Participants

Corinne Franklin; investor relation; Nektar Therapeutics

Howard Robin; President, Chief Executive Officer, Director; Nektar Therapeutics

Jonathan Zalevsky; Chief Research and Development Officer; Nektar Therapeutics

Sandra Gardiner; Interim Chief Financial Officer; Nektar Therapeutics

Dominic Risso-Gill

Julian Harrison; Director; BTIG LLC

Jay Olson

Mayank Mamtani

Jessica Fye; Analyst; JPMorgan

Presentation

Operator

Good day and thank you for standing by. Welcome to the Nectar Therapeutics first quarter 2025 Financial results conference call.
 (operator instruction)
 I would now like to hand the conference over to your speaker today, Corinne Franklin and Nectar Investor Relations, who is filling in for Vivian Wu, who is on maternity leave. Please go ahead.

Corinne Franklin

Thank you, Crystal, and good afternoon, everyone.
 Thank you for joining us today.
 With us on the call are Howard Robin, our President and Chief Executive Officer, Doctor Jonathan Zaleski, our Chief Research and Development officer, Doctor Brian Kotson, our Chief Medical Officer, and Sandra Gardiner our Chief Financial 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 and research programs.
 The timing of the initiation of clinical studies and the availability of clinical data for drug candidates.
 The timing and plans for future clinical data presentations.
 The formation, future development plans, or success of our collaboration agreements, financial guidance, and certain other certain 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, or actual results may differ materially from these statements.
 Important risks and uncertainties are set forth in our Form 10k that was filed on March 14, 2025, which is available at SEC.gov.
 We undertake no obligation to update any of these forward-looking statements, whether as a result of new information, future developments, or otherwise. A webcast of this call will be available on the IR page of Nectar's website at nectar.com. With that said, I would like to hand the call over to our President and CEO Howard Robin. Howard.

Howard Robin

Thank you, Corinne, and thank you all for joining us today.
 During the first quarter of 2025 we've been concentrating on the successful development of our immunology pipeline with a focus on advancing ResPEGaldu leukin, also known as ResPEG, in three separate phase 2 studies and completing the IND enabling studies for our lead earlier stage program, Nectar 165 at TNFR2 ex agonist antibody.
 ResPAG is a first in class regulatory cell biologic therapy with the broad potential in a number of immune disorders.
 As a novel immune modulator mechanism, ResPE is poised to help a significant number of patients battling chronic conditions.
 In June we planned to share our first top line results from the 16 week induction period for the 400 patient phase 2b study known as resolve AD.
 Which is studying resPEG in biologic naive patients with moderate to severe ectopic dermatitis.
 I will let Jay-Z review the upcoming important data milestone and the study design in a moment.
 Our objective in this study is to demonstrate efficacy and safety and establish a dose to take forward in phase 3 studies.
 The study also has a 36 week maintenance period where patients will receive the same dose from induction but at every 4 week or every 12 week dosing intervals. The data from this maintenance period will be available in early 2026.
 Ectopic dermatitis is a significant opportunity as there's a high unmet need for new mechanisms to treat these patients. There are currently $30 million adult patients with ectopic dermatitis in the US and $220 million adult patients globally. About half of these patients have moderate to severe disease, and this means their eczema covers a significant portion of their body and can severely affect their overall quality of life. According to the National Eczema Association, adults with ectopic dermatitis are 3 times more likely to experience anxiety and depression, which increases with the severity of the disease. Eczema could also cause severe itching and inflammation, impact a patient's sleep, and lead to body shame.
 Currently, approximately 8% of the patients with moderate to severe disease are treated with a biologic, most frequentlydexin, and yet we know that about half of those patients ultimately either don't benefit from treatment or become refractory, and once treatment is stopped, their ectopic dermatitis returns.
 We believe this is because the approved biologics are effective at controlling the signs and symptoms of the disease, but they do not therapeutically target the underlying disease pathology to restore and heal the skin.
 As a regulatory cell therapy, ResPeg instead regulates multiple immune pathways to address the overall disorder, and so we believe it could provide a much needed alternative to the IL-13 and IL 31 based therapies currently approved for these patients.
 For our ResPEG AA phase 2B study in alopecia areata, we will report topline results in December of this year.
 The patients enrolled in this study have severe to very severe alopecia areata.
 These are patients who have lost at least 50% of the hair on their scalp. In addition, this disease can impact the patient's eyebrows, eyelashes, and facial hair. Nearly$ 7 million people in the US have alopecia areata and $160 million people worldwide. Many of these patients also have other autoimmune diseases.
 Our 90 patients study.
 Is evaluating a 36 week treatment period for patients with alopecia areata as compared compared to placebo.
 We will then evaluate patients once they are off therapy to understand the long-term remittive potential for ResPEG.
 Today DAC inhibitors are used to treat alopecia, and we know that when therapy is removed, patients lose their hair again very quickly.
 Our hope is that Resay can provide a new treatment paradigm and a long-term solution for patients battling this chronic condition.
 In type 1 diabetes, Respa has great potential as a key regulatory cell therapy to slow the progressive loss of insulin producing beta cells, which are the target of the patient's overactive immune cells in this disease.
 We're looking forward to the start later this year for the important proof of concept study in new onset type 1 diabetes, which is being sponsored and funded by Trials.
 Finally, with respect to our early stage immunology pipeline, we're advancing nectar 165, our TNFR2 agonist antibody program through IND enabling studies this year, and we've made great progress on this front.
 We're on track to complete these studies in 2025 and we'll be prepared to submit an IND filing. In addition, the by specific program Nectar 166, which incorporates a TNFR2 epitope with a validated antibody target. Is also on track and we're advancing this new program into preclinical studies.
 Lastly, we remain in a strong financial position with a runway into the 4th quarter of 2026.
 And with that, I'll hand the call over to Zaleski, for a review of the upcoming data milestones. Zaleski,

Story Continues

Jonathan Zalevsky

Thanks, Howard, and thanks to everyone on today's call.
 To begin, I'd like to share with you some of the trial design details for our ResPEC studies, which will be providing nectar with numerous data catalysts over the next 9 months.
 First, in atopic dermatitis, resolve AD enrolled approximately 400 biologic naive patients from October 2023 to January 2025 across multiple geographic regions globally.
 The 52 week study is designed in two distinct phases, the induction phase and the maintenance phase.
 As you'll recall, we only had the induction phase, which was 12 weeks of treatment in the prior ResPA phase 1b study.
 The goal of our phase 2b study is to identify a proper dose for an initial 16 week induction period, which can be our phase 3 dose, and also to identify a maintenance dose regimen that would be used for an additional 36 weeks after induction to maintain or potentially even improve effect for patients.
 For the induction, we are evaluating 3 dose regimens as compared to placebo with a 3 to 3 to 3 to 2 design.
 A high dose of 24 mcg per kilogram twice monthly, a mid-dose of 18 mcg per kilogram twice monthly, and a lower exposure dose of 24 mcg per kilogram once monthly with the goal, as I just stated, to establish a dose for induction treatment to advance into phase 3 studies.
 As you will recall, the 24 mcg per kilogram dose given every two weeks was carried over from the phase 1B study of resin ectopic dermatitis, and this dose arm achieved statistical significance as compared to placebo following only a 12-week induction treatment period in that study.
 ResPA resulted in an 83% decline in E scores as compared to 47% in placebo.
 After withdrawing the treatment in the phase 1B, we observed a strong signal of a remittive effect, with patients maintaining their reduced Escores for 36 weeks once the 24 mcg per kilogram twice a month dose was stopped at week 12.
 The mid dose of 18 mcg per kilogram given twice a month is a dose that is in between the 12 mcg per kilogram level that was studied in the phase 1b and the highest dose study of 24.
 And finally, in order to approximate the PK exposure for the low dose of 12 mcg per kilogram from the phase 1B study, we also gave the 24 mcg per kilogram dose once a month.
 Importantly, because respeg is an agonist, we maintained weight-based dosing in our phase 2B study in atopic dermatitis, as well as in the alopecia study.
 And our primary endpoint is the mean change and E score from baseline, and we are also measuring a secondary endpoints E 75, EZ 90, BSA, itch, and VIGA scores.
 As you will recall in the stage 1B study for rape and ectopic dermatitis, all patients were enrolled in the US.
 Because we observed an increased placebo effect in the US in our phase 1 study, and other investigators have experienced the same challenge, we targeted a lower enrollment number in the US for the phase 2 study.
 As a result, we enrolled only 17% of patients in the US with 67% in Europe, primarily in Poland, and the remainder in Australia and Canada.
 We took other important measures to address the high placebo rates observed in other atopic dermatitis studies. First, prior to randomization and resolve AD, baseline scores for patients were collected at screening and again at randomization. Patients with high variability in their baseline scores were screen failed, and this was done to eliminate patients with unstable disease.
 Another key objective in the phase 2 study was to utilize primarily sites that were led by board certified dermatologists who had specific prior experience in successful atopic dermat sites.
 This ensured higher quality sites were participating in the study. We enrolled patients across 110 global sites, and the sites were carefully chosen and trained as part of our study operations.
 As I just stated earlier, we saw a strong signal of remittive effect after the 12-week induction period in our phase 1B, even after removal of two twice monthly dose regimens after week 12. For the phase 2B, we are exploring what continued treatment with breast will look like after the induction period for a 36 week maintenance period.
 At the end of the 16 week induction period, patients who achieved at least an easy 50 score were re-randomized to receive one of two maintenance regimens at their original dose level for a 36 week treatment period on either a once a month or once every 3 month regimen.
 We're excited to see the effect of continuing to treat after induction for Respa, which, as Howard said earlier, will be a future data readout in early 2026.
 Patients that did not need an easy 50 or better efficacy threshold at week 16 were permitted to go into an escape arm, which is the 24 mcg per kilogram dose given every 2 weeks.
 Because RESPEC has an immune modulating mechanism, we are also following participants for one year after the conclusion of the 52 week treatment period, enabling us to evaluate RESPEC's potential for a long term remittive effect in patients.
 We want to understand how RESPEC differentiates from the IL-13 based mechanisms and DAC inhibitors where disease recurs in a substantial fraction of patients after discontinuing treatment.
 Now moving on to alopecia areata, as Hower stated, we expect top line results from the 90 patient alopecia study in December of this year.
 This study was started in March of 2024 and we completed enrollment in February of this year across 30 sites globally.
 62% of patients were enrolled in Poland, 24% in Canada, and the rest in the US.
 The study has a 36 week treatment period and is a similar design compared to the phase two study of baritin and alopecia.
 Alopecia areata is a dermal disease in which the patient's immune system mistakenly attacks the hair follicle and disrupts the body's normal ability to keep and grow hair, leading to severe hair loss and lack of hair regrowth.
 There is strong rationale for RESPEC in this indication based on the role of T. Rex to either prevent or downregulate the underlying pathology of the disease.
 Patients had to present with severe to very severe disease to find the severity of alopecia tool score, or SALT 50 to salt 100, for at least 6 months in order to be eligible for inclusion.
 We are evaluating two doses, the 24 mcg per kilogram and the 18 mcg per kilogram given every two weeks as compared to placebo.
 Placebo rates tend to be quite low, under 10%.
 Our primary endpoint for this study is mean% improvement in salt at week 36.
 We will also be looking at a number of other secondary endpoints, including the proportion of patients that had certain levels of improvement in SAT score, including the regulatory approval endpoint for a phase 3 study, the SALT 20 responder health.
 As Howard stated, we are also excited about the start of the phase 2 trial sponsored study, type 1 diabetes for breast.
 The 66 patient placebo-controlled study will enroll stage 3 new onset type 1 diabetes patients, and we look forward to providing the respi drug for this important indication.
 Finally, we are making great progress in the ID enabling studies for our novel TNFR2 agonist antibody program, Nectar 0165.
 TNFR2 agonism potentiates Treg function as well as maintenance of T. Reg lineage stability, especially in the non-lymphoid tissue compartment.
 The first preclinical data from this program presented last year at UULAR demonstrated the nectar 0165 has a very high specificity for signaling through TNFR2 on Trex and enhancing their immuno regulatory phenotype.
 It also showed that the agonist we discovered is able to signal to the TNFR2 multimeric receptor as a single-arm monovalent antibody.
 We believe this is the only antibody in this class being developed that has this attribute.
 We are very excited with the unique and differentiated profile of this antibody, and we believe it has potential to become a first in class treatment for various autoimmune diseases, including multiple sclerosis, ulcerative colitis, and vitiliga.
 We're also designing a pipeline of by specific molecules that pair TNFR to agonism with other antibody targets, and we've identified the first by-specific antibody, nectar 016 in this program.
 This first by specific antibody incorporates the TNFR2 epitope with another validated antibody target, and we are initiating our preclinical studies now.
 We look forward to providing more details on this antibody as the studies progress.
 For NA 255, our IL-15 based oncology program, I am excited to share the data from our collaborators at the Fred Hutchinson Cancer Center in Seattle. We accepted for an oral presentation at this year's European Hematology Association congress being held in Milan.
 This will be the first data presented from their investigator sponsored study of nectar 255 following CD19 directed CAR T cells, brianzi in the 2nd and 3rd line, large B cell lymphoma patients.
 We believe these data reinforce the potential for nectar 2.5 to improve upon existing cell therapies for patients.
 We continue to explore opportunities for continued development of this drug candidate in partnership with collaborators.
 And now I'd like to turn the call over to Sandy for a review of our financials.

Sandra Gardiner

Thank you, Jay-Z, and good afternoon, everyone. We ended the first quarter of 2025 with $220.7 million in cash and investments and with no debt on our balance sheet.
 We remain in a strong financial position and still expect our cash runway to extend into the 4th quarter of 2026 and to end 2025 with approximately $100 million in cash and investments.
 Turning to the income statement, our first quarter 2025 revenue of $10.5 million was within our guidance range and comprised of non-cash loyalty revenue.
 We currently expect our quarterly revenue to remain at a similar level to Q1 for the remainder of 2025, totaling approximately $40 million for the full year.
 Our R&D expenses were $30.5 million for the first quarter of 2025, and we still anticipate full year R&D expense to range between $110 and $120 million including approximately $5 to $10 million of non-cash depreciation and stock-based compensation expense.
 Our GNA expenses were $24.3 million for the first quarter. We still continue to expect GNA expense for the full year of 2025 to be between $60.65 million dollars, including approximately $5 to $10 million of non-cash depreciation and stock-based compensation expense.
 Note that our operating expenses are not ridable throughout the year and will vary based on the level and type of activities each quarter. For example, our R&D expenses are higher in the first half of the year with greater study operational activities in our ResPEG Phase 2 atopic dermatitis study.
 Non-cash interest expense for the first quarter was $5 million and is expected to remain at a similar level for the remaining three quarters, totaling approximately $20 million for 2025.
 This quarter we have included a new non-operating line item on our income statement titled Gain or Loss from equity Method Investment.
 As a reminder, on December 2, 2024, we completed the sale of our Huntsville manufacturing facility for consideration of $64.7 million in cash, net of transaction costs, and approximately 20% ownership in the new portfolio company Gannet Biochem or Gannet.
 Under the required equity method of accounting, our investment in Gannet was recorded at fair value.
 At each subsequent period and date, our share of Gannet's gains or losses are recorded using the hypothetical liquidation at book value or HLDV method.
 The HLBV method calculates the change in the hypothetical amount we would be entitled to receive if Gannet were liquidated at book value at the end of each period. This is a non-cash charge recorded outside of nectar's operating expenses and from period to period could fluctuate from a loss to a gain.
 In the first quarter, due to this accounting methodology, we recorded a non-cash loss from equity method investment of $4.5 million and we currently expect a loss of approximately $10 million for the full year 2025.
 And importantly, as I just said, this is non-cash. We have no commitments to contribute cash to Gannet as an equity investor. We are simply providing this information as a housekeeping item so that you can forecast the rest of 2025 for this new non-cash line item.
 Our net loss for the first quarter was $50.9 million or $0.24 basic and diluted net loss per share.
 Net loss before the equity method investment totaled $46.4 million equating to a non-gap basic and diluted net loss per share of $0.22.
 And as I stated earlier, we still expect the year to end the year with approximately $100 million in cash and investments with our cash friendly extending into the 4th quarter of 2026.
 Finally, as we head into our June data reporting, we intend to enter into a quiet period for the month of June until we report the top line results for the ResPEG atopic dermatitis study.
 And with that we'll now open the call for questions operator.

Question and Answer Session

Operator

(operator instruction)
 Yasmin Rahimi from Piper Sandler.

Dominic Risso-Gill

Hi, this is Dominic ontrias.
 Thank you for taking our questions and congrats on the quarter. Could you, I have a couple of questions. One, could you remind us kindly what you hope to see in Resolve AD to move forward into a phase 3? And is your plan to move forward with one or two doses for that? And then also, what is your expectation for the placebo response in Resolve AD?

Howard Robin

Thank you.
 Jay-Z, would you like to answer that?

Jonathan Zalevsky

Certainly, thank you for the question. So firstly, one of our objectives is that we, of course, had phase one data already. And have demonstrated proof of concept in atopic dermatitis. So one of the things we'd like to see is a replication of that data. So that's one of the of the components of efficacy that we'd like to see. And then we'd also compare the results against the other key benchmarks. And of course Dupikin is a very important benchmark. It is the leading standard of care in this space, so we'd like to be, minimum in the range of the efficacy that you see with Dupikin.
 And then of course we'd like to even better improve on that and replicate our results of phase one. In terms of the number of dose levels that we would like to study, the purpose of the phase 2 study is that it's a classical dose range finding study. So ideally we would identify, a pretty clear dose and dose regimen that we would take forward. We'd have to obviously see what the results show us, but in the ideal case we would have one dose level that we would be taking forward into the phase 3 studies.
 And can you remind me your third question, please?
 Yeah.

Dominic Risso-Gill

It was what are the expectations for the placebo response in Resolve 8D?

Jonathan Zalevsky

Yeah, okay, thank you. Yeah, so as I mentioned in the call, in the phase one, we use sites that were 100% in the 13 sites, and we saw about a 47% placebo response, which was a little bit on the higher side, still in the range of modern studies, but on the higher end, and it's certainly reflective of a general trend that we're seeing, particularly in sites in the US. And so we took, proactive measures in order to TRY and control the placebo response rate by only enrolling a proportion of patients in the US, 17%, and enrolling in the rest of the world for the remainder of the patient population, as well as some of the other things that I mentioned, such as using board certified dermatologists and the majority of sites to have consistent and highest quality rating of the disease.
 So we'd like to see, a lower rate, for example, than what we saw in that might be and we'll look forward to reporting, the actual placebo response rate as we prepare and and report the top line next month.

Operator

Thank you.
 Julian Harrison from BTIG.

Julian Harrison

I congrats on the progress and thank you for taking my questions.
 On the phase 2B atopicderm data we're expecting in June, or rather the trial, I have a specific question. I was wondering if you're able to tell us how many patients have progressed to the maintenance portion of the trial so far, and of those, how many have crossed over to the escape arm of the trial?
 Are you blinded to that, or is that maybe something you could disclose now?

Jonathan Zalevsky

Jay, did you get that question Julian? Yeah, this is Jay-Z. Yeah, so it's a good question.
 We can't disclose that kind of information right now, but we will disclose that as well as more features of the data and the actual results, next month when we present the top line results.

Julian Harrison

All right, thank you.

Operator

Thank you.
 Jay Olson - Oppenheimer & Co. Inc.

Jay Olson

Oh hey, congrats on the progress and thank you for taking our questions.
 When you share the results from the Phase 2B results study, can you just talk about the scope of the data you're planning to share and of the secondary end points which are most important?

Jonathan Zalevsky

Yeah, thanks, Jay.
 So one of the kind of unique things about the dermatology conferences is that they're a little bit more lenient than say ASCO is in terms of embargo data, and I think that's a good thing, here.
 So certainly when we present the topline data, the primary endpoint will be a key key element that we would present. And that's the percent change from baseline and score and compared to placebo, all of the cohorts one by one and then there are secondary end points and you ask which ones are, quite important. So definitely EZ 75, EZ 90, the IGA, those are quite important. Probably itch is also quite important. I mean, those are the ones that really firstly are used as registering end points in the case of EB 75 VIGA and also things like H are just key, for the kind of comparisons that we do and then we also give, the picture isn't efficacy it be the total tolerability, the total ability to understand the both risk and the benefit of the drug. So I hope that gives you a flavor of the kind of things we would present.

Jay Olson

Yeah, absolutely super helpful and maybe if I could please ask one follow up, will you be taking weight-based dosing into phase 3, or will it be a fixed dose?

Jonathan Zalevsky

Yeah, so one of the things that we've learned about this drug as an agonist, it's quite important. To dose it very precisely. And so weight-based dosing is what we've identified is critical.
 So our plan is to continue to use weight-based dosing and it's pretty common, there are many drugs that are dosed in what you call weight bands, so if a person is between weight A and weight B, they get this SKAU or SKU, for example, Orencia and other drugs, many other drugs that do that way. So we would be using weight-based dosing and then our long term goal would be also that we would launch, in an auto injector and maintain that kind of weight-based banding as our dose approach.

Jay Olson

Great thanks so much for taking the question.

Operator

Roger Song from Jeffrey's.

Great, thanks for the update and taking your question.
 Can you remind us what is the dropout rate for your phase 1 B dermatitis trial, as I understand the small, but what is the expectation for your phase two? Anything you can tell us on the blind blinded fashion, what is the discontinuation you're seeing, would you report both ITT and Esimal for the efficacy endpoint?

Jonathan Zalevsky

Yeah, hey Roger, yeah, thanks for the question. So you know when we published The results from the phase 1B last year in our nature communication paper we showed that there was between a 30% and 20% dropout rate for placebo and the two dose levels of Respe, and it was actually higher for placebo, 30% for placebo, and in the low to mid-20s for the respeg arms for the low dose and the high dose. And so, we presented that data.
 For example, if you consider a study like the Lebrecizumab phase 2 trial there in that study when they looked at the overall pool analysis, I think they had about a 28% dropout rate.
 It's just another benchmark. And for us, in the case of June, we'll report that, the dropout rates, and we'll report that, for example, patients that discontinued during the induction period as well as the earlier question, patients that completed the induction period that either went on to re-randomize into maintenance or that went into the escape.
 So stay tuned and we'll report all of those results next month.

Got it. Okay. And then in terms of the next step, given the phase two is biologic 9 patient population, how would you consider to expand this into post biologics and then in the phase 3?
 Thank you.

Jonathan Zalevsky

Yeah, so you know our data is really built upon what we've seen in our own proof of concept study, right? And that's why we ran that phase 1 in biologic naive patients and we ran the phase 2 biologic naive patients and we would expect to also run our phase 3 studies in the biologic naive patients.
 However, during the phase 3 program, we would also study the drug. In biologic experience. And so that would be something that we would do as part of the phase 3 program. Different companies use different approaches, for example, Amgen with the oka program combined biologic naive and experience into the same study. Whereas lebbracizumab and amitumab did separate studies, for those populations, so we'll still be, deciding the best approach for us, but we'll definitely evaluate both naive and experience-based populations in the phase 3 program.

Excellent. Just one last quick question in terms of the partnership, would you be considering, seeking partnership after phase two, or you will take this, red flag into phase phase 3 on your own.
 Thank you.

Howard Robin

Yeah, that's this Howard. That's a very good question, Roger. I think, look, if you look at Nectar's current financial position, we clearly aren't in a position to, execute on a full phase 3 program without a partner. So I think what we will be doing is looking at the quality and the strength of the data, and we will be talking to companies about collaborating now. That doesn't mean we'll be out licensing the drug. Way we will do that, but we will be talking to companies and come up with a collaboration that allows, the least amount of dilutive financing for our investors and at the same point allows us to retain, a significant portion of ownership of the drug and there's lots of lots of different ways to do that, but clearly, collaboration is likely the direction we go

Excellent. Thank you.

Operator

Mayank Mamtani - B. Riley Securities

Mayank Mamtani

Yeah, yes, good afternoon. Thanks for taking our questions. JZ, are you able to provide any color on your where your baseline E could come out and how much is going from 12 to 16 weeks, in this phase 2B versus phase 1 be important for that separation from placebo and is there expectation for all those levels, including the 24 meg per gig. Once every monthly, everything sort of statistically, clearing the static bar and 24, the monthly dose being the lowest therapeutic effective dose.

Jonathan Zalevsky

Great, yeah, thanks, so.
 So, obviously, when we report the top line results, we'll get the detailed baseline easy, but I can tell you that with the kind of prospective actions that we took in the study, such as the geographic footprint, as well as focusing on, experienced dermatologists, board certified derms that have successfully participated sites, we'd like to see. Our baseline easy rate between 25 and 30, and we think that when you look across successful studies, whether they are phase two or phase three, this is a, that's a very good zone to be in. You'll note, of course, from our publications, we're a little bit lower than that in our phase one, we were in 22, 23 range. Again, that was all US sites, so we'd like to see a higher baseline using at this study.
 And then you ask the other interesting question about the impact of increasing the time of dosing, the overall dose interval, and we do think that that's quite important. So the phase 1 B was really informative and it showed us that a 12-week, twice a month dosing regimen could definitely deliver quite a lot of efficacy and it could deliver a remittive effect.
 I was seen in the majority of people, but it was also evident that there were people that could have done better with additional doses. And when you look at that week 12 to week 19 off drug period, we lost a few people at the different dose levels that really had an effect, but then that effectwed. So there were clearly people that could have done with additional dosing. So one of the first things that we'll be looking at in this study is the additional extension of the induction period from 12 to 16 weeks. That also gives more as you described space and the separation from placebo. But then also, beyond that is the fact that we keep dosing in the maintenance period, which is also something that that I mentioned we're very excited about because it's possible we haven't really mapped out the extent of efficacy. And that would continue treatment through 52 weeks. Patients could see even more benefits. So we're very excited to see the effect of that additional dosing. And then to your last question about the different dose levels. So we gave an additional caller in the call today, about our expectations about the PK exposure and the kind of you see that's matched across those dose levels. But also remember this is a very well powered study. And we enrolled 400 patients into the study in order, to fill the maintenance arms, and then the benefit of that is that the induction is very well powered. So that gives us a very good opportunity and, a very good chance to hit significance across multiple dose arms. So thanks for the questions.
 Great.

Mayank Mamtani

Great. And if I may squeeze in a alopecia study question please, do you have a sense of what a proportion of patients between very severe versus severe subgroups and if you could comment on the kinetics of response, relative to a pretty fast onset, you get an AD, how, what would be your expectation be on the kinetics there and then I have just one last follow up after that.

Jonathan Zalevsky

Sure. So if you just look at the epidemiology, if you look at people that are salt 50 or higher, you'd find between, well, between a third and half are actually in the very severe, which are 95% and high, right? And those are also the people that tend to be the candidates for clinical trials as well. So that's just where the epidemiology breaks down in that from a third to a half are in that very severe category, which is defined as 95 to 100 on the SAT scale. And then your other question about onset, it's it's a very interesting question. The physiology in that disease is very different, like, in atopic dermatitis, you're dealing with effectively an organ that recovers quickly in the skin. Rashes can come and appear and clear quickly, as and so can other excoriation latification, other features of the disease as well.
 But hair is its own thing, right? There's different stages of hair growth. In patients with alopecia, they have an arrest, but the hair follicle, so there's inflammation that slows down and it really interrupts the stem cell, a portion of the disease. And so that's why we actually are doing a 36 week induction period in that study, and we see that even with DAC inhibitors, right, it can take time, to grow hair. So so we're doing a longer induction period and in December we look forward, to present the top line results of that study, and there we'll be able to characterize not just the magnitude but also the cadets of the response. So we'll stay tuned for until December for that.

Mayank Mamtani

Great, and just one corporate question. Any anything you guys can comment on the, lili litigation, just update on what next steps are and, if it all respects progression, to they say development has any impact on potential damages, thanks again for taking our question.

Howard Robin

Yeah, look, I can't obviously can't go into detail on our litigation. I can only tell you that we strongly believe we've been damaged by Lilly. And we're active, we're clearly actively pursuing an aggressive strategy in this legal action, and I think whether whether Respe is successful or reseg is not successful, I don't think it has really much impact on the damage that they've done us. So let's watch and wait as we move towards a trial.

Mayank Mamtani

Understood.
 Thank you.

Operator

Arthur He -HC Wainwright & Co.

Hey, good afternoon. How are your team. Thanks for taking my question. So JZ, you read my mind about the by disclosing the dose level for the AA study. And, so I'm just wondering, so assuming this phase to be starting in the A, can that meets your guys' expectation. How should we think about the design for when you guys evaluating the maintenance of the in the A patient? Would that follow similar design path as the AD study?

Jonathan Zalevsky

Yeah, it's a it's a really great question, Arthur. Yeah, thank, thanks for that. So yeah, one of the things we're going to learn in this phase to the study is what happens when we stop treatment, right? So in the study design, there's a 9 month induction and then the 6 month, off treatment period, and our hope and desire in designing the study that way was that we could see, the same kind of remittive potential in alopecia that we saw in atopic dermatitis in that on drugg period there. That would be a complete transformational, change in this indication. So firstly, there is no biologic approved in this disease, and the DAC inhibitors, can be effective for people with alopecia. They're kind of difficult drugs to take because you have to take them for so long and this disease and you also have to step up a dose in patients. But then, as Howard and I described it, it's very difficult for patients because when you stop taking the Jack inhibitor.
 The rate of hair loss is quick and you don't have a regrowth or a maintenance of what you grew. So so we do think there's a really unique opportunity and again being having the potential of being in a very exciting position as a biologic. Tested in the potential for it to be so early into the space as a biologic therapy. The way we would approach a phase 3 study, we would of course have to see the results of the phase 2, where we'd have to learn about the dose ranging that we've done in the phase 2 study. And then as we look at the off drug period, we would think about what is the appropriate maintenance regimen. Most likely we would treat and approach alopecia the way we approach atopic dermatitis where there would be an induction period that would be a higher frequency of dosing. And then there would be a maintenance period that would be much lower in frequency.
 That's the most likely what we would see, but of course, we have to see the final results of the study to make that final design.
 Thanks, Jason.

So just a quick one, on the technical side for the study design for the alopecia study. So I noticed that, for those patients did not reach aAR score less than 20, they can get an additional 16 week treatment, right? So the, those patients will also be followed in an additional 24 weeks. So, is that right? Or I mean, for that thing, those patients' kind of the total study time period will be a little bit longer.

Jonathan Zalevsky

It's the latter. So, for those people, everybody gets 24 weeks off drug. So even if some people had were were improving at the end of week 36 and had an extension, they would still be followed for 24 weeks at the end of do. You are correct.

Okay, got it, yeah.

Jonathan Zalevsky

Thanks for taking my question.

Operator

Jessica Fye from JPMorgan.

Jessica Fye

Hey guys, good afternoon. Thanks for taking my question. Is it fair to expect that you would wait for the 36 week AD data before pursuing an end phase two meeting with FDA and preparing to initiate a phase 3 trial, or is there potentially motivation to meet with the FDA sooner on the back of this upcoming data and get the ball rolling on phase 3 that much sooner?
 Thank you.

Jonathan Zalevsky

Yeah, thanks for the question, Jeff, and it's the latter, so we don't have to wait for the completion of the maintenance, which would come in the very early part of next year before we connect with that the induction regimen.
 And so in fact it is our plan that with the top line data when it comes next month, we would begin eyeing in end of phase two meeting.
 With that 16 week induction data being the main substance and substrate as well as the driver of the phase 3 study design that we would take forward, so yeah, actually we would, we don't need to wait, and our goal would be to really to keep the momentum. On the program. So if the study gives us the kind of results, that we think it can, our intention would be to move quickly, maintain the momentum, and I phase 3, moving into that phase 3 program as quickly as we can.
 Okay, thank you.

Jessica Fye

Thank you.

Operator

Our next question comes from Andy Shea from William Blair. Your line is open.

Jonathan Zalevsky

Oh, thanks for taking our questions. So, 22 for me, I, I'm just curious for the protocol for atopic dermatitis, do you allow patients to be off the drug but still on the trial? The reason I'm, why I'm asking this question is perhaps for the first look, you can potentially get a glimpse into potential remittive effects, like you said, Jay-Z for those patients who are off drug but still on trial. So that's question number one. Question number 2 is for the primary employee, I'm curious about which imputation method you're using. I think this is going back to Roger's question before, but I also have the same question.
 Thank you.
 Okay, sure.
 Yeah, so in terms of your first question, so like any other protocol, right, there are rules for either stopping the study or stopping the treatment, right? And then there are, if you fall into one of those categories like any other protocol, you still keep the patients in the study. They continue to have follow-up visits, not just an end of study, but even after the end of treatment, they could continue to be followed. And so our protocol is no different than any others, and it does allow that.
 And again, like, so yeah, so that's something that is allowed in our protocol.
 And then the second question that you asked was about imputation.
 And so yeah, the kind of imputation methods that are used are typical of phase two studies, right? So the FDA likes you to use an estim demand approach, right, when you report this kind of data.
 So there are events called in current events, and again, they're well defined and the FDA gives this guidance to all sponsors when you have a study of phase two size.
 So we'd be using a primary estimate analysis. And again, the routine kind of imputation methods that are typical of other studies. When we present the results, we'll get into the details, the methodologies so you can see that before you see the protocol, for example, when we publish the study results, but that I hope that gives you the kind of flavor. It's a it's a standard imputation of a primary estimate analysis. Yeah, that's helpful.
 Thank you, Jay-Z.

Operator

Thank you.
 And I am showing no further questions from our phone lines. I now like to pass it back to Howard Robin for any closing remarks.

Howard Robin

Well, thank you all for joining us today and we greatly appreciate your continued support, and I want to thank all of our employees for their hard work and diligence, and I look forward to sharing our RESPEC date in June. So please 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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