Nektar (NKTR) Q3 2026 Earnings Call Transcript

DATE

Thursday, Nov. 12, 2026

CALL PARTICIPANTS

• President and Chief Executive Officer - Howard Robin
• Chief Medical Officer - Mary Tagliaferri
• Chief Research and Development Officer - Jonathan Zalevsky
• Chief Financial Officer - Linda Rubinstein
• Investor Relations - Vivian Wu

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TAKEAWAYS

• Total Revenue -- $9.4 million, consisting entirely of noncash royalty revenue related to the sales of future royalties, compared to $11.8 million in the third quarter of 2025.
• Net Loss -- $55.7 million, representing an increase from a net loss of $35.5 million in the prior-year quarter due to higher research and development costs.
• Net Loss Per Share -- $1.63, compared to a net loss of $1.87 per share in the third quarter of 2025 on a higher weighted average share count.
• Cash and Investments -- $952.9 million as of Sept. 30, 2026, which management reported provides a strong position to fund Phase 3 registrational programs.
• Year-End Cash Guidance -- More than $840 million, which is at or above the top end of the previous guidance range of $815 million to $840 million.
• Research and Development (R&D) Expense -- $44.1 million, driven by clinical trial activities for the ZENITH AD and ZENITH AA programs and manufacturing for rezpegaldesleukin.
• General and Administrative (G&A) Expense -- $24.6 million, reflecting an increase in legal expenses during the third quarter.
• Full-Year R&D Guidance -- $185 million to $200 million, including approximately $5 million to $10 million of noncash depreciation and stock-based compensation expense.
• Full-Year G&A Guidance -- Approximately $65 million, which management noted is within the range provided in previous financial updates.
• Atopic Dermatitis Market Forecast -- $30 billion by 2033 in the U.S., representing a growth opportunity as only 1 in 4 patients currently receive systemic treatment.
• Alopecia Areata Market Forecast -- $5.2 billion by 2033, driven by the current lack of systemic treatments without boxed safety warnings.
• ZENITH AD Enrollment Target -- 1,500 patients across three pivotal Phase 3 studies evaluating monotherapy and combination use with topical corticosteroids.
• ZENITH AA Enrollment Target -- 850 patients for the global Phase 3 study, which is scheduled to begin in December, earlier than previously planned.
• Physician Survey Data -- 90% of dermatologists indicated they would consider starting a patient on REZPEG before utilizing other biologics or JAK inhibitors.
• Atopic Dermatitis Top-Line Data -- Expected in the summer of 2028, with management targeting a Biologics License Application filing by the end of 2029.
• Vitiligo Patient Population -- 1.9 million Americans, of which only 15% seek treatment, providing a large under-penetrated market for new therapies.
• Vitiligo Proof-of-Concept Study -- 30 patients with non-segmental vitiligo, with data readouts anticipated in late 2027 or early 2028.
• Type 1 Diabetes Data -- Late 2027 or early 2028 for the first cohort of 18 patients in the trial sponsored and funded by TrialNet.
• Phase 2b Maintenance Data -- 83% of patients maintained EASI-75 responses on once-a-quarter dosing in the REZOLVE-AD trial.
• Noncash Royalty Revenue Guidance -- Approximately $38 million for the full year 2026, based on the company's royalty interest portfolio.
• Noncash Interest Expense Guidance -- Approximately $28 million for the 2026 fiscal year, related to future royalty sales.
• DUPIXENT Market Share -- Declined from 81% to 65% of new-to-brand starts, with more than half of the lost share shifting to novel mechanisms of action.
• Alopecia Areata SALT 10 Achievement -- 19% of patients achieved a SALT 10 score six months after stopping REZPEG treatment, compared to 7% at the end of the treatment period.

SUMMARY

Nektar Therapeutics (NASDAQ:NKTR) is advancing its lead product candidate, rezpegaldesleukin, into late-stage clinical development across several autoimmune dermatology indications. Management reported an adaptation of the ZENITH AD-2 study to evaluate the drug in combination with topical corticosteroids, a change implemented to align with global regulatory feedback and broaden the potential commercial label. The company reported a cash and investment balance of $952.9 million, which management stated is sufficient to fund the current registrational trials in atopic dermatitis and alopecia areata. The development strategy focuses on a novel regulatory T-cell mechanism designed to restore immune balance across multiple inflammatory pathways, providing a different therapeutic modality from existing cytokine-blocking agents.

• Management adjusted the ZENITH AD-2 study protocol to include both naive and experienced patients in combination with topical corticosteroids following input from the FDA, EMA, and PMDA.
• Chief Medical Officer Tagliaferri stated, "The program positions REZPEG for usage across the full spectrum of patients with moderate to severe atopic dermatitis," covering first-line and subsequent treatment lines.
• Howard Robin noted that NEMLUVIO has captured approximately 10% of new treatment starts seven quarters into its launch, which the company views as evidence of physician demand for novel mechanisms of action.
• Translational data from a 100-patient sub-study showed that early increases in FoxP3 and IL-2RA at week two were predictive of clinical skin clearance measured at week 16.
• In the REZOLVE-AA study, 63% of patients who achieved a SALT 20 score during 52 weeks of treatment maintained that response through six months of off-treatment follow-up.
• Jonathan Zalevsky indicated that preclinical work is continuing for the TNFR2 program, including the NKTR-0166 bispecific candidate, which targets immune regulation rather than simple inflammation suppression.

INDUSTRY GLOSSARY

• REZPEG (rezpegaldesleukin): A first-in-class regulatory T-cell stimulator designed to restore immune balance in autoimmune diseases.
• EASI-75: A clinical endpoint representing at least a 75% improvement in the Eczema Area and Severity Index.
• SALT 20: A Severity of Alopecia Tool score of 20 or less, indicating 20% or less scalp hair loss.
• Treg (Regulatory T-cell): Specialized immune cells that maintain balance and prevent the immune system from attacking the body's own tissues.
• BLA (Biologics License Application): A formal request to the FDA for permission to market a biologic product.
• vIGA-AD: Validated Investigator Global Assessment for Atopic Dermatitis, a scale used by physicians to measure skin clearance.
• JAK Inhibitors: A class of medications that block Janus kinase enzymes, often used for inflammatory diseases but frequently carrying safety warnings.
• IL-13 (Interleukin-13): A protein that promotes inflammation in atopic dermatitis and is the target of several current biologic treatments.
• ACQ5 (Asthma Control Questionnaire-5): A standardized tool used to evaluate the clinical control of asthma symptoms.
• DUPIXENT: A widely used biologic treatment for moderate to severe atopic dermatitis that targets the IL-4 and IL-13 pathways.
• NEMLUVIO: A newly launched IL-31 cytokine blocker used to treat atopic dermatitis.
• FDA (U.S. Food and Drug Administration): The federal agency responsible for the oversight of drug safety and efficacy in the United States.
• EMA (European Medicines Agency): The regulatory body responsible for the scientific evaluation and safety monitoring of medicines in the European Union.
• PMDA (Pharmaceuticals and Medical Devices Agency): The Japanese regulatory agency responsible for reviewing drugs and medical devices.

Full Conference Call Transcript

Operator: Hello, and thank you for standing by. Welcome to the Nektar Therapeutics Third Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. I would now like to hand the conference over to Vivian Wu from Nektar Investor Relations to kick things off. Please go ahead.

Vivian Wu: Thank you, Crystal, and good afternoon, everyone. Thank you for joining us today. On today's call, you will hear from Howard Robin, our President and Chief Executive Officer; Dr. Mary Tagliaferri, our Chief Medical Officer; Dr. Jonathan Zalevsky, our Chief Research and Development Officer; and Linda Rubinstein, our Chief Financial Officer. Before we begin, I would like to remind you that we will be making forward-looking statements regarding our business, including statements related to the therapeutic and commercial potential and development plans for rezpegaldesleukin, the timing and execution of clinical trials, expectations for clinical data and regulatory filings, potential strategic partnering activities, financial guidance, and 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. For a discussion of these risks and uncertainties, please refer to our filings with the SEC, including our most recent Form 10-K and subsequent filings. We undertake no obligation to update these forward-looking statements except as required by law. A live webcast and replay of this call will be available on the Investor Relations section of our website at nektar.com. With that, I'll turn the call over to Howard.

Howard W. Robin: Thank you, Vivian. Thank you to everyone for joining us this afternoon. Q3 was a transformative quarter for Nektar as we advanced REZPEG into phase III studies. Building on its compelling phase II results across two key immune derm indications, we initiated a comprehensive phase III plan for REZPEG in both atopic dermatitis and alopecia areata. Our global phase III studies in atopic dermatitis have started, and our phase III study in alopecia areata is on track to start in December, earlier than was originally planned. As we said last quarter, we anticipate our first top-line data readouts for the atopic dermatitis studies will be in the summer of 2028.

In the U.S. alone, over 31 million people are estimated to have eczema. The U.S. market for treatments for this chronic disorder is expected to grow to over $30 billion by 2033. Now, in spite of a number of approved systemic therapies to treat patients with moderate to severe atopic dermatitis, only 1 in 4 patients today receive a systemic treatment. Atopic dermatitis is a highly heterogeneous disease, meaning the biology driving the underlying disease state can be complex and can vary significantly from one patient to another. The current approved biologics target one single inflammatory pathway, specifically the type 2 inflammatory pathway, and mostly through IL-13 cytokine blocking.

In order to ensure we have treatments that can address the needs of all patients with atopic dermatitis, it is necessary to have novel mechanisms that target the heterogeneous nature of this disease. Importantly, today we know that at least half of patients on an existing biologic report inadequate control of their atopic dermatitis for this reason. To that end, REZPEG's novel Treg mechanism offers a critically important therapeutic modality for patients and one that is currently missing from the treatment armamentarium. We know from our market research that physicians are looking for different mechanisms of action than those that are already approved.

Rather than blocking a single downstream inflammatory pathway, REZPEG's first-in-class Treg approach selectively expands the immune cells to restore immune balance. In other words, we're addressing the underlying inflammatory drivers rather than simply controlling the symptoms of the disease. JZ will talk more about some of the important translational work we have from REZPEG AD, which demonstrates the unique profile we have for REZPEG. In the commercial landscape in atopic dermatitis, we've already seen clear evidence of the demand for a mechanism outside of IL-13. NEMLUVIO, which is an IL-31 cytokine blocker, gained a label in atopic dermatitis only in combination with topicals.

Based on recent U.S. claims data, NEMLUVIO is capturing at least 10% of new treatment starts about 7 quarters into launch. In fact, since its launch, DUPIXENT has lost these new-to-brand patients starts, going from an 81% share of starts in 2024 to 65% today, with more than half of the share that DUPIXENT has lost going to novel MOAs. Physician willingness to start patients on a novel agent outside of DUPIXENT reaffirms for us the market research we've conducted for REZPEG, indicating an opportunity for REZPEG in first-line as well as second-line treatments.

With the recent setbacks in the OX40 class, we believe there are no agents in mid-to-late-stage development that address the underlying heterogeneity of disease in atopic dermatitis in the way that REZPEG addresses it, by targeting the full range of inflammatory pathways. This gives REZPEG a truly unique competitive position. In our research, approximately 90% of surveyed dermatologists indicated that they would consider starting a patient on REZPEG before starting a patient on another biologic or a JAK inhibitor. This underscores the dermatologist community's receptiveness to try novel MOAs as a first-line treatment.

With regulatory agency alignment, we're advancing our phase III program to support a broad label, including first-line use in patients new to biologics and JAK inhibitors, as well as second-line use in previously treated patients. In alopecia areata, REZPEG has a unique opportunity to offer a compelling first-line therapy as compared to the existing approved JAK inhibitor class. Oral JAK inhibitors require daily dosing and carry box safety warnings and laboratory monitoring requirements. The market, according to Decision Resources Group, is forecasted to reach approximately $5.2 billion by 2033. Mary will talk more about our phase III programs in atopic dermatitis and alopecia areata in a few moments.

At the recent EADV conference, we presented multiple oral presentations for REZPEG, which Mary will also review in a bit. Beyond our 2 lead dermatology indications, we believe REZPEG continues to offer broad potential in other autoimmune indications. The phase II study in new-onset type 1 diabetes, sponsored and funded by TrialNet, is ongoing, and we currently estimate that we could have data from the first cohort of patients in late 2027. As I said last quarter, we are planning to initiate a new signal-seeking trial for REZPEG in another immune indication, and Mary will talk more about our specific plans and that opportunity. With that, I will turn the call over to Mary.

Mary Tagliaferri: Thank you, Howard, and good afternoon, everyone. As stated earlier, we had a significant presence at the EADV conference with three separate oral sessions for REZPEG. We had 2 presentations for REZOLVE-AD. One was a very important translational biomarker sub-study conducted at Mount Sinai, and the second was our 52-week monthly and quarterly maintenance dosing data. For alopecia areata, we presented off-treatment data demonstrating strong retention of hair regrowth and additional hair regrowth for patients who received 52 weeks of REZPEG treatment and were followed for 6 months off treatment. On the heels of this strong EADV presence for REZPEG, we are enrolling patients into our phase III ZENITH-AD program.

Our global phase III ZENITH-AD program includes 3 pivotal studies with 510 patients 12 years or older in each study. All 3 of these studies have been initiated. The first ZENITH AD-1 study is evaluating REZPEG monotherapy in patients who are oral JAK inhibitor and biologic naive. For ZENITH AD-2, we have recently made a change to adapt this study to evaluate REZPEG in combination with topical corticosteroids and enroll both naive and experienced patients. This change incorporates recent input from regulatory authorities and is intended to support a label for REZPEG that extends beyond monotherapy to combination use with topical corticosteroids. ZENITH AD-3 is enrolling patients who are JAK inhibitor and biologic experienced.

With these 3 studies enrolling a total of approximately 1,500 patients, we now have a registrational program designed to support the broadest possible label for REZPEG at commercial launch, spanning adults and adolescents, biologic and JAK inhibitor naive and experienced patients, and monotherapy treatment, as well as combination use with topical corticosteroids. The program positions REZPEG for usage across the full spectrum of patients with moderate to severe atopic dermatitis. As Howard stated, we still expect our initial top-line data in the summer of 2028 from the ZENITH-AD studies, with a goal of filing a BLA by the end of 2029.

All 3 ZENITH-AD studies include a 24-week induction period, with patients receiving REZPEG at 24 micrograms per kilogram every 2 weeks or placebo. The primary registrational endpoint is an Investigator's Global Assessment, or IGA, at week 24. EASI-75 is a key secondary registrational endpoint and will also serve as a co-primary endpoint with IGA in significant territories outside the U.S. Other important endpoints, which are multiplicity protected in the trials, include itch and patient-reported outcomes, as well as control of comorbid asthma, which affects approximately 25% of patients with moderate to severe AD. After 24 weeks, patients who achieve an EASI-75 or IGA 0 /1 response will enter a 28-week maintenance period evaluating less frequent monthly and quarterly dosing.

During induction in the phase IIb REZOLVE-AD trial, REZPEG demonstrated a rapid onset of activity with early improvements in skin clearance and itch and strong efficacy across key clinical endpoints. The longer-term results that were presented again at EADV provided further evidence of REZPEG's potential to deliver durable and deepening disease control. Importantly, both monthly and quarterly maintenance dosing demonstrated sustained responses across key measures of disease activity, including EASI responses, clear or almost clear skin as measured by vIGA, and clinically meaningful itch relief. We also saw new responses emerge in patients who had not achieved these thresholds during induction, with more patients reaching complete skin clearance over time.

As Howard mentioned, we will report the 52-week off-treatment follow-up data from REZOLVE-AD in the first quarter of 2027. As a reminder, we ran an induction treatment and a maintenance treatment in REZOLVE-AD. You will recall that patients who completed the maintenance treatment on REZOLVE had high durability of responses and continuing deepening of responses for endpoints like EASI-75, EASI-90, and EASI-100. Patients who completed the maintenance treatment of 52 weeks entered an off-treatment follow-up period where we continued to evaluate the maintenance of their responses.

For these patients who completed 52 weeks on treatment and entered the off-treatment evaluation period, we assessed their maintenance of disease clearance, including EASI and other metrics of disease that are patient-reported, such as itch and quality of life. After completion of the 52-week on-treatment maintenance portion of the trial, follow-up off-treatment assessments were done at weeks 4, 13, 26, 39, and 52. A total of 125 patients in REZOLVE-AD completed the maintenance treatment period. Of those, 110 patients were in the REZPEG maintenance treatment arm, and 15 were in placebo. The placebo patients were included in the off-treatment period to continue to maintain the blind for patients in the study.

Of note, there was no option for additional treatment or enrollment into a long-term extension study following the 52-week off-treatment period. This differs from all the placebo withdrawal studies for the currently approved agents. In REZOLVE-AD, patients received no injections during the off-treatment period, unlike placebo withdrawal designs that continue a sham injection. To our knowledge, only one other trial has included an off-treatment follow-up that was not a placebo withdrawal design. This is the phase II roca-OX40 study. Their on-treatment period was only 36 weeks, and their follow-up off-treatment period was only 20 weeks without sham placebo injection. What sort of bar are we looking for here?

As we have done when we reported our maintenance data, we like to look at DUPIXENT as a good comparison. When you look at DUPIXENT, they completed a 9-month follow-up off-treatment analysis looking at maintenance of the EASI-75 response. Now this study was a placebo withdrawal design, but they reported that approximately 50% of the patients maintained their EASI-75 at 9 months off treatment. If we see this level of maintenance of EASI-75 at 12 months off treatment or better, that would be an interesting finding. Why? Because it opens up the possibility to move EASI-75 responders to quarterly dosing after 52 weeks of induction and maintenance treatment.

Additionally, as further differentiation, such results could create the potential for patients achieving a deep and sustained response across multiple disease measures to transition to dosing as infrequently as every 6 months following 52 weeks of induction and maintenance therapy. Now, turning to alopecia areata. We recently presented new off-treatment results for the first time at EADV that provide further evidence of REZPEG's mechanistic potential to deliver durable and deepening responses. In April, we presented data that showed treatment with REZPEG through week 52 resulted in higher SALT 20 responses. At EADV, we showed that these patients sustained their responses for months after their treatment ended.

This is especially important in alopecia areata, where loss of hair regrowth following discontinuation of a JAK inhibitor is a major concern for both patients and physicians alike. This durability of response supports evaluating less frequent maintenance dosing after one year of twice-monthly REZPEG treatment for patients who achieve SALT 20 or better. For example, 7% of patients who were treated for 52 weeks achieved a SALT 10 at the end of treatment, and 6 months later off REZPEG, 19% of patients had achieved a SALT 10. These data demonstrate real promise for patients. Importantly, we have now shown multiple times that treatment with REZPEG demonstrated durable responses across atopic dermatitis and alopecia areata.

Together, this reinforces REZPEG's potential to deliver sustained disease control with infrequent dosing, a potentially important differentiator in the treatment of chronic inflammatory diseases. Our phase III ZENITH AA study will start next month. This single global registrational study will enroll approximately 850 patients, ages 12 and up, with severe to very severe alopecia areata. Patients will receive REZPEG at 24 micrograms per kilogram every 2 weeks or placebo through week 52. The primary endpoint will be SALT 20 or less at week 52. The study will include both patients who are naive to systemic treatment and patients who have previously received a systemic agent after an appropriate washout.

It will also enroll patients with a current alopecia areata episode of up to 8 years. Following 52 weeks of treatment, patients will enter a long-term extension. Those patients who achieve a good response during the 52 weeks of treatment will receive monthly or quarterly maintenance dosing. We currently expect data from ZENITH AA in 2029. With ZENITH AA, the overall ZENITH program will enroll approximately 2,400 patients, 12 years and older, across the atopic dermatitis and alopecia areata studies, enabling a substantial safety database to support registrational approval.

Separately, we are also planning an investigator-sponsored study that will be conducted at Mount Sinai in patients with alopecia areata, which will include moderate alopecia areata patients, as well as severe and very severe patients. The population of moderate patients is a large opportunity, and we believe generating data in this patient population is critical as we think of the overall positioning of REZPEG across the entire alopecia areata patient population. This IST will start in the first half of next year. As Howard mentioned, we are also planning to explore new indications with REZPEG. The first study we are planning is a proof-of-concept study in about 30 patients with vitiligo.

Vitiligo represents a compelling potential expansion opportunity for REZPEG, with a significant unmet need, a large under-penetrated market, and strong mechanistic rationale for Treg-based therapy. Today, there are approximately 1.9 million Americans with vitiligo, yet only 15% seek treatment. Similar to the competitive landscape in alopecia areata, the only approved agents or those in late-stage development are JAK inhibitors. All these agents, whether oral or topical, come with significant safety concerns and lab monitoring burdens. Moreover, most patients lose near-complete repigmentation within a year of stopping treatment with JAK inhibitors, presenting an unmet need for differentiated treatment options that can lead to durable responses and less frequent dosing. Importantly, vitiligo biology provides a strong rationale for REZPEG.

Vitiligo is an autoimmune derm disease in which cytotoxic CD8-positive T cells attack and destroy melanocytes. This phenomenon results in impaired Tregs, characterized by loss of IL-10 and TGF-β1 regulation, which results in loss of pigmentation. In a minute, JZ will talk more about the biomarker sub-study from REZOLVE-AD that was presented at EADV. Critical to vitiligo, that study showed that treatment with REZPEG led to serum IL-10 and TGF-β1 elevations as early as week 2, which were positively correlated with clinical effect at week 16. By restoring both Treg number and function in patients with vitiligo, REZPEG has the potential to generate meaningful clinical responses in this indication.

This study, which will start in the next few months, will generate proof-of-concept data in late 2027 or early 2028. Building on this, we continue to explore additional indications where REZPEG's novel Treg approach has clinical application, including asthma, where REZPEG has already demonstrated strong reduction in ACQ5 scores in patients with atopic dermatitis and comorbid asthma. We look forward to sharing more as these programs develop. With that, I will turn the call over to JZ. JZ?

Jonathan Zalevsky: Thank you, Mary. I'd like to spend a few minutes talking about the biology of REZPEG, and specifically the biomarker data we presented at EADV, which provide important new insights into how REZPEG works and help us better understand the clinical responses we've observed. As Howard mentioned, atopic dermatitis is a complex, heterogeneous disease involving multiple inflammatory pathways. However, the currently approved biologics target only one inflammatory pathway, specifically type 2 inflammatory pathway, through IL-13 cytokine blockade. REZPEG, on the other hand, is designed to selectively expand the immune cells that help restore balance across multiple pathways.

And to better characterize this novel Treg mechanism, we worked with investigators at Mount Sinai to conduct a biomarker analysis in 100 patients from the REZOLVE-AD study. The sub-study analyzed gene and protein expression in blood samples and in non-invasive skin tape strips, comparing REZPEG at the doses selected for phase III with placebo. The results showed that as early as week two, there were significant increases in FoxP3 and IL-2RA, 2 important markers of regulatory T-cell activity. At the same time, we saw changes consistent with normalization across multiple inflammatory pathways involved in atopic dermatitis, including Th1, Th2, and Th17 inflammatory pathways, as well as JAK-STAT signaling.

These effects were evident in both the skin and circulation, providing further evidence of the breadth of REZPEG's mechanism. Importantly, we were also able to establish a relationship between these early molecular changes and the subsequent clinical improvements. Changes in several blood biomarkers at week two, including increases in IL-10 and TGF-β1 expression, and reductions in the inflammatory marker TARC, were significantly correlated with greater improvement in EASI scores at week 16. These correlations were statistically significant in REZPEG-treated patients and were not observed in the placebo group. The REZPEG-treated patients in this substudy also achieved a mean 64% reduction in EASI at week 16, consistent with the results in the broader study population.

We also observed changes in the molecular signature associated with cardiovascular disease, atherosclerosis, and alopecia areata, strengthening our belief in REZPEG's potential as a pipeline in a product. These findings provide important validation of REZPEG's differentiated mechanism. They show that REZPEG induces early regulatory T-cell-associated activity and influences a broad range of inflammatory pathways, with molecular changes that are linked to later clinical improvement. Beyond REZPEG, we are continuing preclinical work for our TNFR2 program, which includes NKTR-0166, our bispecific program that combines NKTR-0165, our TNFR2 agonist antibody, with a second validated immune target that we have not yet disclosed.

This program extends the same core strategy that underpins REZPEG, developing therapies that restore immune regulation rather than simply suppressing a single inflammatory signal. With that, I will turn the call over to Linda to review our financial results. Linda?

Linda Rubinstein: Thank you, JZ, and good afternoon, everyone. On today's call, I'll review our quarterly financials for the third quarter of 2026 and updates to our 2026 financial guidance. We ended the third quarter of 2026 with approximately $953 million in cash and investments, with no debt on our balance sheet. We now expect to end 2026 with more than $840 million in cash and investments, which is at or above the top end of the range of $815 million to $840 million provided on our Q2 call. Turning to the income statement, our third quarter 2026 non-cash royalty revenue totaled $8.5 million. We now expect non-cash royalty revenue will be approximately $38 million for the year.

Our R&D expenses were approximately $44 million for the third quarter of 2026. We expect an increase in the fourth quarter due to REZPEG AD enrollment, AA clinical startup, and supporting CMC activities. We now anticipate full-year R&D expense to range between $185 million and $200 million, which includes approximately $5 million to $10 million of non-cash depreciation and stock-based compensation expense. Our G&A expenses were approximately $25 million for the third quarter. We expect G&A expenses for the full year 2026 to be approximately $65 million, which is within the range given previously. This includes approximately $5 million of non-cash depreciation and stock-based compensation expense. Non-cash interest expense for the third quarter was approximately $6 million.

We now expect non-cash interest expense will be approximately $28 million for the year. Our net loss for the third quarter was approximately $56 million, or $1.63 basic and diluted net loss per share. As I stated earlier, we expect to end 2026 with more than $840 million in cash and investments. Our financial position is strong, enabling us to execute our robust and exciting REZPEG ZENITH AD and ZENITH AA program. With that, I will hand it over to the operator for questions.

Operator: [Operator Instructions] Our first question will come from Yasmeen Rahimi from Piper Sandler.

Yasmeen Rahimi: Congrats to all of the updates. I am really excited to hear about your interest in vitiligo and moving forward, but would love to get a little bit more color on what work is needed to complete in order to kick off the studies in the upcoming months. Would you envision a placebo-controlled study, an open-label study? And also maybe give us some insight on how do you think about dose selection in vitiligo? Sorry, this was more than one question. My apologies.

Howard W. Robin: I will defer to Mary on going through some of the detail on that. I would say that it is an interesting indication because, as JZ did say, it is very much T-cell mediated. It is a T-cell-mediated disease. So, I think it is really a perfect opportunity for us to show the potential for REZPEG in broad applications in autoimmune disease. Mary, maybe you could answer some of the questions about study design.

Mary Tagliaferri: Yes. So this is a proof-of-concept study, and we want to establish whether the strong biologic and mechanistic rationale we see for REZPEG in vitiligo, that we have seen in our immune derm diseases, translates into vitiligo. As you know, probably, there are companies that have done an open-label single-arm study and then moved into a phase III program. We do feel that there is an opportunity to do this because, like alopecia areata, there is a very low placebo effect on these endpoints, like facial [ VASI-75 ] or even mean percent change from baseline in facial VASI. We do believe that there is an opportunity to very efficiently conduct a trial in an open-label population.

We are still working on the final design concept. I just had a call this morning with Dr. David Rosmarin, who we are working very closely with on this study design, and we will be able to launch this study next year. So stay tuned. As Howard and JZ and I have said, there is such strong mechanistic rationale for going into this indication, and also given that this is primarily a Th1-dominated disease, and we saw the good data in alopecia areata, we believe that there is great read-through into vitiligo from what we have already collected in these inflammatory skin diseases. As we mentioned, this is really an under-penetrated market with only 15% of patients getting treated.

We are very excited to quickly move forward into this new indication.

Operator: Our next question will come from Julian Harrison from U.S. Bancorp, BTIG.

Julian Harrison: As we look ahead to the REZOLVE-AD off-treatment data next quarter, can you walk us through the rationale for why 52 weeks instead of 36 weeks on treatment may set REZPEG up for better odds of sustained responses off treatment? Are there any important differences in statistics versus the phase [Ib] atopic dermatitis trial we should keep in mind? Can you also talk to us about how you will be handling rescue therapy and missing data there?

Mary Tagliaferri: Yes. We are really excited to look at these data. We have given you some guidance that we had about 125 patients that had the dosing. I do believe that what we have learned from our maintenance period in the phase IIb was we saw one very robust maintenance of EASI-75. As you will remember, we followed patients who just received Q12-week dosing, or once a quarter. And those patients who came off of 16 weeks of Q2 weeks of 24 micrograms per kilogram, half of them went on to receive just 3 doses of REZPEG. And what we saw is 83% of those patients were able to maintain their EASI-75.

So I think we have nice data from the phase IIb, as you were mentioning, that show this durability with just 3 doses of REZPEG, and we did even see patients having deepening of responses. That, coupled with the data that we saw from alopecia areata, where we dosed patients for 52 weeks and then stopped treatment and followed those patients who had SALT 20 for an additional 6 months, we did also see really good durability with those patients.

I would say the maintenance portion and the data that came out of the phase IIb, coupled with what we saw from the phase IIb in alopecia areata, both strongly support that we will be able to see patients having durability of treatment with 52 weeks off of REZPEG. And the nice part of the study, we are going to be able to look at, well, what happened to patients 4, 13, 26, 39, and 52 weeks off treatment? And we believe that this will help guide us, in particular after 52 weeks, what type of dosing do these patients need in a long-term extension?

Is a Q, a quarterly dosing optimal, or for those patients who have very deep responses, could they even go on to a Q6-month dosing regimen? We look forward to sharing those data with you in the first quarter of next year.

Operator: Our next question will come from Jay Olson from Oppenheimer.

Jay Olson: Congrats on all the progress across so many different clinical development programs. Since your work at EADV linked early increases in IL-10 and TGF-β1 changes to subsequent clinical improvement, are you also looking at whether those same early biological changes might predict sustained responses after treatment withdrawal? And if so, would those findings strengthen the case that REZPEG is potentially disease-modifying by restoring immune regulation rather than just producing temporary suppression of inflammation? And then if I could, as a follow-up, can you just talk about any update on your type 1 diabetes program and when we should expect to see clinical data?

Jonathan Zalevsky: Happy to take the first question. That is indeed, as you telegraphed it, a suite of activities that we're doing. Because in this study, the cohort's large enough, that we have the ability to parse the patients and look for different features of the responses. And we are indeed looking at both the skin as well as the serum for any hallmarks associated with those kind of stratifications of the responses. We're doing that first in the 16-week induction data, and we presented just a portion of the data. There's much more data than was presented by Meredith in that EADV presentation. Importantly, we also collected tape strips through 52 weeks in that study, as well as serum samples.

This is indeed a significant area of our translational focus, because we do believe that we're able to see features of the kind of normalization as well as the immune changes that could be consistent with really the rebalancing mechanism of REZPEG. So, this is going to be definitely the subject of additional work that we're doing. Mary, maybe I'll turn the type 1 diabetes question over to you.

Mary Tagliaferri: So I know the TrialNet has probably about 2/3 of their clinical sites that they plan to enroll to up and running, and the first cohort will be 18 patients, 12 on REZPEG and 6 on placebo. So, they're anticipating having the data from that first cohort, the six-month data, either at the end of 2027 or the beginning of 2028. So, we're really excited and looking forward to seeing those data as well.

Operator: Our next question will come from Cha Yang from Jefferies.

Cha Cha Yang: This is Cha on for Roger. I also have a question on the vitiligo selection program. If you could tell us more about how you are choosing patients and which patients you're choosing to prioritize, whether that's active disease patients or patients with stable disease, where the goal might be primarily repigmentation. And then in relation to that, if you could tell us about the percentage of patients for each and the commercial opportunity for targeting certain subgroups of patients that you're going after.

Mary Tagliaferri: Yes. We are going to enroll patients with active disease, and these are patients with non-segmental vitiligo. We were just mentioning that this is a fairly large market, very similar. We're looking at this market very similar to alopecia areata. We are working with our advisors, like I said, just actually speaking to Dr. David Rosmarin this morning about some of the specifics of the study design. As we get our trial up and running, we will let you know in more details about the total patient population and the exact design of the study and our anticipated date for having data.

Operator: Our next question will come from Tara Bancroft from TD Cowen.

Tara Bancroft: I was hoping maybe you could give us an update on how you're seeing enrollment progressing in the biologic-naive versus experienced phase III studies. I am trying to see if you are seeing any particular headwinds or tailwinds in either, and if you are expecting that these trials are going to complete enrollment in a similar timeframe, just as we are thinking ahead about the cadence of data.

Mary Tagliaferri: Yes. So, yes, we are just getting started, and I would say, right now, not a huge difference between enrollment between the naive and the experienced patients. All of our enrollment projections for all 3 of the AD trials, we believe, are all going to coalesce and finalize and have our top-line data by the summer of 2028. So, that means all the patients will be enrolled to these trials around January of 2028.

Operator: Our next question will come from Samantha Semenkow from Citi.

Samantha Semenkow: Just on the ZENITH AD-2 study, can you talk a little bit about the regulatory feedback that you received that led to the change in the protocol? What drives this feedback from regulators, and can you say which regulatory agency initiated the feedback?

Mary Tagliaferri: We have received regulatory feedback from the U.S., from the FDA, from the EMA, and from the PMDA, from the Japanese health authority. I will say that it's not always the exact same, but everybody agrees that having a clinical trial in combination with topical corticosteroids is a wise way to go. I think what's changed probably from when DUPIXENT and lebrikizumab and tralokinumab started their development programs is it was more common to do 2 clinical trials in naive patients and a third trial in topical corticosteroids.

And I think, as the evolving landscape has more people treated with biologics, certainly doing a study in patients who are experienced with something and feedback that all the regulators had shared with us. I'll just finally state that in Japan, for registration there, you have to do a trial in combination with a topical corticosteroid. So in totality of the feedback that we got from all three agencies really made it very clear that the best way to strengthen our overall phase III registrational package to support the broadest possible label and meet the needs of all three regulators was to change that AD-2 study to a topical corticosteroid.

It wasn't one, it was a combination of all three, and it really was the totality of their feedback really helped us strengthen our overall program for commercial purposes too.

Operator: Our next question will come from Will Soghikian from Leerink.

Will Soghikian: Great. Congrats on the progress this quarter. I do have a follow-up to the ZENITH AD-2 study. Just on the adjustment that you guys did, does the addition of TCS cause a sample size change or a powering assumption change as well? What placebo plus TCS response are you guys assuming, and is there a cap or stratification factor on experienced patients that we should be mindful of here?

Mary Tagliaferri: Yes. To take the last part first, the stratification factors. When you look at roca-OX40 data, where they enrolled experienced and naive patients, and if you look at the ADhere trial, which was the lebrikizumab TCS combination study, both of those studies did exactly what we're doing, which is stratifying on geographical location, age, and disease severity. And when you look at those trials, they were both well-balanced in terms of prior biologic use versus not. And because this trial is so large, 510 patients, we have no worries, just like in the roca trial. And even the ADhere trial, which was only 211 patients, they had very well-balanced experienced and naive patients given the stratification factors.

Then, in terms of power calculations, all of these studies are very well-powered, 99%. And the reason that the trials are so large and that we have a 1,500-patient overall phase III program is really to collect adequate one-year safety data. The trial in topical corticosteroids is adequately powered and over 90% power to detect a statistical difference. And in terms of looking at other clinical trials, the benchmark for you in the TCS studies, both the placebo arm and the treatment arms, are slightly higher, not dramatically higher, but slightly higher than what you see in the monotherapy studies. You can look in the DUPI, the tralo, and the lebri trials.

They all ran 2 naive studies as well as one TCS study. So, you can compare the EASI-75 and the IGA results of those. You can see slightly higher, but not dramatically higher. And the delta between the 2 is still quite robust. And then they reached very strong p-values in the TCS studies as well as the naive studies, because again, these trials are so overpowered for safety purposes and not based on efficacy.

Operator: Our next question will come from Arthur He from H.C. Wainwright.

Yu He: Congrats on the progress. I have 2 questions. So one is, could you still give us more color on what moved the ZENITH AA study earlier? What has changed after the last time you updated us for the early 2027 start compared to now you are pointing to December? The second question is, could you remind us how you guys plan to evaluate the off-drug activity for REZPEG in the ZENITH AA study? Is there any randomized period after week 52?

Mary Tagliaferri: Great. Yes. Thanks, Arthur. Nektar has a very experienced, and highly committed, and very competent team in their clinical development and clinical operations , biostats and drug safety, and they are really able to move mountains. The team was able to write the protocol, submit it to the health authorities, build the systems, make sure there is an ICF, develop budgets, and go out and train the sites. And they were all able to do that ahead of schedule, and I think it really speaks to just how highly experienced they are, the incredible leadership, and the dedication.

Likewise, I think there is a lot of motivation among the dermatologists that we have met to participate in the study because a lot of their patients do not want to go on a JAK inhibitor. That addresses your first question. Your second question is off drug. No, we plan on moving patients after 52 weeks into those patients that have deep responses. We will randomize those patients into a monthly and quarterly dosing.

For those patients who have not hit SALT 20 yet, as you will recall, when we looked at the shape of the curve, the trajectory of the curve, the slope of the curve, it continued upward, and we really believe that those patients who have not hit SALT 20 yet, with ongoing Q2-week dosing, we can convert many more patients, as we have not seen a plateau effect. So those patients who do not have SALT 20 will continue on that Q2-week dosing. We do not have a model in our long-term extension to withdraw treatment.

Mayank Mamtani: Our next question will come from Mayank Mamtani from B. Riley. Your line is open.

Unknown Analyst: [ Mike ] I'm on for Mayank. For the REZOLVE-AD data coming out in the first quarter of 2027, which patients will come off drug, and how would you define and maintain response there? What would be the endpoint? We know that in lebrikizumab, about 2/3 of patients that switched to placebo were still EASI-75, so how would a Treg drug like REZPEG do something different here? From the alopecia data, we know that patients who dosed to week 52 held response far more than those who stopped at week 36, and the response kept deepening. Should we expect that here in AD?

And finally, on the new vitiligo data going into argenx has a vitiligo asset that is an IL-2 inhibitor, and REZPEG here is an IL-2 agonist, so how does that kind of work here?

Mary Tagliaferri: Yes. Great. I'll take the first question, and I'll punt the second one to JZ. Our goal has always been to create a therapy that enables less frequent dosing while maintaining durability of responses. Our objective is to give patients a more convenient and flexible dosing schedule after an initial treatment period. What we're able to do in our phase II study, which, to the best of my knowledge, no one has been able to do, is evaluate what is standard, a 52-week treatment, which includes an induction phase and includes a maintenance phase, and then we're able to look at what happens to those patients off treatment and assess and evaluate the durability of their responses.

And we're doing this specifically because we want to know after one year, what type of dosing can help patients maintain their responses, and are there some patients who could even go to an every 6-month dosing period, and those patients who could continue on a quarterly dosing regimen. So we think we'll have very good data with 125 patients to evaluate these questions. Regarding the vitiligo question, I'll ask JZ to comment.

Jonathan Zalevsky: Yes. So, basically, you asked the question about argenx has an anti-CD122 antibody that was the acquisition from Forte, and also IL-15 blockade has demonstrated some activity. Basically, those are kind of, I see them almost sort of like an extension of the JAK inhibitor mechanism. So with a JAK inhibitor, you're blocking the same cytokine pathways that IL-2 uses and IL-15 uses. So those are mechanisms that are aligned to reduce inflammation, particularly interferon gamma and some of the type 1. REZPEG's mechanism is, of course, different, right? We're inducing a cellular mechanism. We're activating a cell population.

Our aim is to restore the sort of the missing counter-regulatory mechanisms that are defective in the case of vitiligo or defective in the case of alopecia. So they are related. They're similar axes. They're approaching this from 2 different directions, and obviously, we're very excited to kick off the vitiligo study and very confident about that study and the mechanistic translation based on what we've seen in alopecia and atopic dermatitis.

Operator: Our next question will come from Jessica Fye from JPMorgan.

Unknown Analyst: This is [ Jose ] on for Jess. For the off-treatment dataset coming up in the first quarter of '27, how many patients will there be? And could you remind us of your expectations for REZPEG's effect size in biologic-experienced patients compared to naive patients in AD?

Mary Tagliaferri: Yes. We have 125 patients that entered into the long-term extension. Of the 125 patients, 110 of them were actually on REZPEG in the maintenance period, and 15 of them were on placebo, and those 15 patients are carried through simply to maintain the blind. And then with respect to biologic experience and biologic-naive patients, what we've seen so far, even with the IL-13s of lebrikizumab, the efficacy in patients who have been previously treated with DUPIXENT is relatively the same.

And we believe we have an even stronger mechanistic rationale for why we will see very similar efficacy, because unlike the cytokine-blocking agents that merely can really address the Th2 disease patients, we do know that this is a very atopic dermatitis is a very heterogeneous disease where patients have Th1, Th2, Th17 disease phenotype. And going upstream and being able to increase T regulatory cells, which could have an effect on all those phenotypes, and that's also corroborated by the data that was presented at EADV, with the ability to normalize Th1, Th2, Th17, and fibrosis. We strongly believe that we're going to see very similar efficacy in those biologic-experienced and naive patients.

Now we have the only dedicated clinical trial that's ever been done in a purely experienced patient population. So In the summer of 2028, we'll be able to address specifically this topic with our AD-1 and AD-3 studies.

Operator: Our next question will come from Kelsey Lucerne from William Blair & Company.

Kelsey Lucerne: This is Kelsey on for Andy. We were curious, taking a regulatory perspective, with ZENITH AD-2 now including both naive and experienced patients, how should we think about ZENITH AD-3's incremental role in the registrational package? Is success in ZENITH AD-3 necessary to support use in previously treated patients, or could positive AD-1 and AD-2 results support that broader label?

Mary Tagliaferri: We really wanted to have the best commercial label possible when we launch REZPEG. ZENITH AD-1, that's really naive patients, and we can think about that as a first-line patient population. You think of the AD-3 study as those experienced patients, so these are really patients who would be second or third-line. So, those are two different subsets of patients. In both of those studies, we're enrolling adolescents age 12 up to 18. And then when you add AD-2, now you're adding the combination with topical corticosteroids. In that study, again, we have adolescents, and we have experienced, and we have naive.

So, the way we look at this is a very strong, robust overall phase III registrational packet that includes the broadest label there is, first-line, second-line, third-line, combination, adults, and adolescents. And then with respect to your regulatory question, we really view the ZENITH AD program as an integrated package rather than looking at any one simple study as backup for another. That being said, you do need 2 successful phase IIIs for registration. So, we're believing, due to the power of these trials, that we will see 3 positive studies. In the event that one isn't, then we have certainly the opportunity to speak to regulators about a path forward for registration.

But certainly, we've built this program as an integrated registrational package rather than looking at any one as just a backup to another.

Operator: Our next question will come from Alice Nettleton from UBS.

Alice Nettleton: You seem to have benefited from the setbacks with OX40 class, which makes sense. There are several atopic derm competitor readouts coming up, including STAT6 and various bispecifics and trispecifics. If any of these were to have setbacks also, could this also benefit REZPEG, or do you view the target patient populations differently such that it wouldn't have much of an impact?

Howard W. Robin: Yes, let me take a stab at that. I think, look, clearly, setbacks from one company potentially benefit another company, but I don't really look at it that way. I think this is enormous. I actually don't want to see companies fail. Quite frankly, the market for atopic dermatitis is so significant and so large, even a 10% market share puts you at a potentially $3 billion to $4 billion product. So I think there's a lot of room for different drugs. The heterogeneity of the disease certainly means that patients aren't going to be well-treated by only one mechanism. Certainly, IL-13, while it does incredibly well and it's an important mechanism, it isn't the solution for atopic dermatitis.

While I do want to see other companies succeed, I do think the market is large enough for all of us, and the disease is not very well treated right now. As we said earlier, half the patients who take an IL-13 ultimately fail that therapy. So, large market, lots of opportunities, and I hope everybody does well there. Mary, is there anything you want to add to that?

Mary Tagliaferri: No, I think that's a great answer, Howard. Nothing to add.

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

Howard W. Robin: Okay. Well, thank you again, everybody, for joining us today. We are entering an important period for Nektar, focusing on executing on registrational programs. It's a great position to be in. We believe REZPEG has the potential to establish an entirely new approach to treating immune-mediated disease, and our focus now is squarely on carrying out the phase III plan and bringing this potential therapeutic option to patients as quickly as possible. I want to thank all of our employees for their hard work and dedication, and we look forward to updating all of you on our progress. So, stay tuned.

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

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