Nektar Therapeutics (NKTR) 2018 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Nektar Therapeutics Q1 2018 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, Ms. Jennifer Ruddock, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Crystal. Good afternoon, and thank you to everyone for joining us this afternoon. With us today are Howard Robin, our President and CEO; Gil Labrucherie, our Chief Financial Officer; Dr. Steve Doberstein, our Chief R&D Officer; Dr. Jonathan Zalevsky, our Chief Scientific Officer; and Dr. Mary Tagliaferri, our Chief Medical Officer.

Several members of our team are joining from different locations. So we ask for your patience today during Q&A, if there is any lag in responding.

On this call, we expect to make forward-looking statements regarding our business, including the timing of future clinical trials and clinical trial results, clinical development plans, regulatory plans, the economic potential of our collaboration partnerships, the therapeutic potential of certain drugs and drug candidates as well as those of our partners, our financial guidance for 2018 and certain other statements regarding the future of our business.

Because 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. Important risks and uncertainties are set forth in the Form 10-Q we filed earlier today, which is available at sec.gov.

We undertake no obligation to update any forward-looking statements whether as a result of new information, future developments or otherwise.

A webcast of this call will be available on the IR page at Nektar's website at nektar.com.

With that, I will now turn the call over to Howard. Howard?

Thank you, Jennifer, and thank you to everyone for joining us today for our first quarter 2018 conference call. On today's call, we will review our achievements since the beginning of this year for Nektar's pipeline and our planned milestones over the next 12 months, including our submission of an NDA for NKTR-181, which will occur this month and the continued advancement of our I-O portfolio with NKTR-214 entering Phase III trials and NKTR-262 now being evaluated in the recently initiated REVEAL study as well as our progress with our immunology program, NKTR-358.

We will also update our financial guidance for 2018, incorporating the upfront payments we received in the Bristol-Myers Squibb collaboration, which recently closed.

Already this year-to-date, we have achieved multiple successes with our pipeline of Nektar-invented medicines across 3 therapeutic areas: Immuno-oncology, immunology and pain.

In the area of chronic pain, we will submit the NDA for NKTR-181 to the FDA this month. I'd like to acknowledge the incredible efforts of the team here at Nektar, as they've done a tremendous job over the last several months with both our FDA interactions and the preparation of the NDA incorporating FDA guidance.

In immuno-oncology, we remain focused on our strategy to develop a full pipeline of new potential medicines that address the key components of the immune cycle in order to restore immune surveillance and properly harness the body's immune system to fight cancer.

Our new BMS collaboration, which became effective in April, provides a platform for us to develop our lead I-O candidate, NKTR-214, broadly and rapidly with over 20 registrational trials in 9 tumor types. We believe this will also allow us to achieve our goal of establishing NKTR-214 as a backbone of cancer care across multiple indications. I'll talk more about this progress of this program in a moment.

And in immunology, as you saw, we announced this week, we have now advance NKTR-358 into patients with the initiation of a Phase Ib multiple ascending dose trial being conducted in lupus patients.

So 2018 is off to a great start, and I'm very proud of our employees for their efforts in executing on our strategy.

So first, let's review NKTR-181. As you know, our highly productive interactions and pre-NDA meetings with the agency led to assembly of our NDA package, which includes an extensive amount of efficacy and safety data in over 2,100 patients and healthy subjects. As I said earlier, we will submit the NDA this month. We incorporated the clear and collaborative guidance given to us by the FDA into our NDA submission. We believe that NKTR-181 is emerging at the right time to offer patients suffering from chronic pain an accessible and important potential new therapy, while also helping to address the current opioid public health emergency. Our mission with NKTR-181 from its invention was to provide pain relief to patients without the high risks of abuse and addiction found with today's opioid drugs.

As the first new full mu-opioid agonist molecule to be developed in over 50 years, NKTR-181's unique inherent properties position the drug to not only help stem the rate of new addiction to conventional opioids, but also to reduce diversion of prescription pain medicines for abuse.

NKTR-181 is not only an important therapy for patients, but is a major building block in the fight against opioid addiction in our country. We remain highly focused on finding the best way to bring this important new medicine to patients quickly following approval.

Because of NKTR-181's significant potential and the current financial strength of our company, our focus is to no -- is no longer on near term economics for NKTR-181, but rather to retain as much back-end value as possible. As such, we are evaluating several strategic structural alternatives for the commercialization of NKTR-181, one of which is to establish a separate majority-owned subsidiary with one or more partners to launch this important molecule. This approach is consistent with our strategy to focus our efforts and resources on the development of Nektar's immuno-oncology and immunology pipeline, while maximizing the value of NKTR-181 for our shareholders.

Now let's talk about NKTR-214. As you know, we recently entered into a transformative collaboration with Bristol-Myers Squibb. Nektar and Bristol-Myers Squibb have already begun planning the most important next steps in the joint clinical development program for NKTR-214. The intent of the broad clinical development program is to advance this potential combination regimen in I-O to as many patients as possible as quickly as possible. To that end, we are extremely pleased that we are planning to start our first Phase III trials for NKTR-214 with Opdivo in the third quarter of this year. The first 2 trials will be in first-line melanoma and first-line renal cell carcinoma, and we plan to share the preliminary trial designs at this year's ASCO meeting.

Beyond renal cell carcinoma and melanoma, one of our top priorities is this -- in the second half of 2018, will also be to design and launch our first registrational trials in lung cancer. BMS and Nektar are highly focused on a multipronged approach for NKTR-214 plus Opdivo in lung cancer, which envisions multiple registrational trials in different patient populations. Under the framework of this new collaboration, Bristol-Myers Squibb and Nektar are planning over 20 registrational-enabling trials that will enroll approximately 15,000 patients in 9 tumor types.

We were extremely pleased that the abstract from the PIVOT trial was accepted for oral presentation during the Developmental Therapeutics Immunotherapy session at ASCO. As you know, with an ongoing trial, the acceptance of an abstract is more difficult. And so we were delighted that the committee chose our abstract for an oral presentation. The abstract includes preliminary data from both escalation and expansion stages of PIVOT based on the database cut from early February. As this is an ongoing study, we plan to present our updated and new data at the meeting, which is consistent with how we presented ongoing data in the past, including at last year's SITC presentation. We will also host a webcast IR event on Saturday evening, following the oral presentation, which will include an expanded discussion of the preliminary updated data from PIVOT as well as a panel with 3 of our investigators. The panel will include: Lung oncologist, Dr. Scott Gettinger from Yale; melanoma specialist, Dr. Adi Diab from MD Anderson, who will present at the oral session; and Dr. Nizar Tannir, who is a renal cell and bladder cancer specialist, also from MD Anderson. We look forward to seeing many of you in Chicago for this event.

In addition to our notable oral presentation, there are a number of other preclinical presentations for NKTR-214 with additional mechanisms of action beyond checkpoint inhibition, which will also be showcased at ASCO. This includes our first presentation of preclinical data for NKTR-214 with Takeda's compound TAK-659 in preclinical models of both liquid and solid tumors.

As you know, we just initiated a new clinical collaboration with Takeda, which includes a Phase I study evaluating the combination of NKTR-214 with TAK-659 in patients with non-Hodgkin's lymphoma. The study will start in the second half of this year. We're extremely excited about the possibilities of evaluating NKTR-214 for the first time in a liquid tumor setting. I'll let Jonathan talk about the unique synergies of the combination of these two I-O mechanisms in a moment as well as other preclinical presentations planned for ASCO.

Following the signing of Bristol-Myers Squibb collaboration, we are now in an exceptionally strong financial position, which allows us to execute on our vision for Nektar's portfolio in immuno-oncology.

Our pipeline of I-O candidates beyond NKTR-214 includes: NKTR-262, a TLR7/8 agonist; and NKTR-255, an IL-15 candidate, which can simulate both NK cells and memory T cells.

In April, we dosed the first patient in the REVEAL trial, which is evaluating a combination of NKTR-262 with NKTR-214. The trial is enrolling up to 400 patients with 8 different tumor types in first and second line settings as well as refractory settings. The first stage of the trial is assessing the doublet of NKTR-262 and NKTR-214. Following that, the second stage of the trial will have the option to evaluate a triplet of NKTR-262 and NKTR-214 plus Opdivo. We expect to have initial early data from some of the first patients in the trial sometime in the fourth quarter of this year.

Now let me give you an update on the advancement of NKTR-358 with our partner Eli Lilly. As we've stated in the past, the initial data from our ongoing first-in-human Phase I trial of NKTR-358 in healthy volunteers has shown dose-dependent increases in T regulatory cell levels with no increase in conventional T cells or NK cells. This is comparable to what we saw in our nonhuman primate models, and we are extremely pleased that this mechanism has now been confirmed in humans.

This week, we announced that we have now dosed our first patients in the Phase Ib multiple ascending dose trial in patients with lupus, and Jonathan will discuss this more in a moment. This program continues to advance quickly, and we expect initial data from the lupus study sometime in the second half of next year. We are very excited about the potential of NKTR-358 as a resolution therapeutic to bring a new paradigm to the treatment of autoimmune diseases and chronic inflammatory indications.

And with that, I'm going to turn the call over to Jonathan.

Thanks, Howard. I'll spend some time talking about the science behind combining NKTR-214 with other mechanisms beyond checkpoint inhibition and why we are so excited about this. And then, I'll cover the trial that Nektar and Lilly just initiated with NKTR-358.

As Howard stated earlier, NKTR-214 is a broad-based immune mechanism that we intend to establish as a keystone therapeutic in I-O. And in this capacity, there are many scientifically driven ways to combine NKTR-214 with other agents that have complementary and non-overlapping mechanisms in order to unlock the full potential of cancer immunotherapy. And in this regard, our approach is to go where the science leads us and think broadly to incorporate combinatorial mechanisms, expanding beyond checkpoint inhibition.

In March of this year, we began the REVEAL clinical trial, which evaluates the combination of NKTR-214 with our polymer conjugated intratumoral TLR7/8 agonist, NKTR-262.

NKTR-262 was designed expressly to be used in combination with NKTR-214. As a TLR7/8 agonist, NKTR-262 targets the innate immune system, and when combined with NKTR-214, which targets the adaptive immune system, this combination engages the same biological pathways that our immune system uses to fight infections, except in this case we use infrequent injection of NKTR-262 into 1 or 2 tumor lesions to educate the immune system, and NKTR-214 to expand and propagate the educated immune system response throughout the entire body to target all tumor lesions, even ones not injected with NKTR-262. We call this an abscopal immune response, and we routinely see this in preclinical tumor models using NKTR-262 and NKTR-214.

At AACR last month, we presented preclinical data showing the efficacy of this combination in multiple mouse and genetic tumor models. And in addition, we showed deep mechanism of action data demonstrating how the individual agents, NKTR-262 and NKTR-214, work together to engage the innate and adaptive arms of the immune system, control the maturation and function of the underlying myeloid and lymphoid cell populations and their modification of systemic immunology to drive an abscopal antitumor response.

We are very excited that the REVEAL trial is underway, and have designed the trial to include a robust biomarker program predicated on the translation of a unique mechanism of action of this combination.

In April of this year, we announced a new clinical collaboration with Takeda to evaluate NKTR-214 with Takeda's dual SYK/FLT inhibitor known as TAK-659 for the treatment of liquid and solid tumors. TAK-659 is a clinical stage compound developed by Takeda that has already shown clinical activity in non-Hodgkin's lymphoma.

In preclinical mouse tumor models, TAK-659 has shown to reduce the levels of myeloid-derived suppressor cells and increase the levels of proinflammatory M1 macrophages in the tumor microenvironment. Since NKTR-214 does not target these myeloid cell populations, it provides a unique non-overlapping and highly complementary mechanism to TAK-659.

At ASCO, next month, we will present our first preclinical data evaluating this combination in multiple mouse tumor lines, modeling both liquid and solid tumors. We are very excited to advance NKTR-214 into the liquid tumor setting, and our first clinical study will evaluate the combination of NKTR-214 plus TAK-659 in Hodgkin's and non-Hodgkin's lymphoma and the trial will begin later this year.

Additionally, we are conducting preclinical research in the syngeneic mouse tumor models evaluating doublet combinations of NKTR-214 with a PARP inhibitor and with a dipeptidyl peptidase, or DPP, a FAB inhibitor as well as in tumor models with neoantigen-based vaccines in order to explore a patient's specific personalized cancer vaccine strategy.

In all cases, we believe to have a strong scientific rationale for the combination that is both specific to the individual combination partners and the tumor selection for the intended use of each combination. The emerging data are very encouraging and some of this, as Howard mentioned, will also be presented at ASCO next month. And as we move forward with the development program for NKTR-214, we will prioritize which of these mechanisms we could advance into the clinic.

And I'd like to now expand on Howard's discussion of NKTR-358 and review the clinical trial we just started in lupus patients. As Howard said, NKTR-358 is a notable program for Nektar as it has great potential in a number of autoimmune disease states. It provides further evidence of our ability to optimize cytokine biology and use our core chemistry to control ligand receptor interactions to create potential new breakthrough medicines. This expertise is now well recognized by our large pharmaceutical partners, such as Bristol and Takeda, for NKTR-214 and, of course, with Lilly for NKTR-358.

Our collaboration with Lilly is now focused on the comprehensive development of NKTR-358. As you know, Nektar is responsible for all activities up to the end of Phase I, and then Lilly will take the lead from Phase II onwards. We've observed promising biomarker results in our ongoing Phase Ia study of NKTR-358, which is a single ascending dose-escalation trial in healthy volunteers. This trial evaluated safety, tolerability and mechanism-based immunological biomarkers associated with the pharmacodynamics of NKTR-358. We have now dose escalated several times and the trial is progressing very well. So far to date, we have observed dose-dependent increases in Treg levels, with no increases in conventional T cells or NK cells. And in fact, as Howard stated, the results in healthy volunteers track very well with the preclinical studies we conducted in monkeys.

And earlier this week, we dosed the first patients in the Phase Ib trial with NKTR-358, which is a multiple ascending dose-escalation study in patients with systemic lupus erythematosus, also known as lupus. In this study, our objective is to evaluate the safety, pharmacokinetics, pharmacodynamics, changes in disease-specific biomarkers and any clinical signs of activity in patients treated with repeat dose administrations of NKTR-358. The PD markers will include evaluation of Tregs, T conventional cells, the Th17 to Treg ratios, B cells and memory B cell levels, NK cells as well as disease-specific serum biomarkers, including anti-double stranded DNA antibodies and complement. We will measure clinical response using the SLE disease activity index. This study will inform the dose levels and design the Phase II studies that our partner Lilly will run in several different autoimmune diseases indications.

And with that, I'd like to hand the call to Gil.

Thank you, Jonathan, and good afternoon, everyone. I will start with a brief review of Nektar's first quarter 2018 financial results, and then I will give an update to our annual financial guidance.

We ended the first quarter of 2018 with $333.8 million of cash and investments, which does not include the payments from Bristol-Myers Squibb for the strategic collaboration transaction that closed on April 3, 2018.

At the closing, we received $1.85 billion from BMS comprised of $1 billion upfront payment and an $850 million premium equity investment. We still expect to end the year with a cash position of approximately $1.9 billion to $1.925 billion. For the first quarter, our revenue and expense line items were consistent with the annual guidance we gave on our year-end call.

Now let's turn to our 2018 financial guidance. Our annual financial guidance remains largely unchanged. We have completed the revenue recognition analysis and our independent auditors are in the process of completing their audit procedures for the BMS collaboration payments that will be accounted for in the second quarter ending June 30, 2018.

We now expect to recognize substantially all of the $1 billion upfront payment as revenue in the second quarter. As a result, we are raising our full year guidance to approximately $1.1 billion. Our full year revenue guidance outside of the payments from the BMS collaboration is unchanged at $100 million to $110 million, and we expect the remaining revenue to be recognized ratably over the remaining quarters of 2018.

We continue to project 2018 GAAP R&D expense to range between $400 million and $425 million, which includes approximately $67 million of noncash depreciation and stock compensation expense. We now anticipate G&A expense for 2018 to be between $70 million and $75 million, which includes $28 million to $32 million of noncash depreciation and stock compensation expense. As I stated earlier, we plan to end 2018 with approximately $1.9 billion to $1.925 billion in cash and investments.

With that, I'll open the call for questions. Operator?

(Operator Instructions) And our first question comes from Chris Shibutani from Cowen.

And Gil, that's a pretty healthy balance sheet you have there. Lots of interesting things I'm sure you guys can do. With the Bristol deal that you announced, we've certainly been looking forward to and hearing a lot about PIVOT. One of the other partnership programs, obviously, that you've also had with 214 was PROPEL. Can you give us a sense for are there any implications of the Bristol deal to PROPEL? And will we be learning anything, in particular, at ASCO from those combination studies or partnerships?

Chris, this is Mary Tagliaferri. Thank you for asking the question. Recall that the PROPEL study is not a partnership with any external party. This is fully run and sponsored by Nektar. And as you know, we're enrolling patients with NKTR-214 plus atezolizumab and those patients are patients who have first or second-line bladder cancer or second-line non-small cell lung cancer. And then in addition, we're combining NKTR-214 plus pembrolizumab in patients who have first-line melanoma and patients who have non-small cell lung cancer and those patients would be first-line patients who have PD-L1 greater than 50% or second-line non-small cell lung cancer patients or, again, bladder cancer patients. We are actively enrolling those patients. We are not presenting data at ASCO this year, but we have said in the second half of this year that we would have data to share on the PROPEL study.

And then one thing that's often debated amongst investors is, what your process is for the central adjudication of responses? Can you just clarify what your processes is there? And in particular, how -- when do we see that type of data? When do your partners see that on the central adjudication front? That would be helpful to clarify.

Chris, per our protocol, our primary efficacy endpoint in both the PROPEL study and the PIVOT-02 study is an investigator-assessed objective response rate, and that's obviously the most common approach in terms of Phase I and Phase II studies. We also, in addition, have an independent radiology group called BioClinica that also reviews all of the patients, who have been enrolled to PIVOT-02 and does an evaluation as well. If we were to move forward with an accelerated approval pathway for any of the relapsed/refractory patient populations, obviously the FDA would ask for both the investigator-assessed objective response rate as well as the data from the independent radiology.

Great. And then finally on lung, can you remind us what we should expect in terms of numbers of patients that we will see from lung cohorts from PIVOT at ASCO?

Thanks, Chris. Well, first, I want to share with everybody that we were very honored to be selected as an oral presentation at ASCO. This year, there were over 6,400 abstracts submitted. So selection for podium time at ASCO is truly a distinction. And we shared we will have at least 100 patients who are I-O naïve that we're going to be presenting at ASCO. And given the clinical safety and efficacy data that we presented at SITC and, of course, the investigators that were already enrolling to the trial, accrual to the renal cell carcinoma and melanoma cohorts occurred more briskly. So therefore, at ASCO, we'll have the largest proportion of data for patients who have both first-line melanoma and first-line RCC and are stage IV disease. We're also going to have a handful of data for patients in lung cancer and triple-negative breast cancer. And as those investigators came on after our GU and melanoma oncologists, we'll have fewer patients in those populations. I also want to let you know that the abstract will be available next week and the data cut for our abstract was in early February, although we will be providing a more current update with data plans to be presented at ASCO. So the other thing that's very important to understand, Chris, is that when we present the PIVOT-02 data at ASCO, they're going to be a number of patients who have only had one post-treatment scan. And as you know, in our dose escalation data set, we see patients having a deepening of response over time and an increase in the number of patients who respond as they stay on treatment. And of course, we've shared many times that patients are able to tolerate treatment and continue on the doublet because the treatment regimen is very well tolerated. So we'll clearly point out to you the studies -- the patients who have been on study longer and those patients who have had one scan and more than one scan. And so I just want to say, we're really looking forward to seeing you and everyone on this call at our ASCO presentation, and that's going to take place on Saturday, June 2, in the Developmental Therapeutics session between 3:00 p.m. and 6:00 p.m.

And our next question comes from Jessica Fye from JP Morgan.

Lung has been such a big focus, and I realize we have only seen 5 patients worth of data so far, and I recognize that the lung cohort we get at ASCO might be less mature and smaller numbers than the RCC and melanoma group. But can you just kind of set the stage a little bit for what we should and should not expect to learn from the lung updates at ASCO? And beyond the data itself, I'd be curious to hear now that the dust has settled a little bit and there's been maybe some more time to digest the 189 data, kind of what your latest thinking is on best strategies in areas to move forward and within lung cancer?

Great, Jessica. Thank you for asking that question. So mostly the non-small cell lung cancer patients that will be presented will be the second-line I-O naïve post-chemotherapy. That being said, we also will be presenting some case studies of other lung cancer patients in both the first line and the relapsed/refractory population so we can provide you with a more broad understanding of the fact that we see with NKTR-214 placebo in lung cancer, and ideas of patient populations where we will be moving forward to and moving forward in those patient populations in our Phase III clinical development plan. Remember, again, I have to emphasize that I -- what I just told Chris, but I want to tell you, too, Jessica, most of these patients are going to be on study with one scan. And so we do -- again, I want to emphasize that we see our efficacy data mature over time, and so we will have to provide you with the information about those patients who have been on study longer and those patients who have only had one scan. Likewise, we will provide an update for those patients who were enrolled to the dose escalation, and we'll let you know how the patient with the complete response and the 2 patients that we previously reported to you that had partial response that were treated in the second-line non-small cell lung cancer setting.

Okay, thanks. Appreciate that. And then can you also just clear the air and talk about the recent management stock sales? I completely realize that share appreciation has been meaningful, but the optics aren't great. So I wanted to give you the forum to address those investor questions.

Sure, Jessica, I'm happy to address it. I think, look, you -- all the management stock sales have been done under plans that were put in place some time ago. And for the most part, the sales of shares that you see are just a small percentage of the ownership of the management team and, quite frankly, are generally within a year of expiration. Now I think if you look at -- I always look at this myself because I think it's a very important question to ask, and I certainly know the investors are looking at this carefully, but if you look at the ownership and shares of the senior management team at Nektar, they probably still own 80% of their vested shares and they haven't been selling those. So if you come upon shares that are expiring or soon to expire, of course, they're going to be disposed of in some fashion. But if -- but I always look at the -- I look to myself and I look at the entire team and I say, where do we stand as a management team in owning a portion of Nektar. And for example, I still have -- probably 80% of my vested shares are still sitting in the bank, so to speak, right? So I don't think there's been any unusual stock sales. I think the management is going to dispose of shares as they come close to expiration as stock options come close to expirations. But I also know that the team is well staked with vested shares and has a strong belief that this company has enormous potential and a long way to go. And I don't see anybody disposing off shares that aren't reasonably close to expiration. So -- or I should say, options reasonably close to expiration. So I hope everybody understands that in some fashion, stock options are a form of compensation and it's not unusual to see that form of compensation taken advantage of by management, especially after such a successful performance in 2017 and so far in 2018. And quite frankly, while I'm always looking at this, I don't have a problem with people taking little bit of money off the table when shares are in the neighborhood of expiring, when options are in the neighborhood of expiring. I hope that answers the question.

And our next question comes from Tyler Van Buren from Piper Jaffray.

As we head into the ASCO abstract, could you just help us -- of course, without giving any content, just help us understand how it will be structured? I imagine we'll see response rates by tumor types, but will we see a stratification by PD-L1 expression status? Will there be a breakdown of scans? And will there be some sort of breakdown by treatment naïve versus experienced patients? And maybe if you could compare and contrast that with respect to what we'll see at the actual oral presentation?

Great. Tyler, it's Mary. So in the abstract, which you'll see next week, we included all the I-O naïve patient populations that were enrolling to PIVOT-02. So those are patients that were first-line RCC, first-line melanoma, second-line non-small cell lung cancer, I-O naïve, first-line cisplatin-ineligible bladder cancer patients as well as first-line -- excuse me, second-line triple-negative breast cancer. We also have broken down the abstract to show your response rates by PD-L1 status. So we'll be also sharing that as well as our safety update. Again, as I just told Chris, the largest cohorts that we'll be presenting at ASCO will be the melanoma and RCC cohorts.

Since you'll be breaking it down by PD-L1 expression status, maybe it would just be helpful to kind of understand broadly what type of response rates or what kind of difference in response rates you all would expect to see or that we've seen historically with I-O or monotherapy?

Yes. Tyler, it's a great question and it could go into some depth. So we will present the benchmark data for single-agent nivolumab as well as single-agent nivolumab efficacy by PD-L1 status during our investor presentation and Dr. Diab will also present some of that data in his oral presentation during the Developmental Therapeutics session. So we really encourage you to attend, and we're looking forward to sharing with you all that specific data.

Great. And in terms of the data cut for the ASCO oral presentation, can you all tell us approximately when that occurred?

Yes, we haven't actually done the data cut yet for ASCO. We are going to doing it in the next couple of weeks, obviously, as we head into ASCO.

Okay, great. And Bristol, before the recent deal was announced, did they see all the data that was in the abstract?

Yes, Bristol did see the data that were in the abstract. As you know, we had our clinical collaboration with Bristol-Myers Squibb. And at that time, in February, when we submitted the abstract, they were certainly our clinical collaborator moving forward with us. So they did see the data and that did happen before they made the very large clinical collaboration with us that led to $1.85 billion in the bank for Nektar.

Wonderful. I look forward to seeing a more mature data at ASCO.

We're really look forward to seeing you, Tyler.

And our next question comes from Bert Hazlett from BTIG.

Congratulations on all the progress. With regard to the Phase III decision, glad to hear you're moving into some pivotal studies. Could you articulate a little bit more about what went into deciding to move into Phase III for those specific indications? And then are there any potential for accelerated pathways? And if so, what at least might be in the realm of possibilities? Then I have one more after that.

Yes. So as we shared many times, we had enrolled the largest number of patients into the melanoma and RCC cohorts. And any Phase II protocol that's written also has embedded stopping criteria for efficacy. And so we will be presenting some of those data as well as at ASCO, which will show why we bridged our Phase II into our Phase III for melanoma and renal cell carcinoma. And certainly, we are very eager to move forward in a very broad clinical development program. As Howard mentioned to you, we have over 20 registrational studies that we're launching within the next 14 months. And we have shown and shared with you efficacy data already for multiple different tumor types at various stages of development. And to answer your second question about the accelerated approval pathways, we do have strategies embedded into our protocol, and we are moving forward with accelerated approval pathways in the relapsed/refractory populations for non-small cell lung cancer, bladder, melanoma and renal cell carcinoma. And we do believe that this is an opportunity to rapidly and potentially have NKTR-214 on the market.

And then just with regard to the 214, 262 doublet and then triplet, could you remind us does the dosing from animals translate well to humans with such a combination? And then, how are you thinking about dosing a potential triplet combination with Opdivo as well?

JZ, you want to take that question, please?

Sure. Thank you, Howard, and thank you, Bert. So yes, actually we did a lot of studies in the preclinical lab understanding the nature of the tumor kind of like the cellularity of the tumor, the size of the tumor and the age. And from that, we actually developed a number of models to allow us to translate dose administration and make predictions on how to scale and plan to do the dosing using the animal model as a guide. So certainly the first dose levels that we selected as well as the strategy and approach for the radiate -- for the new guided injections, those all came from information learned from the animal studies. And then in regards to the second part of your question, so we administered NKTR-262 in the protocol. It's infrequent.

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so we don't necessarily need to repeatedly inject the tumors. So the way that we would be using that doublet or triplet is we would introduce intratumoral NKTR-262. But then systemically, we would give either NKTR-214 alone in the case of a doublet or NKTR-214 plus nivolumab in the case of the triplet. And then the patients would stay on the systemic therapy, and we would only re-administer NKTR-262 if necessary upon restaging the patient.

Thank you for that color. And I guess, more broadly, as you brought up strategy and discussion surrounding I-O, given the novelty of the 214 mechanism, how are you strategically contemplating the development of this molecule? Obviously, PD-1s and you've got the Takeda collaboration, but how do you frame the development across the I-O landscape? And are you -- do you have a strategic plan in mind? Or are you just letting the data drive you at this particular point?

No I think that -- listen, I think, that's a great question. And clearly, there's a strategy behind this, and it goes back to what I've said all along and I know JZ has said all along, which is a molecule that can cause the proliferation of effector T cells is the centerpiece of I-O. Without T cells, without effector T cells, I-O therapy starts to fall apart. So because what I believe is that we have the centerpiece of an I-O therapy and we also have other pieces, such as NKTR-262, I don't think we're dependent on checkpoint inhibition as a strategy. I think NKTR-214 carries its own strategy, and we're going to look at it with checkpoint modalities, but we'll also be looking at it with methods of creating antigens, such as NKTR-262, potentially neoantigen vaccines and potentially even chemotherapy approaches. So there's a number of different things you can do with NKTR-214 in a very broad way in immuno-oncology. And if you believe it's that center of that circle, which we think it is, then think of all the possibilities and all the different things you can do, even combinations with CAR-T therapies, which have proven enormously important, given their very short duration of effect. So I think we do have a strategy. We haven't mapped it out publicly yet. We're discussing possibilities with numerous companies. You can see what we just did with Takeda's small molecule. There is a lot of companies that want to work with NKTR-214. You know outside of the BMS collaboration, we're allowed to work with it in all these different approaches. And I think you're going to see a lot of studies start up over the coming year with NKTR-214 as that centerpiece.

We're looking forward to ASCO.

And our next question comes from Arlinda Lee from Cannacord.

I was hoping to kind of clarify the duration of what we might see at ASCO or maybe the duration of follow-up? I think Mary mentioned that there was most patients had one scan. I wasn't clear that was SITC or in the abstract or what? And then, on maybe the -- secondly maybe the scope of the PROPEL study that we might see in the second half, is that going to be a medical meeting presentation and maybe just duration of follow-up and the number of patients you would expect for that? And then lastly, on the TKI combination with Takeda, I'm wondering if JZ, is there something particular about the SYK/FLT pathway? Or do you think that this a combination with other TKI is a potential strategy going forward in general for 214?

Arlinda, it's Mary. So as I told Jessica and Chris, and I'll repeat it, at ASCO, we'll have the most amount of data for the melanoma and RCC populations. And as such, those patients, some of those patients will have been on study longer than in some of the other I-O naïve patient populations. The other thing I wanted to mention, though, we will be providing you with an update of those patients that were enrolled to the dose escalation. And recall that those first patients came on the dose escalation of PIVOT-02 in December of 2016. So we do have some long-term follow-up for patients, who were enrolled to our first-line melanoma, first-line RCC and non-small cell lung cancer cohorts. We're looking forward to sharing more long-term follow-up on the dose escalation patients. And then again, as we mentioned, many patients who were enrolled to the expansion cohort recently came onto the study, and so a number of those patients will only have one post-treatment scan. And then now, JZ, I'll turn it over to you to respond to the next part of her question.

Sure. Thanks, Mary, and thanks, Arlinda. So you know you highlighted a very interesting point. So TAK-659, it is a kinase inhibitor, but it's a very selective kinase inhibitor that has dual activity on the lone animal, and that's again SYK, which is spleen tyrosine kinase, and also the FLT-3, which is the signals in response to the FLT-3 ligand. And so there are 2 really unique features of this particular TKI besides the selectivity. And the first is that with SYK, you engage the immunoreceptor tyrosine kinase signaling. So these are the kind of ICAMs that you see in a lot of immune cells. And SYK is the key enzyme that controls the downstream signaling of those complexes and controls signaling to the downstream machinery such as phospholipase gamma and others. And we find that ICAMs can control signaling in a range of different cell types, not just in B cells, where we typically think of SYK, but also in monocytes and myeloid cells, even in high granular cells that rely on it for signaling. And we also noted that's the case with FLT as well is that's highly representative along the myeloid compartment. And so what is very unique is that in a lot of preclinical studies, Takeda scientists discovered that a lot of the suppressive cell populations that have myeloid -- that are of the myeloid subset, I mean, in the tumor microenvironment are highly kind of almost addicted to these pathways. And then when you treat these kind of tumors, the cell populations themselves vanish or they dedifferentiate. And in particularly, what was very exciting was changing the plasticity of M1 macrophage phenotype creating a very large increase in the proinflammatory macrophage subset. So why this combination is so interesting to combine with NKTR-214 is that it really targets cell populations and cellular processes that NKTR-214 does not directly engage. And so that's why this doublet is very interesting. And I hope you have a chance to see the presentation at ASCO because the preclinical data with these 2 agents as a doublet is very, very compelling when we see some very, very strong preclinical results. And we're seeing those results pretty quickly that lead us into this advanced -- moving into this clinical collaboration with the first trial starting later this year.

And our next question comes from Difei Yang from Mizuho Securities.

This is actually Alex on for Difei. Thanks for taking the question. I just had a quick one here on NKTR-262, 214 and the combo. You said you're expecting to have initial data in the fourth quarter. Do you plan on presenting that at a medical conference?

Alex, it's Mary. We would like to present that at a medical conference. That's certainly been our practice. I can tell you and share with you that we've already enrolled the first cohort of patients. We have 3 patients that have been dosed with NKTR-262. So we expect by the end of the year, we could provide an update of those patients. So we look forward to sharing the data with you. And as JZ explained, very compelling and interesting signs. We have a lot of enthusiasm and excitement for enrolling patients to the study.

And our next question comes from Andy Hsieh from William Blair.

So one on just the RCC landscape, just wondering your view about what's a suitable comparator arm? I know that Bristol recently started a Phase III trial that uses Opdivo/YERVOY as a comparator. So happy to hear what you -- what your view is there.

Hi, Andy. I think there are multiple opportunities for comparator arm in RCC. And I don't think we will be locked into just ipi plus nivo as a comparator. And we do -- we have designed our Phase III trial in renal cell carcinoma. We are looking forward to sharing the trial design with you for both, the first-line melanoma trial as well as the RCC trial at ASCO. And it is a really good question. Landscape is changing quickly across all the tumor types really that where we are moving forward. I think that the goal of Nektar and BMS is to design clinical trials that will truly change standard of care, and also where we believe we have a high probability of technical success. And so we look forward to sharing more details about both our first-line RCC strategy as well as our first-line melanoma strategy.

Great. So one follow-up, if I may. So you alluded to the -- over time, the response deepened with 214 and Opdivo. Just wondering if you have updated measure in terms of median time to respond? And how does that compare with the value that you typically see with Opdivo YERVOY?

So at ASCO, we are going to share the time to response data as well as continue to provide you with an update of a more mature data set from the dose escalation in renal cell as well as the new patients that came onto the study and were treated at a recommend Phase II dose, which, of course, is the regimen that we'll be moving forward into with our Phase III trials. So we will be providing updated time to response data at ASCO, and we'll be doing that for both our melanoma and our renal cell populations.

And our next question comes from Corey Davies with Seaport Global.

Just beyond general FDA criteria, can you elaborate a little bit more on some of the specific things, for lack of a better word, that you'd need to see in the data to be able to dictate an accelerated filing and approval pathway? And what do you think is that quickest way to market for 214?

Hi, Corey, it's a very good question. And as you can imagine, partnering with BMS, we're able to leverage a lot of experience that they've had with the FDA on these topics. But in general, what you need to prove is that you can, with your 95% confidence interval for your objective response rate, that your lower bound of that 95% confidence interval rules out the point estimate for standard of care. So just to give you, like a specific example in terms of relapsed/refractory melanoma population, where those patients have been treated with a prior checkpoint inhibitor, a second-line treatment could be ipilimumab, which has about 13% objective response rate. So you would want to see an objective response rate somewhere around 20% or above 20%, where your 95% confidence interval, the lower bound would be above 13%. In terms of non-small cell lung cancer, post-I-O plus chemo or post-I-O, docetaxel is a very reasonable comparator in the second-line setting. And there's been a number of large Phase III trials that show that the objective response rate for docetaxel is roughly 9%. And so in the non-small cell lung cancer population that has been previously treated with an I/O agent, the doublet of NKTR-214 plus nivo, we had estimated has to have an objective response rate around 18% or higher to rule out the lower bound of the 95% confidence interval that's above 9%. Just to give you some ideas, when we do our statistical calculations, those cohorts need to be around 100 patients to be able to demonstrate that level of efficacy. I hope that helps.

That was great, thanks very much. Second question, just the deepening of the responses in RCC patients that were just alluded to, is there a mechanistic explanation to think that it might work better in that tumor type? And more broadly, are there tumor types before you actually look at clinical data that would be predicted to have a better response with 214 in the mix?

Yes. We've shown an update from our dose escalation patients for first-line melanoma, first-line RCC and non-small cell lung cancer. And this pattern, we've actually seen to be consistent across all 3 of these solid tumor types. And from a biological perspective, it makes sense that NKTR-214 would have this robust effect in all tumor types because the mechanism provides for new antigen-specific T cells to be generated every 21 days, and that's why we see this effect over time in contrast to CAR-T cells, where you see a very high rate of relapse after 6 months of treatment because all those T cells are now gone. In contrast, NKTR-214 generates this new replenishment of these antigen-specific T cells every 21 days, which is why we see this ongoing tumor regression and tumor reduction with ongoing treatment.

And our next question comes from Debjit Chattopadhyay from H.C. Wainwright.

So as you start thinking about the frontline non-small cell setting, what is your thought process post-KEYNOTE-189 on using a chemo conditioning prior to 214 plus Opdivo?

Debjit, I think that's a really great question. And I want to tell you that we've been meeting regularly with BMS, and we also already had an Ad Board meeting with the top lung thoracic oncologists, including people like Mark Awad from Dana-Farber and Scott Gettinger from Yale and Matt Hellmann from Memorial Sloan Kettering and Roy Herbst and (inaudible), and we've been getting a lot of input. And you know while combining with chemotherapy is one strategy, we also believe there are other first-line strategies as well in stage IV disease. To just give you an example, the KEYNOTE-042 study is going to fully read out and be presented at ASCO this year. And we're really looking forward to seeing those data because we believe both KEYNOTE-189 and KEYNOTE-042 will be very informative to the type of clinical trial in the first-line setting that we could design. And so while chemotherapy is a option, I don't think it's the only option, and we are looking forward to sharing more information with you about our specific trial designs in long as we fully digest all the data that we think can help guide us to the best Phase III trial design. I also want to mention that in addition to stage IV front-line setting, we're also looking at other earlier stage settings with lung cancer and in the relapsed/refractory population. So our strategy in lung cancer is very broad and not isolated to just the stage IV first-line setting.

Great. And I know this question doesn't get asked often, in terms of the sarcoma study, obviously, it's a smaller market, but this is a I-O cold tumor, any updates on the study ongoing at MSKCC and when might we see the data from that?

Yes. As you know, this is an investigator-initiated study and so Dr. Sandra D'Angelo will be making a decision about the presentation of that study. I know she is eager to present the data. However, she hasn't shared with us the conference that she will be submitting an abstract to. So we'll all have to wait and see the data until she presents it. So I'm unable to provide you with an update at this time.

So one last one. In terms of getting a pivotal study up and running in non-small cell, whether it's frontline or relapsed/refractory or second line, how many patients do you need before you guys are comfortable in terms of both powering the study and trying to avoid the pitfalls of the Incyte, Merck ECHO-301 study?

We haven't shared all of our data with you, which we look forward to sharing at ASCO. I don't think that there's any magic in number. I think we're going to look at the totality of our data in lung cancer and multiple different lines, in the frontline, in the second-line I-O naïve as well as the relapsed/refractory setting to guide us. And I think in addition to that, we obviously are looking very closely at our biomarker data, which we are excited to share with you at ASCO as well, of course, the safety profile. So I don't think that there is a magic number to share with you, but the totality of the data in all 3 of those settings will certainly guide us as to the robust effect, we believe, we'll see in a Phase III non-small cell lung cancer trial.

And that does conclude our question-and-answer session for today's conference. I would now like to turn the call back over to Howard Robin for any closing remarks.

Well, thank you, everyone, for joining us today. That was a lot of really good questions. And again, I'd like to thank our employees for all their hard work, which resulted in this enormous progress we've made in moving our pipeline forward. And I look forward to seeing many of you in a few weeks in Chicago. So thank you for joining us this afternoon.

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.