Nektar Therapeutics (NKTR) 2022 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Nektar Therapeutics Third Quarter 2022 Financial Results Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.

I would now like to hand it over to your speaker today, Vivian Wu. Please go ahead.

Thank you, Crystal, and good afternoon, everyone. Thank you for joining us today. With us on the call are Howard Robin, our President and CEO; Dr. Jonathan Zalevsky, our Chief of Research and Development; Jill Thomsen, our Chief Financial Officer; and Dr. Brian Kotzin, our Chief Medical Officer.

On today's call, we expect to make forward-looking statements regarding our business, including statements regarding the therapeutic potential of and future development plans for drug candidates in research programs. The timing of the initiation of clinical studies and the availability of clinical data for our drug candidates, the timing and plans for future clinical data presentations, the formation, future development plans or success of our collaboration arrangements. The expectations following our corporate restructuring and reorganization, financial guidance and certain other statements regarding the future of our business. Because forward-looking statements relate to the future, they are subject to uncertainties and risks that are difficult to predict, many of which are outside of our control.

Our actual results may differ materially from these statements. Important risks and uncertainties are set forth in our Form 10-Q that was filed on August 5, 2022, which is available at sec.gov. We undertake no obligation to update any of these forward-looking statements, whether as a result of new information, future development or otherwise.

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

With that said, I would like to hand the call over to our President and CEO, Howard Robin. Howard?

Thank you, Vivian, and thank you to everyone for joining us today. During the third quarter, we continued to make meaningful progress towards execution of our new strategic plan directed to the fields of oncology and immunology with a sharp focus on 3 core R&D pillars, NKTR-358, NKTR-255 and our research activities. With NKTR-358 and NKTR-255, our biologic clinical pipeline is poised to generate value enhancing clinical trial data begin '23 and continuing through 2025. Importantly, our plan provides us with a cash runway through the middle of 2025, and this is exclusive of any potential future cash inflows from new partnering activities.

Each program in our pipeline provides us with a distinct and highly promising opportunity to provide patients with novel potential medicines across a range of therapeutic areas, and we're already starting to see encouraging data across our portfolio. This past quarter, we reported positive data for our clinical stage program in immunology, NKTR-358 now known as rezpegaldesleukin or REZPEG, in the setting of atopic dermatitis. REZPEG is being developed with our partner, Eli Lilly, in multiple autoimmune diseases. And in addition to atopic dermatitis, we're also pursuing lupus, and we have plans to go into at least 1 additional indication. And we look forward to announcing that new indication in the coming months.

Our lupus Phase II study, which enrolled about 280 patients is expected to report top line data in the first half of 2023. And the important Phase Ib data in atopic dermatitis patients that were presented in Q3 will shape the robust Phase IIb study in this setting, which is planned to start also in the first part of 2023. The design for that study is being finalized now, and Brian will provide further information on the REZPEG program in a moment.

Our second significant clinical program is NKTR-255, our novel wholly-owned IL-15 agonist being developed in both liquid and solid tumor settings. In large B-cell lymphoma, we're on track to initiate our own sponsored study of NKTR-255 in combination with approved autologous CD19 CAR-T products.

The study is designed to demonstrate the potential of NKTR-255 to enhance the efficacy benefit of these therapies. This Phase II/III trial will be a randomized, double-blind, placebo-controlled study comparing NKTR-255 versus placebo in relapsed or refractory patients being treated with CAR-T cells. It will position us for key comparative data in 2024 for NKTR-255 in second-line and third-line large B-cell lymphoma, which is the labeled indication for these approved CAR-T products.

In multiple myeloma, we plan to present the data from the first several patients enrolled in our study of NKTR-255 in combination with DARZALEX FASPRO at the upcoming ASH meeting in New Orleans. The study is continuing dose escalation and we're encouraged by the early data we see that continue to support the biologic mechanism of NKTR-255. Specifically, we've observed that NKTR-255 can restore blood NK cell levels after DARZALEX mediated NK cell clearance.

And finally, the JAVELIN Bladder Medley Phase II comparative study in combination with avelumab began actively enrolling patients in the third quarter. Our partner, Merck KGaA, is running this study, and we're on track to generate PFS data for this study by the end of '24.

In research, we're working on a novel TNFR2 antibody that we believe will be highly differentiated from anything in the field and holds great promise as a next-generation selective Treg agent in autoimmune diseases such as multiple sclerosis and inflammatory bowel disease. This will be the first antibody program in our pipeline, and we're focused on advancing this important new mechanism to be prepared for IND-enabling studies in 2023.

In addition, we're continuing to advance our preclinical work in oncology, NKTR-288 is a novel PEG conjugate of interferon gamma designed to modify binding of interferon gamma to its receptor and nonreceptor substrates and optimize the duration of interferon gamma signaling. Next week at SITC, we will present the first set of preclinical data for this program.

We ended the third quarter with approximately $546 million in cash, and as I stated earlier, we've implemented a strategic plan, which enables us to have a cash runway through the middle of 2025. We do not anticipate a need to raise capital during this period. We are well funded with a strong financial position and we will enable us to drive our key programs forward to value generating data and milestones.

And now I'd like to turn the call over to Brian to provide an update on REZPEG. Brian?

Thank you, Howard. REZPEG is a unique molecule, and I am truly excited about the work we are doing with our partner, Eli Lilly, on this important first-in-class Treg stimulator for the treatment of autoimmune and inflammatory diseases. Our goal with this program is to address the underlying Treg deficiencies and consequent overactivity of effector T cells in these diseases by selectively activating and expanding Tregs. Unlike immunosuppressive drugs, REZPEG is designed to bring the immune system back into a normal balance.

The data we recently presented in atopic dermatitis continue to reinforce our conviction in this approach. As Howard mentioned, this past September at the EADV Congress, full data from our first initial proof-of-concept study in moderate to severe atopic dermatitis were presented. The 12-week Phase Ib study conducted by Lilly tested 2 doses of REZPEG compared to placebo, and then followed patients for 36 additional weeks after the last dose of therapy.

Treatment with REZPEG showed a dose-dependent reduction in Eczema Area and Severity Index scores in patients, also known as the EASI score, with approximately a 70% reduction in scores at week 12 at the highest dose tested. We also saw a trend toward a dose-dependent improvement in the investigator global assessment for atopic dermatitis and itch responder rates through week 12 of treatment.

Consistent with the REZPEG mechanism of action, total Tregs and CD25bright Tregs increased versus placebo through week 12. The efficacy observed at 12 weeks of treatment with REZPEG is in line with efficacy observed after 16 weeks of treatment with DUPIXENT, the current standard of care for moderate to severe disease. But clearly, the most fascinating observation from the study was that when we looked at patients 36 weeks after we stopped dosing REZPEG, their skin scores and other measurements of disease remain very low, and this is an effect that is not observed with DUPIXENT. This has us and Lilly very enthusiastic about the potential for long-lasting responses and infrequent maintenance dosing with REZPEG in the setting of atopic dermatitis.

When we began this program at Nektar, our hypothesis was that restoring Treg populations in Treg deficient patients would restore the normal balance in the immune system and potentially provide a disease-modifying therapy. Along with Lilly, we coined the term resolution therapeutic to describe the mechanism of REZPEG. We are excited to see the long duration of sustained response observed in the atopic dermatitis study consistent with this hypothesis.

In addition, we are encouraged by REZPEG's safety profile, no serious or severe adverse events were reported from patients treated with REZPEG. These collective data support our plan to initiate a Phase II study in atopic dermatitis together with Lilly. This will be a relatively large placebo-controlled study. We expect the design of the study to be completed near the end of the year and the study to start in the first part of 2023.

REZPEG is also being evaluated in a Phase IIb study in patients with continued active lupus despite being on standard background therapies. As a reminder, this Phase II study evaluates 3 dose levels of REZPEG compared to placebo in approximately 280 patients for a 24-week treatment period. The study is fully enrolled and we are on track to report data from the study in the first half of 2023.

Lastly, Lilly is also planning a third Phase II study in a yet-to-be-announced autoimmune indication, which we hope to unveil in the coming months. We have a number of important milestones for REZPEG in 2023, and the compelling data generated to date reinforce our confidence in this program. We are looking forward to our continued collaboration with Lilly.

And with that, I'll hand the call over to JZ to discuss NKTR-255 and our preclinical programs. JZ?

Thanks, Brian. Our therapeutic candidate, NKTR-255, is an agent that engage in the full biology of the IL-15 pathway to provide functional activation and homeostatic control of IL-15 responses of immune cells, namely natural killer cells, CD8 T cells and immune memory subset. As a full agonist of the IL-15 pathway that can signal through both cis- and trans-presentation, the trimeric IL-15 receptor complex. NKTR-255 can be combined with multiple mechanisms ranging from targeted agents to cell therapies, including CAR-Ts and even checkpoint inhibitors to potentially improve the efficacy of these agents.

We are pleased to be presenting the first data for NKTR-255 in combination with DARZALEX in patients with multiple myeloma at ASH. This combination study of NKTR-255 for DARZALEX is a key biological proof of mechanism study for NKTR-255 because of the unique consequences of the DARZALEX mechanism of action.

DARZALEX is the CD38 targeting antibody that depletes CD38 positive cells through an ADCC mechanism. DARZALEX is effective for the treatment of multiple myeloma because M cells, which are the pathogenic tumor cells in multiple myeloma, expressed CD38 on their cell surface and are effectively targeted and depleted by DARZALEX. However, NK cells also express CD38 on their cell surface and these cells are also directly targeted and depletion by DARZALEX. And since NK cells is a critical immunofactor cell that execute the ADCC mechanism and emerging hypothesis is that restoring NK cell level during DARZALEX treatment may be beneficial.

Consistent with this hypothesis, last summer, we published a paper in blood advances with our collaborator, Dr. Nikhil Munshi at Dana-Farber. That showed NKTR-255 when used in combination with DARZALEX substantially potentiated the efficacy of DARZALEX against multiple myeloma cells in a number of in vitro and in vivo preclinical models.

As mentioned by Howard, we're very encouraged to see that the early patients in the NKTR-255 with DARZALEX combination demonstrated NK cell recovery in the peripheral blood within days after starting NKTR-255 administration. This proof of mechanism study is continuing to enroll patients. And as we stated in the past, we will wait to assess the mature data from dose escalation before making a final determination on any investment in future ADCC combination work in this setting.

We are also focused on pursuing NKTR-255 as a potentiator in the landscape of cell therapy. Since their first approval years ago, the usage of autologous CD19 chimeric antigen receptor T cells or CAR-T therapy has grown significantly in the B-cell lymphoma treatment landscape. Although these therapies offer great treatment benefit for those patients who fail first or second-line treatment, many patients tend to relapse over time post treatment with CAR-T and there is a high unmet need to provide both an extended duration of response and to drive a higher frequency of complete responses.

We have done a large number of preclinical studies using multiple autologous CAR-T therapy demonstrating that addition of NKTR-255 can drive cell proliferation and expansion in the presence and (inaudible) of antigen as well as maintain CAR-T cell functionality and sustain their survival by limiting cell death pathways.

In multiple most preclinical studies, the combination of NKTR-255 plus CAR-T is far more effective than CAR-T alone in clearing tumors in xenograft models. So consequently, our clinical hypothesis is that the addition of NKTR-255 to the CAR-T regimens may increase CAR-T cell levels leading to enhanced efficacy.

As Howard said earlier, we are on track to initiate the NKTR sponsored study of NKTR-255 combined with approved CAR-T therapy. Next month at ASH we will unveil the trial design of this Phase II/III study in patients with relapsed or refractory diffused large B-cell lymphoma.

The goal of this study is to generate comparative data with NKTR-255 plus CAR-T cells versus placebo plus CAR-T cells. Our target is to initiate the first clinical type of the study by the end of this year.

And as Howard stated earlier, we are expecting initial data in the second half of 2024. We already have 2 studies underway with external collaborators to evaluate NKTR-255 in combination with CAR-T therapy. The first study is sponsored by Dr. Crystal Mackall, who is the Founding Director of the Stanford Center for Cancer Cell Therapy and is combining Stanford's proprietary CD19/CD22 bispecific CAR-T cell therapy with NKTR-255 in patients with relapsed or refractory acute lymphoblastic leukemia.

The second study is being conducted by Dr. Cameron Turtle's lab Fred Hutchinson Cancer Center. Fred Hutch is combining NKTR-255 with BREYANZI in relapsed or refractory large B-cell lymphoma patients. The goal of these 2 studies is to demonstrate the pharmacodynamics and safety of NKTR-255 for CAR-T therapy in patients. Specifically, our objective is to demonstrate the NKTR-255 remote CAR-T cell expansion and duration of persistence with repeated treatment.

Additionally, the studies will assess the full safety profile of NKTR-255 when beginning treatment shortly after the start of CAR-T cell therapy. We expect to have results from the first several patients in these studies in 2023.

Another focus area for our development plan for NKTR-255 is the work being conducted with Merck KGaA, who has initiated the JAVELIN Bladder Medley Study. This Phase II randomized open-label study is comparing avelumab combination with 3 antitumor agents, NKTR-255, Fidelity and one of the Merck's own anti-TIGIT therapeutic candidates. Tested in the setting of maintenance treatment for bladder cancer in patients whose disease did not progress following the platinum regimen. Avelumab is annualizing at about a $500 million revenue run rate in this setting, and the study gives NKTR-255 a possible path to a future registrational trial in this setting based upon the strength of the data generated in this Phase II study. We expect the first potential PFS data from the Phase II study in late 2024.

Now turning our attention to our preclinical research programs. We are cultivating our research pipeline with a near-term focus on biological programs that have applications in oncology and immunology. One of the programs we are working on is NKTR-288 a pegged conjugate of the protein interferon gamma. Interferon gamma is a cytokine that induces cellular antigen presentation and enhances tumor antigen-specific cytotoxic T cell responses and may have application in a number of therapeutic characters, including oncology, infectious disease and others.

With NKTR-288, we have designed a site-specific conjugate of peg to protein, in order to modify binding of interferon gamma, both with its native receptors as well as in other binding substrate hubbard. Overall, this design enhances and prolongs the pharmacodynamic duration of interferon gamma signalment.

In our preclinical study, NKTR-288 a regulated MAC Class I and PD-L1 expression on tumors and enhanced the antitumor activity in mouse models when combined with anti-PD-1 or PD-L1 and also worked as a single agent. We look forward to presenting you an additional data for our NKTR-288 program at SITC next week.

We are also continuing our preclinical work on our tumor necrosis factor receptor II program or the TNFR2 program and collaboration of biologic design. The goal of this program is to generate novel antibodies that are selective agonist of TNFR2. TNFR2 is a key receptor that signals exclusively through transmembrane TNF alpha to suppress inflammation and promote tissue protection and repair.

One key role of TNFR2 is to promote Treg stability, homeostasis and function in diverse anatomical tissues. We have leveraged our understanding of Treg biology, and in particular, their responsiveness to IL-2 signaling versus NF-kappa B signaling to drive the TNFR2 antibody discovery in collaboration with biologic design. The TNFR2 agonist could have application for a number of autoimmune inflammatory disease, including multiple sclerosis, inflammatory bowel disease, arthritis as well as antibody-mediated autoimmune disease. We look forward to keeping you updated on our progress as this program matures.

With that, I will turn the call over to Jill for a review of our financial guidance. Jill?

Thank you, JZ, and good afternoon, everyone. We ended the third quarter with $546 million in cash and investments and no debt. Our 2022 financial guidance remains unchanged, and we expect to end the year with approximately $450 million in cash and investments. We rapidly executed our restructuring and strategic plan beginning in April. And because of this, our financial position remains strong with a cash runway that extends through the middle of 2025. This will take us through several key value-generating milestones for our pipeline.

Our team has worked diligently to execute an efficient operational wind down of the BEMPEG program, consistent with our obligations to patients and their physicians.

In accordance with that plan, all patients on the 6 Nektar run BEMPEG studies have now transitioned to standard of care or other post-trial treatment options.

Now I'd like to remind you of our financial guidance. Our full year GAAP revenue guidance is unchanged and expected to be between $85 million and $95 million, which includes $15 million to $20 million of product sales and $70 million to $75 million in noncash royalties. We still expect to recognize a total of approximately $150 million to $160 million in restructuring and impairment charges related to the BEMPEG program termination.

Our R&D expense is still expected to be between $240 million and $250 million, including $40 million to $45 million in noncash depreciation and stock compensation expense. And our G&A expense is still projected to be between $90 million and $95 million, including $25 million to $30 million in noncash depreciation and stock compensation expense.

Finally, our noncash interest expense is expected to be between $25 million and $30 million related to the prior monetization of our royalty streams.

I'd like to reiterate that we still plan to end the year with approximately $450 million in cash and investments.

And with that, we will now open the call to questions. Crystal?

(Operator Instructions) And our first question will come from Jay Olson from Opp Co.

This is Cheng on the line for Jay. And congrats on the progress. Maybe on the REZPEG, just wondering how are you thinking about the unmet need that can be potentially addressed by REZPEG. And if you think the target population, to be those who do respond well to DUPIXENT? And maybe if I can ask 255 questions in combination with CAR-T. Wondering what was the expectation you want to see for the additional benefits, whether you are planning or you're hoping to see higher response rates, say, at month 6, where patients may remain disease-free for a longer time?

So thank you for the question. In atopic dermatitis, it's important to emphasize that the mechanism of REZPEG is completely different than any of the other therapeutics now being studied. And because of this, it seems very possible that patients who do not respond to standard of care therapies, for example, DUPIXENT or even other IL-13 directed therapies can respond to a mechanism like REZPEG, which is really extremely different. It's inducing Tregs to suppress the inflammation at the site without increasing immunosuppression. So REZPEG has this possibility in terms of the unmet need that you're asking about to not -- to approach people who are not responding, for example, other standards, others -- therapy -- standard of care therapies like, for example, DUPIXENT and the IL-13 directed therapies.

It's also important to emphasize that in our initial data, we saw this really fascinating observation that once we stop therapy, we continue to see a suppression of disease. This was really quite remarkable. And it's this durability of response that also differentiates us from, for example, DUPIXENT. So it's possible that we could deliver this therapy and maintain responses with very infrequent therapy, much less frequent, for example, than DUPIXENT and/or even without therapy for long periods of time. And I think this is another area that we can differentiate in this space. So thanks again for the question.

And we'll have JZ answer the 255 question.

Yes, thank you. So the question was about the expectation in our study. So I guess -- start off by reminding you about some of the preclinical studies that we've conducted evaluating NKTR-255 in combination with a range of different CAR-T therapies. And what we've seen both in vitro and in vivo is that the addition of NKTR-255 caused 2 really strong biological effects, very prominent effects. First is it causes a very large expansion in the maximum number, the peak of CAR-T cells that proliferate inside of the organism after the CAR-T cells have been transplanted. Remember, these are living drugs, and they proliferate inside of the patient or inside of the test system and say it's a mouse or something. So with 255 would be a large expansion in cells.

Second thing that we see is a prolongation of the cell survival inside of the animal when we treat with 255. So you get both an increased number and you get an increased persistence. And in those preclinical studies, that leads to substantial efficacy. And efficacy relative to CAR-T alone and the assets of 255 is quite different. And it's that night and day kind of a difference.

So then when we turn our attention to some of our expectations, we hope to see similar kinds of effects. We would like to see increases in CAR-T cell number when we add 255 to patients receiving one of the approved CAR-T cell regimens. So they increase their peak, and we want to increase their persistence and duration. We also want to increase their memory, phenotype, sustain and stabilize that phenotype and maintain an activated state in those subs. And then clinically, our hope is that this will give rise to at least 2 kinds of measurements. We'd like to see an increase in the complete response rate and the durability of that complete response rate. As you know, one of the challenges with these therapies is that the effect wanes over time. We want to make that effect last as long as possible, and then ultimately, that should translate to additional time-to-event endpoints as well.

Our next question will come from Chris Shibutani from Goldman Sachs.

Two questions. One, on the sort of run rate for operating expenses, a lot of hard work this year, obviously, difficult to address the restructuring should we think about the level of R&D and SG&A spending that you just posted in this most recent quarter, R&D coming in below what we had projected, and I believe consensus as well, is this a reasonable proxy, if we're thinking about on a go-forward basis for the near to intermediate term?

And then a second question, perhaps for Howard. Obviously, during the quarter, there were headlines that related to a potential combination with PureTech, which would have prompted some unique sort of potential combinations for you as an entity. I think that discussion was relatively briefly in discussions, but then terminated, I think, today was technically originally the end of that. Can you talk to sort of the genesis of that and maybe how you're thinking strategically. It's clear that you have the Lilly partnership, the oncology assets, et cetera. But that certainly was sort of ink in the ointment that not many would have anticipated. And if you could share any comments about how that came about and where we move forward from here in terms of how you and the Board are thinking that would be terrific.

This is Jill. So I'll take the financial question first. So when we -- just to reiterate, we're not changing our guidance for 2022. But as we look forward into 2023 and our runway through 2025, when we announced our restructuring plan last spring, we talked about our burn going -- our annual burn going into the direction of $150 million to $175 million a year on average over that time period. So I think that's the way you can think about the cash burn guidance. GAAP could be a little bit different from that. As you know, it depends a little bit on the timing of the incurred expenses. But if you want to focus on the GAAP, the cash, I would say $150 million to $175 million is kind of the right way to think about it for now. And of course, we'll give updated guidance in our February call for 2023.

This is Howard. Good question. Let me give you some background. I think look, first of all, as I said in our -- in April, when we reintroduced our strategic plan, and we've revised our strategic plan. I said that we'd be listening to anybody -- any company that has levels of interest in a business combination, and we certainly continue to do that. And I think like any company from time to time, we're going to evaluate proposals from other companies that could benefit our business and make the proverbial 1 plus 1 equals 3. And the PureTech approached us. We had some discussions with them. Normally, those discussions -- we have discussion -- actually, we have -- we're always having discussions with companies. It's something that goes on a regular basis. And I can tell you though, that the only reason it became public is because under certain -- they're a U.K. company. And under certain U.K. rules, it had to be disclosed even though we were fairly early in discussions. So I wouldn't read too much into that. I would say that we're always evaluating opportunities. And if there's an opportunity that makes sense for our shareholders, we are highly interested in pursuing it. And with that -- other than that, I really can't comment too much more on what we're doing in that regard. I hope that helps.

Our next question will come from Mara Goldstein from Mizuho.

This is Supawat for Mara. Another question on REZPEG. I know that the Phase II strategy is still being worked out with Lilly, but I'm just curious if you have some sort of baseline activity that you hope to see for the Phase II study started in atopic dermatitis? And secondarily, when do you anticipate getting to that point of making a decision, whether this would proceed to a Phase III or registration directed study?

As we mentioned, we're in the process of designing the Phase IIb study, which follows our proof-of-concept study that was presented. In terms of the goal of the next study, the Phase IIb is really to fully demonstrate the potential efficacy that we will see with REZPEG. The -- it will be a study which has pretty standard elements to it. There'll be an induction phase, probably similar to other agents. There will be a maintenance phase, and we will study different dosing regimens during that maintenance phase. And I think the key points that we will be looking for is what type of efficacy, what level of efficacy do we see at the end of induction and that will be in different patient subgroups. And then how does that compare to other therapies in the space? And then in terms of -- especially in maintenance, what types of infrequent dosing can we get to -- can we achieve that maintains the benefit that we see after induction. And of course, we're hoping for best-in-class type efficacy. So that's our expectation. Thank you.

We'll take our next question from Roger Song from Jefferies.

Great. Congrats for the progress. I just have a quick one for 255, understanding the mechanisms proliferating the T cell and it makes sense to combine with the CAR-T. But just curious, given the bispecifics, particularly they also -- kind of a passive T cell therapy. Do you have any sense, why or why not 255 can combine with those bispecifics to drive better efficacy?

Yes. Roger, thanks for the question. This is JZ. So certainly, there is no scientific or other reasons why NKTR-255 could not be combined with bispecific, whether it's a CD3 targeting bispecific for T cells, and even an NK cell targeting bispecifics such as the CD16 arm. In fact, both of those are very relevant and reasonable opportunities as well for NKTR-255.

In terms of the basic mechanisms that could lead to potential synergy, right, of the bispecific with an agent like NKTR-255, is not that different from CAR-T. The CAR-T cells express IL-15 receptors, so they're a direct target of NKTR-255 in this case, whereas in the bispecifics we've been targeting T cells and given the T cells that are CD3-positive health and the CD3 engager or you'd be targeting and enhancing NK cells in the CD56 engager. Our intention to focus in the cell therapy space is, obviously, there are more free agents here in this space. There's clearly a high unmet need as well even in these approved on labeled indications with these autologous products. And we think there's -- it's a great place to show a lot of opportunity.

Another key reason why we're really focused on the cell therapy space as well is also because there's quite a lot of data that shows that IL-15 levels, both that are reached post conditioning regimen as well as that are maintained after CAR-T treatment has begun, they seem to be highly linked with patients' ultimate ability to mount the best and most durable strongest response. So there's also a really strong scientific theory for IL-15 and the IL-15 pathway itself in that cell therapy setting. And that's how we chose to focus there. But certainly, there's no reason why we also couldn't include bispecifics as a component for a combination strategy in the future.

Our next question will come from Jessica Fye from JPMorgan.

I'm curious, do you expect you or Lilly to disclose the (inaudible) indication for 358 before or after the lupus Phase II data?

Thanks for the question. I think it's -- we just don't know right now, we will be announcing that indication and -- or hope to be announcing that within the next few months -- in the upcoming months. But I don't know how that will relate to the timing of the readout of the lupus study, which will also occur in early 2023.

Our next question will come from Greg Harrison from Bank of America.

Assuming that REZPEG continues to look differentiated in atopic derm, how fast could a pivotal trial be executed? And what would it look like in your ideal scenario? Just trying to get a sense of how a larger data catalyst like this would line up with your cash burn guidance?

So I think you can look at typical studies. It does depend on the size of the Phase IIb that's in -- right now, as we talked about, we're in the process of finalizing the design, and that will be completed around by the end of the year. And we're planning to, as we said, to initiate the study in the first part of 2023. So a typical study, the length of that study, maybe 18 to 24 months. So that's when we might expect the data to -- from the study.

(Operator Instructions) Our next question will from Andy Hsieh from William Blair.

Great. I got 2. So one maybe for Brian, as you kind of think about the bladder cancer maintenance landscape, PADCEV could potentially be approved around that setting around midyear next year. So I'm just curious if there is any kind of strategy to potentially get incorporated into that setting as opposed to just a maintenance setting. So that's question number one.

Question number two, maybe for JZ. You mentioned about the pivotal study with CAR-T, which is very, very interesting. I'm curious if you could remind us about explorations that you've done to get a sense of what is the best sequencing. You kind of mentioned from previous questions, about potentially after the condition of regimen or shortly after the infusion. But I'm just curious about whether that's been worked out, especially in light of Project Optimus where -- when the FDA is really honing in on selecting the right dose?

Yes. Thanks, Andy. So I think I can actually answer both of them. So the first question you asked was about the avelumab setting, right? So avelumab label right now is in patients that take a platinum regimen to chemo regimen, right, in the first line. And then patients that don't have a complete response, they can -- they're eligible for avelumab maintenance. And it's quite effective, as you know, at maintaining patients and it has a nice survival that they presented. And that's what was the key for their approval in that setting.

Now it's true that there is some potential PADCEV plus PEMBRO around the corner, but it's still a Phase III study that needs to complete and conclude. It is possible we're always looking to see if that changes the first-line landscape. So for example, does it start to erode or displace that first-line chemo, which is where avelumab is used. So that's a component that we're looking and paying attention to. And you can imagine that our collaborator Merck KGaA is paying even closer attention to that. So we're very tuned in on to that as well.

And then in terms of long term, depending on the results that we see in this maintenance setting and what we learn in the bladder, yes, I think there's an opportunity for additional expansion, additional lines to be evaluated as well, even potentially on that PEMBRO PADCEV regimen if that regimen is approved. So that's kind of like a crystal ball kind of a question.

And the next question that you asked was about the CAR-T setting. And I think you asked a really great question. So you got in -- a mention of Project Optimus in the selection of dose and the selection of regimen. And this was something that we paid a lot of attention to in our preclinical studies. So we did a number of studies with our collaborator, Cameron Turtle at Fred Hutch using the same autologous CD19 CAR, CAR-T, where we tested multiple dose ranges and dose levels of NKTR-255 as well as timing of administration starting NKTR-255 relative to the CAR-T cell administration. That's something that we really put a lot of energy and a lot of resources into.

When we unveiled kind of the design of that Phase II/III study that we'll be sponsoring and as I mentioned, we'll be unveiling that at ASH at an event that we host. You'll see a lot more color there on how we're directly addressing your question, paying very close attention to both the dose level and the dose regimen that's critical to be used in the cellular therapy.

And the reason why it's particularly important in the cell therapy space. I mean we always have to remember these drugs are basically living medicine -- it's a live medicine, right? The cells proliferate their CD19 positive. There are a lot of B cells expressing CD19. There's a lot of antigen, right, for these cells to proliferate with and proliferate with an antigen-driven response. And so the application of NKTR-255 to prolong and sustain that proliferation as well as that total cell population and its fitness is something that both the regimen and the dose is very important too. So we look forward to sharing our approach for that with you pretty much next month.

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, for joining us today. And we've -- today I think we've outlined our continued progress in successfully executing on our strategy. And our pipeline and partner programs continue to advance and have the potential to address the needs of a significant -- of significant patient populations and provide the opportunity to create significant value for our shareholders. So I'd like to thank all of our employees for their efforts and hard work, and I want to thank our shareholders for continued support -- with an update on our progress. So stay tuned. Thank you very much.

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