Q2 2025 Nektar Therapeutics Earnings Call
Speaker #2: Hello, and thank you for standing by. Welcome to the NEKTAR THERAPEUTICS second quarter, 2025 financial results conference call. At this time, all participants are in the en-only mode.
Speaker #2: After the speaker's presentation, there will be a estion-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Corinne Franklin from NEKTAR THERAPEUTICS Investor Relations to kick things off.
Speaker #2: Please go head.
Speaker #3: Thank you and good afternoon, everyone. Thank you for joining us today. On the call today are Howard Robin, our president, and chief executive officer; Dr. Jonathan Zalevsky, our chief research and development officer; and Sandra Gardiner, our chief financial officer.
Speaker #3: Dr. Brian Kotzin, our chief medical officer, will also be available during the question-and-answer session. On today's call, we expect to make forward-looking statements regarding our business, including statements regarding the therapeutic potential of and future development and regulatory plans for red pegatus lichen and our other drug candidates.
Speaker #3: The timing and plans for future clinical data presentations and other statements regarding the future of our business. Because forward-looking statements relate to the future, they are subject to uncertainties and risks that are difficult to predict, many of which are outside of our control.
Speaker #3: Our actual results may differ materially from these statements. Important risks and uncertainties are set forth in our Forms 10Q that was filed on May 9th, 2025, and is available at sec.gov.
Speaker #3: We undertake no obligations to update any of these forward-looking statements. Whether, as a result of new information, future developments, or otherwise, a webcast of this call will be available on the IR page of NEKTAR's website at NEKTAR.com.
Speaker #3: With that said, I would like to hand the call over to our president and CEO, Howard Robin. Howard?
Speaker #4: Thank you, Corinne. Good afternoon, everyone. The second quarter of 2025 was transformative for NEKTAR. In June, we reported highly compelling initial data and ectopic dermatitis for our lead clinical program, res pegatus lichen, also known as res peg.
Speaker #4: These data established res peg as a potential first-in-class novelty regulatory mechanism for patients suffering from this chronic relapsing inflammatory skin disorder. In 2023, we took the bold step to pursue qi regulatory cell science across our pipeline.
Speaker #4: This science is focused on stimulating Tregs in different ways to restore the proper balance between P effector cells and T regulatory cells, and achieve homeostasis in the immune system.
Speaker #4: And we had the goal at that time to demonstrate that this important pathway could represent a completely new way to treat autoimmune and inflammatory disorders by mimicking the way our own immune system works to resolve inflammation.
Speaker #4: So in October of 2023, we initiated a 400-patient phase IIB study for res peg in patients with moderate to severe ectopic dermatitis. We're early proof of concept data in patients had shown promise at the time.
Speaker #4: For our second indication, we chose to run a phase IIB study in alopecia areata. This is a disease setting where the underlying T regulatory cell deficiency creates a known imbalance between T effector cells and T regulatory cells, leading to hair loss for these patients.
Speaker #4: The resolve AD study results we recently reported also validate NEKTAR's novel approach to access Tregs through the IL2 pathway with a unique molecular design as compared to the competitive landscape.
Speaker #4: While other approaches to access IL2 have focused on the design of mutines, which we believe hindered their development recently and over the years, we instead took a straightforward and elegant approach of accessing Treg biology through a native sequence IL2 and then applying pegulation of proven chemistry that has led to the approval of over 30 biologics and small molecules over the last several decades, and many of these are ones in which NEKTAR played a role.
Speaker #4: Now that we've been granted FDA fast-track designation for both ectopic dermatitis and alopecia, we have the opportunity to move more quickly and align with the FDA to design the most expeditious regulatory pathways.
Speaker #4: This underscores that there are undoubtedly still remains a large unmet need in the setting of ectopic dermatitis and alopecia areata for novel mechanisms of action.
Speaker #4: And we believe we're well positioned with a first-in-class novelty reg mechanism that is poised to interface redevelopment in 2026. Now, since Dupixent was launched eight years ago, the ectopic dermatitis market has grown to around $15 billion in US sales.
Speaker #4: With expectations that it could reach nearly $30 billion by 2033. Our own recent market research has suggested that physicians with prescribed res peg in both biologic naive and biologic experienced patients with ectopic dermatitis and so our goal is to design a phase III program that captures this unique opportunity in front of us.
Speaker #4: Currently, IL-13-based therapies dominate the treatment landscape, and about 50% of patients fail to respond to this mechanism. Moreover, IL-13-based therapies are known to have side effect risks such as conjunctivitis and infection, which can pose a challenge for patients.
Speaker #4: So in view of these challenges, there's a significant opportunity for res peg. With a fast onset of easy response and itch relief, res peg is poised to take a differentiated position in this landscape.
Speaker #4: As Jay Z will explain in more detail, our phase III strategy is designed to achieve a broad label in both naive and experienced patients, which would allow res peg to capture a substantial share of the growing multi-billion dollar ectopic dermatitis market.
Speaker #4: Given the very high correlation between historically positive phase IIB results and the subsequent approvals in ectopic dermatitis, we're highly focused on moving quickly into phase III and our adiness activities are underway.
Speaker #4: Our oversubscribed 115 million dollar equity financing in June now puts us in an even stronger financial position to complete important phase III enabling CMC and regulatory planning activities to ensure that res peg will be phase III ready in the first half of 2026.
Speaker #4: In addition, the financing also positions us to extend our cash runway into 2027. Looking ahead, the ongoing resolve AD study will generate additional data in Q1 of 2026, which we expect will further characterize the durability and depth of response for res peg out to week 52.
Speaker #4: We plan to present patient-reported outcome data including quality of life and symptom assessments from the 16-week induction period at a medical meeting this year.
Speaker #4: This data presentation will also include a planned data cut for patients who receive placebo in the induction phase and who then cross over to a treatment escape arm.
Speaker #4: With this new upcoming data cut, we're excited to see whether easy responses deepen with continued treatment with res peg beyond the 16-week induction. I'll let Jay Z talk more about this key data set in a moment.
Speaker #4: Now, in addition, we're on track to report data from the separate phase IIB study in alopecia areata in December of this year. This is an indication where we are directly addressing the underlying pathology of hair loss in alopecia patients.
Speaker #4: Another positive outcome here would position res peg as a novel mechanism in a dermatological setting where there is only one mechanism approved for patients, JAK inhibitors.
Speaker #4: These carry multiple well-known black box warnings and are associated with high relapse rates upon discontinuation. The market for alopecia areata treatments is projected to grow to $2 billion by 2033, and we believe a new mechanism, res peg, could take a very significant share of this market.
Speaker #4: And now I'll it over to Jay Z for some more details on res peg and our earlier programs in our pipeline. Thanks, Howard. And thank you to everyone on the call for joining us today.
Speaker #4: To start, I'd like to remind you of the key takeaways from our June 24th webcast, where we announced top-line 16-week induction data from the ongoing phase IIB study known as resolve AD.
Speaker #4: Resolve AD enrolled 393 patients, and its testing res pegatus lichen and biologic naive patients with moderate to severe ectopic dermatitis. The study met its primary endpoint of statistical significance for mean percent change in easy score from baseline for all res pegatus lichen arms versus placebo at week 16.
Speaker #4: All three res pegatus lichen arms met significance on the easy 50, easy 75, and BSA. The every two weeks regimens met significance on VIGA AD and itch NRS, and the high dose of 24 microgram per kilogram every two weeks also achieved statistical significance on easy 90.
Speaker #4: Both easy reduction and magnitude of itch improvement were seen after the first few doses of res peg, which we think could truly differentiate it from other systemic therapies in terms of a faster onset of action.
Speaker #4: Also, the safety profile for res peg in the phase IIB study was consistent with previously reported results from other res peg clinical studies, and there was no increased risk of incidence of conjunctivitis, oral herpes, or oral ulcers as is seen with other agents which are approved or in development.
Speaker #4: The maintenance period of the study is ongoing. And we expect to share the top-line results for 52 weeks of dosing for the 36-week Q4 week and Q12 week maintenance regimens as well as the Q2 week escape arm regimen and Q1 2026.
Speaker #4: As Howard mentioned earlier, we are looking forward to presenting additional differentiating endpoints from the induction phase of the resolve AD study at a medical meeting in the fall of this year.
Speaker #4: These include quality of life assessments such as sleep quality, skin pain reduction, overall patient experience, and other important metrics that are meaningful for patients battling ectopic dermatitis.
Speaker #4: In that presentation, we are also planning a data cut which looks at patients who have received 24 weeks of treatment with the highest dose induction regimen of res peg, 24 microgram per kilogram Q2 week.
Speaker #4: You'll recall that our study design allowed patients from induction who had easy scores of less than 50 to advance to a treatment escape arm for up to 36 weeks.
Speaker #4: As we reported in June, 42 patients who were in the placebo arm during the study had a week 16 Easy Score worse than Easy 50.
Speaker #4: And entered into this escape treatment arm. These patients represent a true crossover population for studying the extended duration res pegatus lichen dosing. By this fall, we expected more than half of the patients in this crossover cohort will have completed 24 weeks of treatment.
Speaker #4: So with this new upcoming data cut, we are excited to see whether easy responses can deepen with continued treatment with res peg beyond week 16 and out to week 24.
Speaker #4: This is a phenomenon not observed with IL13 agents whose treatment effect tends to be capped at the end of induction. And we are excited about this potential because our reported data of res peg at 16 weeks is comparable to 24 weeks of treatment reported with the OX40 agents but with a faster onset of easy 75 and itch response than what is seen with those agents.
Speaker #4: As we announced in February of this year, we received fast-track designation for res peg for the treatment of adult and pediatric patients 12 years of age and older with moderate to severe ectopic dermatitis whose disease is not adequately controlled with topical prescription therapies or when those therapies are not advisable.
Speaker #4: As Howard stated, we have already begun phase III readiness activities and clinical trial design planning as we prepare for an end-of-phase II meeting with the FDA later this year.
Speaker #4: Our goal is to position res peg to enter its first phase III study in the first half of 2026. We are actively evaluating several design pathways, including those that provide a clear line of sight to approval of res pegatus lichen in patients who are both biologic naive and biologic experienced.
Speaker #4: We will finalize the trial design following our end-of-phase II meeting with the FDA later this year. With the strong data from resolve AD confirming the optimal induction dose and target patient population, we're focused on maintaining our momentum to progress res peg as quickly as possible in ectopic dermatitis.
Speaker #4: Now, moving on to alopecia areata. The phase IIB resolve AA trial completed enrollment in February and we're excited to share our -line results in December.
Speaker #4: In this trial, in patients with severe to very severe alopecia areata, res peg is being evaluated at doses of 18 microgram per kilogram or 24 microgram per kilogram every two weeks versus placebo.
Speaker #4: A total of 94 patients were enrolled and the week 36 primary endpoint in the study is the mean percent improvement in SALT score. Now, keep in mind that alopecia areata is another dermal disease.
Speaker #4: And so, our results in ectopic dermatitis and also reinforced by an earlier separate study in psoriasis, point to this T regulatory cell mechanism having strong signals of efficacy in dermatological settings.
Speaker #4: Alopecia areata is a disease in which the patient's immune system mistakenly attacks the hair follicle and disrupts the body's normal ability to keep and grow hair.
Speaker #4: Leading to severe hair loss and lack of hair regrowth. We know the underlying cause here is the imbalance in T effector cells to T regulatory cells around the hair follicle.
Speaker #4: And this imbalance results in the T effector cells attacking and damaging the hair follicle, and prohibits Tregs from signaling to and promoting the function of hair stem cells.
Speaker #4: So by stimulating T regulatory cells, we are seeking to overcome the pathogenesis of the disease and restore immune homeostasis. In resolve AA, we will assess a number of secondary endpoints as well.
Speaker #4: Including the proportion of patients with the greater than or equal to 50% reduction in SALT at week 36, and other assessed time points, and the regulatory approval endpoints for phase III studies: SALT 20 and SALT 10 responder analyses.
Speaker #4: Following the week 36 assessment, patients who did not achieve a SALT score of less than or equal to 20 but did demonstrate substantial hair regrowth over the 36 weeks are eligible to enroll in a 16-week treatment extension, which allows us to have a subset of patients that will be treated for 52 weeks.
Speaker #4: Now, turning to type 1 diabetes, another autoimmune disease where res peg has great potential as a Treg therapy, we believe res peg can potentially slow the progressive loss of insulin-producing beta cells, which are the target of the patient's overactive immune cells in this disease.
Speaker #4: As previously announced, TrialNet is sponsoring and conducting an investigator-sponsored phase II clinical trial evaluating res peg in 66 patients with new onset type 1 diabetes with funding from the NIH.
Speaker #4: We expect TrialNet to begin this study before the end of the year. And finally, NEKTAR O165, our TNFR2 agonist antibody program, is progressing through I&D enabling studies with a goal to advance this program into the clinic in 2026.
Speaker #4: TNFR2 agonism potentiates Treg function as well as maintenance of Treg lineage stability. Especially in the non-lymphoid tissue compartments. The first preclinical data from this program was presented last year at ULAR and demonstrated that NEKTAR O165 has a very high specificity for signal links for TNFR2 on Tregs and enhancing their immunoregulatory phenotype.
Speaker #4: It also showed that the agonist we discovered is able to signal to the TNFR2 multimeric receptor as a single arm monovalent antibody. And we believe this is the only antibody in this class being developed that has this attribute.
Speaker #4: Since the TNFR2 epitope we discovered can function as a single arm agonist, we have leveraged this innovation into a platform of bispecific and multispecific assemblies.
Speaker #4: The first agent from that pipeline, NEKTAR O166, pairs TNFR2 agonism with a well-validated target to create a molecule with a novel mechanism of action and highly innovative properties.
Speaker #4: We look forward to providing more updates on NEKTAR O166 and other agents in the coming quarters. I'll now turn it over to Sandra for the financials.
Speaker #3: Thank ou, Jay Z, and good afternoon, everyone. On today's call, I'll briefly review our quarterly financials and share updates to our financial guidance for 2025.
Speaker #3: We ended the second quarter of 2025 with $175.9 million in cash and investments and with no debt on our balance sheet. As Howard stated earlier, on July 2nd, 2025, we completed a secondary public offering resulting in approximately $107.5 million in net proceeds.
Speaker #3: This fundraising further strengthened our financial position, extending our cash runway into the first quarter of 2027. It also enables us to invest in our RES peg program to progress to Phase III and further develop NEKTAR O165 and NEKTAR O166, our TNFR2 agonist antibody candidates.
Speaker #3: Our expanded 2025 plan includes res peg phase III clinical startup activities and securing additional manufacturing for res peg. We now expect to end the year with approximately $180 to $185 million in cash and investments.
Speaker #3: Turning to the income statement, our non-cash royalty revenue was $11.2 million for the second quarter of 2025, we still expect our non-cash royalty revenue to total approximately $40 million for the full year.
Speaker #3: Our R&D expense was $29.9 million for the second quarter of 2025, and we now anticipate full year R&D expense to range between $125 and $130 million including approximately 5 to 10 million dollars of non-cash depreciation and stock-based compensation expense.
Speaker #3: Our G&A expense was $17.1 million for the second quarter. We now expect G&A for the full year of 2025 to be between $70 and $75 million dollars including approximately 5 to 10 million dollars of non-cash depreciation and stock-based compensation expense.
Speaker #3: This increase in guidance reflects updated estimates for professional services in the second half of the year including legal and other accounting consulting services. Non-cash interest expense for the second quarter was $5.4 million dollars and is expected to remain at a similar level for the remaining two quarters totaling approximately $20 million dollars for 2025.
Speaker #3: As a reminder, in the first quarter of 2025, we began accounting for our investment in the new portfolio company, Gannett Biochem. Under the equity method of accounting, we calculate our non-cash gain or loss based on the change in our share of Gannett Biochem's equity each quarter.
Speaker #3: Our non-cash loss from equity method investment was 2.4 million dollars in the second quarter of 2025, and we still expect a non-cash loss of approximately $10 million dollars for the full year of 2025 on our income statement.
Speaker #3: We have no commitments to contribute cash to Gannett as an equity investor. Our net loss for the second quarter was $41.6 million dollars or $2.95 basic and diluted net loss per share.
Speaker #3: Excluding non-cash loss from our equity method investment, our non-GAAP net loss totaled $39.2 million dollars or $2.78 basic and diluted net loss per share.
Speaker #3: And as I stated earlier, we now expect to end the year with approximately $180 to $185 million in cash and investments with our cash runway now extending into the first quarter of 2027.
Speaker #3: And with that, I will ask the operator to open the lines for Q&A.
Speaker #2: Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced.
Speaker #2: To withdraw our question, please press star one one again. In the interest of time, we do ask that you please limit yourself to one question at this time.
Speaker #2: Please standby. We compile the Q&A roster. And our first question will come from Jay Olson from OPCO, your line is open.
Speaker #5: Oh, hey. Thanks for taking all questions. This is Chung on the line for Jay. And just want to congratulations again on the very impressive results you shared recently.
Speaker #5: Just wondering first, have you maybe started to engage with regulators with the 16-week data? And since you started some activity to prepare for the phase III initiation, any colorization on how are you thinking the trial design and also maybe the number of trials you are planning for the phase III program?
Speaker #5: And maybe separately, just like wondering your thoughts on partnership opportunity for res peg and AD and specifically when would be the optimal time to bring a partner on board and any kind of a characteristic would you define the partner?
Speaker #5: Thank you so much.
Speaker #4: Well, let this Howard, I'll let Jay Z answer the first part of the question. I'll take the second part. Go ahead, Jay Z.
Speaker #6: Yep. Thanks, Howard. And thanks, Chung. So in terms of your first question was have we began to engage with the regulators? So that's an ongoing.
Speaker #6: So our plan, as I mentioned earlier, is an end-of-phase II meeting that we intend to hold before the end of the year. And so at this time, we're ically putting together the meeting request and the briefing package that will go in.
Speaker #6: And the substrate of what we'll discussing there is indeed the trial design. And so our ic concept in the trial design is we expect to have two monotherapy studies that are basically identical in design, as well as a long-term extension study, which enables you to collect long-term safety data and then for this division, there are a number of additional studies that are are typical for every single BLA submission for a new molecule.
Speaker #6: In terms of the studies, as we mentioned earlier in the call, we understand that there is a significant opportunity for res peg in multiple lines in ectopic dermatitis.
Speaker #6: We have very strong data in biologic naive patients. And we've shown that right in our phase IIB results that you commented on. And so that will be a substantial portion of our patient population.
Speaker #6: But our plan is to also include biologic experienced patients in the trial as well. So in that regard, our similar to the kind of study that Amgen and Goweran with Roca where they combined both naive and experienced patients in the same study, we think that was a very efficient approach.
Speaker #6: And our goal is to use that same approach and also have both patient populations in into our phase III program, which would enable us to have the broadest label when we move to register res peg.
Speaker #6: So I think that addresses your questions about some of the health authority engagements and trial designs and how it'll turn it over to you about partnership and timing.
Speaker #5: Yeah, sure. Thanks, Jay Z. Look, as we said the call, we hope to end the year with 180 to 185 million dollars. And we will be prepared to put res peg into the clinic in phase III in 2026.
Speaker #5: We have a runway that goes into '27. We don't any plans for an itional financing at this point. We have a number of important data catalysts ahead of us.
Speaker #5: And we're actively talking to partners about the potential to collaborate on res peg. And this includes strategics as well as financing partners. There's ways to do this that are a collaboration with another company.
Speaker #5: There's also ways to do this with non-dilutive financial methods. So we also have some we also have also have other sources of non-dilutive capital.
Speaker #5: For example, we own three to four percent of Dapimab. You see these drugs for in phase III for lupus. So I think there's and we're certainly looking at monetizing that asset.
Speaker #5: So there's a lot of opportunities for us, but I would say that right now we're engaged in partnership discussions. Got it. Thank you so much.
Speaker #5: And congrats again on the progress.
Speaker #2: Thank ou.
Speaker #6: Thank ou.
Speaker #2: Our next question will come from Yasmeen Raimi from Piper Sandler. Your line is open.
Speaker #7: Good afternoon, team. Congrats on all the updates and all the great commentary. I guess my question is as the next near-term data catalyst is the upcoming AA readout.
Speaker #7: If Jay Z, we could walk us through how your thought process around what is a competitor product profile to advance to a later stage development and whether also we will see at the time of the top-line data some of the patients who continue into the longer extension or should we not expect that?
Speaker #7: And I'll jump back into the queue.
Speaker #6: Yeah, sure. Thanks, Yaz. So you know it's great estion. One of the things that's really important to consider about alopecia is that there are currently no approved biologics for alopecia areata.
Speaker #6: And there's really no therapy that's demonstrated a sustained treatment effect. So JAKs are efficacious. And even most recently, Rinvoq posted probably class-leading JAK inhibitor data in the space and the first of their phase III studies that read out a few weeks ago.
Speaker #6: You know, and it still has a profile that's well-known. So it's a mechanism that requires continuous dosing. If you stop dosing with the JAK inhibitor, the patients lose the hair that they may have grown.
Speaker #6: And then also you have to carry the additional safety liability. And it's particularly challenging in this disease, many patients are younger. They have their disease for their entire life.
Speaker #6: And the concept of chronically taking a JAK inhibitor for many, many years is difficult. For us, the way we designed the study, you know, for this phase II, is a primary endpoint based on percent change from baseline in SALT scores.
Speaker #6: And while we don't need to necessarily sort of hit some of the JAK metrics, we still use the JAK metrics. They're very useful as frames of reference as we put together the TPP.
Speaker #6: That we're considering for this indication. And so just as like some kind of benchmarks to keep an eye on for that endpoint SALT percent change from baseline, low-dose JAK achieves about a 30% reduction in SALT score.
Speaker #6: And high-dose JAK about a 40% reduction in SALT score. So we're looking to be in that range. And ideally, if res peg shows the kind of scientific approach that we think is very meaningful for this particular biology, then obviously our goal is to even push that.
Speaker #6: And then, of course, we'll also be focusing on the key registrational endpoints as those very informative as we sort of continue and look beyond the phase IIB study in alopecia areata.
Speaker #6: So specifically, the SALT 20 and SALT 10 endpoints are key. SALT 20 is the FDA-accepted threshold and SALT 10 is the standard in Europe.
Speaker #6: And the JAK hibitors have about a 20 and 10 percent for SALT 20 and 10 at the low dose. And 35 and 25 at the high dose.
Speaker #6: So again, we're ing those as benchmarks. Along with the data that Rinvoq posted. But we're very excited about the data set that's coming for us later this year.
Speaker #6: I'm very excited about the opportunity of taking res peg forward for yet another dermatological indication. One where we know Tregs plays an important role in even just the fundamental biology of hair growth.
Speaker #6: And having the chance of being potentially the first biologic in this space.
Speaker #3: Thank you so much, Jay Z.
Speaker #2: Thank you. Our next question will come from Julian Harrison from BTIG. Your line is open.
Speaker #8: Hi. Thank you for taking the question and congrats on all the recent progress. It's great hear that you plan to include biologic experienced ectopic derm in your first registrational program for res peg.
Speaker #8: Can you remind us of what underpins your confidence that res peg will be active in the segment?
Speaker #6: Yep. Yeah, certainly. Thanks, Julian, for the estion. You know, it's interesting. I mean, we're tending see that multiple agents are showing activity in bio experience.
Speaker #6: Right? We've seen that now for a few examples: Levery had that example. Roca seems to be also having that example. But for us, we have this basic understanding that our mechanism is in no way overlapping or canceled out or contra to any of the post IL13 kind of biology.
Speaker #6: For example, if a patient has a disease that's more mixed in presentation, say TH2, but additional T helper endotypes that are driving the inflammation, I mean, obviously, if you take a TH2 inhibitory mechanism like an IL4, IL13, you leave the other parts of the immune system kind untouched.
Speaker #6: Well, we know that we have a breadth of ability to block multiple kinds of polarized T cell inflammation. And there's also really no additional kind of a priori knowledge or scientific reason why there wouldn't be an effect.
Speaker #6: Also, because we're an agonist and not an antagonist agent, and we're a cellular agonist, you know, it gives us confidence that res peg should have activity whether the patient is biologic naive or experienced.
Speaker #6: And of course, you know, there are multiple ways that patients fail those agents whether it's tolerability, signal, or a loss of efficacy signal. Again, and both of those cases, we think res peg has potential.
Speaker #8: Very helpful. ank you.
Speaker #2: Thank you. Our next question will come from Arthur He from HCW. Your line is now open.
Speaker #5: Hey, good noon, Howard and team. Congrats on the progress here in quarter. So I just had a quick question on the potential, the pivotal study for the res peg for the AD.
Speaker #5: Regarding the biological experimentation cohort, what's your thoughts around the biological trial biological therapy? Would that be heavily focused on the dupixent experimentation or are you going to do kind the basket patient cohort?
Speaker #6: Yeah. Thanks, Arthur. That's a great question. So you know our goal is to begin our first phase III study in the first half of next year.
Speaker #6: At that time, you know the major approved mechanisms would be the IL4 and IL13 class. Right? So that would be dupixent, lubricosumab, Adbrie, trilocumumab as well.
Speaker #6: And then nimalosumab is also approved as IL31. Antagonist, that would also be bio experienced. You know in our case, you ow while the OX40 class will not yet be approved likely, you ow by the time we begin, likely the first entrant will probably reach approval during obviously, there aren't as many people that have taken those drugs yet.
Speaker #6: But again, that would also represent a biologic experienced patient population. I hope that answers your estion.
Speaker #5: That's a big sense. Thanks, Jay Z.
Speaker #2: Thank you. Our next question comes from Mayank Montani from B. Riley Securities. Your line is open.
Speaker #9: Hi, Dean. Thanks for taking your estions and congrats on a very productive second quarter. As part of the phase III, I was wondering what your expectation for the induction efficacy primary endpoint you know duration of therapy would be knowing that you're not getting to the peak easy and edge efficacy at 16 weeks.
Speaker #9: And also, the thought you might be putting in to get the remative efficacy signal and obviously, you ow is there anything to learn from the OX40 trials that are sort of trying to get to a comparable goal?
Speaker #9: And then I have a couple of follow-up.
Speaker #6: Yeah, sure. Thanks, Mayank. So one of the things that our phase IIB study we think really gave us clear understanding of is the dose level and the regimen that we want take forward into our phase III studies.
Speaker #6: And we've already used since our top line, the results of the study to create a population PK model. As well as an exposure response model.
Speaker #6: As you know, both of those are key components of the end-of-phase II meeting package that are used to defend the dose level for the phase III.
Speaker #6: So we feel very confident with that. We did mention earlier that the way our study is designed is we have multiple portions of the study where patients are ongoing longer duration of treatment beyond week 16.
Speaker #6: We're very excited about the data cut that we talked about earlier in our call. Because that really starts to really sort of drill down.
Speaker #6: Right? Into what are those effects? And the potential of deepening responses when patients are treated beyond 16 weeks. For example, we know for some contemporary phase III studies there's been a trend to move to longer induction endpoints.
Speaker #6: We also feel like we haven't quite even yet reached or seen the maximum efficacy of res peg. Right? We think that's ongoing as people take more treatment.
Speaker #6: There's a strong potential that we could see deepening. So as we move forward into our end-of-phase II meeting, we'll also clarify and propose the duration of our induction and also, of course, the maintenance arms that we're testing in phase II now.
Speaker #6: Those are both Q4 and Q12. So we'll also get more information about how we want to take forward maintenance regimens. So both the duration of induction and then the maintenance portion of those studies.
Speaker #6: And we're ning 52-week studies in our phase III program. Your other question was about the remative potential. And so I want to first just remind everyone that the way the phase IIB is designed is we had a 16-week induction.
Speaker #6: That was followed by a 36-week maintenance or escape depending on how patients ended their 16-week. And then there's a 52-week off-drug follow-up. So our ention is to treat people for a year and then follow them for a year off-drug to assess remission or assess durability and stability or at the very least this prolongation of efficacy after you stop treatment.
Speaker #6: So our phase II study is really poised to give us an even richer data set than we obtained after our 12-week induction in the phase IB study.
Speaker #6: So the way that we would be looking to leverage that in our phase III program is actually going to be similar to what you mentioned both in light lumab and the lumab programs are doing.
Speaker #6: You do treatment withdrawal at different points. In those studies, and our goal would be to do that kind of an approach. So for example, one way we might approach this is that we would do a 52-week treatment.
Speaker #6: And then in our long-term extension, we would have a randomized withdrawal component so that we would be assessing both that remative potential as well as long-term treatment in a blinded randomized withdrawal fashion.
Speaker #6: Thanks.
Speaker #5: Very helpful, Jay Z. And maybe just staying in that same topic of learning from OX40, the alopecia data we've seen so far maybe doesn't get up to the benchmarks you shared for JAK hibitors, but we're just curious given that you're somewhere the middle in AD.
We are very committed to pursuing it. Uh, based upon the resc data that we reported in the data that's developing, I think we believe that potential for this program is, is significant and will drive a lot of valuation from others. So, I, I think, uh, I think the lawsuit is, is, is something that, uh, really will the the, let me put it this way, the results that we have seen so far from res bag, I think will help us with the lawsuit and I, I certainly don't think, um, that we are any position to comment on the specifics other than to say that we're highly committed to the to pursuing this. And we do believe, we were significantly injured by Lily in in, in any case for example, um, the program was delayed by a few years in the marketplace that you can calculate out what that means in the long term. So overall, I think we have a strong position. We're going to follow it. Well, we're going to pursue this lawsuit to its completion and uh, I think, uh, I think we're, you know, we're pleased with the way it's going.
Appreciate the correcting. Thank you.
Thank you. Our next question, will come from Chacha Yang from Jeffrey's. Your line is open.
Hi, can you hear me?
Yes.
Okay. Wonderful. Um hi. This is Chacha on for Roger song. I was hoping uh that you could give us any updates on your studies being done to better understand the isrs whether that's from a mechanistic perspective, or if you could give us any updates in regards to developing strategies for mitigating them upon commercialization.
Sure. Oh, yeah. Thanks for the question. Uh, chat. So, um, in in our studies, we have been assessing, you know, the biology of the ISR using various methods 1, that's been quite useful for us, as using a, a a primary skin organoid cultures using skin. That's attained from tummy tuck surgery. That's very useful because that's abdominal skin and we, you know, inject the abdomen, right? Um, so 1 of the things that we've learned, you know, so far is that this is really as we've known for a long time and il2 effect.
Healthcare practitioner. Um, but we'll be launching with product presentation in a pre-filled syringe packaged into an auto ejector.
And we know that will have a positive effect because that will really standardized, you know, the Drug Administration, the needle depth, the rate, the needle itself will be dry, plus all the things that we're learning from these biological approaches. Um we'll be doing all of those things. While the face reprogram is ongoing and we look to incorporate those into the auto injector that we'll have at the time of launch.
Yeah, let me let me also add to that. Um, I think look I I think from a marketing point of view, it's not a barrier at all. Um, the patients we had, I think 2 patients, drop out of the trial for injection site reactions. Most patients, they were mild to moderate, they self resolved, they did not stop taking the drug because of them and while we did have a lot of patients that had an injection site reaction, they may have only had 1 or 2 and they didn't have any further injections, or reactions sometimes patients went months before they had 1 and then they had 1 and then they didn't have any more. So you have to really understand what happened here with injections that reactions. It's not that a large percentage of patients get them on every injection. That is not the case at all. And in any case there were most of them were mild and the patients didn't seem to care. So I I I think when you look at the, when you look at the the the problems associated with IO 13, drugs such as conjunctivitis infections, I think that's actually
Much more concerning than mild to moderate uh, self-respecting uh, um, injections that reactions. And I think Jay-Z made a very excellent point. I think a lot of that will be cleared up by an auto injector. I think there's a lot of, a lot of, I don't want to say sloppiness, but a lot of inconsistency in the way patients. Administer the drug themselves. They put it in a vial it's it's it's a wet needle. Etc. Etc. There's a there's a um, um, auto injector should solve a number of those issues. And in any case, the the the level of ISR that we saw, I don't think are meaningful from a marketing point of view.
Okay, thank you.
Thank you. Our next question comes from Alex Ramsay from William Blair. Your line is now open.
Hi, thanks so much.
For taking our questions. This is Alex Ramsey on for Andy Shay at William Blair. Um, so just going back to the potential remitted effect of Rose Peg, and a topic during, um, that's something that we've been curious about. And so, we have the upcoming maintenance data in early next year, and we're just curious about what data points or efficacy bar at this readout could be suggestive of a remitted effect or if you will need to wait until 2027 to get a gauge on this potential advantage of the regimen. So that's part one. And then part two is, do you have a sense of how much to blunt disease recurrence to achieve a true native effect?
The the say, thanks. Thanks, Alex, those are great questions. Um, so starting with the first 1, so, with primitive effect. Um, the data in this part of the phase 2v resolve add study is still on treatment data so. So the people that exited week 16, induction that had an easy 50 or better, right? They moved into the maintenance arms. And in the maintenance arms, they stayed on the same dose level that they were on an induction, but they switched to either a once a month or a once, every 3 months regimen, and then they were on that regimen for 36 weeks.
So, you know, the data that we'll be presenting in the first quarter of next year, that will still be on treatment data. So I I'll get to your remitted question for part 2 in the second but you know, just to specify. Yeah, that it that first quarter 2026 data set will be treatment data, but we will have a very low frequency treatment. You know component there will be a number of people
You know, about half of the people that entered into maintenance, will be on a q12 week regimen. So, we will be looking at a very low frequency dosing and comparing that to a Q4 week and, you know, earlier in the call we talked a few times about the potential, you know, of deepening responses and the things that were really interested to look for in the maintenance with ongoing dosing.
Is, for example, the proportion of people that enter that had an easy 50?
Response. So, those are the 2 main buckets of data analyses. You know, that we'll be looking at and in the Escape arm, we'll be looking at elements like the crossover population and so on. When you move everyone to the high dose
so, so that next part really, addresses duration and and 52 weeks of treatment,
Um, that's a very good marker for the U.S., you know, um, for the overall treatment length. Then the second question you had about the remittance was, is there a certain depth of disease that you need to reach before you would have, you know, the best durability? I think it's a really great question. I mean, certainly a person that reaches EASy 75 and a person that reaches EASy 90...
You know, those are 2, different levels of efficacy. Um, it's a really important question, you know to ask is, is there more remission in an easy 90 person or visit the same as in an easy 90 and an easy 75 individual. Um, the only data that we really have to address that is from our Phase 1.
Uh, and in Phase 1, we saw that people who had an IGA response at week 12 and continued to have an IGA response at week 48, even though they stopped treatment at week 12, had about 80% IGA.
Maintenance and about 70% easy, 75 maintenance across that, that kind of 6 months, you know, time Horizon in the 6-month off drug period. So that data might hint that there may be
A little bit better, you know, remittance effect and people that have a deeper disease. But I think it really needs a lot more data, you know, to really be sure of that. And I'm excited to see some of the other mechanisms that we'll be trying to address that as well, such as the Oxford mechanisms that are both including, you know, treatment-free intervals in their Phase 3 programs.
Thanks for your question.
Thank you, that is super helpful. We really appreciate that color.
Thank you. And our next question comes from Jessica 5 from JP Morgan. Your line is open.
Hey guys, good evening. Thank
Um, for Rose Pig, can you just speak to your comfort level with the powering of the maintenance phase of that trial after the dropouts? And the induction portion? I think you would sort of...
Planned for some attrition here. Just want to make sure that you still feel good about the
Powering for the maintenance phase. And I think when you kind of presented the top line induction data in ADD, you were sort of benchmarking off of OX 40. You spent a minute talking about why you think that's the right comp for this product. Thank you.
Sure. Yeah, thanks Jess. Um, so firstly. Um, as as we reported in June, we had 190 people.
That moved into the maintenance arm.
So we think that's a good good population. It's actually right in line with what we modeled.
Uh that would cross over and that modeling was based on other phase 2 studies and you know similar Phase 2 Patient populations similar statistical methods used during induction and then of course you know heavily driven by our Phase 1 data and our Phase 1 results so we're pretty happy with the number of people that moved into the maintenance portion and very much to your point because we wanted to assess 2 regimens.
Right. You're basically randomizing them 1 to 1 the the people that were on Placebo and there was a, you know, a handful right? It was less than 30%, those stay on Placebo when everyone else is on res Peg, right? And then they're randomized 1 to 1 on either a once a month, or once every 3 months regimen. So we're we're right in line with how we designed the study, so we feel pretty good about that.
Um and then to your next question about benchmarking to Ox 40. Yeah. That you know for us it was really in informative when we started to very closely compare the phase 2 studies.
The study designs.
40 phase, 2B studies.
The other studies, like Dhupia, were done many, many years ago—well over 10 years ago. They involved a very different patient population. And Trello, which came next, also involved a very different patient population. As you looked at new mechanisms,
You know, for us, looking at Rest of Pack is a completely novel and first-in-class mechanism in atopical dermatitis, and looking at the Oxford class, which was novel relative to the other 13s. So we focused that as one of our areas of comparison for those reasons. But, of course, you have to consider all of it as well. And that's why we showed all of the agents that are approved, including the ones in Phase 3.
Thank you.
Thank you.
And I am showing no further questions from our phone lines, and I would like to pass it back to Howard Robin for any closing remarks.
Well, thank you, Crystal. Before we close, I want to thank the new and existing investors that supported our recent capital raise.
And we are truly grateful for your support as shareholders. I also want to thank our employees for their dedication and extremely hard work. We look forward to delivering additional data updates later this year and engaging with regulators on our Phase 3 program. Thank you for joining us today, and please stay tuned.
This concludes today's conference call. Thank you for your participation you may now just connect everyone. Have a wonderful day.