Good day, and thank you for standing by. Welcome to the Nektar Therapeutics Fourth Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Vivian Wu. Please go ahead.

Thank you, Crystal, and good afternoon, everyone. Thanks for joining us today. With us on the call are Howard Robin, our President and CEO; Dr. Jonathan Zalevsky, our Chief of Research and Development; Dr. Mary Tagliaferri, our Chief Medical Officer; Sandra Gardiner, our Chief Financial Officer; and Jennifer Ruddock, our Chief Business Officer. On today’s call, we expect to make forward-looking statements regarding our business, including statements regarding the therapeutic potential of and future development plans for drug candidates and research programs. The timing of the initiation of clinical studies and the availability of clinical data for the drug candidates, the timing and plans of future clinical data presentations, the formation, future development plans or success of our collaboration agreements, the expectations following our corporate restructuring and reorganization, financial guidance, and certain other statements regarding the future of our business. Because forward-looking statements relate to the future, they are subject to uncertainties and risks that are difficult to predict, many of which are outside of our control. Our actual results may differ materially from these statements. Important risks and uncertainties are set forth in our Form 10-Q that was filed on November 8, 2023, which is available at SEC.gov. We undertake no obligation to update any 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. With that said, I would like to hand the call over to our President and CEO, Howard Robin. Howard?

Thank you, Vivian, and thank you for joining us today. 2023 was a pivotal year for Nektar. We refocused the company’s development pipeline on immunology and inflammation with our primary near-term goal to advance REZPEG to meaningful data catalysts in the first half of 2025. REZPEG is poised to be highly disruptive in the biologic treatment landscape for atopic dermatitis by offering a novel agonistic mechanism. REZPEG is designed to both dampen the inflammatory response and simultaneously restore immune balance by directly expanding functional T reg cells and engaging multiple immunoregulatory pathways in patients with atopic dermatitis and other autoimmune disorders. Through its unique mechanism, REZPEG also has the potential to provide patients with superior efficacy as well as more favorable infrequent dosing. There are over 30 million people in the U.S. alone battling this chronic skin condition, and it can greatly impact quality of life and mental health for these patients. We made significant advancements in 2023 with respect to our REZPEG program. Most notably, we regained the full rights to REZPEG from Eli Lilly and now own the program 100% with no encumbrances. We moved quickly to design a Phase 2b study in atopic dermatitis based on the promising results from the Phase 1b placebo-controlled randomized study of REZPEG, which showed an 83% drop in eczema skin scores after just 12 weeks of treatment. Our Phase 2b global study in this indication was launched in October of 2023, and enrollment is on track for data readout in the first half of 2025. In late 2023, we also began work designing a Phase 2b study in alopecia areata, another area of high unmet need. The study is starting this month. There are approximately 7 million patients in the United States and 160 million people worldwide who have alopecia areata. JAK inhibitors are the primary treatment option for patients with alopecia, but they have a significant rebound effect with treatment cessation and several black box warnings. Based on the data we have generated to date on REZPEG in the skin-related autoimmune conditions of atopic dermatitis, psoriasis, and in patients with cutaneous manifestations of lupus, we believe REZPEG has strong scientific rationale in this setting of alopecia and could have the potential to be a highly differentiated treatment option with a similar remittive effect for this underserved patient population. As I stated earlier, we look forward to the Phase 2b data for our atopic dermatitis study and for our alopecia study in the first half of 2025. These will be highly meaningful data catalysts for Nektar. In addition to REZPEG, we have another important immunology program that we are moving toward the clinic. This is a first-in-class differentiated mechanism in immunology, a TNFR2 agonist antibody, NKTR-0165. TNFR2 has been shown to potentiate the suppressive effects and overall functional properties of T regs, and the program is built on what we have learned through our deep experience with REZPEG and the T reg field, representing a promising mechanism for treatment of autoimmune diseases, including multiple sclerosis and ulcerative colitis. We are currently conducting IND-enabled studies with the goal of targeting an IND submission in the first half of next year. In line with our objectives to advance our immunology pipeline, today we announced a $30 million financing that further bolsters Nektar’s financial position as we head into transformative data catalysts. Importantly, we are pleased to bring on a new high-quality long-term investor, TCG Crossover, who clearly shares our belief in the potential of REZPEG, at a price of $1.20 per share, the transaction represents a premium of over 80% to Nektar’s 30-day VWAP. This puts us in a strong financial position and extends our cash runway from our previous guidance, which was the middle of 2026, to now well into the third quarter of 2027. And with that, I’ll hand the call over to JZ for an R&D discussion. JZ?

Thank you, Howard. Let’s begin today with REZPEG, which is the most advanced IL-2 based T reg mechanism in the field. Across the REZPEG studies that have been conducted to date, we have observed a consistent and highly predictable clinical pharmacology profile with respect to target engagement as well as the peak and duration of T reg mobilization. It has demonstrated a well-tolerated safety profile and clear clinical efficacy in atopic dermatitis, psoriasis, and in patients with cutaneous manifestations of lupus. Our deep experience with REZPEG to date across the totality of this clinical program gives us convictions in our ongoing Phase 2b studies in atopic dermatitis and alopecia areata. Specifically in atopic dermatitis, there are three important issues that patients with this disease continue to face: first, there is a need for great efficacy, specifically a deeper magnitude of response and rapid onset of treatment; second, patients lack durable responses and therapy-free remission. Once current therapies are discontinued, patients rebound rapidly; and third, treatments with favorable safety profiles are lacking. This is especially important given the chronic nature of the disease and the need for continuous dosing. We believe there are major opportunities in this disease state that the differentiated profile of REZPEG could potentially address. Diving into our Phase 1b data in atopic dermatitis, through the 12-week induction period, REZPEG demonstrated dose-dependent efficacy across both physician-assessed and patient-reported efficacy measurements, reaching statistical significance across many of these measures. At the highest dose level, REZPEG demonstrated a very rapid onset of response, with over 40% of patients achieving EASI-75 by week 3 after only 2 doses of REZPEG. This rapid onset of action rivals that of JAK inhibitors, which have outperformed Dupilumab at this parameter. At the end of the induction period of 12 weeks, we observed a profound magnitude of efficacy, an 83% reduction in percent change from baseline EASI score with the highest dose tested. This is the largest magnitude of change that we’ve seen for a biologic and outside of one JAK inhibitor. Importantly, we are encouraged by the extended durability seen from REZPEG. Long after the completion of the 12-week induction period, many patients maintain durable disease control for an additional 36 weeks after the end of dosing. This type of extended disease control after the end of dosing is not observed for Dupilumab or for JAK inhibitors. Durability of the EASI-75 response was observed with approximately 70% of EASI-75 responders maintaining that response for 36 weeks after the end of the 12-week induction period. This is a very exciting result and suggests that REZPEG has the potential to be the first remitting therapy for atopic dermatitis. For both patient-reported outcomes and physician-assessed endpoints, we observed these same trends, rapid onset of effect, dose dependence, and long durability of control. Additionally, REZPEG was well-tolerated and treatment with REZPEG did not induce anti-drug antibodies in patients, which has been reported with some examples of the IL-2 mutein class. These promising data have us and KOLs very enthusiastic about the potentials for long-lasting responses and infrequent maintenance dosing with REZPEG in the setting of atopic dermatitis. In October 2023, we initiated the Phase 2b study of REZPEG in biologic-naive atopic dermatitis patients, and enrollment is well underway. Our goal is to enroll roughly 400 patients with three different regimens of REZPEG versus placebo, evaluated over a 16-week induction period. After the induction period, patients that meet a threshold to advance from induction to maintenance will be re-randomized into one of two maintenance regimens at different dosages either once a month or once every three months and that schedule will continue for another 28 weeks. Our enrollment for this study is on track and we expect data in the first half of 2025. Moving to alopecia areata, we believe REZPEG has strong scientific rationale for this indication. Alopecia areata is also a disease of the skin, where your immune system starts to attack the hair follicles, thereby weakening the ability of stem cells to grow hair. With prolonged immune attack, this eventually causes the hair follicle to release the hair altogether leading to patchy hair loss and as the disease progresses to baldness. Biologically speaking REZPEG through its central pathway of T reg rescue, is uniquely poised to address the diversity of immunopathology, providing broad potential for targeting multiple dermal diseases, including alopecia. For example, in alopecia, there are almost no immune cells in normal hair follicles, meaning the hair follicle is an immune-privileged tissue. T regs are very important in maintaining that immune privilege, and people with alopecia areata develop a breakdown of that immune-privileged state. We think the T reg mechanism of REZPEG can restore immune privilege and could provide durable disease control, which we believe would be game-changing in this indication. JAK inhibitors are the only agents approved in alopecia, and they do not provide disease durability after a patient’s discontinuation of treatment. With JAK inhibitors, it could take a patient anywhere from 9 to 18 months to grow hair. And once a patient stops taking a JAK inhibitor, which may happen for a variety of reasons, including toxicity, their hair falls out again rapidly. There is a high unmet need in this patient population for tolerable treatment options that provide durable responses. We believe that restoration of immune privilege is key to obtain durability. For these reasons, we believe there’s an opportunity for REZPEG to become a novel biologic therapy in alopecia areata. We are initiating a Phase 2b study of REZPEG in alopecia this month. The Phase 2b study plans to recruit roughly 80 patients with severe to very severe alopecia, who will be randomized to REZPEG or placebo. Patients will be treated for a period of 36 weeks and observed up to 60 weeks in total. Our primary endpoint for this study is mean percent improvement in SALT or the severity of alopecia tool at week 36, which is the validated outcome measure used for regulatory approval. We will also be looking at a number of other secondary endpoints, including the proportion of patients who see a reduction in SALT. Now, turning to NKTR-0165, our TNFR2 agonist antibody. TNFR2 is highly expressed on T reg myeloid suppressor cells, regulatory B cells, neuronal cells and others, and TNFR2 agonism has been shown to potentiate the suppressive effect and overall functional properties of T reg and these other suppressive cell populations. If TNFR2 is absent, it is associated with autoimmunity and other genetic conditions that resemble FoxP3 loss of function. In contrast, its presence has been associated with immunoregulatory function and protective effects for multiple cell populations and tissues in the body. This TNFR2 agonist program in our pipeline is built upon many years of T reg experience gained from REZPEG. For example, we know that central T regs, such as thymic T regs, require substantial JAK-STAT signaling that is physiologically provided by the IL-2 receptor pathway, and this is a central theme in the mechanism of action of REZPEG. In contrast, T regs that leave the central compartment and infiltrate the distal organs and tissues are less dependent on the JAK-STAT pathway and instead shift their reliance onto NF-kappa B pathway engagement for their maintenance of suppressive function. TNFR2 is the most abundant TNS superfamily member expressed on T regs, and the key driver of NF-kappa B signaling in those cells. Consequently, a bona fide TNFR2 agonist would be an incredibly exciting addition to our pipeline. Examples of indications that could be addressed by TNFR2 agonism include multiple sclerosis, mucosal immunology conditions such as ulcerative colitis of the GI or other oral mucosal diseases and even dermal autoimmune diseases like vitiligo. We have identified several lead TNFR2 antibody programs from an artificial intelligence-based antibody discovery campaign with our partner Biolojic Design. The lead antibody is called NKTR-0165, and it has highly desirable properties including exquisite TNFR2 cell activity, TNFR2 agonism in primary human cells, activity in multiple preclinical efficacy models, and a very well-tolerated profile in early non-GLP toxicology studies. We have developed a manufacturing cell line for the lead, and we are conducting upstream and downstream process development with the aim to enter the clinic for this program in the first half of 2025. Later this year, we plan to present the first preclinical data for NKTR-0165 at an upcoming medical conference. As we move forward with our IND-enabling studies, there is growing interest in a novel selective TNFR2 agonist like NKTR-0165, and thus we remain open to the opportunity of working with companies that have interest in these areas to strategize on the best path forward. Now, let’s switch gears to our IL-15-based oncology program, NKTR-255. NKTR-255 is an IL-15-based mechanism of action that holds great promise as a combination agent of cell therapies and other mechanisms such as checkpoint inhibitors, and we are exploring the best partnering paths for continued development of this drug candidate. Our Nektar-sponsored trial, combining NKTR-255 with the approved CD19 CAR-Ts BREYANZI and YESCARTA for treatment of patients with large B-cell lymphoma, has enrolled 15 patients in the dose-escalation portion of the study. The combination of NKTR-255 in BREYANZI is also being studied in a separate investigator-sponsored trial at Fred Hutch. We are targeting the potential submission of data from these studies at medical meetings in the second half of this year. A clinical trial in non-small cell lung cancer sponsored and funded by AbelZeta, which evaluates the combination of AbelZeta’s tumor-infiltrating lymphocyte cell therapy, plus NKTR-255 and checkpoint inhibitors is also ongoing and enrolling patients. With our partner, Merck KGaA, we have also been evaluating NKTR-255 in combination with BAVENCIO versus single-agent BAVENCIO in the Phase 2 JAVELIN Bladder Medley study, and that study is on track to potentially report interim PFS data later this year. And with that, I will turn the call over to Sandy for a review of our financial guidance. Sandy?

Thank you, JZ, and good afternoon, everyone. We ended the year in a very strong financial position with $329.4 million in cash and investments and with no debt on our balance sheet. As Howard stated earlier, today’s announcement of a $30 million financing further strengthens our cash position. Our revenue was $23.9 million for the fourth quarter of 2023 and $90.1 million for the full year of 2023. Our operating costs and expenses for the fourth quarter 2023 were $57.4 million and $353.8 million for the full year 2023. Our non-operating expenses for the fourth quarter of 2023 were $8.6 million and $12.6 million for the full year 2023. Q4 2023 included a non-cash charge of $6.1 million or $0.03 per share for the reclassification of the foreign currency translation adjustment to income related to the wind down of our India legal entity. As a reminder, our India facility was sold in December 2022 for approximately $12 million, with the wind down of the entity occurring in 2023. Our net loss for the fourth quarter of 2023 was $42.1 million or $0.22 per share. For the full year of 2023, our net loss was $276.1 million or $1.45 per share. Excluding $111.8 million in non-cash goodwill and other impairment charges, net loss on a non-GAAP basis for the full year 2023 was $164.3 million or $0.86 basic and diluted loss per share. Looking forward to 2024 and beyond, our financial position remains strong, in part reflecting the cost savings initiatives we undertook last year. We plan to end 2024 with $200 million to $225 million in cash and investments. In addition to the $30 million PIPE we announced this morning, our 2024 cash guidance also includes $15 million resulting from an amendment executed today on a former 2020 agreement with certain entities of healthcare royalty. Our cash runway now extends well into the third quarter of 2026, which will take us through key value-generating milestones, including phase two REZPEG data in atopic dermatitis and alopecia areata. Our revenue for the full year of 2024 is expected to be between $75 million and $85 million, which includes $55 million to $65 million in non-cash royalties, and $20 million to $25 million in product sales. We anticipate full-year R&D expenses will range between $120 million and $130 million. This includes approximately $5 million to $10 million of non-cash depreciation and stock-based compensation expense. The increase in R&D spend for 2024 over 2023 represents an increased investment into REZPEG Phase 2b studies in atopic dermatitis and alopecia areata, as well as IND-enabling studies for our antibody program, NKTR-0165. This increase is partially offset by decreased spending on NKTR-255 clinical studies and cell therapy, which are completing in 2024. The remaining ongoing clinical studies for NKTR-255 are primarily funded by our external partners. We expect G&A expenses for the full year of 2024 to be between $70 million and $75 million, which includes $5 million to $10 million of non-cash depreciation and stock-based compensation expense. Our full year non-cash interest expense is expected to be between $20 million and $25 million. As I stated earlier, we expect to end this year with $200 million to $225 million in cash and investments. And with that, we will now open the call for questions. Crystal?

Thank you. Our first question will come from Jay Olson from Opp & Co. Your line is open.

Oh, hey. This is Cheng on the line for Jay. Thank you for taking the question, and congrats on the progress. Maybe just on the REZPEG AD study, wondering if you can talk about the initial feedback from doctors and patients participating in the study, especially in a context that there are many other competing trials out there. If you also could comment on the recruitment progress thus far versus your internal expectations? That would be great. And I have a quick follow-up question after that. Thank you.

Mary, do you want to take that question?

Yeah. Sure, Howard. Thank you. Hi, Jay, this is Mary Tagliaferri. When we look at the aggregate of our data from site activation, screening activities, and enrollment, we are on track to have our top-line induction data from the AD study in the first half of 2025. In terms of feedback, we’re really pleased with the type of screening we are seeing, and we believe this is driven by the data that was presented by Jonathan Silverberg at EADV 2023. The doctors really do see that, one, REZPEG has a very rapid onset of action; number two, the depth of response that we’ve seen with the percent change in EASI after only 12 weeks of treatment when most studies look at an induction period of 16 weeks, the doctors have been very impressed with that. And then certainly for the benefit of their patients, they really love the durability that we saw when patients were off treatment for 9 consecutive months, and they were able to maintain that very deep response in EASI. This is all very, very attractive for recruiting patients to the study. So we’re doing very well. I have heard that other studies are focused on enrollment, and we’re not experiencing that.

Got it. Thank you. And just a quick follow-up. Just wondering to what extent you can leverage the clinical sites for the AD study for the upcoming alopecia areata initiation. So can you just use the same site for this, or is there another layer of work to do?

Yes. So we are going to use 12 sites that are participating in the AD study for our alopecia study. And those physicians are very excited to have an opportunity for a second skin disease to evaluate REZPEG in alopecia areata. And, again, they’re really eager to see a durability of response because, of course, when they treat their patients with JAK inhibitors and they grow their hair back, immediately they start to lose their hair once they discontinue treatment with the JAK inhibitor. So the promise of an age of durability and restoring immune privilege is definitely really encouraging and exciting to this audience.

Thank you. And our next question will come from Roger Song from Jefferies. Your line is open.

Hi, team. This is Kambiz on for Roger. Maybe just following up on the alopecia areata study. How many total clinical sites will you be enrolling, and what's kind of the geographic distribution of those sites? And then, are there some key baseline characteristics for the patients in these studies? Will most of them be JAK inhibitor refractory? Any detail there would be appreciated?

Mary, do you want this again?

Thank you, Howard. We will have slightly over a certain number of sites. We plan to be in Canada, the United States, and Poland. As you can imagine, there are access issues in Poland, and it often takes a long time for patients to see a dermatologist. This creates a favorable environment for enrolling patients. We will focus on JAK inhibitor-naive patients, specifically those with severe to very severe alopecia, requiring a SALT score of 50 or higher. This aligns with the patient population that has been included in baricitinib and Lilly's JAK inhibitor, as well as Pfizer's JAK inhibitor for their pivotal trial.

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

Hey, thanks for taking my question. For the Phase 2b atopic derm trial, what’s the threshold patients need to meet to be considered a responder and be re-randomized at week 16? And then also, I’m curious what is your latest opinion on whether the AD or alopecia trial will read out first and why?

Yeah. Hi, Jessica, it’s Mary. So, to be re-randomized, that patient has to have an EASI of 50 or above when they are re-randomized to the maintenance dose of once a month or once every 3 months. They will be on the same dose that they were randomized to in the induction period. And do you have a second question?

Oh, just the timing of alopecia versus AD data?

Yeah. So we expect that the AD trial to read out first.

Thank you. Our next question will come from Julian Harrison from BTIG. Your line is open.

Hi, congrats on the progress, and thank you for taking my questions. I’m curious if you could remind us how you’re thinking about efficacy beyond 12 weeks of dosing with REZPEG in atopic derm. Do you expect a plateau at some point or do you expect response rates to maybe be progressive through 44 weeks of dosing? And then with regards to the Lilly litigation, sorry if I missed it. I’m wondering if you could comment on its current status and the timing of next steps.

Mary, why don’t you take the first part, and I’ll take the second part.

Yeah, I definitely think that as we extend our induction period from 12 weeks to 16 weeks, I think we’re going to see a greater number of patients experience a deeper response. So I very much look forward to seeing what the mean percent change is. As you know, our EASI mean percent change from baseline to 12 weeks was 83%. And as such, that was greater than any of the biologic agents; if you look at Dupilumab, Adbry, Lebrikizumab, or Nemolizumab, we definitely saw the deepest response. But I do believe that we’ll probably see more patients who experience an EASI-75 and even an EASI-90 as we extend the induction period by an additional 4 weeks.

With regard to Lilly, after we filed our complaint in federal courts, Lilly tried to convince the federal court judge to dismiss the case. As you know, last week the federal judge refused Lilly’s request, and the judge agreed to allow Nektar’s primary claims to move forward, and we expect the judge to set a trial date in 2025. The court also ordered the parties to engage in mediation within the next 3 months to try to resolve the issue. We’re very, very happy the case is moving forward. The judge did not dismiss the case and we look forward to vindicating ourselves through the litigation process.

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

Great. Thanks for taking our questions. Two quick ones for us. One is, can you talk about this ebb and flow dynamic associated with hair loss in alopecia? Would enrolling kind of severe and really severe patients mitigate that variability? And the second question has to do with the TNFR2-0165 program. We know that the receptor family is a trimer, so I guess to maximally agonize this receptor, you might have to have a trimer design. I’m just curious if that’s kind of a part of the design that goes into 0165. And downstream from that, there’s also kind of clustering. So, is that also a part of the design of the molecule? Thanks.

Mary, do you want to take the hair loss? And then JZ, you can take the TNF?

Yeah. Hi, Andy, it’s Mary. So you’re exactly right. Once patients go into the severe and very severe categories, generally speaking, there’s not a regrowth of the hair, and you’re exactly right; that’s why the eligibility criteria and even the threshold for approval by the FDA is this patient population. It does happen that patients start out with experiencing just patchy hair loss. But as the disease progresses, certainly the hair loss becomes more extreme and can lead to baldness. But once a patient loses their hair, it’s very unusual for them to have regrowth without some sort of medical intervention. And then I’ll pass over the second question to JZ.

Yeah. Thanks, Mary. And thanks, Andy, for your question. So you’re right, TNF proteins are trimers. But as we’ve learned more and more about the biophysics of the receptors and the way the plaid domains, right, which are the cysteine-rich domains that hold together the receptor subunits, they actually work to create dimers of receptors. And then a trimer comes along to cluster six receptors or three pairs of dimers. You can get additional clustering, and some of this ultra-structure has been published and sub-structural studies have been completed. We’ve come to understand, A, through learning about the cell biology of these receptors, the way these dimers need to multi-merize, and the ways the epitopes for binding to the receptor behave, is fundamentally important. One of the things we discovered with NKTR-0165 is that it has unique properties and can signal in a completely cluster-independent fashion. For example, it doesn’t need FC, it doesn’t even need balancing. That’s one of the things that’s really unique and highly differentiated about the antibodies that we’ve created, keeping in mind all of these ultra-structural forms of the receptor and the different states that the receptors can occupy.

Thanks for the question.

Thank you. And I am showing no further questions from the phone lines, and I’d like to turn the conference back over to Howard Robin for any closing remarks.

Well, thank you, everyone, for joining us today. As we stated on our call, we really remain focused on executing the development of REZPEG in our immunology-focused research programs. I’d like to thank all of our employees for their very hard work and thank all of our shareholders new and existing for their continued support, and we look forward to providing you with updates on the progress. So stay tuned. Thanks for joining us again.

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