Nektar Therapeutics (NKTR) 2018 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Nektar Therapeutics Q2 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 today. With us are Howard Robin, our President and CEO; Gil Labrucherie, our Chief Financial Officer; Dr. Jonathan Zalevsky; our Chief Scientific Officer; and Dr. Mary Tagliaferri, our Chief Medical Officer. Some members of our team are joining from different locations today. So we ask for your patience 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, 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 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. Important risks and uncertainties are set forth in the Form 10-Q we filed on May 10, 2018, which is available at www.sec.gov. We undertake no obligation to update any forward-looking statements whether as a result of new information, future developments or otherwise. A webcast of this call will be available on the IR page of Nektar's website at nektar.com.

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

Thank you, Jennifer, and thank you to everyone for joining us today for our second quarter 2018 conference call. On today's call, we will review our accomplishments in 2018 to date. And also our planned milestones over the next 12 months, including the initiation of the broad Phase III program for NKTR-214, which includes multiple trials starting this year in melanoma, renal cell carcinoma and bladder cancers. We will also reiterate our financial guidance for the remainder of 2018.

I'll start by reviewing the multiple successes we have achieved with our pipeline of Nektar invented medicines across 3 therapeutic areas; immuno-oncology, immunology and pain. First in the area of chronic pain, we are exceptionally pleased that our NDA for NKTR-181 was accepted for filing by the FDA this month. I'd like to recognize the incredible job done by the team here at Nektar, which worked tirelessly on this goal over the past several months.

Our NDA includes an extensive amount of efficacy and safety data in over 2,100 patients and healthy subjects. Based on advice from the FDA and given the size of the database, we submitted the NDA for a standard review. We've been officially informed that our PDUFA date will be May 29, 2019, and that the FDA plans to hold an advisory committee meeting to review our NDA.

As you know, we've had highly productive interactions in pre-NDA meetings with the agency, and we plan to work closely with them during the review as well.

As I stated last quarter, we are evaluating several strategic structural alternatives for the commercialization of NKTR-181. Our current focus is on establishing a separate subsidiary with one or more commercial or capital partners to launch this important molecule.

We believe this option will allow Nektar to focus our efforts and resources on the development of Nektar's immuno-oncology and immunology pipeline, while at the same time ensure we capture the maximum value of NKTR-181 for our shareholders. We are very excited about the potential of NKTR-181 to help address the nation's opioid epidemic.

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.

Following the signing of the 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 new Bristol-Myers collaboration became effective in April this year and, as you know, provides a unique and broad platform for us to develop our lead I-O candidate, NKTR-214, rapidly. The collaboration includes a broad joint development plan with 20 registrational trials in 9 tumor types and 15,000 patients.

Nektar and Bristol-Myers Squibb have announced the planned start of the first 3 registrational trials for NKTR-214 with OPDIVO this year, which will be in first-line melanoma, first-line renal cell carcinoma and cisplatin-ineligible first-line bladder cancer.

I'll let Mary talk more about these specific studies in a moment. As you know, we're very excited about the data we continue to collect from the ongoing PIVOT study, and in particular, the translational work that shows that treatment with NKTR-214 plus OPDIVO can convert over 50% of patients whose tumors have a baseline negative PD-L1 expression to positive PD-L1 expressers.

As you'll recall, we observe this conversion with NKTR-214 monotherapy in our first Phase I trial of NKTR-214. This is why we believe that NKTR-214 plus OPDIVO can deliver on the promise of becoming the preferred standard of care as a doublet I-O regimen in many different tumor types.

As the first example, we're working to incorporate this advantage of NKTR-214 observed in PD-L1 negative baseline patients into our registrational strategy in bladder cancer.

Beyond these first tumor types, the next set of registrational trials in lung, breast, colorectal, gastric and sarcoma cancers are planned to start in the first half of next year. These studies are being designed and informed by the ongoing PIVOT data, which continue to mature over the next 6 to 9 months.

BMS and Nektar are highly focused on a multipronged clinical development approach for NKTR-214 plus OPDIVO. And this will include multiple registrational trials in each tumor type, including first line and relapsed refractory settings.

The PIVOT trial is ongoing with NKTR-214 plus OPDIVO being tested in numerous patient cohorts. Recently, we added several new cohorts that will evaluate NKTR-214 plus OPDIVO with various doses of YERVOY as well.

The collaboration with Bristol envisions several paths forward in both the doublet and triplet regimens, and these cohorts will inform our designs of registrational trials.

In addition to the triplet patient cohorts, we also added to PIVOT a new second line relapse refractory non-small cell lung cancer cohort that reflects a defined patient population based on the evolving standard of care in non-small cell lung cancer. The protocol now includes enrollment of patients who have received single agent anti-PD-1 in either the first or second line, and the second cohort will enroll patients who have received an anti-PD-1 regimen with a platinum doublet in first-line.

As Mary stated during our recent ASCO presentation, we look forward to presenting new data from the fully enrolled 38 patient first-line melanoma cohort in PIVOT at the upcoming SITC conference in November.

As data from each of the PIVOT cohorts mature over the next 6 to 18 months, Nektar and Bristol are planning to present each of the data sets at various medical meetings, including tumor-specific conferences.

We are also planning to initiate 2 additional trials with NKTR-214 by the end of this year. The first will be a Phase I trial with Takeda to evaluate NKTR-214 with Takeda's dual SYK/FLT inhibitor, known as TAK-659, in patients with non-Hodgkin's lymphoma.

The second will be a Phase I trial with Syndax to evaluate NKTR-214 with Syndax's HDAC inhibitor, entinostat, in patients with I-O refractory melanoma.

We are also actively engaged in discussions with additional companies where there is a strong scientific rationale for the combination of NKTR-214 with other targeted and I-O agents. And we expect that before the end of this year, we will select which of these collaborations will move forward into the clinic.

We continue 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 TLR-78 agonist, and Nektar-255, an I-O 15 candidate which can stimulate 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 combination of NKTR-262 and 214 has enormous potential.

Our preclinical data for the combination of these 2 agents demonstrates clearly 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 modify systemic immunology to drive an abscopal antitumor response.

The dose escalation phase of the trial with sequential NKTR-262 and NKTR-214 is underway now to determine initial safety, PK and biomarker characterization.

Following sequential dosing, we will evaluate concurrent dosing for the doublet of NKTR-262 and NKTR-214. We will also have the option later in the trial to evaluate a triplet of NKTR-262 and NKTR-214 plus OPDIVO.

We expect to have our first biomarker and safety data from the first patients in the sequential dose escalation phase of the trial sometime in the fourth quarter of this year.

Once we have identified the recommended Phase II dose, the trial is projected to enroll up to 400 patients with 8 different tumor types in first and second line as well as refractory settings.

For NKTR-255, our I-O 15 candidate, we have been conducting important preclinical studies in combination with multiple experimental CAR-T cell therapies in collaboration with the Fred Hutchinson Cancer Research Center.

I-O 15 has been associated with the remissions and longer duration of response in patients with lymphoid malignancies who have undergone CAR-T regimens, so we are excited about the potential of NKTR-255 to greatly enhance CAR-T outcomes as well as its potential to be combined with other mechanisms in I-O.

Our preclinical work with CAR-T is progressing nicely, and we plan to file an IND for NKTR-255 in the first half of next year.

Now moving on to our immunology program. Let me give you an update on the advancement of NKTR-358 with our partner Eli Lilly. As we 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.

We also recently started the Phase Ib multiple ascending dose trial in patients with lupus. The trial is advancing very quickly. We expect to present initial data from the Phase I trial, and initial data from the lupus trial at medical meetings in the first half and second half of 2019, respectively.

We're very excited about the potential of NKTR-358 as a resolution therapeutic to bring a new paradigm to the treatment of autoimmune disease and chronic inflammatory indications.

So I'm very pleased with our results in the first half of 2018, and I'm very proud of our employees for their efforts in executing on our strategy.

And with that, I'll turn the call over to Mary to discuss the Phase III trials in melanoma, renal cell carcinoma and bladder cancer.

Thanks, Howard. I'll spend some time reviewing the plans for melanoma, renal cell and urothelial carcinoma, which Howard mentioned, are the first 3 tumor types in which BMS and Nektar are initiating registrational trials by the end of this year.

Our strategy with BMS is to secure as many potential approvals in early and first-line settings across multiple solid tumor types to establish NKTR-214 plus OPDIVO as the standard of care.

First in melanoma, we're very fortunate to be collaborating with BMS, who is the only company to have developed an immuno-oncology doublet therapy for melanoma patients.

The Phase III trial of NKTR-214 plus OPDIVO will enroll 760 patients with advanced and metastatic melanoma, who will be stratified by PD-L1 status, stage of disease and B-rev status. The primary endpoints are PFS and OS, with a projected 22-month timeline for the final PFS analysis. Both the FDA and CHMP have agreed to an open label design into our comparator arm, and we are very excited to initiate this trial.

This typical study in melanoma is designed to secure NKTR-214 plus OPDIVO as the first-line I-O standard of care. The Phase III trial design will be available on clinicaltrials.gov shortly and enrollment should begin within the next month.

In renal cell carcinoma, Bristol-Myers and Nektar are planning to launch multiple registrational trials in advanced renal cell carcinoma patients, which will include separate trials to evaluate the doublet and triplet regimens of NKTR-214 plus OPDIVO, and NKTR-214 plus OPDIVO and YERVOY across multiple early and later stage settings. These trial designs will be finalized in the fourth quarter of this year.

In bladder, we're also planning a registrational program to gain approvals in first-line metastatic bladder cancer and other settings. Since ASCO, we have enrolled additional patients into the first-line cisplatin-ineligible metastatic urothelial cancer cohort in PIVOT. And the ORR continues to be consistent in this patient population.

As you know, this is a patient population with a very high unmet need, particularly for individuals who have tumors with PD-L1 negative disease at baseline, and for whom single agent checkpoint inhibitors are no longer the preferred standard of care.

With this in mind, we have several potential trial designs in bladder cancer, including ones that focus on this underserved patient population. We will review our program with regulatory agencies shortly so that we can be ready to initiate our first registrational trial in bladder cancer by year-end.

As Howard stated, we are advancing NKTR-214 with Takeda's dual SYK/FLT inhibitor, known as TAK-659, into a Phase I/II clinical trial in non-Hodgkin lymphoma before the end of this year.

TAK-659 is a clinical stage compound developed by Takeda that has already shown clinical activity in non-Hodgkin lymphoma. In preclinical mouse tumor models, TAK-659 was shown to reduce the levels of myeloid-derived suppressor cells, and increase levels of pro-inflammatory N1 macrophages in the tumor microenvironment.

Since NKTR-214 does not target these myeloid cell populations, it provides a unique, nonoverlapping and highly complementary mechanism to TAK-659.

As the first trial with NKTR-214 in a liquid tumor setting, the study provides a strategic opportunity for us. The trial will enroll patients who are relapsed or refractory to at least 2 prior lines of therapy, but no more than 3 prior treatments. And we expect the first data from this trial towards the end of 2019.

With Syndax, we are in the process of designing the first combination trial of NKTR-214 with entinostat in patients with I-O relapsed or refractory melanoma, and we expect to finalize the study design before the end of this year.

With that clinical update, I'd like to hand the call to Gil.

Thank you, Mary, and good afternoon, everyone. I will start with a brief review of Nektar's second quarter 2018 revenue, and then I will give an update to our annual financial guidance to incorporate our final accounting conclusions for the BMS collaboration, which closed in the second quarter.

We ended the second quarter with $2.106 billion of cash and investments. At the closing of the strategic collaboration with BMS on April 3, we received $1.85 billion, which includes a $1 billion upfront payment and an $850 million premium equity investment.

We recorded the equity investment at fair value on the April 3 closing date, estimated to be $790 million, which reflected the price of our stock on the closing date and a discount for the unregistered status of the shares issued to BMS. This resulted in $790 million being recorded as additional paid-in capital, and the remaining $1.06 billion being recorded as revenue in Q2, based on our GAAP revenue accounting conclusions regarding the units of accounting in the collaboration arrangement and the allocation of value to those units.

Now let's turn to our 2018 financial guidance. Our annual financial guidance remains unchanged other than incorporating our final GAAP revenue accounting conclusions for the BMS collaboration transaction.

Our full year revenue guidance of $1.165 billion to $1.175 billion includes $1.06 billion of revenue recognized in Q2 from the BMS payments, and an additional $105 million to $115 million of product sales, royalty and other revenue.

We expect the remaining $40 million to $50 million in our full year revenue guidance to be recognized ratably over the last 2 quarters of 2018.

Our GAAP expense guidance is unchanged. We anticipate 2018 GAAP R&D expense will range between $400 million and $425 million, which includes approximately $60 million of noncash stock compensation and depreciation expense.

G&A expense for 2018 is still projected to be between $72 million and $75 million, which includes $28 million of noncash stock compensation and depreciation expense. We still expect to end the year with a cash position of between $1.9 billion and $1.925 billion.

And with that, I will open the call for questions. Operator?

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

In the past, particularly for lung, you have been consistent in describing your multipronged approach, and likely taking it to envision multiple trials, which Mary elaborated a little bit. Can you help us understand your latest thinking as far as the development strategy? In particular, when we might be able to finish the year and sort of get an understanding of what segments of lung patients we might see results from?

Chris, it's Mary. Thank you for the question. We've always said that we were going to move forward with a very broad program in lung cancer. And to that end, we have a strategy for moving forward into first-line lung cancer. And as you may know, we are looking now in the patient populations, that's PD-L1 high, PD-L1 intermediate and PD-L1 low. And we do believe there are opportunities in all three of the segments, although the clinical trials may not look the exact same for each one of those patient populations. In addition, after the release of the KEYNOTE-189 data, we think there is a very important opportunity for those patients who have actually either relapsed or are refractory to a frontline I-O agent and we also are pursuing a second line strategy that is both embedded into our PIVOT-02 study as well as randomized placebo -- randomized controlled studies. Third, we also believe that there is an opportunity for those patients who have unresectable stage III lung cancer and would go on to an I-O regimen such as durvalumab and so we are looking also at an opportunity in stage III patients. And then fourth, we also are looking at designing trials for those patients who have early-stage lung cancer that is resectable. And so we were moving forward with a broad strategy and those are some of the possibilities, not all of them, but some of the possibilities that are top of our mind.

So then in your press release, you did outline particular conferences, some of them on the more specific and unique side. And Howard also did talk about presenting data at maybe tumor-specific events. And if I think about now to the end of the year, there's some pretty obvious and maybe some less obvious ones. But I've I think about lung, there's World Lung in September, there's ESMO. And I think your release identified certain abstracts there. And then you did mention SITC as far as the PIVOT update. But for lung, should I be thinking that any of those 3 represent unique end specific opportunities to learn about a data update, specifically on lung cohorts that have had at least 1 or hopefully more than 1 follow up scan?

Yes, great question. So we plan to maintain data visibility with a continual stream of presentations at scientific meetings. And moving forward, we're going to do just as you were talking about, is present either by individual cohorts at distinct meetings. So this means that over the course of 6 to 18 months when we have sufficient maturity of the data, we are very thoughtfully planning with BMS where to present the lung data, as you mentioned as well as all of the other cohorts to highlight our results. And remember, one of our primary goals is going to be to educate the medical oncology community who are going to be participating in our 20 registrational trials. So while some of the presentations are going to be at the large general oncology conferences such as ASCO or SITC, we also are planning presenting at more tumor-specific focused symposiums where we could capture a large audience, such as the thoracic oncology community. Remember that PIVOT data is maturing at different rates and I think you are very well aware in a cohort like first-line RCC, the response rate has increased over time and so the maturation of the data in RCC could be very different than, say, what we're seeing in urothelial cancer where we showed you a very rapid response to the doublet treatment with 6 out of 10 patients having objective response, which we presented at ASCO. So Howard made it very clear today too that at SITC we'll be providing a full update on our first-line melanoma cohorts that includes 38 patients at SITC this year. And those patients will all have had a 6-month follow-up at the time of our presentation.

And our next question comes from Jessica Fye from JPMorgan.

Mary, I think this one is probably going to be for you, again. And sort of following up on Chris' question. Just to really make sure I understand the cadence of data releases and updates from PIVOT going forward, is that first-line melanoma update at SITC the only update we should expect to see of those various cohorts between now and year-end?

Yes, Jessica, that's correct. The melanoma first-line cohort will be the data from PIVOT that we update at SITC and then, again, there are numerous other tumor-specific conferences coming after SITC and we plan on, like I said, very thoughtfully, when we have 6-month follow-up for cohort that's been fully enrolled to present those data. And again, just as I mentioned to Chris, we really see a continual stream of presentations at scientific meetings over the next 6 to 18 months. And as you know, we have multiple cohorts in the PIVOT-02 program that allows us and affords us that opportunity for data release.

Okay, got it. And just following up on that, you mentioned this kind of 6-month mark. Is that the sort of definition you've established or agreed upon with Bristol to sort of define what constitutes mature data? I'm thinking, in particular again, about when we could see those post-PD-1 lung cohorts you mentioned, specifically the ones that were just post single agent PD-1 and post-PD-1 plus chemo. And can you remind me if the -- I think you mentioned you had a few dozen of those patients already enrolled as of ASCO. Were those a mix of post single agent PD-1 and post chemo combo? Or were those all post single agent PD-1 patients that we heard had been enrolled then?

Jessica, so your second question, I'll take first, which is what we presented at ASCO was a mix of both second and third line patients. In PIVOT-02, we have 2 relapsed refractory cohorts, one that would allow those patients who had a single agent checkpoint inhibitor in frontline as well as patients who had a chemotherapy doublet, then went on a single agent checkpoint inhibitor. So we actually have one cohort that allows second or third line patients, and then we have a cohort that could serve potentially as an accelerated approval cohort of patients who just failed chemotherapy plus pembrolizumab in the first-line, and then those would be second line relapse refractory patients. Going back to the same question that Chris asked, is when will we have data? We really are going to be transparent once we have mature data, and are going to be presenting data at a scientific conference. Today, Howard's made it really clear that we're going to be at SITC as we promised, at ASCO showing the first-line melanoma data and then the 6-month follow-up data really is a general sense of when we believe data will be mature. Obviously, some data may be mature more quickly and in the relapse refractory setting we may see it takes a little bit longer for patients to respond to treatment. We also will always ask you to keep in mind we see deepening of responses over time as we follow patients and we also see increased number of patients who respond as we go over time and just in RCC alone, we've seen 1 patient on the fifth scan convert from stable disease to a responder. So we do know that in certain tumor types, it's going to take longer for the data to mature and in other tumor types it will be more quickly. As we make a decision on the presenting the data, we will ensure that our investors and our scientific community are aware of that.

Okay. But just to be clear, you have established what constitutes mature data in lung with Bristol? Or is that something where you both kind of have to look at it and make a call as you see it coming through? Because I appreciate the dynamic you're talking about that the response rates can evolve over time depending on the tumor type.

Yes, so in general we have agreed to a 6-month follow-up time, is, roughly speaking, what we will be aiming for. But again, we are working hand-in-hand with Bristol on the design of these Phase III trials, on the interpretation of the data and on the release of the data. So while we have a general rule of thumb, for some data we may say the maturation is sooner than 6-month follow-up for the last patient in and we're going to move forward with submitting an abstract.

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

I think Mary, you talked a lot about the frontline and second line opportunities across different tumor types. Just wondering about your view and your partner Bristol-Myers' view, in terms of the adjuvant setting, given that could be opportunity that's multiples of the metastatic settings. So curious about your thoughts on that market.

Oh, it's a great question. And in all the tumor types that we're pursuing, we have done a deep dive into the opportunities in the adjuvant settings. And I think the one thing that is very appealing in some cases is that the adjuvant setting you can compare to placebo. So it does provide a unique opportunity to explore the benefit of the doublet and provide patients with an extension of a disease-free interval. We are evaluating potential strategies in the adjuvant setting and we certainly, as we evolve in our development plan, we will be transparent about where we're moving and the trials that we're conducting. As Howard and I have mentioned today, we're moving forward into 3 different Phase III trials this year and very shortly, you will see the clinical trial design for the first line melanoma study on clinicaltrials.gov and we will regularly be updating clinicaltrials.gov with the designs of all our Phase III trials.

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

With respect to the Phase III first-line melanoma study, could you give us some details on the assumptions for the control arm in terms of how many months? I guess you said -- did you say 22 months to the PFS end point? And can you just define whether that's from the end of accrual or the beginning? And just what your assumptions are with respect to what the control arm will do?

Great question, Tyler. We're very excited to be working with BMS, obviously, on the study because we can leverage their success in the first-line melanoma setting because they are the only company that has shown superiority of an I-O doublet over a single agent checkpoint inhibitor. So the design of our Phase III trial is very similar to CheckMate-067. And I strongly encourage everybody to look at the New England Journal of Medicine article for the results of their study. And the first off, there's James Larkan, who also happens to be on our steering committee. So in terms of your specific question, it's 22 months from first patient being dosed. And in terms of what we expect the control arm, how we expect single agent development to perform is very clearly shown in the CheckMate 067 study, which is a median PFS of 6.9 months.

Wonderful. That's really helpful. And in response to Chris' question, when discussing RCC, you mentioned that the response rate has continued to increase over time. Have you seen those similar dynamics play out from the updated data set of 26 patients at ASCO? Is it possible to give any color there?

Yes, we -- I say this all the time. My academic collaborators will kill me if I give any new data out on an earnings call. And so we definitely plan on providing updates on all of our cohorts at scientific conferences. And the melanoma cohort we'll be providing an update on in November at SITC, we have 38 patients. And that is the fully enrolled cohort.

Understood. And in the Phase III plans, you mentioned that bladder, the ORR continues to be consistent with what has been observed. Can you just confirm how many bladder patients have been enrolled? And maybe how many have received a first scan?

I just wanted you to remind everybody again, at ASCO we had a 60% ORR. And we saw equal efficacy in both the PD-L1 negative and PD-L1 positive patient population that was first-line cis-ineligible. And while I shared with you qualitatively that we see the consistency of the data as we have more patience with available scan data, we are going to be providing an update at scientific conference for the total cohort that's available. So thank you for asking the question.

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

So maybe this question is for Mary. Just for baseline characteristics of those PD-L1 negative patients, over time, do you have a rough idea without the treatment of 214, but other background treatment, what percent roughly will turn into PD-L1 positive? Or is that not possible at all?

One of the things that we were very fortunate to do in our program is launch this study in collaboration with MD Anderson in an alliance. And we also are very fortunate to have Jonathan Zalevsky as our Chief Scientific Officer, who has deep tumor immunology. And because of that, we, in a very calculated way, went about understanding our mechanism of action by collecting biopsies at baseline and on treatment. And while we have been very transparent to publish our data showing over 50% of the patients have converted, unfortunately, other companies haven't presented the same sort of data. And so we would be very happy to review data from other clinical trials, but as far as we know, we seem to have the highest proportion of patients convert. And what we also showed at ASCO is not only do we have a high proportion of patients who convert from PD-L1 negative to positive but those patients who do have a clinical outcome very similar to patients who are PD-L1 positive at baseline. So we look forward to other companies sharing their data over time. And unfortunately, those data aren't available from a lot of other clinical trials. And I am just very grateful to be in collaboration with Jonathan who encouraged us to capture that data at the beginning of our studies.

And then just in general, a follow-up question. In general, what is the assay variability on these PD-L1 biopsies? Are they fairly consistent or they vary significantly?

I can let JZ answer this but I know that there has been published literature to show very consistent assay results from both the commonly used assays for both BMS and Merck. And so JZ, if you want to comment further about the methods, I'd appreciate you taking this question.

Sure thing. Happy to. So indeed, as Mary said, the methods are validated. And as they are validated, they reach a level of precision and accuracy, which is consistent with their validation. So that the method is very reliable and robust. And in addition, in our trials, we collect fresh biopsies from almost all of the patients to collect the data for PD-L1 status at baseline. And in this case, in addition to that, say, as validity as the method, using the fresh tissue biopsy further strengthens the result because it gives you the most moment-in-time result associated with the start of therapy.

And our next question comes from Bert Hazlett from BTIG.

A couple of clarifying questions. We're seeing the -- thank you for the data releases upcoming. And you've discussed 262 with 214 together. I think it's trial-in-progress, that poster that's going to be presented at ESMO that says with or without nivolumab. I guess just thinking about 262, 214 combination. Is that going to be subject then to kind of this Bristol-Myers, let's let the data mature type of agreement? Or is that something you can maybe more freely present as it matures?

Yes. Bert, obviously, we're going to share data that is mature and can be put into clinical context. And we will be doing that across all of our programs, whether it's our immunology, our pain or our immuno-oncology programs. So we will definitely be sharing data on that trial, once we have first -- the first step is to identify our recommended Phase II dose. And once we have identified that in our dose escalation, then will be moving broadly into multiple different tumor settings with roughly 400 patients. And so I think that the data release will be very similar in that program as we're talking about with PIVOT, as data become mature over time, we will have a continual stream of presentations at scientific meetings. First step though, again, is to get through the dose escalation and identify our recommended Phase II dose.

Okay, so when might we be able to see the first whiffs of data with that combination then?

Yes. So by the end of this year, we should have biomarker data from the earliest cohorts. Recall that in our early cohorts and because this is a novel-novel combination, we have to do sequential dosing with NKTR-214 and NKTR-262. So in the first cycle, we will be capturing isolated safety data from NKTR-262. And then in cycles 2 and beyond, we combine with NKTR-214. So -- and I'm going to turn it over to JZ because he can give some more details about all of the biomarkers and specifically those related to the TLR pathway. JZ?

Sure, thank you Mary. Yes, so Bert, one of the key things that we did in this trial is we made sure that in both our blood-based collections and tumor-based collections, we could delineate the mechanism of NKTR-262 as it engages the TLR-78 pathway. And then in addition, see how that delineation stacks against the NKTR-214 specific sets of immune activation. So in the tumor and in the blood, we have a number of biomarkers that detect type one interferon activity. And so that's associated with the kind of interferon signaling pathway that, that TLR engages. So we can detect that both in the tumor and in the blood in terms of both molecular biomarkers such as gene expression. But then also changes at the protein and cellular level because the TLR engages different cell populations than does NKTR-214. So those 2 sets of biomarkers specific to 262 and specific to 214 are very important. We use them together. They'll show us the differentiation of this combination from NKTR-214 alone, for example. And it will also just really inform the types of tumors and the way we would use the combination going forward.

That's great additional color. And just a clarifying question then, with the triple combination with OPDIVO and 214, did you say, Mary, that the initial indication was going to be an RCC? Or did I mishear that?

So we are looking at the triplet combination in a few different dosing regimens. And the first cohort of patients we've enrolled are both in RCC and non-small cell lung cancer. We will also be looking at regimens in bladder cancer and melanoma as well.

Okay. And just one strategically for Howard, with 181 you're making excellent progress but there's a blizzard of activity, some productive, some not productive maybe with regard to the opioid landscape. How do you think about monetizing this asset? It's an intriguing one but I know you're thinking about it but there's a ton of activity, again, some productive, some maybe not so. So I'd love to get your thoughts.

It's a very good question. And we've spent a lot of time talking to the people that are heavily involved in dealing with the opioid epidemic in our country, both at the care level and the legislative level. And I think there's certainly a high level of interest for a molecule like NKTR-181, which can address the opioid crisis. I think -- we have an NDA that has now been filed by the FDA, we have a PDUFA date. I think we've had incredibly useful meetings with the agency and they've been very, very helpful in guiding us through this process. And I strongly believe that there is a great opportunity for NKTR-181 as a novel analgesic. We'll see how things evolve over time. I agree with you, it's a very confused landscape and you see issues coming up all the time, but that's exactly what we're trying to solve. We're trying to solve the very issues that you're identifying as problematic. So let's see how NKTR-181 progresses and, again, I believe that it will do a lot of good for dealing with the opioid crisis in the U.S.

And our final question comes from Corey Davis from Seaport Global.

I don't think I'll do the final question. It's due, but the question is more generally -- and I know it's early. But which of all the indications that you are talking about do you think is going to be fastest to market for 214? And is any accelerated approval still a possibility at this point, or is that highly unlikely?

Yes, so we've talked about moving forward into three different Phase III settings in renal cell and melanoma and in bladder. We haven't gone into all the details of our bladder strategy, but certainly, what we're exploring is an accelerated or rapid pathway to approval. Now to get there, of course we need to review our strategic strategy with the FDA and with health authorities and we are moving rapidly to do that in order to launch our Pivotal trials by the end of this year. Likewise, as you heard today that the melanoma primary efficacy endpoint is projected for 22 months after the first patient is in. We also have always said that in PIVOT-02, we have potential of potential to convert that study into a registrational study for a patient population with a high unmet medical need. And certainly, those patients who receive a checkpoint inhibitor plus chemotherapy in non-small cell lung cancer would also qualify for high unmet medical need as they relapse from that combination. There are also others, like a third line urothelial carcinoma population or relapsed refractory melanoma population. So we have always created a strategy that would allow us to leverage data quickly from the PIVOT-02 study to launch into definitive Phase III studies as well as potentially move any of those cohorts into a rapid accelerated approval pathway. And we have had those conversations with the FDA which allows us to convert the PIVOT-02 into a registrational study and so as we move forward, we believe that while the melanoma study will have a read out in 22 months, there are other opportunities for potential accelerated approval.

And second question is in thinking about the effect of converting negative patients to positive patients, do you think that's anything the FDA would ever allow as either a claim or just information in the label? And being used as perhaps a surrogate end point? Or is just kind of a nice to have and at the end of the day it's still just about survival and/or response rate?

Yes, it's a really good point, and we are evaluating multiple different opportunities to capitalize on ways to broaden our indications and move forward quickly with the FDA and that is certainly on the list.

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

Well thank you, everyone. It's certainly exciting to embark on the initiation of 20 registrational trials with NKTR-214 as well as the initiations of trials for other targeted therapies in I-O therapies. It clearly says a lot about the importance of this molecule and we strongly believe that NKTR-214 can be the central therapy in immuno-oncology. So I want to thank our employees for their spectacular performance and our investors for all their great support and we'll keep you posted. Thank you very much for joining us.

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