Nektar Therapeutics (NKTR) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by and welcome to the Nektar Therapeutics COVID call. [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. Jennifer Ruddock, Head of Corporate Affairs. Ma'am, you may begin.

Thank you, Crystal. Good morning, everyone, and thank you for joining us this morning. Presenting today are Howard Robin, our President and CEO; and Dr. Jonathan Zalevsky, our Head of R&D. Also joining us are key experts from our COVID Scientific Advisory Committee; Dr. Richard Bucala from the Yale School of Medicine; and Dr. Robert Gallo from the University of Maryland School of Medicine. On today's call, we expect to make forward-looking statements regarding our business, timing and plans for future clinical trials; timing and plans for future clinical data presentations, the therapeutic potential of bempegaldesleukin, and certain other statements regarding the future of our business. Because these statements relate to the future, they are subject to inherent uncertainties and risks that are difficult to predict and many of which are outside of our control. Important risks and uncertainties are set forth in our Form 10-Q that was filed on August 10, 2020, which is available at sec.gov. We undertake no obligation to update any of these statements whether as a result of new information, future developments or otherwise. A webcast of this call will be available on the IR page at Nektar's website at nektar.com. With that, I will now hand the call over to our President and CEO, Howard Robin. Howard?

Thank you, Jennifer, and thank you to everyone for joining us on the call today. We hope everyone is safe and remains in good health, and managing through this unprecedented and challenging time as best you can. As you probably saw in the news, the United States hit an all-time high in new coronavirus cases on Friday, surpassing the previous mark set this summer. We see hospitalizations are increasing. And as we enter the winter months and people spend more time indoors, we will continue to be vulnerable to the spread of the virus. As you saw from our press release this morning, we're initiating a study to evaluate bempegaldesleukin, also known as NKTR-214 or bempeg, for the treatment of patients with COVID-19. The FDA has cleared our IND filing and the Phase Ib trial for bempeg in adult patients with mild COVID-19 infection will begin enrolling patients immediately at clinical sites in the U.S. We've been asked by many of you recently whether any of Nektar's immune stimulatory cytokines in our development pipeline could be used to treat or help COVID patients. As you know, the speed by which our industry has responded over the last 8 months has been incredibly impressive. However, the decision to initiate this trial with bempeg is one that we didn't want to rush into. And as a result, we undertook an extremely thorough evaluation of this emerging body of data on COVID-19 patients. And all of these factors are necessary for our decision making before we embark upon a COVID-19 development program. Specifically, several key findings have emerged in publications on COVID patients, which have correlated lymphocyte levels and T-cell responses to severity of disease in these patients. These key findings, which have been consistent from publication to obligation, drove our decision making. In addition to our own evaluation, we also had in-depth discussions on the merits of exploring T cell stimulating mechanism with experts in virology and immunology, including Dr. Bucala and Dr. Gallo, who are joining us today. Dr. Bucala is co-director of the Advanced Therapeutics team at Yale that reviews available literature and works to address newer therapeutics and is the co-Chair of the steering committee for the study. Dr. Gallo, who is also co-Chair of the Nektar's Steering Committee is a world-renowned virologist at the University of Maryland. Their input has been instrumental in shaping our hypothesis to move forward to evaluate an IL-2 mechanism in the treatment of COVID patients, and we thank them for their expertise and advice on our study design. I'll now turn the call over to Jonathan for a presentation and discussion on the rationale for us proceeding with this study of bempeg. Jonathan?

Thank you, Howard, and good morning, everyone. As Howard said, our decision to initiate a study to explore the use of bempeg for the treatment of COVID patients was one that our team has been carefully evaluating over the past several months. As we watch the COVID situation evolve, and we've observed the continued need for more treatment options, we were intrigued by the possibility that perhaps an early interventional treatment that directly strengthens the patient immune system could play a role in limiting progression of the viral infection in certain patients. Our hypothesis is based on the body of data, which correlates low lymphocyte counts in COVID patients with worsening symptoms, hospitalization and death. On the flip side, the data show that patients who maintain normal or elevated lymphocyte counts experience far better outcomes. Now we're 9 months into the pandemic. And there is a great body of literature showing that the severity and progression of COVID symptoms correlate with the patients' ability to successfully mount an adaptive immune response to the virus as measured, among other things, by low lymphocyte count. We generally see that convalescing patients have mounted both a cellular and humoral immune response to the virus. And as I'll get into a bit more in a moment, we hypothesized that both cellular and humoral components are essential for successfully warding off the infection. Therefore, we believe that patients who present with low lymphocyte counts are at especially high risk. But what if we could intervene early on in those patients with low counts? What if we could increase the lymphocyte levels in those patients when their symptoms are only mid to moderate, but we know their prognosis could be very poor, thereby strengthening and boosting the patient's own immune system in the fight against the infection. Our study aims to look at this hypothesis. The biology of IL-2 is unique and the cytokine acts as a growth factor for the lymphocyte arm of the immune system. At Nektar, we applied our polymer chemistry platform to cytokine IL-2 to generate bempeg. Bempeg is currently in multiple registrational trials in combination with nivolumab for the treatment of metastatic melanoma, adjuvant melanoma, renal cell carcinoma, urothelial carcinoma and other cancers. Ever since we began clinical testing of bempeg in 2015, we have observed the profound effect it had on the adaptive immune system. Shown on this slide, is exemplary bempeg data from the EXCEL clinical trial, which evaluated single-agent bempeg in patients with advanced solid tumors. From the chart, you can see that lymphocyte counts were raised by multiple folds within a week of bempeg dosing. The lymphocyte effect was dose-dependent and occurred through the configuration or the direct proliferation of the lymphocyte pool. And I'll describe this in a bit more detail on the next slide. Additionally, in our oncology clinical program, we have now treated more than 1,000 advanced cancer patients with this investigational drug. And we've seen the same phenomenon even in elderly and immunocompromised cancer patients. A complete adaptive immune response is critically important for the patient's immune system to overcome a COVID-19 infection. Our scientific hypothesis with the application of bempeg for potential treatment of COVID-19 is rooted in this fundamental biology of IL-2 pathway agonism. This slide depicts a deeper dive into the lymphocyte effects of bempeg monotherapy. Bempeg treatment caused a statistically significant increase from baseline in the absolute count of CD4 T cells, CD8 T cells and NK cells, as shown in the top panels. Importantly, bempeg administration invigorated this compartment. And the bottom panel indicates recent cell division of each cell type as measured by induction of the Ki-67, a marker of cellular cytokinesis. We believe that these immunological effects are very important in the setting of an adaptive immune response to a virus. For example, CD8 T cells and NK cells make up the cellular antiviral immune response, wherein these cells patrol the body and directly kill virally infected cells. Meanwhile, CD4 T cells can prime B cells to differentiate into antibody secreting cells to generate the antiviral humoral responses. Our overall scientific objectives with exploration of bempeg for the treatment of COVID are to restore lymphocyte levels and that this, in turn, enables the patient to mount an effective antiviral immune response. I'll now review the body of data of COVID patients we used to evaluate whether we should consider a study in these patients. And I will ask Dr. Gallo to provide his commentary and thoughts as well following this data review. The data shows what has been learned to date about the relationship between early lymphocyte counts and T-cell responses in patients that go on to worsen to more severe COVID-19 symptoms. I'd like to start with a discussion of what we have learned about this important correlation observed between lymphocyte counts and the severity of disease in patients. Shown here on the right of the slide is a recent study from the Lancet, in which Wuhan researchers looked at 191 hospitalized patients diagnosed with COVID and their lymphocyte counts over time. You can see that surviving patients were those who maintained lymphocyte levels in the first week with lymphocyte levels rising over subsequent weeks and this contrast with the patients who experienced declining lymphocyte levels over time with severe lymphopenia observed until death. This phenomenon has been reported in several studies in the U.S. as well, with lymphopenia being reported in approximately 60% of hospitalized COVID patients. Shown here is a meta-analysis of 21 separate COVID publications. As you can see, these studies show that lymphopenia was associated with poor outcomes. When patients present at the hospital in the lymphopenic condition, their chances of having positive outcomes with the virus are already decreasing. Lymphopenic patients are 4x as likely to progress to severe disease, 3x as likely to experience poor outcomes, such as admission to the ICU, oxygen saturation below 90% invasive mechanical ventilation and severe disease, including death. And severe lymphopenia, as reported in the Lancet publication, was associated with a 12-fold increase of odds of in-hospital death. So what do we know about the effect of SARS-CoV-2 infection on T cells? A key observation that has been made in the unfolding pandemic is that successfully overcoming COVID-19 involves both innate and adaptive immune response to the virus. The adaptive response has 2 components: cellular antiviral immunity mediated by T cells and humoral immunity mediated by B cells and plasma cells. Some patients who have not survived the virus experienced an uncontrolled innate immune response, coupled with either limited or altogether, no adaptive responses. Additionally, the patient's death is often preceded by decreasing total lymphocyte counts. We now have research showing that the infection causes an overall decrease in T cells and NK cell numbers and the amount of decrease correlates with the severity of disease. In addition, the cytotoxic lymphocytes in COVID-19 patients are functionally exhausted, as demonstrated by the high PD-1 and TIM-3 expression on T cells. Indeed, increased levels of activated CD4 and CD8 T cell lymphocytes have been observed in recovering patients and markers of T cell exhaustion are increased in severe patients. Robust and early T cell responses may play a crucial role in clearance of SARS-CoV-2. Shown on this slide is a study from Nature Medicine, which shows that patients with higher T cell infiltration into the lung microenvironment experienced mild COVID. In short, these observations make T cell and NK cell stimulating agents such as bempeg attractive to explore for the treatment of adult patients with mild COVID-19, who are also exhibiting lymphopenia. And with that, I'd like to ask Dr. Robert Gallo to add his thoughts on some of these data that have been reported in COVID patients and his perspective on the possibility of intervening early in the course of the disease with an agent that could stimulate an adaptive immune response. Bob?

Thanks, Jonathan. I think that was a very clear and very nice synopsis of what we have going. I don't think it -- there's any part that wasn't crystal clear. Let me say that I think it's a very good hypothesis. I think it's rationally approached and I think extremely worthwhile doing and really congratulate you for -- you and colleagues at Nektar for bringing this forward. I want to comment on one particular slide where you list exhausted T cells accumulate during the disease, the T cells are so-called exhausted and they develop these surface molecules that say that and that seemed to be associated with bad immune responses. I want to say that in a recent study I've been carrying out with collaborators in France that these exhausted T cells doesn't mean they're functioning less. They're functioning, but in a negative way. They're producing more immune suppression. They act like these kind of key T regulatory cells, which dampen immune responses. So as they increase, they're also -- it becomes kind of a vicious cycle. They make more reduction in the adaptive immunity. I might say a word on the history of interleukin-2, which is the basis for your drug. It goes back to 1975, my coworkers and I at the National Cancer Institute, NIH, at the time, discovered it, it's been called the first cytokine. When we discovered it, I wanted to use it for one thing: to grow human blood T cells in a laboratory to try to find viruses that target T cells. That led to our discovery of human retroviruses, a leukemia virus first and then later as co-discovery of HIV as the cause of AIDS. However, even then, I was thinking that I don't know a lot about this concept of immune therapy, but somebody right across the next building almost with Steve Rosenberg. He pioneered immunotherapy. And I told him about the system and made available to him the interleukin-2. Original name was T cell growth factor, TCGS, changed by immunologists to IL-2 or interleukin 2. He brought it to good use in some pioneering studies with malignant melanoma and growing infiltrating T cells of the tumor that were targeting the cancer cells. And as you pointed out, your company and other groups have been using interleukin-2 since in various imaginative ways for cancer therapy. At that time, I couldn't know -- never thought that this would be something that would be used in treating viral diseases. But here we are. So your presentation makes it clear that there is a severe problem with production of all kinds of lymphocytes and NK cells in this disease, that those who have the worst the -- well, the greatest rather ability -- the greatest capacity for loss of T cells are the ones who are going to be in most trouble. Consequently, raising the T cell count early in disease, early after infection, as you can, is completely rational and merits doing as soon as possible. So I think this is a very interesting and important program and glad to be a component of it even if it's a small component.

So thank you, Bob. For those -- Thank you, Bob, for those thoughts. Much appreciated. I would now like to ask Dr. Richard Bucala from Yale to talk about the current treatment paradigm for COVID patients and then review the study design. The first, a brief introduction. Dr. Bucala is a professor of Medicine, Pathology and Epidemiology in Public Health at the Yale School of Medicine. Rick studies the mechanisms by which protective immune responses lead to immunopathology, focusing on MIF family cytokines and their genetics with his group, which his group first cloned and characterized. Currently, his laboratory is leading multidisciplinary efforts to develop immunotherapies tailored to an individual's genetic makeup. An anti-MIF antibody developed by his group is undergoing clinical evaluation in oncology and additional MIF antagonists are in advanced clinical testing for different inflammatory indications. Dr. Bucala is also credited with the discovery of the fibrocyte, which has been targeted therapeutically in different fibrosing disorders. He is a co-founder of MIFCOR, a biotechnology startup begun as a student-advised project. Dr. Bucala was elected to the American Society for Clinical Investigation and the Association of American Physicians. He is the former Editor-in-Chief of Arthritis & Rheumatology and has served on numerous advisory boards for the NIH, the pharmaceutical industry, academia and private foundations. Rick?

Yes. Thank you, Jonathan, and good morning, and thank you for having me on the call today. I'm excited to be serving as co-chair of the Nektar COVID Steering Committee for this trial, and I'm looking forward to our involvement in this study and the immune phenotyping methods leveraging Yale assays that were developed in my lab. If you look on Slide 12, at the scheme, once a person is exposed to the COVID-19 virus, it usually takes about 4 to 5 days until they experience symptoms. The most common symptoms that a majority of COVID patients encounter are fever and coughing, usually accompanied by difficulty breathing and shortness of breath. About 4 out of 5 patients initially present with mild-to-moderate symptoms, which would include symptom severity up to mild pneumonia. For patients whose symptoms continue to get worse, it usually takes between 8 to 12 days before they experience dyspnea or difficulty breathing and are admitted to the intensive care unit usually on days 10 to 12 and with an acute respiratory distress syndrome, or ARDS. An additional factor observed in patients with worsening disease, as we've discussed, is continuing and worsening lymphopenia. As we discussed earlier, there's a strong working hypothesis supporting the potential of bempeg as a treatment for COVID-19. Lymphopenia is clearly correlated with increased mortality in patients hospitalized for COVID. While we don't yet know is whether -- what we don't yet know is whether or not treating the lymphopenia and boosting the patient's immune system will, in turn, improve outcomes. But we do know that the adaptive immune response is not currently working properly in these patients. As a result, I'm excited about testing this hypothesis that strengthening the adaptive immune response could stop the overcompensation we see from the innate immune response that happens with COVID and can ultimately lead to severe outcomes and death. Our overriding goal is to help patients fight this difficult infection. This trial gives us the opportunity to potentially further explore an IL-2 mechanism provided by bempeg with its immunostimulating mechanism and the possibility of helping patients with COVID-19. If you turn to Slide 13, where you can see the details of the study. This is a randomized, double-blind, placebo-controlled Phase Ib study designed to test the safety, tolerability and pharmacokinetic, pharmacodynamic profile of bempeg in adult patients with mild COVID-19 disease. The trial will enroll 30 adult patients with a confirmed COVID-19 infection and mild symptoms. In order to be enrolled, a patient will have to have a blood oxygen saturation above 93% without supplemental oxygen, a respiratory rate below 20 breaths per minute and a heart rate below 20 beats per minute. Upon enrollment in the trial, patients will be admitted to the hospital for an inpatient stay of 8 days of monitoring. They will be evaluated for multiple clinical and translational assessments, including the change over time in absolute lymphocytes and lymphocyte subsets. Follow-up assessment will be conducted at 30 days for both safety and to complete in-depth immunophenotyping. The primary objectives of the trial are to establish the tolerability of bempeg in patients with COVID, evaluate the changes in immune activation over time and identify the recommended dose for future trials. As secondary endpoints, we'll track the need for supplemental oxygen and monitor the patient's clinical status for 30 days post discharge, including analysis of SARS-CoV-2 serology or antibody responses and immune cell profiling over time. The trial will have 3 cohorts of patients with a maximum of 10 patients in each cohort. Patients will be randomized 1:1, receive a single dose of bempeg or placebo. Patients may also receive standard of care for their symptoms while participating in the study. We'll start at a very low initial dose of bempeg since this is the first time where we are in this clinical indication. The starting dose is 0.75 micrograms per kilogram and we'll escalate to a maximum dose of 3 micrograms per kilogram. In the Phase I clinical evaluation, evaluating bempeg monotherapy for the treatment of advanced solid tumors, 3 micrograms per kilogram was well tolerated, and there was no treatment-related grade 3 or above adverse events in patients that were treated at this dose. One of our first sites will be Temple University Hospital in Pennsylvania, led by Dr. Gerard Criner. We're focusing on sites in high case load states in order to speed the study enrollment and we expect the study to be completed in about 3 to 6 months. I'll turn the call back now to Jonathan for a conclusion. Jonathan?

Thank you, Rick, and thank you, Bob, as well, for your comments today. I will finish by saying that we are excited about the COVID treatment initiative and the possibilities ahead to support physicians and patients in this pandemic. However, I'd like to reiterate that Nektar remains firmly committed to our ongoing focus for development of candidates in immuno-oncology and immunology. I believe our team has balanced thoughtfulness, external input and an assessment of the current climate with the appropriate level of urgency as we look to explore the potential for bempeg to help patients battling this virus. We are looking forward to partnering with Rick, Bob and others on this initiative to address the ongoing COVID-19 pandemic. And with that, I will open the call for questions. Operator?

[Operator Instructions] And our first question comes from Tyler Van Buren from Piper Sandler.

Thank you for the interesting presentation. I guess just on the Phase Ib trial, I would be curious to hear your thoughts on how you plan on picking the recommended Phase II dose? 10 patients per cohort seems too small to really discern any differences in functional endpoints such as supplemental oxygen or the progression scale, the WHO progression scale. So maybe you could just be more specific on exactly how you plan on picking the recommended Phase II dose?

Tyler, this JZ. Thank you for the question. So one of the important features of this trial design, right, is in order to address the compendium of observations after we treat patients with early disease. And one of the important features of that is going to be looking at changes in the lymphocyte count. So we'll be balancing all of those components, anything related to any signs of safety, any sign of clinical tolerability, changes in the lymphocyte count as well as changes in the underlying biomarkers in the study as well. And Dr. Bucala mentioned that we'll be measuring a lot of T cell responses to the virus as well as T cell functional responses as well, as well as any changes in the ordinal scale of the patients. So the trial is actually designed with those 3 dose levels. And also, Tyler, with all the information that we know about dosing at substantially higher levels in cancer patients in order to give us a very good footing, the doses that we would look to take forward in future studies.

Our next question comes from Boris Peaker from Cowen.

Just a question. Looking long-term in terms if this study is successful and bempeg is ultimately developed for COVID-19. I'm just curious, have you given any thoughts how it could be priced for COVID-19 as well as in oncology indication?

It's Howard. I was going to answer that. I think it's actually a very interesting question. And if you look at the dose, though, that we'll be providing in the COVID-19 patients, it's a very, very, very small dose, much smaller than what we use in oncology. And rather than treating every 3 weeks for a period of time, as we do in oncology, the COVID patients will only receive 1 or 2 doses. So I don't think there's going to be any kind of pricing discrepancy. And I don't think it will be overly complicated. I think one of the most important things about this program is that we want to move as rapidly as we can, and we want to make sure that all patients have easy access to this kind of a therapeutic. I think we certainly believe that an adjuvant therapy such as bempeg is going to be very important in treating COVID patients and other patients -- and other virus patients as well. So from a pricing point of view, I think it's all relatively consistent and it works.

Our next question comes from Jessica Fye from JPMorgan.

Given that it seems that some of the effects of this disease are driven by an overactive immune response is how do you balance that risk when you take bempeg into these patients? And is that why you're going into mild patients versus more severe where that risk may be greater? It just seems like it's difficult to know ahead of time, which patients are going to go on to develop a hyperinflammatory response. And it seems like there are plenty of young people who easily clear the virus initially but then have bad problems starting in the second week and lasting long-term due to a hyperinflammatory response. So given that the disease has 2 phases and the damage in the first week is more virus-driven with the second week seemingly more driven by the immune response, how do you ensure you get to these patients soon enough in their disease course for a product like this to have a benefit?

Jessica, this is JZ. It's a very insightful question. And really understanding the early disease that we're treating and the time of intervention is critical. And we've had a lot of discussions with this, like in our Steering Committee and other forums. And Dr. Bucala, do you mind if I ask you to comment on the interesting selection of timing for intervention as well as the whole landscape and standard of care against the backdrop of potential agent like bempeg?

Yes. I'm happy to comment. I think Jessica, you point out something very important, which is that this is a very diverse disease. Both in the patients, it infects everyone, and there are protean clinical manifestations. We know from the data presented today that there's a proportion of patients who present early with loss of lymphocytes. So their white cell counts are low. And so this occurs before there's been overwhelming inflammatory end-organ damage. And so the notion, the therapeutic notion here is that a proportion of patients can be identified early on that have low lymphocyte counts and thus are at risk for high morbidity and mortality. And it's this group that can be selectively treated with low-dose bempeg, low-dose IL-2 to try to prevent this lethal complication.

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

Jonathan, I was -- perhaps you could comment on the selection of doses that you're using. They seem quite low and certainly lower than what you're using in the oncology setting. What sort of data do you have regarding the PK/PD relationship with those doses in animal models? And then if I could ask another quick question is, do you think that bempeg could have any actual antiviral activity in these patients?

Thank you, George, for the question. I'll answer the first part about dose selection, and then I'll ask Dr. Gallo to comment about your second question about bempeg and the potential for antiviral effect in the patients we're treating. So to start with, dose selection. So as you heard from the presentation and Dr. Bucala's comments, we're starting at 0.75 micrograms per kilogram. So this dose is 8x lower than the 6-microgram per kilogram dose, which is what we're going forward with in all the registrational studies of bempeg in combination with nivo. So we picked that dose for a number of considerations. So the first is we wanted to definitely balance the expected pharmacological effect of giving bempeg, namely stimulation of lymphocyte counts, proliferation of the lymphocyte compartment in the CD8, CD4 and NK cells, along with everything that we've learned about application of those much higher doses of bempeg. Now the great thing is that even though we studied down to 3 micrograms per kilo in cancer and then doses substantially higher than 6 also in cancer patients, George, the great thing is now we have so many patients that we dosed over 1,000 that we have very, very extensive exposure of response modeling that our pharmacometricians at Nektar have been able to generate. Because as you know, when you have such a large data set, you can build a very large population PK model, and then you can use it to predict down to lower doses. So we've modeled that. We believe there'll be activity even at these lower doses. And then, of course, the trial is designed with the standard dose escalation paradigm built in as we'll start at that 0.75 and then we'll escalate up to higher doses as we move through the successive cohorts. Now for the second -- so just to summarize quickly, we feel very confident in the starting dose. We expect it to be active, and we believe we have a really good vector for making a risk-benefit opportunity to argue and obtain data with bempeg in treating these patients. Now for your next question, you asked if there is a possibility that bempeg could have antiviral effect in patients with early COVID that we're treating in the study. And Dr. Gallo, can I please ask you to comment on some of your thoughts about the opportunity for bempeg as a potential therapeutic for the treatment of early COVID?

Yes. Well, so of course, not directly antiviral. This is not targeting a stage in the virus replication cycle, like, let's say, for example, a reverse transcript days or protease inhibitors in HIV. So it has no direct antiviral activity. However, indirectly, just think about it. If you're promoting the recovery of CD4 T cells, they, in turn, one of their several functions of help, that's why they're called -- a subset of them, a major subset are called helper cells. Without them, we don't properly make sufficient antibodies. So off the back, you're going to say, you should be helping in antibody production, both speed and amount, which, of course, will include antiviral antibodies. And that's not immediate. It's after some weeks, but not -- it doesn't mean any inflammatory stage of the disease. Secondly, it also, as you saw in the charts, promotes the CD8 T cell numbers and what CD8 T cells do? Well, like CD4 T cells, there are CD8 T cells and there are CD8 T cells. There's more than one function. The major component is the function to kill so that shouldn't be there. Cells with foreign proteins that they are recognizing on the surface of cells, such as viral proteins or pieces of proteins presented in cell membrane, they'll target it and kill that cell. So that becomes indirectly a potent way of being antiviral. Perhaps most important of all because it's going to be earlier. NK cells, as was stated earlier, I believe, by Jonathan, are part of the innate immune system, natural killer cells, which all go back in evolution to the beginning of the cellular immune response. Like CD8 T cells, they will also target cells that shouldn't be there that are such as a tumor cell if it's presenting some antigen protein -- a piece of protein that really shouldn't be there, it's not the normal situation, or particularly virus infected cells. In contrast to CD8 T cells, they kill like CD8 T cells, but call natural killer because they do it so immediately. They don't need a proper presentation. We just call the MHC -- they have the piece of protein presented in a recognized complex called MHC complex, which involves T-cell receptor, which involves a piece of the protein, presented at the cell surface with CD8 T cells that our killers can recognize. In contrast, these cells don't need that. They see and recognize this as foreign and they kill. They're a very important part of the immediate response that even protects us from infection. When you get virus infections, which you get a lot of, you cure most of them, right, before you ever get to the time when you make antibodies or the time it takes to make a good T cell response. You're probably infected in your lifetime with 100, 100, probably. I don't know the number, but certainly, by midlife, you're infected with many dozens of different viruses. The vast majority don't take 2 to 3 weeks to get better. Well, how do you get better as no antibodies is significant and the marshaling of enough T cell response in that time. You get rid of it by your innate immune response, which invertebrates, that's all they have. With an innate immune response, a big part of it is the molecule called interferon. Another big part of it are NK cells. And another big part is things that are still being researched, meaning we still don't understand a lot about the innate immune system. But no doubt, NK cells are critical, in fact, best, which you all know can carry coronavirus. It looks like virtually all types of bats, all around China, for example, where it's been studied, doesn't mean China is unique in this regard, will harbor coronaviruses, every single type of bat all around the country. Many of them potentially could come into man. Well, how do bats live with them and live fine? It's by the innate immune system. And mainly, as studies are going on, it's by keeping the interferon not high. They don't overreact, but at a constitutive level, constantly expressed. We don't do that. Other mammals don't do that. But more importantly, it seems they have a significant number of activated NK cells that are keeping that virus in check. What you saw a depletion of NK cells in the slides presented by Jonathan early on. And if you can restore NK cells, believe me, that's not good for the virus, okay? So it works as a so-called antiviral, but it's not really directly antiviral, by knocking off virus infected cells ultimately and indirectly. That's the answer to your question, I believe.

Our next question comes from Peter Lawson from Barclays.

Questions for Dr. Gallo and Dr. Bucala. Just other agents you think that could be interesting in bolstering the recovery of lymphocytes and whether it's a single agent or combination agents?

Are there -- are you asking, are there others?

Yes, just other ones that interest you or you think...

I mean that's a company question. Really, I mean, as -- I think they got the major growth factor. There are other things that can affect T cell growth like interleukin-15, which is well, I won't get into it. It's a funny story in my laboratory at that time. I discovered it a few years after interleukin-2. So I mean -- but you start getting into serious complexities when you start mixing cytokines. It would be, in my mind, irrational, unless you were talking about, I mean, a real emergency where you didn't have even time to think or work and you had to give something to save a life instantly and you were in that phase. We are not in that situation. There's research going on. I would start combining a number of different cytokines. But yes, there are other factors that can augment T cell growth. And IL-15 is the principal one other than IL-2 with a different -- somewhat different approach to making T cells grow. But you start mixing them. They don't have other effects as well. And you'll never know what's going on. That's for sure. Sure, we can start that way. So...

Thank you, Bob. Dr. Bucala, maybe if I can also ask you to comment, please, also with other agents that you're interested in.

Sure. I mean there are investigational studies of transferring leukocytes into patients early on that might augment antiviral function. But I think we don't need to discuss really the practicality of that. It's not really a practical therapy. Perhaps it could be developed. It's kind of like a blood banking procedure for some extreme cases. But -- and it still has to be established to be of any benefit and no harm.

That said, Rick, I think I sympathize completely with you that, that needs a lot of thought before you'd ever do something like that. Moreover, you'd have to type the kind of cells you're giving. I mean because it's going to include a lot of T regulatory cells that had an immune response. I mean that would be -- it's a -- that's a nightmare, at least I think. [indiscernible] I wouldn't do that.

Thank you both. Peter, it's a very good question. And I think that just to sort of summarize, I think you've been following Nektar for a while. And since 2015, when we first brought bempeg into the first clinical trial, we've shown how distinguished it is in its composition of mechanism and having this unique and important biological ability to restore and replenish the patient's own immune system. And while there are other cytokines in clinical development earlier on, much more early stages relative to bempeg in oncology, I mean I think you've seen all of our presentations over the years that really the unique place that bempeg has and the very unique biology and the tremendous lead that we have over the other agents. And we think that's one of the very important differentiating elements of its biological mechanism. And also one of the really strong scientific hypothesis why we are embarking in this study here. So thank you for the question, Peter.

Our next question comes from Andy Hsieh from William Blair.

Great. So I think JZ, you mentioned about you want to enrich for early-stage patients. Just wondering about the enrollment criteria. Any way to kind of exclude patients based on that? And also a follow-up to Jess' question, which is basically, if you see an immune flare-up, is there any way to kind of rescue that? Any antidotes that's kind of specified in the protocol just in cases like that?

So Mary, may I please ask you to answer the 2 questions. One is about the enrollment criteria, right, in the selection of early COVID patients and how we define that and how we design the study that way as well as any kind of immune flare or rescue if it's necessary?

Andy, this is Mary. So as Rick, mentioned, there's really 2 phases of this disease, the phase where patients have mild symptoms. And this is also an opportunity to identify patients who have lymphopenia. In our particular patient population, we have identified patients who are very mild in symptoms. So these patients can have severe cough, [ sore throat ], malaise, headaches, muscle pain, but they cannot, as Rick mentioned, have shortness of breath or dyspnea. They can't have any clinical signs of serious COVID-19. And so we do that by monitoring things like the respiratory rate, the heart rate, their O2 saturation. So these patients have no evidence that they're progressing to ARDS. So that's number one. And as such, as Rick was saying, there's really 2 phases to this disease. In the future when we would go into a larger clinical trial should we demonstrate that we can increase the absolute lymphocyte count and the compartments of lymphocytes, we could identify a patient population who's in that early phase that hasn't gone into hyperinflammatory stage by those who are very early on in hospitalization and have elevated levels of -- excuse me, have low lymphocyte counts and are not demonstrating wildly high levels of IL-6 and IL-10.

Next question comes from Paul Choi from Goldman Sachs.

My question is, as you think about development here and particularly with regard to the inclusion criteria as well as downstream development for COVID, will the standard of care allow for other -- use of other antivirals if patients progress, such as remdesivir? And then broadly, how do you think about integrating other therapies in terms of combination approaches with subsequent stage trials?

Yes. Paul, so yes, one of the things that I'll say very briefly, then I'll turn the question over, is that keep in mind that the trial is designed where there is a placebo arm, but all the patients will be receiving standard of care, right, which is the appropriate standard of care in the institutions and hospitals that they're using it. And since remdesivir was recently approved, that can very easily be a component of the standard of care. But if I could turn the question over to you, Rick, to also give Paul some additional discussion about the application of adding bempeg into the standard of care, not just in this trial, but even future studies could unfold as well.

Right. So I think, first of all, and Bob mentioned, Dr. Gallo mentioned this, this is not a direct antiviral drug or mechanism that's helping the host immune response fight the virus. So it's completely open in terms of the current treatment paradigm to add an effective antiviral. Unfortunately, we don't have such a thing yet. We have remdesivir. But that's only available for hospitalized patients with a more severe disease, difficulty breathing because that drug has to be given intravenously and it's still kind of unsettled, I think, how truly effective it is. Currently, there is no treatment for early disease for patients who are not hospitalized, who have not yet progressed to being in serious trouble with difficulty breathing. So there is -- it's really wide open in terms of applying an agent early, specifically agents that might show signs of getting into trouble, which is -- would be a low leukocyte count as has been proposed here. And so I think this -- it's an open opportunity for early disease. That's where most patients are. That's where the risk is progressing. And it does not -- would not, in my view, and Bob can comment on this, interfere with any future antiviral, direct antiviral drug that may be developed.

I'll agree with Rick, there's no reason to believe that. But I also have trouble with the suggestion in the question about remdesivir. Generally, why do you care about remdesivir? It really is a nonspecific and hardly very effective agent and [Audio Gap] very long with remdesivir for this pandemic. Let me say that. In short, it's not a very desirable drug. And there's no evidence that it is and no theoretical reason that it should be.

Our last question comes from Difei Yang from Mizuho.

So a quick one, do we know if interleukin-2 is contraindicated in -- potentially contraindicated with any of the antibodies that are being developed for COVID-19?

Difei, this is JZ. To our knowledge, it shouldn't be contraindicated with any of the antibodies that are under development. There's no, for example, either target sharing, for example, in convalescent plasma, if you look at the passive immunization or if you look at sort of the anti-inflammatory antibodies, like IL-6, IL-6 receptor as well. So yes, we don't have any reason to believe that there would be any first principles reason for why there'd be a negative interaction with those agents.

And that does conclude our question-and-answer session for today's conference. I'd now like to turn the conference call back over to Jonathan Zalevsky for any closing remarks.

Thank you, Crystal. So I'd like to start off by thanking everyone that joined us this morning. I know it's early. I know you're all very busy right before the market opens in just about now. I also want to really thank our 2 co-chairs of our Steering Committee for joining us, Dr. Rick Bucala, Dr. Robert Gallo. Thank you for taking the time. Your comments have been really, really, really awesome today. And then lastly, I want to thank all of the talented researchers, scientists, drug developers, manufacturing and all the staff of Nektar for working so hard on continuing to develop bempeg as well as the rest of the pipeline. And then particularly this new development with all the work that went into the regulatory submissions to open the IND as well as prepare for a clinical trial, which begins next month studying bempeg in mild COVID patients. With that, I want to wish everyone the best of the day and a wonderful week. Thank you so much.

Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect. Everyone, have a wonderful day.