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Nektar Therapeutics (NASDAQ:NKTR)

Discussion of Positive Data from Human Abuse Liability Study for NKTR-181 Conference

June 19, 2013 1:00 PM ET

Executives

Jennifer Ruddock – Private Investor Relations

Howard W. Robin – President and Chief Executive Officer

Robert Medve – Senior Vice President and Chief Medical Officer

Sidney H. Schnoll – Pinney Associates

Analysts

Jonathan Aschoff – Brean Capital, LLC

John S. Sonnier – William Blair & Company

Matt Lowe – JPMorgan

Operator

Good day ladies and gentlemen and thank you for standing by. Welcome to the Nektar Therapeutics Conference Call. At this time all participants are in a listen-only mode. Later we’ll conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder this conference is being recorded.

I would like to introduce our hosts for today Ms. Jennifer Ruddock, Private Investor Relations. Ma’am, please go ahead.

Jennifer Ruddock

Thank you, Karen. Good day, and thank you everyone for joining us on today's conference call to discuss the NKTR-181 Human Abuse Liability data that was presented this morning at the 2013 Annual Meeting of the College on Problems of Drug Dependence in San Diego.

With us today are Howard Robin, our President and CEO; Dr. Robert Medve, our Chief Medical Officer; and Dr. Steve Doberstein, our Chief Scientific Officer. We are also pleased to have on the call with us today Dr. Sidney Schnoll at Pinney Associates, we are the leading expert in the field of abuse and addictions.

The call today includes supporting slides which can be accessed one of two ways. Slide can be viewed by live by acted in the webcast from the home page of our website at nektar.com or you can download a PDF of the slide from the home page as well.

On this call, we expect to make forward-looking statements regarding our business, including but not limited to the potential for NKTR-181 as a new opioid therapy would produce abuse potential and the timing of future clinical studies and results.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes that are difficult to predict and many of which are outside of our control. The important risks and uncertainties are set forth in our quarterly report on Form 10-Q which was filed on May 9, 2013 and our Form 8-K filed today with the SEC and can be found at www.sec.gov.

We undertake no obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise. A webcast of this call will be available for replay on the IR page of Nektar’s website at nektar.com.

With that I would now like to hand the call over to Howard. Howard?

Howard W. Robin

Welcome everyone and thank you for joining us today to discuss the important Human Abused Liability data we announced this morning for NKTR-181. NKTR-181 is one of the most exciting programs in our pipeline, as most of you know NKTR-181 is a new opioid molecule that has received Fast Track Designation from the FDA.

Today's data which Dr. Robert Medve will review in detail in a moment demonstrate that NKTR-181 could address the serious issue of prescription opioid abuse and addiction. The NKTR-181 molecule has been designed to enter the CNS slowly to reduce the dopamine rush and its associated euphoria that lead to the abuse of and addiction to current opioid analgesics. In addition NKTR-181 could result in reduced sedation and respiratory depression which would give NKTR-181 an excellent clinical profile to treat patients with chronic pain.

NKTR-181 is the first new opioid molecules specifically designed to have slow CNS entry. Importantly its properties or inherent to its molecular structure without the need for any abuse deterrent formulation if we are successful in the development of this new medicine NKTR-181 could become the therapy of choice in the $12 billion opioid market for chronic pain. We are tremendously excited about the HAL study data that was presented today at the College for Problems of Drug Dependence Conference.

And I'm pleased to hand the call over to Rob Medve for review of the data.

Robert Medve

Thank you Howard, and thank you everyone for joining us today. Very exciting data to share with you, but I like to start with just a little bit of background on the problem that we face particularly in this country. There is over a 100 million chronic pain patients in the U.S. and for those patients prescription opioids are a critical part of the management of their overall pain condition. But as we all know abuse these prescription opioids is a very serious public health issue, and one that FDA is now started to very directly address, and you need to see that reflected in the recent draft guidance on abuse liability.

Our traditional approaches as an industry have been to look at formulation based approaches, basically using physical barriers to prevent manipulation of sustained release formulation, so that a highly abused and very desirable drug like for example Oxycodone is not immediately released and have a large amount of drug available for, to the brain immediately. We know that drug abusers place a very high value on that rapid onset and they have much more interest in drugs like again Oxycodone that enter the brain very quickly and act very rapidly.

So these drugs basically contain, these formulations contain a drug that’s very attractive to them and provide a lot of incentive for them to tamper to get that drug out. And we know that drug does have to come out of these formulations actually to be therapeutically effective. So you see people crushing, snorting, smoking, injecting, and all of this is gamed towards getting a faster effect of the drug.

And that is true largely whether it’s a sudden there is an opioid or for example nicotine or any other substance of choice, the faster the effect on the brain, stronger the effect, and the stronger the high that’s produced. And we’ve learned that over the years, there is a very important component of the reinforcing effects of these drugs.

So while the formulation approaches attempt to address this issue, there is clearly not the solution to this issue, at the end of the day, they still contained the drug that abusers are looking for, and that’s a really powerful incentive for them to start tampering and ultimately to defeat these formulations.

So the solution to the problem is something we’ve been talking about it and it is very clear in the scientific presentations at this meeting that we need new molecules. We need new ways to think about opioid analgesia, and modules that inherently safer and don’t rely upon formulations that are ultimately going to be broken. So 181 was designed to be exactly this kind of new opioids, this kind of new thinking, so it’s a molecule that enters the brain more slowly in order to reduce the euphoria that reinforces and leads to abuse.

This is a data that you have seen before on Slide 2 of the deck, and this just talks, shows you in humans exactly what happens when you take NKTR-181. Oxycodone very highly abused drug goes potently from plasma into the brain equilibrates in minutes, 11 minutes you see reflected here. We do this measuring pupils and plasma levels of the drug.

When we look at that same set of calculations and evaluations for 181 we see the equilibration is three hours, nearly three hours, so about 15 times slower than Oxycodone in terms of its rate of entry into the brain. And that’s fundamentally important when we start thinking about abuse and what’s happening and driving these reinforcement effects and we believe that makes a very big difference. We’ve seen that in preclinical models, and now we have confirmed that with human data and Human Abuse Liability Study.

So we think this is particularly important as the concept behind 181, and the question is how do we assess this in the clinic in humans? So as you might imagine there is many things that we think about and consider, Human Abuse Liability Studies is clearly the most important scientific test with this potential of a particular medication. So these studies are well recognized by the FDA and other regulatory authorities. And in fact our study design for the NKTR-181 HAL study is in line with the FDA’s recent Draft Guidance which very clearly describes the mythology of HAL studies. We were also able since we do our Fast Track Designation; we are able to review our study design with the FDA prior to initiating the study to make sure we were in agreement how that should be included.

So the HAL studies are typically conducted in a particular patient population? It’s a non-dependent recreational drug abuser population. And they are designed to show whether a particular medication will be liked and therefore attractive to abusers, these patients, these subjects recognize very clearly the effects of drug that they liked, they know what effect they’re looking for, that feeling of being high and they are able to discriminate very clearly between not only active drug and placebo, but different levels of effects with these drugs. So they are very sophisticated assessors of these drug effects that they are looking for.

The primary endpoint in the HAL studies is the standard one for these studies and also described in the guidance document, and is drug liking, which we measure used on a bi-polar visual analogue scale. The bi-polar meaning that the baseline point is actually in the middle of the scale, in this case at 50 and anything as drug liking is actually above 50 or realistically above about 60 and things that are negative, so these are actually negative effects that people don’t like, so those are rated lower than 50, it’s just the most common scale.

In guidance document this is, it suggests that this endpoint is known to correlate most directly with a potential for abuse. So in our HAL study, we enrolled 42 recreational drug abusers, which is a good size for a study like this and it’s typical from what is see, nature of the study was well powered to show us what we were looking for. And I just wanted to remind everybody through the design of these trials, actually how rigorous it is for these subjects to participate in.

So if you go to Slide 3 you will see a schematic of the Human Abuse Liability Study, this is schematic of our design but typical of these kinds of studies. So as I mentioned, we looked for a non-dependent recreational drug users. They have to be preferring opioids, not any specific opioid, but preferring the effect of an opioid. And what we do is, we bring them in and we confirm through a naloxone challenge, we give them an opioid antagonist to make sure that they are not physically dependent on opioids. Patients who are physically dependent on opioids have potentially a very different dynamic, a very different response when they are given when a drug like Oxycodone or any active abuse drug.

So they may have a very different response, we’re looking for patients that are not physically dependent on opioids. If we see any signs of withdrawal, they are eliminated from the studies, if they don’t show any signs of withdrawal, which they most certainly would have if they were physically dependent and we give them an opioid antagonist. Then they continue on to the next phase of the study, which is drug discrimination. And here is where we are sort of separating the wheat from the chaff if you will; we’re asking these subjects to identify the difference between Placebo and a low dose of an active drug. And that’s important that they would be able to do this and do this reliably and show us results that are consistent with what is known about how patients respond.

And if patients, if these subjects in these trial are able to do that then they qualified to be randomized. And when we randomize, we do what is called a Williams Square design and sparing of the details, basically there is a number randomized sequences, so patients are in different sequences, nobody knows who’s getting what at any given time during the trial, but each subject in the trial will receive each of all five of the treatment arms.

And in this case the five treatment arms are 181 at dose of 100 milligrams, 200 milligrams, 400 milligrams, Oxycodone 40 milligrams and that’s a standard comparator, you can also look – look we preferred to the guidance to see that, and we always use a placebo control as well. So when we – this is the basic design of the trials. As you can see, it’s rigorous for patients, for the subjects to get in and qualify and then they are subject to battery of assessments to assess what they experienced when they do take the drug.

So this is randomized double blind placebo control and positive comparative controls crossover. And the primary end point in these studies is drug liking is measured on a bipolar visual analogs scale and as I talked a bit about that earlier. But it is important to note that that is stated in the guidance document is correlating most directly with potential for abuse.

We also ask other questions around how high the subjects are feeling, following each dosing arm and a number of other questions to determine their overall response to the medication of whether they like it or not. In the case of 181, we were also particularly interested in sleepiness. We think there may be some impact on sedation from with 181 having less sedation than typical opioids.

So and now let me move on to the new data, and I just want to emphasis at this point is as a pain management specialist and having been in the field for a long time, having written and conducted Human Abuse Liability Studies in the past, I find these data to be remarkable, and I’d like to walk you through that and tell you why.

So moving on to Slide 4, this is the primary measure in these trials. This is a bipolar VAS. And what you’re seeing is how these subjects respond to the question of do you like the drug effect, you’re feeling now. As noted the scale is a 0 to 100 scale were 50 is neutral, something maybe the like nor dislike. And the positive data numbers above 50 or really realistically somewhere around 60, you start to see liking increasing and then you see strong liking effects up in the range where you see in this particular slide Oxycodone.

So 40 milligrams of Oxycodone given as an oral solution resulted in a maximum drug liking score of 85, which indicates a strong liking. Now, this is very much in line with what we’ve seen previously in these studies and historically for the response to Oxycodone. So it’s very – helps us to understand that our study is on track and we’re getting the reliable data, similar you see placebo hovers around 50 and that again is very typical.

What is really interesting here is that 181 rates similar to placebo at all the doses studied and differentiates from the – from Oxycodone with high statistical significance, and I’ll show you those p-values in a minute, but they’re very small p-values. The Oxycodone liking score was significantly different from placebo and from 181 as early as 15 minutes after dosing and the Oxycodone liking scores peaked at around 60 minutes after dosing. And this is a kind of profile that abusers are looking for, that rapid onset, that rapid rise to peak.

On the placebo arm, the maximum drug liking score was around 50 and that’s what we expect with placebo. So well validated study both by the active control and by the placebo control. 181 as I mentioned was similar to placebo in terms of the maximum response. So for we see – we see for 100, 200, 400 the maximum was 58, 58 and then 63 for 400. So we don’t see a huge differentiation from placebo. Those in fact a very little statistical differences if it all in across this. We see huge statistical differences between Placebo and 181, between those two agents and Oxycodone in this study. And let me just show you to the next slide with the P-values for this.

And you will notice that it starts with 15 minute, these are very, very small P-values just compared to Oxycodone, and it goes out to four hours. We also see the overall 24 hours. I do want to note that if you were to briefly refer back to the slide you would pick this up, but at four hours this is not the liking scores of 181 increasing; this is Oxycodone effect wearing off. And that’s why after that point you start to lose your ability to separate because your Oxycodone is actually wearing off. It’s not the 181 going up, it’s Oxycodone coming down that does that that’s I think there are also very compelling finding.

One of the other measures I noted was how high are you, so I’ll show on to Slide 6, here we look at the patients, the subject to response to how high do you feel right now. Now in this case instead of the bipolar scale you saw earlier, we use what is called the unipolar scale, so it’s just zero to 100 its simple, it should be sort of analogous to a VAS pain rating scale, but rating how high they are. So we see here a very similar pattern, we see the patients on Oxycodone and they have a rapid rise to peak effect early onset of the high and you can see almost from immediately from the administration of that of the drug they are quite high on the scale here. You see at the first measure time point, they right around 55.

So again, using the same pattern with all doses of 181 is scoring similar to the Placebo and Oxycodone achieving a maximum score of about 80, 81. Again, historically that correlates well with what we know about the performance in these models. The 181 maximum score were 14 and 14, and 23 for 100, 200 and 400 respectively. And again, very, very small P-values less than .0001 compared to Oxycodone. Placebo in this particular measurement, you see the maximum score of about nine.

And just go to the next slide, again here’s the P-values. Now I’m showing you here the P-values for 15 minutes and four hours and overall. Again, if you flip back to that chart, you will note that the significance extends well beyond that four hour intervals. But that early onset, that early time is very important in abuse, as you recall what I mentioned earlier about having that early onset of the effect, how that drives subject to try to manipulate, tamper dosages forms to push that forward, we just don't see an effect of 181 occurring early in this time course that's very, very important, in fact we see very little effect overall which is really exciting. And once you emphasize that 181 in this study is given as an oral liquid, so this is already crushed and put into solutions.

This is not a formulation of any sort it’s not even a simple pill, this is a oral dosing solution of the drug. So what you’re seeing here is a performance of the molecule, you’re seeing the relationship to the blood-brain barrier, you are seeing something very different from what we’ve seen before with other opioids this is very exciting data.

We also looked as I’ve noted a number of other measures, I’m going to pull out sleepiness and as of course we’ve talked about the potential that have reduced sedation was 181 compared to standard opioids. So looking at the effects on sleepiness this is one of the sub scales of something we call the Drug Effects Questionnaire which looks at high, liking and a number of other things but also excessive sleepiness.

So you know 181 was designed to address multiple CNS effects including abuse but also respiratory depression and sleepiness and we see here is the reflection of that, you see that 181 is very different from Oxycodone in terms of overall sedation and the maximum sleepiness score for Oxycodone was 44 against the unipolar scale compared to the scores for 181 the maximum which is 10, nine and 18 respectively for 100, 200 and 400 again very small P values for all of these comparisons, 181 is just very, very different than Oxycodone in terms of these particular measurements and these results are also very, very important when we start to consider the overall profile of 181 and the therapeutic profile that we want to achieve here.

Of course this is relevant if the drug is analgesic and we already know from what we’ve conducted in Phase 1 that 181 is an analgesic compound the doses selected for this particular Human Abuse Liability trial is the same dose range that we use in our Phase 2 efficacy trial and I’ll come back to cover that in just a minute.

But we have seen analgesic response to this – to these doses. We have done over 160 healthy subjects in 181 Phase 1 program, we’ve confirmed as you’ve seen the slow rate of entry into the CNS which by the way is not dependent on dose happens on the first dose at any dose level happens on the 15th all the remaining doses on the multiple dosing that's a property of the molecule that doesn't change depending on when you dose. This is how the molecule relates to the blood-brain barrier and crosses in slowly.

So in the Phase 1 analgesic models and here you see illustrated the cold pressor test in healthy volunteers and then another sort of a model, the UV burn injury and just spare you the details on these models, the cold pressor test is excruciatingly painful, it’s essentially 39°C water in a circulating bath and dunk your arm in close to the elbow, and it’s very difficult to keep your hand in there for any appreciable amount of time, everyone is different of course, but 30 seconds is a pretty good amount of time to endure your hand being in there, it’s quite painful.

What you are looking for is the ability of a drug to change how long people can keep their hand in that bucket of water, and we see this happens to be 200 milligrams illustrated here, you see again small number of subjects would still achieve the P value of significant differentiation from placebo on this important test of centrally mediated pain. So we’re very pleased seeing that, we use this data and other data from other parts of our Phase 1 trial to select that dose range we are studying in Phase 3 and the dose range that’s in the human abuse liability studies, which about 100 to a maximum 400 mg of 181.

Well we also see on the slide model that’s more typically a peripheral analgesic input and this is one element of what’s called the UV sunburn test. But we know there’s likely to be a peripheral component of analgesia produced by 181 and this is an attempt to actually look at that and assess in experimental models. So we are pleased with what we are seeing on the analgesic effect of 181, we see that it’s in the dose range that’s very relevant for what we studied in the HAL studies.

And then of course, you know, that we’re running a Phase 2 efficacy trial in patients with OA of the knee and will be assessing efficacy in approximately 200 patients with chronic pain who are opioid-naïve.

Now to refresh you on the design of this particular study this is what we call a randomized withdrawal design, enriched enrollment randomized withdrawal. And this is preferred by the FDA, in fact, developed in cooperation with the FDA number of years ago. As potentially a better way to assess analgesic efficacy, this design, this basic design models is used as pivotal trial and has been for a number of opioid programs.

Just I'll walk you through this; the important features are that it includes an open-label titration phase, in which patients are titrated to effect on 181 from starting in 100 milligrams twice a day up to 400 milligrams twice a day. The patients need to achieve a pre-specified in clinic relevant reduction in pains scores and then to maintain that level, in this case for eight days. If they are able to do that they are randomize on a one-to-one basis to either continue on the therapeutic dose of 181 or to receive placebo that’s randomize withdrawal portion obviously. And the primary endpoint is based upon each patient’s own baseline and their response after randomization.

So we’ll also be assessing multiple secondary endpoints in this trial including of course CNS mediated side effect, and in order to establish a differentiated profile for 181 and the treatment of chronic pain and certainly to guide our Phase 3 program.

So at the moment is not compete in the study, the majority of patients have now completed the titration phase and have been randomized and they are working their way through this schematic you see here. So I want to note again, the patients do have meet a pre-specified decrease in pain score during the titration period in order to qualify to get randomized. So we are pleased with what we’ve seen so far. Study is near completion and we expect to report the results of this trial of this summer.

So as you can see there’s lot of excitement around what we’ve seen in the human abuse liability study, we’re looking forward to getting the results efficacy trial, and I couldn’t be more pleased to have the opportunity to work on this compound.

I would like to take a moment to introduce Dr. Sidney Schnoll; I’ve known Dr. Schnoll for a while, since long ago working on Tramadol, and his expertise in Abuse Liability and Risk Management, Risk Assessment is well known and he is internationally recognized in addiction and pain management with over 30 years of experience in academic medicine. Dr. Schnoll served on FDA’s Drug Abuse Advisory Committee; he is on the board of the College on Problems of Drug Dependence; and was a member of a team that developed the Tramadol Independent Steering Committee, which resulted in Ultram actually being launched as an unscheduled analgesic, which is a landmark event.

Dr. Schnoll also worked at Purdue Pharma and worked on the RADARS System to study the abuse and diversion of prescription opioids, and he is an authoritative figure in this area. I’m pleased to benefit from his insight into these issues, and I’d like to ask Dr. Schnoll to comment on this data that we’ve presented today, and particularly to speak about the potential impact this could have on patient care, and how we think about opioids. Sid.

Sidney H. Schnoll

Thanks Rob. I’d like to make a statement that this is really important that these data were presented at this 75th Anniversary of the College on Problems of Drug Dependence Meeting. The predecessor to the college was developed 75 years ago by the National Academy of Sciences with the hopes of developing a non-abusable analgesic medication. And I’ve been attending this meeting for approximately 30 years now, and over and over again, I’ve heard data about potential product and this is the most exciting product I’ve heard about in 30 years, and this is a real game changer in terms of understanding something that could have a significant public health impact in terms of treating patients with pain.

Over the years, as I treated many patients with pain, patients were very concerned about taking the medications that I prescribed for them they were concerned about whether or not they would become addicted to the medication. But they also had concerns about whether someone would steal their medications may be someone in their own household actually the days my clinic met, we have to have an armed guard outside of the pharmacy because patients would come out of the hospital with large amounts of opioids. And people would be trying to buy them from them.

So this is a medication that could give confidence to patients, also importantly providing confidence to prescribers who will feel that they have a compound that they can provide to their patients that will have a much lower abuse potential for the patients. And in that regard, as I said this is a real game changer, and Rob has talked about this is not a formulation, but what he presented is inherent in the molecule itself, and when it comes to formulations there is always a way to get the active ingredient out of a formulation.

And I monitor websites and look at the various attempts that people make to get drugs out of the formulation some of them successful, some of them not, but as I stated this is not a formulation, it's a molecule and the inherent quality of this molecule reduce, had the potential for reducing abuse.

So as I said this is a real game changer. We know that people are concerned about abuse of opioid product. 82%of the public has this as the major concern; they are more concerned about this than the treatment of chronic pain. And so being able to provide a product like this really is very important, and I'm looking forward to data from the Phase 2 study and certainly Phase 3 studies and if this continues, this is going to be a landmark product.

Robert Medve

Thank you very much Dr. Schnoll, I really appreciate your comments and your enthusiasm for this. With that I’d like to open line for the opportunity to ask questions about this data in this program.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from the line of Jonathan Aschoff from Brean Capital.

Jonathan Aschoff – Brean Capital, LLC

Hi, thank you. Congrats on the results. And I was wondering if you can give you a sense of what OxyContin might look like in this type study probably more relevant, the newer formulation of OxyContin. And I was kind of wondering would that question almost be unfair, because we predict that don’t even have an opportunity in this kind of trial significantly something that they may check at these products?

Robert Medve

Two parts of the question and what is the new formulation of the OxyContin look like that [warranted] the labeling change, I mean, we tackle that first. And the data that’s in the label, you’ll see there’s actually intranasal data, so the formulation has ingredients in it that sort of prevents it from being crushed into something that could be snorable or potentially injectable. And it doesn’t address the oral component.

Do you see nasal data, and let just be aware of that is as intranasal that’s snorting data that you see in the label. And when you look at that, you see the original formulation finally crushed gives you peak liking score of 94 the new formulation finally crushed is about 80, and the – just drug powder is about just about 90, for just oxycodone drug powder. So those are the data you see presented in that label, there is no public data that I'm aware of on oral dosing and perhaps Dr. Schnoll can comment on his thoughts on that?

Sidney H. Schnoll

Well, the new formulation of OxyContin was designed to be as closely similar in terms of drug release to then in terms of clinical drug release has the old formulation. And we know that there was a rapid release of some of the Oxycodone initially, I think that has been decreased in the new formulation, but patients report starting to feel effect within 20 minutes to 30 minutes. So it’s not quite as fast, as we’re seeing with the immediate release product, but they do start to feel effect sooner.

And so I think that's a big difference when we're talking about a product now where we are seeing effects not coming on until 90 minutes or longer, so that's a big difference.

Robert Medve

And the second part of your question John?

Jonathan Aschoff – Brean Capital, LLC

Well, it's just it’s not even a fair question, because you are not able to, these patients, aren’t able or don't have a opportunity to manipulate any of these, so it's not a really a real world abuse liability [health].

Robert Medve

In terms of our attribute abuse liability study we will elected to go right in with the hardest possible assessment, and that was looking at the actual drug substance given as an oral liquid, so there is no – you are correct the subjects in this trial don’t get to play around the coffee grinder, or mortar and pestle, or chew it, or do anything else. We did all that work for them, when we gave them a fine drug powder dissolved in water. So we put up the highest possible barriers. Again, working with our experts in the field, this is a kind of thing you want to know early and put up this high barrier to this assessment. So in fact is quite difficult study to in terms of showing results and the results I think are remarkable particularly, because this is already crushed, it’s an oral liquid.

Jonathan Aschoff – Brean Capital, LLC

And how does the success read through the rest of the pain pipeline?

Robert Medve

The question was how does that read through the rest of the pain pipeline. I think it’s an excellent question. As you have seen with naloxegol and nowhere with 181 and certainly congratulations to Steve Doberstein and his group, they have developed an understanding of how to create molecules and have a differential relationship with the blood-brain barrier.

Keeping it out of the central compartment in the case of naloxegol, regulating the rate at which it enters into the brain in the case of 181 and of course 192 with form, similarly and with 171 is entitled to be again a more peripherally restricted component. So I think they’ve done excellent work in doing that, I think with naloxegol’s excellent results and with 181s outstanding results on this study I think I am confident that we’ve got really outstanding group of scientists who understand very well what they are doing and are doing an excellent job of it.

Jonathan Aschoff – Brean Capital, LLC

Is this how study HAL study large enough to be a pivotal study to withdraw or just part of it?

Robert Medve

If it’s a large study, we’ll just have those discussions with the FDA, there may be some additional things we wish assess, again this drug is fast track status, it allows us an opportunity to have a close interaction with the FDA to discuss these sorts of things, so that would be very much a discussion that we have with the FDA.

Jonathan Aschoff – Brean Capital, LLC

Great. Thank you very much.

Operator

Thank you. And our next question comes from the line of John Sonnier from William Blair.

John S. Sonnier – William Blair & Company

Okay, thanks for taking the question, congratulations. I guess the question is, you have a profile now, I think is just about as good as you could have hoped for, where do you go from here, talk a little bit about Rob maybe what a Phase 3 would look like, how much the safety database would you need with this type compound, what does the FDA want, and Howard, do you keep this yourself, is it something that Nektar can take on in terms of maintaining ownership or is it something to partner in front of the Phase 3? Thanks.

Howard Robin

Thanks John. Let me answer this second part of the question first, and then I’ll turn over to Rob. Look, clearly we’ve said that we’d like to keep this drug for ourselves, I think finding a partner ex-U.S. would be beneficial to us, as I don’t think at the moment we’re in a position to commence global Phase 3 studies for a drug like this, so an ex-U.S. partnership I think would be very helpful to Nektar, but clearly this is the program that we would like to keep for ourselves and become the launch pad for our pain portfolio.

So let me turn it over to Rob for the technical portion.

Robert Medve

Regarding John, about the, what the further development plans look like around this compound. Again, when we map this out, I always sort of map out of base case and things we would need to do in a course of a typical analgesic development program. And as I mentioned earlier there may be some additional abuse liability work we wish to do, and we look carefully of that, we know we’ll to compile safety database long-term safety, and do pivotal efficacy studies.

The efficacy studies in this field tend to vary, people tend to use the enriched enrollment randomized withdrawal design, it’s a good design processing, the analgesic response to a compound and that’s very likely what’s our Phase 3 designs will include as to everything that would be included, how many pivotal trials and size of database and so on.

Again we can put out base cases, but which we use for our internal projections, but with Fast Track status a lot that is up for discussion, and we would expect to have that continuing dialogue with the FDA, which is of course Fast Track allows in addition to other benefits to us, in fact, that ability to have that ongoing dialogue with the FDA about what they want to see and need to see is critically important.

So you are not showing up the data that somehow are wide of the mark, other advantages of Fast Track of course, includes higher likelihood of priority review and definitely to do things like what’s called a rolling NDA, so you can file based upon completed efficacy study, and fill in safety data during the course of the review and some other pieces of information without resetting your review clock, all of which is sort of agreed upon ahead of time.

So we can have a, basic outline will be two pivotal efficacy studies and a long-term safety study, and plus some of the fill in studies that we need to do, but Fast Track could make that look quite different in the end.

John S. Sonnier – William Blair & Company

Perfect, thanks a lot.

Operator

Thank you and our next question comes from the line of Cory Kasimov from JPMorgan.

Matt Lowe - JPMorgan

Hi there it’s Matt Lowe in for Cory today. Just a couple of quick questions, I guess the first one, if you could go over how you’re aiming to minimize the risk of a placebo effect in the key maintenance site of the Phase 2 study that would be good. And then secondly as a follow-up I guess if you could just help us think how would you characterize what a good efficacy outcome would be in the Phase 2 that would be great. Thank you.

Robert Medve

Certainly and we were always guarding against placebo effects it sort of haunts analgesic trials and many other trials subjective endpoints and we are always very careful with dealing with this I don’t think as an industry we’ve ever been able to solve that problem we know we in the study we titrate on an open label fashion, we titrate to effect obviously it’s an ongoing trial, so I can’t disclose any particular details.

But we do look for the nature of the subject’s response; I mentioned earlier that they have to have a durable response at a particular dose level. That’s an important feature and then once they randomize you don’t know of course who is on active drug and who is on placebo, but the endpoint is based upon changes in pain score that occur after they randomize. So you can see groups of patients whose pain scores are getting worse and again its blinded data are getting worse for patients who were dropping out for lack of efficacy and so on.

So we take steps to try to make sure that we don’t say prematurely randomize patients and make sure that the analgesic response that they are feeling is at least durable before they are randomized, you can’t ever completely exclude that, but we take a lot of steps to do that including one of the most important features is the assessment of the clinicians who are running our study as they view the patients and the second part of your question was.

Matt Lowe - JPMorgan

If you could maybe just characterize what a good efficacy outcome would be in the Phase 2 in your eyes that’d be great thanks.

Robert Medve

All right, so we look at efficacy in a number of different ways, clearly it’s a primary endpoint which is based upon what happens after they randomized, there’s a number of different things we’re looking for in a Phase 2 trial. So we can sort of hone in on the therapeutic dose range, because on the maximum dose in the trial is 400 milligrams, so we can see what the responses look at for patients who randomize at various doses, side effect profile, tolerability, all of these are key ingredients to assessing the overall, risk benefit of the drug.

So you need to provide analgesia, but you can’t do that at a price, I mean a price to the patient in terms of side effects that’s unacceptable, and that’s one of the things that this design does for you, is you titrate open-label, patients who don’t tolerate the drug will just stop taking the drug, so you’re really getting an analgesic assessment of patients who can at least tolerate the drug to measure real analgesic effect, which is not polluted by patients who just drop out and then you have to statistically deal with what happens after they drop out.

So in terms of the ideal outcome, clearly statistical significance around the primary end point, but there’s many other things we’ll be looking at in this particular trial, as well, because this will be guiding our Phase 3 development. So there’s publications out there that talk about clinically relevant reductions in pain that typically you see that at about 30% and you have to sort of remember that that includes everybody.

So you may have a patient who has 50% reduction or 75% reduction, you may have patients who don’t tolerate a particular drug and drop out, and they statistically get treated with baseline carried forward and they just sort of drag the whole thing down, but, so tolerability is obviously a key piece of this. But that 30% number is being clinically relevant difference in a trial like this I think is an important number.

Matt Lowe - JPMorgan

Okay. That’s great, thank you. And then just one last quick follow-up question, on the liking data, I guess, how should we think about that versus Embeda, or other abuse deterrent, extended release formulation beyond OxyContin. Thanks.

Robert Medve

I’m going to ask Sid to actually address that question; he had lot of experience with the formulation approaches.

Sidney H. Schnoll

Well as I mentioned before, the formulation approaches have an inherent drawback in that the drug can be taken out of the formulation and people work very hard to do this. As I mentioned, I look at websites where people talk about these kinds of things and these are very sophisticated chemists who put together these approaches and they have come up with ways of doing this and this is so different from that, because the properties that we are talking about of abuse-deterrence are built right into the molecule. So manipulation doesn’t change anything, whereas with these, the products you are talking about the new OxyContin, Embeda some of these other things manipulation can take the drug out the API that people want, they could convert it to an immediate release product and abuse it, this at least what we are seeing right now can be done with this molecule.

Operator

Thank you and I see no further questions at this time.

Jennifer Ruddock

Okay I think we’re ready to wrap up. Howard, would you like to make a statement?

Howard W. Robin

Yeah, well thank you everyone for joining us today and we’re tremendously excited about the data and the potential for NKTR-181. So please feel out, feel free to reach out to us if you have any additional questions. Thank you very much.

Jennifer Ruddock

Thanks again, bye guys.

Operator

Ladies and gentlemen thank you for your participation in today’s conference, this does conclude the program and you may now disconnect. Everyone have a good day.

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