Nektar Therapeutics (NKTR) Earnings Call Transcript & Summary

Thanks, Crystal, and good afternoon to all of you. We appreciate you being with us today; during this call, you'll be hearing from Howard Robin, who serves as our President and Chief Executive Officer, Dr. Mary Tagliaferri, our Chief Medical Officer, Dr. Jonathan Zalevsky, our Chief Research and Development Officer, and Linda Rubinstein, our Chief Financial Officer. Before we get started, I'd like to note that forward-looking statements about our business will be made on this call, including ones concerning the therapeutic and commercial potential and development plans for rezpegaldesleukin, the timing and execution of clinical trials, expectations for clinical data and regulatory filings, potential strategic partnering activities, financial guidance, and other statements about the future of our business. Since forward-looking statements concern the future, they carry uncertainties and risks that are hard to predict, and many of those lie outside our control. For a discussion of these risks and uncertainties, please refer to our filings with the SEC, including our most recent Form 10-K and subsequent filings. Except as required by law, we undertake no obligation to update these forward-looking statements. A live webcast and replay of this call will be available on the Investor Relations section of our website at nektar.com. With that, I'll hand the call over to Howard.

Thanks, Vivian, and good afternoon to all of you for being with us. For Nektar, the third quarter marked a major step forward as we moved REZPEG into phase III trials. With strong phase II data behind us in two important immune dermatology indications, we launched a broad phase III program for REZPEG covering both atopic dermatitis and alopecia areata. The global phase III trials in atopic dermatitis are now underway, and our phase III trial in alopecia areata remains on schedule to begin in December, which is ahead of the original timeline. As we mentioned last quarter, we expect the first top-line results from the atopic dermatitis trials in the summer of 2028. In the U.S. by itself, an estimated more than 31 million individuals have eczema. The American market for therapies addressing this chronic condition is projected to reach more than $30 billion by 2033. Now, despite several approved systemic therapies for patients with moderate to severe atopic dermatitis, just one in four patients currently receives a systemic treatment. Atopic dermatitis is a very heterogeneous disease, which means the biology driving the underlying disease state can be complicated and may differ considerably between patients. The biologics approved today each target a single inflammatory pathway, namely the type 2 inflammatory pathway, and largely by blocking the IL-13 cytokine. To make sure we have treatments that can meet the needs of every patient with atopic dermatitis, novel mechanisms targeting the heterogeneous nature of this disease are necessary. Importantly, we now know that at least half of patients on an existing biologic report inadequate control of their atopic dermatitis for this reason. With that in mind, the novel Treg mechanism of REZPEG provides a critically important therapeutic modality for patients, one that is presently absent from the treatment armamentarium. Our market research tells us that physicians are seeking mechanisms of action different from those already approved. Instead of blocking one downstream inflammatory pathway, the first-in-class Treg approach of REZPEG selectively expands immune cells to restore immune balance; put differently, we address the underlying inflammatory drivers rather than merely controlling the symptoms of the disease. JZ will discuss further some of the important translational work from REZPEG AD that shows the unique profile we have for REZPEG. In the atopic dermatitis commercial landscape, we have already seen clear evidence of demand for a mechanism outside of IL-13. NEMLUVIO, an IL-31 cytokine blocker, received a label in atopic dermatitis only in combination with topicals. According to recent U.S. claims data, NEMLUVIO is capturing at least 10% of new treatment starts roughly seven quarters into launch. In fact, since launch, DUPIXENT has been losing these new-to-brand patient starts, falling from an 81% share of starts in 2024 to 65% today, and more than half of the share DUPIXENT has lost has gone to novel MOAs. The fact that physicians are willing to put patients on a novel agent outside of DUPIXENT confirms what our market research for REZPEG has shown us, pointing to an opportunity for REZPEG in first-line treatment as well as in second-line treatment. Given the recent setbacks in the OX40 class, we think no agents in mid-to-late-stage development tackle the underlying heterogeneity of disease in atopic dermatitis the way REZPEG does, by targeting the full range of inflammatory pathways. That hands REZPEG a genuinely unique competitive position; in our research, roughly 90% of surveyed dermatologists said they would consider starting a patient on REZPEG before starting that patient on another biologic or a JAK inhibitor. This highlights how receptive the dermatologist community is to trying novel MOAs as a first-line treatment; with alignment from the regulatory agency, we are advancing our phase III program to support a broad label, covering first-line use in patients who are new to biologics and JAK inhibitors as well as second-line use in patients previously treated; in alopecia areata, REZPEG has a unique opportunity to offer a compelling first-line therapy when compared with the existing approved JAK inhibitor class. Oral JAK inhibitors need daily dosing and come with box safety warnings and laboratory monitoring requirements. The market, per Decision Resources Group, is forecasted to hit approximately $5.2 billion by 2033. Mary will say more about our phase III programs in atopic dermatitis and alopecia areata shortly. At the recent EADV conference, we gave multiple oral presentations for REZPEG, which Mary will also go over in a bit. Beyond our two lead dermatology indications, we believe REZPEG keeps offering broad potential in other autoimmune indications. The phase II study in new-onset type 1 diabetes, sponsored and funded by TrialNet, is ongoing, and we currently estimate that data from the first cohort of patients could be available in late 2027. As I said last quarter, we are planning to start a new signal-seeking trial for REZPEG in another immune indication, and Mary will say more about our specific plans and that opportunity; with that, I will hand the call over to Mary.

Thanks, Howard, and good afternoon to everyone. As we mentioned earlier, we had a major presence at the EADV conference, where REZPEG featured in three separate oral sessions. Two presentations covered REZOLVE-AD. One was a highly important translational biomarker sub-study run at Mount Sinai, and the other was our data on 52-week monthly and quarterly maintenance dosing. In alopecia areata, we presented off-treatment data showing strong retention of hair regrowth, plus additional hair regrowth, among patients who had received 52 weeks of REZPEG treatment and were then followed for six months off treatment. Following that strong EADV showing for REZPEG, we are now enrolling patients in our phase III ZENITH-AD program. We have three pivotal trials in our worldwide phase III ZENITH-AD program, and every one of them involves 510 patients who are 12 years of age or older. Enrollment is now underway in all three. In the first of these, ZENITH AD-1, we are testing REZPEG as a monotherapy among patients who have not previously received oral JAK inhibitors or biologics. For ZENITH AD-2, we recently modified the design so that the trial now assesses REZPEG in combination with topical corticosteroids and accepts both treatment-naive and previously treated patients; this adjustment follows recent feedback from regulatory authorities and is intended to help secure a label for REZPEG that goes beyond monotherapy to cover its use alongside topical corticosteroids. ZENITH AD-3 is currently enrolling patients who have already been exposed to JAK inhibitors and biologics. These three trials together will enroll roughly 1,500 patients, giving us a registrational program that is built to secure the widest label we can get for REZPEG when it reaches the market — covering both adults and adolescents, patients who have and have not previously received biologics or JAK inhibitors, and use as monotherapy or combined with topical corticosteroids. With this program, REZPEG is positioned to serve the entire range of people living with moderate to severe atopic dermatitis. Per Howard's remarks, we continue to anticipate the first top-line results from the ZENITH-AD studies during summer 2028, and we aim to submit a BLA before 2029 comes to a close. Each of the three ZENITH-AD trials has a 24-week induction phase where participants get either REZPEG at 24 micrograms per kilogram every other week or a placebo. The main registrational endpoint is the Investigator's Global Assessment, or IGA, measured at week 24. EASI-75 serves as a key secondary registrational endpoint and, in major markets outside the U.S., will additionally function as a co-primary endpoint alongside IGA. Additional endpoints, with multiplicity protection in the trials, cover itch and patient-reported outcomes, plus control of comorbid asthma, a condition affecting roughly 25% of patients with moderate to severe AD. Following those 24 weeks, patients who achieve an EASI-75 or IGA 0/1 response move into a 28-week maintenance phase that tests less frequent monthly and quarterly dosing. In the phase II-B REZOLVE-AD trial's induction period, REZPEG showed activity starting quickly—early gains in skin clearance and itch, plus robust efficacy on key clinical endpoints. Results from the longer term, presented once more at EADV, added evidence that REZPEG may achieve disease control that is both durable and deepening. The key point: sustained responses appeared on the monthly schedule as well as the quarterly maintenance dosing schedule, across key measures of disease activity—EASI responses, clear or almost clear skin per vIGA, and itch relief that is clinically meaningful. On top of that, we observed new responses appearing in patients who hadn't hit those thresholds during induction, and over time a greater number of patients reached complete skin clearance. As Howard said, the 52-week off-treatment follow-up data from REZOLVE-AD will be reported by us in the first quarter of 2027. Just to remind everyone, in REZOLVE-AD we ran an induction treatment as well as a maintenance treatment. You'll remember that patients who finished the maintenance treatment on REZOLVE showed high durability of responses along with continued deepening of those responses for endpoints such as EASI-75, EASI-90, and EASI-100. Patients who completed 52 weeks of the maintenance treatment then entered an off-treatment follow-up period, during which we kept evaluating how well their responses were maintained. For these patients who finished 52 weeks on treatment and went into the off-treatment evaluation period, we assessed maintenance of disease clearance, including EASI and other disease metrics that are patient-reported, like itch and quality of life. Once the 52-week on-treatment maintenance portion of the trial was completed, off-treatment follow-up assessments took place at weeks 4, 13, 26, 39, and 52. In REZOLVE-AD, a total of 125 patients completed the maintenance treatment period. Among them, 110 patients were in the REZPEG maintenance treatment arm while 15 were on placebo. The placebo group stayed in the off-treatment phase so that study blinding could be preserved for everyone enrolled. Note that there was no choice to receive more treatment or to join a long-term extension once the 52-week off-treatment window ended; every placebo withdrawal study run for the currently approved agents differs on this point. During the off-treatment period in REZOLVE-AD, patients received zero injections, unlike placebo withdrawal designs in which a sham injection continues to be given. As far as we know, only one additional trial has included off-treatment follow-up that did not use a placebo withdrawal design — the phase II rocatinlimab/OX40 study. Their time receiving treatment was just 36 weeks, and then they were followed for only 20 weeks after stopping, without any sham placebo injection. So what standard should we be measuring against? Just as we did when we shared our maintenance results, we find DUPIXENT a useful benchmark. With DUPIXENT, a nine-month post-treatment follow-up analysis was completed that looked at how well the EASI-75 response was sustained. That trial relied on a placebo-withdrawal design, and they reported that about 50% of patients kept their EASI-75 at nine months off treatment. If we were to observe that same degree of EASI-75 maintenance at 12 months off treatment, or even better, that would be a notable result. Why? Because it opens up the possibility of moving EASI-75 responders to quarterly dosing following 52 weeks of induction and maintenance treatment. On top of that, as an added way to stand apart, results like these might open the possibility that patients who reach a deep and lasting response measured across several disease parameters could move to dosing as rarely as once every six months, after 52 weeks of induction and maintenance therapy. Now let's turn to alopecia areata. We recently shared new off-treatment results for the first time at EADV, which offer additional evidence of REZPEG's mechanistic potential to produce responses that are durable and deepening. During April, we shared findings indicating that patients treated with REZPEG up to week 52 achieved greater SALT ≤20 response rates. At EADV, we demonstrated that once treatment concluded, those same patients maintained their responses over the course of several months. This is particularly important for alopecia areata, since losing regrown hair following discontinuation of a JAK inhibitor represents a significant concern for both patients and physicians. Given this durability of response, we believe it warrants investigating maintenance dosing administered less frequently after a full year of REZPEG given twice monthly among patients who achieve SALT ≤20 or better. As an example, among patients who received treatment for 52 weeks, 7% reached a SALT score of 10 or lower when treatment concluded, and half a year afterward—with REZPEG discontinued—19% of patients had attained a SALT ≤10; these findings indicate genuine potential for patients. Notably, we have shown repeatedly by now that REZPEG therapy yielded lasting responses in both atopic dermatitis and alopecia areata.

All of this together strengthens the case that REZPEG could provide lasting disease control with dosing that isn't frequent, which may be a meaningful point of difference when treating chronic inflammatory diseases. Next month we'll begin our phase III ZENITH AA study. Roughly 850 patients, ages 12 and older, who have severe to very severe alopecia areata will be enrolled in this single global registrational trial. Through week 52, patients will get either placebo or REZPEG at 24 micrograms per kilogram once every two weeks. SALT ≤20 or less at week 52 will serve as the primary endpoint. The study will enroll patients who are naive to systemic treatment as well as those who previously received a systemic agent following an appropriate washout; patients whose current alopecia areata episode has lasted up to eight years will also be included. After 52 weeks of treatment, patients will move into a long-term extension. Patients who show a good response during those 52 weeks of treatment will be given maintenance dosing on a monthly or quarterly basis. Results from ZENITH AA should arrive in 2029, and when you add that study to ZENITH AA, the whole ZENITH initiative is going to bring in roughly 2,400 patients aged 12 and up, spanning the atopic dermatitis and alopecia areata trials, which gives us a sizable safety database to back a registrational approval. Beyond that, we're setting up an investigator-sponsored trial at Mount Sinai focused on alopecia areata, and it's going to cover moderate cases as well as severe and very severe ones. Moderate patients are a big opportunity in our view, and we think producing data in that group matters a great deal as we think through how REZPEG is positioned overall across the full alopecia areata population. That IST gets underway in the first half of next year. Howard noted earlier that we're also looking at additional uses for REZPEG. Our initial trial will be a proof-of-concept involving roughly 30 vitiligo patients. For REZPEG, vitiligo is an appealing possible growth area — there's substantial unmet need, a sizable market that remains under-penetrated, and solid mechanistic support for treating with a Treg-based therapy. Right now about 1.9 million people in the U.S. have vitiligo, but just 15% pursue treatment. Much like the competitive picture in alopecia areata, the sole approved drugs or ones in late-stage development are JAK inhibitors. All of those products, taken orally or applied topically, come with notable safety issues and burdensome lab monitoring. Beyond that, the majority of patients see their repigmentation largely disappear within twelve months after they cease JAK inhibitor therapy. That creates an unmet need for differentiated options that can deliver durable responses with less frequent dosing. Crucially, vitiligo's underlying biology gives a strong rationale for REZPEG. Vitiligo is an autoimmune dermatologic condition where cytotoxic CD8-positive T cells assault and destroy melanocytes. This leads to impaired Tregs, marked by a loss of IL-10 and TGF-β1 regulation, and that in turn causes loss of pigmentation. In a moment, JZ will discuss further the biomarker sub-study from REZOLVE-AD that was presented at EADV. A key point for vitiligo: the trial showed that treatment with REZPEG led to elevations in serum IL-10 and TGF-β1 starting at week two, and those elevations showed a positive correlation with clinical response at week 16. By restoring both the number and the function of Tregs in vitiligo patients, REZPEG may be able to produce meaningful clinical responses in this indication. That study, which launches within the coming few months, will provide proof-of-concept data in late 2027 or early 2028. On top of that, we continue to investigate additional indications where REZPEG's novel Treg approach might have clinical utility, including asthma, where REZPEG has already demonstrated a strong decrease in ACQ5 scores among patients with atopic dermatitis and comorbid asthma. We’re eager to provide further updates as those initiatives move forward. With that said, I’ll now turn things over to JZ. JZ?

Thank you, Mary. I want to take a few minutes to discuss REZPEG's biology, particularly the biomarker data we shared at EADV, since those findings give us important new understanding of how REZPEG operates and help explain the clinical responses we have seen. As Howard noted, atopic dermatitis is a complex and heterogeneous disease that involves multiple inflammatory pathways; even so, the biologics approved today target just one inflammatory pathway, namely the type 2 inflammatory pathway, by blocking the IL-13 cytokine. REZPEG, by contrast, is engineered to selectively expand the immune cells that assist in restoring balance across multiple pathways. To characterize this novel Treg mechanism more fully, we collaborated with investigators at Mount Sinai on a biomarker analysis covering 100 patients from the REZOLVE-AD study. This sub-study examined gene and protein expression in blood samples and in non-invasive skin tape strips, comparing REZPEG at the doses chosen for phase III against placebo. Results demonstrated that by week two, significant increases had occurred in FOXP3 and IL-2RA, two key markers of regulatory T-cell activity. We also saw, at the same time, changes consistent with normalization across multiple inflammatory pathways implicated in atopic dermatitis, including the Th1, Th2, and Th17 inflammatory pathways, along with JAK-STAT signaling. Such effects appeared in both skin and circulation, which offers further evidence of how broad REZPEG's mechanism is. Importantly, we could also establish a link between these early molecular changes and the clinical improvements that followed. Changes in several blood biomarkers at week two, including rises in IL-10 and TGF-β1 expression and decreases in the inflammatory marker TARC, correlated significantly with greater improvement in EASI scores at week 16. These correlations reached statistical significance in patients treated with REZPEG and were absent from the placebo group. REZPEG-treated patients in this substudy also achieved a mean 64% reduction in EASI at week 16, consistent with results in the broader study population. We further observed changes in the molecular signature associated with cardiovascular disease, atherosclerosis, and alopecia areata, which strengthens our belief in REZPEG's potential as a pipeline in a product. These findings offer important validation of REZPEG's differentiated mechanism. They demonstrate that REZPEG induces early regulatory T-cell-associated activity and affects a broad range of inflammatory pathways, with molecular changes tied to later clinical improvement. Beyond REZPEG, we continue preclinical work on our TNFR2 program, which includes NKTR-0166, our bispecific program combining NKTR-0165, our TNFR2 agonist antibody, with a second validated immune target we have not yet disclosed; this program extends the same core strategy behind REZPEG, developing therapies that restore immune regulation rather than merely suppressing a single inflammatory signal; with that, I will hand the call to Linda to review our financial results. Linda?

Thanks, JZ, and good afternoon, everyone. During today's call, I'll go over the quarterly financials for the third quarter of 2026 as well as the updates to our 2026 financial guidance; we closed the third quarter of 2026 with roughly $953 million in cash and investments, and our balance sheet carries no debt. Our current expectation is that we will finish 2026 with over $840 million in cash and investments, which sits at or above the top end of the $815 million-$840 million range we gave on our Q2 call. Moving to the income statement, non-cash royalty revenue for the third quarter of 2026 came to $8.5 million. For the year, we now expect non-cash royalty revenue of approximately $38 million. R&D expenses for the third quarter of 2026 were roughly $44 million. We anticipate a fourth-quarter increase driven by REZPEG AD enrollment, AA clinical startup, and supporting CMC activities. Full-year R&D expense is now anticipated to fall between $185 million and $200 million, including approximately $5 million-$10 million of non-cash depreciation and stock-based compensation expense. G&A expenses came in at about $25 million for the third quarter; for the full year 2026 we expect G&A expenses of approximately $65 million, which falls within the range given previously. That figure includes approximately $5 million of non-cash depreciation and stock-based compensation expense. Non-cash interest expense for the third quarter was approximately $6 million. For the year, we now expect non-cash interest expense of approximately $28 million. Our net loss for the third quarter was approximately $56 million, or $1.63 basic and diluted net loss per share. As I said earlier, we expect to finish 2026 with more than $840 million in cash and investments. Our financial position is strong, which lets us execute our robust and exciting REZPEG ZENITH AD and ZENITH AA program. With that, I'll turn it over to the operator for questions.

Good afternoon, team. Congratulations on all of the updates. I'm genuinely excited to hear about your interest in vitiligo and about moving forward, but I'd love to get a bit more color on what work needs to be completed in order to kick off the studies in the upcoming months. Would you envision a placebo-controlled study, or an open-label study? Also, maybe give us some insight into how you think about dose selection in vitiligo? Sorry, that was more than one question. My apologies.

Hi, Yasmeen. That's a really good question. I'll defer to Mary on going through some of the detail on that. I would say it's an interesting indication because, as JZ did say, it is very much T-cell mediated. It is a T-cell-mediated disease. So, I think it's really a perfect opportunity for us to show the potential for REZPEG in broad applications in autoimmune disease. Mary, maybe you could answer some of the questions about study design.

Right. Hi, Yasmeen. This is a proof-of-concept study, and what we want to establish is whether the strong biologic and mechanistic rationale we see for REZPEG in vitiligo, which we have seen in our immune derm diseases, carries over into vitiligo. As you probably know, there are companies that have run an open-label single-arm study and then moved into a phase III program. We do feel there is an opportunity to do this because, like alopecia areata, the placebo effect on these endpoints is very low, such as facial VASI 75 or even mean percent change from baseline in facial VASI. We do believe there is an opportunity to conduct a trial very efficiently in an open-label population. We are still working on the final design concept. I just had a call this morning with Dr. David Rosmarin, with whom we are working very closely on this study design, and we will be able to launch this study next year. Stay tuned. As Howard and JZ and I have said, the mechanistic rationale for going into this indication is very strong, and also given that this is primarily a Th1-dominated disease, and we saw the good data in alopecia areata, we believe there is great read-through into vitiligo from what we have already collected in these inflammatory skin diseases. As we mentioned, this is really an under-penetrated market with only 15% of patients getting treated; we are very excited to move forward quickly into this new indication. Thank you.

Hi there, and thanks for taking our questions. Looking ahead to the REZOLVE-AD off-treatment data coming next quarter, could you walk us through the reasoning behind using 52 weeks rather than 36 weeks of treatment, and why that may give REZPEG a better chance at sustained responses once treatment stops? Are there any notable statistical differences compared with the phase I-B atopic dermatitis trial that we should bear in mind? And could you also discuss how you plan to handle rescue therapy and missing data in that study?

Yeah. Hi; we're genuinely excited to see these data; we've provided some guidance that roughly 125 patients received dosing. I do think what we learned during the maintenance period in the phase II-B was that we observed one very robust maintenance of EASI-75. As you'll recall, we followed patients who received only Q12-week dosing, or once a quarter; among those who came off 16 weeks of Q2 weeks of 24 micrograms per kilogram, half went on to get just three doses of REZPEG. What we observed is that 83% of those patients were able to maintain their EASI-75. I think we have good data from the phase II-B, as you mentioned, showing this durability with only three doses of REZPEG, and we even saw patients whose responses deepened; that, combined with what we saw in alopecia areata, where patients were dosed for 52 weeks and then treatment stopped and we followed those with SALT ≤20 for another six months, we also saw really good durability in those patients. I'd say the maintenance portion and the data that emerged from the phase II-B, together with what we saw from the phase II-B in alopecia areata, both strongly support that we'll be able to see patients achieving durability of treatment with 52 weeks off REZPEG. The nice part of the study is that we'll be able to examine, well, what happened to patients at 4, 13, 26, 39, and 52 weeks off treatment? We believe this will help guide us, particularly beyond 52 weeks, as to what type of dosing these patients need in a long-term extension? Is quarterly dosing optimal, or for those patients with very deep responses, might they even move to a Q6-month dosing regimen? We look forward to sharing those data with you in the first quarter of next year.

Oh, hi there. Congratulations on everything you've achieved across such a wide range of clinical development programs, and thanks for taking my question. Given that your EADV work tied early rises in IL-10 and TGF-β1 changes to later clinical improvement, are you also examining whether those same early biological shifts could predict sustained responses once treatment is withdrawn? And if so, would that strengthen the argument that REZPEG may be disease-modifying by restoring immune regulation rather than merely causing temporary suppression of inflammation? As a follow-up, if I may, could you speak to any update on your type 1 diabetes program and when we should expect clinical data? Thank you.

Glad to take the first question. As you anticipated, that is indeed a set of activities we have underway. In this study the cohort is large enough that we can parse the patients and search for different features of the responses. We are in fact examining both the skin and the serum for hallmarks tied to those kinds of response stratifications; we're doing that first in the 16-week induction data, and we presented only a portion of the data. There is considerably more data than Meredith showed in that EADV presentation. Importantly, we also collected tape strips through 52 weeks in that study, along with serum samples; this really is a major area of our translational focus, because we do believe we can see features of the normalization as well as the immune changes that could be consistent with the rebalancing mechanism of REZPEG. So this will definitely be the subject of additional work we're doing. Mary, perhaps I'll hand the type 1 diabetes question over to you.

Right, thanks JZ. And thanks, Jay. From what I understand, TrialNet has roughly two-thirds of the clinical sites they intend to enroll at now operational, and that initial cohort is going to be 18 patients — 12 receiving REZPEG and six getting placebo. They expect to have results from that first cohort, the six-month data, either at the close of 2027 or early in 2028. So we're genuinely excited and eager to see those results too. Thank you.

Great. Thanks. Congratulations once more.

Hello, team. Cha Cha here, filling in for Roger. Thanks once more for such an informative call, and I appreciate you taking my question. I've also got a question about the vitiligo selection program. Could you share more on how you're picking patients and which ones you're choosing to prioritize — is it those with active disease or those whose disease is stable, where the main goal might be repigmentation? And tied to that, could you tell us the percentage of patients in each group and the commercial opportunity for targeting particular subgroups you're pursuing? Thanks.

Yeah. Hi, Cha Cha. We'll be enrolling patients who have active disease, and those are patients with non-segmental vitiligo. As we were just saying, this is a fairly large market, very similar; we see this market as very similar to alopecia areata. We're working with our advisors, and, like I said, just this morning actually spoke with Dr. David Rosmarin about some specifics of the study design. Once our trial is up and running, we'll let you know in more detail about the total patient population, the exact study design, and our anticipated date for having data. Thank you.

Hi there, and good afternoon. I was wondering whether you might be able to update us on how enrollment is going in the phase III studies for biologic-naive patients versus those who are experienced. I'm trying to figure out whether you're noticing any specific headwinds or tailwinds in either of them, and whether you expect these trials to finish enrolling within a similar timeframe, since we're already thinking ahead about the cadence of data. Thank you.

Yeah, thanks for the question. So, yeah, we're really just getting started, and I would say that at this point there isn't a huge difference in enrollment between the naive and the experienced patients. For all three of the AD trials, we believe all of our enrollment projections are going to coalesce and finalize, and that we'll have our top-line data by the summer of 2028. So that means all the patients will be enrolled in these trials around January of 2028.

Hello there, and good afternoon. Thank you so much for taking my question. Regarding the ZENITH AD-2 study specifically, could you share some detail on the regulatory feedback you got that prompted the protocol change? What is behind that feedback from the regulators, and are you able to tell us which regulatory agency was the one that initiated it? Thanks.

Hi, Sam. So, regulatory feedback has come to us from the U.S., from the FDA, from the EMA, and from the PMDA, the Japanese health authority. What I'd say is that it isn't always identical, but all of them agree that running a clinical trial in combination with topical corticosteroids is a sensible approach. What has probably shifted since the days when DUPIXENT, lebrikizumab and tralokinumab began their development programs is that it used to be more typical to run two clinical trials in naive patients plus a third trial in topical corticosteroids. I think, with the landscape evolving and more people being treated with biologics, certainly running a study in patients who are experienced with something, and that feedback was shared with us by all the regulators. Let me just close by noting that in Japan, for registration there, a trial in combination with a topical corticosteroid is required. The totality of what all three agencies told us made it very clear that the best way to strengthen our overall phase III registrational package, to support the broadest possible label and meet the needs of all three regulators, was to change that AD-2 study to a topical corticosteroid. It wasn't one agency, it was a combination of all three, and truly the totality of their feedback helped us strengthen our overall program for commercial purposes too.

Great. Thanks for taking the question, guys, and congratulations on the progress this quarter. I have a follow-up question about the ZENITH AD-2 study. Regarding the adjustment that you made, does adding TCS also result in a change to sample size or to the powering assumption? What placebo plus TCS response are you assuming, and is there any cap or stratification factor on experienced patients that we should keep in mind here? Thank you.