Good day, and thank you for standing by. Welcome to the Nektar Therapeutics First Quarter 2024 Financial Results Conference Call. 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. Thank you for joining us today. With us on the call are Howard Robin, our President and Chief Executive Officer; Dr. Jonathan Zalevsky, our Chief Research and Development Officer; Dr. Mary Tagliaferri, our Chief Medical Officer; and Jennifer Ruddock, our Chief Business Officer. Unfortunately, Sandra Gardiner, our acting Chief Financial Officer, was not able to make it on today's call due to an unexpected family emergency. 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 drug candidates, the timing and plans for 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 for 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-K that was filed on March 5, 2024, which is available at sec.gov. We undertake no obligation to update any of these forward-looking statements, whether as a result of 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 would like to note that our team is dialing in from different locations and that Howard will be moderating 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, Vivian, and thank you all for joining us today. We've begun 2024 with positive momentum as we continue to build a best-in-class pipeline focused on immunology and inflammation. One of our key goals is to address the underlying deficiency in regulatory T cells, which underlie a range of serious immune disorders. We have several key immunology targets in first-in-class mechanisms in our pipeline, including our lead program, REZPEG, as well as a new TNFR2 agonist, NKTR-0165, both of which target immune-resolving pathways. In the first quarter, we continued to make significant advancements with our REZPEG program. As you know, we're evaluating REZPEG in a Phase IIb study in moderate to severe atopic dermatitis which started last year, and the study is currently enrolling patients worldwide. I'm pleased to report today that the study enrollment is on track to report topline data from the study's 16-week induction period in the first half of 2025. There are approximately 30 million people in the U.S. alone living with atopic dermatitis, and half of these patients are diagnosed with moderate to severe disease. Biologic treatments for atopic dermatitis represent a multibillion-dollar market that continues to grow. And we're excited that REZPEG could become a highly differentiated treatment for atopic dermatitis, a disease that still has a high unmet need for safety and durable treatment options. We believe REZPEG has the potential to be a significant advancement in the treatment of atopic dermatitis. The new and corrected data from the Phase Ib study we reported at the EADV conference last year showed a dramatic drop of 83% in EASI scores over 12 weeks of treatment. Notably, the study also showed that REZPEG resulted in durable responses, 36 weeks after treatment ended, opening up the potential for REZPEG to have an immunomodulatory effect. This past quarter, we initiated our second Phase IIb study of REZPEG in patients with severe to very severe alopecia areata. We believe there is a significant opportunity for REZPEG to help people with this devastating disease. Nearly 7 million people in the U.S. alone have or will develop alopecia areata. This disorder significantly affects the quality of life for patients, and the currently available therapies are not durable, have high relapse rates, and carry significant safety risk. Therefore, there is an urgent unmet medical need for new therapies. Enrollment opened in March for the Phase IIb alopecia areata study to evaluate REZPEG over a 36-week induction period. JZ will talk more about this program later on the call. Enrollment is on track for this study, and we expect to report topline results in the first half of 2025. In addition, we're advancing NKTR-0165, our novel TNFR2 agonist antibody. TNFR2 has been shown to potentiate the suppressive effects and overall functional properties of Tregs. This program is built on what we've learned through our deep experience with REZPEG and the Treg field and represents a promising first-in-class differentiated mechanism for multiple sclerosis, ulcerative colitis, and a range of other autoimmune diseases. We are currently conducting IND-enabling studies with the goal of submitting an IND in mid-2025, and I'm pleased to announce that our preclinical data has been selected for a presentation at EULAR, and we're looking forward to presenting the first data on this program. Moving to NKTR-255, our IL-15 program in oncology, we're continuing our clinical work with our partners, and we expect data from some of these partners this year. Consistent with our strategic focus in immunology and inflammation moving forward, we're continuing to evaluate strategic partnership opportunities for this program. Finally, Nektar is in a strong financial position with a cash runway that extends well into the third quarter of 2026. I'm very proud of our team at Nektar, and we are laser-focused on executing the development plans for REZPEG in order to achieve value-enhancing data milestones next year. And with that, I'll hand the call over to JZ for an R&D discussion. JZ?

Thank you, Howard. Beginning with REZPEG, this program is the most advanced IL-2 Treg mechanism in the field. In the setting of atopic dermatitis, there are three important issues that patients with this disease continue to face. First, there is a need for more efficacy, a greater magnitude of response, and a rapid onset of treatment. For example, only about half of patients treated with IL-13 based biologics achieved a meaningful clinical benefit. Second, patients lack durable responses and therapy-free remission. Once current therapies are discontinued, patients rebound rapidly. And third, treatments with tolerable long-term 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 REZPEG could potentially address. In our Phase Ib data in atopic dermatitis, REZPEG demonstrated dose-dependent efficacy and encouraging durability seen long after the patients completed the 12-week induction period. In fact, for both patient-reported outcomes and physician-assessed endpoints, we observed the same trend: rapid onset of effect, dose-dependence, and long durability of control. Additionally, REZPEG was well tolerated, and treatment with REZPEG did not induce antidrug antibodies in patients, which has been reported with some examples in the IL-2 mutein class. We are looking forward to publishing in a peer-reviewed journal this year new translational biomarker data from the study, along with the clinical and safety data from atopic dermatitis and psoriasis. The rapid onset of action and the type of extended disease control after the end of dosing rivals or outperforms that of Dupilumab or JAK inhibitors. These promising data have us and KOLs very enthusiastic about the potential for long-lasting responses and infrequent maintenance dosing with REZPEG in atopic dermatitis. Enrollment is progressing on track in our Phase IIb study of REZPEG in biologic-naïve atopic dermatitis patients. 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 at either once a month or once every three-month dosing schedules. We expect initial data in the first half of 2025. Moving to alopecia areata, we believe REZPEG has strong scientific rationale in this indication. Alopecia areata is also a disease of the skin where your immune system starts to attack the hair follicle, weakening the ability of stem cells to grow hair. With prolonged immune attack, it causes the hair follicle to release the hair altogether, resulting in baldness. Biologically speaking, REZPEG, through its central pathway of Treg rescue is uniquely poised to address the diversity of immunopathology, providing broad potential for targeting multiple dermal diseases, including alopecia areata. Specifically, alopecia areata is a breakdown of immune privilege in the hair follicle. Normal hair follicles exist in a state of immune privilege; in other words, there are no immune cells, no MHC expression, and basically no immune system components inside the follicle. We know this exclusion of the immune system is needed to maintain healthy, long-lived, and continuously functioning stem cells to grow hair during our lifespan. In people with alopecia areata, there is a breakdown of the immune privilege in the hair follicle, infiltration of the immune system, inflammation, and all this leads to hair loss and eventually complete baldness. Preclinical studies in vitro and in mice implanted with human alopecia skin samples have shown that Tregs are essential for restoring and maintaining immune privilege and thus are a novel therapeutic strategy for the treatment of this disease. Consequently, we believe the Treg mechanism of REZPEG can restore immune privilege and could provide durable disease control, which would be game-changing in this indication. Alopecia areata JAK inhibitors are the only agents approved in this field, and it is a lifelong treatment; it could take a patient anywhere from 6 to 12 months to grow hair, and once a patient stops taking a JAK inhibitor—which may happen for a variety of reasons, such as 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. For these reasons, we believe there is an opportunity for REZPEG to become a novel biologic therapy in alopecia areata. We are well underway with enrolling patients into the Phase IIb study of REZPEG in alopecia areata. This study plans to recruit roughly 80 patients with severe to very severe disease that will be randomized to REZPEG or placebo. Patients will be treated for a period of 36 weeks and observed for up to 60 weeks in total. Our primary endpoint for this study is the mean percent improvement in SALT for the severity of our alopecia tool at week 36. We will also be looking at a number of other secondary endpoints, including the proportion of patients that were observed to have varying degrees of improvement in SALT score. We expect to have topline data in the first half of 2025. Now turning to NKTR-0165, our TNFR2 agonist antibody. TNFR2 is highly expressed on Tregs, myeloid suppressor cells, regulatory B cells, neuronal cells, and others. TNFR2 agonism has been shown to potentiate the effector functions, suppressive functions, and maintenance of lineage stability of Tregs, especially in non-lymphoid tissue compartments. If TNFR2 is absent, the phenotypic effect is autoimmunity and other genetic conditions that resemble FoxP3 loss of function. In contrast, its presence and activation of its signaling have been associated with immunoregulatory function and protective effects for multiple cell populations and tissues in the body. The TNFR2 agonist program is built upon many years of Treg experience that we've gained from studying REZPEG. TNFR2 is the most abundant TNF superfamily member expressed on Tregs and the key driver of NFkB signaling in those cells, which is why we are very excited about this program and target. In our program, we collaborated with an AI-based antibody engineering company to screen a wide diversity of TNFR2 selective binding antibodies for novel modes of TNFR2 agonism. We are very excited about the unique and differentiated profile of the antibodies that we have discovered and we are rapidly advancing these into the clinic. We anticipate our IND submission for this program in the middle of next year. Examples of indications that could be addressed by TNFR2 agonism include multiple sclerosis, mucosal immunology conditions such as ulcerative colitis in GI or other oral mucosal diseases, and even dermal autoimmune diseases like Vitiligo. As Howard mentioned, data from our preclinical research program has been selected for poster presentation at EULAR. This will be the first look at this novel therapeutically active anti-TNFR2 agonist antibody, and we're looking forward to presenting these data. There is growing interest in novel selective TNFR2 agonists like NKTR-0165, and as we move forward with our IND-enabling study, we will continue to be open to the opportunity of working with companies that have interest in these areas to strategize on the best path forward. Finally, turning to our IL-15-based oncology program, NKTR-255. We believe the IL-15-based mechanism of action has promising potential as the combination agent with cell therapies and other mechanisms such as checkpoint inhibitors. We are exploring the best partnering paths for continued development for this drug candidate. We are completing our NKTR sponsor trial combining NKTR-255 with approved CD19 CAR-Ts, BREYANZI and Yescarta for treatment of patients with large B-cell lymphoma. A separate investigator-sponsored trial with Fred Hutch is also evaluating the combination of NKTR-255 and BREYANZI, and we plan on presenting data from this ongoing study at a medical meeting later this year. We continue to collaborate with AbelZeta, a leading cell therapy company, to evaluate NKTR-255 in combination with their tumor-infiltrating lymphocytes or TILs, TIL therapy in an ongoing Phase I clinical trial in patients with advanced non-small cell lung cancer who do not respond to anti-PD-1 therapy. Lastly, we are continuing to work with our partner, Merck KGaA in the Phase II JAVELIN bladder Medley study evaluating NKTR-255 in combination with BAVENCIO and expect to report interim data, including PFS, later this year. And with that, I will turn the call over to Jennifer for a review of our financial guidance. Jennifer?

Thank you, JZ, and good afternoon, everyone. We ended the quarter with $326 million in cash and investments with no debt on our balance sheet. Our financial position remains strong, and we still plan to end 2024 with $200 million to $225 million in cash and investments. This cash guidance includes a $30 million private placement of prefunded warrants completed in Q1 and a $15 million cash payment from an amendment of the 2020 agreement with Healthcare Royalty also completed in Q1. Our cash runway now extends well into the third quarter of 2026, which will take us through several key data milestones including, of course, the top line data from the Phase II REZPEG studies. I'll now briefly review our quarterly financials and reiterate our financial guidance for 2024. Our revenue was $21.6 million for the first quarter of 2024. We still expect our revenue for the full year to be between $75 million and $85 million, which includes $55 million to $65 million in noncash royalties and $20 million to $25 million in product sales. R&D expense for the first quarter of 2024 was $27.4 million, and we still anticipate full year R&D expense to range between $120 million and $130 million. G&A expense in Q1 was $20.1 million. We continue to expect G&A expense for the full year to be between $70 million and $75 million. Our 2024 noncash interest expense guidance also remains unchanged and is expected to be between $20 million and $25 million. Our net loss for the first quarter of 2024 was $36.8 million, or $0.19 per share. I will note that the loss per share reflects the increase in weighted average shares outstanding during the first quarter as compared to a year ago. The increase is primarily related to the effect of the PIPE financing in March and is partially offset by the effect of the shares we repurchased from Bristol-Myers in February. Both of these items will be fully reflected in the calculation of weighted outstanding shares at the end of the second quarter. As I mentioned earlier, we still plan to end 2024 with $200 million to $225 million in cash and a runway that extends well into the third quarter of 2026. And with that, we'll now open the call for questions. Crystal?

And our first question will come from Jay Olson from Oppenheimer.

Congrats on all the progress. Can you talk about the enrollment progress for REZPEG in both AD and AAA? And how is the enrollment tracking with your internal projections?

Yes. I'll let Mary answer that in detail. Our enrollment is going perfectly according to plan, but I'll let Mary explain it in a little more detail. Go ahead, Mary.

Thanks, Howard, and thank you, Jay, for the question. So just to remind you, in October of last year, we started our Phase IIb study, where we plan to enroll 400 patients with moderate to severe atopic dermatitis, and these patients are all biologic naïve. As both Howard and JZ mentioned on this call, we are absolutely on track to have our topline data from the 16-week induction period in the first half of 2025. The study is enrolling as expected, and the trial is currently open for enrollment in the United States, Canada, Australia, and Europe. The feedback we've received from our investigators is that they're very excited to evaluate REZPEG given the novel mechanism of action to boost Tregs. The investigators also like the compelling data in atopic dermatitis that was presented by Dr. Jonathan Silverberg at EADV last year. As Howard and JZ have mentioned, the Phase Ib showed that REZPEG had an 83% reduction in mean percent change in EASI. With just a small sample size, we reached statistical significance compared to placebo. The doctors are also very excited about the powerful efficacy. They, as practitioners, are very familiar with the real-world evidence showing the lack of durability when they treat their patients with DUPIXENT. It's shown in the literature that 79% of patients that discontinue DUPIXENT boost their disease control after an average of four months off treatment. So the practicing dermatologists greatly appreciate the remitted effect that JZ was talking about and the durability of responses that we saw off treatment for nine months in the patients that were dosed in the Phase Ib. I'll just say, finally, the staff at these sites as well as the investigators also really appreciate that REZPEG has a very well-tolerated safety profile. Moving over to alopecia, it was in March when we started the Phase IIb trial, as JZ mentioned. We're going to evaluate two different doses versus placebo with the SALT scores as the primary efficacy endpoint and the trial is going to be open at roughly 28 sites in the U.S., Canada, and Poland. Again, we are absolutely on track with our enrollment to allow us to have data in the first half of 2025.

That's super helpful. I really appreciate the additional color on the promising efficacy of REZPEG, especially in atopic dermatitis. Maybe just if I could follow up on your comments about the safety. Since there was a competitor's Phase II atopic study that was recently closed following a clinical hold, can you just comment on any feedback you're getting from the DSMB on the safety of REZPEG in atopic dermatitis?

Sure. We have now conducted nine clinical trials in the REZPEG program and there are 592 patients who've been exposed to REZPEG to date, and there were about 150 patients in the program who were randomized to the placebo in our trials. When we received all the data back from Lilly from these completed trials, our very astute biostatisticians and drug safety team created pooled safety tables so we could more closely review the safety profile of REZPEG, and we plan to publish these data. From a very high level, there are some really important key takeaways from the integrated safety data. The first is the most common side effect we see is injection site reactions. These tend to be mild to moderate, and they're seen mostly in the first or second cycles, and their frequency and duration wane over time. But most importantly, REZPEG is not a classic immunosuppressant, and we were very pleased to see there were no increased risk for infections. We didn't see any increased cases of COVID on the REZPEG arms versus placebo. We don't see any increased risk for reactivation of herpes, either Herpes simplex or Herpes Zoster. We don't see conjunctivitis as an increased risk on REZPEG, nor do we see the facial erythema, red face or arthralgia. Regarding the hepatotoxicity issue that you're talking about with the other agent of great importance, we do not see any increased risk for hepatotoxicity or AST or ALT increases. We do see that some patients have increases in eosinophilia, but no cases of any kind of symptomatic eosinophilia or tissue damage or organ involvement. Finally, we saw that there was a higher incidence of severe treatment-emergent AEs and serious AEs only in the placebo group compared to REZPEG. So we're very pleased by the safety profile, and again, our investigators are very happy to move this compound forward in clinical testing, given the well-tolerated safety profile for a biologic. Again, no evidence of increased risk for hepatotoxicity. Thanks for pointing that out, Jay.

Thanks so much for the comprehensive overview of REZPEG's safety. If I could maybe sneak in one more question on the preclinical program. Can you please talk about the preclinical data that you're expecting later this year and the strategy behind clinical development and prioritizing the different indications you're thinking of?

Yes, sure. Jay, this is JZ. EULAR is in June, right? We'll be presenting in roughly a month. It's in Vienna this year. The data that we'll be presenting will be work around the discovery of the antibody. We took a kind of a novel approach in how we identified agonists. Part of that was definitely from the AI-based computational engineering, and the other part was how we screened for the agonism. That will be one element of the presentation. That defines the discovery of antibody specificities and epitopes. We've turned those into preclinical development candidates, so that kind of data is presented there as well. There will be binding data, specificity data, cell signaling data, changes in the kind of architecture of the cells that you expect to see when you agonize TNFR2; and also some animal data showing biological activity, clinical efficacy in some animal models. It will be an important milestone as the first preclinical presentation of the work that we've been doing in the program in a public forum, especially under the guise of a very important and critical medical meeting, such as EULAR being a very large conference. In terms of indications, one of the things that's really unique about TNFR2 is that as regulatory T cells move further and further away from the sinus or blood or the secondary lymphoid organs, like the lymph nodes, spleen, and so on, they become much more dependent on an NF-kappa B signal and on actions of ligands for TNFR2 as a key transducer event of Kappa B. We're looking at other indications. That's why, for example, mucosal immunology conditions are very high on our list. We know that in mucosa, Tregs have a completely different cytokine environment that they're exposed to—very low IL-2 in those environments, right? So they need a different signal. Thus, ulcerative colitis and indications that impact both the lower and upper mucosa are ones that we're prioritizing. We also know that in the CNS, particularly around the role of myelin and demyelination and the role that TNFR2 plays in controlling some of that biology, which has been shown in animal preclinical models in mice. The reason why multiple sclerosis is also a high indication for us. That's just a flavor of how we're thinking about the program. Certainly, the two really go together and are highly complementary. Between REZPEG and NKTR-0165, they kind of hit the two main biological axes of Treg biology.

Our next question will come from Roger Song from Jefferies.

Maybe just a quick one regarding the REZPEG next step after the Phase IIb results, understanding you need to follow them a bit longer, but at the top line, what will be your next step plan for those two indications?

Okay. I'll have Mary answer that. Clearly, we said we'd have data from the initial 16-week induction period by the first half of next year. Then, of course, we'll go into looking at the durability of the response, but I will let Mary expand on that.

Yes. Thank you, Howard, and thank you, Roger. Lucky for us, the pathway to approval for an agent that you're developing for atopic dermatitis as well as alopecia is very clear. For atopic dermatitis, should our Phase IIb trial readout as positive and we show a statistically significant benefit on the EASI score, then we would start planning for the Phase III program. In the Phase III program, typically, you would have either one or two doses of your drug versus placebo; the primary efficacy endpoint in these two monotherapy trials versus placebo is the 16-week. Some other agents look at a 24-week induction period. For the FDA, the primary efficacy endpoint is the VIGA. In Europe, it's a co-primary endpoint of VIGA plus the EASI 75. In addition to those two Phase III monotherapy trials, you typically do a combination trial with topical corticosteroids versus the topical corticosteroids alone. That is the Phase III program for atopic dermatitis. These trials are pretty easy to enroll. It generally takes about a year to enroll those studies. In addition to the efficacy, you need roughly about 600 patients that have been exposed to REZPEG at your highest dose for 12 months. In terms of alopecia areata, it would be two Phase III trials, and it would be REZPEG versus placebo. The induction period is a little bit longer than you see in atopic dermatitis because it takes longer to grow hair. So the induction period tends to be about 36 weeks. There's obviously not a combination trial that would be run. In contrast, atopic dermatitis that requires two Phase III trials, alopecia areata would require only two.

And then maybe if you can comment on your ongoing litigation with Lilly for your REZPEG, any kind of updates from that end?

Sure. Look, as you know, the court ordered us to go to mediation with Lilly, and that's actually scheduled for next week. We're not going to comment on the results of this. We'll comment when we reach a solution with Lilly, but we will be mediating with them. They were clearly responsible for an egregious error that changed the dynamics of REZPEG. If you look at the original data and then the corrected data, REZPEG seems to have functioned very well in atopic dermatitis. It appears to be highly competitive, very different from their initial calculations. So they filed a counterclaim, which, of course, has very little merit behind it. We certainly don't expect that to be valued by the court, nor do we expect that we will owe Lilly any money, not at all. I think this will sort itself out over the coming year. I can only tell you that the judge did not dismiss our case against Lilly and ordered us into mediation. We'll see how that goes.

And our next question will come from Jessica Fye from JPMorgan.

This is Nick on for Jess. Maybe just a quick one in revisiting the design of REZPEG. I understand the PEG conjugation part is kind of a differential bias for IL-2, alpha versus beta. But can you remind me exactly where on the IL-2 molecule, the PEG is placed to impart that bias binding?

JZ, do you want to take that?

Yes. Nick, we've not shared that level of detail. We have published in our first manuscript in the Journal of Translational Autoimmunity a lot of information about the design of REZPEG, but we have not shared which amino acids, for example, are PEGylated. What I can tell you is that we have a lot of experience in designing these kinds of molecules. This kind of a molecule in REZPEG is very similar to some of the original foundational molecules like Pegasys or Neulasta that we've made with many of our partners over the decades. In regards to how it works, those biological effects from the PEGylation impart the right kind of receptor occupancy and the right duration of signaling, and that gives REZPEG this continuous ability to renew regulatory T cells as you continuously dose it. We have data dosing people for three months and six months with the maintenance of that kind of pharmacodynamic effect; that's the goal of that treatment.

That makes sense. Maybe just a quick follow-up to build on that. I know there's obviously clinical data, there's in human data, but just understanding a bit more. I know there are some observations of NK cell activation at higher doses in other earlier models. Have you seen any instances of that happening in the clinic and at the doses that you're testing? And how would that manifest if so, either in trial?

Yes. Well, we've published that as well. In our second publication, which captured the results of our Phase Ia and Phase Ib studies, we presented those results. We do see that in some people, not in all people, but some people have an NK elevation. It seems to build up with time. REZPEG, for example, caused the Treg and its elevation from the very first dose. NK cells are sporadic; we don't see them in all people. When you do see them, they seem to take longer to present themselves. One thing that's very curious is we change the skewing of the NK profile. As you know, there are CD56 bright and CD56 DIM NK cells, which differ in the expression of Fc-gamma R3A CD16. In a normal situation, or in one kind of immunological state, you will typically have primarily CD56 DIM 16 high. REZPEG doesn't induce those cells; it induces the CD56 bright 16 negative NK cells, which many people have postulated actually have regulatory functions. So, it doesn't induce NK cells in a sporadic way. When it does, it skews them into that other possibly more regulatory phenotype. We published those results.

And our next question will come from Andy Hsieh from William Blair.

Great, appreciate the update. Just two quick ones. One on TNFR2 validation that you mentioned, JZ. Just to clarify, are you referring to human genetic validation on a population basis to derisk the mechanism? Secondly, for 255, in the Phase II JAVELIN bladder Medley study, I think the last time you mentioned that there could be a second-half update. So curious about the timing for that and also the disclosure. Would that be in conjunction with the partner, would that be kind of Nektar's disclosure? Just trying to get a sense of the logistics there.

Yes. Let me answer the second part first, and I'll let JZ go on. We expect data from the Medley bladder cancer study in the second half of this year. We don't have an exact date yet. We will certainly disclose it once the data has been cleaned up and Merck KGaA has looked at the data, cleaned it up, discussed it with us, and we go through a normal process. But I would expect that to all happen in the second half of this year.

Sure. Andy, thanks for asking a great human genetic question. TNFR2 validation comes from a number of different sources. Before actually touching on human, let me touch on a few of the critical preclinical findings made. TNFR2 has both been overexpressed and knocked out, showing the kind of corollary phenotypes: when it's gone, animals have a hard time maintaining Treg populations. They also have a hard time amounting any burst of Tregs or Treg control, like in the setting of a model like PEG, for example. If you run EAE in TNFR2 knockout, the disease is extremely exacerbated; it’s much worse than it is. Whether you use other inflammatory agonists, you see similar results. Likewise, when you drive its expression, you can reduce the ability to even insult using various inflammatory agents. Some studies that have been done on transmembrane TNF mice show similar results: these animals were driving TNFR2 and remain highly immunoregulatory. It's very hard to create an inflammatory model in that background. People are observing clusters of tips and other kinds of polymorphisms together. One of the most canonical forms of Treg dysfunction is IPEX, which is when FoxP3 is lost, leading to severe autoimmune skin-type disease. TNFR2 has been shown to modify its expression or signaling, mimicking IPEX—but not as severe since knocking out FoxP3 is much worse. I hope that answers your question. There are many streams of TNFR2 validation, and one more is through the field using TNF inhibitors, such as Humira or Remicade, which are contraindicated in numerous indications. That's because if you treat with a pan TNF inhibitor, you see that it knocks out both transmembrane and soluble TNFR, removing the TNFR2 signal and short circuiting the therapeutic goal. All of those paths lead to the understanding that TNFR2 and R1 have very differentiating functions and that R2 serves as a natural antagonist to R1, turning off that inflammatory pathway that TNFR1 drives and is highly tissue protective. Thus, creating a TNFR2 agonist to capture that biology could be therapeutically ideal, and that's what we're trying to do.

Our next question will come from Arthur He from H.C. Wainwright.

Just maybe first question for Mary. Are you guys open to evaluate REZPEG in the patients with biologic experience either with a single agent or in combination with biologics through a kind of collaboration or IFT?

Yes. Arthur, that’s a good question. We talk a lot about this internally. Generally speaking, the FDA requires you to ensure that patients who are biologically experienced have a washout period of 5.5 half-lives. Patients who have previously been exposed to another biologic agent that have to be off treatment for about 12 weeks. Some clinical trials have permitted these patients to be enrolled. Because of the very long washout period on their prior agent, it ends up being pretty difficult to enroll these patients, even though scores of patients have been exposed to DUPIXENT. It is something that we're considering for the Phase III program, how or potentially if we can include those patients into our study. JZ, Jennifer, and I have spoken many times about whether or not we would ever do a combination trial, say, with REZPEG and an IL-13 inhibitor. So we've also spoken about that a lot internally, and it's certainly on our list of clinical trials to consider. For us, though, the primary goal is to execute the Phase IIb, see the data, and, should that be positive, to move very quickly to a program that would allow REZPEG to get to patients as quickly as possible.

My second question is for 165. Just curious, what are the gating IND-enabling studies right now for these programs moving to the clinic next year?

JZ, do you want to cover that?

Sure. Arthur, thanks for the question. We’ve advanced the program, like I mentioned earlier, by identifying candidates and characterizing them in vitro and in vivo. We've also run large animal studies like a non-GLP toxicology study. We’ve even moved into making a manufacturing cell line, and we have begun manufacturing. The next big milestones for our IND-enabling package, which is no different than any other IND-enabling package, includes the GLP toxicology—we'll start that at the end of the year—and also advancing into GMP manufacturing for the Phase 1 supply. We've already done a lot of work and major milestones like non-GLP toxicology studies in primates that have given us the confidence to move through these IND-enabling studies.

And I am showing no further questions from our phone line. I'd now like to pass the conference back to Howard Robin for any closing remarks.

Okay. Thank you, everyone, for joining us today. We remain focused on executing on the development of REZPEG and, of course, our other immunology programs like NKTR-0165. I want to thank all of our employees for their extremely diligent and hard work. The coming year should be an exciting one, and we look forward to providing you with updates on our progress. So thanks for joining us today. Appreciate it.

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