Nektar Therapeutics (NASDAQ:NKTR) Q2 2020 Earnings Call

0:00 Ladies and gentlemen, thank you for standing by, and welcome to the Nectar Therapeutics Second 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 and then 1 on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star and then 0. 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 Libursary, our COO and CFO, Dr. Jonathan Zalevsky, our Chief of Research and Development, and Dr.

0:49 Wei Lin, our Head of Development. On today's call, we expect to make forward-looking statements regarding our business. including clinical trial enrollment and clinical trial results, timing and plans for future clinical trials, timing and plans for future clinical data presentations, the therapeutic potential of our drug candidates, outcomes and plans for health authority regulatory actions and decisions, estimates and predictions of the COVID-19 pandemic's impact on our business and clinical trials, financial guidance, and certain other statements regarding the future of our business. Because these forward-looking statements relate to the future, they are subject to inherent uncertainties and risks that are difficult to predict, and many of which are outside of our control.

1:36 Important risks and uncertainties are set forth in our Form 10-Q that we filed on May 8, 2020, which is available at sec.gov. We undertake no obligation to update any of these forward-looking statements, whether as a result of new information, future developments, or otherwise. A webcast of this call will be available on the IR page at NECTAR's website at NECTAR.com. Before turning the call over to Howard, I'd like to comment on a small housekeeping item. Due to the continued shelter-in-place restrictions in San Francisco, each of us are, again, calling in from different locations. So in order to facilitate a smooth call flow, I will moderate the Q&A session for our team so we can avoid technical issues during the session. We appreciate your patience as we work to ensure that there are no technology disruptions for those who are listening. With that said, I will hand the call over to our President and CEO, Howard Robin. Howard?

2:31 Thank you, Jennifer, and thank you to everyone for joining us on the call today. I'd like to start the call by reviewing the ways in which we've successfully led our business, as well as our accomplishments during the second quarter and year to date. For all of us located in the many areas that we operate our business and our clinical trials, we continue to face a complex environment caused by COVID-19. Our key focus has been to navigate this dynamic situation with minimal disruption to our business. And as a result of these efforts, we've seen continued progress in the advancement of our registrational and earlier stage clinical trials, as well as the continuation of our research and manufacturing activities in spite of the challenges posed by the COVID-19 pandemic. We ended the second quarter in a position of exceptional strength.

3:19 We have built a robust pipeline in oncology and immunology, with multiple registrational and earlier stage clinical trials underway. And we ended the second quarter in a strong financial position with $1.2 billion in cash and investments and no debt on our balance sheet. During this time, we've adapted our practices to allow us to both protect the health of our employees and continue essential operations at our locations, such as research and manufacturing laboratory-based activities, which are essential to our business. We've also worked tirelessly with our trial investigators and their teams to ensure that they can continue to provide superior care and uninterrupted access to study treatment to patients fighting cancer in our clinical trials.

4:06 Finally, we've been diligently working to ensure that the conduct of our clinical trials is minimally impacted by the evolving situation and that the integrity and quality of data being collected from these studies are maintained and tracked appropriately. Wei will review these items in more detail later in the call. With these things in mind, we made great progress on a number of fronts during the second quarter, including continuing to enroll new patients in our clinical studies in order to meet our enrollment timelines, while at the same time providing effective oversight of trial conduct and support to our trial sites. We've worked closely with our pharmaceutical partners on this front as well, and I will provide more updates on this in a moment, We've experienced no supply interruptions for manufacturing and our continued preparations for commercial supply of BEMPEG remain on track.

4:59 Many of you continue to ask about our assessment of current clinical trial timelines or impacts to any of our clinical studies related to COVID, and I'll provide a review of the current timelines for our studies today. We have been tracking timelines for all of our studies very closely during a fluid and uncertain time, and we will need to continually assess these timelines as well as assess any impact to patients in our clinical studies throughout this year. This quarter, we continue to laser focus on oversight and advancement of the five registrational studies for BEMTAG plus NEVO in the BMS Nectar Joint Development Program. These are the first-line metastatic melanoma study, the first-line bladder cancer study, the first-line renal cell carcinoma study, the muscle invasive bladder cancer study, and the adjuvant melanoma study.

5:48 In addition to these registrational trials, we're also advancing nicely in the PROPEL study of BEMPEG plus PEMBRO, the NECTAR-262 REVEAL study with BEMPEG, and finally, the NECTAR-255 study in hematological malignancies. First, starting with adjuvant melanoma. We're particularly pleased to announce today that NECTAR achieved their goal to start this Phase III study of BEMPEG plus nivolumab, which plans to enroll 950 patients. Our team was able to initiate this trial in early Q3, which was ahead of our original schedule, with the first patients in the study entering screening just last week. This is an important study that builds on our breakthrough designation achieved with a doublet in metastatic melanoma. In Q2, we recognized a new $25 million milestone payment from BMS related to this study start.

6:41 I'm very proud of our team and the progress and execution on this front. With respect to the first-line metastatic melanoma study, which is being run by our partner BMS, starting in July, BMS has successfully restarted enrollment activities for this study in many countries. They also have a plan to bring on more sites to this study in order to make up for the lost time related to the COVID pause. At their recent analyst event, BMS indicated that the first data from the melanoma study would be expected in Q4 of 21 or Q1 of 22, and this is relatively consistent with our assessment of the situation, which we provided last quarter, that we expected enrollment delays related to COVID could push timelines out by as long as six months.

7:26 While we are all disappointed in the timeline delay relative to COVID-19, we're very pleased to see that BMS is actively bringing back enrollment activities which were paused as a result of the pandemic and that they are working to meet these revised timelines for this very important study. Many of you have listened to the BMS analyst call this morning and where they highlighted BEMPAG as an important next-generational late-stage medicine in IO that has achieved proof of concept in their development pipeline. With respect to the first-line bladder cancer study, we expect to be on track to reach our enrollment goal late this summer. As a reminder, the primary endpoints in this study are ORR, and duration of response by independent review for patients with under 10 CPS score.

8:14 Depending upon how long we follow patients for duration of response, we're projecting a timeline to achieve top line results for this study in the second half of 21, consistent with our prior guidance. For the first line renal cell carcinoma study, we remain on track for our projections for enrollment with this study, which means we also expect to potentially achieve the first interim analysis on the primary endpoint of overall survival in the first quarter of 22, consistent with our prior guidance. For the first-line muscle-invasive bladder cancer study, which is being run by BMS, this study is enrolling approximately 540 patients who will receive BEMPEG plus NEVO or NEVO for a 12-month treatment period following surgery.

8:59 This study is actively recruiting patients, and more sites are being initiated throughout the year. As this study is longer, we expect first data readouts to be in 2024. With respect to earlier stage studies of BEM-PAG and the BMS Infectory Development Program, BMS is also planning to start an additional study of BEM-PAG plus NEVO in combination with a TKI in patients in the first line renal cell carcinoma setting. This study builds on the registrational study in RCC that we're running of the doublet of BEM-PAG plus NEVO versus a TKI. With respect to first line non-small cell lung cancer, as you know, Nectar has been running the PROPEL study of BEMPEG plus PEMBRO as a separate independent study from the BMS development program with the goal of moving forward with a registrational strategy in non-small cell lung cancer that combines BEMPEG with the existing and preferred standard of care, which is PEMBRO-Lizumab.

9:58 The development of regulatory pathway for BEMPEG plus NEVO is very challenging given the volumab's lack of a single agent label in first line non-small cell lung cancer. BMS has recently informed us that they will not start the phase two study in first line non-small cell lung cancer with BEMPEG plus NEVO. That was outlined in our amended agreement. Thus, in line with this agreement, Nectar no longer has any exclusivity obligations related to advancing registrational or other trials in non-small cell lung cancer with BMS. With pembrolizumab firmly established as the preferred standard of care, we are now in a position to move quickly on a strategy for a registrational trial in first-line non-small cell lung cancer with PEMBRO upon successful outcomes with a Propel study.

10:47 The Propel study is actively enrolling patients in line with our timeline objectives, although last quarter we mentioned that the COVID situation delayed initiation for some investigator sites in Europe for Propel. We were able to successfully bring several new European sites online during the second quarter, and these sites are now actively enrolling patients. will expect to be on track to generate initial safety as well as preliminary ORR data for between 10 and 20 patients with a minimum of two scans on treatment from both the dose escalation and non-small cell lung cancer cohorts of this study by the end of this year or first quarter 21. Our phase 1-2 reveal study of Nectar 262 is also on track. We're in the expansion phase of this study which is evaluating simultaneous dosing of the recommended Phase II dose of Nectar 262 administered in combination with BEMPEG, either with or without nivolumab, in up to 24 relapsed and refractory melanoma patients.

11:48 As we stated last quarter, we observed high levels of TLR activation in the tumor microenvironment during the sequential dosing of Nectar 262 and BEMPEG, and we're able to characterize safety for Nectar 262. These data are being submitted for presentation at the CITSE Congress this November, and support our advancement into the relapse and refractory melanoma patient population post-IO treatments with this program. For NECTAR-255, our IL-15 agonist program and our next cytokine therapy and clinical development, we are actively enrolling patients into the first in human clinical study of NECTAR-255 in patients with hematological malignancies which began late last year.

12:33 Our goal is to complete the dose escalation monotherapy portion of this study by the end of this year. Of course, meeting this goal will depend on how many dose cohorts we need to enroll before achieving the maximum tolerated dose. As a reminder, this study is evaluating Nectar 255 first as a monotherapy in dose escalation, after which we will expand into several arms that will evaluate Nectar 255 as a monotherapy at the recommended phase two dose, and also evaluate Nectar-255 in combination with Aritumumab in multiple myeloma and with Rituximab in non-Hodgkin's lymphoma. We have already observed target engagements of the IL-15 pathway starting from the first dose level studied and we are very excited to submit these preliminary data for presentation at this year's CIPSI conference.

13:26 There has been an increasing interest in natural killer cell therapies and we are taking a comprehensive approach to developing NECTAR-255 in several cancer settings. In addition to the studies ongoing in heme malignancies, we're also planning to initiate a study of NECTAR-255 in patients with solid tumors before the end of this year. And Jaydee will talk more about this study in a moment. Moving on to our partner Eli Lilly and NECTAR-358, our Treg Simulatory Program. We recently presented data at the ULAR Congress from the Phase 1B study of Nectar 358 in patients with mild to moderate lupus. These exciting data led to the Phase 2 study, which is also being run by Lilly, in patients with moderate to severe lupus.

14:12 And I'm excited to announce that Lilly began initiating clinical sites in late July and screening patients in this study just this week. Jaydee will, again, talk more about this study later in the call. In addition, the Phase 1 multiple-dose study in psoriasis and ectopic dermatitis being conducted by Lilly are enrolling patients again after a three-month pause in response to the COVID-19 situation. Finally, we are planning to present additional data on Nectar 358 from the Phase 1B study at the 2020 American College of Rheumatology Congress, also known as ACR, which occurs in early November. So we're all looking forward to sharing new data on Nectar 358 with you folks.

14:58 Finally, Lilly plans to start another Phase II study in an additional autoimmune disease in the second half of this year. We are very pleased with Lilly's continued commitment to Nectar 358, as well as their broad plans for its development, which reflect the potential of this truly novel mechanism to play an important role in the treatment of a wide range of autoimmune diseases. Before I hand the call to Wei, I'd like to mention an additional data presentation for BEMPEG that we're planning this year. First, for the melanoma cohort from PIVOT-02, as many of you know, last year we obtained an FDA breakthrough therapy designation for BEMPEG plus NEVO in patients with metastatic melanoma based upon the positive data from the PIVOT-02 study, including a high resist complete response rate of 34%, with 42% of patients experiencing complete regression of their resist target meetings. As we stated on our last call, at the 21-month median follow-up point for patients in this cohort, we had still not achieved median PFS.

16:01 We continue to see deepening of response for these patients and are very excited to submit updated data from the melanoma cohort with an even later data cut closer to this year's 50-2020 meeting. We also plan to present some initial landmark survival data. As we've stated in the past, we are very excited about the potential of this doublet combination for melanoma patients. So for this year's CITSE Congress, our plans are to present data from three Nectar programs. Updated data from the first-line metastatic melanoma cohort, as I just stated, data from the first patients in the Nectar 255 study in hematological malignancies, and data from the dose escalation phase of the Nectar 262 study. And with that, I'd like to turn Nicole over to Wei to review in more detail the Bentec Development Program.

16:51 Thank you, Howard. As Howard stated, we continue to take all possible measures to ensure that our clinical studies remain on track during the COVID pandemic. In addition to the rigorous ways our study teams conduct our clinical trials, our monitors and data collection systems are also capturing any COVID-related protocol deviations or changes in study conduct that we may need to apply to the FDA in the future. As you know, the FDA has issued guidance on clinical trial conduct during the pandemic and work closely following FDA guidance as we track any impact of COVID on the patients in our study. We have seen very good patient compliance, particularly in their visits to study sites to receive study treatments and for scheduled scans.

17:41 We continue to be tremendously impressed with high degree of engagement from our investigators and their staff and extraordinary care they're providing to their patients during this very challenging time. for all of us. In response to some questions we're receiving, we have received only a few reports of patients in our studies who have had suspected or confirmed COVID infection. As of today, for the clinical studies that NECTAR is running across our 200 plus investigator sites globally, we have very few reports of patients who have been diagnosed with COVID or have missed study treatment or missed study scans due to COVID. We're carefully collecting all information pertaining to these cases and any other impact to the studies that could be related to COVID and are following FDA guidance to enable us to communicate any protocol deviations related to COVID to the FDA to ensure future registration.

18:46 Before I hand the call to Jaydee to discuss our work with NECTAR-358 and NECTAR-255, I want to follow up on continued inquiries we've received on the changing of the interim response rate endpoint from overall response rate ORR to complete response rate CRR in our first-line melanoma study. As you know, we received a breakthrough therapy designation for BMPAC-plus eval based on the high complete response rate we observed in this patient population. In the Phase III study, we have three endpoints, overall response rate, or ORR, progression-free survival, or PFS, and overall survival, OS.

19:32 The first endpoint is an interim analysis where a very small amount of alpha lifespan to compare the ORR in the doublet arm of BAM-PEG plus NEVO to the ORR in the NEVO and the Monotherapy arm, which will be done in a specific number of patients with at least six months of follow-up. This endpoint will allow a potential early accelerator filing for the doublet so that we could bring innovative treatment to patients earlier. The full approval filing in the U.S. and in Europe will be based on PFS and OS. Because of our high and many more. As we look at the complete response rate, many of you have asked whether we could change the interim ORR endpoint to look at the complete response rate instead.

20:25 We and our partner, VMS, continue to explore this possibility, including outreach to global health authorities to discuss how best to support this restoration path. during this process is that we maintain the integrity of the ongoing phase three trial so we can use the data from the study for global registration of MPEG plus needle in first-line melanoma. This process may take some time. However, we are hopeful that we could provide an update on this before the end of this year. In the meantime, the study continues to have the original three endpoints of ORR, PFS, and OS.

21:14 The original design of the study is based on Checkmate 67. The PFS analysis is projected to occur approximately six to seven months after the first interim analysis of ORR. However, this projection is affected by the rate of enrollment and the rate at which PFS events occur on the study. Thus, that timing could change. For both ORR and PFS, the results will be analyzed by blinded independent radiology review. So this process will affect timing for the completion of any data analysis as well. As we get closer to achieving these endpoints, we will be able to refine our timeline and share them publicly.

22:07 I just stated OR is designed as an accelerated approval endpoint. We spend only a small amount of alpha on this, and PFS is a full approval endpoint. With that, I'll hand the call to JV to discuss more on our NECTAR 358 and NECTAR 355 program. JV? Thanks, Wade. I'd like to spend a little more time discussing two programs. The first is a Nectar 358 program in our plans for the lupus study, and the second is our IL-15 program, Nectar 255. First, for Nectar 358, as Howard stated, we presented 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, conference in early June. We are the only company that has presented data from a multiple ascending dose study of a novel Treg stimulating therapy in patients.

23:08 We are tremendously pleased that these promising data have now led to our partner, Eli Lilly, initiating a Phase II study in lupus patients to plan for a second Phase II and another autoimmune indication by year's end. Many autoimmune disorders, including systemic lupus, are associated with decreased Treg numbers, reduced Treg function and or reduced production of IL-2. Treg deficiencies are important in the pathogenesis of these autoimmune diseases. And with Nectar 358, our goal is to address these Treg abnormalities and disease and to develop an IL-2 like molecule that could selectively stimulate Tregs in a much more effective manner than IL-2.

23:53 The results from the phase one study presented at ULAR concluded that Nectar 358 was safe and well tolerated when multiple doses were administered in patients with lupus. This reinforces our earlier study findings with single-dose administration and healthy volunteers. Additionally, demonstrating that the safety profile was similar between single and repeat administrations was critically important for potential treatments for chronic disease. The data also showed a dose-proportional PK and prolonged exposure with a half-life of 10 to 13 days. That's easily enabled as a two-week dosing in the Phase II study. Importantly, Nectar 358 enlisted a marked, selective, and dose-dependent expansion of proliferating Tregs in patients with lupus.

24:41 And this was maintained through multiple dose administration. As Howard stated earlier, the Phase IIb study is now underway and being run by Lilly. The patient population is similar to other Phase IIb lupus studies in regards to required diagnosis of SLE using ACR classification criteria, positive autoantibodies characteristic of lupus, and active clinical disease activity despite standard of care treatment. In this study, patients must have a systemic lupus erythematosus disease activity index, or SLDI2K, that's greater than six points at screening. In addition, patients must have a measurable level of clinical activity at baseline, including secondary organ manifestations such as arthritic joints or skin involvement.

25:33 Patients will be randomized to one of three dosages of Nexus 358 administered every two weeks or placebo for a treatment period of six months or 24 weeks. The primary endpoint in the Phase II study is percent of patients achieving at least a four-point reduction in the 3I2K scale. Important secondary endpoints include the percent of patients who achieved an SRI-4 response, bilag-based FICLS response, and the level of low disease as defined by the Lupus Low Disease Activity State, or LLDAF. We will also characterize pharmacokinetics, pharmacodynamics, and immunogenicity in treated patients. The primary and key secondary endpoints will all be measured at week 24, and we expect the study to be completed within 18 to 24 months.

26:25 And moving on to Nectar 255. As Howard stated, the dose escalation portion of this phase 1-2 study in patients with e-malignancies is proceeding, and we plan to present initial data from the first patients with a dose escalation at this year's QTSI Congress in November. The study is evaluating the safety, pharmacokinetics, and pharmacodynamics of Nectar 255 in hematological malignancies in order to establish a Phase II dose to be used either as a monotherapy and in parallel tested in combination with antibodies that work through an ADCC mechanism, including daratumumab and rituximab. Depending upon how many dose cohorts we proceed through, 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 the study. We have also introduced a robust biomarker program into this trial, including measurement of the NXRT255 effect on multiple immune cell populations of both peripheral blood and lymphoid tissues.

27:30 We are especially focused on expansion of NK cell numbers and analysis of NK cell subsets, as well as their activation and function. 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. So we look forward to sharing these with you in November. Additionally, we are planning to initiate a second Phase 1-2 study of Nexa-255 in solid tumors before the end of the year. This study will evaluate Nectar 255 in two solid tumor settings in combination with the Tuximab. The first setting is head and neck cancer, enrolling patients who have progressed on platinum therapy and a checkpoint. The second setting is metastatic colorectal cancer, enrolling patients who have received two prior metastatic treatments.

28:29 The overall study will enroll up to 75 patients and will include a dose escalation component for the combination regimen, and then expand into dedicated cohort in head and neck and colorectal cancer. And with that update, let me turn the call over to Gil for a review of the financials. Thank you, Jay-Z, and good afternoon, everyone. On this call, I'll review our 2020 financial guidance, which is unchanged. Starting with our strong financial position, during the second quarter, we repaid $250 million in outstanding senior notes, ending the quarter with $1.2 billion in cash and investments and no debt on our balance sheet. We still plan to end 2020 with over $1 billion in cash and investments.

29:19 Turning to our annual financial guidance, 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. We recognized a $25 million milestone for the start of the muscle invasive bladder cancer study in Q1. And as Howard mentioned, we successfully initiated the adjuvant melanoma study ahead of schedule and recognized a second $25 million milestone under the BMS collaboration The 90 to 95 million of remaining GAAP revenue is still expected to be recognized on a fairly ratable basis over the four quarters of this year.

30:17 Our GAAP R&D expense guidance is also unchanged as our clinical pipeline progress remains largely on track. We anticipate 2020 GAAP R&D expense will range between $475 and $500 million, which includes approximately $70 million of noncash 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 noncash depreciation and stock compensation expense. We continue to closely manage our operating expenses and remain highly focused on the execution of our broad portfolio of research and development programs.

31:07 And as I reviewed earlier, we plan to end 2020 with at least a billion in cash and investments. And with that, I'll open the call to the 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 touch tone 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 the questions. Just really on the early clinical data that we see for 262 and 255. Is there something that we should focus on? What should we expect and is there anything we should draw our attention to?

32:01 JV, I'm going to ask you to answer that question. Thanks. Yeah, thanks, Peter. So certainly both programs are giving early data, both of them from FIRST and Human Studies. So the things that we pay attention to are really what the focus and design of the studies were. These studies are designed to assess the overall tolerability and safety of the agents, also to assess the pharmacokinetics and also the pharmacodynamics. Now, as you know, we really pay a lot of attention onto the mechanism that these drugs have, and really that's really built in into how we do our drug development, and especially at the early stages. So both of the studies have robust biomarker programs built in, So in the setting of Nectar 262 and Reveal, we are looking at key biomarkers associated with TLR7 and 8 activations.

32:56 And remember, we can analyze those as a monotherapy in the first cycle, and then also in combination with BEM-PAG on successive cycles. Because remember, that study has a kind of a staggered design because it was the first in humans for a novel-novel combination. So in that setting, we'll be looking very closely at the interferon responses type 1 induced by the TLR activation and the type 2 interferon responses induced by BEMPEG, and then looking at the combination of the two as patients receive continued treatment. In the setting of 255, you know, that's a different cytokine than BEMPEG, and it engages a different set of immunological pathways. So, as I mentioned earlier in my presentation, they're really diving very, very deeply into certain immunological tissue and blood-based cellular compartments.

33:51 In particular, we're focusing a lot on natural killer cells. NK cells are a very robust target of IL-15 pathway engagement, and NXR255 really targets that compartment very well. So we don't just look at total bulk numbers. We'll even look at the different subsets of NK cells, even precursor, you know, in early maturing immune cells as well. and then we'll study markers of activation and even extend that to overall markers of effect or function. So that's the nature of the data that we will be focusing on and kind of gives you a flavor of the kind of data that you can expect to see later this year. Okay, thank you. And then how many patients could we potentially see and could we see, do you think, initial clinical efficacy or is that too early?

34:44 Yeah, so, you know, with 255, it'll be, you know, a subset. As we mentioned, that study is still ongoing dose escalation, so that'll be an early set of cohorts. And in the reveal study, you know, we have the entire dose escalation moving through the identification of the recommended phase two dose, which is being studied now in larger cohorts. So, we'll definitely present all of the data that's available. We presented earlier that we had instances of responses observed in the REVEAL study. We presented that data last year. So we'll continue to build on all of those. But to your point, you know, it's really when we move into the larger cohort that the studies start to enroll, you know, patients with, well, large enough patient cohorts, right, that really zero in on efficacy.

35:34 Thanks for the question, Peter. Great. Great. Thanks, Mitch. Thank you. Our next question comes from Tyler Van Buren from Piper Sandler. Your line is open. Hey, guys. Good afternoon. Congrats on all the progress. I guess I have two questions. The first one is on Propel, the first line non-small cell lung cancer trial combo with PEMBRO. We're going to get initial data potentially year end early next year, and you noted that we could get overall response rate data in 10, 20 patients greater than two scans. So I guess can you just help us understand exactly what PEMBRO monotherapy would show at that time point and therefore what overall response rate with the combo you'd like to see to really be confident in the combo moving forward? And then the second question is just related to the process that you're undergoing to potentially first-time melanoma to move that interim readout from overall response rate to a CR rate interim look, which is, of course, encouraging given the wider delta there. But maybe just I'd like to hear, you know, the argument that you're going to make to the FDA and the regulatory agencies to get that changed.

36:55 Thanks, Tyler. Wei, I'm going to ask you to remind folks of the PROPEL design and the different cohorts that we're looking at. With respect to your Alzheimer's, to help Tyler with his first question, thank you. Okay, sure, absolutely. Yeah, thanks for the question. Yeah, certainly, I think non-small cell lung cancer, even with the recent advancement, still remains a high medical need. I think, so we're building on the standard care of temporal monotherapy, and as you know that non-small cell lung cancer really is segmented into three different populations based on PD-L1 status. You have the 50% above PD-L1 expression and 1 to 49 and less than 1%. And there are different benchmarks in the 50% above and 1 to 49, the response rate single agent is certainly different and that's also different than the less than 1% where that model is not actually approved.

37:55 because we have available these response data of temporal monotherapy, we can evaluate what the added value or potential synergy that the MPEG in combination with Pembrolizumab can bring. And so that is how we're going to really evaluate the data. So with our PROPEL study design, so first of all, we have two parts of the study. There's the optimization cohort and there's the expansion cohort, non-cell-cell lung cancer. and to really address your question, I'll focus on the expansion cohort in non-small cell lung cancer. And in there, we have actually subdivided the groups of patients into enrolling separately patients who are 50% above, 1 to 49, and also less than 1%, conforming with the current kind of the segmentation of use of either PEMBRO monotherapy or PEMBRO plus chemo in these segments.

38:51 and also knowing the different benchmarks. And so that is how we're going to really look at the data. So we'll enroll 20 patients roughly in each of these subgroups for a total of roughly 60 patients. And then based on the response we observe in the 60% and above, in the 1 to 49 and less 1%, and benchmarking against PEMBO monotherapy, that's how we'll make an assessment whether there's additivity or synergy that we can potentially observe with a combination of with pembrolizumab and BAMBAD and a future restoration trial in non-small cell lung cancer entirely based on what we have to observe in each of these subgroups and what population will be ideally enrolled into the future restoration study. So, yeah, so that addresses the how we're going to look at the data in regard to making a restoration decision in non-small cell lung cancer. Jennifer, should I go on and try to answer the melanoma?

39:53 Yes. Could you share a little bit about how we're thinking about the CR endpoint and what sort of things that we're looking at there? Thank you. Sure. Sure, absolutely. ORR historically has always been used as sort of the benchmark for assessing, you know, the primary activity of any drug in oncology. I think, you know, these response rate endpoints are somewhat arbitrary and their strength really lies on how they correlate with progression-free survival and ultimately overall survival. And what really helped us our assessment and certainly is the argument we were making to both FDA as well as ex-U.S. health authorities including EU and other places is really based on and a number of other people who have been involved in the study. And I think it's important to note that this is the first time that we've been able to do this kind of analysis.

40:56 And I think it's important to note that this is the first time that we've been able to do this kind PD-1, PD-L1, or even CTLA-4. Based on all these first-line data they have in their database, they perform meta-analysis, look at the correlation of various response rate endpoints to pre-survival or post-survival. And what they have actually demonstrated in their analysis of nearly 5,000 patients is even beyond just over-response rate, ORR, The depth response, the deeper the response, the stronger the correlation to PFS and over survival. So the correlation to long-term survival is higher for 50% depth response compared to 25% and even higher for patients who achieve 75% shrinkage of tumor compared to 25%.

41:57 And the best patients who did the best are the patients who achieved 100% shrinkage of their tumor. and that is really the strength with which we're proposing a change from OR to CRR because of this stronger correlation with a deeper response. And the highest response or most depth of response we achieve is, of course, a complete response. And this is what we've been seeing with our data generated from Pivot02 for the combination BAM-PEX from the Ebola map. We've achieved a 34% response rate with just a year follow-up and now We have beyond 21 months of follow-up, and that's a number 34% is higher than what NEVO or even NEVO-IPI, which is the best available standard care, have achieved with five years of follow-up.

42:49 They had only a 21% complete response rate with five years follow-up, and this is with a number that continues to evolve and deepen over time, which is very characteristic of immunotherapy. So it is certainly our aspiration and hope that with longer follow-up, that complete response rate will both improve in the PIVO2 cohort and also especially in the restoration study that's actually operationalized by our partner, BMS. So I think this is really, I think the argument we're making with health board use is based on FDA analysis, the death response correlates the strongest with long-term survival and the complete response of all the death response correlates the strongest. And if there's one surrogate endpoint that should be used based on response rate, it should be a CRR endpoint. And with that strong linkage, that should be used for the early assessment recovery approval.

43:47 So that is the argument we're making. Great. Thanks for taking the questions. Sure. Thank you. Our next question comes from Chris Shabitani from . Your line is open. Great. Thanks very much. Two questions, if I may. On 358, can you just remind us, and I apologize if you already mentioned, psoriasis and AD, will we see data on this, and if so, when? Sounds like Lilly has commenced some Phase II in one of those during the year, or that is the plan. and when we see that data, will it just be PKPD similar to lupus or is there a possibility of seeing some early efficacy endpoints as well?

44:34 Thanks, Chris. J.J., I'm going to ask you to take the 358 question. Thanks. Yeah, sure. Hey, Chris. So, yeah, just to clarify, Lilly is running two Phase 1B studies. That one is in psoriasis and the other is in atopic dermatitis. And we mentioned in the call, so when the COVID, you know, pandemic broke out, Lilly's first response was to pause those studies. And, you know, it really made sense. Those are non-oncology studies, for example, so they're really chronic, non-life-threatening diseases. But as we did also mention earlier in the call, those studies have now been restarted and they're enrolling patients. So we would expect that data from those studies will not be presented this year.

45:22 You know, those studies are still in the enrollment phase, but it's reasonable that perhaps at the end of next year, that would be reasonable to see some data from these studies. And then in terms of what kind of data you could see, so these studies are phase 1B, so they definitely have a substantial pharmacokinetics as well as pharmacodynamic component to them. But the other thing that's also present here is there are a lot of biomarkers that have been put in, especially, as you know, Chris, with your familiarity with a lot of skin studies, you know, skin biopsies and punch biopsies are very, very doable. So there's also going to be an assessment of what's happening locally in the skin, for example, with the different keratinocytes, things that are happening within disease lesions, and in particularly looking for infiltration of Tregs that could be very disease-beneficial.

46:15 I hope that answers your question. Yeah, so then how will we determine which one they'll start a phase two trial in in terms of the two indications and will we get a visibility into that decision during 2020? Yeah, so in the deal that we signed with Lilly, you know, a few years ago, in that deal there were four phase two studies. And Lilly very much likes to use the practice of of not announcing what the indications are too early to maintain competitive and other advantages. So the lupus study is announced because that study just kicked off. As we stated, there's a second phase two study that will begin later this year and a different autoimmune indication, not lupus, a different one.

47:03 And as we get closer to the start of that study, I expect Lilly will announce that indication and then there are two more indications that are coming that again will be announced later. And we expect those two studies to begin next year. Great. My quick second follow-up, the current conference calls have tended to be toys, Easter egg moments during Q&A where you give us some sort of a Ben Pegg PIPO2 melanoma update. Did I miss that? Is there anything you can share with us? We're going to save that for SISI, Chris. Okay. Thank you. Thank you. Bye. Thank you. And our next question comes from DeFay Yang from Mizuho.

47:51 Your line is open. Hey, good afternoon, everyone. This is Alex, one for DeFay. I had a question on the bladder cancer setting. I guess I was wondering if you could comment on, you know, how do you see the market opportunity there for Venpeg and where do you see the biggest unmet need given the involving competitive dynamics, competitive landscape there? So, Wei, do you want to answer that question? Sure, yeah, I'd be happy to. So I think over the last year, I think the landscape for first-line metastatic bladder cancer has continued well and will gain some clarity.

48:38 I think, you know, with the success of a value map in that disease setting, we see that maintenance therapy now has been introduced in the bladder cancer in the first-time setting. And then with the failure of PEMBRO in their graduation trial in combination with chemotherapy, I think the combination with chemotherapy, it looks like it won't be the de facto, the dominant standard care in first-line. so it remains really segmented in the sense that you still have disease entities that are classified as cis-plotting eligible and cis-plotting ineligible and the standard here hasn't changed dramatically in the sense that in the cis-plotting ineligible remains to be segmented for IO, for POM positive and POM negative, right? I think what has gained clarity is and probably IO plus chemo, it's not going to be a dominant therapeutic option, unlike say non-small cell lung cancer or in head and neck cancer.

49:43 And it remains fairly open for novel agents that can bring significant benefit to patients in that therapy. So providing that context first, I think the promising treatment that are currently in development certainly include not only our combination of BEMPAD plus Evolumab, but also passive from Saldigenics plus Pembrolizumab. And there's pros and cons with different regimens. I think our regimen is a pure IO regimen that still reserves chemotherapy options for later line of therapy, whereas the passive Pembro combinations is really a combination that passive Well, it's the ADC is effectively a pretty smart chemo backbone. And so, I think, you know, the activity looks like it's higher based on early-phase data, but the safety profile is actually probably worse compared to BAMPAC plus NEVO.

50:49 And so, I think the jurors throughout depends on how they will have early-phase data that we have presented publicly as well as Seattle Genetics and Merck. remain to be seen what the registration trials really delivers in terms of clinical activity. Now, the highest in that need, we still recognize as being the patients who are cisplotin ineligible, and hence not the most powerful and most effective chemotherapy for treating bladder cancer are not available to these patients on the one hand. And on the other hand, The PDR1 negative population, IO therapy is not available to them as first-line therapy. So that's why I think our development strategy is still very relevant at this stage, even with all the evolving treatment landscape, that we still believe the highest in that need remains to be in the patients who are cis-fine eligible and PDR1 negative for that subgroup of population.

51:51 And I think our ratification strategy is still positioning us as a potential and many more. So, we're certainly optimistic that we can replicate what we have seen in PIVOT-02, that we still can bring some value to patients. And I think, you know, the usage in this disease area really ultimately depends on both the safety as well as efficacy delivered by our combination and the combination of Pembroke plus Patsyth. And I think the safety consideration will probably be another key factor. I think there's certainly room for both potentially to have a restoration path and ultimately it's really going to be tailored by the individual physicians based on the need and the health status of bladder cancer patients, many of whom have had the bladder removed and have and a number of other co-mortem conditions that may not allow them to tolerate a fully toxic chemo regimen or treatment options that have sort of a chemo-like toxicity profile.

53:05 Okay, thanks very much for the color. And then just on the PIVOT2, do you guys have any plans to provide an update from PIVOT2 and bladder cancer by any chance before the Phase 3 data? The data we provided today publicly both in public congresses as well as over earnings calls have been pretty mature data. I think for future update we do plan to collate our data from Pivotal 2 including our bladder cancer data in a follow-up publication where we can more fondly and more in greater detail and all the nuances of the data and provide much richer set of data in a publication than can otherwise be presented in a five to ten minute Congress presentation.

54:00 Great. Thanks for taking my questions. Thank you. Our next question comes from George Farmer from BMO Capital Markets. Your line is open. Great. Thanks. This is open on for George. There's two questions, one on 358 and the other on the bedding program. But for 358, as we think about the data coming up, I believe the mild to moderate data and then I think Daisy mentioned the lupus disease activity index for the upcoming trial is going to be six and above. But for this one, it was probably below six. So I'm just trying to figure out here if there's going to be some biomarker data, there's going to be some probably this metric is going to be activity and this is going to be shown. How should we be thinking about what would be a meaningful change, totally understanding that this is not, this was not a trial designed for F50, short duration of treatment and all of that.

54:59 And then the second question on the BEMPEG part was for the BEMPEG Keytruda program, can you remind us again how BEMPEG was able to go higher I believe you guys are dose escalating that higher than what you've done with Altivo. And with that higher dose, is that something that you guys, if you guys expanded into other tumor indications, you would be at this higher dose as well? Thanks. Thanks, Govind. I'm going to ask J.D. to take the first question on 358 and the ACR data that we plan on presenting, and then I'll have Wei take the second one back to the Propel design and the dose escalation component of it. Thanks, Casey. Yeah, thanks, Jennifer. Delvin, very insightful questions.

55:46 So you're absolutely right. The MAD study in 358 was in mild to moderate lupus patients. So there's really a range of baseline disease, including very mild, right, in some cases, because remember the patients are on steroids and, you know, they could be under control. which is in stark contrast to the Phase 2b where all patients will have at least a baseline speed out of six. So those patients are going to be much more advanced and they'll all have clinical presentation of disease which is not the case in the Phase 1b VAT. So the patient population is different and then of course the duration of treatment is very different, right?

56:31 It was a six-week treatment in the Phase 1b whereas it will be a six-month treatment in the Phase 2b. So then given all of those important differences, what are some of the things that you could look for? So when we present additional data from that study, firstly, we'll be presenting the same kind of sort of additional constellation of data that we presented for the single descending dose study in Healthy Volunteers. There's quite a bit more biomarker data. There's quite a bit more FOXP3 and other Treg associated data. as well as potential for some genetic gene expression data as well. So that we presented at ACR last year in the SAD data. So we'll present the same additional biomarkers.

57:16 And then there's one additional set of features, which is that we do have measures of disease activity, anything that we measured. And we measured a range of different endpoints, such as the LIDI scale, the CLASI scale, and so forth. So it is kind of an early study, an early setting. What I really look for that makes me excited is do I see dose-dependent changes? And, you know, you don't expect that under such a short amount of treatment, you know, you would have a very profound setting on the disease course. But if I see dose-dependent changes in a clinically measurable marker, that would make me really excited. and certainly the kinds of information that would make you feel really confident to move into the Phase IIb setting.

58:03 So our aim will be we'll be working with Lilly, and we're going to present many additional features of that setting. So please stay tuned for that. That's also coming up in November, Goldberg. And now what I'll do is I'll turn it over to Yue to talk about the dose escalation and optimization portion of the BEMPEG plus PEMBRO program. Thanks, R.J.C. So that's a really great question about the – so why are we still optimizing the dose when the molecule is already in registration? So first of all, I think it's helpful to remind people that the six micrograms per kilogram dose in combination with nivolumab in registration in several of our programs, it's a very efficacious dose.

58:48 That's the dose on which we have obtained a breakthrough therapy destination from the FDA. and so it's highly active and so it's actually a very good dose and provides an outstanding safety profile where we basically, as far as immune-related AEs are concerned, we observe the same rate of IMAE-senable monotherapy. So that having being said, I think if you took a look at the entire oncology landscape and varieties of tumor types, you kind of can separate into roughly Several different types in regard to the response to PD-L1. Therapy, you have diseases like melanoma and RCC where a PD-L1 biomarker is not needed at all. So monotherapy, PEMBRO and monotherapy MEVO works very, very well because of PD-L1 expression in melanoma.

59:44 And RCC in combination, you do not need a biomarker at all. Now then, on the other hand, you have tumor types. such as non-small cell lung cancer, head and neck cancer, and especially triple negative breast cancer where a biomarker is needed. Now, for both lung and for head and neck, monotherapy only works for a certain cut point or higher of PD-L1 expression. Below that, you really need the boost from chemotherapy. And for triple negative breast cancer, both the PEMBRO and the TEFL data demonstrate even in combination chemotherapy the fetal and negative patients do not derive benefit from the addition of a checkpoint.

1:00:33 So I think in some tumor types you definitely need some additional activity of inflammation to really change the immune status of these tumors. And BEMPEG being a pro-inflammatory cytokine we believe can provide that extra boost , and we have clinical evidence to suggest that, based on PIL-L2, we have in several tumor types have demonstrated the upregulation of PD-L1 and other inflammatory status markers in the tumor after receiving just a single dose of MPEG. Specifically, in our bladder cancer cohort, we had 10 patients from whom we have obtained on-treatment biopsies.

1:01:19 so those patients were dosed with MPEG placebo and then before they received the second dose of MPEG placebo prior to their 21-day follow-up, we obtained another biopsy and that biopsy demonstrated that just a single dose of MPEG were able to turn 10 patients who were previously PD-L1 negative, really PD-L1 expression is zero, to become PD-L1 positive. So that's seven out of 10. So that being the case, We certainly have a lot of motivation to try to tackle diseases that are previously either code to checkpoint monotherapy alone or even in the case of TMBC or even additional chemotherapy not able to really turn this into immunosensitive state. With additional BEM-PEG, I think we certainly are eager to test hypotheses whether BEM-PEG can actually provide that immunoinflammation to make checkpoint widely available. and many more.

1:02:20 So that's our primary motivation. Now, is that possible, right? Is it safe to do that? And we believe it can be done, probably also because of the wealth of data we've generated in all our ongoing programs. As we treat more and more patients and develop improved management guidelines to really manage a lot of the adverse events observed associated with MPEG, especially the cytokine-related toxicity, What we've seen is these are very manageable, and especially with nutrient guidelines, one of which was a dose-limiting toxicity of MPEG, which is hypotension, and very well managed by just proactive hydration during cycle one. And when we implemented that, the rate of hypotension dropped significantly, and then we don't see the high-grade event that we had typically seen and very early dose escalation when we did not have these management guidelines, hydration guidelines in place.

1:03:20 So we actually believe with the current management guidelines, BMPAC has a safety profile for which we can increase the dose even higher and deliver a similar safety profile. On the one hand, on the other hand, produce even more pro-inflammatory activity of our cytokines and perhaps really in combination checkpoints can broaden the activity of a checkpoint to broader population of patients. So those are kind of the two primary motivations, and I think some evidence that we can actually do that. And then if we succeed in giving a higher dose, we can certainly take the combination to some of the tumor types I just highlighted, where PD-L expression is low for a large portion of patients, and the current IO therapy does not demonstrate significant activity in those patients.

1:04:13 Thank you. That's really helpful. Thank you. If I may just have one more on top of that. Does that mean you guys have figured out what the new BEMPEG dose is with this new protocol? And can you share that with us? And so that's still in dose isolation, the optimization cohort, and it's actually active going. And then I think we, so that data will be presented at a future Congress. And so far, So far, we've not identified any DLTs in our ongoing dose isolation, but we'd certainly be happy to share the data at a future congress. Thanks. Great. Thank you. Thank you. Our next question comes from Aidan Hasimov from Benchmark.

1:05:00 Your line is open. Hi, everyone. Thank you for taking my questions, and congrats on the progress this quarter. I have a question regarding PEMPENG adjuvant melanoma study. Is there any accelerated approval kind of survey endpoint just like CR and metastatic just to make this argument for adjuvant melanoma case? And also regarding the enrollment, so I think it was previously 1,100 patients. Could you just clarify the target enrollment at this time? Ray, could you review the study design and address the question? Thanks. Yeah, so for the action study, it's a wonderful question.

1:05:45 I think that's sort of the holy grail. All of us would like to have a surrogate endpoint, allow an early readout for action study, because action study can be very, very long on the one hand, and it requires large portions of patients and it's a huge investment. and then a lot of patients are certainly waiting because that's one area we can provide a cure to a lot of patients. So I think, you know, I'd like to say in the metastatic setting, actually really it's challenging in having a certain amount of data to link up some type of surrogate to either disease-free survival or relapsed-free survival and in melanoma, I think the most promising marker to date is probably some type of therapy in tumor DNA clearance. However, that has not been firmly established yet.

1:06:42 There's not a wealth of data, like I pointed out, with the FDA meta-analysis where they have connected the depth response with long-term survival. There has not been a wealth of data of a lot of patients tested with ccDNA. in a completed retreation study and link the clearance of ctDNA, say, with either DFS or RFS. So with that lacking, I think the health-worthy feedback, and I've certainly attended a number of workshops on this, and I think that's FDA-made clear in one of the workshops that that is the kind of data they're looking for to really establish a marker such as ctDNA clearance as a potential surrogate for federal approval, right? So that's sort of what has not been, what's the missing piece in terms of registration for action setting.

1:07:40 Now, whether that data will emerge between now and the completion of our melanoma study in action setting, I think that yet to be seen. If such a data were to emerge and FDA feel confidence about that data, that would certainly allow them to provide open up using, say, for instance, the ccDNA as a surrogate to allow an early approval in the actual study followed by delivery of the DFS or RFS in that setting. Thank you. Thank you. Yeah, absolutely. And for the target enrollment for this study, Oh, it's targeting Roman Ott. Yeah, go ahead. Yeah, I was just going to say, he's saying the difference in the 950 and 1100 would be landed on 950 for the final protocol.

1:08:30 Thanks. Yeah. Is that what you were asking, just the numbers? Yeah, yeah, yeah, just the tutors. Yeah, thanks. Thank you. Great. The next question comes from Jay Olson from Oppenheimer. Your line is open. Oh, hey, guys. Congrats on the progress, and thanks for taking my questions. I had a question about 358, and I was wondering if you could comment on Amgen's recent decision to discontinue development of their IL-2 mutine in RA and focus on GI autoimmune disorders.

1:09:15 Is there something... about IL-2 that makes it particularly effective in the GI tract, and would you consider developing 358 for any GI indications? Susie, I'm going to ask you to take that one. Thanks. Sure. Yeah. So, yeah, definitely we noted that AMG-592, you know, through clinical trials like that where they announced some modifications to that study. Remember, that study has been really ongoing for a very long time, right? Yeah. They never really reported on the 1B portion, and they moved into the expansion in lupus, and then the RA part of that went away. For me, from my standpoint scientifically, you wouldn't say that Tregs are not appropriate for study in RA. There's definitely some scientific rationale for that.

1:10:10 I would just probably guess that they were focusing on other indications. Now, we do know some data from the study that's going on in Europe called TransReg. This is a study that was run by David Klatsman, where he used low-dose IL-2, where, as you know, you can get a small amount of Treg induction using some kind of high-frequency dose administration regimens, no more than doubling or tripling the cells over baselines. But in that study, 12 different autoimmune disease indications were explored. And it was noted that some of the GI indications, such as ulcerative colitis and Crohn's disease, have a propensity.

1:10:55 And scientifically, that makes a lot of sense, Jay, because we know that Tregs play an important role in the GI tract. They actually help control some of the mucosal immunology that happens, you know, in between all the microbes on one side of the gut and all of the immune cells on the other side of the gut, and especially in areas like the Peyer's patch and other parts of immunological structures. So it definitely makes a lot of sense, you know, to focus on GI indications. And, of course, Amgen is continuing to focus on lupus. which has been the ongoing part of their ongoing clinical trial up to date. Great. Thank you for that comprehensive overview. That's super helpful. Appreciate you taking the question.

1:11:44 Sure. Thanks, Jay. Thank you. Our next question comes from Paul Choi from Goldman Sachs. Your line is open. Hi. This is Corinne Jenkins on for Paul. I was just hoping you could talk a little bit more about how you think about a registrational study in non-cell cell lung cancer and what the catalyst path will look like post that initial data from Propel later this year or early next. Thanks, Corinne. Wei, I'm going to ask you to help Corinne with that question. Thanks. Sure. Absolutely. So as I discussed earlier, the current Propel study really has three sub-studies in the expansion cohort.

1:12:29 It includes around 20 patients who are PD-L1 positive, 5% above, and then another 18 or 20 patients in the 1 to 49 group, and then the less than 1% also has another 20 patients. And we're really looking for both a response rate as well as depth response and viability response in each of these subgroups. Now, the benchmark number for PEMBRO, each of these subgroups are well-known and those who are publicly available. So we can easily benchmark, and the study is designed, our analysis plan is designed to benchmark against these numbers. And it's really going to be based on these comparisons to the historic numbers that we're going to make an assessment where our combinations deliver the greatest value, whether it's in the 50% above patients making an already inflamed tumor even more inflamed and bringing out the activity of Pembro-Mono to even a higher level and then even potentially longer durability.

1:13:34 Whereas in the 1% to 49% where Pembro-Mono seem to have comparable, provide comparable survival benefit to just platinum-double chemotherapy but does not provide any superiority to existing chemotherapy. But safety-wise, that's actually superior. So that's another area. I think really high potential for a cytokine-based drug like BAMPEG to really add a lot of substantial value by inflaming a tumor that's only low to moderately inflamed. And then obviously there's still the patients who have basically effectively PD-L negative, less than 1%. And those patients' monotherapy does not work. It's inferior to available chemotherapy.

1:14:21 And for those patients, typically, The standard care today is chemo plus pembrolizumab or chemo plus atezolizumab. And so that obviously does deliver clinical benefit, but really has the added toxicity of the combination of chemotherapy. And I think what patients and their doctors are looking for is a chemo-free regimen that can provide similarly even superior benefit to what chemo plus a checkpoint can really deliver. And so these are really almost three different subgroups for which we're going to have independent decisions made. And the phase three trials are going to really be based on what the observed activity and durability of our responses and the depth response that we can see in the PROPEL study.

1:15:17 Great, thank you. And then separately, can you talk about how you landed on the solid tumor indications you're looking at with Nectar 255? What's the rationale for an IL-15 in head and neck and colorectal cancer? And are there any other indications where IL-15 really makes sense in your view? Yeah. I think that the selection of those two tumor types are based on a couple considerations. I think, you know, the now IL-15 really act on two different cell populations among others in terms of therapeutic benefit. One is the FKG cell population and the other is the NK cell population. And apparently the solid tumor study is really leveraging or focusing in trying to harness the NK activity of our 255 molecule.

1:16:11 So the NK cells are instrumental for delivering the ADCC activity of monoclonal antibodies, which is the backbone of many of the transstandard care in oncology. And when we look at the entire treatment landscape in solid tumor and where you have benefit offered by monoclonal therapy, we were looking for tumor types and also drug combinations that can still have potential room for improvement and can provide a proof of concept after which they can expand the utility of 255 into many other solid tumor types because there are many other monoclonal antibodies that are in use in solid tumor in addition to such as Tepsmat which is the backbone we're adding onto here. I think head, neck and colorectal cancer offer a couple advantages as that first initial proof of concept because You know, as monotherapy, the Sus-Taximab alone delivered a response rate in the 10 to 15% range.

1:17:21 So, it is active. The way that single-agent chemotherapy is active, but it's not so active that, you know, that's very hard to improve upon. And so, that provides sort of an ideal platform for demonstrating and providing that proof of concept where there's still substantial room for improvement and agents like 255 that can significantly expand the NK cell population and really grow the army upon which these monoclonal antibodies really rely on in executing the cell killing of these monoclonal antibodies. I think we can probably have the opportunity to see the greatest signal and provide really a strong proof of concept by selecting Cetuximab in head, neck, and colorectal cancer. So that's where they sort of the clinical and biological consideration. And the other element is both of these tumor types have substantial populations, right, and where the EGFR monoclonal antibody, like Cetuximab, has really, really broad use as part of the strong standard care. basically every patient who has access to these antibodies always get a subtoxamab as part of their standard care treatment.

1:18:46 And colorectal cancer patients, as long as they're a KRAS wild type, they invariably either first line or second line receive a HFR monoclonal antibody. So the patient population and the opportunity is fairly large if we can demonstrate that proof of concept and their clear registration path to go forward. And if we are able to demonstrate chronical efficacy in these two tumor types, then I think we have substantial proof of concept with one monoclonal antibody over two different tumor types. That provides really a strength to our data. And also, the only 10% to 15% baseline response rate give us Thank you.

1:19:31 And again, ladies and gentlemen, to ask a question, please press star and then 1 now. And our next question comes from Dana Graybosh from SVB Limerick. Your line is open. Great, thank you. Two questions for me, one two-part and one one-part. The two-part one on Neftar 358, Lilly is pretty excited about lupus, and they have multiple agents in the clinic for lupus, including their JAK and a BKLA inhibitor. And I wonder how you think Lilly's thinking about their portfolio, if they're going to take them all forward or pick one.

1:20:26 And then sort of the second part to that, Lupus has been a really hard place to do clinical trials, and I wonder if you can talk about why that is and what about your design is going to help you avoid those pitfalls in the past. And then one small question on Nectar 262. I wonder in the biomarkers you've seen thus far and that we'll see in the fall if you're going to tease out the relative contribution of TLR7 and TLR8 agonism. Great. JV, do you mind taking the three questions? Sure. Yeah. So, okay. So, hey, Dana. Thanks for the question. So, let's start off. You asked questions about Lilly's lupus portfolio. Yeah, they have multiple agents, small and large molecule there, you know, Barry as well as BTLA. And basically, those agents, right, as you know, they're targeting activation immunological mechanisms, right?

1:21:23 So, JAK inhibitor is blocking signaling. through any JAK-STAT mediated pathway, so primarily in the cytokine-driven way. And then DTLA is also blocking one of the co-stimulatory, co-adapter kinds of molecules. So one of the reasons why Lilly places so much excitement and importance around the 358 program is because that's what we call a resolution therapeutic. And so conceptually, it's targeting a different and others. They're blocking mechanisms of activation of immunological pathways and inflammatory pathways, whether they're triggered by release of, say, RNA from dying cells, you know, triggering events, or other kinds of systemic chronic inflammation. But the T-RAG mechanism is actually aiming to activate the body's natural immune restoration or homeostatic or immune-resolving pathway. So it's really a different arm and a different approach, right, for targeting these kinds of diseases.

1:22:38 And one important component of that is it also does even if you really have a long view in mind, which you do if you're building, you know, say a pipeline of multiple agents targeting lupus. You also start to envision having the opportunity for combinations. And if you have a drug that, say, blocks activation and, say, another drug that stimulates resolution, now you're starting to talk about a really rational, scientifically driven, you know, kinds of approach to treating these diseases. And traditionally, you know, it's been difficult to stack, you know, agents that block activation as they have a lot of overlapping toxicity profiles. But, again, that's not the case if you have a resolution therapeutic. So that's one of the ways that I think Lilly is really eyeing their long-term vision in autoimmune disease and really in building an industry-leading pipeline in lupus and in other indications.

1:23:35 And the next question was about sort of the concept of doing lupus trials. And I think that historically we've sort of walked away with the understanding and notion that it's just very hard to develop in this field and that notion was driven by a couple of things like the kind of heterogeneity of the patient population and then the fact that there wasn't a clear-cut instrument to measure the disease. While there is Selenus, Sleedi and Biklam bilag, there are other measures that you see coming in more recently, for example, with anaphylumab that have started to help clarify some of that. So I think that's one of the pitfalls and then the other, is that I think we haven't seen very strong mechanisms, mechanisms that can be measured on top of the standard of care steroids that the patients are getting. So we've addressed that in a couple of ways.

1:24:32 One of the ways is we're including all of the possible endpoints to measure the disease. So while the primary is based on 3Di2K reduction, the secondaries, as you know, include , as well as SRI-4, and even other low disease activity scoring systems. So those are really addressing all of the different ways that rheumatologists address and measure the disease. We're also trying to clarify the patient population, you know, by really zeroing in on patients with the right kind of severe disease, all of them stratified to at least having active disease. And then, of course, we're also allowing the opportunity to taper sterile use throughout the study. And then the last point for us is that one of the sort of hallmarks of lupus, particularly severe lupus, is a well-documented dysfunction of the IL-2 compartment.

1:25:26 And that manifests itself both in terms of not just low cytokine levels, but also in a reduction in Treg numbers and really also a reduction in Treg suppressive capacity. And that's often, as you know, balanced by an over kind of a Abundance or an increase in the amount of TH17 cells that you see in these patients. And so what we are really also addressing is I think really an underlying disease pathology, also by targeting the disease with NEXRA 358. So we're very hopeful that with this design and with this mechanism that we'll have the opportunity to see activity of NEXRA 358 in the Phase IIb study. And we're obviously very excited as is really that the study is now underway.

1:26:14 The next question you asked was about Nectar 262 and if in our biomarker program we'll zero in and look for signs of target engagement for both TLR7 and TLR8 as well as difference between those. And, you know, it's a very insightful question because, you know, the base drug that we conjugated to the polymer is riziclomide, right? And so that's a dual TLR7-8 agonist. And so we do have the opportunity using gene expression with various mRNA networks to focus in on networks that are more TLR7 and more TLR8 related. In addition, as you know, certain cell types have more or less than one or the other. In particular, if you consider things like plasmacytoid dendritic cells, right, those are TLR8 specific and TLR8 only.

1:27:09 They don't even express TLR7. So the biomarker program that we've put in, which includes all of the deep biopsy analysis, it includes cellular composition analysis in the biopsies as well as the gene networks. And so our aim is very much to demonstrate that when we say we're engaging a target, we can say it's TLR7, TLR8, or both, or either one or the other. Thanks for the question, Dana. Great. Thank you. Thank you. And that does conclude our question and answer session for today's conference. I'd like to turn the conference back over to Howard Robin for any closing remarks. Well, thank you, everyone, for joining us today.

1:27:54 I'd like to thank our employees for their hard work and commitment during these very difficult times for business in general. We're very proud of how our employees have worked tirelessly to advance our clinical studies, keep our business on track, and navigate this environment with both optimism and perseverance. We're fortunate and proud that Nectar has built a highly valuable pipeline of programs in immunology that address significant areas of unmet medical need in solid and liquid tumors across many potential treatment indications and across multiple autoimmune and chronic inflammatory disease states. And as I stated earlier, we're in a unique position of financial strength with a robust balance sheet with $1.2 billion of cash and no debt. This enables us to continue our important work on advancing potential new medicines that can transform patient care. And we thank you all for your support as shareholders.

1:28:47 We look forward to continuing to provide you with updates on our progress. And we also wish you and your families safety and health during this time. So thank you for joining us today. Appreciate it. Ladies and gentlemen, thank you for participating in today's conference. This just concludes the program. You may all disconnect. Everyone, have a wonderful day.