Nektar Therapeutics (NASDAQ:NKTR) Q1 2020 Earnings Call

0:00 Ladies and gentlemen, thank you for standing by, and welcome to the Nectar Therapeutics first quarter 2020 financial results conference call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your speaker today, Ms. Jennifer Ruddock, Head of Corporate Affairs. Ma'am, you may begin. Thank you, Crystal. Good afternoon, everyone, and thank you for joining us today. With us are Howard Robin, our President and CEO, Gil Labruchery, our COO and CFO, Dr. Jonathan Zalevsky, our Head of R&D, and Dr.

0:51 Wei Lin, our Head of Development. On today's call, we expect to make forward-looking statements regarding our business. including clinical trial results, timing and plans for future clinical trials, timing and plans for future clinical data presentations, the therapeutic potential of our drug candidates, outcomes and plans for health authority regulatory actions and decisions, estimates and predictions of the COVID-19 pandemic's impact on our business and clinical trials, financial guidance, and certain other statements regarding the future of our business. Because these statements relate to the future, They are subject to inherent uncertainties and risks that are difficult to predict, and many of which are outside of our control. Important risks and uncertainties are set forth in the Form 10-K that we filed on February 28, 2020, which is available at sec.gov.

1:44 We undertake no obligation to update any of these 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 NECTR's website at NECTR.com as a replay. Thank you very much, and we appreciate your patience as we work to ensure there are no technology disruptions for those listening. With that said, I will hand the call over to our president and CEO, Howard Robin.

2:29 Howard? Thank you, Jennifer, and thank you to everyone for joining us on the call today. I'd like to start the call by discussing what is certainly on everyone's mind, managing the challenging circumstances caused by COVID-19 in the past several months. So the wide range of impact that this virus has had on the health and well-being of our communities is significant. And like all of you, We're all working hard to appropriately adapt our business practices while at the same time leading and operating the business effectively. This is a dynamic situation and we will continue to adapt our response. However, I want to highlight a few key areas. As we start working, as we work together to navigate the current environment, we have three main priorities. First is to protect the health of our employees while continuing our essential operations on site to advance our research and development such as laboratory and manufacturing activities. Second, to ensure that each of our trial investigators and their teams can continue to provide superior care and uninterrupted access to study treatment to patients fighting cancer.

3:37 And third, to ensure that the conduct of our clinical trials is minimally impacted and that the integrity and quality of data being collected from these studies are maintained. So to the first priority, for employees who continue to work on clinical tasks Thank you for joining us. At this time, we do not anticipate any supply interruptions for manufacturing, including our preparations for scale-up of commercial supply of BEMPEG that are underway.

4:34 We have sufficient clinical trial material on hand to treat all patients in the studies for BEMPEG, Nectar 262, Nectar 255, and Nectar 358, which are either underway or planned to start in 2020. We and our manufacturing partners are continuing to regularly assess the situation as well. Additionally, our research team is continuing to work towards generating our next IND candidate so that we can achieve the company's next IND filing in early 2021. So the second priority, we have over 200 investigator sites around the world participating in our oncology clinical studies. We've been actively engaging with site investigators and our CRO partners in order to assess site status and staffing issues and to provide resources and support to these sites.

5:27 Conditions are fluid and evolving. However, Nectar is taking a strategy to allow sites to continue to enroll new patients and to initiate new investigator sites. So far, this strategy has been successful and Wei will discuss more of these initiatives in a moment. Our third but equally important priority is to ensure the integrity and conduct of our clinical trials. This means capturing any protocol deviations if they arise during this time, carefully collecting any patient information which may be related to a COVID diagnosis, and being prepared to track any possible interruption of important treatment or scan visits related to COVID travel restrictions. The FDA has issued guidance on clinical trial conduct and we expect this guidance to continue to evolve. In light of this, the most important activities for us are to carefully monitor are study sites to ensure that patients meet the appropriate eligibility criteria under the protocol and that the data are being collected and tracked appropriately as well.

6:29 Now, many of you have asked about the potential impact of clinical trial timelines related to COVID. We have some preliminary insights to share, but caution that because of the fluidity of the situation, there is significant uncertainty. We will therefore need to continually assess these timelines throughout the year, and we continue to get more visibility to the timing and extent of COVID impacts. Our Nectar clinical development and operations teams are highly focused during this time on the oversight of the five clinical studies in immuno-oncology where Nectar serves as a sponsor. The first-line bladder cancer study of BEMPEG plus NEVO, the first-line renal cell carcinoma study of BEMPEG plus NEVO, the PROPEL study of BEMPEG plus PEMBRO, the Nectar 262 reveal study with BEMPEG and the Nectar 255 studies.

7:19 First, in response to some questions we've received, we've only had a few reports of patients in our studies who have had suspected or confirmed COVID diagnosis. For the five clinical studies that I just mentioned, as of today, we have received only four reports of patients who have been diagnosed with COVID. This is across our 200-plus investigator sites. With respect to new study starts, Nectar is still on track to initiate the adjuvant melanoma study in the third quarter. Based upon our assessment of the current situation, and barring any negative external COVID developments in the second half of the year, we believe this is very achievable. The protocol for the adjuvant melanoma study is now being finalized, and we are in the process of identifying and recruiting investigator sites for initiation later this year.

8:08 With respect to the first-line bladder cancer study, we have not seen any impact on enrollment pace to date, and we expect to achieve our enrollment goal this summer. This means that we will meet the timeline of achieving primary endpoint for the study sometime in mid-2021. As a reminder, the primary endpoint in the study is ORR, independent review for patients with under 10 CPS score. For the first-line renal cell carcinoma study, we are on track for our projections for enrollment prior to COVID, which means we are also on track to achieve the first interim analysis on the primary endpoint of the overall survival in the first quarter of 2022. For our Propel study of BEMPEG plus PEMBRO in non-small cell lung cancer that was initiated late in 2019, enrollment is ongoing.

8:59 The COVID situation delayed initiation for the investigator sites in Europe for Propel. However, we are still initiating some of these European sites in countries that are less impacted by COVID. But we are doing this very carefully and only with sites Thank you. Thank you. Thank you. Our Phase 1-2 reveal study is advancing. We recently expanded the study to evaluate the recommended Phase 2 dose of Nectar 262 in up to 24 relapsing refractory melanoma patients. We are now, for the first time, evaluating simultaneous dosing of the two investigational agents. In the dose escalation phase, we observed high levels of TLR activation in the tumor microenvironment and were able to characterize safety for Nectar 262.

10:12 We're planning to submit these dose escalation data for potential presentation at a medical meeting or a manuscript publication later this year. For Nectar 255, our IL-15 agonist program, and our newest clinical candidate, we're actively enrolling patients into the first in human clinical study of Nectar 255, which began late last year. We're still initiating sites in this study and still have a goal to complete the dose escalation portion of the study by the end of this year. Of course, meeting this goal will depend upon how many dose cohorts we need to enroll before achieving a maximum tolerable dose. With the first several patients we enrolled into the study, we already have good biomarker evidence of target engagements of the IL-15 pathway, and we're planning to present these data later this year or early 2021. And as a reminder, the study is evaluating Nectar 255 first as a monotherapy, and then in combination with daratumumab or rituximab, and multiple myeloma and non-Hodgkin's lymphoma, respectively.

11:18 Now I'll move on to discuss studies that are being run by our partners. As many of you have likely listened to the conference calls from large pharmaceutical companies over the past several weeks, management practices around ongoing and planned clinical trial activities have varied during the COVID situation. Many companies are projecting that normal practices for clinical trial activities in most countries will resume in the second half of 2020. In general, this has meant adjustment of timelines for studies of anywhere from three to six months. Each of our partners has deployed different methodologies. With respect to our partner, BMS, during the ongoing COVID situation, BMS has publicly stated that they have paused initiation for all new investigator sites in any clinical study they are conducting across the company.

12:07 BMS is running two ongoing BEMPEG clinical studies, currently the first-line melanoma study and the muscle invasive bladder cancer study. As you know, BMS is operationalizing these studies and managing these studies' timelines. BMS continues to recruit patients for these studies at investigator sites that are allowing on-site monitoring for new patients. At this time, because the COVID situation is ongoing and BMS has not reprojected any study timelines, Nectar expects this will have an impact on the enrollment for both studies, which could translate into delays of three to six months. We are now working closely with BMS to determine when BMS will remove or modify any restrictions that impact enrollment. Also as a reminder, we received a $25 million milestone payment in the first quarter of this year under the revised BMS agreement for the start of the muscle invasive bladder cancer study for BEMPEG plus NEVA. BMS is also planning to start later in the year for the TKI combo renal cell carcinoma study and the phase two study of BEMPEG plus NEVO in first line non-small cell lung cancer.

13:14 With respect to our partner Lilly and Nectar 358, our Treg stimulatory program, the phase one multiple dose studies in psoriasis and atopic dermatitis have temporarily suspended recruitment during the COVID situation. However, Lilly is continuing to assess the situation and evaluating the status of investigator sites to determine when the best time is to reopen these studies for patient recruitment. We're still anticipating two phase two studies to be initiated by Lilly this year, one in lupus patients and one in an additional autoimmune disease state. Both are slated to start in the second half of 2020. We know that the team at Lilly is evaluating all options to start these studies, including focus on initiating investigator sites in countries with low impact or minimal current impact from COVID. And so we appreciate their dedication to creatively finding paths forward to initiate these new studies. Overall, we're very pleased with Lilly's continued commitment to Nectar 358, as well as the broad plans for its development, which reflect the potential of this novel mechanism to treat autoimmune disease.

14:22 And before I hand the call over to Wei, I'd like to mention several additional data presentations we're planning for this year. First, for the melanoma cohort for PIVOT-02, As many of you know, last year we obtained FDA breakthrough therapy designation for BEMPEG plus NEVO in patients with metastatic melanoma based on the positive data, including a high CR rate from our PIVIT-O2 study. At CINCI last year in November, we presented data from this cohort with a median follow-up of approximately 18 months. At that time, 34% of patients had a complete response as determined by blinded independent central review, 42% had a 100% reduction in target lesions, and 47%, almost half, had a greater than 75% reduction in target lesions.

15:12 We recently completed an additional blinded review of the Pivot02 melanoma cohort at the end of December 2019, and this data cut added three additional months of follow-up from our prior CITI presentation, and I'm pleased to inform you today that at the 21-month median follow-up point, We have still not achieved median PFS for the patients in this cohort. We also continue to see deepening of responses for these patients, and we plan to present updated data from an even later data cut at the CITSE 2020 meeting. Also, for BEMPEG data from the dose escalation portion of PIVOT-02, it will be recognized in a publication at a canceled journal in May. And finally, we are planning to submit for publication additional manuscripts for the bladder and kidney cancer patient cohorts from PIVIT-02.

16:05 For NECTAR-358, we recently completed the phase 1B multiple ascending dose study in lupus patients that NECTAR conducted as part of our Lilly collaboration. And the initial data from this phase 1B study were accepted for presentation at the upcoming virtual ULARC conference. We also intend to present additional data from the same study at the 2020 American College of Rheumatology meeting, ACR, later this year. With that, I'll turn the call over to Wade to review in more detail some of the techniques we're deploying across the Nectar-run clinical trials to address the COVID situation and to ensure the integrity and conduct of the studies during this challenging time. Wade? Thank you, Howard. I'd like to discuss briefly the comprehensive plan we've developed to ensure that we're meeting the two priorities Howard mentioned earlier.

16:58 One, to ensure patients have uninterrupted access to study treatments in our clinical trials, and two, to ensure that the conduct and integrity of our clinical trials are intact. For those patients currently enrolled in our clinical trials that Nectar is running, we're making every effort to ensure that patients in highly affected areas and in areas with heavy restrictions are able to continue their study treatment and receive appropriate care and monitoring. As conditions allow and within the applicable guidelines, we're deploying extra patient concierge services to provide transportation options and resources for patients in their RR studies. We're also allowing patients to visit local facilities for scheduled study treatment and scan visits rather than having to travel longer distances when possible.

17:50 and we're heavily focused on utilizing every method possible to provide our investigator sites with the proper resources necessary to maintain care and monitoring of patients, including virtual monitoring and telemedicine, in order to protect patient and site staff safety. We've increased our efforts to monitor site activities. We've been in continual communication with site investigators and staff. We focused We are also checking to ensure that site staff are available and able to comply with any new measures being put in place.

18:39 Our clinical monitors are focused on collecting all relevant data with respect to any protocol deviations, data entry, or any study conduct We're also engaged, along with our industry peers, in providing input back to FDA on various clinical trial conduct issues that arise due to the COVID-19 pandemic. We're permitting sites to continue to enroll new patients and we continue to initiate new study sites. However, we're highly focused on the appropriate eligibility of the patients being enrolled and ensuring that all enrollment criteria are met.

19:35 In addition, we want to make sure a site is appropriately staffed and is not overly impacted by COVID-19 before bringing a new site into any of our clinical studies. I'm pleased to report that, to date, we have seen exceptional patient compliance in our clinical studies, particularly in terms of receiving study treatment and scheduled scans, with only one patient across all of our NECTAR-run studies who has missed a scan and none have missed a study treatment. We have been tremendously impressed with the high degree of engagement from our investigators and their staff, and extraordinary care they're providing to their patients during this difficult time.

20:25 We believe that with the measures we're taking, we can appropriately navigate the current situation so that we can advance our clinical programs forward. Beforehand, I hand the call to Jay Z to discuss our work with Nectar 358 and Nectar 255. I want to address questions we've been getting on the changing of the interim response rate endpoint in our first-line melanoma study. As you know, we received a breakthrough therapy designation for BAMPEG plus NEVO in this setting, based upon the high complete response rate we observed in the first-line melanoma population.

21:10 In the Phase III study being run by BMS, we have three endpoints, overall response rate, ORR, for progression-free survival, PFS, and overall survival, OS. The first endpoint is an interim analysis where a very small amount of alpha is spent to compare the ORR in the doublet combination of BAMPAC plus NEBO to the ORR in the nebulomab monotherapy arm. We are looking for a six-month duration of follow-up for a specific number of patients in the study. Because of our high complete response rate, many of you have asked whether we could change the interim to look at complete response rate in each arm instead.

21:58 This is something we and our partner BMS are evaluating, and we hope to have an update on this question before the end of the year. In the meantime, the study continues to have our three original endpoints, ORR, PFS, and OS. The original design of the study, which was based upon Checkmate 067, modeled the PFS endpoint at roughly six to seven months following over response rate. But as a reminder, this was only a projection and is event-driven and based upon enrollment rate. And so that timing could change. For both ORR and PFS, the results will be analyzed by blinded Thank you for joining us.

23:16 I'll hand the call to Jay Z to discuss more on our Nectar 358 and Nectar 255 programs. Thank you, Wei. I'd like to spend a little more time discussing two programs. The first is the Nectar 358 program and our plans for the lupus study, and the second is our IL-15 program, Nectar 255. First, for Nectar 358, as Howard stated, We will present our first data from the Phase 1b Multiple Ascending Dose Study, which was conducted in patients with mild to moderate lupus at this year's European League Against Rheumatism, or ULAR, meeting in early June. As the conference is virtual, we will also host a virtual webcast to review the data with investors and analysts on the morning of June 5th.

24:08 Many autoimmune disorders, including systemic lupus, are associated with decreased regulatory T cell numbers, reduced Treg function, and or reduced production of IL-2. These Treg deficiencies are important in the pathogenesis of these autoimmune diseases. With Nectar 358, our goal is to address the Treg abnormalities in disease and to develop an IL-2 molecule that could selectively stimulate Tregs in a much more effective manner than native IL-2. You will recall that at last year's ULAR Congress We presented results from our first in-human single-dose study, which showed that Nectar 358 was safe, well-tolerated, and exhibited a dose-proportional PK profile, prolonged exposure with a half-life of approximately 8 to 9 days.

24:57 Importantly, Nectar 358 resulted in a marked and selective dose-dependent expansion of CD25 bright Tregs. In contrast, There were no measurable effects on the numbers or percentages of CD4 and CD8 conventional T cells at all doses tested. In the study we will present at this year's ULAR Congress, we evaluated multiple ascending dose regimens of Nectar 358 in lupus patients in order to study the safety, tolerability, and pharmacodynamics of Nectar 358, and also to inform the design of the Phase II study of Nectar 358. As Howard stated, This Phase 2 study in lupus patients is planned to start in the second half of this year, and we are excited about the advancement of this program.

25:46 Moving on to Nectar 255. The dose escalation portion of this Phase 1-2 study is proceeding. The study is evaluating the safety, pharmacokinetics, and pharmacodynamics of Nectar 255 as a monotherapy, and then will expand into combination with antibodies that work through an ADCC mechanism. including daratumumab and rituximab. We plan to enroll up to 40 patients with relapsed or refractory multiple myeloma and non-Hodgkin's lymphoma in the dose escalation part of this study. We have also introduced a robust biomarker program into this trial, including measurement of the NECTAR255 effect on multiple immune cell populations, especially on expansion of NK cell numbers as well as their activation and functions.

26:35 We aim to provide a deep assessment of the NECTAR255 mechanism of action. As a reminder, unlike other IL-15 approaches, NECTAR255 was designed to capture the full biology of the IL-15 pathway, specifically meaning that NECTAR255 is designed to capture all the receptor ligand interactions available through targeting the IL-15 agonist pathway. This gives NECTAR255 the ability to act as a significant expander of natural killer cells, as well as the ability to promote the survival and expansion of memory CD8 T cells. As Howard stated, our goal is to complete the dose escalation monotherapy portion of the Phase 1 trial by the end of this year, and we are excited about the early biomarker results we've observed in the first patients enrolled.

27:27 With that update, let me now turn the call over to Gil for a review of the financials. Thank you, Jay-Z, and good afternoon, everyone. On this call, I will review our 2020 financial guidance, which is unchanged. Starting with our exceptionally strong financial position, we ended the first quarter with $1.5 billion in cash and investments. As we discussed on our last earnings call, we plan to repay the $250 million in outstanding senior notes in the second quarter of this year. We indeed completed this repayment in April so this will be reflected in our Q2 2020 balance sheet.

28:12 The senior note repayment has strengthened our balance sheet and will result in approximately 20 million of annual interest savings on a go-forward basis. After taking into account the repayment of our senior notes and our projected cash usage this year, we still plan to end 2020 with at least a billion in cash and investments. As we discussed on our last earnings call and consistent with our guidance, we recorded a $45.2 million impairment charge in the first quarter that concludes our Nectar 181 activities. Our loss per share of 78 cents for the first quarter includes the 25 cent loss per share attributable to this impairment charge.

29:06 I will now turn to our 2020 financial guidance, which remains unchanged. At the outset, I'd like to note that we are not changing our full year financial forecast based on COVID-19 impacts, given that our clinical pipeline progress remains largely on track as Howard reviewed earlier on the call. Our full year gap revenue guidance remains between $140 and $145 million for 2020. This includes $50 million of milestone payments from BMS and $90 to $95 million of royalties, product sales, and other revenue. As Howard stated, we recognized and received the first $25 million milestone for BMS's start of the muscle invasive bladder cancer study. Thank you for joining us.

30:28 Our GAAP R&D expense guidance is also unchanged. We anticipate 2020 GAAP R&D expense will range between $475 and $500 million, which includes approximately $70 million of non-cash depreciation and stock compensation expense. Our G&A expense for 2020 is still projected to be between $105 and $115 million, which includes approximately 45 million of non-cash depreciation and stock compensation expense. And as I reviewed earlier, we still plan to end the year with at least a billion in cash and investments after we completed the repayment of our 250 million in senior debt this quarter.

31:21 And with that, I will open the call to questions. Operator? Thank you. Ladies and gentlemen, if you have a question at this time, please press the star followed by the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Once again, to ask a question, please press star and then one now. And our first question comes from Peter Lawson from Barclays. Your line is open. Hi. Thanks for taking my questions. I guess the first question is just probably around for GEZ, just around 255, just timing around the initial data and patients we could see and what would you want to see to move that project forwards?

32:10 Sure. Thanks, Peter. Oh, sorry, Jennifer. Yeah. Thank you, Peter. So, yeah, so with Nectar 255, as we stated earlier in the call, so we've been Starting into the dose escalation now, and we have seen some very interesting target engagement data from the first few patients that we've enrolled into the study. And the kind of results that we're looking to see obviously is an assessment of the overall safety and the tolerability and the pharmacokinetics and pharmacodynamics, all of the things that are typical in every kind of first-in-human study. When you advance into the clinic for the first time and you perform the dose escalation. But specifically in the case of 255, we had built a wealth of understanding from our preclinical studies where we remember we evaluated the molecule in non-human primates and mice and other species, and we saw the effect on the immunological changes that the molecule could make.

33:12 So we saw natural killer cell elevations. We saw their persistence. We saw changes in the activation state of these cells. And we also even, of course, have published data, presented data on the overall differentiation of the natural killer cell compartment as well. This is the kind of biology, Peter, that's only possible to achieve with an IL-15 mechanism. So as we move into the clinic, we're looking to translate all of those kinds of findings. And the clinical trial has built into it. An extensive biomarker program that allows us to measure these kind of changes. It allows us to assess the natural killer cells and the CD8 T cells and assess them in multiple compartments, such as the blood as well as in the tissue.

33:58 So we'd be very excited to present the data that we're seeing in this study. We think it's reasonable that either later this year or early next is a time when we can do that, assuming the dose escalation continues as planned. and the kind of things we'd like to see out of that dose escalation are, as I described, a combination of safety, tolerability, the PK and the biomarkers in the program. Thank you. I know it's difficult during this time, but the interim readout for first-line melanoma to assess between the two arms, is there any sense of timing around that and how's the dialogue have changed or if you had further dialogue with the FDA around that change in endpoint.

34:48 So thanks, Peter. This is Jennifer. I'm going to ask Wei to address that if possible. Wei? Yeah, thanks, Jennifer. Yeah, thanks for the question. So we are actually working with our partner, BMS, in engaging the health authorities. So we'll definitely provide feedback once we complete it. The current design with the three endpoints has been reviewed and approved by the relevant health authorities. So before we make a change, it's not only the FDA engagement, but also other health engagement that we need to obtain before proceeding with the change.

35:48 And once that's done, then we'll be sharing that information. Great. Thank you so much. I'll call back into the queue. Sure. Thank you. Our next question comes from Tyler Van Buren from Piper Sandler. Your line is open. Hey guys, good afternoon. Thanks for taking the questions. I guess the first one is on the melanoma pivot to update that you gave with December cutoff. I think you said that median PFS was not achieved at 21 months. And if I look back to SITC, it was 18.6 months of follow-up. And at that point, you guys said that median PFS could be Thank you, Jennifer. Yeah, thanks for that question.

36:37 So it's not always directly linear. Definitely with longer follow-up, then the minimum would be The minimum PFS would also be extended. But because what we presented is an ongoing look as we do periodic data review, and we were not ready to present this publicly yet, so I would not, you know, we have not done the analysis to really project out what the minimum PFS would be at this time.

37:30 It's definitely longer than it was back at CITSEE. and we do plan in the second half of the year to update melanoma data. At that time, we can provide the detail what it means in terms of PFS as we continue our follow-up. Okay. And as a follow-up, is it possible to state, I guess, what median PFS, at what point of median PFS, how many months You guys would be really confident that you're seeing a significant difference here with the combination because, you know, if you look at other Phase II studies, some clients have pointed out that they've shown, you know, 20 months median PFS and then in Phase III have shown no effect, even though these time points seem to be impressive relative to NEVO monotherapy at 7 months and NEVO IPI at 11 1⁄2 months.

38:29 I'm going to ask you to answer that as well. Thanks. Sure. So I think I'll kind of break this into kind of two parts to really address. One is sort of the median, and the other is the HASS ratio. So ultimately, when FDA and other health authorities review the data for a full approval based on PFS, it's really the combination of those two values. So median certainly is very important, but the HASS ratio will give you for the entire length of the curve. So those two elements are really important, too. So it's always difficult to really say that, you know, oh, this is a particular median is sufficient because it's really the complete shape of the curve.

39:22 Sometimes the median can bubble. Sometimes the median may not, can cave a bit. But if the rest of the curve contribute to a really strong hazard ratio difference. That's also very, very meaningful, too. But I think the current data certainly suggests a fairly big separation between the NEVO-BENPEC arm versus the NEVO arm, but that's based on the PIVOT-02 data. Now, in terms of translatability, so the second part I want to really talk about is really translatability. of the Phase 2 data from Pivotal 2 onto a recreational Phase 3. And that sort of gets to the crux of your question, which is, you know, certainly historically there's been many studies where the Phase 2 data does not translate into a Phase 3. And to what level of confidence do you actually have in doing that?

40:10 And granted that there's many historical examples of that, and I want to really point out the – largely the non-translatability has to do with the lack of connection with the endpoint being studied in the Phase II and the endpoint being studied in the Phase III. So take an example. There are many diseases where the Phase II is actually based on a PFS endpoint, and then the Phase III is based on an OS endpoint. And in certain diseases, those two endpoints do not really connect really well. It does connect, for instance, in CRC really well, But in many other tumor types, it does not really connect really well. But for lack of a good endpoint, then people kind of have to base it on something, and oftentimes it's based on PFS and hoping it will translate to OX. And that's where the lack of connections leads to some of the failures we've observed in the past. Now, in our particular case, in the first time metastatic melanoma, what gave us particular confidence is the analysis done by FDA that was presented at ASCO in 2019. And in that FDA analysis, many of you are familiar, FDA took nearly 5,000 worth of patient data from all the restoration trials that were submitted to them for approval in first-line metastatic melanoma and did a very comprehensive

41:40 meta-analysis. And what they asked is the question is, How well do response rates really connect with both progression-free survival and overall survival? And in particular, how well does a death response, not the arbitrary resist 1.1 criteria, which is 30% reduction in tumor size, but actually across all cut points, they looked at 25% tumor reduction, 50% tumor reduction, 75% tumor reduction, and also the complete disappearance of all the TARG lesions. And With each of those subgroups, they took a look at what is their PFS, what is their OS, and is there a strong correlation across all these cut points? And they see an extremely strong trend, not only with target therapy like VARAP and neck inhibitors, but especially with immunotherapies such as Nivolumab and Pembrolizumab and Ipilutimab.

42:39 And the conclusion they come to is that The depth response really correlates extremely strongly with survival, both in terms of PFS and overall survival. And in particular, the strongest came through when you look at patients who have more than 75% reduction and also especially with complete disappearance. And it's really on that basis looking at the biggest difference that we observed between the PIPO2 data and ultimately connecting to The survival is really our CR rate. And based on the FDA analysis, if for the patient complete disappearance of their TARC lesions, the PFS at one year and the PFS and OS at one year is extremely high.

43:30 And it's really so there's a clear demonstration given the extensive meta-analysis the FDA have done of translatability or strong connection Thank you. Okay. Thank you. Our next question comes from Chris Shibutani from Cowan.

44:15 Your line is open. Great. Thanks very much. Maybe this is for Jay Z. I know that certainly in Propel, the combo work that you're doing involved the opportunity to explore different doses of BEMPEG, in particular, I think, higher doses. And I think that's some commentary that you began describing over six months ago now. I'm just curious to know if there's anything at this stage that you have been observing or learning that is making you contemplate approaching any further development work with BEMTAG, either an existing or additional indication in any other way? Thanks, Chris. Actually, I'm going to ask Wei to comment on that. He's been working on the dose escalation component for Propel.

45:01 And then I'll ask you to comment after Wei. Thanks, Wei. Yeah, sure. Absolutely. So You know, so the profile study may be helpful to take a step back and look at the bigger picture. So profile study really has two parts. There's a dose optimization part, and then there's a focus expansion, sort of a phase two study embedded in there, looking at specifically non-small cell lung cancer in the first line setting. So the rationale for us to undertake a dose optimization, even though the molecule is already in the restoration phase, is to It's actually a couple of fold. One is we have learned a tremendous amount about this molecule as we progress. This is still a clinical development stage molecule.

45:50 And while we have full confidence in the dose of six micrograms per kilogram in combination with nivolumab in all our current retrogens studies, and that's highlighted by the fact that the data is good enough to obtain a Thank you very much. Thank you. and that's really also supported by the belief and investment from our BMS colleagues and also the breakthrough destination from the FDA.

46:43 But that being said, we have learned a tremendous amount as we dose a lot of patients and manage the AE profile that we think we can actually improve the management of the adverse events in patients and perhaps can even push the dose even higher. and as you know, different diseases have different sensitivity to immunotherapy. And in lung cancer compared to, say, melanoma, the degree of sensitivity is not as strong. So, for instance, you know, monotherapy NEVO or monotherapy PEMBRO is active across all PD-L1 expression subgroups in melanoma, but not so in lung. So the current approval is really for just PD-L1 positive.

47:30 not for the old-comer population, and the predominant use of PEMBOL is really in the 50% above population. And given that, we thought it would be really helpful to really push the dose a bit, see if we can, with a new management guideline in place, identify even a higher dose and produce even stronger benefit to patients in a disease that's more challenging than melanoma in terms of how sensitive it is to immunotherapy. So that's the dose affirmation and the rationale why we're indicating that. At the same time, we're doing the expansion in first-line non-small cell lung cancer and combining with pembrolizumab in a combination because PEMBRO currently is the established first-line standard care in the first-line study.

48:25 So any willingness to share hints about whether it seems promising or not? Well, the study is ongoing. We've dosed a handful of patients, and then we have, as Howard mentioned, we have plans to really share a part of that data at a future conference, either at the end of this year or beginning of next year. Okay. Well, you're so well-behaved, I know you're not going to spill anything. Maybe I can ask a question about partnerships. So, you know, I mean, thinking about historically, you guys really set up a terrific relationship with Bristol Going Back, and that was structured with kind of a timeline objective, which I remember a year ago you guys extended into September, and then we've had the renegotiated contract. And I think that was kind of announced at the end of September, really pre-COVID kind of era. Now that we're in this COVID environment where everyone is looking to buy time, Just curious about the renegotiated contract.

49:25 Is there some sort of an escape clause that allows them to wiggle in an extra three or six months? Is there some sort of timeline that we should think? Is there a get-out-of-jail card? Just curious to know, given clinical trial pacing and completion timelines are obviously all sort of encumbered now, and wondering in particular about the Bristol renegotiated or maybe some of the other material partnerships you have with folks like Pfizer or Gilead. Thanks. Thanks, Chris. I'm going to ask Howard if he can answer that. Howard? Sure. Hi, Chris. Look, there's certainly nothing in the contract that gives one an escape for this kind of force majeure situation, obviously. But I will tell you that, look, every company has its own method of moving trials forward in this situation.

50:18 You know, Nectar's being fairly – are all successful in recruiting sites and recruiting patients. There will always be some delays, but generally we're moving things along quite nicely. Other companies such as BMS have said across all their programs they're not going to be recruiting any new sites until they get a better handle on what's going on with COVID-19. So we said there could be a three to six month delay. It doesn't really change anything in the agreement. I think we're still working very closely with BMS to move these programs forward. The ones that we're running in the collaboration are moving forward nicely. They will figure out shortly, I'm sure, how to start enrolling sites again and how to recruit patients again remotely as every other company is doing.

51:03 And so I think there could be a delay. There most likely will be a delay in some of those studies, but I don't think it's anything that has any contractual impact. And as long as we have a great relationship with them and and we do, the teams have changed and evolved and I think together with BMS everything is going smoothly outside of COVID-19. I think there's always going to be delays, there's always challenges in any clinical study but I think everybody believes that certainly BEMPEG and NEVO and first-line melanoma, metastatic melanoma have a significant benefit. And if you look at the PFS data that we've had so far in the PIVOT-02 study, I don't see how we'll be lower than 21 months.

51:56 I would think the 21, 21 and a half months would be the lower limit of median PFS. So with that said, I think when you compare that to Nevo alone, which is six and a half months, I think that's fairly dramatic. And remember, as Wei said earlier, and this is what everybody I think is excited about, what Wei said earlier is I don't think you can compare this necessarily to other challenges that companies have seen when they went from phase two to phase three. Number one, we have the same endpoints. We didn't see any toxicity in Phase 2 that would require us to lower the dose going into Phase 3, which some other companies have had to do. So I think it's as apples to apples as you're going to get. And I think CMS should be and is as excited about it as we are.

52:42 But, no, there's no contractual provision for this type of thing. No one could have ever envisioned this. So as far as I'm concerned, the companies are behaving well together, and I'd like to see it all move forward in a respectable fashion. Great. And then lastly, when your team is sitting on those Zoom conference calls with the Gilead folks, are they begging to put one of your assets into a COVID Therapeutics trial? Might be good for a retail pop in the stock. Well, look, I can say this. Look, we've certainly looked at all the literature, and there's an awful lot of literature that suggests that patients who have low lymphocyte counts, leukemia, don't do very well with COVID-19. And if you can increased their lymphocyte levels. Those patients with higher lymphocyte levels actually do much better with COVID-19.

53:30 So it's something we're looking at. It's something we're talking about. And we haven't made any plans yet, but it's something that if we decide to, if we come up with an approach to move forward, we'll certainly share it with everybody. Great. Thanks for powering my questions. Thanks, Jen. Thank you. Our next question comes from Jessica Five from J.P. Morgan. Your line is open. Hi, this is Yuko on the call for Jessica. Thank you for taking our questions. Starting the 180 patient phase one to dose optimization and expansion study in non-small cell lung cancer that BMI will be running, can you provide an overview of that study including the doses that you'll be evaluating in the dose optimization phase?

54:18 And then do you plan to select patients based on PD-L1 status or any other biomarkers? Thanks, Yuko. I'm going to ask Wei to walk through what the structure of the BMS study would be for bent-type placebo and non-small cell lung cancer. Thanks, Wei. Yeah, thanks. So that study, also very similar to the PROPEL study in design, Now, that study is not finalized yet, so I cannot share too much details. Now, but at a very high-level concept, it would be very similar to Propel in the sense that we'll be pushing the dose higher, beyond 6 micrograms, and in addition, we'll be enrolling patients across OPR1 expression to really try to observe if the combination of MPEG plus nivolumab can expand the activative checkpoint to the low-expression population as well as the negative population.

55:21 So the data coming from that study along with the Propel study would help we and our partners to make an assessment what would be the most appropriate and best trial design going into Phase 3. Great. Thank you. Thank you. Thank you. We'll take our next question from Defay Yang from Azuho. Your line is open. Hi, good afternoon and thanks for taking my question. Just a quick one on the NKTR255. So you have a couple trials ongoing in liquid tumor. How do you think about the opportunities for solid tumor? Where do you see the biggest opportunity for R15?

56:12 Thank you, Desai. I'm going to ask Jay-Z to answer that. Jay-Z? Yeah, certainly. So, hello, Desi. So, there are a number of interesting opportunities in the solid tumor space when you consider a combination with targeted antibodies that we know have a component of their mechanism associated with antibody effect or function. So, you know that in the tissues, right, that we typically see lower levels of natural killer cells, right? So, We rely on antibodies that work through direct signaling, like, for example, EGFR engaging antibodies, you know, for example. But then we also hope that they can engage a phagocytic mechanism as part of their effect or function in the tissue. And one of our overarching hypotheses with 255 is that in addition to all those mechanisms, you know, we should be able to drive natural killer cells into the tumor as well.

57:10 and I think you saw some of the data that we presented at SITNI and other conferences that showed that even in the mouse model where you had an intact immune system or in one that you had a xenograft but it was skid so it was still NK cell confident, even if you implanted tumors into peripheral tissue like the flank or the thigh and you gave 255, you could still drive NK cells into these peripheral tumors. and you know this very well, right? That's not a lymphoid kind of a tumor. It's not a liquid tumor by any means. This is a traditional solid tumor that NK cells can populate. And we demonstrated that whether you combine with antibodies like, you know, EGFR engagers like cetuximab or septin types of bindings like Herceptin, you know, HER2s and others, that in a range of different tumor models, either in the xenograft or in the fully competent or even in the PDX case, you can engage those kind of activities in the solid tumor space. So as we eye opportunities in the clinic, some of the things that's quite interesting to us are combinations, for example, with agents like cetuximab. We already know that there are opportunities in targeting the NK cell compartment in the combination with cetuximab We've seen some other antibody combinations do that. So I think that represents one very unique opportunity. And then, of course, there's really a whole wealth of other

58:44 opportunities because you can quickly move beyond cetuximab to additional solid tumor-targeting antibodies and consider additional lines of therapy. So I hope that answers your question, Daphne. Yeah, very helpful. Thank you, Steve. I have just one quick follow-up with BAMPAC. Wayne, would you remind us, what is the MTD for BAMPAC? For the perpetual study, something like you're planning to dose escalate to 10 micrograms per kilo, but what is the MTD? Wayne, would you like to take that question? Sure. Sure.

59:29 Yeah, so the current design allows us to dose escalate all the way up to 12 micrograms per kilogram, which is twice the current dose in our registration studies. Now, obviously, in the end, MTD is one of the elements that contributes to the decision for RP2D, but in addition, we're going to look at the totality of data, both in terms of safety and efficacy, and from the safety, also, as patients get treated longer, whether the tallibility continues to be well-behaved. Yeah, thank you, Wei, and thanks for taking that question. Sure, absolutely. Thank you. Our next question comes from Bert Haslett from VTIG.

1:00:18 Your line is open. Yes, so thanks for taking the question. I'm not sure if this got asked yet, but in the PIVOT-02 melanoma cohort, Is it possible that you are already at the minimum of 21 months in terms of PFS for that cohort? Just an update on the PIVOT-02 melanoma cohort. PFS would be great. Jay-Z, do you want to take that one? Yeah, sure. Hey, Bert. Nice to speak with you. Yeah, I wanted to definitely clarify. You diagnosed that correctly. So in the current assessment of the data, We're at a minimum of a 21-month duration in the PFS. This is very exciting data. We're continuing to watch this cohort develop, continuing to see the patients. Obviously, this is indicative of the kind of durability that we've already presented on last year. We're seeing that kind of durability extend, and we're seeing a further extension of the PFS. We're really looking forward, Bert, to giving an additional update on this cohort and We'd be looking to do that, you know, perhaps at a medical meeting, you know, later this year.

1:01:34 Okay, thank you. We're looking forward to it as well. Thank you. Our next question comes from George Farmer from BMO Capital Markets. Your line is open. Hi, good afternoon. Thanks for taking my question. More on Pivot02 and the melanoma cohort. I recall at CITSE that... Thank you for joining us. and are you in fact following all the patients or have some patients been lost to follow-up and they're just censored at various time points?

1:02:29 You could comment on any of that. That would be great. Wade, do you want to start or Jay-Z? Either one of you. Jay-Z, do you want to start first? Yeah, I'll add anything. Yeah, sure. So, you know, George, those are good questions. And what we would like to do is to update, you know, the data at a medical meeting later this year. Then we can go through all of the details of the data because in addition to any, like the questions you asked about durability, right, also, you know, we can cover deepening of responses, the additional kinds of overall effect that the patients have seen.

1:03:15 Also, I have to remember, these are patients that have now been in treatment for a very long time as well, right? So we were also, as you saw last time when we gave an update at SISI, we saw patients that achieved maximal benefit, maintaining very, very deep responses or complete response in many cases for over 12 months of additional treatment. So we would provide that kind of detail and that kind of assessment and, you know, even we can walk through the kind of spider plots that we do, right, like one-on-one. So like We would do that at the future meeting when we could really unveil the data later this year. Well, do you think you'll be sharing overall survival data as well? So I can say that we are. Yeah, okay. Go ahead, Wade.

1:04:02 Yeah, I think so right now the survival data is really quite long. So I think our primary goal will be really focused on survival. Describing the PFS, since that, in the end, is the primary endpoint for the study on the basis which will be for us to obtain a full approval. So I think that's probably the more meaningful. I think it's right now be really hard to estimate what the OS is, given how the curve is looking. Okay. And then, Jay-Z, regarding 358 and the presentation of the lupus, the Phase 1B lupus, Lupus Data. You're presenting at two conferences, at ULAR and ACR.

1:04:51 What will be different between those two presentations, if anything? Yes, sure thing, George. Good question. So one of the things is because ULAR is going to be a virtual conference, you know, we know that it's harder to get the same kind of visibility, you know, of the program because You're normally used to that large conference, you know, all the people there and the ability to socialize the results. We expect that ACR, American College of Rheumatology, which comes in November, you know, we expect that that is likely not going to be a virtual conference. I mean, with COVID aside, you know, we're projecting that the situation is different, you know, roughly six months from now. And so for there, we would be looking for the actual real-time conference field One of the things that we did last year when we presented the single ascending dose data is that we covered, you know, kind of the clinical data in two parts. So, for example, at the ULAR conference in the SAD study, we covered the safety, the pharmacokinetics, and then the Treg pharmacodynamics, showing the dose-dependent expansion that we presented.

1:06:04 Remember, we showed about a 17-fold increase in Treg levels over baselines. at the top dose that we evaluated in that study. And then at ACR, we dove much deeper into the phenotype of the patients treated with Nectar 358. So there we looked very closely at any cytokine responses. We looked very closely at the Tregs and their activation status. And we even did, as you recall, methylation studies of the FOXP3 promoter. You know, again, really diving deeper into the immunology. So that's one thing that you can consider for how we will parse the data, you know, in consideration for ULAR and ACR. And then, of course, the key point of the multiple ascending dose study is this is in lupus patients. So we're evaluating 358 in the diseased immune system.

1:06:58 And, of course, we're evaluating multiple doses of the drug, not just a single dose. So ULAR is really right around the corner. It's barely a month away. So you'll see the early presentation of the data and then a much bigger kind of showcase of it to come at ACR later this year. Okay. And then finally, do you think 358 could treat cytokine storm associated with COVID? So that's a very interesting question. So 358 definitely induces regulatory T cells. And yeah, you're familiar with our data. It can induce a polyclonal regulatory T cell response. So it's a very interesting concept and nuance.

1:07:43 One of the things that we do know about, you know, COVID and the cytokine storm is those seem to be non-lymphoid derived cytokines, right? They're typically innate kind of cytokines like IL-6, you know, others linked to CRP, for example. So we typically do think that lymphoid cells can antagonize that. So it's a very interesting thought, very interesting idea. But, you know, right now our plans with 358 are very squarely focused in the autoimmune disease space. Okay, great. Thanks very much. Thank you. Our next question comes from Arlinda Lee from Canaccord. Your line is open.

1:08:33 Please check that your line is not on mute. Sorry, I was on mute. Thank you. Thanks for taking my question. I had maybe a follow-up question on your IL-15 agonist 255. You already talked a little bit about what you guys are looking to see in the data set, in the initial phase one data. I'm curious that with other IL-15s entering the clinic recently, with different strategies. Whether you might also talk a little bit more in depth about how you guys designed your IL-15 and what kind of differentiators might we look for in that early data set that you guys are hoping to have around your end.

1:09:22 Thank you. Thanks, Linda. I'm going to have Jay-Z answer that. Jay-Z? Sure. Hi, Linda. So one of our goals at As you know from our 255 program was that we really wanted to maintain all of the possible receptor-ligand interaction that IL-15 uses when it naturally signals as a cytokine, you know, like a naked cytokine in the human body. And we know that it has at least two, well, at least three different kinds of binding modes. So it can signal through the dimeric beta-gamma receptor complex. wherever that complex can exist on any cell type. But then it can also signal through a trimeric receptor complex where there's an IL-15 receptor alpha specific subunit that then complexes with beta gamma.

1:10:16 And that mode of signaling is different than the IL-2 pathway because in this case the IL-15 alpha receptor subunit can either be expressed on the same cell as beta gamma, we call that cis signaling, or it can be expressed on a neighboring cell where it hands off to a beta gamma on a nearby cell. That cell is kind of like a cell-cell contact mediated signaling and we call that trans-presentation. So those are all three modes of natural IL-15 dependent biology. And the immune system uses all three. And so we wanted to make sure that the biology of 255 could recapitulate and all of the biology that the native IL-15 has available to it. So fundamentally this approach is very different than a lot of the competing pipelines because almost all of those designs involve the IL-15 cytokine generated as a drug product in complex with the extracellular domain of IL-15 receptor alpha.

1:11:20 And there are variations on that theme. Some use the entire receptor. Others just use the sushi domain. Others use an FC fusion to make a two-armed cytokine plus receptor complex. But they all have that same sort of basic underlying design principles. And there are some unique differentiating properties. We presented recently at CITSE last year, we presented some studies that evaluated head-to-head The assemblies that have the receptor and complex to the cytokine in comparison to either native IL-15 or Nectar 255. And we saw a lot of unique differences. We saw differences in receptor internalization between the different designs versus the native or 255.

1:12:09 We saw differences in granzyme B production intracellularly in NK cells. And even when you evaluated an intact PBMC culture, We even saw differences in CD14 monocytes that could express intracellular interleukin-18. And we saw those kinds of changes in granzyme B inductions really in either the native IL-15 or the 255 molecule. Those kind of things were not really well supported or induced with the assemblies that had both the receptor and complex with the cytokines. So we think that's one difference. There should be a very sort of significant modification of how the immune system can be targeted with the IL-15 pathway using this kind of 255 design. And we think that could translate into things like reduced tachyphylaxis, repeated dosing, and a number of other kinds of potential improvements.

1:13:14 Thank you. And our next question comes from Aiden Husanoff from Benchmark. Your line is open. Hi. Thank you for taking my questions and I appreciate all the safety measures you provide across the site. I got a couple of questions on Benfec melanoma study and one follow-up about the guidance. So on melanoma, I wanted to confirm the status of phase 3 melanoma study, how many patients have been enrolled so far. And given that it looks like the PFS is expected to be in the first quarter of 2021, whether we would be able to see the complete response numbers earlier than that, let's say maybe early at the end of this year or maybe in the beginning, at the very beginning of the next year.

1:14:13 Thanks, Aiden. Wei, I'm going to ask you to address that question. Sure. Thanks for the question. So just to correct, the guidance is not the PSS will be beginning of next year. Our guidance has been that the response rate-based endpoint, that first endpoint would probably occur potentially in Q1 next year. So, and our guidance has been that based on the study design, the current study design, the initial projection has been that the PFS could potentially come in six to seven months after the OR endpoint. Now, as we discussed before, that currently we're in discussion with health authorities for the potential change in the first endpoint, which from OR to CRR, and then In addition, with that change and then the current ongoing enrollment of the study, the difference in the CRR readout and the PFS readout, if we were to affect that change, could be different than the six to seven months. So some of that really is because PFS is really an event-driven readout. So I want to be clear about the guidance we provided to date. and regarding your first question, how many patients can you enroll, that is really a study conduct. In an ongoing study, we typically do not provide those numbers.

1:15:45 Once the study is completely enrolled, then that, the completion enrollment information will be provided. Thank you. Okay, appreciate that. Just want to confirm, so we're going to CCR number together with ORR number in the beginning of 2021, right? That's our current guidance, yes. Okay, appreciate that. And another question on financial guidance. So I was just curious to understand that given that certain studies would be postponed or pushed to the later of the year or some may be even pushed to the next year, trying to understand the cash burn, Why it kind of stays the same as previously guided, given that there might be less expenses associated with research and development and overhead expenses.

1:16:43 Yeah, great. Yeah, thanks for the question. Yeah, as we talked about on the call and Howard reviewed, you know, many of the studies that we're running and the ones in particular that we have in-house, remain on track. So that obviously would have no effect on our expense guidance. And some of the other potential changes are more minor in nature. So as we sit here today, I think that's going to have an impact on our R&D expenses. Some of them are activity-based. Some of them are not. So we're comfortable with the current guidance. We aren't making any changes at this time. Okay. Thank you. I appreciate that. Thank you. Our next question comes from Jay Olson from Oppenheimer.

1:17:33 Your line is open. Oh, hi. Thanks for taking the questions. I had one on RCC where it seems like the goal line keeps moving with all the combinations and now the Checkmate 9ER study results look pretty solid for NEVO plus CAVO. So I was wondering if those study results change your view of the opportunity for Ben Pegg plus Nevo in RCC and then I had a follow-up on 358 if I could. That's great, Jay. Thank you. Wei, I'm going to ask you to address the RCC question in landscape. Thanks. Sure. Yeah. So I think definitely the RCC landscape pension evolved and so right now you have a Nevo plus AP combination and also Checkpoint plus TKI both involving Pembroke and and a value mapping now most recently with new NEVO.

1:18:31 So the way we think about it is really two things. One is the combination of BAMPAC plus NEVOLIMAB does offer another treatment option. Now, the TKI can be used in multiple settings. It can be used in combination with a checkpoint in the first line setting or can be used later as a monotherapy treatment. I think if you talk to different physicians around the world, people are really taking advantage of these options and using them differently. There are still some physicians who prefer to use an IOIL combo in first-line setting, and others like to use a TKI combo and then use that option of a TKI in the first-line setting. I think our goal here is to introduce another treatment option Now, we expect to have a different safety profile than is offered by a checkpoint plus a TKI combination, and then also depends on the efficacy we're able to deliver.

1:19:31 I think it does offer a different treatment option and also give the doctors an opportunity to reserve a TKI as a later-line therapy rather than exhausting the first line. So that's one. And second of all, as has been disclosed previously, BMS is undertaking a Phase I study. with a triple combination of BEMPEG plus NEVO and then TKI. And that study is expected to start. And so that triple combination, once it progresses on to a retribution study, can offer additional treatment options that involved a BEM-BEMPEG within that line of therapy.

1:20:16 Oh, great. Thank you. It's super helpful. Thanks for that. comprehensive review. And then I guess just on 358, it seems like there's been a few new drug approvals for lupus over the past 50 years. I think Ben Liston might be one of the only ones. And now there's a few promising treatment options in development including AstraZeneca and Biogen's new molecules. I was wondering how you see the lupus landscape evolving and how the 358 mechanism compares to anaphylumab and BIP-59. That's great. JV, I'll take that one.

1:21:01 Yeah, thanks. Yeah, happy to answer that. So, yeah, you definitely diagnosed and characterized the problem very, very well. So, outside of Ben-Lista, right, which, you know, came, you know, several years ago, there really haven't been any approvals. And Frankly, there haven't really ever been even any kind of really exciting trial results until antifrolimab came along. And, you know, the thing that we saw was some pretty exciting data in Phase 2, and then we saw Phase 3 data. Phase 3 data, Fran, is a little bit more confusing, right, as you know. And also what we see in that case is, potentially yet again changing in some of the endpoints in lupus studies.

1:21:46 We saw that the first time, you know, with Ben List's approval and potentially going to see it again in the case of Annie. One of the things though that's an important takeaway is if you look at the landscape of mechanisms that have been tested for treatment targeting, they're all highly overlapping, right? They're targeting the same kind of pathways. They're focused on the same kinds of specific subset of immunology. And we keep doing a lot of studies with very, very similar kind of mechanisms. One of the things that's really exciting about considering Tregs as a treatment option in lupus is that lupus patients are known to have a very specific dysfunction in their Treg compartment.

1:22:32 We know that lupus patients have progression to moderate severe disease. They have low levels of IL-2. even in response to normal stimuli that would induce interleukin-2 expression. They also have reduced levels of regulatory T cells. They have kind of that imbalance between Th17 and Treg cells where you see an over-preponderance of Th17 and a drop in Treg numbers. And there are also reports of even reduced suppressive capacity of Tregs in lupus patients. So of all of the things that make up It is a heterogeneous disease. We have to accept that. Tregs are a very unique biological feature that seems to be associated with the dysfunction in the patients that present with this disease.

1:23:24 We've now seen multiple clinical studies where low-dose IL-2 has been applied for treatment of lupus. We've seen both Treg elevations by low-dose IL-2, these two multiple studies. For example, one was in China, one was in Germany. And we've also seen some efficacy that came out of those trials. So this is kind of the application of a first-in-class kind of a mechanism for the treatment of lupins. So I think that represents one kind of exciting opportunity. The other exciting opportunity for us is that, of course, we've already shown that Nectar 358 can induce Tregs, both in their number and their duration of expansion. and even in their suppressive functional enhancement in a way that IL-2 just can't. You know, you can't use any kind of low-dose IL-2 regimen to produce the mass quantity, you know, the huge amount of Treg induction that we're able to produce with 358. So we think all of those things together represents a very reasonable and strong scientific rationale to advance into lupus.

1:24:29 And that's why this will be the first phase two study that we're going to be initiating with Lilly. and as Howard said, it's not going to be the last. You'll see additional phase two studies and other indications after lupus. And contractually, the two companies, we've agreed to run up to four phase two studies. So we'll be looking for the full expansion of that, you know, this year and into next. That's super helpful. Thank you very much for taking the questions. Thank you. And we'll take our next question from Paul Choi from Goldman Sachs. Your line is open. Hi, this is Corinne Jenkins. I'm for Paul.

1:25:14 I was wondering if you could talk a little bit about what your ability is to advance Nectar 358 outside of some of these Lilly studies and if you've explored potential indications where you could pursue either in different partnerships or on your own. Daisy, I'm going to let you answer that. Yeah, so with Nectar 358, we signed basically like a licensing kind of a collaboration with Eli Lilly. So we work with them exclusively on Nectar 358. As I mentioned, the scope of the 358 program is pretty large, right? You could think of applying the T-RAG mechanism to a range of autoimmune diseases, and that's what we're doing together. But it's really a program that we've exclusively partnered with Lilly and all of its development is in direct collaboration with Eli Lilly.

1:26:09 Okay, thank you. And then I think you said that you didn't still have 10 to 20 patients in the Propel update, but that's been pushed a couple months. In addition to the delay, should we expect any impact on patient enrollment? Could we expect maybe the lower end of the range due to COVID or anything like that? Wei, I'll let you answer that. Sure. Yeah, so this study is rolling globally. That's our plan in US, EU, and Australia. Based on the sites we selected, we expect the majority of patients will come from Europe. There's a delay in site activation due to the effective pandemic in Europe. We're actively looking at the sites in Europe.

1:26:59 There's a high degree of variability, as you observed, The degree to which the pandemic really affected from country to country, there's a big difference between what has happened in Italy and Spain versus what's happened in, say, Germany. And so we're taking a very measured approach, trying to understand at the site level, in addition at a country level, what could be impact and trying to be very opportunistic in how we open up sites and roll patients. So as been mentioned earlier in the call, what's almost important to us is really to make sure that the right patients get put on the study and not compromise on the eligibility because of the ongoing pandemic. And in addition, we would only activate a site, enroll patients at a site if that site has demonstrated a full capacity to follow through with the protocol to really care for the patients and to execute all the treatments as well as the tumor assessments.

1:28:04 So it's under those circumstances that we plan to really continue to go into the study. So I think since we're really only a couple months into the pandemic, exactly projecting out for the next six months impact would be really difficult at this time. But Our team is really working hard to fulfill those criteria and making sure that this study does advance as we had really hoped. Thank you. Thank you. And we'll take our last question from Dana Graybosh from SVB LeanRank. Your line is open. Great. Thank you for the questions. I have two. I'll give them both and you can answer them in whatever order.

1:28:50 The first is on Propel or BMS's study that you guys are planning in first-line non-small cell lung cancer. I'm wondering if there's any way that might be a small randomized study as we have seen more companies take with IO-IO combinations and when you might make the decision. And the second is on 358. You know, there's other companies with their own IL-2s or Treg-directed therapies, and they're going after different indications. And I wonder if you can talk through how you and Lily are prioritizing your indications beyond lupus and whether, I guess you're probably not going to say, you could go to gut directed, but just what criteria you're using to make that next decision. Thank you.

1:29:35 So I'd like to start with Jay Z answering the 358 question and then move on to Wei to address the question that Dana had about randomized controlled trials. Thanks. Sure. Hey, Dana. Nice to speak with you. So with 358, you know, as you know, so Tregs can be applied to a range of different diseases. And so when we considered the different indications that Lilly and Nectar would be working on, we looked at a number of factors. We looked at, of course, the strategic factors that fit the areas that Lilly is heavily engaged in and prioritizing. And we also looked very scientifically, almost from a bottom-up approach, where we looked at where the kinds of underlying disease pathology is most heavily driven by a dysfunctional T cell compartment, where the nature of that T cell compartment is antigen-driven, where we have a kind of understanding of at least some of the key antigenic drivers.

1:30:39 And then where we think we can, of course, generate antigen-specific Tregs, that can antagonize the autoreactive immune cells that are responding to that same antigen. So we have ways of kind of classifying autoimmune diseases for ones that have different types of inflammation depending on the organ that's involved, the underlying immunity in that organ. And that can go all the way from diseases that are highly inflammatory and drive, say diseases like Crohn's, for example, Thank you very much. and many more. So we can prioritize diseases Based on their underlying immunology, look at where 358

1:32:13 and the cell populations that it induces could make the biggest impact, and then use that to select for indications for assessment. Now, with Lilly, you know, we don't announce those indications ahead of time, so we would be announcing them as we get much closer to the start of those studies. So stay tuned as we get to later this year as we announce the additional indications that we'll be working on together. Great. Thanks, Jason. Thank you. And that does conclude the question and answer session for today's conference. And I'd like to turn the conference back over to Howard Robin for closing remarks. Okay. Well, thank you. Thanks, everyone, for joining us today.

1:33:01 and I also mainly want to thank our employees for the incredible amount of hard work and commitment to the company and particularly during this time where our environment is changing so rapidly and we've had to adopt our work practices and behave in a different way. I'm exceptionally proud of how our employees have risen to overcome our daily challenges, keep our business on track and make tremendous progress. So I have to thank them all. You know, we've built a very valuable pipeline in immuno-oncology and immunology, meeting addressing areas of high unmet medical need, and we're focused on moving these programs forward. And as shareholders, we want to thank you for your support, and we will continue to provide updates on our progress. And we also want to wish all of you and your families safety and health during this time.

1:33:48 So thank you for joining us. Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone, have a wonderful day.