Good day, and thank you for standing by. Welcome to the Nektar Therapeutics First Quarter 2021 Financial Results Conference Call. Please be advised that today's conference may be recorded. 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, and good afternoon, everyone, and thank you for joining us today. With us on the call are Howard Robin, our President and CEO; Gil Labrucherie, our COO and CFO; Dr. Jonathan Zalevsky, our Chief of Research and Development; and Dr. Brian Kotzin, our Interim CMO and Head of Development. On today's call, we expect to make forward-looking statements regarding our business, including clinical trial enrollment and clinical trial results, timing and plans for future clinical trials, timing and plans for future clinical data presentations, the therapeutic potential of our drug candidates, outcomes and plans for health authority regulatory actions and decisions, estimates and predictions of the COVID-19 pandemic's impact on our business and on clinical trials, financial guidance and certain other statements regarding the future of our business. Because forward-looking 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 the Form 10-K that was filed on February 26, 2021, which is available at sec.gov. We undertake no obligation 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. Before turning over the call to Howard, I'd like to remind you that since we're dialing in from different locations today, I will moderate the Q&A session for our team, so we can avoid technical issues during the session. We appreciate your patience. With that said, I would like to 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 entered 2021 with a deep portfolio of candidates in immuno-oncology and immunology, spanning from Phase I to Phase III developments, and we're looking forward to a steady cadence of key data readouts beginning later this year. These data sets have the potential to set Nektar on a new trajectory and transform the treatment of a range of tumor types in autoimmune disease. Each investigational medicine in our portfolio provides us with its own distinct value and gives us the ability to broaden the patient populations that we could potentially serve. Our pioneering work designing novel cytokine conjugates as medicine has given us a leadership position in the field, and we continue to focus our research in this area and in the area of immune science, setting the stage for the next wave of IND candidates for our company. So I'll start with a brief overview of the status of BEMPEG, our most advanced late-stage clinical program and a novel IL-2 pathway agonist, which is being developed in combination with checkpoint inhibitors, Opdivo or nivolumab and KEYTRUDA or pembrolizumab. Our strategy for BEMPEG combined with these checkpoint inhibitors is focused on pursuing multiple large frontline and adjuvant solid tumor settings: melanoma, renal cell carcinoma, and bladder cancer with nivolumab; and head and neck cancer and non-small cell lung cancer with pembrolizumab. The opportunity for combining BEMPEG in these tumor settings is significant. 2020 sales of PD-1 checkpoint inhibitors across these 5 tumor settings were greater than $5 billion. So we're pleased with how BEMPEG is positioned in multiple registrational studies and with our planning for additional strategic late-stage studies. The clinical program we put in place over the last several years positions us far ahead of others pursuing IL-2 programs in cancer. Through our partnership with BMS, we have 5 ongoing registrational studies of BEMPEG with nivo that are proceeding nicely. Our first 3 registrational studies to readout in the first half of 2022 are the Phase III study in metastatic melanoma, the Phase III study in renal cell carcinoma, and the Phase II accelerated approval study in cisplatin-ineligible bladder cancer. Also ongoing are 2 large Phase III trials further up line, one in adjuvant melanoma and one in muscle invasive bladder cancer. Both indications offer an opportunity to expand the patient populations in melanoma and bladder cancer that could benefit from treatment with BEMPEG. In addition, BMS is conducting a Phase II study in renal cell carcinoma for BEMPEG plus nivo with a TKI to pave the way for future development of a TKI-inclusive regimen in the setting of first-line RCC, designed to build on their recent successful approval of nivo plus cabo. In terms of our strategy for BEMPEG plus PEMBRO, our first priority is to focus on the largest settings where pembrolizumab is the gold standard of care: non-small cell lung cancer and head and neck cancer, and where we have the ability in that setting to combine BEMPEG with PEMBRO and run a comparative study designed for registrational purposes comparing against monotherapy PEMBRO. For the first-line head and neck cancer indication, in February, we announced 2 separate collaborations, one with SFJ and one with Merck, which allows us to fund in advance a new registrational study for BEMPEG plus PEMBRO versus monotherapy PEMBRO. Recently, 2 late-stage competing studies had negative data readouts in the first-line setting, and as a result, the competitive landscape has become so narrow that we're excited about our decision and our ability to proceed with this study. PEMBRO is now used in over 70% of patients in this setting and has replaced the extreme regimen. The study is very much on track to start at the end of Q3 or early Q4. We estimate that this new opportunity in head and neck cancer could generate annual revenues of between $500 million and $800 million globally, and so it represents a substantial value addition to the BEMPEG development growth. In non-small cell lung cancer, Nektar is advancing our own Phase II study known as PROPEL, studying BEMPEG plus PEMBRO. We have been very pleased with the great interest in the study from leading thoracic oncology treatment sites. While pembrolizumab has improved overall survival for patients with non-small cell lung cancer, its benefit is still limited to approximately 2 years. We believe there's an opportunity to increase the treatment benefit and develop a chemo-sparing regimen in this tumor setting. We're planning our first formal data cut from the initial part of the study sometime in the second half of this year. As we track the doubling in PROPEL, we will use these data to form our first Phase III registrational trial strategy in non-small cell lung cancer, where we believe there could be true differentiation in a chemo-sparing regimen. Now to remind you, in the agreement with BMS, we have a $1.4 billion filing and milestone approvals for BEMPEG in the U.S., Europe, and Japan, and these are tied to any approval of BEMPEG, whether the approval is in combination with nivo or not. We're eligible to receive $625 million for filings and approvals in the first indication and $260 million for each of the next 3 indications. Again, regardless of whether the filing and approval is in combination with nivo or PEMBRO. With 6 registrational studies to support potential filings, we have many opportunities to bring in these milestones. I'll now turn to NKTR-255, our second major cytokine program in immuno-oncology. This candidate is a remarkable development opportunity for us as a proliferator of natural killer cells that has also demonstrated its ability to expand CD8 T cells and memory T cells. These unique attributes provide us with an opportunity for NKTR-255 that could even be more significant than BEMPEG in different tumor types, as we are developing this differentiated IL-15 agent in early-stage studies in both liquid and solid tumors. Our first Phase I/II clinical studies focused on combining NKTR-255 with leading approved antibodies that use the mechanism of antibody-dependent cellular cytotoxicity to kill cancer cells and which require functional natural killer cells for their mechanism of action. We know that long-term expansion of natural killer cells through an IL-15 mechanism can greatly enhance the activity of these ADCC agents. We are focusing our initial clinical studies in liquid and solid tumors to demonstrate that NKTR-255 given in combination with these agents increases clinical benefit for patients. In liquid tumors, we're combining with rituximab and daratumumab. In solid tumors, we're combining with cetuximab. We will have our first data in combination with these agents by the end of this year, and we look forward to sharing these data with you. And JZ will talk more about our excitement for NKTR-255 in a moment. The third cytokine program in our portfolio is NKTR-358, which is being developed in autoimmune disease in partnership with Eli Lilly to address a broad range of autoimmune and inflammatory conditions. We currently anticipate Lilly will pursue Phase II studies in at least 4 indications. NKTR-358, which was developed and discovered in our labs at Nektar, targets the interleukin-2 receptor complex in the body in order to stimulate proliferation of powerful inhibitory immune cells known as regulatory T cells. By activating these cells, NKTR-358 may help bring the immune system back into balance. With our partner, Lilly, we are the clear leader in this space, with respect to both our scope and our stage of development. We are the only company to have reported multiple dose effects of our agent on T regulatory cells in patients. Brian will share more on this program later, but we've made great progress over the last 6 to 9 months. The clinical program successfully transitioned from our development team to Lilly's team. Lilly now has 4 clinical studies underway: A 280-patient placebo-controlled Phase II study in lupus; a 200-patient placebo-controlled Phase II study in ulcerative colitis; and 2 ongoing separate Phase Ib studies in psoriasis and atopic dermatitis. There are plans for additional Phase II studies to be added to the program. In lupus and in ulcerative colitis alone, the opportunity for NKTR-358 could be very significant. The leading agent in lupus right now, Benlysta, sells almost $800 million worldwide, but there's a great need for new and better treatment for these patients with an estimated 750,000 patients in the U.S. now diagnosed with lupus. Our early results are highly encouraging, which led to a large dose-ranging, placebo-controlled study of NKTR-358 in these patients started in Q3 of last year. We anticipate results from this study could come in 2022. In ulcerative colitis, current approved agents sell approximately $6 billion per year, with 600,000 patients in the U.S. and Europe alone diagnosed with moderate to severe ulcerative colitis. We believe we have an opportunity to serve these patients with a better potential therapy. The Phase II study in ulcerative colitis is now recruiting patients, and we're looking forward to the advancement of that program as well. We and our partner, Lilly, view NKTR-358 as a potential first-in-class resolution therapeutic that may address the underlying immune system imbalance in patients with many autoimmune and inflammatory conditions. Finally, our economics are significant here for NKTR-358, as our royalties in this agreement scale along with our development participation, which translates into significant ownership of an agent that is being broadly developed. We're proud of the work we've done in this program and are excited about the recognition from Lilly, a leader in the autoimmune space, that NKTR-358 has the potential to help patients with a wide range of autoimmune and inflammatory conditions. We also remain in a very strong financial position to execute against our deep and expanding pipeline. We ended the first quarter of 2021 with approximately $1.1 billion in cash and investments. As you could see, Nektar has built an incredibly powerful pipeline of differentiated cytokine therapeutics that positions us well to build substantial value in multiple therapeutic areas. So I'd like to turn the call now over to JZ, who will spend some time talking about the key development programs and the data readouts this year as well as other updates. JZ?

Thank you, Howard. Let me start with the BEMPEG program and timing for our registrational trial readouts. First, for the first-line metastatic melanoma study, which is being run by our partner, BMS, BMS has indicated that data from this trial would be available in the time frame of late this year or in the first part of 2022. Now this study evaluates the combination of BEMPEG plus nivolumab versus nivolumab monotherapy, and the design is modeled on a median progression-free survival for the nivolumab arm to be comparable to the 6.9 months observed in the CheckMate 067 study. And remember that since PFS is an event-driven analysis, a number of factors, including the rate of PFS event accumulation, might impact the timing. The next study, which Nektar is running, is the Phase III first-line renal cell carcinoma study. We expect that we could reach our first interim analysis for the primary endpoint of overall survival sometime in the first half of 2022. As Howard stated earlier, BMS and Nektar are taking a comprehensive approach to the development of BEMPEG plus nivolumab in this tumor type. BMS is conducting a Phase I/II study in RCC that combines BEMPEG plus nivolumab with a TKI and allows us to compare this treatment to the nivolumab TKI regimen to pave the way for a TKI-inclusive regimen in RCC with a BEMPEG plus nivolumab doublet as well. With respect to the Phase II study in first-line cisplatin-ineligible urothelial carcinoma, the study is designed to serve as a basis for a potential filing for accelerated approval. The primary endpoints of overall response rate or ORR and duration of response as determined by central radiology review for about 110 cis-ineligible urothelial carcinoma patients who have a baseline CPS score of 10 or lower as a measure of PD-L1 expression. For this study, we are looking to achieve a median follow-up for measuring duration of response of 18 months, and we expect our first data from this study in the middle of 2022. We also have 2 large Phase III studies that build on our other work in urothelial carcinoma and melanoma. First, our muscle invasive bladder cancer study, which is being run by BMS, is enrolling approximately 540 patients who will receive BEMPEG plus nivolumab or nivolumab monotherapy in the periadjuvant setting for the 12-month treatment period following surgery. As this study is large, we expect the first data readout to be in 2024. This study is also designed to serve as a confirmatory study for a potential accelerated approval in the cis-ineligible urothelial carcinoma setting. Second, the adjuvant melanoma trial is enrolling approximately 950 patients within a 12-month treatment period post-surgery, and an endpoint of event-free survival. The study is designed to position BEMPEG as the standard of care for the treatment of melanoma, building on the recent nivolumab approval in this setting. This study, if successful, could significantly increase the number of melanoma patients that can benefit from the BEMPEG plus nivolumab combination. Initial data from this study is also expected in 2024. As Howard stated, we expect to report initial data from the PROPEL non-small cell lung cancer study in the second half of this year. As we've said in the past, we are looking for a maturity of at least 2 scans or more for patients on treatment so we can fully understand the potential clinical benefit of the doublet over time. The patients will be spread across 3 separate PD-L1 expression subgroups, and the study plan is designed to show the benefit of the BEMPEG plus pembrolizumab doublet compared to historical ORR rates achieved with single-agent pembrolizumab in the efficacy of evaluable patients treated in less than 1%, 1% to 49%, and greater than or equal to 50% PD-L1 expression subgroups. In non-small cell lung cancer, we know that the quantity of underlying inflammation in the tumor microenvironment has a big impact on the efficacy of single-agent checkpoint inhibitors such as pembrolizumab. This is defined by PD-L1 expressive status. As we have discussed in the past, single-agent pembrolizumab has the most benefit in patients in the greater than 50% subgroup. Given the mechanism of BEMPEG, which targets and increases the inflammatory state of the tumor microenvironment, we believe that the combination of BEMPEG and pembrolizumab in non-small cell lung cancer could improve the efficacy of the doublet in multiple PD-L1 expression subgroups. We also recently added a chemotherapy combination arm to the PROPEL study in order to allow us to potentially include the doublet with chemo option in our Phase III strategy. The initial data from PROPEL and the additional work we are also doing with a doublet in combination with chemotherapy will allow us to determine a comprehensive Phase III strategy for BEMPEG in non-small cell lung cancer. We're looking forward to presenting data from the BEMPEG plus pembrolizumab double cohort in the second half of 2021. For our new registrational Phase II/III trial in head and neck cancer, we are sponsoring the study and are close to finalizing the protocol details with the FDA and our collaborators, Merck and SFJ. As Howard stated earlier, we are on track to start the study in the second half of this year. The 500-patient trial is designed to support a potential global registration for the BEMPEG plus pembrolizumab doublet. It includes an interim analysis of ORR after the first 200 patients are enrolled. If the ORR passes a prespecified futility boundary, the study will continue and the remaining 300 patients will be enrolled for the Phase III portion of the study, and now 500 patients evaluated for the primary endpoints of ORR and overall survival. We are excited about the potential of this doublet to increase and deepen their response versus pembrolizumab alone in this immune-sensitive cancer, especially given the data we have seen combining BEMPEG plus nivolumab in melanoma, which is another immune-sensitive cancer. Historically, IL-2 has shown activity in head and neck cancer with several published studies in both the metastatic and adjuvant setting, and we're very excited to develop BEMPEG plus pembrolizumab here. Additionally, there are limited late-stage studies going on in this frontline indication. There have been several recent failures of other mechanisms in the front line, so we see this as a unique opening for us to establish BEMPEG as the first IL-2 mechanism in head and neck cancer. For our COVID-19 study, we remain on track to report data from this study by the middle of this year. As a reminder, last November, we started this Phase Ib randomized, double-blind, placebo-controlled trial evaluating single doses of BEMPEG, given to up to 30 adult patients with a confirmed COVID-19 infection who have mild symptomology. The primary objectives of the trial are to establish the tolerability of BEMPEG in patients with mild COVID-19, evaluate the changes in immune activation over time and identify a recommended dose for the next study. The study is proceeding very nicely, and we are currently enrolling into our last dose cohorts of patients. We are on track to report the first data this summer, and this will help us shape the potential future development path for BEMPEG in this setting based upon the current treatment landscape. And turning to NKTR-255, our IL-15 agonist program. The importance of natural killer cell biology in the treatment of cancer is becoming widely recognized. We've accessed the rich biology and therapeutic potential of natural killer cells with the discovery and development of NKTR-255, an agent that engages the full biology of the IL-15 pathway. Moreover, the holistic function of engaging the IL-15 pathway with NKTR-255 can provide functional activation and homeostatic control of IL-15 response of immune cells, namely natural killer cells, CD8 T cells, and immune memory subsets. The biology unleashed by NKTR-255 can be combined with multiple mechanisms ranging from targeted agents to cell therapies and even to immunological checkpoints to potentially improve their efficacy. Our first clinical study focuses on targeted antibodies that function through an ADCC mechanism of action. We've developed a clinical strategy to combine with leading targeted antibodies in both liquid and solid tumors. We expect to have several initial data readouts for multiple studies capturing single-agent NKTR-255 dose escalation and combination with at least one targeted antibody in the second half of this year. We are looking forward to sharing these initial findings. For our Phase I/II study in patients with relapsed/refractory hematologic malignancies, we've reported encouraging initial data at SITC 2020 in November, in patients with multiple myeloma and non-Hodgkin lymphoma, or NHL, which show that NKTR-255 is increasing NK cells in these patients. We demonstrated additional dose-dependent pharmacodynamic changes and encouraging early signs of clinical activity of NKTR-255 as a single agent in these early dose cohorts. We expect to complete the dose escalation monotherapy portion of the study in the first part of 2021, with data from dose escalation to be presented later this year. Once dose escalation is complete and we've identified a recommended Phase II dose, we will expand into several arms to approximately 20 patients per arm. One arm will evaluate NKTR-255 as monotherapy or in combination with rituximab in third line or greater follicular lymphoma or low-grade NHL. Another arm will evaluate NKTR-255 as a monotherapy and in combination with DARZALEX FASPRO in third-line or greater multiple myeloma. One arm will evaluate NKTR-255 as a monotherapy for NHL patients who have previously progressed following approved CD19 CAR T cell therapies. Our second clinical study is evaluating NKTR-255 in combination with cetuximab in 2 distinct groups of highly refractory late-line patients with metastatic colorectal cancer or head and neck cancer. We are enrolling up to 80 patients in the U.S. and Europe. As you know, cetuximab has a very low response rate, about 10% or 15% in these settings. Our goal is to improve upon that with the addition of NKTR-255. This study begins with a dose escalation combination arm, and we've already treated patients here at our lowest dose and are proceeding to the next dose level. As I stated, because of the low response rate achieved with cetuximab alone, there is a high unmet need in this later-line setting. If we are able to demonstrate a higher response rate, we will have several potential paths forward with NKTR-255. After the dose-finding portion for the combination, the study will then expand into dedicated cohorts for colorectal cancer and head and neck cancer patients. We expect to have some initial data from the dose-finding portion of the study later this year. Now before I hand the call to Brian, I'd like to provide a brief update on our next wave of research activities. In our research and discovery laboratories, we continue our pioneering work based on our rich foundational expertise in immune science, cytokine biology, and polymer chemistry. It goes without saying that the application of polymer chemistry has dramatic potential to improve the pharmacological properties of proteins, especially cytokines. At Nektar, we have provided 3 clear examples in BEMPEG, NKTR-358, and NKTR-255. We continue this work with emphasis on other cytokines and their therapeutic applications inside and outside of oncology. This is a very rich target space for us because there are many cytokines that target diverse biological processes. With polymer chemistry, we can employ multiple druggability vectors to reach the desired biology. Additionally, we focus our immune science expertise to consider other platform modalities beyond polymer chemistry on a case-by-case basis, depending on the target and therapeutic hypothesis. Earlier this year, we announced a discovery collaboration with Biolojic Design to develop therapeutic antibodies against a very important targeted immune system. In this collaboration, we seek to further strengthen our pipeline and expand our modality footprint. We continue our efforts with preclinical advancement of our IND-enabling programs, and I look forward to sharing additional updates on this work in the future.

Thank you, JZ. As Howard said earlier, we are very pleased with the broad scope and progress of the NKTR-358 program by our partner, Eli Lilly. Following positive data in lupus patients last year, Lilly commenced the Phase II study in lupus, followed earlier this year by the initiation of a Phase II study in ulcerative colitis. Lilly also continues to advance the 2 separate Phase Ib studies in psoriasis and atopic dermatitis. The rationale for T regulatory cell or Treg mechanism in the treatment of autoimmune diseases is compelling, and based upon extensive evidence of the role of the malfunctioning or imbalanced immune system as the underlying cause of the clinical manifestations of these diseases. Many autoimmune and inflammatory disorders, including systemic lupus and ulcerative colitis, are associated with decreased Treg numbers, reduced Treg function, and/or reduced production of IL-2. With NKTR-358, our goal is to address these Treg abnormalities and to develop an IL-2-like molecule that could selectively stimulate Tregs in a more effective manner than native low-dose IL-2. Data presented last year at both EULAR and the American College of Rheumatology meetings highlighted the potential of our approach. Importantly, we saw a dose-dependent and profound increase in Tregs and Treg subsets, induced by NKTR-358 in patients with mild-to-moderate lupus. We also saw improvement in lupus skin disease activity with NKTR-358. These exciting data led Lilly to initiate a Phase II study in lupus with moderate to severe systemic lupus. In the Phase II study in lupus, which began dosing patients in Q3 of 2020, 280 patients are being randomized to 1 of 3 doses of NKTR-358 or placebo, administered every 2 weeks for a treatment period of 24 weeks. The primary endpoint in the Phase II study is the percentage of patients achieving at least a 4-point reduction in the SLE disease activity index, or SLEDAI scale. Standard clinical composite endpoints used in lupus studies are also included as secondary endpoints. We will also characterize pharmacokinetics, pharmacodynamics, and immunogenicity in treated patients. Endpoints will be measured at week 24, and we expect the study to be completed within 18 to 24 months. Earlier this year, Lilly also initiated a Phase II randomized placebo-controlled trial in patients with ulcerative colitis that began enrolling patients in Q1 of 2021. As in lupus, there is considerable evidence in the literature on the role of Tregs in inflammatory bowel diseases such as ulcerative colitis. Reduced numbers and functionality of peripheral Treg cells have been noted in these patients, and there is also evidence that an inappropriate balance between functional Tregs and T effector cells in the intestinal microenvironment contributes to inflammatory lesions. So we are excited to pursue ulcerative colitis with NKTR-358 and expand this program with our partner, Lilly. The study will evaluate multiple dose levels during the initial induction period using an adaptive design. Total enrollment is planned to be 200 patients, and the trial endpoint is the percentage of patients with clinical remission after induction treatment at 12 weeks. In addition, as Howard stated earlier, we know that Lilly is planning to continue to grow the development program for NKTR-358. There are plans for 2 additional Phase II studies to be initiated within the next 9 to 12 months, in as yet undisclosed indications. We are pleased with Lilly's rapid advancement of the program and their desire to develop this agent broadly in inflammatory and autoimmune diseases. Finally, we look forward to the potential presentation from the Phase Ib work ongoing in psoriasis and atopic dermatitis with NKTR-358, with data from at least one of these studies to be presented at a medical meeting in the next year.

Thank you, Brian, and good afternoon, everyone. On this call, I will review our 2021 financial guidance, which is unchanged for the year. We ended the first quarter in an exceptionally strong financial position with $1.1 billion in cash and investments. During the quarter, we were pleased to announce that we entered into strategic collaborations with SFJ Pharmaceuticals and Merck. Under the terms of these agreements, SFJ is committed to fund up to $150 million to support the BEMPEG registrational study in head and neck cancer, and Merck will contribute pembrolizumab at no cost to Nektar. SFJ is entitled to success payments based only on FDA approval of BEMPEG in first-line metastatic melanoma, head and neck cancer, and one other BEMPEG indication. We are very pleased with the risk/reward structure of these collaborations, giving us the ability to add another very large indication opportunity to the BEMPEG portfolio. Our projected cash usage for 2021 is unchanged from our February earnings call, and we still plan to end the year with at least $750 million in cash and investments. Our full year GAAP revenue guidance remains unchanged at approximately $100 million for 2021, and includes between $15 million and $20 million of product sales, and $80 million and $85 million of noncash royalties. We expect to recognize this revenue on a fairly ratable basis during the year. Our GAAP R&D expense guidance is also unchanged for the year. We anticipate 2021 GAAP R&D expense will range between $450 million and $500 million. Our R&D guidance includes a significant noncash component of approximately $85 million, which is comprised of $30 million of noncash development expenses for the BEMPEG head and neck study, which is being funded by SFJ, but which will continue to be reflected as a component of our R&D expense, and approximately $55 million of noncash depreciation and stock compensation expense. Our G&A expense guidance for 2021 is still projected to be between $120 million and $125 million, and includes approximately $45 million of noncash depreciation and stock compensation expense. Our noncash interest expense is expected to be between $50 million and $60 million, arising from the monetization of our royalty streams. Additionally, our nonoperating expense includes the accounting for the contingent success-based payments to SFJ as a derivative liability. Over time, we will assess the probability of SFJ earning these success payments and recognize the expense on our income statement with a corresponding increase to the derivative liability based on a probability-adjusted and weighted discounted cash flow model that we will examine on a quarterly basis. As I reviewed on our February call, we continue to expect approximately $15 million of noncash expense related to the remeasurement of this derivative liability during 2021. And with that, I will open the call to questions.

[Operator Instructions] And our first question comes from Peter Lawson from Barclays.

Great. On the PROPEL study in lung, what's the amount of data that we could potentially see in the second half of this year?

Thanks, Peter. JZ, do you mind taking this one?

Yes, sure. Peter, this is JZ. Thank you for the question. So as we gave an update both at JPMorgan and even earlier this year, the way the study is designed is that it's designed to enroll approximately 60 patients. Those patients are stratified across 3 different PD-L1 expression subgroups. It's approximately 20 patients across each of the subgroups. We explained late last year that we saw a real increased rate in the accrual of patients, which had a lot to do with the reduction in a lot of COVID intensity in Europe. Many of our European sites really enrolled very quickly. With the patients, we intend to follow them for a very long period of time with at least 2 scans of data worth for the patients to provide a very rich and mature data set. Targeting our second half of the year presentation, we'll be presenting the totality of data that you can expect to see from such a Phase II study. For all of the patients, we'll present the response rates, we'll present all the additional composites of the response, such as the complete response rate, the depth of response, the duration of response, any of the time to event kind of endpoints, along with all of the safety information that we've accumulated from the patients as well as some of the biomarkers that we've also collected from available tumor biopsies as well as whole blood samples. The benchmarks that we talked about thinking about this kind of study is that there are some reasonable information for single-agent pembrolizumab across the PD-L1 subgroups. In the less than 1%, we've seen about an 8% response rate for single-agent pembro from the KEYNOTE-001. In the 1% to 49% subgroup, we've seen a response rate of about 15% for single-agent PEMBRO. In the greater than 50%, we've seen a response rate of 40% to 45%. Those are the kinds of benchmarks to keep in mind as we think about the data from this study. Thanks for the question.

And then just a follow-up. Does that -- I guess the third arm with chemotherapy in the PROPEL lung, when should we see data around that as well?

Yes. So we just started to open those cohorts. They are just starting in their accrual. We would expect to see data in the future, well into next year.

Our next question comes from Jay Olson from Oppenheimer.

As nonchemo triplets become increasingly promising, can you comment on where the triple combo of BEMPEG plus nivo plus TKI would fit in RCC? And the potential to move a triplet combo like that into earlier lines of non-small cell lung cancer?

Thank you, Jay. JZ, will you take that question?

Sure. Yes. Thank you for the question. We've seen the real impact of a TKI combination with a checkpoint inhibitor in RCC, with multiple examples of that. We've seen it with avelumab plus axi, with PEMBRO plus axi, and then PEMBRO with Lenvima, really some amazing results. Of course, cabo plus nivolumab. The opportunity to add a third agent does still exist because there is still a need for better response rates, better durability, and further elevation of the tail of the curve. Now all that said, you have to also balance these things. The RCC landscape is crowded, and there are a lot of developments going on. You also need to pay attention to not overly increasing any toxicity when combining 3 drugs together. But we're very excited about the opportunity with BEMPEG plus nivolumab and the TKI. BMS is as well, which is why this is an important part of our development program. That clinical trial is underway and recruiting patients. We think there's a real opportunity in that setting. The other part of your question regarding non-small cell lung cancer is very interesting. We know there's an ongoing study around the corner, the LEAP study with PEMBRO plus LENVIMA in non-small cell lung cancer, which focuses on the greater than 1% population added on to nivolumab.

Our next question comes from Jessica Fye from JPMorgan.

I have a few on BEMPEG. First, on melanoma and then a couple on lung. So you talked about the time to potential first data in that first-line melanoma study around year-end or early 2022. I want to confirm whether that's based on the ORR interim? Or is that a PFS readout that you're referring to? And if it is ORR, then when do you expect the PFS results from that study to readout?

So Jess, this is Jennifer. I'll take this and see if JZ wants to add anything. But BMS is actually running the melanoma study. We do have 2 endpoints, ORR and PFS, that will readout first. Based on the original design of the study, those 2 endpoints were separated by between 4 to 6 months. We have not decided with BMS yet how we'll be disclosing the data. But I think the best guide is probably to look at other companies that they've had studies running with, in terms of their disclosures and how they disclose data. For example, the CheckMate 9ER study was disclosed in a press release. BMS is running the study, and we'll be working closely with them on the disclosures around it, but I don't think any decisions have been made yet on that. The original design was ORR then PFS, and both by independent review.

Okay. And then on lung, what do you expect the average number of scans to be per patient in the PROPEL study by the time that it's presented? I know you talked about the patients all having a minimum of 2 scans, but I'm asking what the average number of scans you expect by then will be?

JZ, do you want to try to address this in terms of the level of maturity?

Yes. Our intention, Jessica, is to present mature data. Because the study began in the middle part of last year, some patients have been in the study longer than others. We scan on approximately 9-week intervals. Our intention is that the minimum amount of data is 2 scans per patient. The goal is to present a rich and interpretable data set.

And our next question comes from Difei Yang from Mizuho.

This is Alex on for Difei. Another question on the lung data here that's coming up in the second half. You talked a little bit about the sort of benchmarks with PEMBRO alone and the ORR rates in the different PD-L1 expressers. Can you talk a little bit about what you would consider as promising in terms of the delta in response rates versus PEMBRO alone that you'd like to see and that would -- that you would take forward? Will the decision to move forward or not be a joint decision made by Merck and Nektar together?

Thanks, Alex. JZ, do you want to answer?

Yes, absolutely. And those are good questions. The benchmarks we talked about for single-agent pembrolizumab include some kind of Fleming guidelines built into the trial. To think it through, we are looking for meaningful differences compared to those benchmarks. For example, we consider doubling or tripling the response rate in the less than 1% subgroup. The goal is to look at the totality of the data as well. We'll also look at durability of the responses and time to event like progression and other kinds of components. In terms of the decision to go to Phase III, remember that we are running the PROPEL study on our own. We are not collaborating with Merck on that trial. Any decision to move forward to Phase III will be based on the actionability of that data from PROPEL, and that will be our decision, Nektar's to make.

Our next question comes from Ben Burnett from Stifel.

Fantastic. Just a quick one for me. Regarding the PROPEL study and the cohort with chemo being added to the doublet, I guess, what flexibility do you have around the dose of BEMPEG? Are you dose-ranging here, or have you already settled on the specific dose of BEMPEG?

Yes, those are good questions. We actually have the flexibility to evaluate different doses of BEMPEG in the PROPEL study. This includes both a dose optimization component that we're running with the doublet in a range of different tumor types. We also have the opportunity to explore different dose levels of BEMPEG with chemotherapy, but it's really as needed. We feel very confident in the dose that we can combine BEMPEG plus PEMBRO with the chemo.

[Operator Instructions] And our next question comes from Daina Graybosch from SVB Leerink.

We had some recent interesting ODAC on accelerated approval of checkpoints, 2 on bladder cancer. There was a discussion that the avelumab approval as a first-line maintenance for platinum-sensitive patients narrows the unmet need for accelerated approval potentially from cisplatin-ineligible. The second, across all of the ODAC conversations, was a discomfort from the FDA about using early-stage checkpoint studies to confirm metastatic accelerated approval. I wonder if you have any thoughts or implications potentially on your accelerated approval strategy in bladder cancer.

Thank you, Daina. JZ, I'll ask you to take a stab at that one.

Sure. Thanks, Daina, for the question. Those sets of ODAC committee meetings were very interesting to our community, and we watch them closely across all the different tumor types. Certainly, all of the points you make were discussed. We'll have to see how the end result of the ODAC and the final interpretation of the FDA's opinion on the things that they specifically didn't vote for but that could impact us in this case. The unmet need could be different with the recent approval that you mentioned. Our key point is to provide the best possible data set in PIVOT-10, showing very long durability of response, showing good ORR ideally with a CR rate, balanced with a very acceptable safety profile. That's key for the FDA's potential accelerated approval decision. There is also potential for the FDA's opinion on confirmatory studies over accelerated approvals. The success of those could impact us, but for now, we will have to wait and see how exactly it would impact us.

And our next question comes from Arlinda Lee from Canaccord.

On 255, can you talk about the -- I know you've answered some of this before, but on the 2 scans? If they respond early, would they be a confirmed response, and that duration would be at least 9 weeks? I'm wondering roughly how many patients do you think might be at that point? And then I was curious about your earlier stage stuff on other cytokines and platforms beyond polymer chemistry. What kind of things would you find interesting? Maybe additive or complementary to what you have now?

Thank you, Arlinda. JZ, do you want to talk through the 255 data that will be seen in these studies?

Yes. I'm not entirely sure if I understood the question, Arlinda. In 255, we're evaluating patients in either heme or solid tumors, and then depending on the nature of the heme malignancy, such as NHL or multiple myeloma, they're evaluated differently. We use Lugano criteria for NHL patients and Myeloma Working Group criteria for evaluating patients with multiple myeloma, focusing more on RECIST criteria in the solid tumor setting. We're excited with the data we're seeing from the 255 studies, both of them. We're able to dose escalate effectively. We're seeing all the cellular population changes that we expect to see. We're seeing systemic and local effects in patients treated with NKTR-255, including those with significant bone marrow dysfunction. Despite advanced disease, patients are seeing elevations in NK cells and CD8 T cells, inducing output. In terms of our research and discovery, we announced a collaboration with a company called Biolojic Design that specializes in antibody engineering using a computational approach. We're working with them to target important immunological targets using an antibody approach. We have additional projects exploring chemical modifications to proteins, polymers, and non-PEG-based polymers to reach our desired biology. I'm excited about those programs moving forward and additional INDs to come.

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

Thank you, everyone, for joining us today. I'd like to thank our employees for their continued dedication and consistent efforts during these very challenging times. Their dedication to advancing our clinical studies while keeping our business on track is impressive, and we're grateful for their contributions. As I stated earlier, we are well-positioned with a strong balance sheet and an important portfolio of immuno-oncology and immunology programs, many of which are the most advanced in their field. We thank our shareholders for their ongoing support and look forward to continuing to provide you with updates on our programs. We hope that you and your families continue to stay safe and healthy. Thank you very much. Appreciate it.

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