Nektar Therapeutics (NKTR) Earnings Call Transcript & Summary

Hello, everyone, and welcome to the Jefferies Healthcare Conference. I'm Dave Steinberg, analyst at Jefferies. And we are delighted to have with us this afternoon, the management of Nektar. With us today will be Wei Lin, who's Head of Development; and also Jennifer Ruddock, Head of Investor Relations. So there's a lot to talk about. ASCO just got over, EULAR is coming up. And with that, Wei Lin, take it away.

Okay. Well, thank you so much for the invitation to speak at Jefferies. So we've prepared a slide deck to share with the latest update about our status at Nektar Therapeutics. And if we go on to the next slide, the Slide 3. So Slide 3 really highlights the breadth and scope of the program at Nektar. We have transitioned ourselves into an immuno-oncology company with a strong focus in our IL pipeline. And in addition, we have ongoing collaborations with both Eli Lilly and as well as Gilead in immunology and virology. So focus on our IL pipeline. Our most advanced program and the one that has brought us through breadth is in collaboration with BMS, and that's how our bempegaldesleukin program, and that's the PEGylated IL-2. It's in combination with nivolumab in 4 tumor types and across 7 indications, and that includes metastatic melanoma, adjuvant melanoma, RCC in the first-line setting with a doublet and as well as BMS's -- will be operationalized a dose optimization finding study for a triplet combination that we're taking to RCC as well. In the bladder space, we have ongoing studies in both first-line metastatic bladder as well as earlier stage muscle-invasive bladder cancer and in non-small cell lung cancer, both EMS and Nektar are doing combinations independently with nivolumab as well as pembrolizumab to enable future Phase III studies in that line of therapy. In addition, we have numerous collaborations with several companies, including Vaccibody and BioXcel and others, and we are engaged in dialogue with expanding that scope of the study. And moving on further, we have 2 additional IL agents. One is interleukin-15 based PEGylated that's Nektar-255. We have a really broad exciting development program that's just being kicked off. We currently have a heme study that's focused on combination with ADCC molecules like daratumumab as well as rituximab going into non-Hodgkin's lymphoma and multiple myeloma. And we plan to open this summer, a solid tumor study to be able to open up additional indications also based on our ADCC mechanism. And we're also looking at future studies in heme to allow IL-15 to be or 255 to be really developed in the cell therapy space. So that -- and then finally, in IL pipeline, we have a 262 molecule which is a toll-like receptor 7/8 agonist. And that -- we have identifier recommended Phase II dose in the first half of this year, and we're well into our expansion in relapsed/refractory melanoma indication. The collaboration with Lilly covers a number of autoimmune diseases, including lupus, psoriasis and atopic dermatitis. And virology program is being carried out with Gilead. Currently, it's in the preclinical stage with work enabling future development of R-255 within the virology space. Next slide, please. So here's just some anticipated milestones. I think some of these have been really addressed in our earnings calls, and we'd be happy to discuss some of these in the Q&A section. But really, I think the key highlight is we had 2 landmark payments this year with the already opened muscle-invasive bladder cancer study. And then a second half of the year, we'll be opening our adjuvant melanoma study. So both would be a $25 million payment, respectively. Next slide, please. So here's covers the whole breadth of our IL pipeline, really harnessing both innate immunity with our toll-like receptor 7/8 agonist, 262, as well as the on the adaptive immunity side, leveraging the potent activity of IL-2 for effector T cells within IL space as well as there's a 358 molecule, which expands the regulatory T cells in the autoimmune space and that's being developed with Lilly. And on the 255, is really leveraging its activity on NK cells as well as effector T cells and really having development plans focusing on ADCC monoclonal antibodies as well as CAR cell therapy. Next slide, please. So we are focused on bempeg. So bempeg is a PEGylated IL-2 because IL-2 can activate as well as regulate and suppress immune system molecules designed with 6 PEGylation that can be hydrolyzed over time. And the hydrolysis exposed first effector T cell activation side of the molecule and as a really important molecule to be used in combination with other IL activations. Next slide, please. So this is the data we feel really proud of because it garnered us a breakthrough designation for bempeg in first-line metastatic melanoma. That's the first time FDA has given a BTD in the first-line setting for melanoma. And it's also the first time they've given it for a breakthrough destination based on complete response rate in solid tumors. So if you look at the table on the right-hand side, we have achieved a response rate of 53%, a CR rate of 34%. And then those activities are really strong across all high-risk subgroups, including patients who are high in LDH who have liver metastasis. In fact, all 5 patients with liver metastasis have achieved complete responses and also the activities across all PD-L1 expression subgroups. It's highly active and acts really fast with an onset of activity at 2 months and a time to CR rate of about 8 months. And on the graph on the left-hand side, as you can see, it's one of the salient features of our IL-2 molecule, bempeg, which is the continued deepening response over time. And so over the course of nearly year from 2018 to 2019, we have deepened response demonstrated in a number of patients who initially achieved a partial response, and those are highlighted with the white arrow pointing downward. So at the upper end of the white arrow were the response rate that were presented at SITC 2018, and then when that data was updated a year later in SITC 2019, as you can see, a number of patients had continued deepened response and at least 4 patients have complete reduction of tumor, visible tumor where it was only a part response beforehand. So and this concordantly well with what FDA has demonstrated had presented ASCO 2019, which is these type of deepened response are very strongly correlated with progression-free survival as well as overall survival. And that's what gave FDA confidence that this could -- has potential to be transformative in first-line metastatic melanoma translated into survival, and that's the basis for the breakthrough designation. Next slide, please. And this is, as I highlighted before, the correlation between depth response and progression-free survival or overall survival. This is a Kaplan-Meier analysis of the PFS back in SITC 2019, so the past November. And since then, we have continued -- even longer follow-up than 18.6. Now we've exceeded 21 month of follow-up, and we have still not reached a progression-free survival meeting, which means that it's likely would be longer than 20 months of meeting for this cohort patients from PIVOT-02. And that compared very, very nicely against the historical number of nearly 7 months for nivolumab single agent and then less than 12 months for nivo plus ipi. So this give us high degree of confidence as we continue to follow these patients that if these numbers translate into registrational Phase III trials that are ongoing, then we should have a really high chance of success and really change the standard of care in first-line metastatic melanoma. Next slide, please. So this is just the highlight. We continue to update our data. We published our PIVOT-02 manuscript in Cancer Discovery. It's just a shout out. The results really suggest that bempeg plus nivolumab has substantial therapeutic potential for patients with poor prognostic risk factors in response to PD-L1 blockade. And this really drives the combination to not only in old patient populations, but especially for the low expressors, patients who do not do well I-O, bempeg should really transform that for those patients. Next slide, please. So here's -- I just lay out the registrational program that I discussed early on. Really 2 -- we have a very, very broad program in melanoma, in RCC and bladder. Both in melanoma and bladder. We have programs both in first-line metastatic as well as in the early disease setting with adjuvant trials in melanoma as well as muscle-invasive bladder cancer. In RCC, with ongoing study in first line, and then we plan to engage once we have identified a regimen piece to dose based on those finding studies in additional study in RCC with a triplet combination. In non-small cell lung cancer, we hope to provide some data in this year, beginning next year on our PROPEL study, and that hopefully will engage registrational study in first line non-small cell lung cancer. Next slide, please. This is just to share with people the study design from adjuvant trial that we'll be opening in the second half this year. We're really excited about this study. It's going to be have a nearly 1,000-patient study. And currently, either nivo or pembro monotherapy checkpoint is a standard of care for adjuvant therapy. And I think the excitement we have around the combination of bempeg with nivo, especially what we've seen in metastatic disease setting, give us high degree of confidence to proceed with early disease and really try to change the standard of care in the adjuvant study. Next slide, please. So this is the PROPEL study, and so worthwhile to review this a bit. This has become the basis for our lung program in first-line non-small cell lung cancer. We have, in this study, embedded 2 separate cohorts. One is dose optimization. The other is expansion in non-small cell lung cancer. For the dose optimization, our motivation is really to -- given what we know about AE management, we believe that we can perhaps push the dose even higher. While in disease such as bladder and melanoma, we've seen good activity that has not only enabled us, along with our partner, BMS, to open registrational studies in [ brided ] indications but also garnered our breakthrough designation, first-line metastatic melanoma. So the 6 microgram dose is certainly very active in combination with nivolumab in those indications with undertaking. But I think for a disease such as lung cancer, where really the substantial activity of monotherapy really seen in the 50% above PD-L1 expresser, we believe that a higher dose of bempeg would be able to deliver based on the mechanism that we know the patients with poor responses to checkpoint single agents, which are moving to 1-49 and even further down in PD-L1 less than 1 with a negative population. And we believe a higher dose will be more helpful in diseases such as non-small cell lung cancer. Furthermore, we learned a lot about how to manage the AEs, and we believe we can go on an even higher dose and that can be both tolerable and also of manageable toxicity. So that's one part of the study. The other part is really splitting out around 60 patients into the different expressing groups and then testing out in respectively 20-patient cohort looking for activities that would actually help us to decide which patient population may benefit at the most with the bempeg plus pembro combination. And a similar study is being conducted by BMS with nivolumab combination, and we're working together to try to decide what is the best Phase III design, what's the best combination of [indiscernible] first-line non-small cell lung cancer. Next slide, please. So this -- then moving on to our next molecule, 262, our toll-like receptor 7/8. Next slide, please. So this is active in innate immunity. So this mechanism really should work well for patients who have failed initial checkpoint and need us to reignite the fire, and the innate immunity is very potent in drawing in the adaptive immunity. And this is intratumor injection of toll-like receptor, and this model has been also similarly developed by other companies with the toll-like receptor 9. And our focus is on 7/8, and we have identified a recommended Phase III dose based on what we've seen in terms of PK/PD and especially gene expression modulation of the tumor site based on treatment biopsies, and we're moving forward with the recommended Phase III dose into 2 separate expansions. 1 expansion is a combination of 262 with bempeg. And the other combination is that doublet plus nivolumab and both in relapsed/refractory melanoma to really change standard of care. And for those patients who have exhausted the I-O option. Next slide, please. So finally, the 255. The 255 molecule, IL-15 is certainly very exciting right now. There are a number of companies developing IL-15-based therapeutics. We think our molecule is highly differentiated because ours is only one based on our proprietary PEGylation technology, both in terms of exposure time as well as the timing for our dosing. We have a lot more flexibility than some of the other pure biologic platforms. And so we're really excited about this program as well. Next slide, please. So staying on the top of 255, the 2 population -- the 2 cellular type populations that we're trying to address is, one, expanding the NK cells and the other is the CD8 effector T cells. The NK cells is really important for executing the ADCC mechanism. That's a basis for most of the monoclonal therapy currently part of the standard of care in across all of oncology that include rituximab, Herceptin, daratumumab plus Erbitux and a variety of other [ AE ] agents. And then these cells, the CD8 expansion, that would help us to really go after current excitement in cell therapy, especially RT. So this is the basis for our future development plan with our Nektar 255 molecule. Next slide, please. So here's just some of the preclinical data that we've generated that we believe really demonstrate 25 -- concept 255 combining with daratumumab. As you can see, the substantial cell expansion when 255 is being added with daratumumab in terms of the NK cell as well as lymphocyte expansion. And then in the animal model, the lymphoma model, it has superior efficacy and longer survival compared to daratumumab alone. Next slide, please. And here's additional data really to demonstrate toward a unique feature of 255 in not only expanding the effector cell and NK cell, but also making them activated and generated the granzyme release, which is really what the basis for their -- the activity in killing cancer cells. Next slide, please. And so here's a trial design for our initial first-in-human study. This is a dose escalation we're currently on where we just enrolled the first cohort. And we're already seeing activity of the molecule, both in terms of modulation of the PD as well as biomarker gene expression as well as symptomatology in the patients who're being dosed. And our goal is to arrive at a recommended Phase II dose sometime this year and expanding into 3 different cohorts in patients who failed cell therapy, in patients who failed all lines of therapy in multiple myeloma and patients who failed all lines of therapy in non-Hodgkin's lymphoma. And the latter 2 really combination with daratumumab and rituximab to leverage the ADCC mechanism I highlighted before. Next slide, please. So we have ongoing collaboration with Janssen because of our interest in work in the ADCC mechanism, and they have a substantial pipeline in that respect. Next slide, please. And also a close collaboration with Gilead in the virology space, where both the NK as well as the T cell biology should really help in dealing with viral diseases. Next slide, please. And finally just touch base -- touch some highlights about the 358 molecule. 358 is the flip side of our bempeg. It was designed to really -- to work on expanding the regulatory T-cells to really suppress immune system. And it's an ideal drug to be developed in the autoimmune space. Next slide, please. And here's some of the early phase data that we have really presented at EULAR 2019, showing that successive dose escalation, we're able to expand the Treg population, especially in regard to the overall T cell population concentration in proportion of T cell, the Tregs gets expanded with introduction of 358. And then on the right-hand side, is really changes in the Tregs. Next slide, please. So finally, so we have 15-fold expansion of the Treg population. And the development plan is really, right now, we have identified our dose, and we handed the program over to Lilly, our partner, in this undertaking, and they'll be operationalizing both the proof-of-concept as well as registrational studies. And we will continue to remain a partner in the whole endeavor as well as having commercial interest, if this drug were to get approved. And the indication to be exploring include psoriasis, atopic dermatitis as well as lupus. And there will be additional indications that'll be shared for another autoimmune diseases. Next slide, please.

We have reached the conclusion, Wei.

Yes. Okay.

Thank you, Wei Lin. I don't see any questions in the queue. We have 1 minute left, so I'll ask one. Obviously, Nektar has a very, very broad pipeline with many clinical trials ongoing. Real quickly, many companies are seeing delays in some starts of trials or pauses in others. What are you seeing? And importantly, everyone is going to be on the lookout for your registrational Phase III readout? I believe your first one is first-line metastatic melanoma. What is the latest timing and when that will be -- when that data set will be available?

Yes. So the guidance we provided is -- so the first readout based on a response rate endpoint. And then we had projected out that in Q1, the data should be mature and available. And then so it depends on the other process, data cleaning and readout to be sometime in Q1 versus Q2. So that's the -- that's study being operational by BMS. So that's the latest time line that gets shared with us. So as things evolve, we will certainly update public, but that's the current guiding post. And then the next readout for melanoma will be based on PFS, and that would enable us to gain approval. And then -- so the PFS is more of an event driven, and so that would occur after their response. And the other thing we shared publicly is we're in discussion with health authorities regarding the endpoint of ORR versus CRR as the best response based and that's ongoing dialogue.

I just want to clarify that we have seen what we believe will be at least a 3- to 6-month delay in the BMS study. They have not provided us with a reprojection, but we did move our guidance from Q1 potentially, also all the way out to Q3 based upon our projections, while we wait for BMS to assess the slowdown or potential slowdown in enrollment from COVID. But we haven't seen that in our own studies.

Okay. Well, Wei Lin and Jennifer, that was a very comprehensive and excellent presentation. We're exactly out of time. Appreciate you joining. And for everyone in the audience, thank you for listening in, and I hope everyone has a great day. Thank you.

Thank you very much.