Good day. And thank you for standing by. Welcome to the Nektar Therapeutics Fourth Quarter 2021 Financial Results Conference Call. Please be advised that today's conference may be recorded. If you require any further assistance, I would now like to hand the conference over to your speaker today, Jennifer Ruddock, Head of Corporate Affairs. Please go ahead.

Thank you, Crystal, and good afternoon, everyone. 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. Dimitry Nuyten, our Chief Medical Officer. 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 regulatory actions and decisions; financial guidance; and certain other statements regarding the future of our business. Because these 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. Our actual results may differ materially from these statements; important risks and uncertainties are set forth in the Form 10-Q that we filed on November 5, 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 Investor Relations page of Nektar's website at nektar.com. Before turning the call over to Howard, I'd like to remind you that since we're calling in from different locations, I will moderate the Q&A Session for our team so we can avoid technical issues during the session. We appreciate your patience during this time. With that said, I would like to hand the call over to our President and CEO, Howard Robin. Howard?

Thanks, Jennifer. Thank you all for joining us today. 2021 was highlighted by advancements and execution across many areas of our business, and we continue to establish Nektar's leadership position in the development of cytokine therapeutics for the treatment of cancer and autoimmune disease, and we are excitedly awaiting three late-stage registrational study readouts in the first half of this year from our BEMPEG program. If successful, these studies will put us on a path to regulatory approvals and global commercialization in multiple, large frontline cancer settings in melanoma, renal cell carcinoma, and bladder cancer. Our organization is preparing for potential regulatory filings and the commercialization of BEMPEG. Moreover, with a breakthrough designation in first-line melanoma, we believe that positive Phase 3 data will enable us to expedite the U.S. regulatory filing for BEMPEG in this setting. This means we can potentially make BEMPEG available to cancer patients beginning in the latter part of this year or early 2023. Beyond the three studies reading out in the first half of this year, we have several additional registrational studies underway with nivolumab in the adjuvant setting of melanoma and the peri-adjuvant setting of bladder cancer and with pembrolizumab in first-line head and neck cancer. Our broad global registrational program for BEMPEG was designed to capture the most significant cancer types where we believe BEMPEG in combination with a checkpoint inhibitor has the potential to demonstrate significant clinical benefit for a large number of patients. Current sales of checkpoint inhibitors in these settings are in excess of $6 billion, and we believe we have positioned BEMPEG as a first-in-class IL-2 therapeutic with the development strategy to establish BEMPEG in first-line settings targeting a large number of patients. BEMPEG is the only IL-2 agent in development that possesses three key differentiated attributes in one therapeutic candidate. So first, BEMPEG is designed to allow preferential signaling to the beta and gamma portions of the IL-2 pathway with some retained transient binding to the alpha receptor, which is necessary for T cell priming in the lymph node. Second, we leveraged full-length IL-2 to avoid treatment challenges that could arise in mutant structures. And third, BEMPEG has a prodrug design, which allows us to maintain sustained pathway signaling and mitigate the toxicities associated, achieving an antibody-like dosing schedule that could be combined easily with a checkpoint inhibitor. These attributes in our first-line registrational clinical program are important competitive advantages and make the development path in these indications very difficult for all other IL-2 programs being pursued by others that are in much earlier stages of research and development. As the leader in cytokine therapeutic development, our next program, NKTR-255, targets the IL-15 pathway, enabling us to stimulate the immune system with natural killer cell proliferation, which we believe has broad therapeutic potential not just in solid tumors but also in liquid tumors. JZ will share our progress with that program later in the call. In the area of autoimmune disease, our NKTR-358 program partnered with Eli Lilly, is also advancing very rapidly. We're pursuing significant settings for NKTR-358, including lupus, ulcerative colitis, and atopic dermatitis, where sales of current agents range from $12 billion to $15 billion. This key program has very significant value to Nektar. Our agreement with Lilly has significant double-digit royalties in the mid-teens and low 20s, and we have the option to co-promote as well. With the broad manufacturing mechanism of NKTR-358 and its potential in a number of autoimmune and inflammatory conditions, we're truly excited about how large the opportunity can be. NKTR-358 is designed to be a monotherapy biologic therapeutic that is administered subcutaneously to treat a range of autoimmune conditions. In December, we were pleased to see our partner, Eli Lilly, announce at the Annual Investor Meeting the first proof-of-concept data for NKTR-358 in the setting of atopic dermatitis. These data underscore the great promise that Lilly and Nektar see in this potential resolution therapeutic. Lilly now has three Phase 2 studies announced for the development program for NKTR-358 in lupus, ulcerative colitis, and atopic dermatitis with a fourth Phase 2 study planned as well. NKTR-358 is the clear leader in capitalizing on the novel T regulatory cell biology with respect to both our scope and our stage of development. Again, JZ will spend some time later in the call highlighting the tremendous progress we've made in 2021 for NKTR-358. Now, as this is front of mind for many of you, I'll spend some time now on BEMPEG, which is being developed in combination with checkpoint inhibitors, nivolumab and pembrolizumab. As I mentioned earlier, three studies are on track for top-line data readouts in the first half of this year, beginning first with the Phase 3 melanoma data followed by renal cell carcinoma and then bladder cancer data. Positive results from these studies would support a series of regulatory registrational filings for BEMPEG plus NIVO followed by commercial launches for the doublet regimen beginning as early as late 2022 or early 2023. Nektar will lead all distribution, pricing, and market access activities for BEMPEG. Nektar and BMS will share in promotional activities. We look forward to working closely with BMS as we advance towards regulatory filings and launches. Just as a reminder, Nektar will book all revenue for BEMPEG and retain 65% of the profit. We estimate that patent protection for the BEMPEG combination with an anti-PD-1 antibody extends to at least February 2035. As I stated at the JPMorgan Conference in January, BMS and Nektar have guided to top line results from the Phase 3 melanoma study before the end of April, and we expect shortly thereafter to have the results from the two studies Nektar is running in renal cell carcinoma and bladder cancer. BMS and Nektar are not providing any additional detail on the timing of these top-line data as in most late-stage studies conducted in partnership; our company's plan is to make a joint announcement. As a reminder and as we previously stated, we expect to report top line results for the first two co-primary endpoints of ORR and PFS. With positive PFS results from the melanoma study, we plan to submit regulatory approval filings virtually simultaneously in both the U.S. and Europe. The potential European approval and country launches would, of course, follow potential U.S. approval and launch as the process for European regulatory review and approval is typically longer. As a reminder, Nektar is entitled to receive a total of up to $1.4 billion in milestones for BEMPEG filings and first commercial sales following approvals, and Gil will provide more granularity on the timing and triggers for these milestones in a moment when he reviews our 2022 financial guidance. As I mentioned earlier, JZ will discuss the NKTR-255 program later in the call, but I'd like to highlight a few key accomplishments for this program in 2021. First, we generated some important early data in combination with cetuximab in solid tumors in the early dose escalation work in our Phase 1 clinical study of NKTR-255, and this led to an exciting new collaboration for NKTR-255 with Merck KGaA and Pfizer. The collaboration will combine NKTR-255 with avelumab as part of Merck's Phase 2 JAVELIN Bladder Medley umbrella trial. Merck will sponsor and conduct the study, and we will provide supply of NKTR-255. It's a relatively large Phase 2 comparative study, which has an avelumab comparator arm and will evaluate treatment in the maintenance setting of bladder cancer, which is a label unique to avelumab. We're highly encouraged that Merck shares our enthusiasm for NKTR-255 and its potential to combine with avelumab, which has shown ADCC mechanism in preclinical studies. We recently presented data at ASH, highlighting the potential role for NKTR-255 to serve as a CAR-T potentiator, with NKTR-255 eliciting a several-fold increase over baseline CAR T cells even a year past the patient's CAR T regimen. We're excited to announce today that we just received FDA clearance for the IND related to a study to evaluate NKTR-255 in the setting of CAR-T therapies, specifically CD19 CAR-T. The study will be initiated as an investigator-sponsored study at the Fred Hutchison Cancer Setting. From an operational perspective, we have an exceptionally strong balance sheet and ended the year with approximately $800 million in cash. This cash position together with the support of our strategic collaborations and potential for up to $1.4 billion in regulatory filings and first commercial sales milestones for BEMPEG provides us with a strong financial foundation to execute our robust development strategy. With that, I'd like to turn the call over to our Chief Medical Officer, Dr. Dimitry Nuyten to continue. Thank you. Dimitry?

Thank you, Howard. Before I dive into an update on our BEMPEG trials, let me take a moment to remind you of its mechanism and its approach. Our goal when we started the development of BEMPEG was to create a new and novel molecule that captured the positive attributes of IL-2 and also addresses the historical problems with high-dose IL-2. Leveraging our technology platform, we were able to engineer a product candidate that we believe is best-in-class. Let me highlight some of the differentiating aspects of BEMPEG. First, we preferentially signal to the beta gamma IL-2 receptors, which stimulates the growth of cytotoxic T cells. We do this without over-activating the cell populations, which can lead to downregulation of the immune system. Unlike mutated forms of IL-2 that only bind to the beta gamma receptors, we retain some transient binding to the alpha receptor. By doing so, we can enhance the priming of T cells in lymph nodes, enabling T cell proliferation and infiltration of those T cells into tumors when the new tumor antigen is presented. Second, we used the full-length IL-2 molecule with no amino acid substitutions rather than a mutated version. This ensures that we do not see any tachyphylaxis on the receptor or issues that mutant versions can exhibit over time in vivo, including antidrug antibodies, leading to diminished efficacy over time. Third, as a prodrug, BEMPEG avoids the risk of a cytokine storm that you may see with a non-prodrug approach. Certainly, this is something you really want to avoid in a medicine that could potentially be used in so many cancer patients. Finally, we have achieved an antibody-like dosing schedule in an outpatient setting that easily combines with checkpoint inhibitors versus the intense and dense regimen for high-dose IL-2 usually given in an intensive care unit. We are combining BEMPEG with checkpoint inhibitors, and the combination here is quite simple and elegant. We know that targeting the PD-1 pathway may strengthen the immune response by reactivating cytotoxic T cells that have been stopped by the PD-L1 and PD-1 signaling access. We think of this as removing the brakes on the immune system, an effective approach on its own. Then by preferentially targeting the IL-2 pathway to significantly increase the number of cytotoxic immune cells in the tumor microenvironment, we put our foot on the gas. In our previous clinical studies, we’ve shown two important things. First, that treatment with BEMPEG upregulates PD-1 on these new immune cells, and secondly, that this ultimately leads to upregulation of PD-L1 in the tumor microenvironment. Both of these are expected biological outcomes after BEMPEG treatment, and the end result is that the combination of BEMPEG plus nivolumab could potentially drive deeper and more durable responses in patients. Let me now provide a brief update on the timing for our registrational studies, which are tracking in line with our prior guidance. First, for the 760-patient Phase 3 first-line metastatic melanoma study, which is being conducted by our partner BMS, we and BMS are very much looking forward to reporting top-line data in the near-term. As a reminder, this will include top-line results for the two co-primary endpoints. We plan to present the full data and potentially subset analysis at a medical meeting later this year. We are not yet providing details on which meeting we plan to present, but we will target a significant oncology meeting. The Phase 3 study is well powered and designed, having three co-primary endpoints: overall response rate, progression-free survival, and overall survival. Our previous Phase 2 melanoma cohort saw a median PFS of 30.9 months for our doublet. We know that the current I-O doublet treatments available for first-line melanoma patients in Phase 3 studies have reported a median PFS in the 10 to 11-month range, and they still commonly used global standard of care comparator in our Phase 3 study nivolumab has reported a median PFS between four months and six months in different studies. Heading into our top-line results, we are very enthusiastic based on our previously reported Phase 2 results that BEMPEG plus nivolumab could potentially deliver results that position it well in the current treatment landscape. We envision a unique opportunity for BEMPEG plus nivolumab doublets if we are able to emerge as a new standard of care in this setting. The next study we are running is a 620-patient Phase 3 first-line renal cell carcinoma study comparing BEMPEG plus nivolumab versus a TKI of physician’s choice, which can be either sunitinib or cabozantinib. We expect to reach our first interim analysis for the co-primary endpoint of overall survival sometime in the second quarter of 2022. At that time, we could also conduct a final ORR analysis for the co-primary endpoint. If we do not pass the preset threshold for statistical significance in the first interim analysis, the Data Monitoring Committee will recommend resizing the events for the final analysis for overall survival. BMS and Nektar are taking a comprehensive approach to the development of BEMPEG plus nivolumab in this particular tumor type. Additionally, BMS is conducting a 250-patient randomized Phase 2 study in RCC that combines BEMPEG plus nivolumab with Exelixis cabozantinib, allowing us to compare it to the doublet regimen of nivolumab and cabozantinib to pave the way for a TKI-inclusive regimen in RCC with BEMPEG and nivolumab. Last year, BMS and Nektar expanded the strategy in RCC to include a new collaboration with Exelixis, who will be conducting a study evaluating BEMPEG plus nivolumab with their novel generation TKI known as XL092. This study will also include other genitourinary cancers including urothelial cancer. With respect to the Phase 2 study in first-line cisplatin-ineligible urothelial carcinoma, which Nektar is running, the study is designed to serve as the basis for a potential filing for accelerated approval. This study includes about 110 cisplatin-ineligible urothelial carcinoma patients who have a baseline CPS score of 10 or lower as a measure of PD-L1 expression, representing a group of patients with the highest unmet medical needs who cannot undergo the most effective chemotherapy regimen available for bladder cancer, and checkpoint inhibitors have shown most of their benefit in patients with PD-L1 high tumors. The primary endpoints for this trial are overall response rate and duration of response as determined by central radiology review. To have a robust and mature data set, we are looking to achieve a minimum follow-up of 18 months measuring the duration of response, and we expect our first data from this study to come out in the first half of 2022 as well. As Howard noted earlier, the BEMPEG nivolumab program also has two large Phase 3 studies, one in muscle-invasive bladder cancer and one in adjuvant melanoma. The Phase 3 peri-adjuvant muscle-invasive bladder cancer trial is being conducted by our partner BMS. It has a target enrollment of approximately 540 patients who are cisplatin-ineligible and will receive BEMPEG plus nivolumab or nivolumab monotherapy first in a neoadjuvant setting prior to radical cystectomy, and then in the adjuvant setting for a period of 12 months following surgery. The study has a third reference arm where patients receive cystectomy alone without further neoadjuvant or adjuvant treatment. We expect the first data readout to be in 2024 or 2025. This study is designed to serve as a confirmatory study for our planned potential accelerated approval in metastatic cis-platin-ineligible urothelial carcinoma. The Phase 3 adjuvant melanoma trial is being run by Nektar. This study is enrolling approximately 950 patients for a 12-month treatment period post-surgery with an endpoint of recurrence-free survival by blinded independent central review. Enrollment in this study has exceeded our timeline projections, and we now expect to complete enrollment of the 950-patient study around the middle of the year. The adjuvant study is designed to build upon the recent approval of nivolumab in this setting and broaden the role for BEMPEG in the adjuvant setting. Initial data from the study is estimated to be available in 2024. For our combination studies with pembrolizumab, we are enrolling patients in our 500-plus patient Phase 2/3 trial designed to support registration in first-line head and neck cancer. We have collaborations in place with both Merck and SFJ Pharmaceuticals for the study, and we are very excited about this opportunity to address a large patient population in the frontline setting. It includes an interim analysis of overall response rate after 200 patients are enrolled. If the overall response rate passes a pre-specified fertility boundary, the study will continue and the remaining 300 patients will be enrolled in the Phase 3 portion of the study. Given the favorable competitive landscape, we see this as a unique opportunity for us to establish BEMPEG as the first IL-2 mechanism for the treatment of head and neck cancer. Finally, we are continuing to advance our PROPEL study with the addition of chemotherapy to the BEMPEG plus pembrolizumab treatment regimen in both squamous and non-squamous non-small cell lung cancer patients with PD-L1 expression levels under 50%. The combination with chemotherapy here allows us to consider a broad registrational strategy for BEMPEG in non-small cell lung cancer in these patient populations who currently have the highest unmet need for better therapeutic options. We are very much looking forward to providing future updates on our progress with BEMPEG. Let me now turn over the call to JZ.

Thank you, Dimitry. As Dimitry said, we are all very excited about the upcoming milestones for BEMPEG and the opportunity for this important IL-2-based therapeutic to treat a large number of patients battling cancer. As you know, Nektar has built a very strong and well-diversified clinical pipeline, and we've established ourselves as the leader in cytokine therapeutics. Our focus is on targeting significant opportunities in cancer in solid and liquid tumors, and even beyond cancer in a broad range of autoimmune disorders. We are advancing clinical studies to capitalize on these significant opportunities with two large clinical programs, NKTR-255 and NKTR-358. In addition, we have a robust research pipeline looking at immune-based agents in cancer and autoimmune diseases as well. Let me start with NKTR-255, an agent that engages the full biology of the IL-15 pathway to provide functional activation and homeostatic control of IL-15 responses of immune cells, namely natural killer cells, CD8 T cells, and immune memory subsets. As a full agonist of the IL-15 pathway, NKTR-255 can be combined with multiple mechanisms, ranging from targeted agents to cell therapies, including CAR-Ts and even immunological checkpoints to potentially improve the efficacy of these agents. In our early dose escalation work, we have observed a consistent increase of natural killer cells as well as CD8 T cells across multiple tumor types, including multiple myeloma, non-Hodgkin’s lymphoma, colorectal cancer, and head and neck cancer. We have seen up to a nine-fold increase in NK cells, and our pharmacokinetic profile is highly predictable, allowing us to dose NKTR-255 every three or four weeks. Importantly, we see increases in NK and CD8 T cells, even in the toughest patients, including multiple myeloma patients with compromised bone marrow. This is a very important attribute of NKTR-255 and should allow NKTR-255 to be given as a monotherapy and in combination with targeted antibodies. We also see potential in enhancing CAR-T persistence. At ASH, we shared data from a set of four patients enrolled in an NKTR-255 study with highly relapsed and refractory NHL who also had CAR-T as one of their prior therapies. Three of these patients were well over a year past their CAR-T infusion, and all of them had minimal levels of detectable CAR-T at baseline prior to entering the NKTR-255 clinical study. We were very encouraged to see that in all four of these patients with detectable CAR-T at baseline, there was a substantial increase in these cells after treatment with NKTR-255. These initial data highlight the potential role of NKTR-255 as a CAR-T potentiator, and our next steps in the clinic will be to evaluate dosing of NKTR-255 shortly after CAR-T infusion. We are doing a study with Dr. Cameron Turtle at the Fred Hutchinson Cancer Center to see if we can generate even more durable responses for patients. As we announced earlier on this call, we just received FDA clearance for the study to proceed. In this study, we will evaluate various dose regimens of NKTR-255 given close to the time of CD19 CAR-T cell therapy. Our initial strategy has focused on combining with antibodies to function through an ADCC mechanism of action, and we have a robust clinical program in place in both liquid and solid tumors. For our Phase 1/2 study of NKTR-255 plus cetuximab in patients with relapsed or refractory head and neck cancer and colorectal cancer, we are still in the dose escalation portion of the trial with successive cohorts of patients being treated with ascending doses of NKTR-255 every 21 days plus cetuximab weekly until we reach the maximum tolerated dose or the recommended dose to go forward into the expansion cohorts. For our study in Relapsed/Refractory Hematologic Malignancies, the agent has been very well tolerated as monotherapy. We expect to complete the dose escalation phase of the study in the first part of 2022 and then move into the expansion phase in combination with rituximab or DARZALEX FASPRO. The first arm in the study will evaluate NKTR-255 as monotherapy or in combination with rituximab in third line or later follicular lymphoma or low-grade non-Hodgkin Lymphoma. The second arm will evaluate NKTR-255 as a monotherapy and in combination with Darzalex FASPRO in third line or greater multiple myeloma. Lastly, the third arm will evaluate NKTR-255 as a monotherapy for non-Hodgkin's lymphoma patients who have previously progressed following approved CD19 CAR T cell therapy. Recently, we expanded our program through a collaboration agreement with Merck KGaA to evaluate NKTR-255 in combination with avelumab in the urothelial carcinoma maintenance setting post-chemotherapy as part of the JAVELIN Bladder Medley Study. The foundation of this collaboration is a unique scientific rationale for the combination of NKTR-255 with avelumab, which, to remind you, is a PD-L1 inhibitor with an ADCC Active IgG1 Fc region. The NKTR-255 combination arm and study plans to recruit 72 patients and will be compared to an avelumab control arm. Findings from this trial will help determine whether there is a registrational pathway for NKTR-255 in this setting where avelumab is already approved. In the avelumab alliance, Merck and Pfizer are sponsoring the trial, with Merck running the study, and they are on track to initiate the study next quarter. Now let's turn to our immunology program, NKTR-358. As Howard said earlier, we are very pleased with the broad scope of development and overall advancement of the NKTR-358 program being executed by our partner, Eli Lilly. 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, we've utilized a completely different approach with our PEGylation chemistry to capture the immune-regulating potential of IL-2 by specifically stimulating Tregs. Thus, our goal with NKTR-358 is to address the underlying Treg abnormalities in autoimmune disease and to develop an IL-2-like molecule that could selectively stimulate Tregs more effectively than low-dose IL-2. The data emerging from the program has really reinforced our conviction in this approach. In our multiple ascending dose study in lupus patients, NKTR-358 led to a dose-dependent reduction in lupus skin disease activity, as measured by the Class 8 activity score in the subset of 18 patients with a baseline score greater than or equal to 4. This data, along with the PK, PD, and safety information we collected in this Phase 1b lupus trial, led to Lilly launching a Phase 2b dose-range finding study in 280 lupus patients, which is well underway and recruiting nicely. Late last year, Lilly announced exciting proof-of-concept data in a second dermal disease pathology, moderate to severe atopic dermatitis. The 12-week study tested two doses of NKTR-358 compared to placebo, then followed patients for quite a while after the last dose of the therapy. Treatment with NKTR-358 showed a dose-dependent reduction in eczema area and Severity Index Scores in patients with approximately a 70% maximum reduction in scores by week 12 at the highest dose tested. The efficacy observed in this study is well in line with the current standard of care, DUPIXENT, which requires 16 weeks of treatment. The most fascinating observation from the study was that when we looked at patients 36 weeks after we stopped dosing NKTR-358 therapy, their skin scores remained very low and, in fact, dropped even further during this extended period. This has us and Lilly very excited about the potential for durability with NKTR-358. These data underscore our hypothesis that if you increase the function of regulatory T cells, you might address the underlying immune pathology in the disease, seeing a durable clinical signal like we observe in atopic dermatitis long after treatment ends. NKTR-358 is a first-in-class mechanism. As we realized when we started this development program, NKTR-358 has the potential to treat the underlying disease pathology and provide disease-modifying effects. This means that if we are successful, NKTR-358 could truly transform the treatment of autoimmune disease. The Phase 2 program for NKTR-358 includes the ongoing 280-patient Phase 2 study in lupus, a second ongoing Phase 2 study in 200 patients with ulcerative colitis, a third Phase 2 study planned in atopic dermatitis, and a fourth Phase 2 study in yet-to-be announced autoimmune indication expected to start later this year. With these trials making great progress, we expect a steady stream of data coming from these Lilly studies over the next 12 to 18 months. With that, I will turn the call over to Gil.

Thank you, Jonathan, and good afternoon, everyone. This afternoon, we announced our full year financial results for 2021 in our earnings press release. On this call, I will provide our annual financial guidance for 2022. Starting with our cash position, we finished 2021 with a very strong balance sheet with approximately $800 million in cash and investments and no debt. Additionally, under our collaboration with BMS, there are very significant near-term regulatory and commercial launch milestones associated with successful outcomes from the registrational studies for BEMPEG. Let me provide you with some more detail on how these milestones break down. For the first indication, there are $60 million of milestones associated with health authority filings for BEMPEG in the U.S. and EU, $500 million in commercial launch milestones split equally between the first commercial sale in the U.S. and the first commercial sale in the EU, and $65 million in milestones associated with regulatory submissions and commercial launch in Japan. For each of the next three indications, there are $30 million of milestones associated with health authority filings in the U.S. and EU, $200 million in commercial launch milestones split equally between the first commercial sale in the U.S. and the first commercial sale in the EU, and $30 million in milestones associated with regulatory approval submissions and commercial launch in Japan. Before I get into the line-item projections for our 2022 financial guidance, I wanted to review a few key assumptions that we made in formulating this guidance. If one or more of our registrational studies for BEMPEG are successful in the first half of 2022, it is possible that BEMPEG could be approved and launched as early as late 2022, depending upon regulatory filing and review timelines. However, in our financial guidance for this year, we have only included regulatory filing milestones for 2022 in our revenue and cash position estimates, with any revenue and cash receipts for the potential commercial launch milestones coming in 2023. We will, of course, update this guidance as appropriate based on additional information we receive during the year. Now turning to our 2022 financial guidance. With respect to our cash position, we expect to end the year with approximately $400 million in cash and investments, with net cash usage in 2022 relatively consistent with 2021. Our projected 2022 cash position includes $100 million in BMS collaboration milestones associated with regulatory filings for BEMPEG. Our GAAP revenue is expected to be between $185 million and $195 million in 2022, including the $100 million of BMS collaboration milestones related to BEMPEG regulatory filings. We currently expect approximately $70 million of these milestones will be recognized in Q3, with a balance of $30 million being recognized in Q4. Excluding these milestones, we expect to recognize the remaining $85 million to $95 million of GAAP revenue fairly ratably over the four quarters of 2022. The non-milestone portion of our revenue includes $70 million to $75 million in non-cash royalty revenue and $15 million to $20 million in product sales. We anticipate 2022 GAAP R&D expense will range between $500 million and $525 million, which includes approximately $65 million to $70 million of non-cash depreciation and stock compensation expense and $30 million to $35 million of non-cash development expense for our head and neck program being funded by SFJ Pharmaceuticals. Our 2022 R&D investment will further advance our deep pipeline of immune-modulating medicines and prepare BEMPEG for commercial launch. We and our partners are funding six registrational studies for BEMPEG. This year, we expect to complete enrollment of approximately 950 patients in the PIVOT-12 adjuvant melanoma study by approximately mid-year and also to significantly ramp enrollment in the head and neck study. We are continuing to manufacture BEMPEG for commercial launch, and these expenses will continue to be reflected in R&D until approval of BEMPEG is achieved, in which case we will then capitalize our commercial manufacturing into inventory and expense through cost of goods sold. For NKTR-358, we will be funding our 25% share of development costs for four Phase 2 Lilly clinical studies in lupus, ulcerative colitis, atopic dermatitis, and one additional immune indication. We are completing the dose escalation studies for NKTR-255 in both hematologic and solid tumor settings, and we will be starting enrollment in multiple expansion cohorts this year in combination with ADCC antibodies. Additionally, we will continue our research efforts to enable new programs to add to our clinical pipeline in the coming years. G&A expense for 2022 is projected to be between $175 million and $195 million, which includes approximately $35 million to $40 million of non-cash depreciation and stock compensation expense. As I mentioned earlier, we are currently building our commercial capabilities in a carefully staged fashion with a focus on distribution and market access to prepare for the BEMPEG commercial launch as early as the end of 2022. We continue to carefully gate our commercial investments in the first half of 2022 prior to the receipt of positive top-line data from our registrational studies to support regulatory approval filings. As a result, we do not expect G&A will be ratable through 2022, as commercial activities will increase in the second half of the year following positive top-line data from the BEMPEG registrational studies. Our non-cash interest expense related to our royalty monetization is expected to be between $25 million and $30 million. Additionally, I want to note that our non-operating expense includes the change in fair value of our development derivative liability, which may change significantly this year based on the results of the metastatic melanoma study. With that, we will now open the call to questions. Operator?

Thank you. Thanks for taking the question. Thanks for all the detail in the call. Just maybe as we think about the three Phase 3 readouts, just your level of read-through that we should be taking from melanoma to RCC to bladder for the BEMPEG trial?

Yes. Thank you, Peter. I'm going to ask Dimitry to take that one. Dimitry?

Yes. Thank you for the question. I think these are, as I like to call them, independent shot-on-goals. On one hand, of course, the indications have been carefully selected based on, let's say, IL-2 validation specifically for melanoma and renal cell carcinoma. Bladder cancer is a different indication. We built strong early data across the different indications. However, if you think about read-through, there are very different tumor types. The studies are different in design. Specifically, if you think about melanoma, we are building upon standard of care combining it with nivolumab, comparing it to nivolumab alone. However, in renal cell, we have a double I-O approach versus a TKI approach. I would overall say there's limited read-through, and these are truly independent shots on goal.

Thank you. Our next question comes from Chris Shibutani from Goldman Sachs. Your line is open.

Hi. Good evening. This is CJ Zopf on for Chris this evening. Obviously, we are all waiting on tenterhooks to see the Phase 3 readouts coming up this half. Gil, thanks so much for helping us think through what the spend might look like under the assumptions that you gave. In the unfortunate event that the trials are not positive, how should we be thinking about any potential spend trajectory changes?

Yes. Gil, do you want to take that?

Yes. Of course, as we outlined our assumptions in our guidance, we're expecting positive results out of the BEMPEG trials. As I'm sure you can imagine, we have some contingency plans in the unlikely event we were not to have success. But I think it's way too early to even be contemplating or talking about those plans. So we're certainly planning for success and ready to make any adjustments as we go forward.

Thank you. Our next question comes from Jay Olson from Oppenheimer. Your line is open.

Thank you. This is Cha on the line for Jay. Thanks for taking the question. Maybe just one for 255. Just wondering how you're thinking about the collaboration opportunity for 255 with cell therapy? And separately, I'm just curious about the newly initiated study with CAR T. When will you dose 255 for – in the CAR-T? And if you're going to dose like for one time or will you be dosing periodically? Thank you.

Yes. Thank you for that. JZ, do you want to talk about our approach in cell therapy as well as the CAR T study a little bit more? Thank you.

Yes. Absolutely. Thank you for the question. One of the things that we observed when we started our collaboration with Cameron Turtle at the Hutch is that we ran a number of preclinical studies with him. He is one of the founding fathers of this field. We were really following on the understanding that patients that have the highest levels of IL-15 post-conditioning seem to have some of the best outcomes following CAR T cell therapy transplant. The opportunity here is providing exogenous IL-15 pathway source to help in this setting. From our early preclinical studies, we saw that administration of NKTR-255 could rescue subclinical doses of CAR T cells applied in a preclinical model. These were levels of CAR T that are so low that they hardly provide any tumor control. But in combination with 255, not only do they kill the tumors; the animals maintain long-term persistence of effect. You could keep rechallenging them with the same tumors and they continue to be completely tumor-free for many months after treatment. The study then extended to patients run by Cameron Turtle at the Hutch, leveraging from those early preclinical studies to the ASH data that I summarized, where we are going to be administering NKTR-255 much more contemporaneously with the CAR T therapy. So, 255 will be given very close to the CAR T administration, and as you noted, you have the ability to continue treatment. We will be continuing to treat with NKTR-255 for an extended period after the original CAR T transplant with the opportunity in all these cases to increase the persistence of the CAR-T cells and ultimately, hopefully improve the efficacy and durability seen with these therapies. Thanks for the question.

Thank you. Our next question comes from Jessica Fye from JPMorgan. Your line is open.

Hey guys good evening. Thanks for taking my question. When do you expect to have mature overall survival data from the frontline melanoma trial? And what's the minimum PFS hazard ratio you could detect in that study? Thanks.

Hi Jess, thanks. Dimitry, I'm going to ask you to take those two.

Yes, sure. Thanks for the question. I'll start with the PFS hazard ratio. As we stated before, we haven't given additional guidance or detailed guidance on our statistical analysis plan. This is atypical for companies to disclose those details until a full publication is available. We've talked about clinical relevance before, and I've emphasized two things. First of all, as a reference trial, the CheckMate study can be looked at for a lot of details. Our study is well designed to detect a clinically relevant hazard ratio. Regarding the survival analysis, that's something we haven't commented on. We're not providing any guidance on the number of events and the timing. I can only say that it's one of the three co-primary endpoints. We don't need survival data for a regulatory path. PFS by itself is a registrational endpoint, and survival data, as I think is known for many other trials in melanoma, lag significantly behind, which is beneficial for patients. They’re living much longer than they did without disease progression. We will give updates on that in the future, but not at this time.

Thank you. Our next question comes from Greg Harrison from Bank of America.

Hey good afternoon. Thanks for taking the question. If the melanoma data are positive but either maybe in line or just not clearly superior to IPI/NIVO and CheckMate 067, how would this change or impact your path forward for commercialization? In other words, are there other aspects of BEMPEG that you would expect to differentiate and help you gain some market share there?

Thanks, Greg. I'm going to ask Dimitry to take that one as well. Thanks, Dimitry.

Yes, thank you for the question. I think it's complicated. I've said a few times in earlier calls before the median PFS, of course, is one of many things to look at. The hazard ratio is one thing to examine. If we assume your question about being similar hazard ratios, then there are many differentiating elements in our clinical trial that we can read out and emphasize for the patient's value. One thing as we've shown in the PIVOT-02 data is our impressive CR rate. This is something that is an early readout for potentially long-term benefit. The CR rate provides benefit to a substantial number of patients but perhaps not all patients. It might not capture the median PFS but could capture a significant minority of patients who have very long-term benefits. That's one important differentiator we will be looking at. Based on our safety data presented, that's another strong differentiator specifically for ipi/nivo with an over 50% Grade 3/4 AE rate.

Thank you. Our next question comes from Bert Hazlett from BTIG. Your line is open.

Thanks. Thanks for taking the question. Thanks for the additional detail on the milestones upcoming. Just two quick ones, I'm going to slide in. First, could you remind us again of any differences or similarities in patient population enrolled between Phase 2 and Phase 3 in the first-line metastatic melanoma studies? And secondly, unfortunately, there is a war on, as we know, the sanctions have been mostly financial against the Russian Federation but not all of them. You have some centers there. Do you foresee any challenges in accessing any of the data for any of your trials upcoming? Thanks.

So, I'm going to start with the first part of that question for Dimitry related to the patients enrolled in the Phase 3 versus the Phase 2. For the second part of the study, I'll ask Howard to comment on with respect to the evolving situation in Ukraine. Dimitry, do you want to take the question?

Sure, thank you for the question. Until we have a full publication of our data set, the exact patient characteristics will not be known or disclosed. The percentage of patients with certain characteristics we can't comment on right now. As you know, it's a blinded trial. Overall, the inclusion criteria are very similar. We made sure that we have good representation of different risk factors, and we have talked about before—we stratify for a number of important risk factors to ensure that patients with the different factors are distributed equally between the two arms. We are confident that the Phase 3 trial, which is a global Phase 3 trial, will capture the broad array of different prognostic and predictive factors for patients with metastatic melanoma.

Thank you, Dimitry. Howard, do you want to talk about the evolving situation in Ukraine?

Yes, of course. Look, obviously, the whole situation is devastating to watch, and our hearts go out to the Ukrainian people; it's very difficult to watch what's going on. I can tell you that Nektar does not have any vendors, testing labs, raw material supply chain, or clinical sites in Ukraine, so none of these studies were conducted there. We do not anticipate any— we've looked at this very carefully and it's an excellent question. We do not anticipate any risk to database loss, any plans to analyze top line data, and/or any of the planned study results for BEMPEG due to the Ukraine-Russian conflict. We do not see any filing risks either at this point. We will continue to monitor the situation and determine if there is any problem. But at this point, there doesn’t appear to be anything that puts these trials or the database locks at risk. Again, we have no sites in Ukraine at all. I hope that answers it for you.

Thank you. Our next question comes from Mara Goldstein from Mizuho. Your line is open.

Great. Thanks for taking the question. I wanted to ask about 358 and the decision to opt in. What are the potential timing and gating factors for that? Is the timeframe consistent with this year where you’re expecting clinical data from potentially registrational studies?

Thank you, Mara. I'm going to ask Gil to take that question. Gil?

Yes, Mara. The way our collaboration is structured with Lilly is that when they make the determination to go into Phase 3, we have a certain amount of time to elect to co-develop and co-fund the Phase 3 program up to 25%. This entitles us to the highest tier of royalties, which, as Howard mentioned earlier, is in the mid-teens to low-20s. While we haven’t crossed that bridge yet, as we look out and evaluate the size of these indications and the extraordinarily encouraging results we’ve seen already for NKTR-358, we expect to fund our portion to get maximum royalties. Of course, we’ll have to make the decision at that time when Lilly begins to take different indications into Phase 3 based on the Phase 2 data.

Thank you. Our next question comes from Andy Hsieh from William Blair. Your line is open.

Great. Thanks for taking my question. I have a question for Dimitry. You mentioned the RCC trial in the second quarter that could potentially undergo this resizing based on the recommendation of DSMB. I'm curious about how that decision will be made. Is that based on overall survival response rate? Are you looking at the entire population or specifically just in the intermediate high-risk population? The second part of my question is also related to RCC. You mentioned about the 250 triplet study. Is that ongoing? Just curious about the status of that trial. Thank you.

Sure. Thanks for the question. To start with the second part, that’s relatively easy. That trial is ongoing. We haven’t given any guidance for data readout, but it’s ongoing. The first part of your question: just to emphasize for everyone, it’s not a resizing of the trial. It’s not a sample size re-estimation. It’s an event size re-estimation for OS events. It’s based on modeling provided to the DMC by our statistical group before the trial began to optimize the event rate for survival in intermediate and poor risk patients in the trial. I hope that answers your question.

Thank you. I am showing no further questions from our phone line. I’d now like to turn the conference back over to Howard Robin for any closing remarks.

Well, thank you, everyone, for joining us today. When you consider the range of therapeutic areas that we are working and the sheer breadth of our pipeline, I'm really very proud of our company that has built such a strong and extensive clinical pipeline from a platform of science. We have 17 clinical trials running in the area of immuno-oncology and immunology. In each of these programs, BEMPEG, NKTR-255, and NKTR-358 represent distinct value in our pipeline and each addresses significant patient populations. Of course, we have additional research programs that we’re preparing for the clinic in the areas of cancer and autoimmune disease. Remember something important about BEMPEG IL-2. IL-2 is a well-understood mechanism. Using our technology, we invented a much better IL-2, and that's why we're looking forward to the BEMPEG melanoma results in the very near future. We’re certainly approaching a busy and exciting time for Nektar. I would like to thank our employees for their hard work and efforts, and I want to thank our shareholders for their continued support. We look forward to providing you with updates on our progress in the very near future. So please stay tuned. Thank you very much.

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