Nektar Therapeutics (NKTR) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. And welcome to the webcast conference call for analysts at EULAR. [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ms. Vivian Wu, part of the Investor Relations team at Nektar. Ma'am, you may begin.

Good morning, everyone, and thank you for joining us on today's analyst call to review data presented for NKTR-358 at the Virtual 2020 Annual European Congress of Rheumatology, also known as 2020 EULAR. Joining us today are Dr. Jonathan Zalevsky, our Chief R&D Officer; Dr. Brian Kotzin, our Head of Immunology at Nektar and Program Lead for NKTR-358 with our partner, Eli Lilly and Company; and Jennifer Ruddock, our Head of Strategy and Corporate Affairs. JZ will present some background material and then review the data presented at the Congress, and then we will open it up to Q&A. Before we start, I'll remind you that this presentation includes forward-looking statements regarding Nektar's drug candidate, NKTR-358, and other potential drug candidates, the timing and -- the start and conclusion of ongoing or planned clinical trials with partners and future availability of clinical trial data. Actual results could differ materially, and these statements are subject to important risks detailed in Nektar's filing with the SEC, including the Form 10-Q filed on May 8, 2020. Nektar undertakes no obligation to update forward-looking statements as a result of new information or otherwise. With that, I'd like to hand the call over to Dr. Jonathan Zalevsky.

Thank you, Vivian, and thank you, everyone, for joining us today. I'll start today with a little bit of background of why we and our partner, Lilly, developed an interest in the T regulatory cell mechanism in the field for autoimmune disease. So we know that in the immune system, there are effector T cells that mediate normal protective immune functions. For those with autoimmune disease, these effector T cells don't work properly as a consequence of distorted T effector and T regulatory cell balance. So this actually then suggests that if we could get at the core imbalance of these 2 cell populations, we could perhaps better treat autoimmune disease but in a way that resolves the underlying problem rather than just attacking the symptomology of these diseases. And with an understanding of the function of IL-2 as a natural cytokine and IL-2's ability to influence both of these cell populations, it seems a natural place to start to address this imbalance. In fact, in early experiments with IL-2-deficient mice, we know that these mice were incapable of producing T regulatory cells, and this led to those animals developing severe inflammation and multi-organ autoimmunity. And in humans, we also know that many autoimmune disorders, such as lupus, are associated with reduced numbers of Treg cells as well as reduced functionality of Tregs and also generally lower levels of systemic IL-2. Now, why IL-2 and autoimmune disease? First, as I just reviewed, interleukin-2 is key to the biology of Tregs and also, very importantly, interleukin-2 mechanisms of action are very well understood. And I will show you in a minute some studies that were completed to demonstrate that low dose IL-2 stimulates and expands the Tregs with some results in various autoimmune disease states but with the limitations on the ability of IL-2 to increase dose. And so this is what opened a major opportunity for us. Second, IL-2 also has been proven to block the differentiation of T follicular helper cells, which is a class of T cells that controls antibody production and also that controls auto anti production -- autoantibody production in the same way. And so by blocking the differentiation of these T follicular helper cells, IL-2 has a potential to control the effector antibody-mediating autoimmune response, sometimes also known as the humoral response. And finally, another main property of IL-2 is that it also blocks the differentiation of pro-inflammatory Th17 cells, another subset of cells that are really key to driving certain kinds of inflammation in many different conditions. And IL-2, by blocking of Th17 differentiation, has the potential to control those kinds of pathological inflammatory states. And now all of these properties are translated very well in positive preclinical results obtained in over 30 different experimental autoimmune inflammatory diseases in mice. And this is important research done by many pioneers, chief among them, Dr. David Klatzmann and his laboratories at the Sorbonne. And then Dr. Klatzmann was able to further translate this work into patients in several disease settings. So here is a 2011 study where Dr. Klatzmann did the proof-of-concept work to show that IL-2 has the potential for treatment of autoimmune disease. And this is a paper published in 2011 in the New England Journal of Medicine and focusing on 10 patients with vasculitis. And here, you can see that the administration of low dose IL-2, during 1 injection per day for 5 days, leads to an increase in the Tregs. And that this increase of the Tregs is correlated with the clinical improvement of the patients, which you can see with the different color bars here along on the bottom, where we show each color bar reflects a symptom. And they observed clinical improvements in 8 out of 10 patients. And they also showed in that paper that IL-2 has a very broad anti-inflammatory effect. And now moving on to the setting of graft-versus-host disease. And so chronic graft-versus-host disease, they can be described as being not an autoimmune disease per se, but an autoimmune or allogeneic inflammatory disease. And here, they measure the improvement of skin lesions that are actually approved by treatment with low to intermediate dose of IL-2. About 20 of the 35 patients demonstrated clinical response. And importantly, there was also a reduction in the steroid usage in these patients. And as you can see on this slide, in the upper right quadrant, there was a three- to fivefold increase in regulatory T cells, achieved after treatment of low dose IL-2. And in the lower part of this figure on the right, you can see that in red, there is an increase of Tregs all along the treatment time. And you do see here also an increase in NK cells, is actually very [ marked ] here, because 1 thing we have to stress is that they administered 2 million units more per patient every day for many weeks. Which, in the end, is not really a low IL-2 dose. It's more of an intermediate dosage of IL-2. Now then came the result of the patient with SLE, where efficacy was observed in this patient with low-dose IL-2 administration. This was a female patient who was refractory to any other therapeutic attempt, has a severe disease with the SELENA-SLEDAI score of 14. And what's shown on the left-hand part of the figure is that the score really dramatically decreased and decreased relatively quickly even after the first dosage of IL-2, and then was maintained all along the treatment period. And at the same time, the patient was also able to reduce the amount of corticosteroid use. And now we'll move to the TRANSREG study results. Now additionally, out of the Sorbonne and David Klatzmann's laboratory, they wanted to examine low dose IL-2 across a range of autoimmune disease states. And first, they were looking at whether low dose IL-2 can stimulate Tregs equally well or may it stimulate to different levels in patients with different autoimmune diseases. And they really wanted to measure the various levels of efficacy that could be achieved from low dose IL-2, and then correlate it to the amount of Treg elevation and then decide where to continue to expand patient population into those autoimmune disease types. And Dr. Klatzmann ran a Phase IIa trial with 132 patients with 11 different autoimmune diseases, which we don't have the time to list and explain all of the diseases or why they chose them. But I'll summarize here, all the patients received the same treatment. They had, of course, common and specific criteria for inclusion and for entry based on evaluation. And most of the patients had no concomitant treatment issues and they had moderate disease. So now let's move on to the approach as to design that we've taken with NKTR-358. NKTR-358 is a PEGylated recombinant human IL-2. The IL-2 component has the identical sequence as Aldesleukin. We have designed NKTR-358 using a unique PEGylation approach, which adds 3 key components to the design. First, a PEG chain is permanently attached in NKTR-358. Second, NKTR-358 is an immediate release product that is biologically active upon administration. And third, NKTR-358 is intended as a subcutaneous product to be eventually self-administered by the patient in its final form. As shown on the left-hand side of the slide, NKTR-358 binds to the high-affinity IL-2 receptor, composed of the receptors alpha, beta and gamma components. When compared to IL-2, the PEG conjugation decreases the affinity of the module for all the IL-2 receptor components, thereby favoring binding only to the high-affinity receptor. Furthermore, the PEG conjugation alters the binding bias for the IL-2 receptor alpha and IL-2 receptor beta components. The PEG conjugation also results in a markedly prolonged half-life after injection, when compared to IL-2. This is shown on the right-hand side of the slide, NKTR-358 stimulates cells that express the high-affinity IL-2 receptor, namely CD4+ Tregs. In contrast, because of this design, NKTR-358 poorly stimulates conventional T cells, for example, like including effector CD8 CTLs that express predominantly the beta gamma component of the IL-2 receptor. And the overall result is selective stimulation of Tregs, and this gives NKTR-358 essentially the opposite biological activity of bempegaldesleukin. Now I will show you some of the animal data, and then data from last year's EULAR in healthy volunteers just to highlight how quickly we translated NKTR-358's unique design into the clinic and demonstrated a dose-dependent PK/PD profile. Now here is our data in non-human primates. We chose this model because it's the closest immunologically to humans and where we can see activity of NKTR-358 compared to low dose IL-2. We studied a single administration of NKTR-358 in comparison to 5 daily administrations of IL-2 and use flow cytometry to evaluate blood samples for the magnitude and time course of Tregs and Cytotoxic CD8 T cells. In this regard, we want to see an increase in the Tregs without a corresponding increase in CD8 T cell in order to determine the relative selectivity of NKTR-358 for Treg expansion. The results for NKTR-358 are shown on the left and for IL-2 on the right. As you can see, NKTR-358 was far more effective than IL-2 and stimulated a greater magnitude and duration of Treg expansion. NKTR-358 reached about a 15-fold increase in Tregs over baseline, while IL-2 reached about a fourfold increase. The selectivity between on- and off-target effects was also quite notable and showed a favorable effect for NKTR-358, where we observed a large increase in Tregs and essentially no change in CD8 T cells. And here is our data presented at 2019 last year's EULAR, approximately a year ago from today. These are data from our first-in-human study that we conducted with NKTR-358 in healthy volunteers, where we measured effects of administration of subcutaneous single doses in healthy volunteers. And this was presented last year at EULAR and at other medical meetings. But you can see here, we have a very dose-proportional PK curve. This is really what you want to see. In fact, we achieved a maximum concentration about 5 to 7 days post dose, that was the Tmax and Cmax was reached at that time, and we have an estimated elimination half-life of about 8 to 11 days. And this was deliberate to the design of NKTR-358 because the half-life of IL-2 in human serum is only 5 to 7 minutes. And we set out to design a medicine that could be dosed every several weeks. So here, you can really see the impact of the polymer chemistry at dramatically modifying and increasing the half-life of NKTR-358 relative to IL-2. And here is another takeaway from the first-in-human study. This slide shows the effects of NKTR-358 on circulating CD25bright Tregs. The Tregs are identified by expression of CD4 and expression of FoxP3 as well as CD25, so we know we're enumerating correct population. In the left-hand graph, the data are presented as median peak number of CD25bright Tregs expressed as the actual number of cells per microliter in the blood. The dose for each cohort is shown on the horizontal axis. You can see the dose-dependent increase in number of Treg cells and at the highest dose tested, the red bar, there was a 17-fold increase in CD25bright Tregs over the pre dose number, a very, very large increase relative to baseline. The right-hand graph shows the time course for this expansion. The horizontal axis shows the days after administration of NKTR-358, and the arrow indicates the time of dosing. Note that the peak of Treg expansion occurred at approximately days 10 to 12 and that the numbers of Tregs did not return to baseline until after about 20 days post dose. The magnitude and duration of Treg elevation were quite striking and even larger than what we observed in the preclinical studies in non-human primates. Overall, we're very excited to see this robust proof of mechanism for NKTR-358 and direct translation from preclinical to clinical studies. So again, a quick reminder of the data presented from last year's EULAR. This slide shows the changes in numbers of conventional CD4 T cells and CD8 T cells and natural killer cells after administration of NKTR-358 placebo. In contrast to the effect on Tregs, the graph on the top left of the slide shows that there was no increase in the number of CD4 T cells after administration of the drug. Similarly, the graph on the top right-hand side shows that there was also no expansion of CD8 T cells after administration of NKTR-358. And similar to our preclinical study, we did observe some increase in numbers of the CD56+ NK cells, which is shown in the bottom graph. Over the time course of follow-up, we noted low level increases in NK cells and only at the 2 highest doses tested. There was little change in NK number of cell -- in NK cell number at any of the lower doses. We also evaluated the Treg:Tcon ratio. This is a very important ratio because it indicates the specificity of the T cell expansion. And in this analysis, Tcon are defined as CD8 T cells, and we generate the Treg:Tcon ratio by expressing the cells per microliter of blood for each cell population at each time point. In the left-hand graph, the data are presented as median peak Treg:Tcon ratio. The dose for each cohort is shown on the horizontal axis. You can see the dose-dependent increase in Treg:Tcon ratio and at the highest dose tested, the red bar, there was a 15-fold increase in the ratio above the pre-dose number. And the right-hand graph shows the time course. The horizontal axis shows the days after administration. The arrow indicates the time of dosing. Note that the peak of Treg expansion occurred at approximately days 7 to 10 and does not return to baseline until almost 30 days after dosing for the highest dose levels. Thus the overall characterization of NKTR-358 as a Treg specific agent is also highly consistent between our preclinical and clinical studies. So with these promising data in hand, we then designed a Phase Ib study to look at multiple ascending doses in patients with systemic lupus erythematosus, or SLE. To understand whether we'd see the same levels of Treg increases in patients now who are known to have an underlying imbalance in these types of cells. These data were presented at EULAR in a virtual poster session yesterday evening. So here is the study design. It is a randomized, double-blind study where NKTR-358 was administered subcu on an every 2-week dosing regimen. We enrolled 48 patients with mild to moderate disease activity so that these patients could be on stable concomitant medications, and we could better understand the PK profile of NKTR-358 and its peak pharmacodynamic effects. Patients could be on no more than 10 milligrams a day dose of prednisone. Each dose cohort received a total of 3 doses over a 6-week period. 9 patients in each cohort had active drug and 3 patients received placebo. We escalated from 3-micrograms per kilogram doses up to 24-microgram per kilogram dose level. So what we were looking for in this study was to first establish safety and tolerability at each dose level and then hopefully replicate the tolerability profile that we saw in the first-in-human study in healthy volunteers. But this time, to do so in patients. Also, we wanted to look at the time course and change in number as well as activity of various cell populations. Tregs, Tcon cell populations, natural killer cells and the other subsets. We wanted to look at overall changes in cytokine levels, blood cell populations, serum proteins and gene expression as well as to understand the full expression of NKTR-358 activity in patients. Finally, we had exploratory endpoints related to some disease symptomology. But this is not a primary goal of the study as the patients only receive 3 doses each and were really on study treatment for only 6 weeks and had very mild disease at entry. We are presenting today the PK cell population and safety data and additional data, including gene expression, and any trends in disease activity is planned for presentation at a medical meeting later this year. Now with respect to immunophenotyping, we use a variety of standard flow cytometry methodologies to quantify the immune cell subsets. Here are the demographics. The average age was 47 years with a predominantly female enrollment, and this is not unusual as we know that lupus is a disease which presents predominantly in females. And in fact, in our study, 90% of the patients were female. Patients were on a mix of baseline medications, but again, were required to be on stable medication regimens for at least 8 weeks upon entry into the study. And here are our safety results. We saw very similar safety in the 4-dose cohorts as what we observed in the single ascending dose study in healthy volunteers. Importantly, there were no dose-limiting toxicities. AEs were primarily mild to moderate with a few reports of low-grade injection side reactions. We had 1 patient with elevated eosinophil levels at the highest dose level tested. Very importantly, we had no antidrug antibodies detected during the treatment and throughout the entire 79 days of follow-up from all the patients in the study. Here is the PK profile. And as we saw in the healthy volunteer study, we have very dose proportional pharmacokinetics with repeat dosing. And here is the 6-week treatment and follow-up period. NKTR-358 plasma concentrations reached maximum levels in 3 to 6 days and exhibited a terminal half-life of 10 to 13 days. Results were very similar to those obtained in healthy volunteers in the SAD study with maximum concentration reached at 5 to 7 days post dose. Here are the changes in numbers and percentages of Tregs. We see that NKTR-358 elicits sustained and dose-dependent increases in the absolute numbers and percentages of circulating CD25bright Tregs. The Tregs are identified by expression in CD4, FoxP3 as well as CD25bright Tregs. Much as we enumerated them in all of our other studies, including the single ascending dose study in healthy volunteers. At 24-micrograms per kilogram, NKTR-358 [ rode at a ] maximum 12-fold mean peak increase above baseline levels. This suggests a very large increase in the most desired cell population that the drug is intended to induce. So this is a very positive outcome because it showed a very large increase in Tregs in lupus patients that, as we mentioned, have a dysfunctional immune system. The dose proport -- the dose-dependent increase in CD25bright Tregs was also maintained through multiple administrations of NKTR-358. And so now, with this first study on this patient population, we have consistent conclusions on the stimulation of Tregs, and it's very consistent between healthy volunteers and in lupus patients. And it's consistent with repeat administration. We saw CD25bright Treg levels that peaks on day 10, following the first administration, very similar across studies. Treg levels remained above baseline for 25 to 30 days following administration of the last dose, NKTR-358 in the MAD or in the SAD. And we saw Treg activation markers, which included increase in expression intensity of CD25, up-regulation of CTLA-4, Helios as well as other markers also were increased doses greater than 12 mg per kg. And we're not presenting that data here, but we'll cover that data in their future data presentation. And here are the comparison of the single ascending dose study and the first dose induction in Treg cells side by side. So you can see the consistency of the data between these 2 studies. And really, whether we're testing healthy volunteers or lupus patients, the drug is performing quite consistently between these 2 diverse groups of individuals. And now let's shift gears and take a look at T conventional cell numbers. There were no overall changes in Tcon cell numbers over the treatment period as compared to baseline, which is what we wanted to observe here. This really, again, highlights and improves the selectivity of NKTR-358. At the 24-microgram per kilogram NKTR-358 dose, a transient decrease in cell numbers was observed 5 days after the first and third dose. And this was consistent with the observations that we had for the 20- and 28-microgram per kilogram doses in the SAD study. And elevated levels of T cells in 6-microgram per kilogram cohort were driven by 2 patients with higher numbers of T cells throughout the dosing period. And this was not observed in any of the other cohorts, especially in the higher dose cohorts. And here are measurements of NK cells. And we look at the CD56 NK cells. And this, again, shows us that we have very similar data in lupus patients, in the MAD study, as we saw in the SAD study, in healthy volunteers. There were only low level increases of NK cells, and we saw that across doses. At the highest dose tested, 2 patients of the 9 on treatment had higher increases that really drove any of the separation of these binds. So we saw this as an effect that was not very penetrant throughout the entire population. But again, with very similar results between the SAD and MAD studies, high consistency in both patient populations. Now on this slide, we're measuring peak effect fold changes after multiple dosing. And this shows that NKTR-358 maintains selectivity for Treg expansion even after multiple administrations at all the dose levels. We achieved the same peak effect ratio for Tregs to CD8 and the same fold change ratio as well. Again, very consistent with our first Phase I SAD study. And at the highest dose tested in the MAD, we saw a 12-fold increase in the mean peak Treg:Tcon ratio from baseline. We also saw a sevenfold increase in the mean peak Treg:Tcon ratio after the third administration. So in conclusion, the second Phase I study that was conducted to evaluate multiple ascending doses of NKTR-358 in patients with lupus demonstrated that NKTR-358 was safe and well tolerated. This reinforces our earlier findings with single dose administration in healthy volunteers, demonstrating also that the safety profile was very similar between single and repeated administrations. The data show dose proportional PK and prolonged exposure for the half-life of 10 to 13 days. NKTR-358 elicited a market and selective and dose-dependent expansion of proliferating Tregs in patients with lupus, which was maintained through multiple administrations. These data provide us and our partner, Lilly, with the validation to continue testing in patients with lupus as well as other inflammatory diseases. And we are planning to initiate shortly a Phase II trial, which will be run by our partner, Lilly. And here is a link for you to download the poster at your convenience. And I'd like to take a moment to just briefly remind you of the collaboration that we have with Eli Lilly for NKTR-358. As I just stated, Lilly will initiate a Phase II study in lupus in the second half of this year, and we expect to initiate those first clinical sites later this summer. Lilly is conducting 2 additional Phase Ib studies in psoriasis and atopic dermatitis, and these studies are ongoing. But we know that they're temporarily suspending enrollment due to COVID and we talked about this at our earnings call a few weeks ago. When we look forward to the sites, we'll be able to reopen and enroll patients once again in the second half of the year. Lilly is also planning to start an additional Phase II study in a new autoimmune disease, also in the second half of this year. And with the Phase I studies completed by Nektar, Lilly will now take over all of the clinical development program through registrational trials and also assume responsibility for manufacturing. And here are just a reminder of the economics. Nektar received a $150 million upfront payment when the collaboration was struck back in 2017. Nektar could receive up to $250 million in development and regulatory milestones for future work. Maximum development cost sharing of Nektar, 25%; and Lilly, 75%. And Nektar has the opportunity to receive double-digit royalties that increase commensurate with our Phase III investment and also with product sales. And also, Nektar has a co-promote option in the U.S. as well. And finally, I would like to ask Brian Kotzin to briefly review the design of the Phase II study as he worked very closely with Lilly and Nektar teams on the design of this study. Brian?

Thanks, JZ. Hi, everyone. This slide shows the planned NKTR-358 Phase II study design in patients with systemic lupus. The patient population will be similar to other Phase IIb lupus studies in regards to required diagnosis of SLE using ACR classification criteria, positive auto antibodies characteristic of lupus and active clinical disease activity despite standard of care. In this study, patients must have a systemic lupus erythematosus disease activity index that is a SLEDAI-2K greater than or equal to 6, at screening. In addition, patients must have a minimal level of clinical disease activity at baseline, including clinical SLEDAI-2K greater than or equal to 4 and active arthritis or lupus skin disease. Patients will be randomized to 1 of 3 doses or placebo. The primary and key secondary endpoints will be measured at week 24. The primary endpoint is percent of patients achieving at least a 4-point reduction in the SLEDAI-2K scale. Important secondary endpoints include the percent of patients who achieve a systemic lupus response index and SRI-4 response. Or another key secondary endpoint is the BILAG-based BICLA response. And another key secondary endpoint are the percent of patients who achieve low disease activity as defined by the lupus low disease activity state, the LLDAS. We will also characterize pharmacokinetics in the treated subjects. Overall, the design is fairly straightforward for a Phase IIb dose-ranging lupus study. And with Lilly, we are excited to move to this later phase of development in the NKTR-358 program. And with that, I will open it up to questions.

[Operator Instructions] And our first question comes from Alexander Duncan from Piper Sandler.

I have 2. Based on what you know about prior IL-2 studies in lupus, what do you believe that Treg expansion threshold is to achieve clinical remissions? And do you believe this threshold is the same across the disease severity spectrum? And secondly, do you have chronic 358 dosing data in non-human primates? The second and third 358 injections in the MAD study seem to have a decreased peak expansion. And I'm wondering if you found where this Treg expansion level induction levels off over time.

Sure. This is Jonathan Zalevsky. Let me start off by answering your questions. So in your first question, you asked about IL-2 data from historical studies and Treg thresholds. So definitely, there were examples in the presentation earlier today that indicated that with low doses, there were Treg expansions seen about two- to threefold over baseline. And then in John Koreth's study, which was the chronic graft-versus-host study, he went up in dose, right? He used what we'd call probably more of an intermediate dose. And he was able to reach maybe closer to fivefold increase in some patients. But of course, there is a spread, right, that you'd expect because not every patient will have the identical response, both in terms of its peak or the kinetics, of that response. But there are several important benchmarks that have been presented for low dose IL-2, which is those elevations in that two- to fivefold range have been linked with disease improvements. That was seen both in ANCA vasculitis and graft-versus-host. And in the TRANSREG studies that Dr. Klatzmann is running, it's been observed in psoriasis and a handful of other indications as well. So what that does is it definitely sets at least a floor, and we treat it kind of like a floor. So it says that if we can double or triple Tregs, and you can maintain those, right, at least that minimal threshold, that there is a good chance that you can see disease-modifying effects. Now the whole promise of a drug like NKTR-358 is that it can deliver a completely different duration, magnitude and overall growth expansion of Tregs. Much more so than IL-2 can, right? And so in fact, we're able to achieve levels like we saw in multiple presentations, 17-fold after a single dose over a range of studies in SAD. We've reached a 12-fold level here in the MAD, and it's a dose-dependent effect. And so that gives us the chance to really ask this question in a totally different way, not just what you can get if you double or triple them, but let's really push the Treg expansion, let's elevate it into the double-digit level, right? And then let's look at the kind of potential efficacy that, that can give. And that's what we're excited about. That's why we invented NKTR-358. That's what Lilly is very excited about. Because we're really going to be one and the first to be able to even have a chance to ask that question. And then in terms of multiple diseases, lupus and others, I think the TRANSREG data really addresses that. At least it shows for the low dose IL-2, doubling and tripling can induce that level of effect. But I would point you that there is literature that indicates when you have off-target effects with low dose IL-2. For example, like in the setting of diabetes. There, either may be a different threshold, but our belief, scientifically, is that, that's a result of low dose IL-2 and its poor specificity in Treg:Tcon ratio. Whereas with 358, we see a dramatically different and highly improved Treg:Tcon ratio of expansion. And the second question, you asked about chronic administration. So yes, we have indeed -- this study -- when we do, as you know, development in autoimmune disease and really non-cancer indications, the expectation is that you have toxicology that models your human studies. And as Brian presented, we're planning a 24-week Phase IIb dose range finder in lupus. So we have duration of dosing in non-human primate toxicology models that also has that same span. So we have very, very long-term dosing. And in fact, we followed chronic dosing for 6 months, at least in those studies. And so we have a really good sense of what happens. And one of the really important things is we don't see tachyphylaxis with this drug. So the drug is able to induce Tregs and the Tregs remain, and we see a persistence in Treg effects. And we're also -- you'll be able to see we're preparing a manuscript for publication that will also highlight that data as well. So we hope to stay tuned for that. That's something that we should be publishing later this year. And then finally, to your last question. You asked a lot, so you got a 3-parter. You asked questions about the Treg levels upon each dose. And so there's a couple of important things there. So the first is that if you remember in our SAD data, you see a peak of elevation that lasts between 3 and 4 weeks from a single dose. But we chose to dose on a 2-week regimen in the study. So we're definitely giving our second dose in the middle of a peak of expansion. So that's one of the reasons why you don't see the same kind of kinetics, right? Because the cells are in the process of already sort of mobilizing from the first dose when we gave the second dose administration. And that's why we looked at that third dose because that is now -- it's off of the 1-month regimen, which was the 1-month follow period from SAD. And there, we see another increase. We tend to interpret that all of the results that we're seeing are very, very similar between doses, and we saw that at all of the dose levels studied. There's a couple of patients that had some higher increases in the first cycle, which is why you see the higher larger arrow bars, if you look closely at that slide. That shows the highest dose in the first cycle versus the third. And then the arrow bars become very small. So there may have been something about those 2 patients. But in general, we've looked at so many patients in the study, right, and we've had the chance to look at each individual curve across all 3 doses that we gave. And we don't see tachyphylaxis, which is very important, and we didn't see tachyphylaxis in the primates dosing for 6 months. So we feel very confident now moving into the Phase IIb, where we'll be dosing lupus patients for 6 months, much, much longer dose duration there, okay?. Hope that answers your question. I know you asked 3, so I had to talk a lot. If you have any follow-ups, please feel free to jump in.

Our next question comes from Chris Shibutani from Cowen & Company.

This is CJ on for Chris today. One quick follow-up, just to clarify a point JZ just made before in some questions on tolerability. With respect to the arrow bars that we're looking at on the plot, say, of the full changes, I'm guessing those are like errors on the point estimate for the mean. Can you give us a sense of the range of all the patients, maybe at the top dose for their peak? How high did the lowest patient get?

So the effect was dose proportional. I'm sorry, I don't have in front of me like the exact numbers but we can follow up with that offline. With the arrow bars -- well, I'm sorry, there's a lot of background. So yes. So I don't have like the raw data in front of me to answer your question to that level of detail, so I don't want to overstate something. But the arrow bars are, are as you described, right? And it is a dose proportional increase. So we see that very, very quickly in the data. But we can follow up offline if you'd like some additional information.

Got it. Maybe the simpler question is do all patients get elevated or is this a blend of some patients not really seeing much change while all other patients have a huge change?

No, no. All patients are elevated.

Got it. Okay. So then on tolerability, the 1 patient who had flu-like symptoms, there were no cytokine changes detected or were they just not considered adverse? And how common is it to see flu symptoms without cytokines? And then for the eosinophil-elevated patients, was there a dose response in eosinophils? Or was this idiopathic? And when you say there's no clinical sequelae, do you mean that patient was asymptomatic or it resolved and there were no further issues?

Sure. So let me ask Brian. Those are great clinical questions. Brian, do you mind answering those, please?

No, I don't mind at all. But thanks. So for the subject who had transient flu-like symptoms, they occurred within 24 hours of the dose and then resolved. They -- actually, they occurred within 12 hours of the dose and then resolved within 24 hours of the dose. And so -- and they were transient. They did not require treatment and they resolved. You see transient flu-like illness when you treat with drugs. And as we pointed out, there was no elevated cytokine levels as well. Importantly, I think that the timeframe for these flu-like symptoms is not consistent with, for example, cytokine release. And then in addition, that was confirmed by the absence of elevated cytokine levels. So I think that this is just one of those things that you see sometimes with -- when you introduce therapeutics like NKTR-358. And it would not be something that would stop therapy. The other question you asked is regarding eosinophil. Yes, the answer is there is a dose-dependent increase in eosinophils. We only saw 1 subject who approached levels where there was a decision where we would not provide a third dose. And -- but that subject had no clinical symptomatology related to the elevated eosinophils. We have not seen any eosinophil-related clinical manifestations. And none of the other subjects approached that level of eosinophil increase. So even at the highest dose tested, we think from an eosinophil increase point of view, that it will be well tolerated.

Our next question comes from Difei Yang from Mizuho Securities.

Just a couple here. Given the safety profile you have observed, do you think there's additional room for dose escalation in Phase II? And then following up with that is what is the hypothesis with regards to Treg expansion in the optimum situation where SLE can be controlled? Is there hypothesis out there in the literature?

Sorry -- let me -- we'll do this in 2 parts. I'll answer your first question, Difei, about doses and then -- yes, dose level. And then I'll turn it over to Brian about the Treg hypothesis in lupus. So the first thing I'll comment on, Difei, is that definitely, like in these kind of studies, like we have to cap the dose range by all of the totality of data. And that also includes the nonclinical safety data, right? So we use that to set the overall ranges and limits for any of our studies. And that was certainly what we did in the Phase I program. And then we always look for any kind of opportunities if we need to modify our dosing profile. But what's really important is we have adequate data now to build our entire sort of modeling and simulation approach, right, that we have to always develop as we progress these kind of agents. So we have an exposure response kind of a model that lets us be very confident in the doses that we're picking, selecting and the understanding of the PK/PD relationship that any of the doses expect to give us. And Brian, can I ask you to comment on the Treg and lupus hypothesis story?

Well, first of all, I just want to emphasize that there is considerable underlying biology to support the idea that there's defective Treg numbers and function in subjects with lupus. And that the hypothesis is, of course, to increase, to correct that deficiency so that -- by stimulating the Treg population. I think that in your -- question is the hypothesis of how -- is it a question of the degree of Treg stimulation that you need in order to have an impact on the clinical efficacy? In that case, as emphasized from JZ, that there is a dose-dependent increase in Tregs. And I think at this point, what's important about the studying and the doses and the range of doses chosen in the later Phase IIb study, it's to understand what the increase -- that there's, again, a dose-dependent increase in the Treg induction. And then what is the level of Treg induction necessary to maximize your impact on clinical disease activity. And the hypothesis at this point is that the more you increase the, Treg that you will have a substantial impact on disease activity up to a certain point. And then -- and that's what we're going to be studying.. Could I -- JZ, did you want to take it again? But thanks very much for the question.

Yes. All that I would add, Difei, that -- so we think that this has the opportunity to be profoundly disease modifying, right? Because as Brian said, the underlying biology is that there really is a high amount of T cell dysfunction that's driving the pathology and the ongoing nature of lupus in these patients and its progression. So we would expect that with the Treg sort of rebalancing, we'd be really getting at the underlying problem in the disease, not just the pathology and the symptomology, but the actual underlying disease drivers. So that's the other reason why we're so excited to be advancing into lupus as our first primary test case for 358,

Yes. So then I'll follow-up with a very specific question. The 24-microgram per kilo dose, we shouldn't assume that being the highest dose. Is that a reasonable assumption?

JZ, did you want to take this or should I take it?

Yes. I think you're asking the Phase II questions. Yes, Brian, maybe you'd like to cover that.

Yes. So I just want to emphasize that the doses that we're going to be studying are within the range that we studied in the Phase I program. So we're not planning to go outside that range. And the dose range will be in the -- will be within that, the doses that we've already studied. So I think at that point, I probably will not say anymore because we're, at this point, we're really not indicating the specific doses that we will be studying in that Phase II study.

Our next question comes from Paul Choi from Goldman Sachs.

On the poster presentation in the upper right panel, you talk about the ratio of Tregs versus Tcons here. And I guess what I wanted to ask was, specifically with regard to the discussion you have there on the 24-microgram dose. After the first dosing administration, there was a 12-fold increase. But then you noted after the third, it was -- it decreased somewhat to sevenfold increase, but this is only based on 7 -- 6 patients, excuse me. And I was wondering if you could comment on the decrease in terms of the increase in terms of Tregs:Tcon ratio there and what do you think is going on there? What that could potentially translate to on a clinical basis? And also what happened in terms of follow-up for those 3 additional patients? And then I had a follow-up question.

Yes. Sure, Paul. This is JZ. So as I said earlier, when we look at longitudinally across all the patients studied, we look very closely if there was any kind of single tachyphylaxis. And we really don't see that. So if you look at the T reg expansion, right, like, for example, you can tell that -- and that's presented on Slide 23 in our presentation and also in the poster. You can see that there's consistency, right, in the Treg expansion that you see over all of the cycles and over all of the doses. And whether you look at the full change in absolute number or in the percentage, right, which is 2 different ways of measuring, you can see that there is that consistency. When we looked at the Treg:Tcon ratio, which is what you're highlighting, we think that there were a couple of patients that had a little bit of a difference in maybe 1 period, which is why I mentioned about the arrow bars that you can see in the high dose group that are different between the 2. But then when you look at the middle dose cycle around day 20 and the third dose cycle around day 40, they're very, very close to each other. So again, we looked at this very closely. We looked very closely with our colleagues at Eli Lilly, translational medicine teams, all of us. And we really don't believe that we are seeing any kinds of reduction or loss in activity or any kind of tachyphylaxis with the repeated dosing. And in the primates we dosed for much, much longer periods of time, we also didn't see any reduction or loss in the activity. So we feel very confident going forward into the larger Phase II, where we'll be dosing for 24 weeks.

Okay. And then as a follow-up for either you, JZ, or for Brian. I was wondering if you could maybe offer us some qualitative comment on some of the clinical activity indices that you've seen. I know you plan to present more details here down the road at a future medical meeting. But any color on the clinical front in terms of the clinical measures that you could offer would be great, even after this short dosing interval.

Sure. Brian, would you like to cover that, please?

Sure. So at this time, we're really not going to -- there's really not more that we're going to be saying about clinical disease activity in this study. I just wanted to emphasize what JZ said. This study -- the Phase Ib study was not designed to look at the clinical endpoints. And when you think about it, we had, for example, the disease activity that was required to come into that study. There was no -- patients came in with low disease activity and as emphasized, when I was discussing the parameters for the later phase study, you really need a minimal degree of clinical disease activity in order to see an impact of drugs. And then in addition, we have -- there were 9 treated subjects per cohort in this study in the Phase Ib study. And we're planning to study 70 patients per cohort in the later phase study, which is kind of what you need in order to see the impact on clinical disease activity. And finally, as JZ has emphasized, we treated over a month period of time, that is 3 doses over a month. And again, in the later phase study, we're looking at our endpoints at 24 weeks. So I think that gives you a good contrast for the like -- for the design of a study that is designed to look at impact on clinical disease activity versus what we were -- versus the Ib study, where the focus was on what degree of Treg elevation are we going to see, the pharmacokinetics and the safety. So JZ, did you want to add anything?

I'll just -- what I'll add is, Paul, I'll reiterate that. So our intention, like we did with the SAD data, right, as we presented additional data from the study at a later meeting. And our intention is to also follow that same kind of process with this data. There's additional data that we would want to present. And like I did say in the earlier presentation, there are some encouraging trends that we see with dose-dependent changes with the dosing. So what we would like to do is we'll cover all of the information that we have in that future meeting. Stay tuned.

Our next question comes from George Farmer from BMO Capital Markets.

I want to ask you about the NK level activation. Does that matter, do you think? Because your safety data looks pretty good despite all of that. And how do you think about balancing that? And also, your Phase II design, it looks like you're enrolling a more severe patient population than you are in the Phase I. Can you talk about that a bit?

Yes. Sure. We'll do that in 2 parts, George. I'll answer the first one about NK cells, and I'll ask Brian to comment on the patient population in Phase II. So firstly, yes, so we've been studying 358 through all of these studies. And from preclinical all the way to clinical, we saw that there is some NK cell activity that we see at the highest dose. And that's also not unexpected at all. Right? You get similar kinds of activities from IL-2, for example. And importantly, George, right, we don't see any of the T conventional cells go up at all like CD4s, right? So we've always been managing the NK cells. Now earlier, we did a very important set of preclinical studies. We've presented them at other conferences, and we're also going to be publishing them in the manuscript I highlighted earlier, where we worked with Jerry Ritz, who is a famous Treg scientist at Dana-Farber. And he has developed a very sophisticated Cytos method to enumerate many, many cell populations, in particular, Tregs, many Treg subsets as well as NK and NK subsets. And what we saw when we collaborated with him is that 358 induces only a very small narrow subset of the NK population, and it's that 56bright, bright, bright population. So a lot of people believe are -- or even have an NK regulatory or NK suppressing kinds of function. So that's the extent of the NK elevations that we see through all of those studies. So we're going to definitely continue to monitor it, especially in all the future studies. But as Brian indicated, when we looked at the totality of the adverse events and the overall tolerability profile, it looks like it really doesn't contribute to our overall opportunity and what we know today about the risk-benefit profile of 358 in these early studies. So it doesn't seem like it's a problem for us right now, but we're going to follow it closely. And then, Brian, can I ask you to comment on the patient population?

Yes. And you're correct. The patient population that we'll be studying in the Phase IIb study is going to be -- is going to have more severe active lupus disease than what we studied in the Phase I study. When we designed the Phase I study, we realized that we really didn't need to have subjects with moderate to severe disease that we could get the answers that we needed in subjects who had more mild disease. And that's why we basically designed the study like we did. But as I emphasized, in the Phase IIb study, you need a certain level of disease activity in order to see the impact of the drug. And that's why the SLEDAI,. there'll be a requirement for SLEDAI-2K activity, for example, greater than 6 and a degree of clinical disease activity. And those subjects will clearly be more active, more severe than what we studied in the Phase Ib. I will emphasize, so I believe strongly that the information that we do have from the Phase Ib will translate well into the later phase study.

Next question comes from Daina Graybosch from SVB Leerink.

A couple of questions from me. First, sort of theoretically, where we're talking about the NK cells, do you have any evidence preclinically? Are you looking in that these NK cells could actually help regulate autoreactive T cells? I know many other labs are exploring, actually increasing NK cells for autoimmune disease. And then less theoretically, sort of interpreting the increase in your Tregs here, can we assume if that first peak is sort of aberrant to a couple of patients that you expect going forward, that really it's more around the seven and eightfold increase? So that's more predictive of what you expect to see in further studies in Tregs, and then that will be consistent? And then thirdly, can you tell us what the baseline was, the average in range of Tregs in these patients?

Sure thing. We need to cover all those, the NK reg questions, Tregs and then baseline. Okay. So for the NK reg, in our studies, we're relying on the literature for that. And so it's other labs and investigators that have studied the NK cells and NK regulatory as well as the different subsets. So we're relying quoting on that. In our studies, we haven't focused as much upon those. But you're absolutely right. There are a number of both Treg cell therapy and NK reg therapies that are under development in different stages of early clinical and preclinical testing. Then to your next question. So I think that what's happening on this call is some folks are confusing CD8 to Treg ratio versus the actual Treg expansion. So let me just first clarify those things because I think there've been now several questions that are focused on a part of the data and not the whole data. So if you look at the part of the poster that said NKTR-358 elicited sustained, dose-dependent increases in the absolute numbers and percentages, which is also Slide 23 of the webcast, that shows the peaks, okay, of elevation that you see of Treg expansion over the 3 doses that we're giving. So as I explained, when you give that dose 2 weeks in, it's in the middle of that first peak of expansion, which is why you see it like a shoulder when you look at the highest dose or in the blue, the mid dose. And then the third dose, which is showing its peak around day 40, that's like in the second month. If you compare the SAD to the MAD, you see the same kind of peak of Treg expansion. And you can see that whether it's the red lines for the highest dose, the blue lines for the middle dose or the orange. So what's really important takeaway is that we don't see tachyphylaxis or reductions in the amount of Tregs upon all of those additional doses. In the CDA to Treg ratio, there may be a small difference, which may be some slight differences in what that ratio is measuring. But again, when we look at the CD8 levels, which are presented on Slide 25 of today's presentation or in that other part of the poster, you see flat lines, okay? So we really don't anticipate seeing drop-offs in the activities or kind of tachyphylaxis. And as I said, we've dosed primates for many, many months also without seeing any of those drop-offs. And then third, you asked a question about Tregs at baseline. So the way that we design our studies is we actually -- remember, you're looking at gating and it's on individuals, right? People, right? So the different patients have different kinds of levels. We have patients that were about 0.5% in their Treg levels at baseline. And then we use an auto gate measure, Daina. As you can imagine, there's a lot of flow cytometry here. So we use auto gating to do that kind of analysis. And we set some of those thresholds so that we're at about 0.5% for our patients at baseline. I hope that answers your questions.

I guess not exactly. I'm not -- maybe there's a question clearly about if this is going to be maintained in chronic dosing. There's also a question of how much better is NKTR-358. What we've seen historically with low or intermediate dose IL-2, I think, it's a bit hard to compare, especially fold increase chart, study to study. So I really like, let's say, the one below where you see getting up to around 30 absolute cells and just trying to compare that to that scene with the other studies. So it's sort of, let's say, you're saying you see 10 to 12-fold increase in the top middle part of the poster. And then if I go down, I see about a 32, and if I say 0 is about baseline, I see 5. It's hard for me to see that tenfold, which is sort of why I was asking about baseline and more about comparing to the previous work.

Yes. We believe that this has -- distinguishes itself dramatically from IL-2. First of all, the overall kind of ratio of Treg:Tcon elevation, as we saw in the primates where we tested it head-to-head, obviously, we don't have a human head-to-head data, you wouldn't do such a study, that is wildly different for 358, dramatically more favorable. But then in addition, you have all of the pharmacokinetic differences, right? So you can achieve these kind of levels with a completely different dose regimen that's much more convenient than you could ever do with low dose IL-2. Thanks for the question, Daina. And we can follow-up more offline. We get into more of the specifics and individual patient data type of thing.

Our next question comes from Andy Hsieh from William Blair.

So just curious if you are planning on gathering any sort of disease-specific biomarkers, like the balance of Th17 versus Th1 cells. And also related to that, for the Phase II trial that is pending, is there an opportunity for physicians to dose up or down? And if so, would that be based on any sort of biomarkers?

Okay. Let me start with the first one. So yes, we want to study things like the gene expression profile, even things like the methylation status, right, of the cells. So yes, so we do have plans of evaluating additional measurements than just sort of target engagement beyond that, Andy. So, yes, definitely, that's in the works. And then you asked another question about dosing and if it's driven by biomarkers. So Brian, let me ask you to highlight that. But expect it will be a very similar answer to before.

Yes. So thanks for the question. In a study like this, a non-oncology study, we're really planning to continue the same dose through the full treatment period. There's no planned dosing up or down for each of the dose levels. And there's really -- although, we'll be studying biomarkers and trying to understand everything that we can possibly understand regarding disease activity and other biomarkers in the study, there's no plans to change the dose base on biomarkers.

Got it. Okay. And so for the Phase II trial design, no specific dosing is disclosed. But maybe this is kind of a serendipitous pattern. But if you look at differential dosing for the IL-2 -- naked IL-2 oncology, autoimmune condition, I guess, the ratio is about 1 to 20. I think you presented before the flow cytometry data, also a 20-fold increase. Treg suppressive activity. I think you worked out the stoichiometry to be about 1 to 16. Today, you talked about 12-fold in terms of Treg:Tcon ratio. So just curious about all that and how has that kind of contributed to 3 dosing schemes in the Phase II trial.

Well, they all contribute. And I think, first of all, let me emphasize that the doses that were planned, the low, medium and high, are within the range that we've studied. And I think you mentioned all of the things that enter into the decision of what those doses should be. I think what's important, first of all, is the fact that we studied the different doses, and we understand the safety of our agent, which we think is excellent. And then in addition, the degree of Treg stimulation, the selectivity of that Treg stimulation and other populations that are stimulated at different doses, that all goes into the decision as to what the right doses should be, what we should take forward into the later Phase II study. So JZ, did you want to address that in more detail?

No. I mean it really is all of the things, Andy. I mean, so what our studies have shown us is that not only do the Tregs increase, but they are more functional, right? And we've presented that data. We did a lot of very, very careful pharmacology studies in animals and showing that we could really push the suppressive capacity of these cells, right? And so we know that we're doing two things that we think will be kind of like multifactorial and more than additive, right? So we're making more cells, and we're making the cells that we're bringing are functional. So it's like a double bang for your buck, not just increasing greater capacity, but with a 1x kind of specific activity. So we think that this really gives a really great opportunity for the therapy. And it really shouldn't be overlooked. This is a first-in-class approach to treat this kind of a disease. I mean, we really haven't had reliable, accessible Treg mobilizing drugs that are so well-behaved like this one, where, as Brian was saying, it's dose dependent, it's time dependent, you can really control the pharmacology that you're trying to achieve. So this, I think, gives us a really, really exciting opportunity to move into lupus, to bring brand-new mechanism into the disease, a chance to really get at the underlying disease biology with a drug that lets us control Tregs over the course of the duration of treatment. We're very excited about that.

Thank you. And in the interest of time, that does conclude our question-and-answer session for today's conference. I'd now like to turn the call back over to Vivian Wu for any closing remarks.

Thank you, Crystal. Thank you very much for joining us today. Have a wonderful weekend.

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