Earnings call transcript: Nektar Therapeutics reports Q2 2025 earnings miss

Nektar Therapeutics reported a significant earnings miss for the second quarter of 2025, with an actual EPS of -$2.78 compared to the forecasted -$0.20. This resulted in a surprising 1,290% deviation from expectations. The company’s revenue, however, surpassed forecasts, reaching $11.17 million against an anticipated $9.74 million. Following the earnings announcement, Nektar’s stock experienced a 3.12% decline, closing at $21.75, with further premarket activity indicating a slight decrease. According to InvestingPro data, the stock has shown remarkable strength with a 114.5% return over the past six months, despite its current volatility.

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Key Takeaways

• Nektar’s EPS significantly missed forecasts, while revenue exceeded expectations.
• The company’s stock fell by 3.12% in post-earnings trading.
• Nektar’s cash and investments totaled over $1 billion at the end of Q2.
• The company is advancing its lead program, RespEG, in clinical trials.
• Nektar plans to initiate Phase III studies in 2026.

Company Performance

Nektar Therapeutics encountered a challenging quarter, primarily due to its substantial EPS miss. Despite this, the company demonstrated strong revenue performance, exceeding forecasts by 14.68%. Nektar’s ongoing investment in research and development, particularly in its lead program RespEG, underscores its commitment to innovation in the biopharmaceutical sector. The company remains focused on advancing its clinical trials and expanding its market presence in atopic dermatitis and alopecia areata.

Financial Highlights

• Revenue: $11.17 million, exceeding forecasts by 14.68%.
• Earnings per share: -$2.78, missing forecasts by 1,290%.
• Cash and investments: $1.0759 billion at the end of Q2.
• R&D expense: $29.9 million.
• Net loss: $41.6 million for Q2.

Earnings vs. Forecast

Nektar’s EPS of -$2.78 was a significant miss compared to the forecasted -$0.20, marking a 1,290% negative surprise. Historically, such a large deviation is unusual for the company, indicating potential challenges in managing expectations or unforeseen expenses. Conversely, revenue of $11.17 million surpassed expectations, suggesting stronger-than-anticipated sales or successful cost management in certain areas.

Market Reaction

Nektar’s stock reacted negatively to the earnings miss, declining by 3.12% to close at $21.75. The stock is currently trading within its 52-week range of $6.48 to $37.38. Premarket trading showed a further decrease of 0.23%, reflecting continued investor caution. This movement aligns with broader market trends, where biopharmaceutical stocks have faced volatility amid earnings reports.

Outlook & Guidance

Nektar projects to end 2025 with $180-$185 million in cash, ensuring a cash runway into 2027. The company is preparing for Phase III clinical trials of its lead program, RespEG, targeting a launch in the first half of 2026. Upcoming data presentations are planned for December 2025 and Q1 2026, which could influence future market positioning and investor sentiment. InvestingPro analysts have set price targets ranging from $69 to $120, suggesting significant potential upside from current levels. Access the detailed Pro Research Report for comprehensive analysis of Nektar’s growth prospects and market position.

Executive Commentary

"We believe we’re well positioned with a first in class novel Treg mechanism," stated CEO Howard Robin, emphasizing the company’s innovative approach. Jonathan Zalevski, Chief R&D Officer, added, "We think there’s an opportunity for very exciting outcome for us in alopecia areata," highlighting the potential impact of Nektar’s clinical advancements.

Risks and Challenges

• Significant earnings miss may affect investor confidence.
• High R&D expenses could impact short-term profitability.
• Competitive pressures in the biopharmaceutical sector.
• Regulatory challenges in advancing clinical trials.
• Market volatility affecting stock performance.

Q&A

During the earnings call, analysts inquired about partnership opportunities, injection site reaction strategies, and trial design considerations. Executives addressed potential remission effects and clarified their strategic focus on advancing clinical programs, aiming to capture unique opportunities in their target markets.

Full transcript - Nektar Therapeutics (NKTR) Q2 2025:

Conference Operator: Hello, and thank you for standing by. Welcome to the Nectar Therapeutics Second Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to Corinne Franklin from Therapeutics Investor Relations to kick things off. Please go ahead.

Corinne Franklin, Investor Relations, Nektar Therapeutics: Thank you, and good afternoon, everyone. Thank you for joining us today. On the call today are Howard Robin, our President and Chief Executive Officer Doctor. Jonathan Zalevski, our Chief Research and Development Officer and Sandra Gardner, our Chief Financial Officer. Doctor.

Brian Kotson, 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 our business, including statements regarding the therapeutic potential of and future development and regulatory plans for respegaldeslucam and our other drug candidates, 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 that was filed on 05/09/2025, and is 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?

Howard Robin, President and Chief Executive Officer, Nektar Therapeutics: Thank you, Corinne. Good afternoon, everyone. The 2025 was transformative for Nektar. In June, we reported highly compelling initial data in ectopic dermatitis for our lead clinical program, RespEG Aldis Leukin, also known as RespEG. These data establish RespEG as a potential first in class novel T regulatory mechanism for patients suffering from this chronic relapsing inflammatory skin disorder.

In 2023, we took the bold step to pursue T regulatory cell science across our pipeline. This science is 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. And we had the goal at that time to demonstrate that this important pathway could represent a completely new way to treat autoimmune and inflammatory disorders by mimicking the way our own immune system works to resolve inflammation. So in October 2023, we initiated a 400 patient Phase IIb study for Respag in patients with moderate to severe ectopic dermatitis, where early proof of concept data in patients had shown promise at the time. For our second indication, we chose to run a Phase IIb study in alopecia areata.

This is a disease setting where the underlying T regulatory cell deficiency creates a known imbalance between T effector cells and T regulatory cells, leading to hair loss for these patients. The RESOLVE AD study results we recently reported also validate Nektar’s novel approach to access Tregs through the IL-two pathway with a unique molecular design as compared to the competitive landscape. While other approaches to access IL-two are focused on the design of mutines, which we believe hindered their development recently and over the years, We instead took a straightforward and elegant approach of accessing Treg biology through a native sequence IL-two and then applying pegylation, a proven chemistry that has led to the approval of over 30 biologics and small molecules over the last several decades. And many of these are ones in which nectar played a role. Now that we’ve been granted FDA Fast Track designation for both ectopic dermatitis and alopecia, we have the opportunity to move more quickly and align with the FDA to design the most expeditious regulatory pathways.

This underscores that there undoubtedly still remains a large unmet need in the setting of ectopic dermatitis and alopecia areata for novel mechanisms of action. And we believe we’re well positioned with a first in class novel Treg mechanism that is poised to enter Phase III development in 2026. Now since Dupixent was launched eight years ago, the atopic dermatitis market has grown to around $15,000,000,000 in U. S. Sales, with expectations that it could reach nearly $30,000,000,000 by 02/1933.

Our own recent market research has suggested that physicians would prescribe Respag in both biologic naive and biologic experienced patients with ectopic dermatitis. And so our goal is to design a Phase III program that captures this unique opportunity in front of us. Currently, IL-thirteen based therapies dominate the treatment landscape, and about fifty percent of the patients fail to respond to this mechanism. Moreover, IL-thirteen based therapies are known to have side effect risks, such as conjunctivitis and infection, which can pose a challenge for patients. So in view of these challenges, there’s a significant opportunity for ResMed.

With a fast onset of easy response and itch relief, ResMed is poised to take a differentiated position in this landscape. As James Z will explain in more detail, our Phase III strategy is designed to achieve a broad label in both naive and experienced patients, which would allow ResVec to capture a substantial share of the growing multibillion dollar ectopic dermatitis market. Given the very high correlation between historically positive Phase IIb results and the subsequent approvals in ectopic dermatitis, we’re highly focused on moving quickly into Phase III, and our readiness activities are underway. Our oversubscribed $115,000,000 equity financing in June now puts us in an even stronger financial position to complete important Phase III enabling CMC and regulatory planning activities to ensure that Respag will be Phase III ready in the 2026. In addition, the financing also positions us to extend our cash runway into 2027.

Looking ahead, the ongoing RESOLVE AD study will generate additional data in 2026, which we expect will further characterize the durability and depth of response for ResVeg out to week 52. We plan to present patient reported outcome data, including quality of life and symptom assessments from the sixteen week induction period at a medical meeting this year. This data presentation will also include a planned data cut for patients who receive placebo in the induction phase, and who then cross over to a treatment escape arm. With this new upcoming data cut, we’re excited to see whether easy responses deepen with continued treatment with the RezPEG beyond the sixteen week induction. And I’ll let Jay Z talk more about this key data set in a moment.

Now, in addition, we’re on track to report data from the separate Phase IIb study in alopecia areata in December. This is an indication where we are directly addressing the underlying pathology of hair loss in alopecia patients. Another positive outcome here would position RespEG as a novel mechanism in a dermatological setting where there is only one mechanism approved for patients, JAK inhibitors. These carry multiple well known black box warnings and associated with high relapse rates upon discontinuation. The market for alopecia areata treatments is projected to grow $2,000,000,000 by 02/1933, and we believe that a new mechanism, ResPEG, could take a very significant share of this market.

And now I’ll hand it over to JZ for some more details on ResPEG and our earlier programs in our pipeline.

Jonathan Zalevski, Chief Research and Development Officer, Nektar Therapeutics: Thanks Howard. And thank you to everyone on the call for joining us today. To start, I’d like to remind you of the key takeaways from our June 24 webcast, where we announced top line 16 induction data from the ongoing Phase 2b study known as Resolve AD. Resolve AD enrolled three ninety three patients and is testing Respagal Dysleukin in biologic naive patients with moderate to severe atopic dermatitis. The study met its primary endpoint of statistical significance for mean percent change in EASI score from baseline for all Ras PegaLdysleukin arms versus placebo at week sixteen.

All three raspagalde sleukin arms met significance on the EZ fifty, EZ 75, and BSA. The every two weeks regimens met significance on VIGA, AD, and itch NRS, and the high dose of twenty four microgram per kilogram every two weeks also achieved statistical significance on EZ90. Both EZ reduction and magnitude of itch improvement were seen after the first few doses of Respag, which we think could truly differentiate it from other systemic therapies in terms of a faster onset of action. Also, the safety profile for RespEG in the Phase IIb study was consistent with previously reported results from other RespEG clinical studies, and there was no increased risk of incidence of conjunctivitis, oral herpes, or oral ulcers as is seen with other agents which are approved or in development. The maintenance period of this study is ongoing, and we expect to share the top line results for fifty two weeks of dosing for the thirty six week Q4 week and Q12 week maintenance regimens, as well as the Q2 week escape arm regimen in Q1 twenty twenty six.

As Howard mentioned earlier, we are looking forward to presenting additional differentiating endpoints from the induction phase of the RESOLVE AD study at a medical meeting in the fall of this year. These include quality of life assessments, such as sleep quality, skin pain reduction, overall patient experience, and other important metrics that are meaningful for patients battling atopic dermatitis. In that presentation, we are also planning a data cut which looks at patients who have received twenty four weeks of treatment with the highest dose induction regimen of Respag, twenty four microgram per kilogram Q2 week. You’ll recall that our study design allowed patients from induction who had EASI scores of less than 50 to advance to a treatment escape arm for up to thirty six weeks. As we reported in June, forty two patients who were in the placebo arm during the sixteen week induction had a week 16 EASI score worse than EASI fifty and entered into this ESCaPE treatment arm.

These patients represent a true crossover population for studying the extended duration of Respagaldezleukin dosing. By this fall, we expect that more than half of the patients in this crossover cohort will have completed twenty four weeks of treatment. So with this new upcoming data cut, we are excited to see whether easy responses can deepen with continued treatment with Respag beyond week sixteen and out to week twenty four. This is a phenomenon not observed with IL-thirteen agents whose treatment effect tends to be capped at the end of induction. And we are excited about this potential because our reported data of Respag at sixteen weeks is comparable to twenty four weeks of treatment reported with the AUX40 agents, but with a faster onset of EZ75 in itch response than what is seen with those agents.

As we announced in February, we received Fast Track designation for Respag for the treatment of adult and pediatric patients 12 years of age and older with moderate to severe atopic dermatitis whose disease is not adequately controlled with topical prescription therapies or when those therapies are not advisable. As Howard stated, we have already begun phase three readiness activities and clinical trial design planning as we prepare for an end of Phase II meeting with the FDA later this year. Our goal is to position Respag to enter its first Phase III study in the 2026. We are actively evaluating several design pathways, including those that provide a clear line of sight to approval of Ras Pagaldezleukin in patients who are both biologic naive and biologic experience. We will finalize the trial design following our end of Phase II meeting with the FDA later this year.

With the strong data from Resolve AD confirming the optimal induction dose and target patient population, we’re focused on maintaining our momentum to progress Respag as quickly as possible in atopic dermatitis. Now moving on to alopecia areata. The phase 2b RESOLVE AA trial completed enrollment in February and we’re excited to share top line results in December. In this trial in patients with severe to very severe alopecia areata, Respag is being evaluated at doses of eighteen microgram per kilogram or twenty four microgram per kilogram every two weeks versus placebo. A total of ninety four patients were enrolled and the week thirty six primary endpoint in the study is the mean percent improvement in SALT score.

Now keep in mind that alopecia areata is another dermal disease, and so our results in atopic dermatitis and also reinforced by an earlier separate study in psoriasis point to this T regulatory cell mechanism having strong signals of efficacy in dermatological settings. Alopecia areata is a disease in which the patient’s immune system mistakenly attacks the hair follicle and disrupts the body’s normal ability to keep and grow hair, leading to severe hair loss and lack of hair regrowth. We know the underlying cause here is the imbalance in T effector cells to T regulatory cells around the hair follicle. And this imbalance results in the T effector cells attacking and damaging the hair follicle and prohibits Tregs from signaling to and promoting the function of hair stem cells. So by stimulating T regulatory cells, we are seeking to overcome the pathogenesis of the disease and restore immune homeostasis.

In RESOLVE AA, we will assess a number of secondary endpoints as well, including the proportion of patients with a greater than or equal to 50% reduction in SALT at week thirty six and other assessed time points and the regulatory approval endpoints for phase three studies, SALT20 and SALT10 responder analyses. Following the week thirty six assessment, patients who did not achieve a SALT score of less than or equal to 20 but did demonstrate substantial hair regrowth over the thirty six weeks are eligible to enroll in a sixteen week treatment extension, which allows us to have a subset of patients that will be treated for fifty two weeks. Now turning to type one diabetes, another autoimmune disease where Respag has great potential as a Treg therapy, we believe Respag 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 previously announced, TrialNet is sponsoring and conducting an investigator sponsored phase two clinical trial evaluating Respag in sixty six patients with new onset type one diabetes with funding from the NIH. We expect TrialNet to begin this study before the end of the year.

And finally, NKTR-one 165, our TNF R2 agonist antibody program, is progressing through IND enabling studies with a goal to advance this program into the clinic in 2026. TNF R2 agonism potentiates Treg function as well as maintenance of Treg lineage stability, especially in the non lymphoid tissue compartments. The first preclinical data from this program was presented last year at EULAR and demonstrated that NKTR-one hundred sixty five has a very high specificity for signaling through TNF R2 on Tregs and enhancing their immunoregulatory phenotype. It also showed that the agonist we discovered is able to signal through the TNFR2 multimeric receptor as a single arm monovalent antibody. And we believe this is the only antibody in this class being developed that has this attribute.

Since the TNF R2 epitope we discovered can function as a single arm agonist, we have leveraged this innovation into a platform of bispecific and multispecific assemblies. The first agent from that pipeline, NKTR-one sixty six, pairs TNF R2 agonism with a well validated target to create a molecule with a novel mechanism of action and highly innovative properties. We look forward to providing more updates on NKTR-one hundred sixty six and other agents in the coming quarters. I’ll now turn it over to Sandra for the financials.

Sandra Gardner, Chief Financial Officer, Nektar Therapeutics: Thank you, Jay Z, and good afternoon, everyone. On today’s call, I’ll briefly review our quarterly financials and share updates to our financial guidance for 2025. We ended the 2025 with $1,075,900,000.0 dollars in cash and investments and with no debt on our balance sheet. As Howard stated earlier, on 07/02/2025, we completed a secondary public offering resulting in approximately $107,500,000 in net proceeds. This fundraising further strengthened our financial position, extending our cash runway into the 2027 while also enabling us to invest in our ResTAG program to progress to Phase III and further develop NKTR-one hundred sixty five and NKTR-one hundred sixty six, our TNFR2 agonist antibody candidates.

Our expanded 2025 plan includes ResPEG Phase III clinical startup activities and securing additional manufacturing for ResPEG. We now expect to end the year with approximately 180,000,000 to $185,000,000 in cash and investments. Turning to the income statement, our non cash royalty revenue was $11,200,000 for the 2025. We still expect our non cash royalty revenue to total approximately $40,000,000 for the full year. Our R and D expense was $29,900,000 for the 2025 and we now anticipate full year R and D expense to range between 125,000,000 and $130,000,000 including approximately 5,000,000 to $10,000,000 of non cash depreciation and stock based compensation expense.

Our G and A expense was $17,100,000 for the second quarter. We now expect G and A for the full year of 2025 to be between $70,000,000 and $75,000,000 including approximately 5,000,000 to $10,000,000 of non cash depreciation and stock based compensation expense. This increase in guidance reflects updated estimates for professional services in the second half of the year, including legal and other accounting consulting services. Non cash interest expense for the second quarter was $5,400,000 and is expected to remain at a similar level for the remaining two quarters, totaling approximately $20,000,000 for 2025. As a reminder, in the 2025, we began accounting for our investment in the new portfolio company Gannett Biochem.

Under the equity method of accounting, we calculate our non cash gain or loss based on the change in our share of Gannett Biochem’s equity each quarter. Our non cash loss from equity method investment was $2,400,000 in the 2025, and we still expect a non cash loss of approximately $10,000,000 for the full year of 2025 on our income statement. We have no commitments to contribute cash to Gannett as an equity investor. Our net loss for the second quarter was $41,600,000 or $2.95 basic and diluted net loss per share. Excluding the non cash loss from our equity method investment, our non GAAP net loss totaled $39,200,000 or $2.78 basic and diluted net loss per share.

And as I stated earlier, we now expect to end the year with approximately 180,000,000 to $185,000,000 in cash and investments with our cash runway now extending into the 2027. And with that, I will ask the operator to open the lines for Q and A.

Conference Operator: Thank you. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. In the interest of time, we do ask that you please limit yourself to one question at this time. Please standby while we compile the Q and A roster.

And our first question will come from Jay Olson from OpCo. Your line is open.

Chung, Analyst, OpCo: Oh, hey. Thanks for taking all questions. This is Chung on the line for Jay. And just want to congratulations again on the very impressive results you shared recently. Just wondering first, have you maybe started to engage with regulators with the sixteen week data?

And since you started some activity to prepare for the Phase III initiation, any color you can share on how are you thinking about the trial design and also maybe the number of trials you are planning for the Phase III program? And maybe separately, just like wondering your thoughts on partnership opportunity for Respak and AG. And specifically, would be the optimal time to bring a partner on board? And any kind of characteristic would you define the partner? Thank you so much.

Howard Robin, President and Chief Executive Officer, Nektar Therapeutics: This is Howard. I’ll let Jay Z answer the first part of the question. I’ll take the second part. Go ahead, Jay Z.

Jonathan Zalevski, Chief Research and Development Officer, Nektar Therapeutics: Yeah. Thanks, Howard. And thanks, John. So in terms of your first question was have we began to engage with the regulators? So that’s ongoing.

So our plan, as I mentioned earlier, is an end of phase two meeting that we intend to hold before the end of the year. And so at this time, we’re basically putting together, the meeting request and the briefing package that will go in. And the substrate of what we’ll be discussing there is indeed the trial design. And so our basic concept in the trial design is we expect to have two monotherapy studies that are basically identical in design, as well as a long term extension study, which enables you to collect long term safety data. And then for this division, there are a number of additional studies that are required that are typical for every single BLA submission for a new molecule.

In terms of the studies, as we mentioned earlier in the call, we understand that there is a significant opportunity for Respag in multiple lines in atopic dermatitis. We have very strong data in biologic naive patients, and we’ve shown that right in our Phase 2b results that you commented on. And so that will be a substantial portion of our patient population. But our plan is to also include biologic experienced patients in the trial as well. So in that regard, similar to the kind of studies that Amgen and Kyowa ran with ROKA where they combined both naive and experienced patients in the same study.

We think that was a very efficient approach and our goal is to use that same approach and also have both patient populations into our phase three program, which would enable us to have the broadest label when we move to register ResPEG. So I think that addresses your questions about some of the health authority engagements and trial designs. And Howard, I’ll turn it over to you about partnership and timing.

Howard Robin, President and Chief Executive Officer, Nektar Therapeutics: Yeah, sure. Thanks, JZ. Look, as we said on the call, we hope to end the year with 180 to $185,000,000 And we will be prepared to put Respag into the clinic in phase three in 2026. We have a runway that goes into ’27. We don’t have any plans for an additional financing at this point.

We have a number of important data catalysts ahead of us. And we’re actively talking to partners about the potential to collaborate on Respag, and there’s including strategics as well as financing partners. There’s ways to do this that are a collaboration with another company. There’s also ways to do this with non dilutive financial methods. So we also have some we also have other sources of non dilutive capital.

For example, we own 3% to 4% of dapamab, UCB’s drug in Phase III for lupus. So I think there’s and we’re certainly looking at monetizing that asset. So, there’s a lot of opportunities for us. But I would say that right now we’re engaged in partnership discussions.

Chung, Analyst, OpCo: Got it. Thank you so much. And congrats again on the progress.

Conference Operator: Thank you.

Mayank Mamtani, Analyst, B. Riley Securities: Thank you.

Conference Operator: Our next question will come from Yasmeen Rahimi from Piper Sandler. Your line is open.

Corinne Franklin, Investor Relations, Nektar Therapeutics: Good afternoon, team. Congrats on all the updates and all the great commentary. I guess my question is, the next near term data catalyst is the upcoming AA readout. JZ, if you could walk us through how your thought process around what is a competitor product profile to advance to a later stage development and whether also we will see at the time of the top line data some of the patients who continued into the longer extension or should we not expect that? And I’ll jump back into the queue.

Jonathan Zalevski, Chief Research and Development Officer, Nektar Therapeutics: Yeah, sure. Thanks, Yaz. So, you know, it’s a great question. One of the things that’s really important to consider about alopecia is that there are currently no approved biologics for alopecia areata and there’s really no therapy that’s demonstrated a sustained treatment effect. So JAKs are efficacious and even most recently, Renvoke posted probably class leading JAK inhibitor data in the space and the first of their phase three studies that read out a few weeks ago.

You know, and it still has profile that’s well known. So it’s a mechanism that requires continuous dosing. If you stop dosing with the JAK inhibitor, the patients lose the hair that they may have grown. And then also you have to carry the additional safety liability. And it’s particularly challenging in this disease as many patients are younger, they have their disease for their entire life and the concept of chronically taking a JAK inhibitor for many, many years is difficult.

For us, the way we designed the study for this phase two is a primary endpoint based on percent change from baseline in SALT scores. And while we don’t need to necessarily sort of hit some of the JAK metrics, we still use the JAK metrics. They’re very useful as frames of reference as we put together the TPP that we’re considering for this indication. And so just as like some kind of benchmarks to keep an eye on for that endpoint salt percent change from baseline, low dose JAK achieves about a 30% reduction in salt score, and high dose JAK about a 40% reduction in salt score. So we’re looking to be in that range and ideally if Respag shows the kind of scientific approach that we think is very meaningful for this particular biology, obviously our goal is to even push that.

And then of course we’ll also be focusing on the key registrational endpoints as those are very informative as we sort of continue and look beyond the Phase 2b study in alopecia areata. So specifically the SALT20 and SALT10 endpoints are key. SALT20 is the FDA accepted threshold and SALT10 is the standard in Europe. And JAK inhibitors have about a twenty percent and ten percent for SALT20 and ten percent at the low dose and thirty five percent and twenty five percent at the high dose. So again, we’re using those as benchmarks along with the data that Rinvoke posted.

But we’re very excited about the data set that’s coming for us later this year. I’m very excited about the opportunity of taking Respect forward for yet another dermatological indication. One where we know Tregs plays such an important role in even just the fundamental biology of hair growth and having the chance of being potentially the first biologic in this space.

Corinne Franklin, Investor Relations, Nektar Therapeutics: Thank you so much, Jazie.

Conference Operator: Thank you. Our next question will come from Julian Harrison from BTIG. Your line is open.

Julian Harrison, Analyst, BTIG: Hi. Thank you for taking the question, and congrats on all the recent progress. It’s great to hear that you plan to include biologic experience, atopic derm in your first registrational program for Respag. Can you remind us of what underpins your confidence that Respag will be active in the segment?

Jonathan Zalevski, Chief Research and Development Officer, Nektar Therapeutics: Yep, certainly. Thanks, Julia, the question. You know, it’s interesting. I mean, we’re tending to see that multiple agents are showing activity in bio experience, right? We’ve seen that now for a few examples.

Lebery had that example. Broca seems to be also having that example. But for us, we have this basic understanding that our mechanism is in no way overlapping or canceled out or contra to any of the post IL-thirteen, you know, kind of biology. For example, if a patient has a disease that’s more mixed in presentation, say Th2 but additional T helper endotypes that are driving the inflammation. I mean, if you take a Th2 inhibitory mechanism like an IL-four or IL-thirteen, you leave other parts of the immune system kind of untouched.

But we know that we have a breadth of ability to block multiple kinds of polarized T cell inflammation. And there’s also really no additional kind of a priori knowledge or scientific reason why there wouldn’t be an effect. Also because we’re an agonist and not an antagonist agent and we’re a cellular agonist, it gives us confidence that Respag should have activity whether the patient is biologic naive or experienced. And of course, there are multiple ways that patients fail those ages, whether it’s tolerability signal or a loss of efficacy signal. Again, in both of those cases, we think Respag has potential.

Julian Harrison, Analyst, BTIG: Very helpful. Thank you.

Conference Operator: Thank you. Our next question will come from Arthur He from HCW. Your line is now open.

Arthur He, Analyst, HCW: Hi, good afternoon, Howard and team. Congrats on the progress here on

Howard Robin, President and Chief Executive Officer, Nektar Therapeutics: the quarter.

Arthur He, Analyst, HCW: So I just had a quick question on the potential of the pivotal study for the rest of the AD. Regarding the biological experience patient cohort, what’s your thoughts around the biological the trial biological therapy? Would that be heavily focused on Dupixent examination or are you going to do kind of the basket patient cohort?

Jonathan Zalevski, Chief Research and Development Officer, Nektar Therapeutics: Yes, thanks, Arthur. That’s a great question. So, you know, our goal is to begin our first phase three study in the first half of next year. At that time, you know, the major approved mechanisms would be the IL-four and IL-thirteen class. Right?

So that would be Dupixent, lebrikizumab, Adbri, trilukizumab as well. And then nimolizumab is also approved as IL-thirty one antagonist that would also be bio experienced. You know, in our case, you know, while the aux forty class will not yet be approved likely, you know, by the time we begin, likely the first entrant will probably reach approval during. Obviously, there aren’t as many people that have taken those drugs yet, but, again, that would also represent a biologic experience to patient population. I hope that answers your question.

Arthur He, Analyst, HCW: Yeah. That makes sense. Thanks, JJ.

Conference Operator: Thank you. Our next question comes from Mayank Mamtani from B. Riley Securities. Your line is open.

Mayank Mamtani, Analyst, B. Riley Securities: Hi, team. Thanks for taking our questions and congrats on a very productive second quarter. As part of the Phase three, was wondering what your expectation for the induction efficacy primary endpoint duration of therapy would be knowing that you’re not getting to the peak easy and itch efficacy at sixteen weeks? And also the thought you might be putting in to get the remit of efficacy signal and obviously, you know, is there anything to learn from the AUX40 trials that are sort of trying to get to a comparable goal? And then I have a couple of follow-up.

Jonathan Zalevski, Chief Research and Development Officer, Nektar Therapeutics: Yeah, sure. Thanks, Mayank. So one of the things that our Phase 2b study really gave us clear understanding of is the dose level and the regimen that we want to take forward into our Phase III studies. And we’ve already used since our top line, the results of the study to create a population PK model as well as an exposure response model. As you know, both of those are key components of the end of phase two meeting package that are used to defend the dose level for the phase three.

So we feel very confident with that. We did mention earlier, right, that the way our study is designed is we have multiple portions of the study where patients are ongoing longer duration of treatment beyond week sixteen. We’re very excited about the data cut that we talked about earlier in our call because that really starts to really sort of drill down right into what are those effects and the potential of deepening responses when patients are treated beyond sixteen weeks. For example, we know for some contemporary phase three studies, there’s been a trend to move to longer induction endpoints. We also feel like we haven’t quite even yet reached or seen the maximum efficacy of RasPAC.

We think that’s ongoing as people take more treatment, there’s a strong potential that we can see deepening. So as we move forward into our end of phase two meeting, we’ll also clarify and propose the duration of our induction. And also of course the maintenance arms that we’re testing in phase two now, those are both Q4 and Q12. But we’ll also get more information about how we want to take forward maintenance regimens. So both the duration of induction and then the maintenance portion of those studies.

And we’re planning fifty two week studies in our phase three program. Your other question was about the remitted potential. And so I want to first just remind everyone that the way the phase 2b is designed is we had a sixteen week induction that was followed by a thirty six week maintenance or escape depending on how patients ended their sixteen week. And then there’s a fifty two week off drug follow-up. So our intention is to treat people for a year and then follow them for a year off drug to assess, you know, remission or assess durability and stability or at the very least this prolongation of efficacy after you stop treatment.

So our phase two study is really poised to give us an even richer dataset than we obtained after our twelve week induction in the phase 1b study. So the way that we would be looking to leverage that in our phase three program is actually gonna be similar to what you mentioned, both the enalizumab and the rocantalumumab programs are doing. You do treatment withdrawal you know, at different points in those studies and our goal would be to do that kind of an approach. So for example, one way we might approach this is that we would do a fifty two week treatment. And then in our long term extension, we would have a randomized withdrawal component, so that we would be assessing both remitted potential as well as long term treatment in a blinded, you know, randomized withdrawal fashion.

Mayank Mamtani, Analyst, B. Riley Securities: Thanks. Very helpful, JZ. And maybe just staying in that same topic of learning from OX40, the alopecia data we’ve seen so far maybe doesn’t get up to the benchmarks you shared for JAK inhibitors, was just curious given that, you know, you’re somewhere in the middle in AD, does that read through to the alopecia trial? And maybe just lastly for Howard, any updates on the Lilly litigation And if your belief, you know, with the Resolve AD results now with you, any changes to your belief in the outcome and the related liabilities that you might be claiming? Thanks for taking the questions.

Howard Robin, President and Chief Executive Officer, Nektar Therapeutics: Sure. Me, you want to, JZ, don’t you start and then I’ll take the Lilly question.

Jonathan Zalevski, Chief Research and Development Officer, Nektar Therapeutics: Yeah, sure. Yeah, I’ll start with the alopecia. So firstly, remember, we have a thirty six week endpoint in alopecia. And remember, we just discussed about longer duration of dosing beyond week sixteen. So I urge you to keep those two things in mind.

We think there’s an opportunity for very exciting outcome for us in alopecia areata. And we use the JAK inhibitor as benchmarks but again, there’s really not been a biologic that has established itself in this space and we’re very excited with our mechanism to do that. And so we think that if anything, the read through that we have from atopic derm is a positive read through onto alopecia. And Howard, I’ll turn it over to you.

Howard Robin, President and Chief Executive Officer, Nektar Therapeutics: Okay. Yeah, let me obviously, we’re not going to we certainly can’t comment on the Lilly lawsuit. I think we are very committed to pursuing it. Based upon the ResBeg data that we reported and the data that’s developing, I think we believe the potential for this program is significant and will drive a lot of valuation from others. So I think the lawsuit is something that really will let me put it this way.

The results that we have seen so far from ResBag, I think will help us with the lawsuit. And I certainly don’t think that we are in any position to comment on the specifics other than to say that we’re highly committed to pursuing this, and we do believe we were significantly injured by Lilly. In any case, for example, the program was delayed by a few years in the marketplace. So you can calculate out what that means in the long term. So overall, I think we have a strong position.

We’re going to follow or we’re going to pursue this lawsuit to its completion. And I think we’re pleased with the way it’s going.

Mayank Mamtani, Analyst, B. Riley Securities: Appreciate the color, Dean. Thank you.

Conference Operator: Thank you. Our next question will come from Cha Cha Yang from Jefferies. Your line is open.

Chacha Yang, Analyst, Jefferies: Hi. Can you hear me?

Chung, Analyst, OpCo: Yes.

Chacha Yang, Analyst, Jefferies: Okay. Wonderful. Hi. This is Chacha on for Roger Song. I was hoping, that you could give us any updates on your studies being done to better understand the ISRs, whether that’s from a mechanistic perspective, or if you could give us any updates in regards to developing strategies for mitigating them upon commercialization.

Jonathan Zalevski, Chief Research and Development Officer, Nektar Therapeutics: Sure. Yes, thanks for the question, Chacha. So in our studies we have been assessing the biology of ISR using various methods. One that’s been quite useful for us is using a primary skin organoid cultures, using skin that’s obtained from tummy tuck surgery. It’s very useful because that’s abdominal skin, and we, you know, inject the abdomen.

Right? So one of the things that we’ve learned, you know, so far is that this is really as we’ve known for a long time and IL-two effect. So IL-two is known to cause injection site reactions. And that was discovered in the late 80s and early 90s when subcutaneous studies started being done with the molecule. And so the pathways that we see induced are related to IL-two.

And that’s actually a great observation for us to be able to model those in the organoid culture. We can study them at the mRNA level and the pathway level. And then that gives us opportunities to be very specific with the kind of mitigation approaches that we can use because we know which pathways are firing and we can even identify the cells that are signaling the most. Another important element for us is that we’ve been operating the program basically using drug in a vial and then the drug is drawn up at the study sites and administered to the patient subcutaneously by the healthcare practitioner. But we’ll be launching with product presentation in a prefilled syringe package into an auto injector.

And we know that will have a positive effect because that will really standardize you know, the drug administration, the needle depth, the rate, the needle itself will be dry, plus all the things that we’re learning from these biological approaches. We’ll be doing all of those things while the phase three program is ongoing, And we look to incorporate those into the auto injector that we’ll have at the time of launch.

Howard Robin, President and Chief Executive Officer, Nektar Therapeutics: Yeah, let me also add to that. Think, look, think from a marketing point of view, it’s not a barrier at all. The patients we had, I think, two patients drop out of the trial for injection site reactions. Most patients, they were mild to moderate. They self resolved.

They did not stop taking the drug because of them. And while we did have a lot of patients that had an injection site reaction, they may have only had one or two, and they didn’t have any further injection site reactions. Sometimes patients went months before they had one, and then they had one. And then they didn’t have any more. So you have to really understand what happened here with injection site reactions.

It’s not that a large percentage of patients get them on every injection. That is not the case at all. And in any case, of them were mild and the patients didn’t seem to care. So I think when you look at the problems associated with IL-thirteen drugs, such as conjunctivitis, infections, I think that’s actually much more concerning than mild to moderate self resolving injection site reactions. I think Jay Z made a very excellent point.

I think a lot of that will be cleared up by an auto injector. I think there’s a lot of I don’t want to say sloppiness, but a lot of inconsistency in the way patients administer the drug themselves. They put it in a vial, it’s a wet needle, etcetera, etcetera. An auto injector should solve a number of those issues. And in any case, the level of ISRs that we saw, I don’t think are meaningful from a marketing point of view.

Chacha Yang, Analyst, Jefferies: Okay. Thank you.

Conference Operator: Thank you. Our next question comes from Alex Ramsey from William Blair. Your line is now open.

Corinne Franklin, Investor Relations, Nektar Therapeutics0: Hi, thanks so much for taking our question. This is Alex Ramsey on for Andy Hsieh at William Blair. So just going back to the potential emitve effect of Rezpeg and atopic derm, that’s something that we’ve been curious about. And so we have upcoming maintenance data in early next year. And we’re just curious about what data points or efficacy bar at this readout could be suggestive of aromatic effect or if we will need to wait until 2027 to get a gauge on this potential advantage of the regimen.

So that’s part one. And then part two is do you have a sense of how much how to blunt disease recurrence to achieve a true emit of effect?

Jonathan Zalevski, Chief Research and Development Officer, Nektar Therapeutics: Yeah, thanks, Alex. Those are great questions. So starting with the first one, so with remit of effect, the data in this part of the phase 2b RESOLVE AD study is still on treatment data. So for the people that exited week 16 induction that had an easy 50 or better, right, they moved into the maintenance arms. And in the maintenance arms, they stayed on the same dose level that they were on at induction, but they switched to either a once a month or a once every three months regimen.

And then they were on that regimen for thirty six weeks. The data that we’ll be presenting in the first quarter of next year, that will still be on treatment data. So I’ll get to your remit of question for part two in a second. But just to specify, yeah, that first quarter twenty twenty six data set will be treatment data. But we will have a very low frequency treatment component.

There will be a number of people, about half of the people that entered into maintenance will be on a Q12 week regimen. So we will be looking at a very low frequency dosing and comparing that to a Q4 week. And earlier in the call, we talked a few times about the potential, you know, deepening responses and the things that we’re really interested to look for in the maintenance with ongoing dosing is, for example, the proportion of people that entered that had an easy 50, but not an easy 75. So how many of them deepened to 75? How many of the easy 75 people deepened to 90 and so forth?

And also looking at the people that had a response at the week sixteen induction, how durable was that in the sense that with ongoing dosing, did they lose or keep that response? So those are the two main buckets of data analyses that we’ll be looking at. And in the escape barn, we’ll be looking at elements like the crossover population and so on when you move everyone to the high dose. So that next part really addresses duration and fifty two weeks treatment. That’s a very good marker for us, you know, for the overall treatment length.

Then the second question you had about the remitted effect was, is there a certain depth of disease that you need to reach before you would have, the best durability? I think it’s a really great question. I mean, certainly a person that reaches easy 75 and a person that reaches easy 90, those are two different levels of efficacy. It’s a really important question to ask is, is there more remission in an EASI 90 person or is it the same as in an EASI 90 and an EASI 75 individual? The only data that we really have to address that is from our phase one.

And in the phase one, we saw that people that had an IgA response at week twelve and that had an IgA response at week forty eight, even though they stopped treatment at week twelve, had about 80% IGA maintenance and about 70% EZ75 maintenance across that kind of six month time horizon in the six month off drug period. So that data might hint that there may be a little bit better, you know, remitted effect in people that have a deeper disease. But I think it really needs a lot more data, you know, to really be sure of that. And I’m excited to see some of the other mechanisms that we’ll be trying to address that as well, such as the OX40 mechanisms that are both including treatment free intervals in their phase three programs. Thanks for your question.

Corinne Franklin, Investor Relations, Nektar Therapeutics0: Thank you. That is super helpful. Really appreciate the added color.

Conference Operator: Thank you. And our next question comes from Jessica Fye from JPMorgan. Your line is open.

Corinne Franklin, Investor Relations, Nektar Therapeutics1: Hey, guys. Good evening. Thanks for taking my questions. For RespEG for AD, can you just speak to your comfort level with the powering of the maintenance phase of that trial after the dropouts in the induction portion? I think you had sort of planned for some attrition here.

Just wanna make sure that you still feel good about the powering for the the maintenance phase. And I think when you kinda presented the top line induction data in AD, we’re sort of benchmarking off of aux 40. Can you just spend a minute talking about why you think that’s the right comp for this product? Thank you.

Jonathan Zalevski, Chief Research and Development Officer, Nektar Therapeutics: Sure. Yeah. Thanks, Jess. So firstly, as as we reported in June, we had a 190 people that moved into the maintenance arm. So we think that’s a good population.

It’s actually right in line with what we’ve modeled that will cross over. And that modeling was based on other phase two studies and similar phase two patient populations, similar statistical methods used during induction. And then of course, heavily driven by our phase one data and our phase one results. So we’re pretty happy with the number of people that moved into the maintenance portion. And very much to your point, because we wanted to assess two regimens.

Right? You’re basically randomizing them one to one. The people that were on placebo, and there was a handful, It was less than thirty percent. Those stay on placebo, but everyone else is on Respag, right? And then they’re randomized one to one on either once a month or once every three months regimen.

So we’re right in line with how we designed the study, but we feel pretty good about that. And then to your next question about benchmarking to AUX40. For us, it was really informative when we started to very closely compare the phase two studies. The study designs, the patient populations and other elements. And when we looked at that, we saw that kind of the health authority keeps sort of driving you to more and more rigorous statistical designs, right?

As you have more and more entrants approaching through later stage clinical development. And that’s common, all regulators like to do that, it really pushes the bar. And so we noticed that our study design, our statistical handling, even our sizes and patient populations and even geographic footprint was really much more similar to the AUX40 Phase 2b studies. The other studies like DUPI, I mean that was done many, many years ago, well over ten years ago. Very different patient population.

And Trello which came next, same, a very different patient population. Also as you looked at new mechanisms, for us looking at Respag is a completely novel and first in class mechanism in atopic derm and looking at the OX40 class which was novel relative to the LF13. So we focused that as one of our areas of comparison for those reasons. But of course you have to consider all of it as well and that’s why we showed all of the agents that are approved, including the ones in Phase III.

Corinne Franklin, Investor Relations, Nektar Therapeutics: Thank you.

Conference Operator: Thank you. And I am showing no further questions from our phone lines. I’d now like to pass it back to Howard Robin for any closing remarks.

Howard Robin, President and Chief Executive Officer, Nektar Therapeutics: Well, you, Crystal. Before we close, I want to thank the new and existing investors that supported our recent capital raise. And we are truly grateful for your support as shareholders. I also want to thank our employees for their dedication and extremely hard work. And we look forward to delivering additional data updates later this year and engaging with regulators on our Phase III program.

So thank you for joining us today, and please stay tuned.

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

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