEG treatment? And related to that, are you currently using DUPIXENT off-label for AA? And would you consider switching those patients to REZPEG?

And then if I could please sneak in another question for the Nektar team. For your Phase III program, will you include both JAK naive and JAK experienced patients? And do you think that 1 Phase III study may be sufficient for regulatory filing?

Thanks, Jay. I'll take the second question, and Benji, you can answer the first. With respect to the Phase III program, we are going and speaking to the FDA later this quarter to have a discussion about the Phase III program. We do believe there's precedence for 1 Phase III trial in the area of alopecia areata. Pfizer was able to advance with Litfulo, their JAK inhibitor in 1 Phase III trial and achieve approval. So we will have that discussion with the agency. And then again, we are working on the ideal patient population with respect to patients who have either had JAK inhibitors previously or a naive population.

And then the second question, Benjie, if I can turn that over to you as the expert in the use of DUPIXENT for alopecia areata on a panel.

Absolutely. So yes, I have many patients that I used DUPIXENT off-label for alopecia areata. And again, I think that's an illustration of there being an appetite for alternatives. I have many patients on JAK inhibitors, too. But that's not always going to be the best fit for patients. So I do have many patients. We're actively involved in researching DUPIXENT as an approach to treating this for exactly that reason. I do think that if someone is doing well, and Jonathan, I believe mentioned this earlier, if someone is doing well on a treatment, it's more challenging to switch, but there are people coming in every day where we're having a conversation of what the treatment approaches are. And if there is a drug that has the profile that we've talked about with REZPEG, that's approved and available on label, it kind of makes it a very easy approach to take.

Now in terms of what patients, which I think you started off would be kind of most kind of best candidates for REZPEG, I mean the answer is, in principle, everyone. And in fact, I think that one of the biggest challenges we have is that there are limitations with treatments, whether it's the severity scores, is it worth putting someone who's a little more mild on a treatment and take potential safety risks. If you have a safe effective treatment, the answer is really for everyone. And I'll just add, and this goes back to the previous point also about the trial design, the MOA, without going to too much of immunology, really does not suggest limitations on subsets of populations. In principle, this could be effective really for everyone. Now obviously, not 100% of people are going to respond, but there's no reason to believe that there are specific subsets that are going to be more or less aligned with that. So the short answer is everyone, I think may benefit from this.

Your next question comes from the line of Roger Song with Jefferies.

Great. Congrats for the data, and thanks for putting together this presentation, very informative. And then just a quick one from us. So first is, I think as the KOL just mentioned, the MOA should work across different subgroups. Just curious about the in the Phase II, how do you think about those a little bit more severe patient responding to REZPEG because when we look at the baseline, the SALT score a little bit lower than the Olumiant or the JAK inhibitor. And then how should we think about in the broader population?

And then also, we noticed in the induction period, you have about 20 patients discontinued due to patient decision, likely driven by the efficacy we don't know, but do we know the SALT source score for those patients? And then how likely those patients could improve if they stay on the treatment for a little longer?

Thank you, Roger. I can take the first part. And David, if you could take the second. And David also talk about the moderate patient population as a possibility. So Roger, you bring up a great question. As you mentioned, in the 36-week treatment period, we did see 20 patients go off due to patient decision. That was the reason they left the study. That being said, we then went and looked at the SALT scores you're mentioning of those 20 patients and 15 out of the 20 or 75% had not reached the SALT 30% reduction from baseline. We do believe, as we've shown you here, there are some patients who aren't going to start to grow hair until 6 and even 9 months out. And so when we start our Phase III trial, in the informed consent, we're going to advise patients that it may take a long time for hair to regrow. And we're also going to ask the principal investigators to again, as they are consenting patients, to advise that this is a treatment that may take a long period of time to grow hair and that participants need to understand the kinetics of hair regrowth that we've seen with this agent. And then, David, if I can now turn it over to you.

Yes. So the first comment is that it does work in the most severe patients. We've seen patients who have alopecia totalis respond. The other supporting data is that we see that eyebrows and eyelashes are regrowing as well. Those often correlate, eyebrow and eyelash regrowth with SALT 20 score. And it's much harder to regrow eyebrows and eyelashes then just for patch alopecia, and we're seeing that happen here. So there is confidence that it works even in the most severe patients, although we know we have better responses in patchy alopecia just like in JAK inhibitors. Now in terms of your -- the population in the study, and this is true across different disease states, not just alopecia areata, AT, HS, that after the first studies for approval, the patient populations often moderate in nature. So if you look at this patient population in the study, it's not that different from AbbVie's latest Phase III study for upadacitinib. And so I strongly suspect the Phase III will be more moderate in nature and it will be similar to AbbVie's study because that's just a trend that happens as we have other treatments available. It's not just the most severe patients going into the study. Plus, I think there are many patients who have more moderate disease that may be unwilling to go on JAK inhibitors that will now be captured by this treatment. And again, I think this is a good thing.

Yes. Thank you, David. We appreciate it.

Your next question comes from the line of Mayank Mamtani with B. Riley Securities.

Congrats on the totality of the very positive data set. Would love to also hear your expectation for the SALT 10 endpoint and if there's similar kinetics of observation that you hadn in SALT 20? Obviously, SALT 30, you see the plateauing because a lot of patients get over that mark. So I was just curious if SALT 10 would look very similar to the SALT 20 in terms of the climb you see? And then just a final point on the off therapy durability data, what sort of data you expect to see there to make a decision on a less frequent regimen like a once monthly versus maybe once quarterly, if you could maybe speak to that?

Yes. Yes. Thanks, Mayank. So First, with respect to the off-treatment data, we need to look at that closely to see does it make more sense to have monthly, as you mentioned, or continue even with twice monthly or can you go out longer, and we will size up how many of those SALT 20 patients were able to achieve durability of response in that entire treatment period. So we will definitely make a data-driven decision. And with respect to SALT 10, we believe that the trajectory of that curve when we are able to follow patients for 52 weeks will probably look very similar to what we've seen with the SALT 20, that after 52 weeks, the curve and the slope is still upward, which would mean that we believe that patients will derive benefit in the second year as well as the first year. So we look forward to analyzing the SALT 10 in a large Phase III study to best understand how deepening of response happens over time, especially into the second year of treatment.

Your next question comes from the line of Marc Frahm with TD Cowen. [Operator Instructions].

Congrats on the data. Maybe and recognize some of this will get informed by seeing some of that off-treatment data. But just for the company, can you kind of walk through your current assumptions on how you would approach kind of maintenance dosing? And then for the physicians, similarly, how are you expecting to use this in the real world? Would you try to kind of maybe treat and extend type of model once in a response is induced? Or would you just keep the Q2 weekly dosing kind of indefinitely?

And then maybe also for the physicians, just completely appreciate that there's this large population dermatologists who just aren't even willing to touch or discuss the JAK inhibitor with their patients. But in your practices where you are using JAK inhibitors, can you maybe speak to what percent of patients with alopecia areata, either you yourself are unwilling to discuss it because you look at them and say the risk factors are just too much to justify a JAK inhibitor? Or once you do discuss with them, they ultimately decide not to pursue a JAK inhibitor because of the safety issues?

Thanks, Marc. I'll take the first question. So interesting in atopic dermatitis, we had a Phase Ib study that helped guide us on the type of durability we could see after dosing. And so in the atopic dermatitis study, we selected Q monthly and every 3 monthly dosing. And we were very fortunate to see the ability to maintain the durability as well as deepen responses was successful with both those doses and in fact, we'll take both into the Phase III. I think the same is true for -- we can look at this Phase IIb study as really the guiding light for what our maintenance doses should be. And I think the full range goes from an additional Q2 week all the way to Q12 week. And I think we -- as the saying goes, pornography is difficult to define, but when you see it, I think many of us who've been running clinical trials for decades understand the same principle applies to clinical data, and we will have a good sense of where we want to land in terms of a maintenance dose, and it may be that we evaluate more than one in that second year of dosing. And then with respect to discussions with patients, patients' decision, let me turn it over to Jonathan to summarize his experience.

Sure. So I think there's a lot of different subsets of patients where we would have -- take real pause with JAK inhibitors really that 60-year old and older, 65 and older just because we know that there's an age-related big increase in adverse events with the JAKs. But even amongst younger, healthier patients, like particularly parents of children and adolescents, there's a lot of hesitation in my practice around the use of JAK inhibitors. Even though officially on paper, right, the safety profile can look cleaner there. And then there's just general hesitancy. But I will say there are differences in terms of the threshold and how we would apply it between indications, right? Because in alopecia areata, to date, we've kind of reached even to patients that really are comfortable with because we didn't have anything else. But boy o boy, if I had a clean option, I wouldn't have gone there. And in AD, I don't, right? And I -- because I've got now multiple biologics to choose from, I'm going to go biologic and I'll cycle through biologic before I want to go to a JAK inhibitor. And again, I think it just gets back to that point that there will be a paradigm shift here. But certainly, in that older patient population, the patients who've got that -- those risk factors for any of the JAK side effects, any of the patients who are risk averse, which is a whole lot of them. I mean I find -- David mentioned this earlier, it's not just his experience, it's my experience. It's all my patients' experience, safety first and almost everyone. So the threshold will change, I think, drastically in alopecia areata where people will realign the way they're going to think about risk tolerance.

And Nicole is that the end of our questions?

We do have a couple more questions. Your next question comes from the line of Arthur He with H.C. Wainright.

Congrats. I just have a quick question for the management and a couple of questions for the physicians. So maybe for the physician first. So when we look at this data, how should we think about the respect efficacy in the alopecia patient with SALT score less than 50? And if we want to export that efficacy in the pivotal trial, how should we think about the design for the pivotal trial.

For the management, I think just quickly want to see what -- could you give us more color on the 2 discontinuations during the extension period?

Great. So I can take the second question, Arthur. Neither patient reached a SALT 20, and quite frankly, they were far away from that. That endpoint was -- they did discontinue due to patient decision, but they were not deriving benefit when they did leave the study. And then, David, you've talked a lot about moderations with us, if you could address that topic?

Okay. So first, for moderate patients, and we know that as patients disease is less severe, it is more likely to respond. So I think that I wouldn't expect REZPEG to be an exception to the rule. We would expect even greater efficacy, the more moderate the patient. Now in terms of for a regulatory trial design for a SALT less than 50, well, I would not recommend including patients with SALT less than 50 with patient at severe or very severe because you can increase the placebo rates as well. However, if you were to design a separate study for moderate patients, which is defined by SALT 20 to SALT 50, perhaps the primary endpoint for that type of study could be a SALT 10 or less. But that would need to -- there would need to be discussions with the FDA. And I mean, I absolutely think that a label expansion for this population would be a very positive and doable thing for REZPEG, much more challenging for the JAK inhibitors.

Your next question comes from the line of Andy Shea with William Blair. [Operator Instructions]

Moving on to our next question from Martin Fan with Wedbush.

I have a question for the experts. Could you comment not in terms of first line, but in second line patients who are already on Olumiant or other JAK inhibitors. Assuming that Rinvoq is eventually approved, how many you anticipate to push to Rinvoq as opposed to REZPEG for patients who are already on a previous JAK inhibitor?

And then if you could also comment on your experience with getting payer approval for JAK inhibitors in the context of alopecia?

Benji, can we have you answer this question, please?

Yes. So I think that the major factor kind of to answer to your question is how they're doing on the current JAK inhibitor. So if someone has regrown all their hair, then they're not going to be switched to a different JAK inhibitor like Rinvoq. They're going to either maintain that or there's a conversation about switching to a different kind of treatment like REZPEG? So I think there's initially the bifurcation of how well they're doing. And then there's a question of where we go from that. And there's -- there are some clinical questions that remain outstanding in terms of what it would be like to switch someone from a JAK inhibitor doing well to REZPEG. I think that there is a large population of patients who're currently doing well on JAK inhibitors that would love to switch to a treatment like REZPEG. So hard to quantify exactly, but a very non-negligible proportion. So I think that's very much. And then there was a second part to the question.

Reimbursement, Benji.

Oh, reimbursement. Yes. So there's definitely been a shift towards payers recognizing that this is something that really deserves and requires treatment. It's not a cosmetic condition. It's still a work in progress. And I think that part of this has to do with the holistic understanding of what the costs are, potential adverse events, things like that. Since the approval of Olumiant to now, what is it, 4 years ago, there has been a shift, and I think there's positive momentum towards increased support on the payer side, it's still work in progress, but we have good momentum. And I would say, a fair proportion of patients are getting covered.

Nicole, is that the final question?

There are no further questions at this time. I will now turn the call back to Howard Robin for closing remarks.

Perfect. Thank you, and thank you for everyone for joining us today, and we greatly appreciate your continuing support. And it's not often that a company has the opportunity to develop an important new mechanism that can greatly benefit patients. So I want to thank all the patients who participated in the trials, and I want to thank all of our employees for their hard work and diligence. And again, thank you for joining us today, and we look forward to presenting additional data in the future. So please stay tuned.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, and thank you for standing by. Welcome to the Nektar Therapeutics Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] 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.

Thank you, Crystal, and good afternoon, everyone. Thank you for joining us today. Today, you will hear from Howard Robin, our President and Chief Executive Officer; Dr. Jonathan Zalevsky, our Chief Research and Development Officer; and Sandra Gardiner, our Chief Financial Officer. Dr. Mary Tagliaferri, our Chief Medical Officer, will also be available during the Q&A.

On today's call, we expect to make forward-looking statements regarding our business, including statements regarding the therapeutic potential of and future development plans for Rezpegaldesleukin, the timing and plans for future clinical data presentations 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. Our actual results may differ materially from these statements. Important risks and uncertainties are set forth in our latest Form 10-Q available at sec.gov. We undertake no obligation to update any of these forward-looking statements, whether as a result of new information, future developments or otherwise.

A webcast of this call will be available on the IR page of Nektar's website at nektar.com. With that said, I would like to hand the call over to our President and CEO, Howard Robin. Howard?

Thank you, Vivian, and good afternoon, everyone. 2025 was a pivotal year for Nektar, and we continue to build on the success with significant progress in 2026. In 2023, we unveiled our plans to focus on the advancement of our immunology and inflammation pipeline programs, which center around the biology of T regulatory cells. In October of '23, we began the first Phase II study of our Novel Treg biologic, Rezpegaldesleukin, in patients with moderate to severe atopic dermatitis. In early 2024, we began our second Phase II study in patients with alopecia areata. And just last year, a third Phase II study in type 1 diabetes was initiated with our collaborator, TrialNet, who is funding and sponsoring this trial.

In the second half of 2025, we saw the successful outcome of several years of hard work by our team as we achieved the first positive results from the 2 Phase IIb studies of REZPEG in atopic dermatitis and alopecia areata. The results validated that our novel regulatory T cell mechanism could produce clinically meaningful outcomes in 2 dermatological and inflammatory disease settings.

And just last month, we reported on the long-term monthly and quarterly dosing results from the 36-week maintenance portion of REZOLVE-AD in atopic dermatitis. These data showed a significant durability of efficacy that was highly competitive to what's seen with other biologics and establishes what our Novel Treg mechanism is capable of achieving.

Monthly or quarterly dosing of REZPEG during the maintenance period showed a deepening of response with increases in EASI-75, EASI-90 and an up to fivefold increase in EASI-100 scores. Both atopic dermatitis and alopecia areata are inflammatory dermatological diseases that impact a significant number of patients worldwide. In the U.S. alone, there are over 15 million people with moderate to severe atopic dermatitis, and it is estimated that today, only 10% to 15% of patients are receiving biologic treatments for this chronic skin disorder.

Driven by the rapid adoption of biologics, the atopic dermatitis market is expected to grow to approximately $35 billion by the mid-2030s. Although DUPIXENT and IL-13s are the predominantly used therapeutics today to treat these patients, about 50% of patients fail to respond or lose treatment effect over time with IL-13-based approaches. This leaves a significant opportunity for a novel immune modulating mechanism like REZPEG to enter the treatment paradigm. And the competitive landscape has recently narrowed for the late-stage novel method MOAs being advanced to BLA filing. We believe this puts REZPEG in a lead position as a novel MOA, which could offer both a differentiated efficacy and safety profile with a better dosing regimen and the potential to offer patients complete clearance of disease over time.

In alopecia areata, there remains a need for an efficacious and safe biologic with a better efficacy and dosing profile. Currently approved JAK inhibitors are effective at regrowing hair in some patients, but they carry a number of drawbacks and more than half of physicians and patients are hesitant to use these agents because of the safety risks and the associated monitoring burden they pose. Importantly, the JAK class has poor durability and nearly all patients lose their hair after treatment cessation. With the 36-week data from REZOLVE-AA, establishing a clinical efficacy profile similar to low-dose JAK inhibitors in alopecia, we're looking forward to seeing the 52-week data from that study in April.

For patients who enter the blinded 16-week treatment extension, we will be evaluating the potential of REZPEG to deepen salt reductions, including SALT 20 responses. REZPEG's differentiated clinical profile and a safety database of over 1,000 patients treated to date, equivalent to 381 patient years of exposure provides an exceptionally strong basis for advancing REZPEG into Phase III studies. In June, we will be randomizing the first patient in the Phase III studies in atopic dermatitis. We now have alignment with the FDA on our Phase III dose, the 24-week induction treatment period and other critical Phase III study design elements. JZ will review that in a moment. We expect to have the first data from Phase III in mid-2028 and meet our goal to submit a BLA in 2029.

We ended 2025 with $245.8 million in cash and investments and with no debt on our balance sheet. Since year-end, we've also raised approximately $476 million in additional net cash through both a public offering and exercising a portion of our ATM. Our very strong balance sheet now allows us to move quickly into Phase III.

I'll now turn the call over to JZ, who will share more on REZPEG and our other immunology programs. JZ?

Thank you, Howard. To start off, I'd like to comment in more detail on the significant progress we've made with REZPEG that Howard highlighted moments ago. REZPEG is a very unique Treg biologic that capitalizes on a critical immune pathway. As a highly selective agonist of regulatory T cells, it is designed to address the underlying immune balance of multiple inflammatory pathways. This past year, we have shown through our Phase II clinical data sets that REZPEG is truly differentiated as a novel MOA and late-stage biologic candidate with a compelling efficacy profile and that it can also offer long-term extended dosing frequency. This Phase II data adds to the 36-week off-drug disease control or remittive potential of REZPEG that we demonstrated in the earlier Phase I trial. And now REZPEG is a Phase III-ready program, and we have one of the largest safety databases for agents in mid- to late-stage development in atopic dermatitis, which is now established in over 1,000 patients spanning about 381 patient years of exposure.

In atopic dermatitis, our 16-week induction data reported last June, established that REZPEG has a rapid onset of key efficacy metrics, separating early from placebo after 1 or 2 doses on EASI-75, EASI-90 and itch relief. And notably, our induction data established REZPEG as the first novel MOA to show strong itch relief in conjunction with skin clearance without the need for topical corticosteroids. We know that itch relief is a major driver of improved sleep scores and better quality of life for patients with atopic dermatitis, and this translated into achieving statistical significance on these patient-reported outcomes in our study as well.

At the high dose of 24 microgram per kilogram given every 2 weeks in induction, we also saw comparable efficacy data for both EASI-75 and EASI-90 in the moderate and severe patient populations enrolled in the trial. The study was stratified by vIGA baseline scores of 4 and 3, and efficacy was comparable among both these populations. And this attribute emerges as a key differentiating aspect from what has been seen with DUPIXENT treatment. REZPEG has also shown promising positive results in treating atopic dermatitis patients with self-reported comorbid asthma. We reported this data for the ACQ5 endpoints for REZOLVE-AD last year at ACAAI.

Outside of DUPIXENT, no other approved agent or agent in development has shown the ability to improve atopic dermatitis and comorbid asthma at the same time. In induction, REZPEG resulted in statistically significant and clinically meaningful improvements in ACQ5 scores at week 16 versus placebo in patients and a 75% improvement in these scores in patients with uncontrolled asthma at baseline. And approximately 1 in 4 atopic dermatitis patients also have comorbid asthma, and REZPEG is the only novel MOA to show improvements in this endpoint.

With the 36-week maintenance data reported last month, we demonstrated 2 additional critical features of REZPEG that differentiated from approved agents and those in development. First, we saw significant maintenance of efficacy. And we also saw a deepening of response with continued treatment out to 52 weeks, including improvements in EASI-75, EASI-90, itch and vIGA endpoints.

Notably, we saw an up to fivefold increase in EASI-100, as Howard mentioned earlier, underscoring the potential for REZPEG to give patients complete disease clearance with extended treatment over time and setting a new benchmark in atopic dermatitis. And second, we established that extended monthly and quarterly dosing could be used as a long-term treatment regimen with REZPEG after inducing responses. As I stated earlier, with over 1,000 patients treated to date and about 381 patient years of exposure, REZPEG has a well-established long-term and favorable safety profile. As seen in our reported data, we have generated a differentiated safety profile with no increased risk of systemic adverse events such as conjunctivitis or infection or malignancy.

The REZOLVE-AD data informed our Phase III program, and we will start the first pivotal study in June of this year. Following our end of Phase II meeting, we now have alignment on plans for a Phase III program to evaluate a single dose 24-microgram per kilogram twice monthly for a 24-week induction period. Patients who achieved EASI-75 or IgA responses will then be rerandomized to monthly and quarterly regimens out to 52 weeks. The design of Phase III will be similar to those studies used for registration of other biologics. Our plan is to utilize, as other Phase III programs have, the primary endpoint of an IgA-related endpoint required for U.S. registration and an additional EASI-75 endpoint to support EU approval. Our Phase III program will evaluate both biologic naive and treatment-experienced patients.

Beyond atopic dermatitis, in December, we also established a proof of concept with the data from REZOLVE-AA for REZPEG in severe to very severe alopecia areata. We were pleased that these data have been accepted as a late-breaking presentation at the upcoming AAD meeting at the end of March. It is the only data set in alopecia areata that was accepted for presentation in the late-breaking session. In the REZOLVE-AA study, as we reported in December, REZPEG demonstrated an efficacy response that met our target product profile expectations, which was to achieve efficacy similar to low-dose JAK inhibition at week 36 with every 2-week dosing, and maintain a more attractive and favorable safety profile. We believe the data positioned REZPEG as a potential first-in-class biologic in alopecia.

As Howard stated earlier, the REZOLVE-AA study also included a blinded 16-week extension for patients who reached week 36 in the study but had not yet achieved a SALT 20 score. We plan to report the data from this treatment extension in April. To that end, we will initiate a quiet period beginning April 1 until we unblind and report the data from the treatment extension.

As a reminder, the only available systemic therapies that are FDA approved for the treatment of alopecia areata are JAK inhibitors, but these contain a number of black box warnings and laboratory monitoring requirements. Nearly all patients also experience hair loss after treatment cessation. With the limited treatment options available in alopecia areata, we believe there's a unique opportunity for a novel immune-modulating Treg mechanism like REZPEG to offer attractive dosing as compared to a daily pill and a potentially more favorable safety profile.

Following our 16-week treatment extension data, we expect to hold our end of Phase II meeting with the FDA for alopecia areata in the second quarter of this year. And following that, we plan to share more about our plans for advancing into Phase III.

Before I move on to our earlier antibody program, I want to mention our ongoing Phase II study with REZPEG for Type 1 diabetes. This study sponsored and funded by TrialNet is evaluating REZPEG in patients with new onset Stage 3 type 1 diabetes. Per protocol, patients will be randomized 2:1 versus placebo and receive REZPEG every 2 weeks for 6 months. The study is broken into 3 cohorts, beginning with adult subjects ages 18 to 45 and moving into patients as young as 12 and then 8 years of age. We are excited to be working with TrialNet.

This consortium of type 1 diabetes specialists in the U.S. also ran the first studies for TZIELD, also known as teplizumab in type 1 diabetes. They have a strong commitment to finding and evaluating new therapies that can help patients with this devastating diagnosis. We believe and expect initial data from the trial that sponsored Phase II sometime in 2027.

One of the important paradigms of our work is that by creating a first-in-class Treg targeting approach like REZPEG, we've confirmed what we've always felt as immunologists that Tregs were essential for so many different diseases and that they could be therapeutically targeted for disease treatment. Based upon low-dose IL-2 and Treg biology, either genetically or assessed clinically, we know that there are so many indications beyond what we're exploring in our current Phase II studies that are potential opportunities for REZPEG. These include therapeutic areas such as our skin and autoimmune diseases, such as food allergies or asthma where we've already seen a signal and chronic rhinosinusitis. It also includes skin disorders such as dermatomyositis and also potentially autoimmune diseases such as Sjogren's syndrome. As we advance REZPEG in Phase III, we look forward to the possibility of generating additional proof-of-concept data in additional indications, which could expand the future label for REZPEG.

Moving on to our earlier pipeline programs, NKTR-0165 and NKTR-0166, our TNFR2 agonist and bispecific programs. We expect to present preclinical data from this program at a scientific conference in the second half of 2026. This molecule has a very high specificity for signaling through TNFR2 on Tregs to enhance and optimize their ability to regulate the immune system, which we believe could be impactful in multiple sclerosis, ulcerative colitis, vitiligo and other I&I indications. In the first quarter, we announced an academic research collaboration for NKTR-0165 with Dr. Stephen Hauser at UCSF to explore the potential role of TNFR2 agonism in the reduction of neurodegeneration and promotion of neuroprotection and cell repair. The work being funded by UCSF will look at NKTR-0165 in patient-derived B-cell models of multiple sclerosis. We're looking forward to working with Dr. Hauser to inform future development work for this important molecule.

Leveraging our learnings from the development of NKTR-0165, we have designed a bispecific molecule called NKTR-0166. This bivalent antibody incorporates a TNFR2 agonist epitope and an antagonist epitope that has been previously validated in the treatment of rheumatology diseases. As a dual agonist antagonist of known pathways, NKTR-0166 has the potential to modify disease pathogenesis in a number of autoimmune disorders. And we're planning for IND submission for one or both programs in 2027.

And with that, I'll now turn it over to Sandy to cover the financials.

Thank you, JZ, and good afternoon, everyone. On today's call, I'll review our quarterly and full year 2025 financials and share our preliminary financial guidance for 2026. We ended 2025 with $245.8 million in cash and investments and with no debt on our balance sheet. In February, we completed an underwritten public offering for $460 million, resulting in approximately $432 million in net cash proceeds to the company. We also accessed approximately $44 million of net proceeds to date from our existing $110 million ATM facility in 2026. We now have a strong balance sheet to invest in our pipeline and advance our Phase III program in REZPEG.

I will now provide a quick review of our 2025 financials. Our revenue was $21.8 million for the fourth quarter and $55.2 million for the full year 2025. Our R&D expenses were $29.7 million for the fourth quarter and $117.3 million for the full year. Our G&A expenses were $11.2 million for the fourth quarter and $68.7 million for the full year. Our noncash interest expense for the fourth quarter was $9.8 million and $26.2 million for the full year. And our net loss for the fourth quarter was $36.1 million or $1.78 basic and diluted net loss per share. For the full year of 2025, our net loss was $164.1 million or $9.73 basic and diluted net loss per share.

We are providing very preliminary 2026 guidance on today's call. The guidance ranges are wide as we are still completing the planning and budgeting activities for the REZPEG Phase III program. We began investing in start-up activities for this program last year with production of drug supply and placebo. And as Howard stated earlier, we plan to randomize the first patient in June. We expect an updated 2026 budget at that time, and we'll update our financial guidance as necessary.

With respect to our 2026 P&L guidance, our noncash royalty revenue for the full year of 2026 is expected to be between $40 million and $45 million. Based on our current forecast, we anticipate that full year R&D expense could range between $200 million and $250 million, including approximately $5 million to $10 million of noncash depreciation and stock-based compensation expense.

We expect G&A expense will decline in 2026 over 2025 to a range of $60 million to $65 million. This includes approximately $5 million of noncash depreciation and stock-based compensation expense. Our full year noncash interest expense is expected to be between $30 million and $35 million. Additionally, we do not expect any significant gain or loss on our equity method investment in 2026. Lastly, we expect to end 2026 with approximately $400 million to $460 million in cash and investments.

And with that, we'll now open the call for questions. Operator?

[Operator Instructions] And our first question will come from Yasmeen Rahimi from Piper Sandler.

Maybe a quick question that's sort of 2 part. One is, given -- congrats on presenting the REZOLVE-AA study at the AAD Conference. Hope to understand, JZ, what type of new data we could see? Or is it just more an opportunity to showcase it? And then part 2 is maybe help us frame what you want to -- what do you hope to see in this blinded 16-week treatment extension period? What does REZPEG need to show to be highly competitive, both in regards to mean SALT reduction as well as SALT 20.

Thanks, Yasmeen. So one of the things that we'll be presenting later and that's coming up in the future data presentation is, remember that the way the study was designed is that it was a 36-week treatment period. However, patients that had begun to grow hair but had not yet reached a SALT 20, they were permitted to advance into a 16-week additional extension, which was also a blinded portion of the study where they could receive dosing all the way to week 52.

And when we presented the data in December, we had already indicated that there were already 3 patients that had entered into that period as of the time of that December data cut when we presented the results last year that had already reached a SALT 20 after week 36. And those patients were not even considered in the week 36 numerator because their response happened afterwards.

So when you kind of then ask what is the tone of the presentation that we'll be making once we begin our quiet period in April and after we present the top line results, we'll be sharing the additional effect of treatment with REZPEG and the potential of additional patients to convert to achieving SALT 20 responses, as well as deepening their SALT reductions over that additional 16-week treatment period. And I think you're kind of potentially starting to see a bit of a paradigm. We saw in atopic dermatitis as we extended the duration of dosing to week 52 with maintenance. Patients treated with REZPEG continue to develop additional efficacy, and we think there's a potential that, that could happen as well in alopecia areata as we've already seen 3 patients achieve responses that way. So we'll be sharing the totality of that patient population. All of the patients will have completed week 52 that entered into that extension period, and that will be the nature of the results.

In terms of what we'd like to see for what would be competitive, REZPEG has already demonstrated quite a different profile from a JAK inhibitor. When you consider all of the upsides of growing hair, but then balanced by the downsides, as both Howard and I mentioned in our presentation, there are really significant safety issues and risks that make taking a JAK inhibitor chronically very challenging. And particularly, it's a class of drug that's difficult for dermatologists to use owing to the laboratory monitoring and the additional work and risk that the patients have.

And then when patients have to stop taking a JAK inhibitor for any reason, pretty much everyone loses all the hair but they might have grown when they were on the JAK inhibitor. So we'd like to see an efficacy profile that reaches low-dose Olumiant, we think we have a very good shot of getting to that level. And then we'd like to deliver all of the other things that REZPEG has already shown, which is a completely differentiated safety profile, a much more convenient dosing frequency relative to a once-a-day pill and really an opportunity to provide a much better biologic that can be used chronically in this chronic indication. Thank you for the question, Yas.

Our next question comes from Julian Harrison from BTIG.

Congrats on the progress. Regarding the Phase III program in atopic dermatitis that's expected to initiate next quarter, would you expect the ACQ5 data to make its way into a potential label from those trials? If so, I'm wondering how enabling you would expect that to be from a commercial standpoint relative to dual labeling, both in atopic derm and asthma? And then sorry if I missed it, I'm curious also what percentage of bioexperienced patients you plan to enroll in your atopic dermatitis trial that's upcoming? Is there a defined target there?

Mary, would you like to answer that?

Sure. So we are including the ACQ5 in the Phase III program, we will look at this at baseline and through induction and then we'll also look at the ACQ5 through maintenance. And we are going to power -- and we will control for multiplicity for the ACQ5, and we will make every effort to include that into the label, and that is certainly part of our plan.

With respect to bioexperienced patients, we are anticipating roughly 25% of the patients in our Phase III program will be bioexperienced and then 75% of the patients will be biologic and JAK inhibitor naive.

Our next question comes from Jay Olson from OppCo.

This is Cheng Li on the call for Jay. Congrats on the progress. Just on the AD part, I'm just wondering for the Phase III trial and also for future commercial launch, what are the formulation or design for REZPEG thinking right now? And also like wondering if there are any protocol guidance or implementation on mitigation strategy for your Phase III where you think that's necessary?

Well, yes, I'll cover the question about the formulation, and then I'll turn it over to you, Mary. So REZPEG is a very low volume administered agent. So patients receive -- most patients receive 1 milliliter, 2 milliliter max depending on their body weights. And then our plan is to run Phase III in the same way that we ran the Phase II, where the drug was presented as a vial. And then at study site, it's drawn up and administered to the patient by staff at the study centers. But our plan for the commercial launch is to launch REZPEG in an auto-injector, coupled with an auto-injector device. And so for that, we'll be switching to what's called weight banded dosing. So we won't need to use weight-based dosing because patients will be dosed according to their body weight. And then we know that will have a lot of opportunities and also advantages. This will be a very straightforward self-administered product, very similar to all the biologics that are used in single-use [ PEM ] devices.

And then regarding some of the way we will run the Phase III, I'll turn that over to Mary.

Yes. So first, I think it would be a good idea to just review the ISR cases that we've seen across our program and 99% of the ISRs were mild to moderate in severity with the vast majority being mild and only 1% are severe, and we do see a very, very, very low dropout rate due to ISRs. The reason for that is these ISRs are not like what we're experienced when pulse was launched, we do not commonly see pain. We do not commonly see pruritus. The vast majority of patients, 96% of them are just having erythema or redness. And likewise, these patients are not having ISRs every time they receive an injection. In fact, we see really the vast majority of patients are really only having 2 or fewer during the course of treatment.

In terms of how these are managed, patients use cold compresses with ice. And if need be, they can also use a topical corticosteroid. But since the vast majority of patients don't have pruritus for the most part, patients are not needing to use a topical corticosteroid. We did have Dr. Jonathan Silverberg on in our last presentation of the maintenance data, and he certainly underscored that the trade-off is an easy choice for patients. These patients are having severe itch. And with REZPEG having that very rapid itch relief and resolution of atopic dermatitis with the trade-off being an erythematous ISR that overall, the risk benefit highly favors REZPEG as a treatment for atopic dermatitis.

Our next question comes from Roger Song from Jefferies.

Great. Congrats for the progress. My question is related to, I think, the last data cut for the alopecia areata, you have 3 patients reached 420 and then another 7 patients reached 430. Just curious what are the dosing for those 3 and the 7 patients? And then given if they are deepening the response, since you're getting towards high-dose Olumiant, based on your market research and then your adviser, will this efficacy reaching high-dose Olumiant will change the potential clinical adoption compared to the low dose?

Thank you for your question, Roger. So I just want to reiterate that the study is blinded, right? And so when we share the results coming up very soon in April, we'll unblind and we'll present all of the results for all of the patients that made it through to the extension period. So that will be an update for us very, very soon.

And then in terms of the TPP, one of the really important elements is that this is a biologic and it brings a completely different profile. And our objective was always to achieve the TPP of low-dose JAK inhibitor, Olumiant, and we believe we've already met that with the data that we have. We believe that 52 weeks is the correct duration of extension. So for example, in the Phase III that we plan, we know we'd be treating longer than 36 weeks. And we know that there's an opportunity with the additional treatment duration to potentially elicit even more efficacy of effect. We think there's just this really white slate kind of an opportunity because the first time a biologic moves into an autoimmune indication, it can have a very profound effect on prescribing patterns from physicians. Many doctors are much more comfortable prescribing a safer biologic as opposed to a more difficult to manage and potentially more challenging agent like a JAK inhibitor. So it's something we're very, very excited about. And it's a data update that we're really looking forward to coming up. And it's a TPP that we think could be a really big opportunity for REZPEG in the future.

Our next question comes from Mayank Mamtani from B. Riley Securities.

Congrats on the progress. So another alopecia question. Sorry if I missed this. What incremental data relative to the December update you would get at the conference? And if you could comment on any plans for releasing the off- therapy data for the responders that you had? And I know you had efficacy responses still planning as part of 16-week extension. So I wasn't sure at what point you'd look at the off therapy data.

And then just a little high-level question for Howard, if I may. The EASI-100 responder rate, how important do you think of that as a differentiator? I don't know if many agents get there. I also ask that in context of the initial framing of a large growing ATD market, which could have multiple entrants around the time you get on market in 2029. I understand the near-term launch landscape has certainly narrowed, but just thinking longer term.

Well, I'll answer the last part of the question first and then turn it over to JZ and Mary. I think EASI-100 hasn't been looked at very closely, and it hasn't been reported very much because very few people attain the levels that we've been able to attain. So if you look at the maintenance data, where we have achieved 30% or so EASI-100 scores, again, I think that's very important, and it leads to -- essentially, it leads to effectively complete clearance of the disease in these patients over time. And while it hasn't been talked about much and people talk about EASI-75 and EASI-90, that's because it's really difficult to achieve EASI-100, and we've done it. So I think that says a lot about the potential for the Treg mechanism in general.

I'll turn the rest of the question over to JZ and Mary.

Sure. Thanks, Howard. And Mayank, you asked many, many questions in one question, 12-part. So let me just make sure I catch them all. So -- in terms of the AAD presentation, it's coming up in just a couple of weeks. So you can see all of the data that's presented, and it will be presented in the medical conference, right, by a physician.

In terms of the rest of the study, we do have a catalyst later this year, which will be the 24-week off-drug period of evaluation from the alopecia areata study. But that is not going to be data that we touch on either at AAD or in the April data presentation, which just focuses on the end of treatment at week 52. In the second part of this year, in the later part -- in the fourth quarter, we'll present the results of the 24-week off-drug period. So those will be just future catalysts to look forward to for REZPEG and alopecia areata. Thank you for your question.

And our next question comes from Samantha Semenkow from Citi.

Let me ask one about the type 1 diabetes study. I'm wondering if you could just share a little bit more about that trial. I know there's growing interest in development here. I'm wondering how you see REZPEG potentially differentiating from other approaches in the clinic? And should that 2027 data include C-peptide preservation data? And then if I could squeeze one more in, just more broadly, as you think about advancing REZPEG into additional indications, you mentioned quite a few in your prepared remarks, JZ. How do you think about prioritizing those for which ones might be the first to potentially advance into the clinic?

Thanks, Sam. So in the type 1 diabetes, it was very interesting because TrialNet was actually looking for a regulatory T cell targeting approach. And it was very exciting because there was a lot of sort of mutual drive for bringing that forward. And then it was also a very competitive process working with them because they have many things that they can choose from. We were very, very excited that they selected REZPEG to run the study.

Now one of the underlying scientific themes is there is a well-known sort of theory about the role of regulatory T cells in this disease and that sort of how thymic antigens end up being bad for driving the autoreactivity against the islet cells and then a loss of Treg control really exacerbated. So there was a goal in order to elevate Tregs in these patients in order to slow the progression of the disease and ideally overcome it altogether. And so the first step in sort of achieving this long mission is this therapeutic intervention study. And this trial is really run very much in the same way that the first teplizumab studies were run. The big difference is that we're giving a 6-month treatment as opposed to just a short burst, just a few weeks as how teplizumab is dosed. And then the goal is, of course, to really slow down the rate of decline.

There will be an opportunity for early data next year, and it's a little early to say the full extent of what that would be, Sam. However, yes, a mixed meal tolerance test, right, with C-peptide is obviously one of the key endpoints in the study, along with HbA1c levels and also insulin usage. And so those are the key activities that are being tracked in the patients. And it's a well-designed study with probably the most highly qualified team of people to do that kind of study in the trial in that consortium.

And then in terms of the other indications, it is still something that we're deciding on which indications and which ways to go. But I think that we've seen so many examples of data from our own program that would really make some indications quite attractive. I think it's quite clear that this mechanism in both skin diseases and in diseases that have a Th2 drive has quite a lot of potential. And so seeing the results that we saw in patients with comorbid asthma was very exciting. So that makes that a very, very interesting indication. And there are a number of allergic indications as well that are also potential. So this is something that we'll give more updates on in the future in the coming months.

Yes. And we just may want to add to, just in terms of the differentiation in type 1 diabetes, Tzield is not an easy drug to give. It's administered as a 14-day course of IV infusion with a step-up dosing schedule. And patients can commonly have a cytokine release syndrome. And so then you do have to give a number of other medications, an antipyrotic, an antihistamine, maybe an antiemetic and then clinicians have to monitor for lymphopenia, rash and even elevated liver enzymes. So in contrast, an outpatient dosing regimen with REZPEG where there's not routine monitoring and you don't see cytokine release syndrome, I think also affords a highly differentiated and more favorable both safety profile as well as drug that's administered outpatient as opposed to an IV infusion in the infusion center or even hospital.

And our next question will come from Arthur He from H.C. Wainwright.

Congrats on the progress. So 2 questions. I know you're going to present the extension data from the A study in April. But could you -- if allow, could you tell us how many patients complete the expansion phase? And also when the patient finished the extension, do they have choice to continue on the drug or everybody goes to the off-treatment period? That's question one. Question 2 is, could you give us a quick update on the Eli Lilly trial?

JZ, why don't you take...

So as we announced in December, there were 23 patients that were ongoing in the 16-week extension. If you remember, Arthur, we had like a waterfall plot, and they were the green dot people -- patients on that chart. So the data update that's coming in April will be when everybody completed the 52-week treatment. So those 23 people as well as anyone that had completed it prior. And then for this trial, all treatment stops for all patients at either week 36 or week 52 for the people that went into the extension. And afterwards, everyone has followed for 24 weeks of drug.

And then for the second question, I'll turn it over to you, Howard.

Yes. Thanks, Arthur. Look, obviously, I can't comment in detail on this type of litigation. Trial was scheduled for last year. It was -- it's in federal court. So because of the government shutdown last year, it was moved to this year because the courts were shut down. This trial is scheduled for September 8, a jury trial in federal court in San Francisco, and we're fully committed to pursuing this. And we certainly think we were harmed, and let's see how this plays out in court. Hope that -- it's as much as an answer as I can give you at this point, but thanks for the question.

Our next question comes from Andy Hsieh from William Blair.

Maybe just one on some of the macro developments in the last couple of weeks, Galderma, they kind of talked about increasing confidence in the atopic dermatitis space. So I guess part one, I'm curious if that alters your market sizing guidance that was provided during JPMorgan? And then also kind of a data update from Pfizer with its trispecific asset in atopic dermatitis. Not a lot of numerical data, but kind of curious about your take on that.

JZ, do you want to answer that one?

Sure. Yes. So maybe I'll start off on the Pfizer one, and then Mary, you can touch on the Galderma update. So briefly covering -- Pfizer did present limited data in the press release covering a couple of molecules that were multi-specific molecules that were inhibiting either IL-4, 13 and TSLP, IL-4, IL-13 and IL-33. And they showed some very encouraging placebo-adjusted efficacy data.

One of the things that we -- it's a very interesting question because sort of combining known mechanisms into multi-specific agents, whether bi or tri specific is one way of achieving a combination kind of strategy, but it's also a way of kind of bringing in all the known mechanisms into one thing. It has a potential to be helpful but it is also kind of an incremental approach focusing on known and validated agents.

We think there's an opportunity with a mechanism like REZPEG as a Treg targeting mechanism to provide the patient a much more holistic and potentially comprehensive kind of efficacy because really what a Treg is aiming to do is to fix the underlying pathology of the disease, not take away pathways that are disease drivers per se, but to fix what caused those pathways to be disease driving in the first place. And that's why we think we've been observing in atopic dermatitis with ongoing dosing, such a growing level of efficacy, a deep maintenance and the potential for patients to really do better. It's very interesting.

I mean most medicines you take, they tend to do worse for you over time. But in our studies with REZPEG, we see that patients do better over time. So we think there's a lot of opportunity there. We also are very excited that REZPEG is much further ahead, right? So when you think about the programs that are initiating Phase III, REZPEG is at a very competitive position. And it's a novel MOA, and it has the opportunity to provide very differentiated opportunity for patients.

And let me turn it over to you for the Galderma question.

Let me -- Mary, before you jump in, let me just add to one thing JZ said. Look, it's a great question. I just think it's important to understand the size of this market. Market, as I said earlier, is expected to be by the mid-30s, $35 billion. And 10% -- only about 10% of patients who have atopic dermatitis are taking a biologic. So the potential for market growth is enormous. There's lots of room for various mechanism of actions here. So I don't think that becomes a real hurdle. I do think JZ is absolutely correct that we, as an agonist are taking -- as a Treg agonist are taking a very, very different approach than IL-13, IL-4, whatever blockade. So let's see how it all plays out, but we're dealing with a market that's very, very large. And I think there's room for a number of different opportunities here.

Mary, do you want to go ahead?

Yes. No, I would just say that when we look at the Arcadia Phase III data for [ nemolizumab ], remember, those trials were in combination with topical corticosteroids. And patients really don't like to flatter themselves with topical corticosteroids. By the time they start a biologic, it's because they've already for a very long time, have been using topicals and they haven't controlled their disease. And when you look at those Phase III programs, the EASI-75 ranges between 42% and 44% for nemolizumab in combination with the topical corticosteroids.

I'd just point everybody to look again at our presentation from February where we showed those placebo patients who were the placebo patients from the induction and crossed over for both 16 weeks of treatment and 24 weeks of treatment, where the EASI-75 was higher than what we saw with nemolizumab plus topical corticosteroids. It was 53% at week 16 and 58% at week 24. So I just think even we saw a very rapid itch relief. And then when you look head-to-head at EASI-75, REZPEG seems to provide a deeper response than nemolizumab plus a topical corticosteroid.

So from the perspective that Howard said, of course, this is a huge market, and there's lots of opportunity for multiple agents. I think when you stack up our data compared to nemolizumab plus a topical corticosteroid, we have very, very compelling data, which would really show that a physician would like to select an agent with a deeper EASI-75 for the benefit of the patients. So thanks for the question.

And I am showing no further questions from the phone lines. I'd now like to pass the conference back over to Howard Robin for any closing remarks.

Well, thank you. And I want to thank everyone today for joining us and for your continued support. We really greatly appreciate it. And I want to thank our employees who continue tirelessly on behalf of patients. And together, we've transformed our scientific hypothesis into real and potentially meaningful therapeutic options for patients. We look forward to initiating our Phase III studies in atopic dermatitis in June and sharing our 52-week alopecia areata data in April. So stay tuned. Thanks, everybody.

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

Ladies and gentlemen, thank you for joining us, and welcome to Nektar Therapeutics Analyst and Investor Event to discuss REZOLVE-AD maintenance data with atopic dermatitis experts.

[Operator Instructions] I will now hand the conference over to Vivian Wu, Investor Relations and Corporate Affairs. Vivian, please go ahead.

Thank you, and good morning, everyone. Thank you for joining us today. Today, you will hear from Howard Robin, our President and Chief Executive Officer; Dr. Jonathan Zalevsky, our Chief Research and Development Officer; and Dr. Mary Tagliaferri, our Chief Medical Officer.

On today's call, we expect to make forward-looking statements regarding our business, including statements regarding the therapeutic potential of and future development plans for rezpegaldesleukin, the timing and plans for future clinical data presentations, 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, many of which are outside of our control. Our actual results may differ materially from these statements. Important risks and uncertainties are set forth in our Form 10-Q available at sec.gov.

With that, I would like to hand the call over to our President and CEO, Howard Robin. Howard?

Thanks, Vivian, and good morning. Thank you all for joining us today. We're very pleased to share the results from the 36-week maintenance period of our Phase IIb REZOLVE-AD study, which evaluated rezpegaldesleukin at monthly or quarterly maintenance dose regimens. These results build on our data already reported for rezpegaldesleukin and truly reinforce the promise of a first-in-class novel Treg mechanism to treat atopic dermatitis. In the induction part of the REZOLVE-AD study that we reported in June of last year, we saw a rapid onset of EASI-75 response and itch relief. And at the ACAAI conference, we reported for the first time with a Treg mechanism, a significant improvement in self-reported asthma control and patients with comorbid asthma from the REZOLVE-AD study.

Patients with atopic dermatitis and comorbid asthma represent 25% of the overall population. So this was a very important finding for REZPEG. Importantly, the combined data we've generated for REZPEG from both induction and maintenance showcase how a novel Treg mechanism, which addresses causal human biology, could offer compelling efficacy and safety advantages for patients. We're truly pleased today to welcome 2 experts in the treatment of dermatological diseases to our call today, Dr. Jonathan Silverberg, who is Professor of Dermatology at the George Washington University School of Medicine and Health Sciences in Washington, D.C.; and Dr. David Rosmarin, who is Chair of the Department of Dermatology and Associate Professor of Dermatology at Indiana University School of Medicine.

Following the review of results, they will share their thoughts on the data and take questions. We're planning to initiate Phase III in atopic dermatitis in the second quarter of this year, so we can advance this important potential new therapeutic modality to patients as quickly as possible. If our Phase III is successful, our goal is to submit a BLA in 2029.

And with that, I'll hand the call over to Jonathan.

Thank you, Howard, and good morning, everyone. In today's presentation, Mary and I will highlight the very exciting 52-week results from the REZOLVE-AD study of rezpegaldesleukin in patients with moderate to severe atopic dermatitis. During this call, we will show results demonstrating that ongoing treatment with REZPEG promotes maintenance of existing responses in patients that achieved EASI-75, EASI-90, vIGA score of 0/1 or itch-NRS at the end of the 16-week induction and maintained that response through to week-52. We will also present data showing new responses achieved for EASI-75, EASI-90, vIGA or itch among patients that had achieved EASI-50, but did not have those responses at the end of the 16-week induction and then did achieve these responses with additional dosing by week-52.

Mary will cover these data as well as our results for EASI-100 or 100% complete clearance of disease, shortly. And to begin, we wanted to highlight the mechanism of REZPEG, and how we believe this mechanism allows REZPEG to differentiate itself against the cytokine blocking classes of therapies.

Firstly, REZPEG is an agonist that drives the proliferation and activation of regulatory T cells, and it is then the collection of immune-resolving mechanisms employed by Tregs that drives the efficacy and resolves the symptoms and underlying pathology of the disease. Now this is in contrast to cytokine blocking therapies, which can only inhibit overactive pathways in the disease. For example, with such therapies, the aim is to target one pathway with a single agent or multiple pathways with bispecifics with the goal being to turn off that overactive pathway in the disease or essentially classical drug-based inhibition.

On the other hand, REZPEG through its Treg mechanism of action can address the underlying condition by employing many of the immune system's natural pathways of immune resolution. And for example, in our earlier clinical studies, we demonstrated this directly through serum proteomic analysis of atopic dermatitis patients treated with REZPEG. And data analysis showed that REZPEG modulated multiple immunomodulatory pathways, including those involving Treg function, induction of immunosuppressive cytokines, such as IL-10, active domain setting of immunomodulatory proteins, antigen recognition and MHC binding, antimicrobial pathways, cell adhesion and migration and antagonism of Th2 polarization.

Overall, this immune-remodeling property of REZPEG highlights the differentiation and importance of this first-in-class Treg mechanism of action and its potential to provide deep and durable responses in atopic dermatitis.

In the Phase IIb REZOLVE-AD study, there were 3 key questions that we set out to answer with the trial. The first 2 questions were focused on the dose level and dose regimen for the induction portion of the future registrational studies for REZPEG. And as you recall, we initially presented the 16-week induction results in June last year, and since then, we continued to update the results of placebo to active drug crossover arm through additional presentations made through the year.

I will briefly review these results and the key differentiating features of REZPEG in a moment. The third question asked in the REZOLVE trial was the very important question of, could the low-frequency monthly or quarterly REZPEG dose regimens maintain existing responses achieved by patients at the end of week-16 induction and could the ongoing dosing through week-52 promote new responses in patients that did not achieve a response at week-16. And this exciting data, along with a thorough safety analysis will be presented by Mary in a moment.

So let's briefly review what we have learned to date from the first part of the REZOLVE-AD trial. The results from the 24 microgram per kilogram arm dosed Q2 week have shown us a number of key points for REZPEG. REZPEG has a rapid onset of action for efficacy, and especially for EASI-75 in its relief. Many patients see this effects after just 1 or 2 dose administrations, and this is especially important for itch relief, which is the major driver of quality of life associated with the disease, helping patients feel better quickly is a critical feature and a highly desirable property of a potential therapy.

REZPEG also showed a significant magnitude of itch relief as a single agent without the need for combination with topical corticosteroids. It showed equal efficacy in patients that had either moderate or severe atopic dermatitis at baseline. And besides dupilumab, REZPEG is the only agent that has demonstrated control of self-reported asthma and atopic dermatitis. This population was 25% of our population in the Phase IIb and representative of the 1 in 4 patients who have atopic dermatitis and comorbid asthma.

From our placebo crossover cohort after induction, we have seen that extended dosing beyond week-16 to week-24 results in further deepening of efficacy across key efficacy endpoints. And from these analyses, we have established 24 microgram per kilogram Q2 week for 24 weeks as our induction dose regimen to be evaluated in Phase III.

This is a slide we presented in June 2024, the top line presentation for the 16-week induction data. From that portion of the trial, we established the therapeutic validation of the Treg mechanism of action, the PK/PD profile of REZPEG as well as the efficacy and safety of the 24-microgram per kilogram Q2-week regimen, which was the only dose level and regimen that met statistical significance across all primary and key secondary endpoints. And this slide also from the June top line presentation demonstrates the rapid onset of efficacy for the 24 microgram per kilogram Q2-week regimen, which is the red line in the chart shown in this slide.

And importantly, note the upper left, EASI-75 and lower right itch NRS charts to see the rapid separation from the placebo after just a few administrations of REZPEG. As we reported multiple times last year, we have also observed that ongoing treatment of the placebo crossover cohort at 24 microgram per kilogram Q2 week beyond week-16 to week-24 resulted in further deepening of responses beyond the 16-week period. And this is seen importantly in the key registrational endpoints of EASI-75 and IgA.

And now that we've reviewed what the REZOLVE-AD questions 1 and 2 have taught us, I'll turn the call over to Mary to cover today's exciting data presentation and a deep discussion of the maintenance portion of the trial. Mary?

Thank you, JZ. Our goals for the 36-week maintenance period from REZOLVE-AD were very straightforward, and it is designed similar to other 52-week studies, which evaluated maintenance periods after induction. We assessed monthly and quarterly maintenance regimens with REZPEG to examine the durability of responses across key measurements and to evaluate new and deepening responses with longer-term dosing.

Extending the Phase IIb trial to 52 weeks also allowed us to evaluate long-term safety with 52 weeks of dosing. Our ultimate goal was to show that less frequent REZPEG dosing sustains clinical responses through to 52 weeks of treatment. When we started the trial, we knew that less frequent monthly or quarterly dosing could establish a more patient-centric regimen for optimal long-term chronic treatment of atopic dermatitis.

Our goal was to maintain a high response rate with less frequent dosing while also deepening responses and converting nonresponders to responders by the end of 52 weeks. And of course, we wanted to further demonstrate that REZPEG has a favorable safety profile with up to 1 year of treatment, which is now supported by data from over 1,000 patients treated with REZPEG. You could see that our 381 patient years of REZPEG exposure at the end of Phase II, far exceeds most agents, including the OX40 amlitelimab, which had about half the number of patient years of exposure prior to advancing the Phase III.

Shown here is the design of the Phase IIb study with 3 REZPEG induction regimens compared to placebo. Following induction, patients who achieved at least EASI-50 in induction were rerandomized to receive the monthly or quarterly maintenance dosing at the same dose level they received an induction. Unlike historical Phase III trials that rerandomize patients achieving an EASI-75 and/or IgA response, we intentionally used a lower EASI-50 threshold for rerandomization. We made this decision so we could evaluate REZPEG's ability to deepen responses, which was a core hypothesis based on the T regulatory mechanism of action JZ just described.

For today's presentation, we have color-coded the treatment arms. Red represents 24 microgram per kilogram Q2-week induction to monthly or quarterly dosing and maintenance. Blue is the 24 microgram per kilogram monthly induction to monthly or quarterly maintenance, and green is 18 micrograms per kilogram Q2-week in induction to monthly or quarterly in maintenance.

As was done in all other trials evaluating maintenance regimens, a placebo arm was included in maintenance only to preserve the double-blind from induction for the monthly and quarterly dosing maintenance arms. This arm included patients who achieved at least an EASI-50 in the placebo arm in induction. Because the arm is only used to preserve the blind, it is excluded from the efficacy analyses in an identical fashion to other reported trials with maintenance periods.

On the left side of the slide, you could see patients entering maintenance with a response of at least EASI-50 in the top 2 induction arms, which are shown in red and blue. All patients randomized in these 2 cohorts received the same dose of 24 micrograms per kilogram on either a monthly or quarterly regimen. This allows us to pull the efficacy analysis for all the EASI-50 or higher responders, which increases the sample size for these 2 important planned Phase III monthly and quarterly dose regimens.

To evaluate efficacy at 52 weeks after 36 weeks of maintenance dosing, we utilized the same measurements as seen in other trials with maintenance arms. Specifically, we evaluated the percentage of patients who could maintain their responses of EASI-75, vIGA, EASI-90 and itch from week-16 to week-52. Again, these are key measurements used in other trials to evaluate the drug's ability to maintain durability with continued dosing.

Second, and unique to Nektar, our study was designed to quantify the conversion of new patients to responses on the endpoints of EASI-75, vIGA, EASI-90 and itch who were nonresponders at rerandomization, and also look at patients who deepened their responses during maintenance.

Finally, we're very excited to share with you today an analysis of patients who converted to an EASI-100 response from week-16 to week-52. EASI-100 represents complete clearance of disease, so it is an incredibly important endpoint for patients. With that introduction, I will now review the first new maintenance data, which assesses REZPEG's ability to sustain responses they achieved in the induction period.

Summarized here are the overall durability data by individual maintenance arms. Importantly, these are the same type of maintenance data included in product labels for other approved biologics for atopic dermatitis. Each column shows 1 of the 6 rerandomized cohorts, and the 4 data rows display maintained responses at week-52 for EASI-75, EASI-90, vIGA and itch.

At the top of each cell, you could see the percentage of patients who maintained the response at the end of 1 year. The lower case end between each percentage is the number of responders for each endpoint at rerandomization before they entered maintenance. All of the monthly and quarterly maintenance arms showed excellent durability of responses over the 36-week maintenance period.

As an example, for EASI-75, you can see 74% of patients rerandomized to the 24-microgram per kilogram monthly regimen maintained their baseline response at study end. And what you can see from all the fields is very encouraging for patients, irrespective of dose or dose frequency, responses were maintained and durability was achieved.

As I mentioned earlier, we pulled the monthly dosing cohorts and quarterly dosing cohorts for EASI-50 responders at week-16 who received the same high dose of REZPEG, 24 micrograms per kilogram in the maintenance portion of the study. This is the dose that we intend to evaluate in our Phase III study and the dose that performed the best on the key efficacy endpoints in induction.

Above each bar, you can see the number of patients included in each analysis. Now looking at the left graph, you could see the percentage of patients on the monthly dosing regimen who maintain responses. And on the right, the same data are shown for the quarterly dosing regimen. As an example, 80% of patients who received the monthly dosing regimen maintained an EASI-90, while 78% of the patients who received the quarterly regimen maintained an EASI-90 response. As we look closely at these data, it is clear that both the monthly and quarterly dose regimens provided great benefit to patients in the 36-week maintenance period.

So the next logical question is how these data compare with the current standard of care, dupilumab and the next novel MOA, the OX40 amlitelimab that is expected to advance the BLA filing. So let me walk you through our results in context of the benchmark data. The data on the next few slides for dupilumab is from the SOLO continue Phase III trial, where they conducted a 36-week maintenance period following 16 weeks of induction.

For amlitelimab, we compared the 36-week maintenance dose from the Phase II STREAM-AD study that was moved into Phase III. There has been no reported maintenance data yet from the Phase III trials of amlitelimab. On the left side is a side-by-side comparison for maintaining EASI-75 from week-16 to week-52. You can see that the REZPEG quarterly dose cohort is the same, if not better, when compared to the labeled weekly or every 2-week dose of dupilumab from SOLO continue.

When compared to DUPI's Q4-week and Q8-week maintenance regimen, the difference is even more pronounced. On the right side of the slide are the proportion of patients who maintained a vIGA from week-16 to week-52. Here, the REZPEG monthly regimen showed excellent durability with 85% of patients maintaining their vIGA response compared to 54% on the weekly and every 2-week DUPI regimen. When compared to DUPI's monthly regimen, REZPEG's monthly regimen maintained responses in more than double the patients.

On this slide, you can see the comparison for maintaining EASI-90 for both DUPI and amlitelimab and for achieving an itch NRS response by week-52 for DUPI. There are no analogous itch data reported for amlitelimab from the 36-week maintenance period of their Phase II study.

Again, the appeal of REZPEG's longer dosing regimen is clear when viewed side-by-side to DUPI and amlitelimab. There were 4 additional analyses published from DUPI SOLO continue trial measuring itch and IgA results. These analyses are not available for amlitelimab. On the top of the slide are 2 graphs showing improvements of itch and IgA where a higher percent score is more favorable. And on the bottom part of the slide, you see worsening of these 2 measurements where a lower percent score is more favorable.

Now starting from the upper left, you can see REZPEG is slightly better than DUPI on maintaining an itch NRS response of 3 points or better from baseline to week-52 among EASI-75 or vIGA responders. On the upper right, REZPEG is highly effective at maintaining the vIGA response within 1 point of the week-16 value. On the lower left and right graphs, fewer patients treated with REZPEG experienced worsening of their itch and vIGA scores. These endpoints highlight how REZPEG differentiates from DUPIXENT. On the DUPIXENT 8-week dosing regimen for worsening itch and worsening vIGA, roughly 1 out of 2 patients worsened, whereas on the REZPEG quarterly dosing regimen, roughly 1 out of 14 patients for itch and 1 out of 25 patients for IgA worsened. These results for REZPEG are highly favorable and underscore the important clinical benefit that this novel MOA could offer patients.

Now that we've reviewed REZPEG's ability to maintain responses, and how that compares to standard of care, we will now shift focus to REZPEG's ability to achieve new and deepening responses in the patients who were re-randomized to maintenance regimens following induction. Here, we are showing the 6 dose cohorts and columns with 4 rows highlighting the proportion of patients with new responses. On this table, the new EASI-75 responders come from those patients who were EASI-50 to EASI-74 at week-16. And below that row are the new EASI-90 responders, the new vIGA 0 and 1 responders and the new itch responders.

The lower case ends in each of these fields are the denominator, which equals the total number of nonresponders for each endpoint at the time of rerandomization following induction. And what you see is impressive, REZPEG is able to generate new responses and deepening of responses to the existing ones.

Now looking at the pool of monthly and quarterly dose cohorts for 24 micrograms per kilogram that we're going to advance in the Phase III, we present here the results for new and deepening responses as bar graphs. Above each bar are the number of nonresponders at baseline, and the percentages show the proportion of patients who became new responders.

Patients on the monthly regimen are displayed on the left and those on the quarterly regimen on the right. You can see that of the nonresponders at maintenance baseline, 41% and 40% treated with the monthly and quarterly regimens, respectively, converted to become vIGA responders at the end of 52 weeks. These data show that patients treated with REZPEG continue to derive clinical benefit over time beyond the first 16 weeks of therapy.

This slide shows both the full population of patients in maintenance who are EASI-50 or higher at baseline as well as a subset of those patients who are EASI-75 responders at baseline, which will more closely mimic the design of our maintenance population for the Phase III studies. On the left, you can see all patients entering maintenance with EASI greater than or equal to 50, where roughly 1 of every 2 achieved a vIGA response. This means their disease was clear or almost clear. On the right are all patients entering maintenance with EASI greater than or equal to 75, and/or vIGA-0/1 response. And you can see that 58% and 61% achieved a response on monthly and quarterly maintenance after 1 year of treatment. As I mentioned earlier, EASI-100 is an exceptionally important endpoint because it represents complete clearance for patients. When we look at the same 2 populations to assess the deepest EASI response of 100% at the 24-microgram per kilogram dose, you can see that the monthly dosing regimen had a fivefold increase in complete clearance of the disease for the total population and for the planned Phase III population as well.

While just 6% of patients with an EASI greater than or equal to 75 and our vIGA response at maintenance baseline had achieved an EASI-100. By the end of the 52 weeks, 30% had complete clearance of their disease. This degree of clearance is impressive and consistent with what we'd expect with an immune-modulating mechanism that leverages Treg biology.

Across 52 weeks of treatment, REZPEG's safety profile in both the maintenance and ESCAPE populations remained consistent with previously reported data. The discontinuations for adverse events were low at 3.5%, and this rate is within the range observed in contemporary Phase IIb studies. Importantly, there was no imbalance to suggest an increased risk for infections compared to placebo.

We have not observed the safety signal for conjunctivitis, facial swelling or erythema, oral ulcers, myocardial infarction, pulmonary embolism, deep vein thrombosis or malignancy. The most common adverse events were injection site reactions, and nearly all were mild to moderate and self-resolving.

Treatment discontinuations due to an ISR were very rare at 0.7%, and the ISR frequency decreased with longer maintenance dosing. We were very pleased with the safety data set, which continues to show the regimen is favorable for patients. Now speaking further to the ISR rate, you can see on the top, the frequency of ISRs across all dose administrations from the induction part of the study, and this is what we presented in June. On the bottom, the same data are presented for the maintenance portion of the study. You can see, these data show that the frequency of ISRs decreased in the maintenance period compared to induction.

And with that, let me highlight the key takeaways. As you know, this past year, Dr. Sakaguchi and 2 others were awarded the 2025 Nobel Prize in Physiology or Medicine for their groundbreaking discoveries for peripheral immune-tolerance with T regulatory cells. In our study, we were able to validate the Treg mechanism of action for deep and durable efficacy in patients, with moderate to severe atopic dermatitis with extended dosing out to 52 weeks. Both the REZPEG monthly and quarterly maintenance dosing regimens achieved durable -- achieved durability and demonstrated a deepening of responses, which supports the evaluation of both regimens in our Phase III program.

You saw that extended dosing regimens with REZPEG compared favorably to historically reported long-term maintenance data across other Phase II and Phase III trials for biologics. And on a very exciting note, extended dosing regimens with REZPEG resulted in new and deepening of responses achieved from week-16 to week-52, including up to a fivefold increase in patients who achieved EASI-100 or complete clearance of their disease.

And finally, our long-term safety profile was consistent with previously reported results with no new safety concerns, and we now have over 1,000 subjects who have been treated with REZPEG, establishing a very robust safety package as we head into our Phase III trials.

Shifting focus, let me share with you our Phase III trial design for our registrational program. We completed our end-of-Phase II meeting with the FDA, and we plan to start this study next quarter. We will run 2 global Phase III monotherapy trials, and each study will randomize approximately 650 patients, ages 12 and older with moderate to severe atopic dermatitis. Patients will be randomized 2:1 to receive subcutaneous treatment with REZPEG 24 micrograms per kilogram every 2 weeks or placebo in a 24-week induction period.

For the maintenance phase following an induction, patients on REZPEG with an EASI-75 and/or IgA response will be rerandomized 2:2:1 to receive REZPEG monthly, REZPEG quarterly or withdrawn from REZPEG to receive placebo for an additional 28 weeks. This design is similar to the Phase III designs conducted for the approval of other biologics as is standard in those studies, placebo responders from induction will continue on placebo to preserve blinding and will be excluded from the maintenance efficacy analyses. Our co-primary endpoints are EASI-75 and an IgA-related endpoint. We are currently finalizing the target patient population to be enrolled in the Phase III trials, which is expected to include patients who have not received prior biologics, the biologic-naive patients and could also include patients who have received prior biologics or JAK inhibitors.

Now before opening up the call for questions, I'd like to summarize our upcoming milestones over the coming year. As Howard stated earlier, we plan to start the Phase III study in atopic dermatitis in Q2 of this year, which will allow us to target a BLA filing in 2029. For data milestones, we plan to present data from REZOLVE-AD, including new translational data at a medical meeting in the third quarter of this year. And the 52-week off-treatment part of REZOLVE-AD study will complete in early 2027, and we will announce the data in Q1 2027. In the second quarter of this year, we will announce the data from the 52-week follow-up period in our Phase II study of REZPEG in patients with alopecia areata. And with respect to the ongoing study of REZPEG in patients with type I diabetes, which is being sponsored and funded by TrialNet, we expect to have initial data from that study in 2027. For our next immunology program in the pipeline, NKTR-0165, which is our TNFR2 agonist antibody, we are planning to present new preclinical data at a scientific conference in the second half of 2026.

And finally, for NKTR-255, our IL-15 agonist in oncology, our collaborator, Merck KGaA, will present data from the JAVELIN Bladder Medley Study at ASCO GU at the end of this month.

And with that, let me open the call to questions from our experts -- for our experts from you.

[Operator Instructions] Your first question comes from the line of Yasmeen Rahimi with Piper Sandler.

This is Shannon on for Yas. Congrats on this awesome data. For the docs on the call, we would love to get your perspectives on the REZPEG data package, and how you would expect to use this in practice.

David, do you want to go first? Or should I take a crack at it?

Happy to answer. So first of all, I'm happy to use REZPEG assuming consistency in the Phase III program as first-line treatment. I think, it's a strong overall package. There are patients who would love to have a Q12-week dosing. I think there are patients who are going to be very excited by this mechanism as well. And the fact that it treats comorbid asthma, the fact that it works in patients who have alopecia areata are bonuses on top of that, and it possesses some advantages that we don't see with other assets currently available. So I expect it to use it both as first line as well as later line treatment in my patients. And it's -- again, there are great results here. Jonathan?

Agreed. I think what we're seeing here in terms of the data package is very competitive results compared to DUPI, other type 2 blockers that are out there, but I think really probably going to shift the conversation and advance the field as we start thinking about the deepening of responses over time over that 52-week period, we were talking about it a lot theoretically for the OX40 and 40 ligands previously, but I think that conversation has changed drastically over recent current events with the OX40 ligand class. And even with that conversation, I'm not sure it ever fully made sense the way it was being discussed there, but looking at these data, I think there really is a very strong argument in that maintenance period, again, for the maintenance of response, but also for the deepening of responses.

So -- and importantly, you have a very large safety pool at this point in time, which reassures us. Obviously, you have -- you need even more data, you want to study even more, all right? And that's why we're moving into Phase III. But I think based on what we know right now, we're quite reassured on the safety. And I think based on that balance of safety and efficacy, this really can be a first-line contender and certainly has a real positioning for the preferred second line as well.

Your next question comes from the line of Julian Harrison with BTIG.

Congratulations on the data. Maybe first to the dermatologists on the panel, you were just asked a similar question, but to get more specific, assuming these results in REZOLVE-AD are replicated in Phase III, what fractions of your biologic-eligible atopic dermatitis patients would you expect to eventually be on REZPEG?

Jonathan, do you want to go first?

I hate those questions. I mean, they are hard questions to answer. I mean, there's like so many factors with access and other issues. I mean, from a medical perspective, I mean, it's almost impossible to answer this right now. But I think, from a medical perspective, I'm a big believer in shared decision-making. I don't think there's ever going to be necessarily a single treatment path in this disease given disease heterogeneity. So I'm optimistic that you're going to have a nice-sized chunk.

I could throw out a random number of 25% or more, but I honestly, I don't know yet because there's a lot of other variables that sort of have to sort out, and there's this like rapidly evolving world of access with other drugs, and there's changing and changing patent lives and biosimilars and other things. So, I think, it's hard to answer that specifically, but I can just give sort of a high-level optimism that this is something that's going to be used a lot in my practice. And I just -- I'll say even with my own referral bias, I see a tough-to-treat patient population who've already -- if you came into my practice, you think everyone fails DUPI. And I know that that's not the case. I'm not trying to suggest that. It's just the nature of what I'm treating. So I need to turn to alternate drugs, alternate mechanisms. And so I have sincere enthusiasm about using REZPEG.

I concur with what Jonathan is saying that, first of all, you can't divorce the use of a medicine from access or from the shared decision-making process with patients, and we both practice in a similar way. But I can assure you that we will both be using this medicine quite a bit in our patient population.

Right. And then just as a follow-up, to what extent can you entertain the possibility of progressive efficacy in asthma in light of these strong results in atopic dermatitis? And maybe for management, too, is there a relevant ACQ-5 subgroup analysis we could expect maybe later this year for the long-term data?

I'll start off by saying I think that's a really great question. And given the fact that we're seeing this deepening response here, I think it should have us more optimistic that we would see it in the asthma population as well as other populations as well in general across inflammatory disorders. So I think it has us -- it should have us all very optimistic. But again, you can't say it for sure until you prove it, but again, I certainly am optimistic about seeing it in other inflammatory disorders. The second part of your question, though, in terms of the subgroup analysis, I'll let the Nektar team answer.

Yes. So Julian, in our Phase III program, we are definitely going to be including the ACQ-5. And as we shared before, unfortunately, 25% of patients who have atopic dermatitis have a comorbidity of asthma. And outside of DUPIXENT, none of the other approved agents or the OX40s have shown any benefit for those patients who have a comorbidity of asthma and atopic dermatitis. So we feel like this is a highly differentiating element to REZPEG and look forward to collecting those data now on -- we showed you we're going to have roughly 650 patients in each one of our Phase III studies. So we'll have a very large data set on this patient population, which could also be a major driver for decision-making for people like David and Jonathan and other dermatologists to select REZPEG over an alternative biologic.

Your next question comes from the line of Jay Olson with Oppenheimer.

Congrats on these impressive results. We had a couple of questions. Differences from patients who maintained their response versus those who did not in terms of biomarkers such as Treg levels or other patient characteristics? And then as a second question, as you had previously shown benefits in asthma control for atopic derm patients with concomitant disease, are you also tracking asthma benefits during the maintenance setting? And should we expect the asthma benefits to deepen over time as well?

JZ, do you want to start?

Yes. Mary, I can start with the first one. So Jay, thank you for the question. So this is top line data. And the kind of additional sort of translational and molecular analyses for patients that maintain the response versus new responders is some of the work that's ongoing, but I can sort of highlight, we mentioned that we will be presenting translational data later this year.

And I could give a little bit of the color around that. That really is the same kind of translational analysis for patients in the induction where, if you recall, we had roughly 20% of patients that responded very rapidly after just a single dose of REZPEG and achieved an EASI-50 or deeper response after just one dose. So we will be doing translational analysis to look at some of the features of that population. That's going to be one of the subjects of later this year. And then as far as the maintenance portion, that's ongoing translational studies that we'll be reporting in the future. And then, Mary, I'll turn it over to you.

Yes, yes. So we did not evaluate the ACQ-5 in the maintenance portion. But again, as I just mentioned, we'll have a very large data set from our Phase III program, and we're very eager to see the consistency with that data in the Phase III program because, again, as we've highlighted, because the OX40s and because every other biologic aside from DUPIXENT has run Phase III trials and have not shown efficacy in patients with asthma, we're really excited to show this level of differentiation. So we've built it into our Phase III program, and the next time you'll see data from the ACQ-5 will be from the registrational studies.

Congrats again on these results.

Your next question comes from the line of Roger Song with Jefferies.

Great. Again, congrats for the data. So I got quite a few questions from investors related to the placebo arm of the maintenance cohort performance. Understanding your design is unique compared to others, you don't have the placebo withdrawal arm. So just confirm -- can you confirm with us how the placebo arm performed? Have you ever analyzed the data? And then did that in line with other AD maintenance trial, have any of those trials reported the same -- the placebo arm performance? And I have a follow-up.

Thanks, Roger. I could fully appreciate people who don't have experience with this indication, not understanding the placebo arm when patients move from induction, have a response and go into maintenance. It is standard convention, and we've done what every other trial has completed when that those patients move from induction with a response into the maintenance days and stay on placebo. Those patients are never analyzed for efficacy. They are purely there to ensure you maintain the blind so that the investigators don't know who's on placebo and who's on drug, and the patients don't know who's on placebo and who's on drug, and that's critically important for the integrity of the data set.

So no one analyzes the efficacy of those patients. However, there are placebo patients who will be analyzed in our Phase III program identical to what has happened in other biologic studies. This is a completely different patient population, I want to explain. When in the Phase III, you're randomized to our high dose of REZPEG for 24 weeks. After the 24 weeks, when you move to maintenance, we will re-randomize those patients in a 2:2:1 fashion, where you will be randomized to the monthly regimen of REZPEG, the quarterly regimen of REZPEG, and then a placebo arm. In that case, those placebo patients have now been withdrawn from drug. And so we will analyze those placebo patients in the Phase III program.

We did not have an analogous population like that in our Phase IIb. In the Phase III program, those data looking at the 2 different maintenance doses versus placebo will go into the label. And so for your investors, Roger, who have any confusion, I would direct them to look at the labels, and the published literature for DUPIXENT and lebrikizumab, and they will very clearly see this laid out that, that placebo to placebo population was purely maintained for the blind and never analyzed in any other trial. And I can understand and appreciate it may be confusing for people, but the convention, and the standard for this group is imminently clear when you look in the labels and you look in the literature.

Excellent. Just a quick follow-up. For the ISR, the report, the data, can you comment on those patients, they are the same or different patients during the induction versus maintenance? And then how frequent of the ISR for those patients are different between the induction versus maintenance? Because I remember during induction, you have 70% people, maybe more than that, only have 2 or less ISR.

Yes, sure. So we actually looked at the number of patients who did not have an ISR induction and had it in maintenance, and there are only about 6 or 7 new patients out of the total population that entered maintenance that had an ISR in maintenance and not an induction. We also then looked at just like we did in the induction phase, what proportion of patients had 2 or fewer ISRs in the maintenance phase, and it turned out to be roughly 73% had 2 or fewer ISRs. And you saw from the data that we just presented when we looked at the ISRs per injection that the incidence rate of ISRs goes down.

I think it's really important for you to hear from Dr. Rosmarin, his experience with the patient who took REZPEG, and the ISRs because the feedback we received from the investigators is really what we see in the data. 0.7% of patients actually dropped out due to an ISR. In the maintenance portion, 0% of patients had a severe ISR, and these are largely erythematous areas that are nonpainful that patients experience, and they don't have any impact on the patient's ability to continue on treatment. But Dr. Rosmarin has actually treated a patient, and so I'll let him weigh in on what his personal experience has been.

So my patient experienced an ISR redness every time, and it didn't bother him at all because it wasn't painful. And I think that's consistent with my experience treating a lot -- with a lot of different biologics is that what patients truly care about is they don't want to be heard. They don't want pain. And I think that having some redness is not bad to them. But they -- again, they really don't want to experience frequent painful injections.

And so that's been my experience with my patient, and that's what we're seeing with the data. I'd also highlight some other experiences with -- particularly with psoriasis biologics that have higher rates of ISR that over time, they tend to decrease, and we're seeing the same here that we're not seeing -- we're seeing a decrease in incidence of the ISRs.

Thanks, David. And Jonathan, as a practitioner, can we have you weigh in on a risk-benefit balance of a drug that causes ISRs, but then doesn't have an association with conjunctivitis or ulcers? And just even what it takes for you to manage a patient that has a severe case of conjunctivitis, do they have to go off treatment? Do you have to refer them to an ophthalmologist? Can you share a little bit more with us about the management of a patient on DUPIXENT with the side effect profile that we're aware of?

Sure. I think from the way trial data report out using measure safety reporting, we lump everything together. It's just under this broad bucket of safety. But to me, I would consider ISR is really more of a tolerability issue than a safety issue. And I think it's something -- meaning we're not dealing with something that's going to be life-threatening. We're not dealing with something that's malignancy risk, severe infection risk, opportunistic infection risk, right, which is clotting risks like that these are the safety concerns that we deal with other drugs in the class or not in the class, I should say in the field.

So we're dealing with something that's really more of a nuance and side effect and something that in the derm world, we deal with. I mean, we deal with this, like I manage sometimes ISRs for neurologic medications in patients who are taking it for Parkinson's or other things like that, right? So this comes up, and I think we're comfortable with this.

And to David's point, we see this with other biologics. So I don't think it's something that scares us or intimidates us in any way. And we already have good guidance from the company and what the trialists have used throughout the trial that has worked quite well to keep patients in the trial.

In the grand scheme of things, I don't see it as really being a deal breaker in the slightest. I think it's something we'll work through. We have the conjunctivitis issues, and the facial erythema and some of the rare safety concerns that come up with the type 2 blockers like arthralgias and myalgias, et cetera, and that maybe also a safety signal even comes up with nemolizumab as well. And those are real concerns. And I'll be the first to disclose my referral bias. If you came to my practice, you think every patient who went on DUPI has conjunctivitis. And I know that's not true. I'm not trying to say it is. It's just the reality of what we deal with, and it's not easy to navigate through, and we're compounding -- sterile compounding eye ointments and trying other things and switching medications. And sometimes, once the cat's out of the bag with the facial erythema with DUPI, we can't get it back in, no matter what class we switch to.

I clobetasol ointment at it, and I can't shut it down. So it's -- I don't know if those are deal breakers for those drugs either, but the point is that they really are a nuisance to deal with in clinical practice, and I don't think something should be trivialized.

And here, we're trading off, we're getting to injection site reactions, which just of note, right, we're talking about ISRs more so with REZPEG, but the truth is, right, even you look at any of the data for DUPI, lebri, et cetera, you have a substantial ISR rate there as well.

So I think it's something that is going to be easily enough managed. And I think it's going to be part of that shared decision-making conversation that comes up. There's a lot of patients whether -- sometimes I don't even think it is justified by what they pick up on social media, they're scared, they're all going to go blind from type 2 blockers, and it's like I'm trying to convince them they're not. But to have something that doesn't have this conjunctivitis concern even in theory is a big deal for a lot of patients.

I've never had a patient ask me what's the ISR rate of a certain drug. I mean, people care about the cancer risk that you may see and some other very serious side effects, but I've never had somebody really follow up with injection site reaction. I think it's we're -- it's an advantage here that there's -- it's such a clean profile. I think we're focusing on the one thing that we are seeing, which is, again, ISR rates. But to me, if they're not painful for patients, I don't view this as a problem in my population. I don't expect to get calls from patients several -- after their injections that they're really scared of this. I think if we counsel them that you're going to experience some redness, that's part of how the drug works. I don't think this will be an issue. And I think patients when they get that initial itch relief, which is very rapid, they're going to be really happy with their outcome.

And I want to actually just add 2 points to Dave quickly if we have time. One is just counseling. And I think if you educate the patient, this is not an allergic reaction. There's no reason to come off drug. That's really more important than anything else. But two is keeping in mind, we're seeing some really nice data for the Q12-week maintenance. And that obviously offers that opportunity to tailor to the individual patient because if the patient is doing fantastic clinically, but is getting some ISRs, well, that might be the perfect patient to go to a Q12-week maintenance dose on. And then, I don't have to worry about those ISRs nearly as much. And so I think that's something that's going to be very nice as much as you might argue, well, just keep everyone on Q4 week long term, but the Q12-week data looks so good. It really offers that opportunity to balance on the ISRs.

Yes. I completely concur, John. I think that the Q12-week dosing here, I think, has been -- is going to help a lot of people, and that's going to be very attractive to my patients. In the psoriasis space, having a medicine like Skyrizi or Ilumya that you only dose 4 times a year to be able to do that in maintenance for this medicine is very, very attractive for people. And I think it also mitigates any concerns over the ISRs as well.

Thank you so much, David and Jonathan. Those insights are incredibly valuable, both to us as a company, to patients and to the investors and analysts on the call. So we really appreciate all your commentary here. It's very, very helpful.

Yes. I really appreciate that. Congrats again for the great data.

Your next question comes from the line of Arthur He with H.C. Wainwright.

Congrats. Really happy for you. And I believe that for the AD wise, it's like a horse race. It's not who jumped off the first at the gate, right? It's about who finished at the finish line, right? So I guess for 2 questions, one for the team. Could you clarify regarding the data on the Slide 14, why the IgA-01 is about significant high in the Q12W for the Q4W induction arm? And I had another one for the docs.

We start out with the docs, Arthur, and then we'll put up the slide.

Sure. For the docs, I guess -- yes, for docs, my question is more about the remittive effect of the REZPEG. So given the Phase Ib data, we see about like 36 weeks off-drug treatment efficacy and these -- and also today's maintenance data. So how should we think about the data upcoming for the 52-week follow-up we're going to see next year? And on the separate side, how should we see this impact for the alopecia indication there?

Jonathan, do you want to start?

Yes, sure. I mean, I think, we always have to be very precise and careful when we use terms like remittive effect because I think they've been tossed around way too loosely in the conversations around OX40 and 40 ligand. But I think what we can be comfortable from what we're seeing, especially with the Q12-week maintenance data is a nice persistence of effect. Whether that's the longer half-life or is that a biologic effect because of persistent Tregs that's driving that or both, I think is a very nuanced translational question that obviously, we need more data for.

But my expectation is that we're going to probably see overall good stability clinically over time, whether that's with continued dosing. And probably there will be a subset where you could eventually stop, and they're going to be able to maintain that response over time. I think all of us clinically are going to be a little cautious to do that in the real world because even if I have a drug that shows a high subset of patients where they could have " remission, I have no way of really predicting who that patient is usually on an individual patient level.

So my expectation is I'm going to continuously dose for a good period of time before I really even entertain that conversation. That may be subject to change. Maybe the Phase III data will look so good that it will blow my mind and I'll change my entire practice philosophy, but I'm just guessing that, that's how I would approach it. But I think that there's something real there. And I think it hat's really one of the cool parts of the science of Tregs. And I think it's definitely something we want to watch.

And I think the same concept you asked about alopecia areata, I think, we already have an indication that there's a longer-term persistence in terms of the benefit for alopecia areata. So it's something that we definitely are going to keep an eye on for, but that definitely is one of the value propositions of this drug.

So regarding alopecia areata, I'm certainly more optimistic that there are going to be at least a cohort of patients that are able to hold their response, especially, again, we should have more confidence given the current data. In terms of the remittive effect, that has never been -- so I completely agree with Jonathan, we have to be careful how we're using the terms.

To me, that's not as important as it may allow for the infrequency of dosing because this is a chronic disease, patients are going to still need treatment. 3 years later, they're going to -- they're not going to be off drug. They're going to need something. So the fact that we can go to potentially Q12-week is, again, is very meaningful and impactful. If we see in a Phase III, those patients who are doing well going on to placebo, maintaining their effect for even longer, that's great. But again, I would still -- I still recommend patients really hold on to that regular dosing so that they don't flare, which is just par for the course for AD.

Thank you so much, David. Thank you so much, Jonathan. And then Arthur, to address, I had to pull up Slide 14 for myself to address your question about the field and cell where you see and is equal to 13 for BIGA. Just to let you know, we did stratify our re-randomization from induction into the maintenance portion on 3 factors, and they were all based on the EASI. So we did EASI-50 to 74, EASI-75 to 89 and then EASI-90 to 100. And so, therefore, you can see well-balanced populations based on the EASI, but not on the vIGA.

Your next question comes from the line of Mayank Mamtani with B. Riley Securities.

Congrats on the study, yet again delivering an impressive data set. And I like the Skyrizi analogy. So on the EASI-50 versus 75 cutoff, this responder decision that you made to go into maintenance. And you showed some EASI-75 and vIGA comparisons on Slide 16 and 17 versus peers. If you were to do an apples-to-apples comparison, like for the 75 cutoff, do you expect that delta to even further grow, just also putting in context the Phase Ib study where you just discussed that off treatment, you have the best responders earlier on. And if you can also comment on what the peak 24-week efficacy you're assuming in the Phase III study, what delta you're hoping for? And then I have a quick follow-up.

Yes, Mayank, I do believe when we go into maintenance in the Phase III program, and we are looking at patients that are the EASI-75 and the vIGA-0/1 responders as opposed to EASI-50, I do believe that we will see those patients doing better. And so that is certainly very exciting as well. And then, in terms of your second question, JZ did show you Slide #9, which had the increased efficacy from week-16 to week-24. And you could see, for example, on the EASI-75, 58% of those patients at week-24 were responders. And for the vIGA, you see that 36% were responders at week-24. I believe these data, if they continue into the Phase III, these are nice benchmarks because they're based on our own data for REZPEG. Just to let you know in the Phase III study, these are not like oncology trials where you are powered just enough to see a difference between one treatment group versus a second treatment group where you're adding on a third medication to 2 already active ones. This is a Phase III trial compared to placebo that are very well powered, 99.99% powered to see a difference between placebo and drug.

And the reason for that is you could run smaller Phase III trials to evaluate efficacy. But of course, because this is a disease that hits 10 million people in the United States, we do need to have a robust safety data set. And therefore, these trials are overpowered to be able to really detect and determine the safety profile, not so much efficacy. So these trials are extremely well powered to detect the difference between the EASI-75 and the IgA between placebo and drug, just to provide you a level of confidence about the design of these trials and the robust power that exists to detect differences.

Yes. And maybe for Dr. Rosmarin and Dr. Silverberg, just the importance of the EASI-100 complete skin clearance data set. There's not a whole lot of data for biologics. I think maybe there's a couple, but maybe can you put in context what we've seen there with JAKs or even JAKs, what numbers we are seeing here? And do you expect this to also improve given the Phase III will go beyond that 52 weeks? And do you -- and at the end of the day, do you think this could be a reason why on top of other reasons you've identified, Phase III enrollment could actually go faster than you would think induction, less frequent dosing and then obviously, deepening in terms of EASI-100, all that, what's your sort of feeling on the Phase III enrollment rates?

I mean, I'll jump in. I'm happy to -- because there are a few questions there. So maybe I'll answer the last one first. I think that's a great point. I mean, I think, that it's a busy trial landscape. And so investigators are somewhat selective. And so when you're dealing with early phase studies, there's often a preference towards going towards a later phase study where you have a drug that's got a proven safety and efficacy profile. There's a few things more frustrating than putting a patient doing all that work and then drug doesn't do anything.

So here, having these data, I think, are going to be very positive in that respect. And also the 2: 2:1 in terms of the randomization rates means patients are going to be likely to get drug. So I think you're going to have a good setup there. I think that's going to incentivize sites and patients to want to participate. And I do think that's going to help enrollment. So I think that's a very good point. I don't -- there were a few other questions. I don't remember what the other questions were, sorry.

EASI-100.

I mean, there's no doubt, EASI-100 is a big deal. And we don't even talk about. I mean, there's a reason why you haven't heard about it with the other biologics just because we generally don't get there. And so we don't -- it's not something we're thinking about very much. This would be a paradigm shift to start talking about it in the biologic space.

We do think about a little bit more -- address a little bit more when you're dealing with the high-dose JAK inhibitors, but that's a whole different beast when it comes to the safety profile and the risk-benefit ratio. And so to have for a clean biologic, the ability to start discussing this really is a paradigm shift potentially in the biologic space.

Yes. I completely agree with both comments. First, the EASI-100, I mean, we don't talk about it because it's so hard to achieve with past biologics. So the fact that we're achieving this now is incredibly impressive. And again, you've totally taken away the disease from a patient. That's incredible. And in terms of the trial design, I completely concur with. In trial enrollment, I completely concur with Jonathan, that it's very competitive. There's a lot of AD trials, knowing that you have a drug that works very well, infrequent dosing has all these benefits and will be a long-term trial with a long-term extension will significantly help with enrollment, having more patients on drug compared to placebo, again, helps with enrollment. It's -- there's so many studies for AD right now that matters and for keeping patients in the studies as well.

Yes. Thank you, David. And Jonathan, I think the other point is, again, we mentioned a couple of times on this call that the Nobel Prize in Physiology or Medicine was awarded for the discovery of what T cells can do. And I do believe the population that we're recruiting, and the investigators who are participating in this trial, they're interested in science, and they will be eager to participate in a study that's based on the Nobel Prize winning medicine.

Yes. Got it. And maybe just one quick one for Howard. We haven't heard from him. Just maybe talk about just the pedigree of science, and the clinical validation, all that we have here, just how you're thinking nondilutive versus dilutive in terms -- you want to underwrite this Phase III program, I'm sure, to its full course and obviously, we have the Lilly trial back on docket. And any updates you can share on that, that would be great.

Sure. Good question. Look, we expect to start, as we've said a number of times, Phase III program in the not-too-distant future. And of course, we're looking at a number of ways to raise capital to do that. We were talking about potential collaborations. We're also talking about synthetic royalty structured arrangements to help fund the trial. So I think you'll see that coming in the -- hopefully, in the near future. And of course, I can't comment on this -- on the Lilly litigation. The trial date has been set for September. So we'll have to wait and see how that goes. But really not probably best not to comment on that now.

Your next question comes from the line of Samantha Semenkow with Citi.

Congratulations on the data. Let me add mine as well. I have a couple of questions. One is a follow-up on the Q12 weekly regimen, and how it performed quite well, better than we had expected. For the team, what is driving that mechanistically, do you think? And then just if there's any additional things for the physicians, and how you would think about choosing between Q12 weekly versus Q4 weekly in actual practice, I think that would be helpful to hear.

Sure. Sam, happy to take the first question. So one of the things that remember, we learned in the Phase I study was that even though it was a very small study, we had about 17 people enrolled to 24 microgram per kilogram dosed Q2 weeks. And after only 12 weeks of treatment, we withdrew the drug completely, and we saw a substantial durability of response, right? So we had 80% roughly maintenance of IgA response from that study and like around a 72% maintenance of EASI-75 after only 12 weeks of treatment without any additional dosing. And so that kind of was a phenomenon. It replicated studies we did preclinically in mice, but that's not something an effect that had been seen before in a disease setting in people.

So when we looked at this data from this study, the first thing that we saw when Mary presented the maintenance portion of the study was that we already knew you could stop dosing altogether. And the continuation of dosing looked highly durable, right, and very consistent with what we saw in Phase I. So either a monthly or a quarterly regimen was both were effectively equal, almost equally effective at maintaining the responses that were achieved by patients at the end of the 16-week induction.

What we saw that was new and different than the Phase I was that the continuance of dosing caused new responses and deepening. And it drove to the discussion we just had about EASI-100. That's not something we saw in the Phase I. We saw maintenance, but with additional dosing, we saw additional responses and depth added to the maintenance. So that was a big extension to us from what we learned from that early study of drug withdrawal.

And when we kind of think about what could be driving it mechanistically, I think it really takes me back as an immunologist to what a Treg can do based on all of the first principles and all of the experiments that have been done through the decades since Shimon first discovered these cells in the mid-'90s.

We know that they can have a very long lifespan in tissue. It's a little controversial, because as you can imagine, it's hard to measure cell lifespan in a distal tissue in an organ, but some studies have reported that Tregs can live as many -- as much as 10 years in tissue. And we know that they don't like inflammation. So when there's high inflammation, they tend to have a short lifespan, but when the inflammation is low, they can live even longer, and we see that we're getting disease resolution. So we're clearly fixing the inflammation in the skin, and then there could be a very long-lasting lifespan of the Tregs. That can help explain to me why a once-a-month or once-every-12-week regimen still maintains and allows the deepening to be seen.

Also, for us, the Q12-week was important because our hypothesis was that there should be a true drug holiday on a once-every-12-week regimen. And that is indeed what we saw. We only expect about 8 weeks of exposure from a single dose. And so on a Q12-week regimen, again, you're really treating very infrequently. It truly is the promise of an immunomodulatory drug, and its PD substantially outlasts its PK because this PD is driven by cells. The cells are active long after the drug is gone.

I'll start by saying that when am I going to use the Q12-week? Well, if the patient is doing well. So if a patient said an EASI-75, for example, and again, there is some shared decision-making there, they're going to want to go to Q12-week dosing. And I'm going to be happy to oblige him, and they're going to be, I think, very satisfied with that.

I also want to highlight another part of the study that we haven't really touched much on is that the data on the worsening of itch, which was extremely low in the maintenance phase and significantly higher for other medicines like in the dupilumab studies. And for me, I have plenty of patients who before their next dose of dupilumab of any of the biologics and particularly even the JAK inhibitors, right, before they're taking the next dose of their JAK inhibit, they're getting itchy again.

And the fact that there's such a significant difference from what we're seeing here with REZPEG, even at the 12-week mark, pardon me, any worsening of the itch in patients is extremely meaningful to me, also gives me significant confidence that we can give that Q12-week dosing, especially that's this most sensitive signal is the itch. So that's what I would have you focus your attention to that we can have real confidence in that dosing schedule. And again, to me, that's particularly impressive data. And I'm through the roof for that particular piece.

Yes. I, clinically, I agree completely. I think, from that medical decision-making perspective, I think, David's points are spot on. I mean, I would say some of it will probably depend on what that final label shows, right? Because if the -- in the Phase III, if the Q12 looks just as good as the Q4 maintenance after a longer 24-week induction, then we may have a label that says after 24 weeks decrease to Q12, and that is our dose, and that's it.

Alternatively, it could be that the Q4 week, the Q12 looks great, but the Q4 week looks a little bit better for certain endpoints, in which case, maybe we have the option to use both. For me, bottom line is, as long as the access is available to use continuing Q4 week in that subset, probably a small subset who continue to need it as well as the option in the larger subset to use the Q12 week for maintenance, I think, we're going to be in great shape, and the derms are going to be able to easily figure out where to do that.

So I think, we'll be -- it's great -- personally, I'd love it if you have the option, but obviously, in the labels, it's always a little bit different how you deal with that, but medically, we should be able to navigate that situation very easily.

Got it. That's super helpful context. I have one quick follow-up as well, and it's on the response curves, particularly for those that showed a deepening of response. I'm wondering in the data, if you have it, if you're able to see a plateau of patients achieving a maximal response or if there's a suggestion that with longer-term therapy, which I know we're not doing in this Phase II study, but with longer-term therapy, could you have achieved greater responses approaching like more patients in EASI-90, and more patients in EASI-100.

Yes. We do see a gradual uptick from week-16 to week-52 on almost all the endpoints, Sam. So JZ and I have looked at these data very closely. I think, we shared them with Jonathan and David as well. We do believe there is a possibility for ongoing benefit for these patients. We'll have 2 opportunities to look at that. In the Phase III program, we are looking at additional dosing in a long-term extension study.

And then, of course, even with the Phase IIb, we'll be able to follow these patients to see as with JZ's biology here with the Tregs in the skin for a longer period of time, do people end up having even improved benefit off treatment. So we'll have 2 opportunities to look at additional benefit for patients beyond 52 weeks, one off treatment, looking at the remittive effect and potential enhancement of efficacy over time; and two, in the Phase III program, looking beyond 52 weeks. And the kinetics of the curves that JZ and Jonathan have reviewed really do show that there could be ongoing benefit beyond 52 weeks on these endpoints.

There are no further questions at this time. I will now turn the call back to Howard for closing remarks.

Thank you. I want to thank everyone for joining us today, and I want to thank our employees for their hard work and commitment in moving this molecule forward in the clinic. We look forward to starting our Phase III studies in the near future. So please stay tuned. Thank you very much.

This concludes today's call. Thank you for attending. You may now disconnect.

Ladies and gentlemen, thank you for joining us, and welcome to Nektar Therapeutics' Analyst and Investor event to discuss RESOLVE-AA top line results. [Operator Instructions]

I will now hand the conference over to Vivian Wu, Investor Relations and Corporate Affairs. Vivian, please go ahead.

Thank you, and good morning, everyone. Thank you for joining us today.

Today, you will hear from Howard Robin, our President and Chief Executive Officer; Dr. Jonathan Zalevsky, our Chief Research and Development Officer; and Dr. Mary Tagliaferri, our Chief Medical Officer.

Our KOL panel and renowned experts in dermatology and alopecia areata, Dr. Jonathan Silverberg, Dr. David Rosmarin and Dr. Benjamin Ungar will also be available during the Q&A portion.

On today's call, we expect to make forward-looking statements regarding our business, including statements regarding the therapy potential of and future development plans for rezpegaldesleukin, the timing and plans for future clinical data presentations 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, many of which are outside of control. Our actual results may differ materially from these statements. Important risks and uncertainties are set forth in our Form 10-Q available at sec.gov. We undertake no obligation to update any of these forward-looking statements, whether as a result of new information, future developments or otherwise.

A webcast of this call will be available on the IR page of Nektar's website at nektar.com.

With that said, I would like to hand the call over to our President and CEO, Howard Robin. Howard?

Thank you, Vivian. Good morning, and thank you, everyone, for joining us today.

Over the past several years at Nektar, our strategy has been to advance innovative therapies for serious autoimmune and inflammatory conditions with a focus on regulatory T-cells as a modality. Our work has been driven by early proof-of-concept data signaling to us the potential for this first-in-class mechanism to treat a range of autoimmune and inflammatory conditions, particularly dermatological diseases.

This year, we reported positive Phase IIb data in atopic dermatitis, including patients with comorbid asthma that get us one step further to bringing a T-reg biologic to patients. We're pleased to share today the compelling proof-of-concept results from our Phase II study in alopecia areata, and we believe the results from these 2 studies established at REZPEG, a first-in-class T-reg stimulator, based upon IL-2 has now been shown to be a best-in-class approach. In the RESOLVE-AA study of REZPEG in alopecia areata, we achieved our target product profile, which was to both demonstrate comparable efficacy to a low-dose JAK inhibitor and establish a favorable safety profile that could offer the potential for a much-needed biologic therapy to patients with severe-to-very-severe alopecia areata.

We know that more than half of dermatologists are hesitant to use a JAK inhibitor for their patients and we believe the highly promising data we are presenting today provide a strong basis to advance REZPEG into Phase III development in this patient population.

And with that, I'm going to hand the call over to JZ and Mary, who will walk you through the results. JZ?

Thank you, Howard. I'd like to start by summarizing the Phase II program for rezpegaldesleukin, which is underway in atopic dermatitis, alopecia areata in type 1 diabetes. In atopic dermatitis, we presented outstanding efficacy data results for REZPEG. Our large Phase IIb study, which is still ongoing, validated the therapeutic potential of a Treg MOA in a large chronic disease setting. Besides dupilumab, REZPEG is the only biologic development that has shown clinical efficacy data in patients with atopic dermatitis and asthma, a comorbidity, which occurs in 1 of 4 patients. We look forward to reporting results from the 52-week maintenance portion of the RESOLVE-AD study in the first quarter of next year.

For alopecia areata, we believe the results we're showing today clearly demonstrate that REZPEG achieved proof-of-concept. As Howard said, REZPEG met our target product profile with activity with the treatment effect comparable to low-dose Olumiant but with a completely differentiated and better safety profile.

And finally, our partner, TrialNet, recently initiated a Phase II trial in patients with new onset Stage III type 1 diabetes and a new indication for REZPEG. And overall, we are very pleased with the progress we have made with REZPEG across this Phase II program. There is a high unmet medical need and patient need for an efficacious and safe biologic that can be used to treat patients with severe to very severe alopecia areata. Currently, the approved JAK inhibitors are effective at regrowing hair in some patients, but they carry a number of drawbacks and more than half of physicians want to start in first line with an alternative therapy because of the risks and the monitoring burden they pose. Moreover, these drugs require continuous dosing to maintain efficacy and up to 90% of patients eventually rebound after stopping therapy.

As this slide shows the limitations of JAK inhibitors opened a major opportunity for a biologic in this indication. About 30 years ago, in 1995, Dr. Shimon Sakaguchi identified a subset of lymphocytes called regulatory T cells that were critical to immune tolerance. And 6 years later, Dr. Mary Brunkow and Dr. Fred Ramsdell cloned the FOXP3 gene from the scurfy mouse, identifying the critical transcription factor that controls their function. Together, these 3 scientists won this year's Nobel Prize for physiology or medicine. We are thrilled that Tregs have been recognized and humbled that REZPEG was named and our Nature Communication publication was cited in the scientific background document accompanying this year's prize.

And this figure shows why we're excited. It's a depiction of why and how targeting Tregs could be a good approach to address a range of autoimmune diseases driven by underlying T helper cell pathologies. We know that certain polarities of T cell inflammation underlying inflammatory diseases such as atopic dermatitis, alopecia areata, psoriasis, asthma and others. And the key point is that Tregs have been shown to polarized to the effector T cell type and thus could provide control for many different inflammatory diseases.

And I will now turn the call over to Mary to review the RESOLVE-AA study results. Mary?

Thank you, JZ. I will start with the key questions that we wanted to answer with the RESOLVE-AA study. Importantly, this study is the first time REZPEG has been evaluated in patients with alopecia areata. To that end, it was designed as a signal-seeking study to evaluate the biological activity and clinical efficacy of REZPEG in these patients. In RESOLVE AA, we needed to ask these questions for the first time in this disease setting, which is a different patient population from the other skin disorders we've studied with different disease attributes.

The first question we wanted to answer is whether a Treg biologic drug with infrequent dosing could offer meaningful clinical benefit and a favorable safety profile compared to available therapies. At the time we started this trial, we had a fair degree of compelling safety data across multiple prior trials, but we wanted to understand longer-term, every 2-week dosing safety and whether we could differentiate from JAK inhibitors.

Second, we needed to understand what the kinetics of hair growth where -- with the Treg mechanism and as we knew that a longer induction for hair regrowth might be needed based upon the studies evaluating DUPIXENT in this setting, we chose a 36-week induction period for the primary end point with a 16-week extension.

And third, we wanted to know the optimal dose of REZPEG for Phase III advancement. We believe we have successfully answered these questions with our results.

Shown here is the design of the Phase IIb trial. We incorporated standard eligibility criteria into the study, which included patients with severe-to-very-severe AA with a SALT greater than or equal to 50. The study is being conducted in 92 adult patients with severe to very severe alopecia areata. Patients receive treatment every 2 weeks with subcutaneous REZPEG 24 micrograms per kilogram, 18 micrograms per kilogram or placebo. The primary and key secondary endpoints shown here were assessed at the end of the 36-week induction period. Patients who had hair regrowth at week 36 but did not achieve a SALT 20 score or better, had the opportunity to enter a 16-week treatment extension of their dose arm. And as the time -- and at the time of this data cutoff, we have 23 patients ongoing treatment in the extension portion of the study.

Finally, all patients are followed for an additional 24 weeks of therapy. Today, we will present the primary endpoint along with the key secondary and exploratory endpoints. Details of the statistical analysis methods are shown here.

For the primary endpoint of percent change from baseline in SALT at week 36, the study was designed with 95% power to detect a 23% delta between treatment arms and placebo. The study was not statistically powered for the secondary endpoints. With respect to baseline demographics, 64% of the patients were enrolled in Poland and 36% from North America. The median age is 39 years. At baseline, the average SALT score was 78, indicating a high severity of alopecia. The average time since diagnosis of alopecia areata was 11 years. The protocol CAP study enrollment at 25% for very severe patients.

For this trial, patients received every 2-week treatment with some patients receiving up to 52 weeks of treatment. This represents the longest twice-monthly dosing duration studied in the REZPEG program, and we are pleased to say that the safety profile is very favorable and there were no new safety findings. Nearly all AEs were mild to moderate in severity and self-resolved. Only 1 patient discontinued due to an AE on the REZPEG treatment arms. The placebo-adjusted ISR rate was consistent with prior studies and no patient discontinued due to an ISR.

87% of the ISR events were mild in nature. Of importance for patients with AA, there were no indications of increased risks associated with MACE, thrombosis, infections or other untoward side effects such as acne or oral herpes. Importantly, the known AE profile of REZPEG should not require the extensive laboratory testing or monitoring typically associated with JAK inhibitors.

So here's the patient disposition chart from the study. The majority of patients completed the study out to week 36. And you can see that approximately 60% of those patients that completed week 36 moved into the 16-week treatment extension period. Most of the patients who entered the treatment extension period are still ongoing. Overall, the discontinuation rate in the placebo arm was higher than the drug arms and more patients discontinued before week 16 than after. 75% of the patients who discontinued for patient decision did so before achieving a 30% reduction in their baseline SALT score. We believe this can be reduced in the future by educating investigators and patients about the kinetics of hair regrowth on REZPEG.

Shown here is the primary efficacy endpoint of percent change from baseline in SALT for the modified intent-to-treat population or all 92 patients who received at least 1 dose of study medication. Both REZPEG arms more than double the treatment effect compared to placebo. These data clearly establish clinical proof-of-concept for REZPEG in alopecia areata. While the curve separated from placebo at all time points, the treatment difference between REZPEG and placebo narrowly missed our critical delta of 23% between the drug arms and placebo.

That said, there were 4 patients identified who had major study eligibility violations and who did not meet the strict prespecified inclusion and exclusion criteria. These 4 patients were erroneously enrolled by investigators. And so today's presentations, all subsequent analyses are post talk with an mITT population that excludes these 4 erroneously enrolled subjects based on objective criteria.

Now let me show you what happens when we remove the 4 patients with major study eligibility violations. With this analysis, REZPEG has a fivefold improvement over placebo and both arms achieved statistical significance. Importantly, REZPEG 24 micrograms per kilogram was statistically significant at week 12 and at each time point thereafter. We believe these results further support REZPEG's potential as the first biologic for alopecia areata.

Now to provide more granularity on the eligibility violations, 2 of the 4 patients, 1 on placebo and 1 on REZPEG 24 micrograms per kilogram had unstable alopecia areata with their initial disease being diagnosed less than 6 months prior to randomization. So why is this important? Alopecia areata is considered unstable when patients have a diagnosis for less than 6 months because of the unpredictable nature of its autoimmune response, which can fluctuate in the early months with periods of hair loss and regrowth. Therefore, it's standard practice to exclude these patients from AA studies.

There were also 2 additional patients excluded in this analysis who initiated treatment before completing the prerequisite 8-week washout period for other AA medications. This included 1 patient on REZPEG 18 micrograms per kilogram and 1 patient on 24.

Before moving on, I want to highlight that the curves of the REZPEG treatment arms are consistent with evidence of hair regrowth over time and show no evidence of a plateau. This trajectory is promising for continued hair regrowth beyond week 36 and we'll have the chance to thoroughly evaluate the benefits of REZPEG up to 52 weeks of treatment when we complete the 16-week extension part of the trial next year.

Now what we're showing here is critically important. On the left-hand side are the results for the mITT patients with the 4 patients with the major study violations. On the right side of the slide, the 4 patients are removed. As you can see, the REZPEG groups demonstrate essentially equal treatment effect, whether the 4 patients with the major protocol eligibility violations are included or excluded. In the mITT assessment, the placebo effect was roughly 11% and without the 4 excluded patients, the placebo effect is 5.7%.

As Howard and JZ stated earlier, REZPEG successfully met our target product profile of achieving a 30% reduction in SALT at week 36 compared to a low dose JAK inhibitor. And as you can see here, presented as side-by-side data for REZPEG and low-dose Olumiant from 2 separate Phase III studies. Shown here is a waterfall plot of the best SALT percent change at any time point on the study. Each bar represents an individual patient and the blue bars are the pooled REZPEG treated patients and the gray bars are the placebo-treated patients. 42% of REZPEG treated patients achieved a 30% or more reduction in SALT score, 36% achieved 50% or greater and 17% achieved 75% or greater. All these numbers are well -- are well in excess of placebo. Now any patient with a green dot over the bar is ongoing after 36 weeks in a 16-week treatment extension. The purple dots are those patients that completed 36 weeks and the gold dots represent patients that have completed the extension. No dots over the bars represent the patients who discontinued before week 36.

The key takeaways from this waterfall plot are: First, REZPEG treated patients have experienced hair growth on the study. That's clear. You can see here that the majority of patients who did not complete 36 weeks of treatment cluster around the left side of the waterfall where there is little to no change in SALT scores. This demonstrates that staying on treatment is important to drive maximal clinical benefit.

Second, the 20 patients marked with green dots are ongoing in the 16-week extension and have the opportunity to experience further improvements in hair growth.

The next 5 slides will highlight the dose-dependent results we observed across the key secondary end points. Similar to what we saw in our Phase IIb study with atopic dermatitis, high-dose REZPEG 24 micrograms per kilogram separates from 18, and so this will be the recommended Phase III dose. In these studies, it is common to also evaluate data in the severe patient population because these patients are most likely to have robust responses earlier. Since we had 23 and 25 patients in the severe population for the 24 and 18-microgram per kilogram doses, respectively, we assess the efficacy in this subgroup.

You can see here improved efficacy in the severe patient population for high-dose REZPEG, and this effect size looks quite similar to low-dose Olumiant. Shown here are the REZPEG responders who had at least a 30% reduction in salt as compared to this same endpoint from a reported study that evaluated DUPIXENT for AA. The data shown on this slide indicate that REZPEG is more than twice as effective as DUPIXENT in a similar size study. Recently, new Delphi consensus guidelines for severe alopecia areata recommended DUPIXENT as a long-term treatment option for patients with alopecia areata who have active atopy or a history of atopic dermatitis.

Given the major unmet need for a safe biologic as an alternative treatment to JAK inhibitors, the totality of the data presented thus far support that REZPEG could be a real breakthrough for patients with AA.

Now the next 3 slides show the results for the responder analyses for absolute SALT scores achieved in the study. This is SALT 30, SALT 20 and SALT 10 or said differently, patients that regrew 70%, 80% or 90% of their hair. All 3 analyses illustrate that REZPEG demonstrates a clear dose response, has an early separation from placebo and shows a consistent treatment effect across the FDA and EMA registrational endpoints. Particularly with the deeper response analyses, 24 micrograms per kilogram is superior to 18.

Here are the SALT 30 responses noted that 29% of patients on 24 micrograms per kilogram, regrew at least some 70% of the hair. And then here are the SALT 20 responses. This is the registrational endpoint for the FDA. As you can see, this curve goes through to week 36 with a clear separation from placebo. We've already seen 3 additional patients achieving a SALT less than 20 during the 16-week treatment extension period and these patients are not included in this analysis since they achieved SALT 20 after week 36. Moreover, there are currently 7 more patients that have reached SALT less than 30 by week 36 and are ongoing in the 16-week extension and who can continue to regrow hair out to week 52. We look forward to seeing these patients' data in the next year.

Now just like with our atopic dermatitis program, the REZPEG 24-microgram per kilogram has emerged as the favorite dose across multiple primary and secondary end points. These data from the RESOLVE-AA trial make the selection of REZPEG 24 micrograms per kilogram an obvious choice for our recommended Phase III dose. Of note, the placebo-adjusted SALT 10 responses shown here, which is an EMA approved endpoint, are similar to what you see with low-dose Olumiant.

And then here are the clinician-assessed outcomes for the improvements in hair growth for the eyebrows and eyelashes. It's important to see that the MOA of REZPEG has the ability to impact additional hair follicles beyond those in the scalp, and this potential is demonstrated by patients regrowing eyebrows and eyelashes with an effect similar to reported data with low-dose JAK inhibitors.

So we started out this call sharing with you the key questions we set out to answer and this study delivered what we needed. We now have demonstrated proof-of-concept, and we know every 2 week subcutaneous dosing of REZPEG demonstrates a clear and consistent separation from placebo on all measures of efficacy. Likewise, we see a clear dose response, and we have identified REZPEG 24 micrograms per kilogram every 2 weeks as our recommended Phase III dose. Given what I have shared regarding the ongoing responders in the extension period and with the most profound increases in hair growth beginning after week 16, we will choose 52 weeks as our induction period for the registrational program.

Now I'd like to share 6 cases from the RESOLVE-AA study. Shown here is a 66-year-old woman who received 36 weeks of REZPEG 24 micrograms per kilogram. You can see this patient who has nearly bald has regrown 90% of her hair. For 16 weeks, this patient did not experience hair regrowth. After that time, the patient experienced relatively fast hair regrowth and eventually achieved a SALT 20 response by week 36. What is noteworthy about this case is the ability to treat patients with high SALT scores at baseline and safely treat patients in their 60s who could have comorbidities that would preclude them as optimal candidates for JAK inhibitors given the multiple black box warnings.

And then here's a case where a 40-year-old man experienced improved efficacy with extended treatment. In fact, this patient entered the extension and achieved a SALT 20 score at week 44, and cases like this support our planned 52-week induction period for the Phase III program.

On this slide, you can see a 20-year-old young woman who was diagnosed with alopecia areata 6 years prior to treatment, and she started out with marked hair loss, she has consistent hair regrowth after week 20, as you can -- as shown by her SALT graph to the left, and she has advanced to the extension period where she may continue to experience ongoing clinical benefit from REZPEG. While we did see a clear dose response with REZPEG 24 micrograms per kilogram showing superior efficacy to 18, several patients also experienced meaningful clinical benefit from 18 micrograms per kilogram. Here is a young woman with AA for 17 years who achieved a SALT score of 20 by week 28. It's really not hard to imagine how a young woman's self-esteem, confidence and quality of life would be dramatically improved when you go from an appearance shown in the photos on the top of the slide to the ones on the bottom.

Shown here is a 64-year-old woman who was diagnosed with AA later in life. This is a case where the patient's clinical benefit with REZPEG was delayed. She notably reached the SALT 20 during week 44 of the extension phase of the trial and continued to deepen further to week 52. Again, as I've mentioned on this call, there is evidence that a 52-week induction period for the Phase III is the optimal time period to capture both early and late responders.

Shown here is another patient who was nearly bald with ongoing new hair growth in the extension phase. On the right side of the slide, you can see the regrowth of his eyebrows. Again, it's really not difficult to imagine the improvements in overall well-being, confidence, personal satisfaction and happiness with -- when very young men and women are able to regrow hair.

With all that, let me summarize the key takeaways from the RESOLVE-AA study. Most importantly, the study results demonstrate proof-of-concept for REZPEG as a first-in-class biologic for the treatment of alopecia areata. We are very pleased that REZPEG achieved our target product profile for favorable clinical efficacy and tolerability with a differentiated safety profile. Our target product profile was designed to meet the urgent unmet medical need for a safe alternative to the JAK inhibitor class for alopecia areata.

We're also pleased to share on this call today that in 2 different inflammatory skin diseases, we have identified REZPEG 24 micrograms per kilogram as the optimal dose to proceed to Phase III. And with that summary, we will introduce you to our KOL panel and renowned experts in dermatology and alopecia areata, Dr. Jonathan Silverberg, Dr. David Rosmarin and Dr. Benjamin Ungar.

Before we take questions, we would like to ask each of our KOLs to provide their assessment of the data. Dr. Silverberg, can you please go first? Then we will ask Benji and David, and David will share his own patient case study. Then we will open up the Q&A to our KOL panel as well, so Dr. Silverberg.

Sure. Thanks very much, Mary, and excellent presentation. I mean, overall, I'm very excited about the data. From a broader scientific perspective, I think the data are really cool because they show that proof-of-concept upregulating Tregs as a viable strategy in alopecia areata and I think provide further support for the Treg hypothesis, but particularly within alopecia areata. These are the best data we've seen for a clean biologic. The field sorely needs a clean biologic without the laboratory monitoring or boxed warnings. There are a lot of dermatologists and patients who are scared to use JAK inhibitors. And we see very clearly from atopic dermatitis, other inflammatory skin diseases that a clean biologic will be preferred by patients and providers probably 9 out of 10 times over medications that come with the complexities of boxed warnings and laboratory warnings.

So I think REZPEG would be very well received within dermatology. Obviously, the purpose of this study was to inform the design of the Phase III. And I think we got everything we need to optimally design the Phase III. There's a clear dose response. It's clear that 24 mcg dose is the preferred dose to study in Phase III. It's a relatively small study but there were clean and consistent kinetics curves, which will provide clear guidance on how to power the Phase III study. The efficacy in the study is similar to Olumiant in the first 36 weeks, but when you look at the trajectory of the curves, there's no asymptote. There's no plateau of efficacy, and that really suggests that continued dosing would lead to even greater efficacy over time.

So that has its own important ramifications in terms of long-term efficacy, but I think it also informs that we're going to get even better efficacy at week 52. So I think we have everything we need. I think there's a clear and strong case to move into Phase III. And I think REZPEG can be a really big success in alopecia areata.

Thank you so much, Jonathan. Benji, can we have you weigh in next?

Sure. Good morning, everyone. Can you hear me? Okay. Excellent. So thanks, Mary. So I'm going to echo a lot of what Jonathan said because the short version here is that I'm quite excited about these data. And I'm quite excited about REZPEG as a potential treatment for alopecia areata. So I see many, many patients with severe alopecia areata. I speak with many colleagues who see patients. And so I'm quite aware of the landscape that exists, both in terms of patient really demand for treatments. And my colleagues' appetite for alternative treatments to JAK inhibitors. The advent of JAK inhibitors have really have made a huge difference for many patients' lives. But the reality is that a very small subset of patients who really should be treated with the systemic therapy are currently receiving treatment. And that's primarily because of the limitations and hangups that exist around JAK inhibitors.

And so when patients are seeking treatment, they're very motivated to get treated. And so they, in many cases, will take the best of the available options in this case, the JAK inhibitors, but they really look for alternatives. It's a common theme in conversations with patients, patient conferences. And frankly, that's one of the reasons why in the consensus guidelines that Mary referenced earlier, and I was one of the authors on that, we included a recommendation for alternatives in this case, DUPIXENT because there are patients and physicians who are just not going to use JAK inhibitors. And so the potential for another treatment that has a clean, safe profile that's easy to prescribe and will lead to benefits, really, it's just hard to overstate just how much of a desire there is for a treatment like that.

Now with that said, we still need to look at what the data suggests about this specific treatment that may fill that niche. And the data that Mary presented are quite encouraging. So Jonathan referenced the fact that there's no plateauing. This is a mechanism that I would expect to take a number of months. This is exactly actually the efficacy curve that I would expect. And I have very little doubt that when we extend time points beyond the 36 weeks that were -- that was the endpoint here, we're going to see continued improving efficacy beyond that.

And so the fact that there is this very clear response with a safe profile, no anticipated lab monitoring really is extremely exciting. And I can think of numerous patients of my own that would jump at the opportunity to receive a treatment like this. So I'll stop there. I'm happy to answer questions on any of those points or others beyond that, but the kind of summary here is that this is extremely encouraging. And I think if everything pans out as the study so far projects, there's a significant potential for this treatment.

Thank you so much, Benji. And then we'll have David actually share his own personal experience with REZPEG. Vivian, can you move to the next slide.

So first, I want to echo my colleagues and agree. I think this is a big deal. It's the most effective targeted treatment tested for alopecia areata. And why this is set up to be first-line therapy for alopecia areata. I'm very excited to see a Phase III. I think we can be highly confident it will be successful. And I completely agree with my colleagues that the questions needed to successfully design a Phase III have been answered. So it should be designed successfully.

It's going to improve access to many of my colleagues who currently may be hesitant to prescribe JAK inhibitors for alopecia areata, and it's going to help a lot of people. I also think it can expand access to patients with more moderate disease with potential for an enhanced indication beyond just the severe, very severe population. So it's exciting. And I also want to add, I'm speaking on my own behalf, not Nektar nor my employer, and I'll introduce this patient of mine from the study.

This is a 20-year-old Caucasian male who has had alopecia areata for about 8 years. He previously was in a topical JAK inhibitor study, which he had no regrowth from. Subsequently, he enrolled in this trial. And at about the 4-month mark started to see some hair regrowth. And you can see by the end of the study, he already had some significant regrowth. What you also may not be able to appreciate from the pictures is some of the hairs were long and blonde. And sometimes that happens when patients first regrow their hair and it subsequently becomes the normal color for hair.

And I strongly suspect that, that's what will subsequently happen over the next few months. Also, he had some regrowth of his eyelashes as well, which I think is also notable. And by the end of the treatment, he did not want to come off this study drug, although he had to per protocol. He did have injection site reactions during -- throughout the study which for him was just redness, I never got to see them because they were in between the study visits that he experienced them, and they were not painful at all, and he did not mind them.

So to me, this was really exciting because this is the reason why, again, I go into dermatology to help people like this. And to me, again, this is a big deal, and it's an exciting day.

Thank you so much, David and Jonathan and Benji. We really appreciate these comments. So now we'll open up the call to any questions. And certainly, we're very happy to have our prestigious panel here with us.

[Operator Instructions] And our first question comes from the line of Yasmeen Rahimi from Piper Sandler.

Congrats on the great data and Mary, Wonderful to have you back and hear your voice. Quick first question is just in regards to the 4 patients that were excluded. I think on Slide 13, team, it just says an mITT analysis, there were these 4 patients that have the violation, but then it's says post-hoc. Could you maybe help us understand what that means? I guess, since they violated the protocol they should not be eligible. I just want to understand what that post-talk refers to when speaking about the 4 patients. That's question one.

And then the second question is a quick one. On the safety table, there were on the bottom line, it says investigator-determined AEs. If you could just help us understand what those were qualified as that would be great, and I'll jump back into the queue and congrats on the outstanding data.

Thank you very much. So when you write a statistical analysis plan frequently in large trials, you include all randomized patients that received 1 dose. This is a smaller Phase IIb trial, but we certainly employed the strictest statistical analysis plan. In addition, in statistical analysis plan, you always have per protocol analyses, and in this case, in this analysis, removed 4 patients that were ineligible. And you can imagine in a small study, when you dilute your trial with 4 patients with serious protocol violations that impact actual alopecia areata, you can imagine how that affects these patients.

So these 4 cases were adjudicated by 3 medical monitors that were blinded to the study who all determined in unison that these 4 patients should never have been enrolled to the trial. We then did this analysis and clearly demonstrated a very clear efficacy, meeting our target product profile. And of course that level of efficacy was seen in both the mITT as well as the mITT minus the 4 patients. So we're very excited that we have a drug that has strong biologic effect especially for this indication where there's nothing else that patients can take except for a drug with multiple black box warnings. So thanks for asking that. And it's great to hear your voice, too, Yasmeen.

Our next question comes from the line of Julian Harrison with BTIG.

Hi, guys, can you hear me now?

Yes.

Apologies about that. Congratulations on these results. My first question is maybe just reflecting on the data. Do you have any early thoughts on the remittive potential of REZPEG in alopecia relative to atopic dermatitis? And for the dermatologists on the call, what is your level of excitement for a drug here that has remittive potential specifically?

And then second, taking a step back, can you remind us of your sense of REZPEG scarcity value? IL-2 has been pursued by others before, what do you believe is uniquely enabling about REZPEG across diseases?

Yes, we will have -- Go ahead, JZ.

Yes. I was just going to say so Mary presented data showing the extension and mentioning that we have already seen deepening of responses in that 16-week extension period. 3 people have achieved a SALT 20 after week 36. And 7 patients have reached SALT 30 by week 36 that are ongoing. And then our goal is to give an update in the second quarter about the 52-week data. And then Julian, the trial will continue because all patients will have a 24-week off-drug observation period, and we'll report those results in the second half of next year.

But we designed the study with that off-drug observation really looking to see if that activity that we've seen, this almost like infectious tolerance is the immunological phenomenon that we see with Tregs, that we observed in patients with atopic dermatitis could further translate into these other indications like alopecia. So in the second half of next year is when we would provide those additional updates in the second quarter of 52 weeks and then beyond.

And then I think you asked a question kind of about well, actually, I'll turn it over to the KOLs about remittive potential before getting to your third question.

Yes. And with the KOLs, as you had addressed the remittive potential, can you also just address the difference between a once daily oral dosing for the rest of somebody's life versus a Q2 week subcutaneous biologic, that would be helpful, I think, as well. Go ahead, David, you could start.

Sure. So to answer your question, I am excited, but what I think matters most is safety is #1. So what determines prescriptions is safety by far. Then after that, I think it's the efficacy. And then after that, if it has a remittive effect, then that would be a cherry on top, but that to me will not drive prescriptions nearly as much as safety #1, especially in this disease state and then after that efficacy. I think a good analogy to look at is in Otezla. Why is it such a blockbuster drug within dermatology, even though its efficacy is quite modest in regards to the other options for psoriasis.

It's because of its safety profile and the fact that it doesn't require lab monitoring. So if this drug doesn't require lab monitoring, that is a major bonus to prescriptions. And again, there are interruptions that happen all the time in treatment in the real world. So if there is an option that patients won't quickly lose their hair and have it full out if they miss some treatment, well then, of course, that's a major advantage. And it's a bigger advantage in alopecia areata than in AD because if you're a 20-year-old female that has long hair, and it's taken you years to grow that out, you don't want in the course of a few months or a month or 2 to start shedding that hair. That's very, very disturbing to patients. So having that remittive effect can be, again, a nice bonus.

Thanks, David. And Jonathan, do you want to weigh into?

Yes, sure. I'd love to echo David's point. I agree completely. I think when you're looking at the efficacy profile, I mean, to your question is it's not remittive effect is cool, but that's icing on the cake. But I think there's a bigger story, which is really the longer lasting benefit and the longer lasting therapeutic efficacy. And the reason is because clinically, even patients who do well, you see like in market research, it always says, an own oral is preferred when all things are equal, but all things are almost never equal. And when you're dealing with something that comes with the box warnings and all the concerns, the patients go in starting a JAK inhibitor thinking, well, I'm going to take this for a few months. I'll stop it in like 6 months. I'll have all my hair back and then I can quit, and then everything is going to be wonderful.

And what they don't realize is all of a sudden, once daily oral 9 months later, really becomes a pain in the butt. It's hard to remember to take a medication every day for the rest of your life. And on top of that, patients routinely will endorse after struggling to regrow their hair in the first place, they miss the dose for a few days and boom, they start losing their hair again. And so we need something with a more stable benefit. And based on this mechanism, we would expect this not to be one of these rapid-on, rapid-off effect, but really something that's going to have a much more stable effect.

So I think this is really more of a long-term efficacy story first and foremost, while on drug. But yes, if there's a subset of patients where they can maintain stable clearance and fully hair growth and then be able to eventually stop drive that. And obviously, that would be really cool.

Thanks, Jonathan. We can wait for you, Benji, for the next question. How's that?

Then maybe I'll just really touch on -- you asked the scarcity value question, Julian. I think I'll just echo Howard's words. I mean there were several approaches to target the IL-2 pathway and to create a drug that was scalable and easy to use for Treg mobilization. And I think we've now really clearly established that REZPEG is the correct design. It's the one that survives through multiple clinical studies. We have over 1,500 patients exposed in our safety database. And we've shown clinical activity in multiple indications. We think really this approach to generating an IL-2-based drug is the way to go. We're really excited about REZPEG.

Your next question comes from the line of Jay Olson from OpCo.

Congrats on these landmark results and thank you for providing this impressive update. We also had a question about the 4 excluded patients. Are there any steps that you can take to prevent these types of eligibility violations in future studies? And then also related to future clinical trials, any strategies you can use to mitigate early treatment discontinuation, recognizing that it may take some time for patients to see treatment benefits?

And then finally, one of the KOLs commented that perhaps the benefits of REZPEG could be expanded to less severe patients. And we are wondering if you would expect treating patients earlier before they become severe, could be an important treatment strategy that could result in deeper and more durable responses.

Thank you, Jay. Well, you can bet, JZ and I have spent a lot of time with David, Jonathan and Benji asking them exactly how to exclude these patients from a Phase III clinical trial and they've given us a wealth of information. One is the timeframe by which somebody has actually been diagnosed. That is a simple review of the date. And so that should be very easy to comply with as long as the medical monitors have that very clearly laid out for them.

The second is, though, making sure you enroll the right patients and we can do a central review of the photographs of the patients' alopecia areata, both at screening and before they're randomized to ensure these patients have stable alopecia areata as well. So we spent a lot of time talking about the Phase III design and exactly how to ensure these patients are eliminated. One thing to be said, if we had our mITT patient population, even with the placebo effect of 11% in a Phase III trial similar to Olumiant, we would have absolutely reached statistical significance. So in a much larger trial, the issues that we've actually seen will be diluted just by the fact of the sample size.

The second to talk about early treatment benefits. We've also spoken to Benji, Jonathan and David about how they would approach this with their patients and that they feel like their patients once we set expectations would be willing to stay in the trial, and we'll definitely turn it over to Benji to talk about this since he sees about 150 of these patients a year. And David really is the one who has been pushing us to look in the moderate patient population. So we're going to ask him to address that, but Benji, you have so much hands-on experience with 150 patients you see every year. You're probably one of the highest dermatology, you probably see more patients than the most along with David and Jonathan. So if you could please address how you would actually approach a patient who would want to enroll in the study, given the kinetics?

Yes. So I think that strategy is about enrolling patients are obviously very important for the success of the trial. And fortunately, I actually think it's quite doable in this case. There are a number of different approaches, but I think one of the core issues here is something that actually was addressed by the Phase II data, which is understanding the kinetics of the treatment. And so when patients are unaware of what to expect, it makes it very difficult for them to participate in a trial because, let's say, we fast forward 6 months, they haven't seen hair regrowth. Does that mean they're on the placebo that they're not responding? The eagerness to get treated can be quite significant.

Now understanding actually the data that we have here, it actually helps provide understanding to the patient and investigators ultimately to have the conversation with the patients to say this is what to expect. So you probably will not see results in the first 3 months with full hair regrowth, but that's okay because we expect the results to be later on. And part of the reason I think that it may seem trivial or almost straightforward, but part of the reason I know that's successful is because of the conversations I have with patients on essentially a daily basis with their expectations of treatments, including approved treatments.

This is very similar to the conversations I have, and this is part of the education process. So just in brief, I routinely have patients who come to see me after having seen other dermatologists, treated with medications like JAK inhibitors, who come to me and say, "Hey, it didn't work." And as part of the discussion, we learned that they were not on treatment for long enough. And so simply understanding what to expect a timeline can have a dramatic -- and by the way, those patients then regrow hair under my care just because we give it more time. So understanding that perspective, I think, is a very, very crucial one.

I do want to speak very briefly about the idea of earlier treatment in more moderate disease. So we now know across a number of trials that the sooner you treat alopecia areata, the better the outcomes and the more mild disease, the more successful treatments are. And I -- this is maybe thinking a little further down the line, but one could argue that there is an even larger need for treatments in that moderate to severe range because people are not willing to risk perceived safety issues for more moderate disease. And yet these patients don't respond to local therapies and actually do need systemic therapies.

And so I actually think that a treatment like this with these kinds of characteristics, safety would be a tremendous benefit for that more moderate disease, including in terms of leading to better outcomes across the board with the long-term prognosis of this disease course.

Thanks, Benji. And David, I know you too have been very enthusiastic about looking at the moderate population.

So I completely concur with Benji, and I suspect Jonathan will say the same thing. I do want to further delve into your -- the other part of your question, though, is how do you ensure a successful Phase III is somebody who really enjoys trial design? Well, one, there was no Phase I study done here like there was for atopic dermatitis. So -- and there have been other tested biologics for alopecia areata, which haven't had the same success. So now we know this works and that affects what we convey to patients as well. There may have been others who are in the study that assumed, "Oh, I'm probably not on treatment" or it's not working after just a few months, but we now have that information that, again, you have to wait.

Furthermore, we know also that the Phase III is likely to have a crossover arm. So that also is very helpful in keeping patients in studies.

And lastly, excluding some of the sites where maybe they have multiple studies at the same time that may compete where sometimes sites are incentivized financially to move a patient from one study to another to capture larger revenue. So there's multiple reasons to be quite optimistic for the success of the Phase III and to be more confident to have patients not only remain in the study and to really get quite good results.

Thanks, David. Jonathan, do you have anything you want to add?

I mean I completely agree. I think, really, the key thing is as you move into a larger Phase III program, you're going to be powered sufficiently to address any of these and buffer for all of that. And I think as much as this is a Phase IIb study that we saw today, it's still a relatively small study. So once you go to that larger Phase III program, you're sort of shielded or protected from any of these issues anyway.

Yes. Thanks, Jonathan. It's a great point. Thank you, David and Benji.

Your next question comes from the line of Roger Song with Jefferies.

Great. Can you hear me?

Yes.

Awesome. Great . Congrats for the data. It's really transformational. So a couple of questions. I focus on the plateauing effect. It seems this is the key feature. You're not seeing the plateauing after 36 weeks. If my math is correct, with the 3 additional patients, you achieved placebo adjusted around 18% SALT 20. So can you just give us some context, how does that compare to low-dose Olumiant, even high-dose Olumiant, if we're thinking about additional 7 patients potentially can achieve SALT 20?

And then maybe just a quick clarification question. In terms of ISR, I know this is a known AE for REZPEG, but since the placebo arm also pretty high compared to the atopic dermatitis trial, what's the cost? I understand the placebo adjusted rate is pretty consistent.

Want to go, JZ?

Yes, sure. So I'll just start a preface, but then I'll turn it over to our colleagues. I mean, your question was about sort of the comparison of the SALT 20 rate. And as you point out, the knowledge that we've already seen 3 people achieve a SALT 20 after week 36 and before week 52. And so kind of adding them into the numerator, yes, you're right. We're right on, if not exceeding the placebo-adjusted rate for low-dose Olumiant. And then with the 7 people ongoing again, it's -- they're ongoing, right? So we can't comment about what could happen in the future.

But you could envision this scenario where the majority of those people convert to SALT 20 and then we're exceeding the low-dose Olumiant bar for SALT 20. But what I'd like to do is, for me, that's I'm a different kind of a doctor, certainly not a dermatologist. I'd like to ask our colleagues to comment on that and that kind of long-term potential. Sometimes we've heard this sort of tortoise and the hare analogy about kind of how REZPEG might work and that could be maybe one way to frame this, but I'd love to hear your thoughts.

Yes. And Jonathan, I think you've spoken a lot about this to us, so maybe you could start.

Sure. The concept of speed sounds nice, but the reality is we have nothing right now in the field. We are really desperately lacking any clean biologics right now. And I think you contrast this to, let's say, atopic dermatitis and psoriasis. And you see very clearly who the winners are there in terms of the clean biologics. And it is by patient preference by provider preference. So first and foremost, this is a paradigm shift, right? Because this gives us that clean biologic to turn to as that first-line systemic option and really shunts and changes the entire approach to say, well, now you've got that clean option to turn to without having to turn to the JAK inhibitor.

So in a sense, the questions around, does it take a little longer, become almost a moot point because the clinician is willing to wait there because he doesn't want to take that safety concern. The patient certainly doesn't want to take that safety concern. I think the clinicians will ultimately find ways of optimizing and how to navigate in that earlier period of time. And I think with proper counseling. And that's really a key thing that we saw here. Now that we understand the kinetics, we can give the patients the proper guidance in the clinical trials so that they're encouraged and they stay with it from a regulatory and trial perspective, but also from the real world perspective.

So we're armed now with information. And that information, I think, is going to become very helpful. But when you look at the curves, and I'm not a Prophet. But when you look at the curves, you would expect the efficacy to actually overtake Olumiant to with time. And that is something I think that becomes very important. Obviously, we won't know until we study it. That is the reason to study it in Phase III and to go out to 52 weeks and potentially even beyond that, but my gut says when looking at the data, we will see the efficacy overtake Olumiant too. And the question is then where is that ceiling on efficacy? Will we overtake Olumiant for? Possibly, again, we won't know until we study it, but I think there's a lot to be encouraged here about.

Thank you, Jonathan. Benji or David, do you want to add anything?

Sure. Sure. So I agree with everything that Jonathan said, I do want to operate a slightly different perspective because I think that part of the discussion here really needs to center around, this is something I referred to, but really everyone has about the desire and appetite for a different strategic therapeutic approach. And so it is, I think, very nice to see that the efficacy matches at 36 weeks, low-dose Olumiant, which is a very commonly used prescription among the kind of advanced approved therapies.

But I actually think that pegging the discussion about the efficacy here really is missing a big part of the dynamics of patient prescriber discussions and decision-making about therapies, which is to say there is nothing about 36 weeks in the real world that is meaningful. That's no more meaningful than 52 weeks, 104 weeks and so on. This is a chronic condition. And so looking at 36-week efficacy data, is, in my mind, relatively meaningless. It's just an artifact of you need to decide on an endpoint in clinical trials.

In fact, when we use treatments of other sorts, we look long-term what the effects are, not just how much hair is regrown, but how much of the hair is maintained, what the relapse rates are? And by the way, just not to go down that path. I think that's one of the strengths of a treatment that may have remittive effects. It's likely to maintain responses without flares, which is just can't be overstated how important that is. And so I think that the fact is that if someone comes in with alopecia areata and you can prescribe a treatment that doesn't require monitoring, that doesn't require a discussion about the risks of a very serious side effects and that you know that it works without even looking at the numbers, it is going to be an absolute no-brainer for the vast majority of people to go down that route.

And so yes, the efficacy data is actually quite encouraging, but it's -- I think it's almost secondary to the overall picture of just how potentially really game-changing this kind of drug is.

Yes. Thanks, Benji. And all 3 of you have shared with us they're both the patients that you take share from who would go on a JAK inhibitor, and then you've also shared that you really broaden the absolute patient population with the biologic for those patients and even doctors alike, who would never even prescribe a JAK inhibitor. And David, you shared a lot with me about your colleagues and JAK inhibitors. Can you share this with those people on the call because I think it's really important?

It's -- as Benji said, it's the safety, right? That's what people care about. And it's hard for people to judge how rare events are, but they just never want to do harm, especially serious harm that's what really concerns other dermatologists. So even though it's rare and there are -- by the way, JAK inhibitors are still going to be used in alopecia areata. However, as Benji's saying and Jonathan are saying, this will be used first. And it's the safety that's going to drive it. The efficacy is the secondary consideration for this condition.

And in terms of the speed of onset, I agree it's not as important here. Patients aren't staying awake at night due to their itch. So there's less urgency compared to other diseases like eczema. So again, I completely concur with my colleagues. And again, this, I expect to be first-line therapy for the majority of patients.

Yes. And I think all 3 of you have shared with me both the serious safety concerns as well as the monitoring on treatment, both are barriers to usage and that many of your colleagues won't even prescribe a JAK inhibitor for both of those 2 factors. So thank you.

Our next question comes from the line of Arthur He with H.C. Wainwright.

Can you guys hear me?

Yes.

First of all, congrats Howard and team, and it's really great data there. And Mary welcome back. So just for the Nektar team, I had a quick question. So for the patient you excluded from the placebo arm, could you tell us more regarding the patient baseline on the interim SALT score? And how long these patients have been diagnosed before their randomization?

Yes. Yes. So the patient who was inappropriately enrolled had been diagnosed less than 6 months, roughly around 5 months when they came into the study, they were SALT about 65 and pretty rapidly went down to a SALT 20. And so we can let our KOLs here address what happens to these patients who are newly diagnosed with very rapid hair loss and hair growth and the instability of the disease, so let me turn it over to David, we could start with you.

Yes, absolutely. When patients don't have stable disease, you can have a higher placebo rate and the spontaneous regrowth. And that's why it's routine in all our alopecia areata studies that we have certain criteria for enrollment for inclusion exclusion and these patients are excluded. And the patient should have been. So following the protocol, again, you saw the results that it works. If you don't follow the protocol, you mess with the study, you can get high placebo rates.

And the only reason why this is a factor here is because there were only 20 patients in the placebo arm. If you have a large study where you have several hundred in the placebo arm, this would be a blip on the screen and it won't matter at all. But the key here is you don't want unstable patients in your alopecia areata studies, and this is not something that is exceptional to Nektar study. This is routine in all alopecia areata studies.

Thank you, David. And Jonathan?

I completely agree. I mean I think the alopecia areata is an unstable disease as a general rule. In the early phases when you first see a patient, depending on the severity, depending on their treatment journey, you really don't know where that's going to go. We know in certainly milder patchy alopecia cases, there's a lot of spontaneous regrowth. Sometimes we're hastening that. Sometimes you don't do anything, those sort of isolated patches can get better. So -- and I just say that as proof-of-concept that there's lots of ups and downs.

When you start getting to the more severe disease, that's when you get more of that chronic persistent disease, it just can be stably bad and just -- there's nothing. There's no hair regrowth. And that's really the target population when you think about it. Now we discussed already the opportunity with a clean biologic to open it up to an even broader population. But from the trial population when you're trying to study that and you're trying to minimize placebo responses, there's a reason why we set these definitions in place because we want to know that we did it with the drug and that it wasn't happening spontaneously. And it's as simple as that.

And look, the protocol is meant to be followed, and it wasn't. To David's point, though, it's error one, right? That one case that affects the placebo and in a small study, and then if one can flip any of these sort of binary responses. You go to -- if there were even 10 more patients in each arm, you wouldn't have seen the impacts of that single patient, right? So -- and certainly, when you get to a larger power study, you look at like the Olumiant study it's 5x as many patients per treatment arm, right? So we keep that in mind when you have a larger-powered study you can buffer for all this.

So I think there's lessons learned there. And I think we now know what to be sort of aiming for and watching for a little more with study monitoring in Phase III. But I don't think that's any deterrent for us. I think that just gives us guidance on what to do in Phase III.

Yes. Thanks, Jonathan. And Benji, any additional comments?

Yes. Yes, I'll just add very briefly. So we know that in severe alopecia areata outside the 6-month range, spontaneous regrowth rates are extremely low, that clinically, anecdotally, epidemiologically, in all of the clinical trials thus far, we see the same trend placebo or spontaneous regrowth rates are quite low. And so we -- when looking at the effects of the drug, we want to isolate the biological impact on the disease process. And therefore, we don't want the noise of someone who is fluctuating early on, which is specifically why, as everyone has said, we exclude those patients.

That, by the way, is one of the reasons why I think the data are exciting is because we see a clear response that has to be driven by the biological effects of the drug. The curve of efficacy that we see with REZPEG from these data really can only be explained by the drug doing what we want. And so when I think about this as a Phase II signal-seeking study to proof-of-concept to identify biological effects, I mean, that's exactly what we're doing because this patient aside, we're isolating the people where that's not going to happen on its own.

Yes. And Benji, can you comment -- we showed you many more case studies than even we shared with the audience today. Can you comment from your clinical experience, what you thought of these responses, especially some of these patients that started out bald?

Yes. So I -- again, my prior going into before seeing any of the data on this based on the mechanism, Tregs really kind of upstream a lot of inflammatory pathways, is that this would not be a very rapid treatment that the responses were going to be after several months, which is if anything, I think these results are probably a little more rapid even than I would have expected, which is quite encouraging. I think that when we look case by case, it's probably true. And again, let's keep in mind that this is a preliminary study of sorts that the effects that we're seeing numerically may be underestimating actually what's happening from a clinical perspective because I think, again, many of the lessons learned in terms of enrollment, the design and so on are going to also apply to grading and scoring.

And when we reviewed some of the individual cases, I think some of the patients actually were more severe than certainly I would have scored them at baseline by quite a large amount in some cases or at least a reasonable amount. And I think that happened a number of times that I actually saw no instances of the reverse where someone was being kind of under -- where the effect was under or rather overstated, if anything, the effects were understated.

So again, these are not responses that we see in the cases that happen to people with stable, severe disease. We just really don't see that. And that really demonstrates that this drug is having an effect on the underlying disease pathology that leads to hair loss and with subsequent treatment hair regrowth.

Yes. Thanks so much for commenting on that, Benji, because the steering committee unanimously agreed with you that there was probably an underestimation of the true effect of REZPEG given that the baseline photos from your experience seem to underrepresent the severity of the disease, meaning the baseline SALT score was probably lower than it actually is. Thank you very much.

Your next question comes from the line of Samantha Semenkow with Citi.

Congratulations on this data. I do want to continue the conversation on the lack of plateauing that we're seeing here by week 36. This is similar to what we've seen in the atopic dermatitis trial at week 16. So I'm curious for the physicians that treat both diseases, does this increase your confidence in REZPEG across both diseases? And just based on the data sets that we have, how should we think about what the time on therapy is that is needed to reach maximal benefits and maybe we could talk about both indications? And any expectations into perhaps what we could see in atopic dermatitis with longer treatment?

Thank you, Samantha. And let's have Jonathan start as our lead author of the atopic dermatitis presentation at AA [ meeting ] this year.

Thanks. So there were a few questions there. I hope I don't miss them. Just to start with the first one. From my perspective, I don't -- I certainly didn't have any doubts, and I don't think we had any doubts now that REZPEG works well in atopic dermatitis. It's always nice to have confirmatory data in other diseases. I think, again, the nerdy immunologist in me is -- we've been talking about the Treg hypothesis for 20-plus years, and it's always been this discussion of causation versus correlation. And is it real? Is it not? So this just really reinforces that the Treg hypothesis is real and then if you selectively upregulate Tregs, you can improve a disease.

I mean I think that is a super cool thing. And then the question then becomes, okay, well, what are the next indications because there are plenty of other T cell mediated disorders out there that we could consider to go after. So I think that has its own ramifications from a life cycle management perspective, but at least within AD and alopecia areata, I think it's -- it just further supports the efficacy in both diseases sort of simultaneously. Of note, there is a subset of patients with alopecia areata who have atopic derma and vice versa. So the idea that you have a drug that would "kill 2 birds with 1 stone", is also very cool.

It's often been the JAK inhibitors that have sort of served a little bit of that niche before, and now we don't have to turn to JAK inhibitors. Now we have a clean biologic that can serve that role. So I think that that's an important consideration, although that overlap is not necessarily the largest part of the market by any stretch. So that's sort of my perspective on the biologic efficacy. And I apologize, but I forgot the rest of the questions.

It is about time on therapy, and does this increased confidence across indications, seeing deepening now into...

Yes. Yes. I think the asymptote comment about plateau and maybe you could explain to people what that means too, Jonathan.

Sure. So with every disease and with every drug, the connect curves can and should look different, right? It depends on the mechanism, it depends on a lot of different things. When you think about atopic dermatitis, we've seen with a number of the biologics that the longer you're on drug, the more you get stable efficacy, the better you get. So some of the psoriasis biologic curves look a little different in that respect. And I think here, what we're seeing is something similar, both in AD and in alopecia areata, the idea that the longer on drug, the better it gets.

In terms of stabilizing the responses, in terms of deepening the responses, in terms of more reliable responses, right? Now there's patients who may have previously not in the first 36 weeks, maybe didn't really have so much hair growth, and we're starting to see, as you saw some of those cases already that some switch is turning on even after 36 weeks where they're gaining that efficacy. So those are sort of 3 different considerations about why we want to have patients on drug. But for those patients who may not have this light switch flipped at whatever week 16 just random time point, and all of a sudden, the hair just turns on and fully regrows. It doesn't work that way, right?

Patients have a sort of slow and steady regrowth. And you would potentially worry if there is sort of that slow growth and then it halts, right? And they just can't get past a certain point of regrowth. But when you see that curve just continuing to improve in its efficacy, without flattening out, what that tells us is just keep going and you're going to get more of that slow and steady regrowth. And then on top of that, there's a subset of patients where again, you saw these cases. There's just -- there really wasn't much growth early on at all and for whatever reasons, biologically, they just start to turn on later on. And so now that would be an argument, okay, just keep it going. And we would expect many patients who were "nonresponders earlier to become responders" or many patients who are partial responders to just continue to march along and get further response.

I think this is -- these are both very clinically intuitive sort of scenarios and treatment journeys. And I think the dermatologists will be able to work with us very easily.

Thank you. David, I know you serve on our steering committee for both atopic dermatitis and alopecia areata, if you want to add anything to what Jonathan eloquently just stated.

Yes. As usual, I agree with Jonathan. And look, we're -- I'm optimistic that there will be that deepening of sustained response, with -- and we'll know soon enough within a few months from the 52-week data. So I do expect those numbers to go up. To be fair, they do increase somewhat in the JAK inhibitor trial. So do I expect -- so again, they're going to increase somewhat in the REZPEG study. The question is, will they increase more so than they do for the JAK inhibitor study, and that's what we're really hoping for, and that's what Jonathan is saying.

Also one thing that I just want to emphasize as well is the fact that we're seeing regrowth of eyebrows and eyelashes, which is really challenging, is also extremely meaningful to me and very telling that also -- some of the studies showed that eyebrow and eyelashes can regrow a little bit earlier as well. So the fact that we're seeing that also has been more optimistic that with more treatment, again, we'll see more responders on the scalp as well. So again, there's a lot of reasons to be optimistic about this overall. But I take -- looking at a very big picture whether it's a little bit more effective or not is not what's -- it's -- ultimately, that's not what's going to determine the success is the safety. And the fact that it works and has that safety profile and minimal monitoring is what makes us the first line option.

Yes. Thank you, David, for underscoring that repeatedly, and you can't state it enough, because when I've met with all 3 of you, you tell me, you have colleagues who will never prescribe a JAK inhibitor specifically for that reason alone is pretty remarkable. So thank you for emphasizing that critical point.

Your next question comes from the line of Mayank Mamtani with B. Riley Securities.

Congrats on very impressive results. Just a few clarifying questions. So on the waterfall chart, you do have some super responder placebo patients. So maybe just touch on how those responders differ from the 4 that you're excluding in the mITT? And I also noticed in the placebo cohort, you have a higher number of patients from Poland. Any significance of that as you think about your next Phase III study? And on that note, any gating steps as you also prepare for your end of Phase II separate, I assume, for alopecia and maybe comment on what atopic derm FDA correspondence also operationally helps as you think about this alopecia specific discussion. And JZ, you're big in biomarkers, any early evidence that you're seeing TH1, TH17 mediated mechanism that allows us to understand responders versus nonresponders early on from this alopecia data set would also be helpful.

Thank you. I can just address Poland and the placebo first. One that one of the patients with lack of stable disease was enrolled in Poland. And we did have 2 clinical sites that were recommended to us by the CRO that did have a high dropout rate, 6 out of 6 patients discontinued early and another site 8 patients were enrolled and 6 dropped out. And so we do agree with you that you have to be very careful about the clinical trial sites that you allow to participate in your studies, and that is certainly a lesson learned, and we've spoken to Benji, Jonathan, David extensively about the selection of sites moving forward into our Phase III.

We've also spoken to Benji, Jonathan and David about the specific placebo patient who responded and we've had a long conversation about that, which I'll let them weigh in on. But before we do, Jonathan Zalevsky, do you want to make any additional comments about biomarkers or the waterfall plot before...

Sure. Thank you, Mary. Thank you, Mayank, for the question. Since this was really a first signal-seeking exploratory study, we didn't do a lot of additional collections in this study. We were really looking for translating the science that was known and published before we moved into this. So that will be the subject of future studies, Mayank, in alopecia, where we can tease a part some of those underlying elements. What's the -- for example, we know interferon gamma is a big contributor and driver of this disease and addressing more of that pathway with a Treg mechanism, which we do very differently than a JAK mechanism would.

So that will be the subject of our future activities in this study. But I think just getting back to the placebo question is critical for the -- there were one included patient that had a response. I mean we see that trends quite similarly with other studies, but I'll maybe turn it over to you maybe, David first to just sort of comment, I know you've reviewed all of the case studies and other things, including that one included patient.

Yes. So first of all, this sometimes happens where you can have patients who have spontaneous regrowth. It's a very, very low rate but it's not -- it does happen in these studies, and that's why we run studies with Phase III, we'll have hundreds of patients in it. So I don't think there's anything to be concerned about the fact that there are some patients that have a response. This is what we expect. And the fact that you're seeing about a 30% mean decrease is -- should give us very, very high confidence that a Phase III will be successful. This shouldn't even be close.

And your final question comes from the line of Andy Hsieh with William Blair.

Great. So I'm looking at the SALT score reduction curve, and there's a slide basically comparing that with Olumiant. And I guess the initial observation is that the curve is inversed. Obviously, with REZPEG, you do have the MOA, PK/PD to explain that effect. But I'm just curious if either Nektar or KOLs can comment on the shape of the placebo. Why is that looking a little bit different compared to the JAK studies?

Jonathan, do you want to comment on it when we look at the mITT with 4 patients removed, I don't know if...

Maybe let's put up Slide 15, yes.

You can see that there's a slight increase in the placebo effect before it ends up being about what you see in the Phase III studies.

Sorry, is that targeted to me? Some of your...

Yes, I'm going to ask you. I'm sorry, Jonathan Silverberg. You love to talk about statistics, Jonathan.

I do love to talk about statistics. I think -- well, all right, so...

Can we have the slide?

Yes. I mean first and foremost, you could see also the placebo arm in the REZPEG study is a little more -- yes. So when you look at the placebo arm and would you see versus the, let's say, the Barry studies. There are a few things that should jump out at you. One, wider confidence interval is a little bit more unstable, and that is a sample size issue period. And I don't think there's anything more to it than that. You compare sample size, you're literally more than 5x almost 6x the sample size per study arm in the Barry study compared to REZPEG. And so that gives you a more stable, smooth curve with a tighter confidence interval.

I expect that you're going to end up seeing something that is more akin to the Olumiant placebo responses once you move into Phase III. So it's nothing that stands out to me necessarily. I think it's just, again, an artifact of sample size. What I think is impressive just as a related aside is that despite the small sample size, you actually have such clean, consistent curves on the REZPEG side of things and how smooth they are. And to me, that's actually reassuring. I sort of alluded to that in my opening comments, but that actually reassures me that we have a good sense of effect size to help inform power calculations for Phase III.

Thank you, Jonathan. The other point, which I mentioned earlier, Jonathan Silverberg asked us when he immediately saw the mITT data, he said, "Well, if this were a clinical trial, the size of baricitinib Phase III, I suspect we would have reached statistical significance, but Mary and JZ, go back and have your biostatistician run those numbers. And sure enough, it was strongly statistically significant even with an 11.2% placebo effect. So you've mentioned it on this call, Jonathan, larger numbers protect from all the relevance truly in a Phase III study, even if some of these ineligible patients slip through the door, which we are going to prevent in the Phase III.

Since that was our last question, I definitely want to thank all the panelists for being with us here today. We couldn't be more grateful to have your insights, your guidance and all of your help in the development of REZPEG, both for the atopic dermatitis Phase IIb as well as this Phase IIb for alopecia areata and the insights that we have gained about practitioner practices with JAK inhibitors, specifically in this indication have been extremely elucidating. So we really appreciate your participation. And Howard, I don't know if you want to close this out.

Sure. Thank you. And I want to thank everyone for joining us today, and we greatly appreciate your continued support. It's not often that a company has the opportunity to develop an important new mechanism that can greatly benefit patients. And I want to thank all the patients that participated in the trials. And I also want to thank all of our employees for their hard work and diligence. Again, thank you all for joining us today, and we look forward to presenting further REZPEG data in the future. So thank you. Stay tuned.

Thank you, guys.

Thank you. This now concludes today's call. Thank you for attending. You may now disconnect.

Hello, and thank you for standing by. Welcome to the Nektar Therapeutics Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] 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.

Thank you, Crystal, and good afternoon, everyone. Thank you for joining us today. Today, you will hear from Howard Robin, our President and Chief Executive Officer; Dr. Jonathan Zalevsky, our Chief Research and Development Officer; and Sandra Gardiner, our Chief Financial Officer. Dr. Mary Tagliaferri, our Chief Medical Officer, will also be available during the question-and-answer session.

On today's call, we expect to make forward-looking statements regarding the business, including statements regarding the therapeutic potential of and future development plans for rezpegaldesleukin, the timing and plans for future clinical data presentations 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. Our actual results may differ materially from these statements. Important risks and uncertainties are set forth in our latest Form 10-Q available at sec.gov. We undertake no obligation to update any of these forward-looking statements, whether as a result of new information, future developments or otherwise.

A webcast of this call will be available on the IR page of Nektar's website at nektar.com.

With that said, I would like to hand the call over to our President and CEO, Howard Robin. Howard?

Thank you, Vivian, and good afternoon, everyone. Before I start with remarks for the quarter, I'd like to take a minute to welcome Dr. Mary Tagliaferri back to the company, who has recently rejoined us as Chief Medical Officer after a need to step away for personal reasons earlier this year. Mary was instrumental in the design and execution of our successful Phase II program in atopic dermatitis, and we are so fortunate that she has now rejoined us as we prepare for the initiation of the Phase III program next year.

I'd also like to thank Brian Kotzin for his help serving as the Interim CMO during the period. Brian has worked with us for nearly 10 years, and we are grateful that he will continue to serve as a medical consultant.

This quarter and year-to-date, we've remained laser-focused on pursuing regulatory T cell science across our pipeline and preparing to advance our lead program, rezpegaldesleukin, also known as REZPEG, into Phase III development. Our pipeline programs are focused on stimulating Tregs in different ways to restore the proper balance between T effector cells and T regulatory cells and achieve homeostasis in the immune system.

The data in atopic dermatitis reported in June and presented at EADV 2025 for REZPEG represented a powerful translation of the scientific discoveries that led to an understanding of the importance of Tregs into the first demonstration of their clear clinical efficacy in autoimmune disease.

The Nobel Prize in Physiology or Medicine was recently awarded for these discoveries that established FOXP3-positive Tregs as key enforcers of immune tolerance. We're very humbled that the Nobel Committee included the publication of the Phase Ib data for REZPEG in atopic dermatitis and psoriasis as support in the background documents for this award. The recognition of REZPEG was truly an honor and speaks to the journey that our Nektar scientists and clinicians have traveled over the years to turn important scientific discoveries into real potential medicines for patients.

Our approach with REZPEG and stimulation of Tregs is highly differentiated in the field. We believe this is why we've been able to uniquely generate meaningful and robust clinical data that clearly support continued development of this novel modality. REZPEG was designed to closely mimic the way Tregs in our own immune system work to resolve inflammation. Its construct gets closest to emulating natural human biology, achieving this through IL-2 agonism with native sequence IL-2 receptor interactions and a validated chemistry approach, PEGylation that has led to over 2 dozen approved biologics.

At the 2025 EADV Congress in September, we presented compelling results from the 16-week induction period of the 400-patient RESOLVE-AD study of REZPEG in moderate to severe atopic dermatitis. These data showcased the clinical differentiation that could be achieved with this novel MOA, and JZ will touch on this later in the call.

And this weekend, at the 2025 American College of Allergy, Asthma and Immunology Annual Scientific Meeting, we will present data from a preplanned analysis of atopic dermatitis patients from the RESOLVE-AD study who also had a history of asthma. These data provide further basis for differentiation of REZPEG. Recently approved and in development IL-13 selective pathway blockers and OX40 pathway blockers have shown limited potential to help the asthma symptoms in patients with both atopic dermatitis and asthma, which is a comorbidity in 25% of all atopic dermatitis patients. And so we're very excited about these new data.

In Q1, we will present 52-week maintenance and escape arm data from the RESOLVE-AD study in atopic dermatitis. The maintenance arm data, in particular, will be an important look at continued treatment with REZPEG in patients who have established an EASI-50 response at the end of 16 weeks of induction treatment. There remains a need for novel mechanisms beyond those available currently in the treatment landscape for atopic dermatitis patients. In the U.S., there are over 15 million people with moderate to severe atopic dermatitis and fewer than 10% are receiving biologic treatments for this chronic skin disorder with many patients not responding well to the existing agents. We believe that this market will grow with the adoption of novel mechanisms as was seen with the induction of new mechanisms in the evolution of the psoriasis market. We expect to hold an end of Phase II meeting with the FDA before the end of this year to review our Phase III plans for REZPEG in moderate to severe atopic dermatitis.

Importantly, in December, we plan to present the top line results from the Phase IIb RESOLVE-AA study in patients with alopecia areata. This study enrolled approximately 90 patients with severe to very severe alopecia areata with strong Phase II results in the dermatological setting of atopic dermatitis, we're optimistic about the second dermatological setting for REZPEG. Nearly 7 million people in the U.S. have or will develop alopecia areata and over 1 million of these patients have severe to very severe disease according to the 2023 population-based cohort study. Patients with severe to very severe alopecia have limited treatment options. The only FDA-approved systemic treatments for alopecia areata are JAK inhibitors, which carry multiple well-known black box warnings and are associated with high relapse rates upon discontinuation.

In a 2024 survey of 131 U.S.-based board-certified dermatologists, a majority of physicians said they were uncomfortable prescribing a JAK inhibitor and more than half of these physicians reported they would try alternative therapies prior to prescribing a JAK inhibitor. With this backdrop, REZPEG could be introduced as the first biologic in the setting of alopecia areata, representing an additional $1 billion market opportunity. And so we look forward to these upcoming results from the 36-week treatment period of the RESOLVE-AA study expected in December of this year.

In immunology, our partner, TrialNet, recently initiated the Phase II study of REZPEG in type 1 diabetes. This study, which is funded and sponsored by TrialNet, will evaluate REZPEG in new onset Stage III type 1 diabetes patients. JZ will update you on our other programs as well as our lead pipeline antibody, a TNFR2 agonist that has a unique tissue-specific Treg and Breg stimulator profile. Because of its monomeric activity, we're now building a bispecific program based upon this mechanism, which combines it with validated antibody targets in immunology. Our goal is to advance one of these antibody programs into the clinic next year.

And with that, I'd like to turn the call over to JZ to review more details on REZPEG's ongoing Phase IIb studies and our early pipeline programs. JZ?

Thanks, Howard, and thank you, everyone, on the call for joining us today. To begin, I'll remind you that earlier this year, the RESOLVE-AD Phase IIb results demonstrated the promise of Nektar's novel approach to the IL-2 pathway. The global study randomized 393 patients with moderate to severe atopic dermatitis to receive subcutaneous treatment with 3 doses of REZPEG, a high dose of 24 microgram per kilogram every 2 weeks, a middle dose of 18 microgram per kilogram every 2 weeks and a low dose of 24 microgram per kilogram every 4 weeks or placebo every 2 weeks for an induction period of 16 weeks.

Following week 16, REZPEG-treated patients who achieved EASI reductions of 50% or greater were rerandomized to continue at the same dose level on a Q4-week or Q12-week regimen for an additional 36-week maintenance period. In our June data disclosure, we reported that the study achieved statistical significance on the primary endpoint at week 16 for a mean percent change in EASI score from baseline for all REZPEG arms versus placebo. And the study achieved statistical significance for key secondary endpoints at week 16 of disease reduction, including EASI-75, EASI-90, Itch NRS, the vIGA-AD and BSA.

Additionally, we have yet to see a plateau in the efficacy response in the REZPEG treatment arms. This study is currently ongoing with 2 additional upcoming data readouts that Howard mentioned. The first will be the 36-week maintenance study results, which compare treatment with REZPEG at either 1 month or 3-month dosing intervals out to a full year, which would be the intended maintenance-based dosing regimens following the 16-week induction period. And the second readout will be the 1-year off-treatment data expected in the beginning of 2027, which will measure the potential remittive effect of REZPEG in atopic dermatitis.

In the meantime, we continue to add to the compelling data set from the RESOLVE-AD study, including the data we shared from the escape arm of the trial at this year's EADV Congress. As a reminder, the study design allows for patients who originally received placebo in the 16-week induction period and achieved less than EASI-50 at week 16 to enter into an open-label treatment escape arm to receive the high-dose REZPEG regimen for a treatment period of up to 36 weeks. The data presented at EADV demonstrated a deepening of responses in these patients with continuous treatment with REZPEG and support a 24-week induction period for our Phase III program.

As Howard stated earlier, we are presenting additional data in patients with asthma from RESOLVE-AD in a late-breaking oral presentation at the ACAAI meeting being held in Orlando, Florida this weekend. In addition to the asthma data that I'll discuss in a moment, that presentation will also give an update on the placebo crossover data, where now all but one patient have crossed 24 weeks of treatment with 24 microgram per kilogram REZPEG Q2 weeks. We will also cover additional endpoints such as EASI-90 and itch NRS.

In addition, the presentation will show a forest plot demonstrating the consistency of REZPEG efficacy across multiple subgroups. This important finding prepares us for Phase III. Given that 1 in 4 patients with atopic dermatitis also have asthma, we designed the study in advance to evaluate its effect on symptoms of asthma using the validated 5-point asthma control questionnaire, also known as the ACQ-5. And these data include a prespecified exploratory endpoint for the subset of patients in RESOLVE-AD that also had asthma, including those with moderate and uncontrolled asthma at baseline.

The ability to improve comorbid conditions is a substantial factor in clinical treatment decisions for atopic dermatitis and could expand the potential market opportunity for REZPEG in this setting. We know that beyond Dupixent, neither tralokinumab  nor lebrikizumab  has been able to show an improvement in asthma symptoms in patients with atopic dermatitis. And this extends to the OX40 programs in late-stage development as well.

And now turning to alopecia areata. We are on track and look forward to reporting data from the Phase IIb study in December of this year. A positive outcome here would reinforce the potential of REZPEG to provide a completely new treatment paradigm for patients with chronic dermatological diseases. The RESOLVE-AA trial was initiated in March 2024. A total of 94 patients with severe to very severe alopecia areata who have not received a JAK inhibitor or other biologic were randomized to 2 different dose regimens of REZPEG, 24 microgram per kilogram every 2 weeks and 18 microgram per kilogram every 2 weeks or placebo. Patients were recruited across approximately 30 sites globally with 2/3 of patients enrolled in Europe and the rest from North America.

As a reminder, patient eligibility for this study was determined using the SALT score, both screening and randomization. Patients who experienced an unstable course of alopecia areata over the last 6 months per investigator assessment were excluded from the study and patients with diffuse alopecia and other forms of alopecia were also excluded. The primary efficacy endpoint of this study will evaluate mean percent change in the severity of alopecia tool or SALT score at the end of the 36-week induction period. Secondary endpoints include proportion of patients achieving SALT 20, which is an absolute SALT score of less than or equal to 20, mean percent improvement in SALT score at other assessed time points and proportion of participants with greater than or equal to 50% reduction in SALT score at week 36 and other assessed time points.

Importantly, SALT 20, the responder analysis is also the established regulatory endpoint for Phase III trials. As Howard mentioned, the only available systemic therapies that are FDA approved for the treatment of alopecia areata are JAK inhibitors, which contain a number of black box warnings and many patients experience hair loss after treatment cessation. With the limited treatment options available in alopecia areata, we believe there's opportunity for a novel mechanism like REZPEG, especially when the therapeutic is shown to be safe and well tolerated.

When comparing the outcomes from RESOLVE-AA to the approved JAKs, we see low-dose Olumiant as the appropriate benchmark. In its 2 Phase III trials, the approved 2 mg dose of Olumiant showed that 15% to 16% of patients achieved SALT 20 on a placebo-adjusted basis at week 36, and the mean improvement in SALT scores from baseline was 24% to 26% on a placebo-adjusted basis. Note that the placebo response rate in these trials is relatively low at 3% to 5% for the SALT 20 endpoint and 4% to 9% on the mean reduction endpoint. Because of our differentiated mechanism of action compared to the JAK inhibitors and our safety profile, we see a very clear market opportunity for REZPEG in alopecia areata if REZPEG achieves these benchmarks.

We look forward to sharing the top line data from the 36-week treatment period of the RESOLVE-AA study in December and defining the potential for REZPEG in this new indication. Similar to atopic dermatitis, with positive results from Phase IIb, we would move very quickly into Phase III preparations, taking advantage of our Fast Track designation in the alopecia areata indication.

A quick few words on type 1 diabetes, another autoimmune disease where REZPEG has great potential as a T regulatory mechanism. We believe REZPEG can potentially slow the progressive loss of insulin-producing beta cells, which are the target of the patient's overactive immune cells in this disease. As Howard mentioned, TrialNet has initiated and is funding an investigator-sponsored Phase II clinical trial evaluating REZPEG in 66 patients with new onset type 1 diabetes.

Lastly, on our pipeline progression, NKTR-0165, our TNFR2 agonist remains on track. This molecule has very high specificity for signaling through TNFR2 on Tregs to enhance and optimize their ability to regulate the immune system. NKTR-0165 has also shown that a strong signal can be generated through a single-arm monovalent antibody, making it a perfect candidate for inclusion in bispecific and trispecific constructs. Our goal is to advance one of these antibody programs into the clinic next year. We look forward to sharing more on these sophisticated antibody engineering programs in future earnings calls.

And I'll now turn it over to Sandy for the financials. Sandy?

Thank you, JZ, and good afternoon, everyone. On today's call, I'll briefly review our quarterly financials and share updates to our financial guidance for 2025. We ended the third quarter of 2025 with $270.2 million in cash and investments and with no debt on our balance sheet. As discussed in our Q2 earnings call, this end of third quarter cash balance includes the completion of the secondary public offering in July with net proceeds of approximately $107 million. It also includes additional net proceeds of $34.3 million we raised in September from our existing ATM facility. We now expect to end the year with approximately $240 million in cash and investments, up from our prior guidance of $100 million to $185 million. This increased year-end guidance also includes $38.3 million of net proceeds from additional sales of our ATM facility in October. Based upon our higher year-end cash balance, we are extending our cash runway guidance into the second quarter of 2027.

Now turning to the income statement. Our noncash royalty revenue was $11.5 million for the third quarter of 2025. We still expect our noncash royalty revenue to total approximately $40 million for the full year. Our R&D expense was $27.3 million for the third quarter of 2025, and we still anticipate full year R&D expense to range between $125 million and $130 million, including approximately $5 million to $10 million of noncash depreciation and stock-based compensation expense.

Our G&A expense was $16.1 million for the third quarter. We still expect G&A for the full year of 2025 to be between $70 million and $75 million including approximately $5 million to $10 million of noncash depreciation and stock-based compensation expense.

Noncash interest expense for the third quarter was $6 million, and we still expect noncash interest expense for the full year to total approximately $20 million. Our noncash loss from equity method investment was $0.5 million in the third quarter of 2025, and we still expect noncash loss of approximately $10 million for the full year 2025. As an equity investor in Gannet BioChem, we have no commitment to contribute cash to Gannet.

Our net loss for the third quarter was $35.5 million or $1.87 basic and diluted net loss per share. And as I stated earlier, we now expect to end the year with approximately $240 million in cash and investments with our cash runway extending into the second quarter of 2027.

Finally, as we head into our December data reporting, we intend to enter into a quiet period for the month of December until we report the top line results for the REZPEG alopecia study.

And with that, we'll now open the call for questions. Operator?

[Operator Instructions] Our first question will come from Yasmeen Rahimi from Piper Sandler.

Congrats on a great quarter. This is [ Dominic ] on for Yasmeen Rahimi. We just had a quick question on the upcoming ACAAI  data that will be presented. Could you help us understand what you hope to report presentation in patients with AD and asthma? And then moving forward, how would you expect this data to, I guess, impact development in asthma?

Well, let me -- I'll have JZ answer that, but I would tell you that at this point, we're not pursuing an asthma indication. I think -- however, I think it's important to recognize the -- that in atopic dermatitis, the fact that we have an important drug that potentially solves that comorbidity issue is very exciting. And as I said earlier, 25% of the patients who have atopic dermatitis also have asthma as a comorbidity. So it's -- I think it's a very important component of differentiating REZPEG, although we don't have a plan to run an asthma study. JZ, would you like to help with the rest of the question?

Sure. Yes. Thanks for the question, Dominic. So at the ACAAI presentation, we are presenting the results of a preplanned exploratory analysis that was included in the study. There's a validated questionnaire instrument that it's like a patient-reported outcome around -- it's ACQ-5, which stands for the asthma control questionnaire. And with that, you can assess the comorbidity symptoms of asthma in patients that have both atopic dermatitis as well as asthma. And that allows you to look at the total sort of improvement in the ACQ-5 scores over time. But it also lets you isolate on patients that have more severe, for example, uncontrolled asthma at baseline, and that's a subset of people that have higher scores on ACQ-5 at baseline.

For us, this is really interesting because like we discussed, roughly 25% of patients have that, so roughly 100 people in our study also had asthma in addition to atopic dermatitis. And this allows us to assess the effect of REZPEG on asthma control and even potentially the improvement of those asthma symptoms in patients that also had atopic dermatitis. So one of the things that's so important about that is that when you are faced with treatment decisions as a physician. And you know you have patients with atopy and atopy constantly includes other organs. That's why such a high proportion of atopic dermatitis patients also have asthma. That starts to influence some of the treatment decisions.

Right now, Dupi is really the drug that's gone to for people with comorbidity as Dupi has demonstrated activity in both asthma and atopic dermatitis and in patients that express both symptoms as well as each indication separately. And that's really likely with the IL-4 component of its mechanism. But the other agents in the class approved, atopic dermatitis don't have nearly the level of effect that Dupi does. So this is a differentiating element of the Treg mechanism of REZPEG, and we do think differentiates REZPEG further from the other molecules in the class. And the other molecules in development as well as the approved agents like as IL-13 selective antagonist and the OX40 classes as well. And we think it's something that is potential to really further build upon with REZPEG and something that we'll be exploring and thinking a lot about in the future, both in the setting of the comorbidity and as Howard said, even beyond.

Our next question will come from Julian Harrison from BTIG.

Congrats on all the recent progress. It looks like you've had a few months now to socialize with the medical community, the initial RESOLVE-AD results and REZPEG's potential here. I'm wondering if you have a good sense now for the level of interest for a therapy that potentially has a truly remittive effect. To what extent do you think that could emerge as a differentiator for REZPEG in atopic derm?

And then switching to alopecia areata. JZ, I heard your comments around the Olumiant low-dose magnitude of efficacy potentially setting the bar. Do you see maybe an opportunity for use if efficacy is even lower than that, just given how presumably safe REZPEG is potentially free of box warnings compared to JAK inhibitors?

Julian, I'll take the first part of the question. Look, clearly, this mechanism, Treg mechanism has received a lot of attention, especially in the Novo Prize in physiology or medicine. And I think given this very strong data we have in atopic dermatitis and the cross -- the rescue data or the escape arm data, I should say, where patients who failed to see any response on placebo did exceptionally well when they were crossed over to drug. I think that's incredibly compelling data and we're very proud of that.

The combination of that data with what we now see in the comorbidity of asthma, I think, sets apart REZPEG from a number of different drugs in treating atopic dermatitis. So yes, to answer your question more directly, there's a lot of interest in it. There's a lot of inbound interest in it, and I think it's going to have very good prospects. I'll let JZ handle the rest of the question.

Yes. Thanks, Howard, and Julian. And so I mean, in the context of the benchmarks, I think what's really important is that REZPEG has the potential to be a truly differentiated mechanism in alopecia areata by numerous factors. And one of those is especially given its safety profile. Right now, there are no approved biologics in the alopecia areata space. And there's really been no therapy that's demonstrated like a sustained treatment effect. And what I mean by that is like even the short-term interruption in a JAK course can cause hair thinning. It's really quick to wear off. And so you have the ability to address so many features that both affect the disease and then the convenience factor for the patient and substantially the comfort level for the physician in a drug that doesn't have a black box warning, which is one of the issues and limitations of the JAK inhibitors.

There's no question that those are great drugs for reducing inflammation and reducing inflammation quickly. They're just very difficult drugs to take for a long period of time, and these are chronic conditions. So it's really the challenge with the drug like that. But with REZPEG, you can turn the whole problem on its side. And we have done a lot of the market research we've tested the profile and the profile of low-dose Olumiant, we find is very competitive given all of the other elements, features of the mechanism of action and the differentiated safety profile. And we know that there's space there, to your point, Julian. So -- but we're using that as a reasonable kind of proxy benchmark for now. It is an approved drug and an approved dose, but there is some space around that, to your point.

Our next question will come from Jay Olson from [ OpCo ]

This is [ Cheng ] on the line for Jay. Congrats on the progress. Maybe speaking to the AA, I'm just wondering how fast you can maybe start the Phase III program? And are you planning to move the program by yourself or in a partnership if the December data is positive? And separately, I'm also wondering, in the Phase IIb AD study, are there any patients have alopecia areata comorbidities? And if so, any color you can share on those patients?

Well, I think I got -- I think the first part of your question, I didn't hear it all clearly. But I think the first part of your question -- I'll let JZ take the second part. The first part was when do we think we could start a study in alopecia areata. I think depending on the data that we received in December, we certainly would look forward to starting it next year. I think it's important because as we talked about, the only current therapy is a JAK inhibitor, and they come with lots of concerns and warnings. And as I did describe that at a physician surveys that we've conducted, physicians are somewhat reluctant to use a JAK inhibitor to treat alopecia areata given the safety concerns. So I think if we have a new modality to treat such a very serious disease and a condition that causes extreme depression in people, I think it could be very, very important. And consequently, we do plan to start that study next year. I'll let JZ comment on the rest.

Yes. Thanks, [ Cheng ]. So we did look at multiple comorbidities in the atopic dermatitis Phase IIb study. Asthma was by far the largest patient population, as I mentioned, roughly 100 people had both atopic dermatitis and asthma in that study, and they'll be presented at ACAAI this weekend.

In terms of alopecia, we also looked at vitiligo, for example, very, very few people. So really not a large enough patient population to isolate out as a subgroup, like a handful of few people in alopecia that had both of the diseases.

Obviously, our Phase IIb results in alopecia, which read out next month, I mean, that is by far a more definitive data set, right? Much, much larger sample size, obviously, a patient population enrolled with that as their primary disease. And then, of course, we'll be looking at the treatment effect in that patient population reported next month.

Our next question comes from Cha Cha Yang from Jefferies.

This is Cha Cha on for Roger Song. I was wondering in addition to low-dose Olumiant, are there any therapeutics that are in development, biologics for alopecia that you think would be an appropriate benchmark?

And then my second question is, are there any IL-2 specific studies that you think could provide read-through to REZPEG in alopecia?

JZ, do you want to cover that?

Sure. So yes, there are a couple of biologics in development for alopecia. And we discussed them like an IL-7 receptor and other kinds of agents. So I think that those -- there are some earlier data sets. Our goal is we were doing a much, much larger study than those earlier programs. As we described, 94 people were enrolled and randomized in the Phase IIb alopecia study that we're doing. We also have multiple doses. So a much larger study that gives a chance to really assess the treatment effect, which I think is going to be more informative than a lot of the single arm or much, much smaller studies that have been done to date. But it's certainly an area that people are exploring.

Tregs remain a very important mechanism that is invoked from all a lot of translational studies in patients with alopecia areata. We know that there are low levels and deficiencies in Treg function. We also know Tregs are necessary for hair growth and for hair moving through the hair growth cycle. And the actual antigen phase that actually is associated with the elongation of the hair once it attaches down at the root actually requires Treg signaling to the stem cell compartment. So we know that those are multiple key mechanisms. And those are one of the big reasons why we're so excited in conducting the study that we'll be reading out the top line data for next month.

And then in terms of IL-2 specific studies, there have only been a few studies that have been published with IL-2. One was a case study and one was a small randomized study. The main situation is low-dose IL-2 is really not a good proxy for REZPEG. With REZPEG, we do such a higher amount of Tregs, much, much higher than low-dose IL-2 can ever achieve, a much greater duration of Treg elevation from a given dose and the ability to treat for a very long time. As you know, we've now treated patients for over a year. For example, for a 52-week period in the Phase IIb study in atopic dermatitis. So it's definitely a surrogate in the sense of a Treg elevating agent, but really REZPEG substantially exceeds anything that low-dose IL-2 has been able to present across multiple indications.

Our next question will come from Mayank Mamtani from B. Riley Securities.

Congrats on a productive quarter. On the alopecia top line data analysis, would you have any off-treatment responder rate you plan to report on given some patients may have been past that 36-week treatment period? And if you could remind us if there's an escape arm option here for the placebo non-responders to cross over. Obviously, wonder from your AtD experience, the peak efficacy from the EADV data, you didn't get until 24, 48 -- 44 weeks even. So I just wonder what's your plan to assess if efficacy increases beyond that 36-week period, what's the kind of plan there? And then I have a quick follow-up.

Sure. Yes. So firstly, in the kind of information that we would present in December, we'll be presenting data from the 36-week induction period in the study. The primary endpoint is the mean percent reduction in SALT score from baseline. And then the key secondary endpoints that are really, really meaningful is the proportion of people that achieved the SALT 20 and also SALT 10. SALT 20 is the registrational endpoint in the U.S. and SALT 10 in Europe. And then I mentioned earlier in the presentation, also the additional secondary endpoints, some of the time-dependent endpoints and some of the proportional increases in the kind of hair regrowth, right, as metrics.

And then the other thing that kind of round out the baseline demographics, the safety profile, all the other things. But importantly, Mayank, right, the study is still going to be ongoing. So as you know, the way we designed the study is people that reached week 36 that are experiencing benefits such as hair regrowth, for example, but that have not yet reached a SALT 20 metric, they have the opportunity to take an additional 16 weeks of treatment to 52 weeks for a full year. So there's a proportion of people that will be ongoing.

And also the study design has a 24-week off-drug observation period. So whenever a patient completes treatment, whether that's at 9 months or 12 months, there is then followed for that additional 24-week period of time. And that's really designed to assess that if you grew hair, can you keep hair, right, which is a significant differentiating element from a JAK mechanism of action where the hair loss is really, really rapid when the drug dosing is stopped.

So because the study is still ongoing, I mean, we can't say yet the totality. But definitely, the 36-week endpoint, which is the primary analysis with the entire population crossing the 36-week is going to be the main subject of that top line presentation.

Escape arm, is there an escape arm here?

No, there's no escape arm in the study.

Okay. And on the auto-injector development, how far along are you? And is that going to be at the start of your Phase III study? And is that kind of part of the protocol as you get into the end of Phase II discussion?

Sure. Yes. So the auto-injector development is ongoing. And our goal and plan is to have the auto-injector available at the time of launch of REZPEG. The Phase III studies will be conducted in the same way the Phase II studies were where the drug would be used in a vial. And for us, it's -- we maintain that really for speed because this allows us to start the Phase III studies as quickly as possible relative to when we presented the top line data in June of this year.

And then in terms of your other question, just contextually at an end of Phase II meeting, you really discuss everything in the plan to your BLA. So that includes not just the Phase III clinical development program, the registrational and pivotal studies, it also includes the CMC. So yes, we have presented our plans for the final presentation of the product, the auto-injector and then all the work that we do during the Phase III studies into the BLA to have that available for launch.

Our next question will come from Arthur He from H.C. Wainwright.

Sorry, I apologize if the question has been asked before. So given the readout coming readout for the alopecia, JZ, maybe could you tell us a little bit more like what the potential REZPEG can offer compared to the JAK inhibitor here for the alopecia patient?

Yes, it's a great question. I mean I think that one of the situations with the JAK inhibitors, and we touched a little bit on this earlier, is that they definitely are effective at reducing inflammation. Like if you have common gamma chain uses in multiple cytokines, use any either homo or heterodimers of JAKs. And it's an important part of the signaling cascade in response to multiple cytokines, and they're well known as effective ways of lowering inflammation quite quickly. But the challenge with using a JAK inhibitor in any indication where it's approved is that long-term use carries with it some disadvantages, right? So the drugs have black box warnings. They have other significant limitations. They require monitoring. There's just a number of things that make them a little bit more delicate to use.

And in the dermatological setting, some of those things are a little bit undesirable. So one of the things that REZPEG can offer is if the efficacy profile, as we discussed, reaches a benchmark such as a low-dose JAK in, say, the Olumiant setting, it already brings with it a completely different risk profile, right? It would not have a black box warning, it would have a completely different and much, much better safety profile and really has a safety profile that's much more aligned with being a very long-term chronic use drug. Also, the potential of being the first biologic in this space gives us a real tremendous advantage because that starts to really open access because we've learned from multiple studies that physicians are they're not so necessarily excited to try JAKs as a first option for patients with the disease. So having another alternative that's available could take a significant -- an opportunity advantage.

And then the last one is really comes down to that potential of maintenance. So JAK inhibitors really lose their effect very quickly. And it can be very psychologically difficult for patients because if you spend weeks and months regrowing hair that you didn't have in a really long time and then any need to interrupt the JAK, whether it's a safety signal or other reason or liver enzyme elevation or something, then that can lead to loss of all the hair that you've grown, which can further drive the depression cycle. That's a component of this disease. With REZPEG, there's the potential of maintaining the hair that was grown, having interruptions in drug dosing not be a problem. And that would be completely transformational. So these are all things that we think contribute to a very substantial opportunity for REZPEG and alopecia areata.

So another question is given that you've passed in the data there, how should we think about the primary endpoint for the approval there in the future? Do you think the SALT 20 is still could do the job? Or we probably should look to the SALT 10 or even SALT 0 there for the future drug for the alopecia there?

Yes. Well, I mean, the health authority set the registrational endpoints, right? And so right now, those are defined, right, as SALT 20 in the U.S. and SALT 10 in Europe. But obviously, every study measures multiple secondaries, right, including eyelash, including SALT 0 and so on. So I think that we leave that in the hands of the regulators.

In terms of UPA's efficacy, I mean, it's -- I think everywhere that there are multiple JAK inhibitors approved, UPA or RINVOQ seems to always win, right? It just consistently produces the greatest amount of efficacy compared when it goes head-to-head against other agents. And I think we've seen that in multiple indications, Arthur, right, not just in dose 1. It does carry with it a little bit more of a safety profile, which is the [ take ] related, right? It's more on target and more on-target tox in addition to other things.

But I do think as compared to the other JAK inhibitors, that UPA is going to be very important, probably take a significant position against the other JAK inhibitors. But we don't really see that as impacting the biologics, right? Again, there are numerous indications where biologics and small molecules, JAKs and non-JAKs coexist. Atopic dermatitis is a great example. In psoriasis, you have TYK2 mechanism coexisting and others. And there's really a large enough patient share and the need for multiple mechanisms that always makes plenty of room for multiple mechanisms in this indication.

And we do have time for one last question. And our last question will come from Andy Hsieh from William Blair.

Mary, it's great to have you back. So we have 2 questions. So for the RESOLVE-AD study, I believe you spent a lot of time and resources to ensure that the placebo rate is low. So have you gotten a chance to review that initiative so that you can be best positioned for the positive Phase III outcome?

And then the second question, maybe for Howard, what's your current manufacturing footprint? I figured given the intense interest in REZPEG, it would be really nice if you can secure one of those national priority vouchers.

I'll take the second part first, and Mary can continue. Look, we are looking at a number of different options there. We sold our PEGylation manufacturing facility to Gannet BioChem, but we have a priority position there, and we certainly have a guaranteed source of those raw materials. And we have a number of different contract manufacturing companies, very well-known companies that we work with. So I'm not concerned about at this point, the ability to manufacture -- successfully manufacture REZPEG, and we are looking at the vouchers, et cetera.

I will let Mary talk to you about the other part of your question.

Thanks, Howard. And really great to hear your voice, too, Andy, and I'm really happy to be back. I mean, as you said, the data from RESOLVE-AD are very exciting. And I've also had the opportunity to speak to multiple dermatologists since I've been back, who are also very excited about the totality of the data, the speed of onset and the excellent safety profile. So it's very exciting to move this forward.

And certainly, in our Phase III program, we have every plan to implement the exact same procedures that we did to minimize the placebo effect. And some of those are, of course, ensuring that we have board-certified dermatologists participating in our clinical trials. We also make sure that the eligibility criteria is met both in the screening and right before patients are randomized. And so we took multiple actions. Also in our Phase IIb, we had a quite large size of our placebo group, and we will, of course, have the same when we proceed forward in a larger Phase III study.

So we were very pleased that we were able to implement multiple different procedures and activities in order to ensure our placebo effect was very low, and we believe we will continue to be very successful in our Phase III as well. So we look forward to moving forward. We've been doing a lot of planning. We're going to have our end of Phase II meeting with the FDA by the end of this year, and so we'll have a clear path forward to a BLA.

And this does conclude our question-and-answer session for today's conference. I'd like to turn the call back over to Howard Robin for any closing remarks.

Well, thank you, Crystal, and thank you, everyone, for joining us today, and we greatly appreciate your continued support. And I want to thank all of the patients and their caregivers that have trusted and continue to trust Nektar to treat their disease. None of this research would be possible without them. And I also want to thank our employees for their dedication and extremely hard work, and we look forward to delivering data from our REZPEG program data in alopecia areata in December and additional results from the program in atopic dermatitis in the first quarter of next year. So please stay tuned. Thanks for joining us.

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