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Executives

Jennifer Ruddock – Investor Relations

Jeff Gudin – Clinical Instructor-Anesthesiology at Mt. Sinai University School of Medicine and Director of Pain and Palliative Care at Englewood Hospital and Medical Center

Lynn Webster – Chief Medical Officer-CRI Lifetree Salt Lake City Research Center

Jack Henningfield – Vice President-Research, Health Policy, & Abuse Liability, PinneyAssociates

Jeff Rosen – Medical Director-Clinical Research of South Florida

Edith A. Perez – Deputy Director-Mayo Clinic Cancer Center, Group Vice Chair of Alliance for Clinical Trials in Oncology, and Serene M. and Frances C. Durling Professor of Medicine at Mayo Clinic

Michelle Melisko – Associate Clinical Professor-Medicine, UCSF Helen Diller Family Comprehensive Cancer Center

Seema Nagpal – Clinical Assistant Professor-Neurology and Neurological Sciences, Stanford School of Medicine

Stephen K. Doberstein – Senior Vice President and Chief Scientific Officer

Robert Medve – Chief Medical Officer

Analysts

Cory W. Kasimov – JPMorgan Securities LLC

John S. Sonnier – William Blair & Co. LLC

Bert C. Hazlett – ROTH Capital Partners LLC

Jonathan M. Aschoff – Brean Capital LLC

Anne Anderson – Atlantis Investment Co.

Simos Simeonidis – Cowen & Co. LLC

Nektar Therapeutics (NKTR) Investor and Analyst R&D Day Conference Call October 8, 2013 11:30 AM ET

Jennifer Ruddock

Good morning everyone, we were giving the people from Cowen some time to come over so. But we are going to go ahead and get started. Thank you for joining us today, here at the St. Regis, as well as those joining us by webcast.

We would like to welcome you to our R&D Day; with us today are Howard Robin, our President and CEO; Dr. Rob Medve, our Chief Medical Officer; and Dr. Steve Doberstein, our Chief Scientific Officer. We are also joined today by leading experts in pain and oncology, who will make several presentations and join in panel discussions with the audience.

A few housekeeping items before we start, we respectively ask that all cell phones are turned off or at least silenced, so is not to disrupt our speakers. We have provided wireless for you, if you haven’t figured it out already look for the connection under the St. Regis meeting room, there is no password needed.

Finally, we will hold several Q&A sessions, we ask that you wait for the sessions start before you start with questions and we ask that you use the microphone, there will folks in the room disrupting those, so that those in the webcast can hear our entire event.

We have a full agenda for you today. However, we’ll open with welcoming remarks and then we will start with presentations on NKTR-102 and NKTR-214. We are beginning with our oncology presentations, because a few of our physicians, who were kind enough to join us today, have to catch flights this afternoon. Following the panel discussion with our cancer physicians, we will have a short coffee break and then we’ll reconvene for the review of the pain programs.

The first presentations will focus on NKTR-181 followed by a Q&A session, then we will review our pipeline of pain candidates, including NKTR-192 for acute pain and we’ll also introduce a number of pre-clinical candidates, we’ll then end with a panel discussion with our pain physicians and another Q&A. Following that we would like to invite you for drinks and appetizers downstairs, it will in the lower lobby in the maisonette rooms, it can be accessed through the elevators right off the floor here.

And before I hand things over to Howard, I do need to make statements – fair disclosure statement. I need to remind you that today’s presentation will include forward-looking statements regarding Nektar’s technology, platform, our drug candidates, clinical and regulatory objectives, market opportunity estimates, and royalty and milestone payment potential. Actual results could differ materially from these estimates and these statements are subject to important risks that are outlined in our SEC filings, including the Form 10-Q which was recently filed August 9. Nektar undertakes no obligation to update these statements as a result of new information or otherwise.

And with that I’ll turn the podium over to Howard.

Howard W. Robin

Thanks Jennifer. Thanks for everyone joining us today for our annual R&D meeting. Unfortunately I can’t have the R&D scientists at Nektar here at this meeting, because this is a really in essence some tribute to the hard work that they’ve done over the years. If you look at the pipeline that we’ve put together, we have five programs, five programs that are either complete or in – have completed Phase 3 or in Phase 3. I think that’s remarkable for a company of our size.

We have a program that’s getting ready for Phase 3; we have a program NKTR-181, we’re going to talk about that today. We have a program getting ready for Phase II, NKTR-192. And we have a number of other programs that look really, really interesting in earlier stages of research and I know that’s going to be covered in some detail today. So I think if you look at this pipeline that we’ve put together in just a few short years, it really says a lot about the talent at Nektar and I’m very, very proud of that group.

Now I think it’s always interesting to look at the upcoming events. What’s coming at Nektar? What should you be looking for as investors? And I think that also for me is pretty remarkable. Just look at what’s going to be coming in 2014. We have the FDA Adcom Meeting in OIC, which I would expect Naloxegol to be well represented. We’re looking at the potential U.S. approval for Naloxegol, the potential European approval for Naloxegol, we’re expecting to see an NDA filing for Baxter 855 and by the way the partnered programs that I have in this slide, these are not guidance from the partners, these are our best estimates of when these events will happen, but these aren’t partner guidance.

We are also looking at NKTR-102 interim data, NKTR-171 Phase 1, NKTR-192 HAL data, NKTR-181 starting Phase 3; we’re going to talk about that today and again as I said the Baxter 855 data in an NDA filing. So that is just in 2014 and then if you go to the early part of 2015, NKTR-102 Phase 3 data and NKTR-192 Phase 2 data.

So there is an awful lot more and if you look out through 2015 and 2016 you can see data and filings on a number of different drugs, such as NKTR-102, Amikacin Inhale, approval of Baxter 855, NDA filing on Cipro Inhale, I think really impressive set of events over the next one, two, three years, which really set Nektar apart I think from many, many companies in this field.

Now I think one of the things that we’ll be talking about today and you see I have it prominently displayed on this chart, middle of 2014 is the NKTR-181 Phase 3 start. I’ll speak to that for a moment; I know its going to be covered in much more detail later. We were planning to start in the earlier part of the year of course; we’ve shifted it three, four, five months, because we need to do some more homework here after the Phase 2 study results, but I want to remind everybody, and I think this has been a bit lost on everybody.

While none of us were happy with the fact that we missed the primary endpoint in that Phase 2 study, there is little debate that the drug worked well as an analgesic. So we have a study design issue that we have to get through and you’re going to hear some thoughts today about what can be done to effect that study design and we allowed ourselves some extra time. We’re not going to rush, we’re not going to certainly rushing into Phase 3 without digesting and really thinking through what a proper study design should look like. What it look like.

But let’s not forget that NKTR-181 has incredible HAL data, it was not liked at all by recreational drug users, and secondly, even though we missed the primary end point, because we didn’t see a placebo group separation in phase – in the Phase 2. We had almost every single patient in study, almost every single patient in that study had a significant drop in their pain scores that not a placebo effect. So you have a drug that works exceptionally well in analgesic, it is not liked by recreational drug users, it has fast track status from the FDA as an opioid, and it is ground breaking that it is the first new opioid molecule in quite sometime.

And I’m very, very excited about the program, and we’ve learned from Phase 2, Phase 2 is not a pivotal study, Phase 2 is a learning study and I think we have already some excellent ideas on how to design Phase 3 that will demonstrate how good a drug NKTR-181 is. But we’ve giving our self a little bit of time delay to make sure that we do that right and I can assure you that in that Phase 3 design before we commit to the full clouts [ph] of a Phase 3 study, there will be interim looks, there will be early analysis, there will be a way for us to know that we’re on the right path, before we completely commit to a spending on Phase 3.

So Phase 3 will have those types of appropriate looks in them. So I’m actually extremely excited about 181, as excited as I can be, given the fact that we missed that primary endpoint in Phase 2, but I think we learned a lot from that.

When it comes to oncology, look NKTR-102 is for me a very, very important drug. It is the first topoisomerase I inhibitor that is devoted to patients with advanced metastatic breast cancer and I think that’s not just a new molecule, but it’s also a new mechanism for those patients. And I think if you look at what we’ve been doing in the rest of our oncology portfolio with NKTR-102 and other novel molecules, I think the group there has been really, really productive and I’m very excited about that area as well.

So with that, okay, I’m going to turn this over to Dr. Rob and thank you for joining us today. See you later. Thank you.

Robert Medve

Thank you, Howard, and thank you to all of you for joining us here today. I would like to eco Howard’s thoughts about the – our discovery group, and obviously we can’t bring everyone here, because somebody has to be back at home doing the work I suppose, but we can’t bring everyone here today. But our discovery group has really done an outstanding job of creating the portfolio that you see here today. And I’m going to start our discussion with 102.

102 is the first long-acting targeted topo I-inhibitor, and this product concept is really sort of a fascinating to use polymer chemistry, which had been traditionally applied to biomolecules to reduce in a novel way with small molecules and to do so in such a way that you can actually change a therapeutic area and bring a new approach to patients who are in need. And you’ll see that theme echo throughout our pipelines and what we’re trying to do with this chemistry throughout our pipeline has changed the way people think about current therapy in a space. And 102 I think is a very good example of that.

So it’s the first long-acting topo I-inhibitor and it also was designed to have tissue targeting. So something called the enhanced permeability and retention effect. So because this is a large molecule when it’s given for the large hydrodynamic radius it doesn’t lead the impact blood vessels very readily. But in the setting of tumor it can lead the blood vessels and actually concentrates in the tumor and then releases the active tumor killing agents. So instead of saturating healthy normal tissues with cytotoxic agents, we’re able to concentrate that in the tumor and that’s important.

Also as part of that technology, we’ve managed to optimize the PK profile. So instead of what we see with traditional approaches here, where you’ve got a very high initial spike of the cytotoxic and then a rapid fall off and then letting the patient recover for several weeks in between, during which time the tumor is also potentially recovering, a continuous coverage by changing the half-life of the active agents in patients.

So what we’ve observed is, high response rates, particularly in patients with advanced disease and generally poor prognosis tumors, reaching an excellent response. And we’ve actually – our expectation and we’ve advanced this as you’re well aware into Phase 3 in the BEACON study, is to improve efficacy and at the same time offering more tolerability and that’s particularly important in the setting of metastatic breast cancer and other late stage diseases, where quality of life is particularly important when patients may have advanced beyond the point where cure is a reasonable expectation.

We’ve done a lot of work with 102. Again, as most of you are aware, several Phase 1 studies, Phase 2, we also have done Phase 2 in ovarian cancer and in metastatic breast cancer as a setup for the BEACON program. So there has been a lot of work ongoing here. we’ve focused our attention, in particular on metastatic breast cancer in the BEACON study.

Today, we’ll be focusing our discussions with our expert panel on the BEACON program and on the treatment of metastatic breast cancer in general. And we also have a discussion on the treatment of high-grade gliomas and I’ll touch a little bit more upon this, but of course the experts will walk you through this.

In metastatic breast cancer, one of the challenge is, and this is typically in the setting where serial monotherapy is generally the norm, but most of these therapies are serial microtubule inhibitors and the have offering toxicities and the potential for cross resistance between these agents. The opportunity to bring a new mechanism to this space is particularly important. Dr. Perez has been trying to do this for a long time with etirinotecan which has been in her efforts there, have been – she will certainly walk you through that but it's been some of the toxicities with the etirinotecan has been difficult to manage in the setting of these patients.

So 102 offers away to re-think that and to re-approach that space. So as a single agent in these breast cancer patients, we see low rates of neutropenia particularly important and also that’s in contrast with many of the other agents and etirinotecan itself. We don’t see neuropathy, again microtubule inhibitors are sort of a hallmark of their toxicities. Importantly, little alopecia.

Now remember this is a terminal disease in women and call it a lifestyle issue, but it’s a quality of life issue and dignity is certainly important in the setting of end stage disease, and as many of you’re aware, I’m a hospice physician myself. So that's particularly and he is very close to home with me. And we don’t see cardiac toxicity as well and importantly from a clinical development and regulatory and business perspective there is no other topo I-inhibitors that are currently in development or approved for the treatment of breast cancer.

So we will have a further discussion on that but, as I mentioned in HER2-negative space, you see a lot of developments in the HER2-positive space, but in HER2-negative space about half of these women are receiving serial single-agents and the HER2-negative is of course the largest population of breast cancer patients. So, it is a significant need and a significant opportunity for 102.

I’ll touch very briefly upon high-grade glioma, this is something about which we’re excited by what we’ve seen and it’s what reinforces our belief that 102 is a very active drug in tumor settings where other drugs may in fact be less than optimally active. So, just when I talk about high-grade glioma, these are the fastest growing brain tumors, there is not a lots of these diagnosed in the United States every year and thank goodness, it is a devastating disease with very poor survival, one year survival as you see is about less than 60% for all grades.

When you get in the high-grade glioma patients of the prognosis is dire indeed and we’ll talk about that Dr. Nagpal will talk about the data and what we’ve been able to do. So what we did is on the basically on a proposal from Stanford, we look that group of patients with high-grade glioma, just to see if there would be activity in these patients and that we’re very pleased with the results that we’ve seen and again Dr. Nagpal will talk about that with you.

The expert panel and it is my pleasure to introduce them, it consists of Dr. Edith Perez, Dr. Michelle Melisko from UCSF, and Dr. Seema Nagpal. Dr. Perez will be talking about the metastatic breast cancer and current treatments and where 102 would fit in that treatment paradigm. Dr. Melisko will take about the BEACON study in particular, and Dr. Nagpal will talk about activity that has been going on with this in high-grade glioma with 102.

So with other section my absolute pleasure to introduce Dr Perez, for those of you who don’t know her, she is absolutely a world leading expert in the field of breast cancer. She is a Deputy Director at large with Mayo Clinic Cancer Center. The Serene M. and Frances C. Durling, Professor of Medicine. The Group Vice Chair of Alliance for Clinical Trials in Oncology, and the Director of the breast cancer Translational Genomics program at Mayo Clinic in Jacksonville.

She has been the recipient of multiple awards and recognition for her work in metastatic breast cancer, and most recently the Brinker Award for Scientific Distinction in clinical research. Her contributions to the field have not only in some ways enables what we have done 102. But she has significantly changed the landscape of the treatment of breast cancer. And for not only patients in the United States but worldwide and I makes certainly applaud her efforts for that.

So with that Doctor.

Edith A. Perez

Thank you very much Rob, and good morning to all of you. So pleasure to be here today and to have the opportunity and the honor to kick off this oncology session to discuss metastatic breast cancer hear new data and then move onto the glioma section. As you will see my slides, I have a running ribbon on the left of the slides and then on the right side you see here that I’m already inviting you to look at our website breastcancermarathon.com, for an event that we have in 2014.

The reason for including this in my slides, as I discuss breast cancer and specifically metastatic breast cancer, is that one of the reasons that so much has been accomplished in metastatic breast cancer is because the community have gotten together to improve awareness of the disease as well as to take funds that allow us to conduct research that in turn helps us understand the biology of this disease and how to improve patient care.

You hear lot of breast cancer especially this month, I’m actually returning to New York next week for an event related to breast cancer, and you’re saying my gosh this disease must have been cure already, we hear information almost everyday related to advances, you know that many patients are involved, families are involved and I’m pretty sure that many of you have been personally touched by this disease.

It’s a big, big ugly beast in there that we’re looking for and I tell you today in 2013 I know many patients with breast cancer are cured where my goal as well as the goal of many others is to increase the number of women who are cured and to have more women deal with this disease with optimized therapeutic approaches. Breast cancer is a huge problem though; it’s still the most common malignancy in women worldwide.

Looking at the numbers, which have personal impact as well as potentially financial impact, approximately 1.4 million persons are diagnosed with this disease every year, of those approximately 230,000 diagnoses occur in the United States, one fact that is not clear to many people is that many people think that breast cancer is only a disease of women, but I wonder how many of you are aware that approximately 2000 men are diagnosed with breast cancer here in the United States on a yearly basis. Luckily the biology that we’ve learned about metastatic breast cancer in women has helped us also better deal with males who developed breast cancer.

Although the majority of women or men who are diagnosed with this disease do well. And still almost half a million people die of breast cancer globally on the yearly basis and approximately 40,000 persons in the United States.

Signifying that we must continue our work to optimize opportunities for options for our patients as well as better lives for our patients. Another way to look at the statistics of breast cancer is reflected on the last wallet of the slide. As in seen 2013, approximately 131,000 patients in the United States will be diagnosed with metastatic breast cancer de novo or they are persons who were originally diagnosed with early stage breast cancer and unfortunately the tumor then returned or progresses to metastatic diseases.

So although research has been very good, awareness has been good, this is still a significant problem for us to deal with. I thought it will be a good thing to share with you the typical evolution of metastatic breast cancer by demonstrating you know 3D scans, so typically on the left side you see this is a CAS scan showing – this is the liver for there ones who are not sure what this is, this is the spin, this is a back, this is the tumor here that’s the way tumors look on CAS scan.

So typically we see a patient with metastatic breast cancer then we initiate systemic therapy, then after a few month you see the lesion almost gone. So this is called a response rate, but typically what occurs in the great majority of patients with metastatic breast cancer is that in spite of the systemic therapy we utilize that tumors grow back and some times they grow in other areas, which is eventually when leads to this. We typically manage also the patients with single-agent of therapies whereas you will see in the next few slide is a little bit more complicated than that.

Another important aspect when we think about management of patients with metastatic breast cancer and for all of you considering whether there is really something that is needed, especially reflected on this slide and the information here is based on a question that was issued to clinician investigators and also practicing oncologists and the question was approximately how many lines of chemotherapy were received by the last five patients you have treated who eventually died of metastatic breast cancer.

So you see here the percentage of physicians who vote in, there we have the lines of therapy and essentially what Rob mentioned already is that patients may receive multiple lines of therapy so we use sequential approaches, so we use one therapy tumor progress, then we use second-line therapy, third-line therapy. So what happens in metastatic breast cancer as reflected on this particular slide is that if you look at the lines of therapy I’m going to select number five.

Approximately 37% of the clinician investigators, approximately 31% practicing oncologists say that the average number of cycles of types of chemotherapy their patients receive to a metastatic breast cancer is five. 21% say that they received six. So this type of information lets us understand that although there are few therapies that proved for patients with metastatic disease there is in practice the use multiple lines of therapy, because these patients are buyable, patients want options, we as physicians want to provide options for our patients, because we want them to well in spite of having this disease.

You may wonder well Edith you’ve said a lot of interesting things about metastatic breast cancer, but we spend a lot of money on metastatic breast cancer, is this really a medical need? And it clearly is, and I’ve decided to put the information of the five year survival rates for metastatic breast cancer. In the context of five years survival rate for other malignancies, and I can tell you, you can see can see right away that the five year survival rate pancreatic cancer is pretty bad at 2%, as an example lung cancers still remains 4%, on the other side we see testicular cancer five year survival rate more than 70%, and breast cancer is right there 23%.

So there is much more we can do to improve that number, because my goal is really is for that number to be 50%, 60% 70% and that’s why research is helping us, but its more than a research, we also have tools that we utilize today to manage patients, so in order for me to share with you this information which I know is going to helpful for you today, but its also going to helpful for your future. As I’m pretty sure that you will encounter other the situations in which someone will ask you what you know about breast cancer, either your friends, relatives or maybe your business partners.

But essentially the way we management metastatic breast cancer in patients is based on what we call the histologic subtype for this diseases, and there are three major histologic subtypes for breast cancer. One of them is called a Hormone. Receptor-Positive breast cancer and in case you are not totally aware of what that mean the hormone receptor are astringent and progesterone.

And approximately 65% of all breast cancer are so called Hormone. Receptor-Positive and these tumors can be either HER2-negative or HER2-positive. So HER2 is an another marker result we utilize to categories breast cancer. So to review we use three markers astringent, progesterone and HER2. when the patients have tumor that are Hormone. Receptor-Positive we tend to use hormonal therapy and anti-astringent for initial management. And then as the tumors progress or there is relapse of the initial tumor then we go to second-line hormonal therapies and eventually many end up receiving chemotherapy, because the tumors become refractory to hormonal therapies.

Either tumor is Hormone. Receptor-positive or HER2-positive then we add anti-HER2 agents, which then leads me to the second major category of breast cancer, which encompasses the HER2-positive tumors and this are approximately 15% to 20% of all breast cancers. Here is the management of patients with hormone receptor-positive, HER2-positive, but either tumors are HER2 positive or hormone receptor-negative, the best strategy for management is a combination of anti-HER2 agents with chemotherapy.

So we’ve covered two major subtypes of breast cancer, the third subtype is called triple-negative breast cancer. And these are tumors which do not express the two hormone receptors and they do not express HER2. And the mainstay of treatment for these patients remain systemic chemotherapy. So as you see from the continuum of management of patients with metastatic breast cancer, based on the histologic subtypes that we utilize in 2013, chemotherapy is the backbone of the management of all patients with advanced breast cancer. So as we continue our research identifying better molecular markers, better targeted therapies, I think it is critical for all of us to continue our research to optimize this backbone or chemotherapy that will eventually lead to better patient outcomes.

Now let me move to, what do we want really when we manage a patient with metastatic breast cancer and how do we make sure whether things are working? Certainly we understand that breast cancer is composed of heterogeneous cells. We want to target each one of these cells with a goal of extending survival and to me that remains the first goal of management of patients with metastatic breast cancer, although we also want to do this in the context of improving quality of life and at least maintaining the quality of life of our patients. So we not only pay attention to the months of survival, but we also want the patients to have the better life possible while they’ll deal with this significant disease.

How do we measure this efficacy in the setting of metastatic breast cancer and of course we want any efficacy that we look at to be excellent for our patients. Well, we can look at response rate, which means whether the tumor has shrunk a certain amount. We can look at the response duration, which means well if we administer therapy, the tumor shrunk well for how long did that response last because if the response has last only two weeks then it’s not as meaningful as the response has last three to four months.

We also look at counter progression and by that what I mean is how long has it taken for the tumor to grow. And another term that is some times used is progression-free survival. Certainly we look at overall survival and we have many different tools to measure quality of life. So when we conduct clinical trials in the setting of metastatic breast cancer we have to look at all of these parameters and quantify them and by looking at all of these parameters then we make a decision as clinicians related to whether we are going to incorporate the therapy as one of the first, second, third bit line of approach for patients with metastatic disease.

Now let me share with you what can be accomplished with today’s therapies for patients with metastatic disease addressing three specific points on this slide. Number one, what are the expected response rates? Remember these are the ability of drugs to shrink tumors in a significant way. When we use therapy in the first, second, third line setting what is the time to tumor progression that maybe observed when patients receive the sequential approaches for metastatic breast cancer. And the third issue is what happens after the patients receive daily therapies.

So we’ll look at response rate to begin with, look out what happens in the first-line setting response rate to single agent existing chemotherapy in the range of 25% to 40%. The tumor growth, we use second-line chemotherapy response drugs to 15% to 30% patients as tumor grows, then the response rates go to zero to 20%. So they decrease as we continue with the evolution of treatment.

If we look at the time to progression in months, the same situation is observed. So when we use first-line chemotherapy for patients with metastatic disease, the time to tumor progression or the time for the tumor to grow is between five to eight months and this is with the effective therapies that we have today.

If we use a therapy that works, in the second-line setting than the time to progression is between two to five months. If we use third-line therapy, that works, if this occurs in the minority of patients, then the time to progression is really one to four months.

Then in spite of the need that we have in clinic, they have to deliver few reliable data of the efficacy of any treatment in the fourth, fifth, sixth-line setting. And they are essentially known, it is approved by the FDA for that particular patient population, although in the clinic, I can tell you we use these therapies, because the patients need options that we should administer to them.

So I thought it will be appropriate now to be more granular related to what can be accomplished with chemotherapeutic agents in the setting of refractory metastatic breast cancer. So immediately, you may have what is she talking about, what is this refractory metastatic breast cancer? Well, these are patients who have already received first-line therapy or second-line therapy or third-line therapy who still have an evidence of metastatic disease and the patients are amenable to receive treatment.

So there are two agents that were recently approved by the FDA; one of them is called ixabepilone, the other one is called eribulin. And these are both two new modifying agents. I thought it would be really critical for you to look at what can be accomplished with this existing drugs in the setting of refractory metastatic breast cancer for patients who have been pretreated with drugs such as Adriamycin also known as a group of agents called anthracycline, taxanes or capecitabine. Look out what happens with existing agents somewhere below under rebuilding the response rate are in the range of 10%, that means that 90% of the patients do not have significant tumor shrinkage when they receive this therapy.

If one looks at progression free survival within the range of three months, so even before the group of patients who received these therapies, the medium time for the tumor to regrow is only three months. So you can see by observing this specific numbers how we are taking this so seriously because we must make advances for our patients.

So this information can be placed in the context of the newest data with the NKTR-102 compound, reflected on this summary from feedback was just published in laser oncology about three or four days ago and you will hear more about the data from Michelle. What we did with the NKTR-102 studies that we conducted a randomized Phase 2 trial in which we looked at two different schedules of the drug either every 14 days or every 21 days look at what happened with the response rate, 21% and this was multi-institutional global trial.

If you look at progression free survival 4.7 months, we also looked at the data for the patients who were assigned to receive the NKTR-102 compound once every three weeks which is now the schedule that has been taken to the Phase 3 BEACON trial based on efficacy as well as tolerability.

Look at the numbers, 29% and 5.6 months for progression free survival. So by looking at this data in the bottom versus the data from the agents that are already approved by the FDA, you can immediately appreciate why I’m personally so enthusiastic about the potential role that this agents might have in the setting of metastatic breast cancer which of course, will await the final results of the BEACON global trial. But it is clearly evident to me that 29% is really better than a 10% or 11%. So, I am really happy that to have been involved in the account of this Phase 2 trial and also in the account of the BEACON trial. Because, it’s part of my quest and/or idea to take steps to improve patient outcome.

Overall this new metastatic breast cancer, which said the stage related to the problem of metastatic breast cancer, we talked about what can be accomplished with current therapy, but what’s new? But what’s new is what we call personalized treatment, which may be known by some of you as precision medicine or individualized treatments.

And the idea behind these three ways of describing the same thing is that we want to develop targeted therapies that are based in tumor markers in blood and tumor tissue. So the division that we have for personalized medicine is this genotype first, select target and monitor early.

So, essentially we have a patient here who develops a metastatic breast cancer, we evaluate the tumor to the term in whether the tumor is former receptor positive for [indiscernible] triple-negative. We go beyond this. We evaluate the gene profiles and there only do we evaluate the genes per se, but we look at pathway analysis of the connections of this genes that may ultimately help us with treatment selection, utilization or target a drug that may match the abnormalities that we find in the tumor.

As we conduct this work, we also need to monitor patients to the term in what’s we continue the same therapy, or should we change the therapy the second line, third line, or fourth line and the ways to do that include may be repeating biopsies or that – that’s cumbersome for our patients.

So, we’re looking for other ways such as radiologic tests, such as breast scanning or evaluation of molecular markers inosculating tumor cells. This is a rapidly evolving field. All of us are very involved in researching this area. But I tell you as I view this and as I look at the vision for personalized medicine, one of my strategies is that there is much we can do, think about the future, future and think about the short-term future and think about what we can do with patients today.

So here is my slide before last related to the future of therapy for Metastatic Breast Cancer. When I continue research the personalized Breast Cancer treatment by identifying molecular markers that can help us guide our therapy, we want better tools to predict early response because we want to use a therapy only for as long as they’re working because we want to protect patients from any side effects.

We also need novel effective agents and these agents have to be such that they have alternative mechanisms of action to overcome the resistance that is typically seen after patients receive anthracyclines and taxanes. We need agents that have completely non-overlapping or at least partially non-overlapping toxicity with currently used agents specifically the areas of interest include no Cardiactoxicity, no Neurotoxicity because if patients are exposed to anthracycline and taxanes they may have some underlying problems that we don’t want to exacerbate by the use of novel approaches.

Certainly we want agents that work. We want agents that work in all of the settings of breast cancer but particularly in the difficult to treat subsets such as triple-negative breast cancer as well as patients who have visual involvement from Metastatic Breast Cancer including the brain.

So the last slide I told you that there is much that we’re doing as a group to raise awareness for breast cancer. There is much we’re doing as a group to raise funds to help us get to the end or to finish eventually this disease. So this is a picture to leave you with today.

This [indiscernible] that you can see from that picture in addition to the happiness in my face which is right I’m here and this is literal, maybe literal enough but this was actually Jacksonville in February of 2013 and I was wearing glass, it was 35 degrees guys. Almost I’m unheard of in Jacksonville. But you see a lot of people supporting all of us. This is actually at the end of the Marathon, we call this the National Marathon to finish breast cancer because that’s my goal, hopefully the goal of all of us here in the room, but you see all the people here and they’re actually even more important than I am.

You see this cute guy, wearing the tattoo, classy for breast cancer awareness, and Tim is actually the meteorologist for the two TV stations in Jacksonville, ABC and NBC affiliate. And Tim happens to be Donna’s husband and as you see there were in the Tim, Donna tops here but before I go to Donna actually this is a [indiscernible] hours, you’re working in from an chemical industry. This is a neuroradiologist who never trains, well he shows off at the day of the event because he wants to support us. And this is the most important person here Donna, we all do this our research – my clinical practice and I know that clinical practice of my colleagues here because we want our patients to have better lives.

This research that we do with new agents is part of all of this. We also want to have the patients be part of the process. Well Donna was diagnosed with breast cancer back in 1999, long time ago now. She presented with a very small tumor levels, one centimeter in size, triple negative and I can’t talk about her because she has written two books about this.

So I’m not violating any rules, but her story is reflective of what we can do together. She developed eventual risk cancer reoccurrence five years later. We removed the metastatic side which we do here again with chemotherapy and radiation. Four years later she developed a tumor in the lung, we took it out, guess when that happened? That happened back in 2007. Donna has completed more marathons. She is being diagnosed with breast cancer than before she was diagnosed with breast cancer.

She is an example of what can be done with good research. Good agents as well as a contribution of many people. I just want many, many more patients to be able to run like Donna and all of us. So on this note, I thank you very much. I remember there is always February 2014, you can be part of this type of event to help us finish breast cancer and given us some support to eventually help patients. So thank you very much.

Yeah, so talking about new days and new information about people who get involved, it is actually my true pleasure to invite Michelle Melisko, Associate Clinical Professor of Medicine, at UCSF. She will discuss with you the Phase 3 BEACON data which certainly follows from the randomized Phase II data I shared with you and of course I have to say that Melisko actually has run our breast cancer marathon. She is one of these people who is involved in the fight. So Melisko please come over – Michelle, please come over.

Michelle Melisko

Thank you very much for having me here and I’d also like to welcome you to this Research Day. I’m very excited about being able to share some of the data from the BEACON study and I’m going to be talking about this from a slightly different perspective. I think everyone can see and feel it is, have a little passion about and the management of breast cancer patients and not to continue to use the marathon analogy, but I’m a marathon runner and I often used exercise as a way to motivate my patients and I often explain to patients when they are diagnosis with metastatic breast cancer that this isn’t a sprint, it’s a marathon and taking that into consideration, we need to realize that we have many different end points to look at with metastatic disease and we cannot minimize the importance of quality of life.

And I think that’s one of the most important take away messages I want to deliver to you here is that we are dealing with a effective agent, but also an agent that has non-overlapping toxicities to many of the recently approved agents. And for these patients that are getting 5, 6, 7, 8, 10 I think on my personal record is a patient who receives 16 lines of chemotherapy or other types of biological therapies in the metastatic setting. We have to have new drugs, with novel mechanisms of action that maintain the quality of life.

So, I’m going to start off today by reviewing the Phase II data that evaluated two schedules of NKTR-102. And as Edith mentioned, this data was previously, just very recently published in Lancet Oncology. And I’m also going to talk about some very exciting data which was generated regarding the use of NKTR-102 in an experimental model of breast cancer brain metastatic and this was presented just weeks ago at ASCO [ph].

So, we heard earlier in our first presentation today about the mechanism of action and the way that this drug works and its unique ability to deliver drug to tissues, specifically tumor tissues, in a very effective way with minimizing toxicity. This cartoon or picture describes this mechanism in which the inactive pro-drug is actually able to penetrate through tumor tissue which is leaky, the tissue vasculature is leaky as opposed to normal tissue blood vessels.

This results in a higher concentration of this pro-drug in the tumor tissue that what they are calling Enhanced Permeability and Retention. And then ultimately the NKTR-102 is broken down through molecular reaction that releases the pro-drug which is called SN38, we heard about that a little bit earlier resulting in an increased payload of the delivery of drug to specifically to tumor tissue. And this is of critical importance because it allows better delivery to tumor tissues and reduced delivery to normal tissues.

As a oppose to standard irinotecan, which is usually dosed on a weekly schedule or in some previous trials and in every other week schedule with standard irinotecan the plasma active metabolite SN38 peaks as you can see here by this white upside down triangle and very early, very quickly and then the levels drop-off very quickly.

So there is periods of time in between the dosing where there is a little drug exposure to the tumor tissue. And these drugs the first generation topoisomerase I inhibitors as shown here in this picture have a high initial peak concentration and short half life.

In contrast NKTR-102 the design of this drug results in lower initial peak concentration so you can see here in the light blue, you can see that the peak of the concentration in the blood stream and ultimately delivery to the tumor tissue does not get quite as high, but the concentration is maintained over time and without that spike in concentration in the blood stream you can see reduced you can note that there will be reduced toxicities and the persistent exposure to the tumor tissue can ultimately result in improved efficacy as I’m going to show you in a little bit.

So the Phase 2 study design which Edith already sort of stole my thunder and presented the response phase and time for progression data, I want to go through the design of this trial. The primary efficacy endpoint of this Phase 2 trial was to determine the objective response rate and also to determine the optimal schedule of this novel agent.

Secondary objectives were progression free survival, overall survival and safety. So in this trial about 70 metastatic breast cancer patients who had received up to two prior lines of treatment for metastatic breast cancer were randomized to receive 145 milligrams per meter square of this drug either and on every 14 day schedule or on every 21 day schedule. And just to get back to my experience as a practicing oncologist, one of our challenges again with these patients who are receiving many lines of chemotherapy is that they have life to live.

And the majority of the new agents that have been approved for metastatic breast cancer as well as our existing agents are often dosed on a weekly schedule so to be able to offer a drug that is an either, every two week schedule or every three week schedule really improves quality of life from the very basic standpoint of the patient not having to come in that often.

So it turns out that the 21 – every 21 day schedule was the winner and I’m going to go through that data now. So, what they observed in this trial, in this Phase 2 final trial results were that single agent NKTR-102 resulted in a 29% overall response rate and heavily pre-treated patient with a progression free survival of 4.7 months and a median overall survival of 10.3 months.

What I think is perhaps most remarkable is that over a third of patients were progression free at six months, so if you remember the table and the diagram that Edith provided showing the accepted response rates and the time to progression for patients having received first-line therapy, second-line therapy, third-line therapy, many of these patients are on their third-line of therapy. And if you recall, the median for those patients in terms of progression was between one and four months, and here we have a drug that’s offering over a third of patient stability at six months.

And I can say from my own personal experience when patients are diagnosed with metastatic cancer and they’ve progressed on their first-line of therapy and their second-line of therapy. They’re starting to get nervous, when they know that they’re very first scan that they get could be a point where they have to make yet another decision, they have to make another change in their treatment, they have to face new toxicities. The ability for patients to be stable for four to six months or longer is really very, very rewarding to be able to offer a treatment like that to a patient.

What was also remarkable about this trial was that the overall response rate, these high response rates were maintained and heavily pretreated in poor prognosis subsets. So if you recall the drugs that we frequently use is first-line, second-line and third-line treatment for metastatic breast cancer, the anthracycline, the taxane, capecitabine in that patient population in the study that have received all of these prior treatments, their overall response rate was still 33% and that very difficult to treatment triple-negative subset, where there are so many blogs and patients out there who now sort of quaking fear when they find out that they have triple-negative breast cancer, again, the response rate maintained at 33%. So that was quite remarkable. And then also those patient populations that have visceral disease, life-threatening disease involving their liver and their lungs, response rates of 30%.

So we saw activity in these main three subtypes of breast cancer that Edith gave us a nice review of these subtypes of breast cancer, triple-negative breast cancer HER2-positive and HER2-negative and response rates were maintained across these subtypes.

So how well is this drug tolerated? Well, quite well. As the standard of [indiscernible], diarrhea is very, very problematic and as I mentioned with the weekly dosing, patients really have this problem persistently right from the onset of their treatment, patients often go back and forth between having significant diarrhea interspersed with significant constipation as a result of the treatments that we tried to give them to remedy this problem, but in this trial, diarrhea wasn’t there.

There have been 21% of patients, but what was important is that it didn’t come on immediately that it typically occurred after patients have been on the drug for quite sometime, approximately three months into treatment for both schedules.

Ultimately they discover that the 21 day schedule was better tolerated and more efficacious again with the overall response rate of 29% and a progression free survival of 5.6 months and an overall survival of 13.1 months. So this was the dosing schedule that was selected for the Phase 3 BEACON study.

So we’ve heard a bit about this trial and I’m going to share a little bit more about my personal experience with this trial, but just to review, this is a trial including 840 patients with metastatic breast cancer who had previously been treated with an anthracycline or taxane and capecitabine.

Patients are randomized to receive single agent NKTR-102, again at the 145 milligrams per meter squared every 21 days or they were randomized to the treatment of physicians’ choice and some of these single agent regimens that were offered as the standard of care or the physicians’ choice were recently approved drugs; eribulin and ixabepilone.

We saw the response rates that we could expect from those agents earlier inductor process presentation. Some of the other agents that were options included paclitaxel, docetaxel and non-paclitaxel and all of these drugs are associated with neuropathy. And so very few – there were very few options for patients again that were anything, but weekly dosing schedule.

So eribulin is dosed on a weekly schedule, vinorelbine, gemcitabine. So again from a quality of life perceptive, I had patients who were going on to the study and of course they want to be randomized to the experimental therapy to get access to a new agent, but they were also hopeful that they could randomized to a drug that did not involve neuropathy and was dosed on an every three-week schedule to allow them to live a more normal life.

The primary end point was overall survival and you can see here the secondary endpoints, progression free survival response rate, clinical benefit rate and duration of response. And the global enrollment for this trial did complete ahead of schedule, I was one of the highest [indiscernible] of our institution not any personally, but you see that was a very high accrue to the study. There was a tremendous enthusiasm amongst patients to participate in this trial and the top line data is expected around the end of 2014 as we heard earlier sometimes these time points you have to move around a bit on depending on the numbers of events and the survival, we made that may be profound in to early 2015.

One of the other important things about this trial was the inclusion of key experts or endpoints and we heard from Edith how important it is to for us to be able to understand the biology of tumors to try to better understand the characteristics of cancers and how they respond to certain treatment.

And so to try to better understand which patients benefit most from this novel agent circulating tumor cells were collected in about 80% of patients in this trial and there is going to be ongoing assessment of sensitivity and resistance markers within these circulating tumor cells. There is a lot of enthusiasm about this idea what’s called the liquid biopsy. As Dr. Perez mentioned, it’s very challenging to receptively perform biopsy’s of metastatic phase such as the liver, the lungs, the bone. And these circulating tumor cells represent a very important reservoir for us to be able to understand the biology of the metastasis as it changes over time.

And the part of the study that I was perhaps most excited about was the fact that they were allowing enrollment of patients with stable brain metastasis. As patients have more and more options for treatment albeit limited success for these treatments, there are many, many patients diagnosis with brain metastasis and many clinical trails actually exclude these patients, but this is a patient population that is in some of the greatest need.

And so within this trail of the BEACON study, my understanding is there was between 80 and 90 patients with stable brain metastasis and they are going to be evaluating the efficacy in this subset of patients. So to be able to look at where there any responses to those brain metastasis were stable get smaller? Was there a delay in the development of new brain metastasis in patients who are randomized to the NKTR-102 as compared to the standard treatment? These are some of the things that we maybe able to look at down the road.

So as I mentioned, brain metastasis, this is an area of research that’s very near and dear to my heart. I’ve conducted investigator-initiated trials in brain metastasis now for about seven or eight years and actually conducted a study with standard dose Etirinotecan and I read about Edith’s paper with standard dose of Etirinotecan as a potentially active agent in breast cancer back in 2007, and became excited about this. And I’m very happy that we can study this agent which I think has the potential to be much more effective partly due to it’s tolerability and partly due to this enhanced permeability and retention that has been described previously.

Within breast cancer, the challenge of brain metastasis is as I said, tremendous and increasing and certain subsets of breast cancer patients particularly HER2 positive breast cancer patients and triple-negative breast cancer patients have a very high rate of developing brain metastasis throughout the course of their metastatic disease and survival is actually quite limited.

And so certain subsets of breast-cancer patients with metastatic disease do better based on their ability to control their systemic metastasis, for example HER2 positive patients may live as long as two years, but those triple-negative breast cancer patients who develop brain metastasis, their survival is between three and seven months, median survival from time of diagnosis of brain metastasis.

So currently our ability to manage these brain metastasis is primarily limited to the use of radiation, different forms of radiation or surgery and not to deliver these points, there has been very little success with the use of systemic therapies, in particular chemotherapies and how there have been some biological therapies that have been studied.

So up until now, the standard of care really has been use of either surgeries, Stereotactic Radiosurgery or Whole-Brain Radiotherapy. There is increasing interest in using systemic therapies such as standard chemotherapies or biological therapies because we have this challenge of concurrent need – need to control concurrent systemic progression, as well as progression in the brain.

One of the reasons that it has been so challenging to use systemic chemotherapy is that the blood brain barrier is difficult to penetrate, and so I'm going to walk you through this diagram very quickly, but if you will turn your attention to the lower right side of the slide, you can see that there are some differences in the capillaries between a healthy brain and the capillaries surrounding or in the vicinity of either a brain metastasis or a primary brain tumor.

In typical capillaries, there are these tight junctions that present the penetration of drugs from the vasculature into the tumor space. However with a tumor either a metastasis or [indiscernible] tumor there is some disturbance of this blood brain barrier allowing the passage of some drugs into the tumor space and in particular with an agent like NKTR-102 where this drug can actually penetrate into the tumor tissue and accumulate there, there is a potential for increased release of the active co-drug SN38 into the tumor tissue.

So this is some data that was presented at ASCO just weeks ago looking at an experimental model of brain metastasis that was developed by Dr. Paul Lockman at Texas Tech, there are several publications listed here, where he has tested this model and shown the efficacy of various cancer treatments in this model.

To briefly describe this model, he basically developed an animal model that replicates triple-negative breast cancer that develops brain metastasis in human and so what the researchers do is they actual inject these modified triple-negative breast cancer cells into these animals through a type of specialized type of injection and these cells travel through the vasculature and eventually there is a predisposition of this type of cells to form brain metastasis.

So this model was used in brain metastasis developed in this animal model, the animal subjects were randomized to receive NKTR-102 standard irinotecan or an inactive control and they received this once a week.

And again just to orient you to this slide on the left side, you can see a logarithmic scale of the brain, the concentration of the active metabolite SN38 within the brain tumor tissue and you can note on the top in the sort of light orange the sustained concentration of drug over time in the animals that received NKTR-102 as compared to the, I was going to say patients but we have to remember these are animals who received standard irinotecan so you can see with the initial dosing there is this high peak concentration but it drops off dramatically over a period of 24 hours to 48 hours where the concentration of the active metabolite in the animals that receives NKTR-102 was sustained out for week or longer.

And you can note that this is again a logarithmic scale, so there was a 100 times higher concentration of SN38 after administration of NKTR-102 as compared to standard irinotecan. Well it’s great that the drug gets in but what impact did this have on these animals. Well for those animals that received either the vehicle or control or standard irinotecan the median survival was 21 days this was tripled in the animals that received the NKTR-102 and if you can see out at the end of study at 77 days five out of 10 animals were alive largely unaffected by tumors.

So it’s interesting they actually did experiments and were able to see that the drug was actually able to nearly eradicate tumors in some of these animals whereas those animals that received the vehicle or the standard irinotecan all of the animals had died by day 42. So this looks very promising, I am passionate about the treatment of patients with brain metastasis this is a population of patients that is growing because of our ability to treat systemic disease better and hopefully will continue to have more options.

This not only demonstrates NKTR-102 is able to penetrate into brain metastasis and is retained and it can service a reservoir for the SN38 in these animals.

We see that this drug NKTR-102 prolonged survival in animals due to a higher brain tumor concentration of the active metabolite. This has high clinical relevance because the levels of drug that were observed, the concentrations of drugs that were observed in these brain tumors in these animal where actually levels that are achievable in humans when the Nektar is given intervenously and the dose that’s being used in the BEACON trial.

And so I am very, very excited and enthusiastic to see the data from the efficacy data that we are going to see from the subset of BEACON patients with stable Brain metastasis in this analysis that’s planned.

And so I am going to finish there and welcome up my colleague Dr. Nagpal who have come to us from beautiful [indiscernible] California. I want to mention that that Dr. Nagpal actually trained at UCSF and I met her very briefly at UCSF and then she went down the road to Stanford which is also one of my other alma maters and I am so thrilled to be able to reunited and work with her in this program and be able to see the very exciting work that’s she is going to talk to us about.

Seema Nagpal

Great, thank you Michelle and I do have to say that I have to thank Michelle for introducing me to NKTR-102 and she was excited about this. We met at a breast cancer meeting and I said well, perhaps I treat lots of glioma patients and may be I need to think about this more.

So as she mentioned, I practice at Stanford. We are medium size neural oncology group. There are two neuro-oncologist and we have four pediatric neuro-oncologists and two fellows that we’re growing. We see about 75 to 100 new patients with glioma every year and I am going to tell you a little bit about how we’re setting NKTR-102 in glioma patients today. So this is Ian, thankfully Ian is not one of my patients.

unfortunately, Ian’s father is one of my patients. Ian’s mom and dad haven’t tried to get pregnant for at least three years and found out that they were pregnant and Ian’s dad sort of getting headaches and brain scanner, that they had very, very large tumor is taken out and that tumor was a glioblastoma, which is the most aggressive kind of glioma. His one wish was, let me see my child be born and the context of what we’ve just been talking about metastatic breast cancer where you’re seeing survivors for 10 years. For a glioma patient or glioblastoma patient, actually the nine to 12 months is a big deal and up to 50% of patients wouldn’t make it that far.

So going back to what Michelle and Edith were talking about Brain Metastases is actually the most common brain tumor that is not what a glioma is. In Brain Metastases the cells don’t originate from the actual brain tissue, they originate from a cancer somewhere else in the body like the lungs, the breast and skin cancers like melanoma and that is a really large population of patient, that’s about 150,000 patients or more every year and it’s a common complication, but that’s not what a glioma is.

So what a glioma is actually a primary brain tumor, which is a group of tumors that are diverse, but far or less common. they originate from the cells actually inside of the brain, the covering of the brain and just next to the brain. There are multiple subtypes, but gliomas are the most common of the – of those tumors that are found in the brain itself. They account for above 1% of cancer diagnoses, but 2% of cancer relative death three years. So as you can see, it’s a very mortal or fatal disease once you’ve been diagnosed. And there are about 23,000 to 25,000 cases of all glioma’s prior and the majority of those are glioblastoma or the higher-grade tumors.

So, in this picture you can see nice big yellow cells, that’s been neuron network we some times consider the work course of the brain, that turns out that the neuron can’t function normally unless it has the support cells there, and those are the red guys and blue guys those are oligodendrocytes and astrocytomas.

And when we look at brain tumors under the microscope that’s actually what we’re seeing. We’re seeing more of the support cells kind of going wild rather than the neurons. They are not really neural tumors, they are support cell tumors. And glioma’s are particularly infiltrative tumors. On the far left here, you’ll see lots and lots of blue dots, specifically if you are looking at a tumor under microscope and those blue dots represents the cancer cells and as you move out towards what is actually more normal brain, you’ll still see that there are lots of little blue dots in there.

So, it’s kind of spider webby and what that means for treatment is that, when we take a patient to surgery we can’t ever get the whole thing out. Because there is always going to be 2 or 3 cells left in that, it means all of these patients will need treatments after a surgery. Glioma’s are also very vascular tumors.

We think they make their own blood vessels. What you are looking at here is actually an X-Ray of someone’s head, this is the old fashion way of diagnosing a brain tumor or we get that through a patients leg and then we take an X-Ray of their head and in this circle you might be able to see that dyed which is darker. It’s kind of concentrating in that area. That area is the tumor. That also means that we can’t really do big expensive surgeries on these tumors that successfully because they bleed a lot and they do make their own blood vessels.

So in breast cancer and ovarian cancer, I think you’ve probably heard of grading the tumor and staging the tumor. And in central nervous system tumors, we almost never stage a tumor. I’m almost never worried about the tumor exiting the central nervous system and going somewhere else in the body, so we’re really just talking about grading.

And in the WHO grading classification there are four grades as you can see here and have a nice big fat line between Grade 1 and Grade 2, 3 and 4 that is because I think consider Grade 1 not really cancer. If you take those tumors out, patient is cured most of the time and there is zero effect on the overall lifespan, but if you have a Grade 2 or Grade 3 or Grade 4 tumor, you can see that all of those are incurable.

They are much more infiltrative and there is definitely significant impact on lifespan. And if you’re a patient who is unlucky enough to have a Grade 3 or a Grade 4 tumor, we’re talking years and in the short-end of years and if you have a Glioblastoma, it’s a Grade 4, one year to 1.5 years is average. And that was a very aggressive treatment and the Grade 4 is what Teddy Kennedy had, and it needs to be treated aggressively.

So most centers in the U.S. are using this basic treatment algorithm for treating glioblastoma and it’s a little bit different than breast cancer because they think, if we have the same algorithm there, you would have all sorts of different choices and what you see here is a pretty straight roadmap and there are not a lot of choices for our patients. We start with surgery, we go immediately to radiation with concurrent temozolomide which is an oral chemotherapy and then we follow it with six more months of temozolomide.

If the patient is fortunate, they will get a nice little break and then when the tumor comes back and it almost always does, they will go onto get Avastin plus or minus and other chemotherapy and then, if that drug then fails then they go onto get additional chemotherapy with Avastin or without Avastin.

One of the markers that we use in gliomas is called MGMT and it’s predictive marker in glioblastoma and what you’re actually seeing here is Stanford’s data looking at patients who have that marker and patients who don’t have that marker, and we get this test on anybody who is operated on at Stanford and there is enough tissue and you can see the patients who have that marker do much better in terms of their overall survival than patients who are in the negative groups. So we actually know a little bit about how patients are going to do from the minute they have had their surgery.

MGMT start to predict your response to temozolomide and the unfortunate part is right now I don’t really have an other alternative to temozolomide to even if you’re in that MGMT negative category you’re going to get temozolomide.

As I mentioned almost every patient with glioblastoma is going to have a recurrence in 8 out of 10 patients that’s going to be right in the sight where we took at the tumor out the first time, so what you’re looking at here is a brain MRI with gadolinium or with given through the vein and the red areas are pointing to where the dye has come out and actually we think that that is where the tumor is, and that’s because the tumor blood vessels are leaking that dye vessels Michelle has mentioned these are leaky blood vessels.

And this kind of recurrence usually occurs only 6 to 8 months after diagnosis. So that means that patients especially patients in that MGMT negative group are just going straight from one treatment to another treatment to another treatment there is no nice break for them. On occasion treatment can actually cause an MRI to look like this that’s something that we have to deal within different additional test to make sure we’re reading the MRI correctly.

But in this particular young man, we actually needed to make a decision about what to do now re-operation sounds like a great idea but if you know your brain anatomy which you don’t expect it to, you will see that that white stuff is sneaking up into the control center of the brain called the thalamus, that’s the realization extremely dangerous to go in and take that out. So this patient didn’t really have reoperation as a good alternative for him as most patients don’t. So at that point we are making decisions about should we do reradiation, do we add Avastin, do we add a traditional chemotherapy and unfortunately even adding what is considered standard of care which would be the traditional chemotherapy, your response rate is less than 30% with the next drug that you pick.

Not going to spend a lot of time talking about Avastin, I’m sure everyone in this room is actually quite familiar with this drug. It’s an anti-VEGF antibody. We almost have high levels of VEGF, which is protein vascular endothelial growth factor and we think it is making abnormal blood vessels and Avastin is removing it. So it may not be actually working on the tumor. And for those of you who’ve been up-to-date with the Avastin, you know that the appropriate use of Aavstin and Glioblastoma is actually still fairly controversial, although in the U.S. we are still using it at recurrence.

So I can tell you why most U.S. physicians are really like it, I’m going to give you an example, this is the same patient, same MRI, that we’re really looking at earlier with leaky blood vessels up and at the red arrow and in panel B with the green arrow that’s actually the same MRI but at different sequence, meaning later on in an MRI where there is no die in the veins.

And if that particular sequence shows swelling, edema and probably tumor and this patient came back with nausea, vomiting, vertigo, headache, so he’s feeling pretty [indiscernible]. And why the tools that I have in my tool bag is high doses of steroids, so I gave him appositive high doses of steroids actually made him feel much, much better. And the problem with high doses of steroids is that you end up getting long-term side effects. So you actually ended eating tons, you can get diabetes from being on steroid, your legs can actually become so weak that you can’t get out of a chair and you skin will start to break down.

So it’s not a good long-term solution. So I said okay, we got a little bit better on the steroids. We’re not going to give you a vaccine, which is actually vaccine works really well to get you off the steroids. And as you can see, yellow arrows, in panel C all that white stuff is gone, with that enhancement what we would call the gallium rate.

Now in panel D, what the green arrow is drawing your attention to is, there’s still smudgy white stuff there. So there is still tumor we believe sitting there and that’s needed to be treated. And so this is again, this is Stanford data, this was presented certainly in 2011 and of Stanford, we just basically through all of our patients and one being looked at them, if they get a vaccine, if they not and what we saw was that increases the median survival. But it’s not really touching the tail, because as I showed you in that picture, there is probably something still left. And so this made – as Stanford School where we really need to move the tail, so that’s what that moving the tail, what kinds of things to move the tail. It turned out I ran into Michelle around that same time.

So we were – we started to think about using other chemotherapies. As we mentioned, the vaccine effect is short-lived. you can see here what happens after time on a vaccine, there is nice change in the enhancement pattern from A to B. but from C to D, you’ll notice that the smudgy stuff has gotten much, much bigger. So we’re not really seeing a vaccine actually killed tumor cells we believe in the long-term fashion.

So some people now actually looked at using the etirinotecan in combination with the vaccine this is due group published in 2009 and this clinical trial was prompted by of course, activity in the colon cancer world, but also activity in [indiscernible] using SN38 the active ingredient. And as you can see here in this orange or kind of gold lettering that Avastin plus Etirinotecan can actually do significantly better than Avastin by itself.

So there was definitely a survival advantage, problem is that, in this well selected group of patients the clinical trial patients usually doing a little bit better than the average population of your patient 18% of them came off drug because they were so uncomfortable or they were having diarrhea or they were getting mildest depress. So as you can imagine as a clinician it’s very hard to then take a drug where 20% of the clinical trial [indiscernible] and then use it broadly. So I would say in the community that the combination despite having a survival advantage is not actually getting used.

And this is a busy slide, I apologize for that, but it is a compilation of what Avastin plus Etirinotecan can look like together, when talking about a progression free survival of 41% at 6 months with a median survival of about 8 months after that. This is after you’ve had that first recurrent that inevitable first recurrent. And unfortunately everybody gets to this point as well, third-line therapy and beyond. In this space, we are really looking at limited data, limited survival and patients coming to me and really asking me for [indiscernible], anything, is there anything you can get me that’s going to get me longer time.

And when I’m looking at the data everything is retrospective, there is very few prospective trials in this space. There is mixed response criteria being used in all of those trails and most data includes patients who are continued on Avastin. And even in that group that progression free survival ranges from four to eight weeks of not month’s weeks. And the PSS have six months, progression-free survival at six months is 2% or less, which is a population that’s really looking for anything and this is where we are studying the use of NKTR-102.

So overall, I hope I have given you an idea of where we need some therapies and we are assuming that basically everywhere, right upfront MGMT negative patients, second line because of ixabepilone is not really doing the job and third line and beyond because there is not really a standard of care and they really not got many tolerable options. So while we are always hoping for a care to a tolerable option would be great thing to add to that, the beginning algorithm that I showed you.

This is where we started thinking about using NKTR-102 and at Stanford we designed a very small trial with the goal of looking for any type of signal as this were thinking about further. We used a small design with 20 patients having high-grade glioma, so that’s grade three or grade four being treated with standard first line therapies, so they have already have that and they have recurred after that and they have progressed again after using Avastin in the second line or even in later lines. We have patients in third line, fourth line, fifth line. They are all looking for something.

And in this study, we thought broadly, so we actually allowed VVL patients and the KPS is a performance score and you maybe familiar with the ECOG status and with this as similar to give you an idea what KPS 50 is, if this is a patient who might live at home, but is really getting a ton of help including from their spouse and maybe they have in-home help, they need help with facing, they can eat on their own but they even ambulating might not be a 100% normal for them as walking around house can be tough.

So these are set folks. We are treating them with NKTR-102 alone, so no longer on Avastin. The primary end point was actually quite short, PFS of six weeks. Remember we spoke about how quickly these patients are progressing in that a year to year and a half normal, a relatively short time point in other cancers, but not in glioblastoma.

Our first patient received NKTR-102 in August at 2012 and the last patient received the first dose in May 2013. And the patients that are on primarily glioblastoma patients, but three of them had progression of lower grade with confirmed higher grade and highest grade 3 in two of our patients.

On average our patients were slightly under than the average in the U.S. The average in the U.S is 64 years old. And they did have lower performance that as in almost any other trial you see out there. And seven of them had a biopsy as a prostrate full recession. And biopsy is usually seen in the group someone who is going to be sicker as well. So this is a pretty say population of folks. And many of them have had multiple lines of prior therapy. In fact one patient already had eight points of therapy, before they received NKTR-102.

And so now I am going to talk a little bit about the preliminary study results. We are pretty excited about what we are seeing and just want to remind you put that in the context of glioblastoma which is different and more aggressive cancer than the other cancers you might have been talking about before.

So, first as I mentioned my patients are sick and NKTR-102 is pretty well tolerated and heavily pre-treated in glioma patient. And in this slide and we’ve listed the three most common side effects that we saw was nausea, fatigue and diarrhea. And I want to say that as Stanford and I think everywhere now that basically anything a patient ever feels gets recorded including our friend with [Indiscernible] there. And each event is counted separately for each patients that’s a decision that our clinical trial we made which was to say if you have flatulence on cycle number one and then you had flatulence on cycle number two, that’s two flatulence.

Okay so because of that we have 55 adverse events of any grade and which were definitely attributed again we at Stanford we actually have to put in mark a little box definitely probably maybe and to NKTR-102 and almost all of these are Grade 1 and Grade 2 and no joke they do include flatulence. We only have eight grades, three adverse events, three adverse events that were attributed to NKTR-102 and those were in three patients.

So one patient who didn’t follow the diarrhea protocol that we gave him who ended up with hyponatraemia and et cetera. And there are still patients receiving NKTR-102 so again this is just the preliminary safety data for us. But for the outcome that we were looking for which was is there any signal are we changing the PFS in these patients. We design this to have greater than 25% men we should raise our eyebrows. And why did we took this number well a prior single agent study done at Stanford again patients not on Avastin showed a PFS at four weeks of about 20% and then only 5% at six weeks.

And with NKTR-102 at six weeks we had 55% of patients being stable or actually having response on their MRI. So we feel like the primary end point was met and exceeded and we feel like in a safe way. So what have we learned, preliminary response using the RANO criteria which is a controversial criteria showed 10% with actual tumor change on their MRI.

To put that in context whenever I see a patient the first time I always tell them in this clinic stable is awesome. And basically don’t want to see that MRI change, so to even have one of these risk show some response is pretty amazing in Glioblastoma. All of our MRIs and patients are being reviewed by an independent reviewer that second additional response is picked up actually by the independent reviewer and not by our primary investigators; instead by the way I think this actually qualifies as a response and at least 50% of the patients 10 of them had stable disease at that first MRI.

Two of our patients are still receiving NKTR-102 and one of our patients has been receiving NKTR-102 for 15 infusion and I’ll tell you a little bit about her, she is actually the oldest patient on study, she came to me and the day before she had actually pulled a tree not leaves, pulled a tree out of her yard, and this weekend which is almost a year later she is at her husband’s Naval Reunion in Seattle so, and she is doing fabulous I think if you met her on the street you would never even know she had a Glioblastoma. So she is kind of a success story for us and the rest of the mature data obviously we are excited but we’re not going to be able to present hopefully until 2014.

So going back again thinking about the venues in Glioblastoma is basically everywhere right, first-line patient is getting [indiscernible] even though we are pretty sure, it doesn't work for them, second-line patients most of them, many of them getting Avastin alone at this point or some older chemotherapy and third-line and beyond. So where should or where could NKTR go in this scene? So these were my thoughts and where I would like to use or see NKTR-102 studied more.

So definitely, in that first-line where MGMT patients are essentially getting side effects and treated with a drug that probably doesn’t work for them at second line in combination with the Avastin, I think there is some exciting data that Nektar will can talk about suggesting that they might work well together and then third line and beyond and the patients that I’m actually seeing right now because my options are incredibly limited.

One of the patients who was on this trial and then have progression after NKTR-102 I gave him one dose of the next drug that I would use and that’s BCNU treatment, that’s it that was terrible, BCNU was awful and mustard-gas, that’s old chemotherapy that’s what I’m using.

And so let’s take a look at what we’ve learned overall, I think NKTR-102 is very, very well tolerated and much better tolerated than my alternatives in patients who have recurrent glioblastoma, I think NKTR-102 might be moving the curve in very glioma patients who don’t have other therapeutic options I think there are good options for further developing NKTR-102 in either upfront glioma setting or in the recurring glioma setting because there are promising preclinical data that suggest that the combination might be a good thing and I’m excited to see where this goes and for my patients and then I’m going to close by just sort of how I began it’s a another one of the patients who was with on the study and this is fishing trip to Alaska which I’m fairly certain had a use BCNU first, he would not have gone to Alaska with his brother and I do have to tell him a little surprised about the size of the fish in this picture because when he told me the size of the fish. It was like mistake but his wife continued send you the picture or two.

Stephen K. Doberstein

Great. Hi everybody, I’m Steve Doberstein, I’m the Chief Scientific Officer of Nektar. And I want to thank all of our speakers today who have done a great job and want to share my enthusiasm for NKTR-102 and the BEACON study and the continuing work in the investigator-sponsored trials as well. I think it’s a very, very exciting treatment option that we are looking forward to see in the results in the Phase 3 front.

So if you think about NKTR-102, what we did there was to improve the efficacy of a fairly well understood – a drug and address a fairly well understood biological pathway and we did that by improving efficacy, reducing side effects on both and improving tolerability, and also increasing the concentration of the agent in the tumor itself, between the tumor – the tumor environment rather than the rest of the body.

And so what I’m going to do now is tell you about how we’re applying that same principle of attacking known biology through those concepts. And taking that from small molecule chemotherapeutics and applying it to large molecule biologic immunotherapy in a program, we call NKTR-214.

So NKTR-214 is an engineered biologic. It’s based on a well understood IL-2 pathway and you can take a look here at the left-hand side of your screen, the goals, together looking structures are polymers, the polymer conjugation. There are multiple polymers here attached to a core that’s a pretty well understood molecule, IL-2. In this case it's the same protein sequence that's used to make aldesleukin and a proleukin, which is a drug that has been used for decades now. That has a very sever side effect profile, and in fact well it does have a modest cure rate in some tumors. It’s actually very hard to tolerate, very difficult to administer safely.

What we’ve done is to take advantage of what’s been known about IL-2 for a long time and take advantage of some relatively recent structural information that’s become available, and we’ve done two things to make NKTR-214. First thing we’ve done is to tune the affinity of the drug for the two different receptors filed to. I’ll talk about that in some detail, but our goal here is to increase the activity of tumor killing cells, tumor effector T-cells and to reduce the activity of what are called the T-regulatory cells or immunosuppressive cells that turn down the immune response. This is really the first time anyone has done this kind of engineering of a therapeutic protein and it’s made possible by brand new technology of releasable conjugate technology that we developed with Nektar.

At the same time we’ve also optimized the PK profile in a very similar way to what we’ve down in NKTR-102. So if you think about NKTR-102, we made an inactive pro-drug that reduces the activity of the molecule when it’s first infused and that reduces side-effects and then we get a very long exposure concentrating in the tumor of the activation. We’ve done exactly the same thing with NKTR-214.

So if you look at this graph here up on the top, you can see NKTR-214 on the left as it’s infused into the patient, has multiple polymer arms attached to it. Those polymer arms make the IL-2 inactive. They can’t find any of the receptors as it’s infused. And then, over time those polymer chains are sequentially released from the molecule and what happens is you end up with a single polyethylene glycol chain that’s attached to the core in a specific site and that molecule is highly active and also as a long halfway. So you can see here in that installed base activity assays that in fact that active NKTR-214 species, which consists of the protein and the polymer, the active species as every bit is active installed based assays as IL-2 is itself.

So if you look how we designed NKTR-214, we used structure-based design here and what I want to show you on the left hand side are the protein structures of IL-2 boundless receptor, in light blue or aqua is what’s called IL-2 receptor alpha, in blue is IL-2 receptor beta and gold is IL-2 receptor gamma. The purple structure in the middle is IL-2 itself. That’s the naturally occurring structure of IL-2.

So when IL-2 is released in the body as part of the immune control system there are two different receptor complexes that are combined to it, combined to the alpha, beta, gamma altogether or combined to the beta gamma separately without alpha there. The alpha, beta, gamma structure is present on what are called T-regulatory cells. They are immunosuppressive cells. And the beta gamma structure without the alpha is present on memory T-cells or effector T-cells, the cells that actually can kill the tumors.

So what we’ve done you can imagine is that if one could reduce the infinity of the drug for the alpha subunit we might direct it specifically to the beta gamma subunits that are present on the memory T-cells. So IL-2 itself and for leukemia [ph] to use it as a drug does two things. It increases the amount of effector T-cells, which is good and it increases the amount of regulatory T-cells, which is bad in the context of tumor killing.

So we’ve done is that the Nektar – the active NKTR-214 molecule retains some of its polymer chains and those polymer chains are directed at the interphase between the IL-2 part of the molecule and the alpha subunit of the receptor. So essentially we’ve made now us receptor selective form of IL-2 that in theory should adjust up regulate the memory T-cells. It should have very little effect on increasing regulatory T-cells. That should improve efficacy considerably.

So we can do this experiment in Mice and what we’ve done now is we have to take Mice that have intact immune systems, so they have mouse tumors and in this case, it’s a mouse melanoma model. We let the tumors develop until they’re certain size, we treat the animals with either a vehicle aldesleukin, Proleukin or NKTR-214 and then we excise the tumors and we count, we isolate the T-cells and count the different types of T-cells in the tumor.

So it’s a pretty straightforward experiment and what you find is that if we look on the left hand chart here, you’ll see that this is now the number of effector T cells, number of tumor killing T cells that are in the tumor, you can see very little effective vehicle, a modest effect of aldesleukin that’s the purple bar and then the gold bar you could see dramatic effect, statistically significant improvement over the existing drug aldesleukin of NKTR-214, a dramatic increase in effector T cells.

And then if we look on the right hand side, this is the effect on regulatory T cells. So they can see the vehicle actually has a considerable number of regulatory T cells in the tumor, that’s because the tumor cells themselves are signaling to the immune system that they want more regulatory T cells around. Those are dampening down the immune system and that’s the reason that the tumor is so aggressive in this model.

You can see that aldesleukin actually dramatically increases even our vehicle, the regulatory T cells and as we hypothesized NKTR-214, the gold bar dramatically lower, certainly statistically significant from the aldesleukin treatment.

So we have achieved in sort of cell counting way. We have achieved what we set out to do in terms of cell populations and I believe a picture is worth a thousand words, so what we’ve done here is to take those tumor samples and now we have sectioned them and stained them for the different types of cells and what you can see here in purple are tumor cells and the brown staining are T cells.

On this slide, they’re the cytotoxic T lymphocytes, the memory T cells, the CDA plus cells that kill the tumor. And you can see on the NKTR–214 treated tumor dramatically increased number of brown cells with the good cells on this slide compared to the cells – tumors that are treated without this. So tumor infiltration by the T cells has improved. And that’s exactly what we are looking for here. What we are trying to do is to stimulate immune system within the tumor micro environment itself. And what you see when we do the counter experiment outstanding now for regulatory T cells you can see that as we expected based on our cell counting experiments.

Dramatic increase on the aldesleukin tumor – treated tumor on the right hand side compared to the NKTR-214 treated tumor. So we’ve increased the number of effector cells and we’ve decreased the number of regulatory cells in the tumor itself that’s very important. One of the ways that we design NKTR-214 using that four strategy that we talked about and trying to take advantage of the EPR effect with several of our speakers have mentioned today was to get the cytokine to be active in the tumor rather than active systemically.

One of things we don’t want to do is have a general stimulation of the immune system that can cause all sorts of side effects. So what we’ve done here in this experiment is to show what happens in mice with the optimal dosing schedule aldesleukin that actually dose IL-2 every day twice a day in animals because it got such a short half-life. And you can see the blue bars there are the IL-2 that’s in the plasma. The gold bars are the IL-2 that’s in the tumor, it comes and goes just as fast as the plasma concentrations do.

And then you can see that red line is the increase in tumor size that’s happening over the 14 days of this experiment. When we treat with NKTR-214 this is now a single dose that’s given at Day 1 and you can see very long lived plasma circulation of the pro drug and then in gold you can see that’s the tumor concentration of IL-2. So sustained high levels of the cytokine in the tumor cell is what is giving you those good effects on the immune system that I showed in the previous slides. And that of course you can see there that the tumor growth even after single dose is dramatically slowed.

So let’s take a look at what this means in terms of an actual cancer model and tumor growth. So these are as I mentioned syngeneic models of cancer. So that means that it’s a mouse tumor in the mouse. We have to do that because mouse needs to have an intact immune system, so we can’t use human tumor cells with an intact mouse immune system, they will recognize those immediately as we formally inject them.

So in this case is a very aggressive tumor. And you can see that if you treat with just control on day one by day nine all of the animals have to be sacrificed because the tumors have grown so aggressively. So it’s a very rapidly growing tumor and you can infer from that that, that tumor is somehow regulating the mouse immune system and dampening down its effects, so the mouse immune system doesn’t see it as being formed or can’t respond to it.

So when you treat with IL2, you have to treat everyday twice a day it’s actually kind of a tedious procedure. What you see is that you could put off the first cycle to give the animals a cycle and you have to let them rest for couple of days because of the side effects. So you can see that even after the first cycle, we see a little bit of response which definitely slowing the tumor growth but after the second cycle the immune system goes back to its normal state of being unable to control the tumor and the tumor continues to grow.

So let’ take a look at what happens now with NKTR-214. You can see here that we’re making a single dose now every nine days in these animals and very good long-term control of tumor size even after 45 days after three doses. So if you think about what that means in terms of how much drug is being delivered here, in the case of IL-2, we’ve been delivering 60 mg per kg, in the case of NKTR-214 it’s 6 mg per kg. So one tenth of the amount of drug, and yet we’re getting very good tumor control over a longer period of time, also significantly fewer side effects we had to sacrifice many fewer animals because of that.

So where do we go next? I think any of you who follow cancer immunotherapy, I’d hope we’ll share my excitement for this field, I think it’s some of the big advancements in cancer research that have been made in the last couple of years have fallen into this category. And among the most exciting work has been that of combination therapies.

So if you look on the right has meant to be a T-cell, generic T-cell from your body. On the right hand side, you’ll look there is, the red through the yellow receptor, those are what are called inhibitory receptors. So those are receptors that are only present on T-cells that’s how the body dampens down at immune response by activating those receptors. The blue receptors, blue through white on the bottom on the left hand side, those are activating receptors. So that’s how T-cells are told, hey let’s stet up some activity and kill some cells.

So what’s been interesting is that for example, at ASCO last year there was a report that touched me personally, I have a very close friend who was diagnosed recently with – well that’s not recently, he was diagnosed four years ago with stage four malignant metastatic melanoma and she was fortune enough to enter into a Phase 1 clinical trial with a combination of an inhibitor of CTLA4 that’s the red one on the top there on the right hand side and an inhibitor of PD1 and that combination literally saves her lives now three years into an apparent complete response, so it looks like it’s going to be persistent, so very powerful these combinations of different pathways.

So let’s think about where does NKTR-214 fit into this. NKTR-214, if you think about it and the uses with colleagues stepping on the gas, we’re telling cells we want more, we want more effect from tumor killing cells and the inhibitory pathways are, the foot still on the breaks, so if you just are stimulating with 214, we got a foot on the gas, the tumor is still putting the brakes on. So what happens, if we were to combine NKTR-214 with some of these immune checkpoint inhibitors put the foot on the gas and take the tumors put off the brakes that is how we can think about this.

So this is the first time we’ve shown any of this data anywhere, and I think it’s pretty exciting. So let’s take a look at it. So what we have to do here was to pick tumors that are very, very difficult to treat even with NKTR-214. So in this case this is a breast tumor model and what you can see here on the black line is what happens if you don’t treat the animals with anything treating the vehicle.

The red line is if we’re treating with NKTR-214, so in this model NKTR-214 isn’t very effective at all. The gold line is treatment with [indiscernible] for antibody sort of the mouse equivalent of Yervoy, the drug that BMS has brought forward, so each of those agents individually really doesn’t work very well.

So take a look, let’s take a look now what happens when you combine those two drugs together. So completely flat line response and in fact, 10 of the 12 animals we maintain them after their last dose was on day 22. We kept those animals live up to day 50 and 10 out of 12 animals were apparently tumor free even at day 50.

So the equivalent of the mouse equivalent of the long-term durable response. So I think very striking result and replicated it once again in the wholly different model now this is a colon tumor model where again a very aggressive tumor limited efficacy of each of the single agents but look what happens when we combine them. Once again, flat line tumor response in 8 out of 12 animals tumor free after day 50.

So this concept of foot on the gas and get the tumor, the tumors foot of the brake really seems to work well in this animal models. Very exciting data for us. So wrapping up on 214, we at Nektar believe that immunotherapy is really going to be an area of great promise. I think it’s finally coming into its – if not its maturity at least, its laid out lessons after many, many years of trying. And we think that is a combination therapies maybe particularly effective here. And with NKTR-214, we have applied many of the same principles that we talked about with NKTR-102.

We are concentrating the drug in the right place that is the tumor. And we are effecting the tumor micro environment in a way that induce the patients own cells to take care of the tumor. So we are excited to bring this drug forward we will be filing – looking for filing IND on this drug in 2014 and getting it into the clinic shortly after that.

So with that, I will turn it over to Dr. Medve and we will take some Q&A

Robert Medve

So thank you, very much doctors, Doberstein, Nagpal, Melisko and Perez for your excellent presentations. At this point we will open up to questions. Thanks. And I am sorry for the audience who is on the webcast if you could state your name and institution.

Question-and-Answer Session

Cory W. Kasimov – JPMorgan Securities LLC

Okay, Cory Kasimov with JPMorgan. One of your initial slides on the upcoming events says there is an interim analysis for the Phase 3 BEACON study in the first quarter of 2014. So I’m just wondering, what you can tell us about that interim is this a futility analysis and maybe what type of information will you be able to publicly share once that is conducted. Thanks.

Robert Medve

Sure. The interim analysis was planned on BEACON initially to essentially as a futility analysis. With the expectation at the time we did the analysis enrollment which still be ongoing if you would allow you to make some decisions about continuing enrollment. As you heard – there is lots of enthusiasm from investigators and from patients around the BEACON trials. So as it happens, we completed enrollment of the trial before we got to that particular milestone. We are just based on by the way on one half of projected events. So it’s an event based milestone, timelines are not exact around that that.

So the intent, the most likely it’s all done independently by a panel that’s blinded to some of things blinded us we don’t know the outcomes of that, but there is three possible outcomes from their deliberations; one is that to stop the trial for futility, the other would be that match the criteria for success, and the third and the most likely possibility that you continue to trial as planned.

Now we’ve intentionally done a very low after spend or very low powered analysis on this. So, by far the most likely outcome is that we continue the trial as planned, which you’re aware, is fully enrolled and progressing to its final endpoint.

John S. Sonnier – William Blair & Co. LLC

Bob, can you hear me. It’s John Sonnier with William Blair. Just a couple of questions on 102; first in the breast cancer setting, there have been some nice advances in the HER2-positive setting with PERJETA and [indiscernible] very sooner maybe not so much the HER2-negative and certainly the prognosis I think both illustrated in the triple negative populations is quite growing. Remind us, because we haven’t talked about this in a while, how you thought about the design of the study, the powering for overall survival. If memory serves, the PFS has not been on a great predicator of OS. So, how did you power the study, how do we think about the risk around OS? And I have one more.

Unidentified Company Representative

Certainly, Dr. Perez will be so kind of to come back.

Edith A. Perez

Yeah, I will be happy to start with this question. First of all going back from the very beginning of time in terms of this basic company and when we thought about developing the first study that was large study that was done with I think any breast cancer, we thought about developing the drug because of the different mechanism of action and we wanted options for patients. And then this new technology became available and I personally was very enthusiastic that the company developed the technology and then they invested in the Phase 2 and Phase 3. These occurred at the same time they were this controversy and discussions related to the value of PFS and overall survival. Now we go back on fourth because I can tell you Michelle you can comment, Seema you can comment. To me all of these things are important because if I can relate it to more progression that can be very good for my patients, but paying attention at regulatory agents and our ultimate goal is overall survival for patients and then we thought well, what is really meaningful in terms of improvement in overall survival in the setting of refractory metastatic breast cancer and the way we think about this is at least longer than two months. So I think we can reach that goal I think will be really good for the field.

John S. Sonnier – William Blair & Co. LLC

Okay thank you. And then just I guess a thought on 102 and the neuro-oncology setting, the slide with Avastin etirinotecan combined was actually help to summarize the findings from several studies. And I guess the question is the Glioblastoma and the glioma data look good or is active there. There is any data in brain that’s like can we read through as the tumor biology similar enough to assume that the drug will be active in brain that’s because it’s active in glioma and maybe there are examples where etirinotecan has been added to treat a primary tumor patients where the tumour metastasis the brain where you’ve been seeing resolution. Thanks.

Unidentified Company Representative

I can comment. I conducted a Phase 2 investigator-initiated trial with etirinotecan and temozolmide and have presented the data publicly at San Antonio a couple of years ago and the managed script is in preparation right now and there is activity. I think that one of the important things about the use of systematic agents in metastatic breast cancer is that many of the trials that have tested agents for example, in the HER2 positive setting, there is a trial that looked at [indiscernible] and then added xeloda and the problem is that patients disease had already progressed systemically on Xeloda, so no one was particularly enthusiastic about giving patients a drug that they had already progressed on systemically you have this competing risks of progressing systemic disease.

So the thing that’s so interesting about for me using irinotecan was that, it was a drug that was not necessarily given second line or third line for metastatic breast cancer. This drug I think based on its current activity could move based on the BEACON results could move into a second line or third line physician for metastatic breast cancer, and based on work done by Pat Steeg at the NCI, we think that being able to prevent brain metastasis may actually be easier preventing the outgrowth of micro metastasis maybe actually easier than treating resistant brain metastasis.

So based on its unique mechanism of action of potentially targeting, a target of the cancer cells to metastatic breast cancer cells, we maybe able to control systemic disease better, and then subsequently control the spread to the CNS and then treat it, so yes, there is data currently now and as I said a manuscript in preparation.

Bert C. Hazlett – ROTH Capital Partners LLC

Thanks, it’s Bert Hazlett from ROTH Capital. Regarding NKTR-102 we heard a little bit about the tolerability of the agent and it seems to be reasonably well tolerated. You’ve spoken a little bit about how the onset of diarrhea could you speak to how onerous it might be and how it’s managed in your experience the physician on the panel?

Seema Nagpal

Well, so as I mentioned in the standard dosing of irinotecan where patients are getting the high peak concentrations given, weekly patients will experience diarrhea I mean some of them actually having diarrhea in the infusion chair where it’s just use very difficult to manage on [indiscernible] where and then patients will take something like Imodium or Loperamide medications to counteract the effective diarrhea then they get swung into the state of constipation or there kind of fluctuating between this intense diarrhea and constipation with a more sustained release of the drug and the slower sort of peak, development of the peak not as it is easier I would say to manage the diarrhea, because you can get patients on a schedule of something like Imodium, that’s more manageable so that they’re not fluctuating widely between diarrhea and constipation. So there were definitely cases of Grade 3 items, there are patients that have Grade 3 diarrhea, but it is in general and easier to manage because you can get them on a schedule of management more easily than this sort of swings back and forth that you get with a weekly dosing.

Unidentified Company Representative

If I may follow on this what are the differentiating factors of this diarrhea that occurs with 102 was briefly alluded to by Michelle because when we looked at the data, the onset of diarrhea occurs three months which tells us that really the patients were responding to the drugs are the ones who are eventually developing these side effects.

Obviously we said nobody develops side-effects, but at least we can discuss with patients that this is not a toxicity that we’re going to expose a lot of patients who are not benefiting from the drug in terms of shrinkage of the tumor. So that makes you a little bit different to many of the agents, so we currently use.

Bert C. Hazlett – ROTH Capital Partners LLC

Thanks. And I just have a question on 214. Steve there is a lot of activity in this area immunotherapy in general, can you give us a little bit more about how you are thinking about the development, once the INDs opened combinations with chemo or potential rational combinations with other immunotherapies and in what settings you are thinking about?

Steve Doberstein

Right, great question. So well, we are just starting our clinical planning for NKTR-214 as we are getting to understand it better and as the whole field is emerging of course we are taking lessons from everyone else, that’s working in immunotherapy. So you know Phase I almost certainly will need to be a single agent trial, because when you establish the safety that the pharmacokinetics and tolerability of the agent alone first before we tested in combinations. I can imagine, we haven’t design it yet but I can imagine a trial where we might to enrich for patients with Metastatic Melanoma or with Renal cell cancers, cancers that are known to be addressable with immunotherapy.

After that I think the combination therapies we’re going to really do some good animal work and really understand more of the biology I would like to see us in Phase I have the ability to have some tumors that we can actually biopsy and see the immune response right in the tumor upon 214 stimulation. And then see what might make the most since biologically to combine with, but I think from a combination standpoint we are really thinking as a combination immunotherapy kind of approach I think it is a little of course it’s too soon to speculate about all the stuff, but I’m a research guy so I get to do that.

Unidentified Company Representative

Any other questions?

Unidentified Analyst

I just have one follow-up question and that’s for Dr. Nagpal you started with Ian I was wondering if you could provide us some follow-up on Ian’s dad?

Seema Nagpal

Well, Ian himself is now three and half months old and dad is actually is still doing great and able to take care of him and is very thankful that Ian is sleeping through the night.

Unidentified Company Representative

Thanks. So with that, we’ll wrap our session on Oncology and we’ll take a quick coffee and bio break and we’ll seat panel to discuss our pain portfolio. Thank you.

[Break-out Session]

Sorry I’m just waiting a few minutes for some folks to file into the back of the room. We have less, less interruption.

So we’re going to start this afternoon’s session or the second part of our session today. We’re going to devote to 181 and as Howard mentioned earlier, yes we were all disappointed. We didn’t meet the primary end point, the Phase 2 trial. The intent of Phase 2 was to enable you to understand your drug better in terms of effect size, in terms of side effect profile to really enable you to design the optimal Phase 3 trial. So from that perspective, we feel that the Phase 3 trial that we did on 181 was a success. We had a huge amount of information that we didn’t have prior to going into the trial and we’ll be talking about some of that information today so.

I’d like to start off with an introduction of 181 and I don’t you folks know 181 and then sort of understand it. But I want to be very clear sort of what it is we’re doing. I talked earlier in the introduction of the oncology section about using our Nektar chemistry to change the way people think about the therapeutic area. And we say [indiscernible] that very clearly with 102 and how our export patent-holder was thinking about the different approach to a topo I inhibitor, different disease states, different ways of applying that technology to really change the way we treat patients. 181 is very similar story and from that perspective it’s really the focus on patients in NKTR technology to enable us to change the way people think about a therapeutic area. In this case, let’s change the way we think about opioids and change the way we approach the treatment of patients in chronic pain, and that’s particularly important as you’ll see and as you’ll hear that the way people currently think about opioids in the general market is, as you see in the newspaper all the time not very positive. The risk in that is that patients windup underserved. Patients are afraid to get opioids. Physicians are afraid to prescribe opioids. They need alternatives. They need different ways of treating this. They need new thinking in this space.

So let me start by introducing 181, it’s interesting we’re coming up on 200 years since morphine was isolated as the active ingredient of opium. In those 200 years, we sort of modified the core morphine structure there and we’ve done a few other things but we haven’t really sort of re-thought the whole process. So what we’ve done since then is create some synthetic and semi-synthetic derivatives.

You see oxycodone or hydrocodone, those are just examples; hydromorphone, hydroxymorphine would be further examples and then the [indiscernible] and so on. They are all derivatives of the core structure. And that was great. Those were significant advances at the time. One of the challenges and one of the things people were trying to address there was to make the molecules different in some way for morphine and enhance the properties and we always thought that this liability and analgesic efficacy went hand-in-hand. And I’m going to talk you through why we no longer think that’s necessarily the case. We think we can actually break that link.

So from all these molecules that we’ve had for sadly close to 100 years in some cases and close to 200 years in the case of morphine. We used to feel I think have failed in not bringing out any new approaches to this. We’ve just been reformulating the old stuff for the past I don’t know 30 years close to. We have just been reformulating the old drugs, in many cases the old drugs that have gotten us to problems in the first place.

Now the sustained release formulations were actually very good advantages in their time and they were important and they change the way we thought about using these drugs. Now as you will all well aware we will have to use abuse to current formulations, because these drugs come down and inherent downside to them, there is a risk, there is a danger and we have to change the way we think about formulating these old drugs, but in essence what we’re doing we’re taking these old drugs I don’t want to call them bad drugs, but they are the drugs to got us to the situation we’re currently in where you have a newspaper headline every other day about overdose deaths and prescription drug abuse, but these are the old drugs.

So can we change the way we think about that and that’s what NKTR-181 is really intending to do is take 200 years of development work on the same molecules essentially and just change how we do that. And I will walk you through why the CNS century is important and how that thinking continues the way we think about how we treat pain.

So lets start with the scope of the problem and you guys are all aware as you see this in newspapers all the time, but 16,000 deaths a year from opioid overdose, so just to put that in the context and that’s the tip of the iceberg and that’s a large number no doubt, but for every one death you got 10 admissions for subsensitives. For every one death, we have 32 visits to the emergency department, then it related to abuse or misuse typically overdose but are not legal. For every one death, you got 130 people who are actively abusing where are physically and psychologically depended on the drug. And for everyone there we’ve got 825 people or non-medical users or recreational users of these dugs. They are not using these agents for therapeutic benefits. They are using them for something else entirely and the tragic part in all of this beyond the 16,000 is that these 825 have a very high risk of progressing right up that pyramid until they get to the top and that’s one pyramid you don’t want to be at the top of, I assure you.

But you see this in the news all the time. You see this problem describe. So we wind up with the situation, as I mentioned earlier where 82% of patients, this is from a recent survey, they fear that they’re going to become addicted to the opioids and if they don’t fear that they are going to become addicted they fear that someone in their household is going to come to harm from having these medications in the medicine cabinet. It’s been described variously having a potentially loaded gun in the medicine cabinet, particularly who got, as I do, teenage children. It’s very sorry concerning. So we thought long and hard about this problem and I’m going to leap back to some other things that we thought about over the years, particularly with some members of the panel here. But can analgesia and abuse and the CNS side-effect, can they be delinked, can you separate that or is this all just a function of this monolithic new receptor.

If you activate that then you’re going to get all the good and you are going to get all the bad and you are going to get all the ugly. Our thinking has evolved on this and this started a number of years ago to have the distinct pleasure of working with Dr. Lynn Webster here and we started to think about of using injection [ph] is not something that’s been described. It’s been described before, but we sort of try to put a simple construct around this and it’s something we came up what’s called the abuse quotient. And basically the concept is that faster in to the brain, which is the relevant effect compartment is much more desirable for patients who are seeking to abuse, so that was an interesting finding, we’ve actually done studies, we actually looked at that specifically and that is by and large be very true, but abuse liability is one property of an opioid that seems to be dependent upon rate or time. So there is a time dependent function of an opioid. Now if we say look at analgesia in the setting of chronic pain. Is that a time dependent function of an opioid?

Very interesting question, if you look at things like duragesic patches, where the levels of opioid rise very-very slowly over days and then are maintained over days. It seems that analgesia is not or certainly not completely dependent upon rate or time, to reach effect in opioids. So, if you’ve got to simply a rate dependent function of an opioid in abuse liability. You have got another function of an opioid; the beneficial effect is not dependent on rate or certainly not completely dependent on rate.

You have an opportunity there, you have an opportunity to create a molecule that takes advantage of that gap that time and time is the missing ingratiate that we think we can bring into this equation. So, we took that basic understanding, took the Nektar chemistry and say can we go back to 1870 and can we look at the basic molecule, the basic core structure and do something using our chemistry that creates a new molecule that addresses this problem as a molecule, not reformulating and reformulation are great and the abuse-deterrent formulation to do just fine, they help the problem.

However, it’s like this is the North-East so, all of you know that you put bird seed out in a bird feeder and no matter what you do, the squirrels are going to be on a feeder and that’s what happens with the opioid and abuse-deterrent formulation. The abusers are highly motivated they will do whatever they need to do to get around this formulations and because this formulations have to let the drug out at some point to work ultimately they have a weakness 181 is intended to address that in the molecular level, you can’t crush physically manipulate or otherwise change 181.

Our chemist have tried to validate that externally, we haven’t found a way to do that, we can break the molecules that doesn’t work at all but we can’t make it into something that people are going to like. That’s a significant advance.

So let’s think about what’s going on in the field today, this is just a diagram shows mild pain and the severe pain and we have the short-term and long-term use of the drug that not meant to refer to acute and chronic with short term and long term.

So if you look at sort of mild short-term pain most people result to over the counter things, we also layer in the [indiscernible] and other agents variously in that class.

As we get to longer term more severe pain you see the immediate use opioids are very popular in this phase and then of course the extended release of long acting drugs to layer out there and other system intended to represent identically here what’s going on in the marketplace, but it is intended to show you conceptually what the problem is that we current face and that is you got patients who still are afraid to get an opioid. We got physicians who are afraid to prescribe an opioid, the assumption we all make incorrectly is that toxic are safe agents and we know that there is a lot of deaths in GI bleeding.

There is organizations that recommend against the prescription in patient populations that are not benign. So your patients who are not doing well on current therapies, the physicians either won’t prescribe or they don’t want to get the next thing wind up with the gap and the patients are the ones who fall into this gap and it’s a problem, it’s a problem that needs to be addressed.

We think 181 can fit very well into this patient population because of its unique profile, because it’s a new molecule and because of how it works relating to the blood brain barrier and it’s decreased CNS adverse event profile including abuse and addiction. So this is where 181 we think fits into this therapeutic scheme. This gentlemen to my right will speak much more about that, much more authoritatively but where 181 starts is here and certainly 181with what we’ve seen so far in terms of tolerability is has a potential to really be a growth opportunity certainly as a business.

But from a patient perspective, it really has the potential to change the way we think about opioids and change the way we think about treating chronic pain and that’s really the goal of what we’re doing with 181, I think as I mentioned earlier that’s the goal of everything we’re doing at Nektar is to change the way people are thinking about problems. So I would like to introduce our panel we have Dr. Gudin, Dr. Webster, Dr. Rosen and Dr. Henningfield I’ll hand off directly to Dr. Gudin who is pain expert and he is a Director of the Pain, and Palliative Care Service at Englewood Hospital and Clinical Instructor at Mt. Sinai University.

Jeff Gudin

Thanks, good afternoon and thank you for having me today. So like Rob mentioned I mean clinical practice I worked just over the bridge in Englewood Hospital I run the Pain, and Palliative Care Center and Rob talked about some intriguing points that really are on the front page of our lay press or in the front page of our medical press certainly the issue with abuse of opioids has grown into this national public health crisis.

I’m the proud dad of twins as of a couple of weeks ago and I could tell you I’ve been losing some sleep recently. But I think what is the world of pain going to look like when they get a bit older 20 years, 50 years and I kind of predict one day we’re going to look back and say, do you believe we used to use morphine to treat pain, I mean we wrote for morphine.

Now five years ago, I thought to myself, hey, we’ll have these abuse-deterrent formulations. We’ll do something to the current products, but really the Nektar product is kind of revolutionary and that it’s changed things from a molecular level. and what I hope to do is, just give you a little bit of clinical insight as to what happened with the clinical trials, how was it designed and maybe what could Nektar do better in the future as far as moving this product forward.

So Rob mentioned some of the agents that are available out there. Many of you are familiar with this. It’s just kind of a revision of what’s called the WHO, World Health Organization, analgesic step ladder. And it starts out saying that hey for moderate pain, we’ll take a non-opioid like acetaminophen or an NSAID perhaps if it’s neuropathic pain, we can add an adjuvant agent.

If pain persists or gets worse, we go on to a second-line therapy, add an opioid from mild to moderate pain and continue your other agents, if pain progresses or gets even more severe than that, add another opioid. If you think about it, although this step ladder revolutionize the way we treat pain around the world, it’s rather simplistic.

We are so limited in our choices for analgesics. We have Tylenol and NSAIDs, right, two of our main stay analgesics and we have opioids. And it’s kind of a joke out there in the educational community; if you have a little bit of pain use a little opioids; if you have a moderate pain, use a little more opioids; if you have severe pain use even more opioids. I mean that’s kind of state-of-the-art for us.

So some of our colleagues expanded this to kind of a fourth rung of the ladder, so hey, we do have some of these higher tech treatment options, but those are truly reserved for minority of the pain patients. So the majority of patients that we see in clinical practice get one of these first couple of rung ladders and you see here the ladders are bit broken and the slide says watch your step, because each of these therapies is associated with toxicities.

Number one cause for acute liver failure in this country acetaminophen, 16,000 deaths from – “16,000 deaths from opioids”, there are 16,000 estimated deaths from NSAIDs a year in this country due to GI bleed. So we don’t have the perfect analgesic or the perfect system.

When we look at what should the clinical trail design look like for an opioid, you’ve all heard this term by now and it’s been a little bit controversial out there, not just in the medical world but also in the leprous is EERW clinical trail designs, enriched enrollment randomized withdrawal. Here is a little bit about what that means.

So in 181, the study population were chronic pain patients who had osteoarthritis of the knee that were opioid-naïve. Like any clinical trail, these patients come in and they get screened to see if they need the inclusion criteria to be enrolled in the clinical trial. if they do, their pain scores are established at baseline and they then go into the open-label portion where they’re titrated to effect on drug and you all know about the open-label portion.

We know what those are on that and know what those are on the study, company knows that what those are on. And during that titration period is really where this enrichment process occurs, because the only patients that go on to the randomized portion the double-blind control portion of the clinical trail. Are those patients who were able to tolerate the drug and those patients who get efficacy from the drug, so we’re kind of leveling a plain field here saying, you know what we’re just going to enrich the population of patients who we know will respond to the drug before we even study versus placebo to see if it works.

And as that might not sound like the most optimal design, the FDA has recognized this as truly an optimal design for analgesic or even opioid clinical trails. So then patients then randomized, go into the double-blind treatment phase of which about half get placebo and about half get their active drug, whichever dose that they found optimal.

So this enriched enrollment clinical trial design takes into account to couple of assumptions. First of all, the active drug should have an effect during the titration period; for analgesic trials that means patients should lower their pain scores.

As you see, a pain score starts at a higher level during titration comes down to a lower level. Then when they’re randomized, if they’re randomized to the drug arm, we should see that analgesic response continue, if not even improve a bit over time. And this is supposed to be what happens with the placebo arm, we think once they enter to the double line portion and they’re randomized to placebo, not to active drug, we would think that there would be this rebound effect where their pain scores come back up, usually not the baseline, that’s what we call the placebo response right, that can be a robust response. But at least there was a different here between these two lines, between drug arm and placebo arm, that’s what supposed to happen in these enriched enrolled analgesic trials.

If this response doesn’t occur, it is rebounded to placebo, it’s impossible to achieve the selected primary endpoint. There is no way you could meet your analgesic endpoints, if your placebo arm doesn’t separate out from the drug arm here. There has to be a difference between randomization and measurements at the end of the clinical trial or else obviously, you won’t meet your clinical endpoints.

Let’s talk a little bit about patient disposition in the 181 study. 295 patients enrolled at which 213 were randomized into the double-blind treatment period. About half got placebo, have got active drug 181, you see 96 subjects completed the trial, 11 discontinued, only two for lack of efficacy and seven for AEs.

Now this is a point that’s going to recur a few times in my next couple of slides, the discontinuation rate for NKTR-181 was extremely low and another point I’m going to show you is that we believe that NKTR-181 showed analgesic properties, so this is a drug that looks like analgesic with extremely low discontinuation rates about 3% for lack of efficacy, yet there were typical AEs that we associate with opioids.

So I showed you what the optimal design of these trials look like, let’s look it what happened with 181. 181 significantly reduce pain scores during the titration period from 6.8 down to 3.9 almost three points on that zero to 10 visual analogs scale an average decrease of 40% in their pain scores. As mentioned before, a very small percentage only 3% of patients could not titrate to effective pain relief, this drug looks like analgesic. And look what happens over the next couple of weeks during the double-blind treatment period, as expected we see that 181 maintains its efficacy maintains its analgesic profile and even improved a bit 46% reduction in pain scores from screening.

So when you look at this data it looks pretty exciting that 181 is indeed an analgesic, but much to our surprise integrant the placebo arm didn’t show the usual rebound like I mentioned just a moment ago, that rebound is critical in order to measure an efficacy difference between placebo and active drug. So you see here once they are randomized to placebo, their pain scores never indeed rebounded up towards baseline.

So how did 181 compare to other drug arm, other opioid arm trials during the titration phase of these enriched type clinical trial designs? Here you can see long-acting Morphine, long-acting Oxycodone, long-acting Oxymorphone, long-acting Hydrocodone and you could see discontinuation rates for lack of efficacy with other long-acting opioids run about 4%or 5% between 1% and 5%. Look where NKTR-181 was, about 3%. It looks a lot like the profile of other opioids when you consider discontinuation rates, continuation rates during the titration phase.

How about dropouts for lack of efficacy during the active drug portion. Don’t get lost in the details here, I’ll tell you that this side of the X axis is kind of higher dose more potent opioids, oxymorphone 50, oxymorphone 40, oxycodone 20 to 50 milligrams.

So you can imagine that the dropout rates for lack of efficacy are less over here because these are higher dose of opioids, and high over here like oxycodone 10 milligrams. Where did NKTR-181 fall out about 4%. The dropout rates for lack of efficacy were extremely low with NKTR-181 again suggesting to us that this drug has analogies in properties.

Let’s look at what happens with placebo. This is placebo performance in parallel-group studies in osteoarthritis. And what this chart does is, it looks at percent reduction and pain scores graph versus dropout rates for lack of efficacy. And all of you that have looked at clinical trials in the past know that placebo can have profound or robust effects especially in analgesic trials.

So look here, oxymorphone, tramadol ER, oxycodone CR, oxycodone CR. You see significant dropout rates and a lower reduction in pain score for all of these agents, and this is the dropout rates obviously over time. If you look at NKTR-181, the active drug arm, it doesn’t look like placebo. Yet another data point suggesting to us that this drug is not placebo.

We saw efficacy, we saw similar AE profile. We saw similar discontinuation rates to other opioids that are out there on the market. And clearly we see better pain scores and less drop-out rates for lack of efficacy. This drug appears to have analgesic properties. So if we think about how could we measure, let’s look at the data that we have from Phase 2. If the placebo 1 didn’t rebound and it confounds our data interpretation, were there any efficacy measures that we looked out that didn’t take into account what happens from baseline to the end of the study.

One of those efficacy measures is called Subject Global Assessment and as you know this is commonly done in many analgesic clinical trials now at the end of the clinical trial. So we are not comparing this to anything. At the end of the clinical trial, we ask subjects a set of questions about what they thought of the drug? How did it perform? What did they think about the analgesic? And there was a significant difference between 181 and placebo in the patients who reported I’m either very much or much improved. This was the one efficacy variable that was not confounded by the placebo response because it was only asked at the end of the clinical trial.

So let’s go back to this enriched enrollment clinical trial design. It’s recognized as an accepted study for opioids. It accommodates for the high drop-out rates because opioid profile which is relatively intolerable constipation, sedation, nausea, dizziness, sweating et cetera. So doing these enriched trials allow us to target a population of subjects that will respond to the drug and be able to tolerate those drugs. So again only the patients that respond and tolerate are randomized into the double-blind portion.

Now this is great for an analgesic that has that side effect profile that we are used to see with opioids. But it might be inherently biased towards those drugs that have these AEs, right. So somnolence, dizziness, nausea might be associated with pain relief. Although, it’s when you give patients or subjects the active drug, they feel something. And we wonder if that something that they feel is what they associate with their analgesic. So, when you give them a product that doesn’t have those typical central opioid like side effects, maybe we’re doing the equipment of unblinding the trial, where they feel like there on placebo. And we’re going to discuss this as things move forward and as to how we should design a clinical trial to take this into account.

We talked about how well tolerated 181 was, it certainly has opioid like side effects. But when you look at the side effects, there is a very low rate of those central CNS side effects about a third of the rate observed with standard opioids. So again patients don’t get as much of that stumbling or that dizziness.

So conclusions from the Phase II study for 181, when I look at this data as a clinician there is no question in my mind that this drug has analgesic properties only 3% of subjects fail to achieve pain control during the titration phase a 40% drop in pain scores during the titration Phase, which continued on during the randomized double-blind, portion getting up to a 46% drop in pains scores from titration to the end of the trial.

Well, tolerated only 18% dropout for AEs during titration AEs were almost all opioid related this drug is not placebo. Clearly you saw the difference between this and the placebo. Now the study granted did not meet its primary endpoint. The placebo arm didn’t rebound after they crossed over into that randomized portion. We recognized that, but does that mean that this drug is not an analgesic of course not, it means that we need to do something different in the clinical trial design to decide how to best display the properties of this drug.

So this clinical trial design has enriched enrollment, which has been positive for other opioids in the past might not be the right type of trial design for NKTR-181, which is a new chemical entity, it’s a different than the other opioid compounds that we’ve been seeing, it has a lower incidents of CNS side effects. So what are some of the considerations to design a successful Phase 3 trial, well a parallel group study might be more appropriate with this drug, active versus placebo within a dose range either a fixed dose or blinded titration.

We can wash out all of the subject’s baseline medication, these subjects were on analgesics for I believe five out of seven days a week for the majority of the time. We can strictly limit their rescue minutes which has been done in other analgesic trials. You can enroll patients with a higher pain score baseline.

In my opinion, from previous clinical trials, the higher their score of baseline, the easier it is to assess the difference in pain control. So if you have a pain it’s a nine over 10, that’s pretty bad and we bring you down to a six or help us a five. You’re going to recognize that difference very, very readily, but if you have a pain score that’s a five and you dropped to a three, that’s much more of a subtle difference, even though the percentage of drop might be the same, much more of a subtle difference for patients to be able to determine, and then obviously, as you’ve heard before with oncology trials, even an adaptive trial design that allows for an early interim analysis, so that we can look at the data as we move along.

So as you’ve heard the pain community out there needs new analgesics where we have a public health prices with an epidemic prescription opioid abuse. We need pain medications. That’s clear. Our population is aging. We need a better way to treat these patients. NKTR-181 appears to have a good analgesic profile. It was well tolerated and I think one of our goals in the future as to consult with the Nektar is try to help design the next stages of clinical trials to really show the benefits of this drug. Thank you so much.

Unidentified Company Representative

At this point, I’m going to ask Dr. Lynn Webster to come up, Chief Medical Director for CRI Lifetree. As many of you know, Lynn has been at the forefront of our pain community, President of one of our national pain academies and truly a leader in the pain world.

Lynn Webster

Thanks Jeff and hello everyone. Yes indeed we do have two major public health problems in this country that many people described as crisis, one untreated pain or 100 million Americans who is experiencing pain, chronic pain and that’s probably going to continue to escalate as I get older, not you, but as I get older. And then of course prescription drug is a problem.

Today in the field of pain medicine, the number one need is to find safer medication. I mean, we can give enough opioid, we can give enough other medications probably to anesthetize people and take pain away, but we need something safer at therapeutic levels that makes people function and that’s why human abuse labiality studies are so critical in understanding some of the new molecules that are being developed and even some of the existing molecules that are being developed. So I am going to talk about the human abuse liability data with this particular molecule, but first a little background on opioids.

Opioids don’t just work like a switch. There is a lot of variety and the type of receptors that we have as well as in the molecules that activate those receptors. It’s just like drinking wine. Some of you like a particular type of wine and others will like a different type and that’s how our bodies respond to different molecules. We have different receptors for different taste and that works for our analgesics and particularly for the opioids.

This is illustrated by some work by Dr. Pasternak a number of years ago and that we have genetic variance. Every receptors that responds to a particular drug, say for example on line one drug like you said that’s morphine and on drug two that could be oxycodone and there could be different variance, genetic variance amongst each one of us, for each molecule and so we may respond pretty well to one particular molecule, but not respond to an another, and that’s what gives us individual variability in our response to opioids.

It’s almost an infinite amount of variability because its not that you are responsive to morphine and not responsive to an oxycodone. It is that there is gradual response to one versus the other with huge variability. And this is true for addiction, abuse and addition. All opioids are not the same for people that lead to abuse. Some opioids, some rewarding drugs, whether it’s an opioid or methyl phenidate or something else, I mean we all have different receptors that respond to analgesia, but we also different receptors that respond differently to the different agonist properties that produce a reward.

And that’s why it’s important to understand the properties of any molecule particularly with 181. So what’s the prevalence of the problem, we know that we hear a lot about prescription drug abuse in the country. In a pain population there is a large varied reporting, the prevalence of substance abuse, it depends upon how we define it. Just recently the definition of opioid use disorder has been changed to merge the individual with an addition those with abuse and those who actually are just misusing the drug because of basically logical therapeutic reasons, but they are all now lumped into a new diagnosis called opioid use disorder.

If we take that kind of term it’s probably somewhere around 40% to 60% of the people exposed to an opioid are going to have that diagnosis. Now what does that mean clinically? What does that mean? It means that people are not following the instructions. What’s the driving force? Well, it varies, sometimes it’s because of the inadequate pain relief and people are taking more medicine that’s not been directed to try to get more pain relief but too often it’s because with the first exposure to a drug in a subset of the population they like it. And that liking turns out to be a therapeutic not for analgesia only, it can be for analgesia but it’s also to treat the anxiety. And with repeated use, repetitive use with certain type of receptors and certain types of molecules that individual and unfortunately a large subset of the individuals exposed can develop a problem.

So a recent survey I think Rob was mentioning a moment ago that was conducted that’s pretty astounding actually. Half of the Americans are worrying more about addiction and abuse then the problem of pain, chronic pain only 18%, one out of five essentially are worried about chronic pain. Now maybe they were testing all 20 year olds. I’m not sure with the demographics of this study but I can tell you most of the 70 and 80 year olds find that their arthritic conditions, their back conditions are far more important to them than in most cases they are concerned about abuse and addiction but not in all cases.

So in asking the question you can think that taking prescription pain killers which is a world I’m not particularly fond of but it’s certainly commonly use in the media. For long-term chronic pain could result in addiction again. It’s 82% of the American’s believe that the harm from these medications is really the abuse in addiction. It’s not about over dosing depth although that is certainly the irreversible step in problem that we’d like to prevent from occurring.

So why does all of this happen? It’s because of the release of dopamine in the brain. And what we call the reward center of our brain, it’s the same thing that you experience when you drink alcohol, but it’s also what drives you to eat and procreate.

Without that dopamine release, none of this would happen, we wouldn’t exist, man wouldn’t exist. It’s a natural process out of control. In some individuals, that maybe very robust, very sensitive to some molecules, for me it’s potato chips, French fries, steaks unfortunately. I like to eat and for some others it could be some other substance, it could be cocaine and it could be a particular molecule that is opiate molecule.

Nora Volkow, who is the director of NIDA has done a lot of work on substance abuse that’s for area, particularly in cocaine, methamphetamine drugs and she has demonstrated repeatedly that it is the speed of entry into the brain that is a key factor, if not the most important factor that determines the rewarding property of a molecule into the brain, into the limping system, into that area that drives me to eat potato chips.

Same sort of mechanism, same areas of the brain and so you know you had look at some of her data in which you are looking at is the speed of entry is that pulsing effect that is the height and the speed of which it enters versus something that is chronic and chronically released and we think of NKTR-181 has been something that’s a slow release and enters into the brain as opposed to a rapid onset, opioid that rapidly gets into the brain and if we make an analogy, we can think of a cigarette versus a nicotine patch, same thing. I mean if you’re really interested in getting a nicotine high or the effect of nicotine, you want to take something that’s going to get it into the brain quickly, and that’s true for the comparison with something that gets into the brain, slightly with the patch.

So here is the concept that Rob was talking about earlier that can I exploit developed published on, it’s not just speed, it’s also how much. I mean we can shorten the key match of the interval of time. exposure to intervene the brain and that is a factor and it’s an important factor, but it’s really how much gets in fast. And so we came up with what we call the abuse portion, which is Cmax over Tmax that is, the maximum concentration that is reached in the blood, but really is in the brain, and how quickly it gets into the brain.

We know that oxycodone once it’s in the bloodstream, gets into the brain in about – I think it’s 11 minutes roughly and for NKTR-181, it’s roughly 2.5 hours, a little more than 2.5 hours, much slower entry into the brain. So the Cmax or the abuse portion for 181 is much different, much slower, or much lower than with most of the other opioids that into the bloodstream.

Here is some basic science research that attempts to show the brain uptake and the abuse potential of various compound. So the further you go to the right, here it is the rate of entry into the brain and from bottom to up to the top, it’s the abuse potential. Now these are assays of brains that have been sacrificed, so they can measure the content, hence you know rapidly gets into the brain. It doesn’t really matter once it gets into the blood it gets into the brain very quickly. So and it’s also like a great deal. Next would be oxycodone, next is hydrocodone, and then in the far left corner because of the speed is the NKTR-181.

Slow entry, not rewarding for individual certainly within the time or in this case animals but also I’m going to show you with humans within the timeframe which drives most abused behavior. So abuse-deterrent formulation in contrast to 181 really are working with the formulation as you know. There is basically two different concepts, there are a couple of others, but they’re mostly making it difficult to take an extended release formulation and crush, so that you can get a large Cmax in the short Tmax. So the abused portion is very high.

And then you’ve got the combinations which have the agonist and antognist properties so if it’s used properly, you just get the extended release of product or opioid out, but if it’s crushed in the antagonist like now Traxon is released to neutralize the effect of the opioid and people who are opioid dependent that means they’ll go into withdraw. And there is a series of cases where that has been demonstrated in those combinations. There is a pro-drug, there are some other noxious ingredients and sometimes when taken in excess or inappropriate ways that could be released, but this is primarily the two mechanisms that abuse-deterrents are developed around today.

So the goal with any human abuse liability study is really to provide some scientific evidence, it’s validated for the FDA and the DEA to look at how to schedule the drug and to do a comparison with other molecules that are out there to look at the relative comparison of abuse potential. And you do this always against the known control something that we all understand. We feel like we understand reasonably well and have an abuse profile around.

Our primary endpoints usually it’s the primary endpoint is drug liking and so we take subjects who are experienced in assessing this and ask them how much they like this and its just relative to that moment in time. But there are a couple of other primary endpoints that are opting the part of this and that is how high do you [indiscernible] as well as take a drug, take drug again. So sometimes the FDA requires all three of these as primary endpoints sometimes only one or two of them. We’re also looking at the adverse effects, which are very informative and important and particularly if we’re looking at aversive type of products, that’s not 181, it doesn’t have aversive product properties, but we also want to know is this something that’s not going to be used clinically and that that helps us with this particular profile.

So the recreational drug users that we use and we’ve got thousands in our data base in Sale Lake City where many of you aren’t probably be surprised, we do so much of this work, yes we have problems with drug abuse in Utah, believe it, yes. You know it’s important to point out that this is a genetic phenomenon but one out of five us in this room are vulnerable to an opioid addiction and certainly with some from of addition, one out of five of us that means if we have an average of two kids in the family, in our families here amongst to all of us, we have maybe a 100 people here, 20 of our family members are vulnerable to the disease of addiction when exposed to a drug that is rewarding and has the properties to rapidly into the brain and produce that liking effect.

This is a serious problem. And so, we use in Utah individuals, the volunteer who admit that they have been recreational drug users admit that they have been recreational drug users. This is a very common problem and I was just in Missouri speaking in the University of Columbia in Psychiatric Department and I had to go from one city to another city and the young man who was a junior there told me about we stopped and had lunch and started to chat he wanted to know what I was doing I told him that this is the kind of area that I’m working in and he says have you heard of Erowid, that’s now an app now for your palm, look at that ERDR.

If you have got any college kids that going to be exposed to this you have to be on a college campus to get this, to access you have to have an EDU, e-mail address and its sole purpose is to trafficking drugs.

In the University of Missouri, the student told me he says he doesn’t know anybody who is not at least trading methylphenidate and others. So this is a serious problem we need safer medications that when they get out of the hands of the people then whom they are intended they are not going to harm our children or anyone else in the community and that’s where we get people like our illustration here with Robert Parker and the individuals who can differentiate small differences in an amount of a rewarding drug like oxycodone.

The design of a health study is usually like this, it’s very similar to this we take non-dependent meaning that they are not physically dependent but exposed to an opioid, there is an ethical issue make sure that they’ve been exposed but also we want people that admit that they like the drug that we’re choosing in this case it would be an opioid in other cases it could be benzazepine or methylphenidate or stimulant of some type if we were looking at different drugs and then we bring them in and given narcan or naloxone to see if they’re physically dependent that’s to make sure we have people that aren’t that will be responsive basically because if the receptors are fully occupied, they’re not going to be very sensitive to the small changes that we want to detect, we then put them through a discrimination phase, we give them a small dose in this case oxycodone, so that we can measure the amount that they like it and how high they get and they have to meet a certain criteria in order to be enrolled.

So that’s a sensitivity assay. We’re trying to choose individuals who really have the Robert Parker nose and palate and that allows us to really define the property of the molecule better. And then they’re involved in randomized and they all get all arms of the study. So that we are comparing all of these different doses and the positive control like oxycodone and of course placebo.

Now this slide I’ll try to read it. I just want to point out here that the anchor is at 50, so this is a scale. We have two different types of scales, the bipolar scale and the unipolar scale. Unipolar is where we’re measuring from zero to some number usually a 100. In this bipolar scale here for drug liking, we’re measuring from 50 to 100.

So our baseline number is 50 if you see some number of 55 is not like zero to 55, it’s really 5, the difference is 5. And so here it is blown up, but it’s blown up and what’s important on this slide is to look at the first 90 minutes. Think of the abuse portion. Think of the speed at which it gets in to the brain that’s really important.

Most of us believe and most of my sources which are my recreational drug users and also an addictionologist, so I’ve been treating addiction for a long time. Well, tell me that they’re not going to get something out of the drug very quickly. They’re not going to get something out of the drug very quickly, they’re not interest, there are too many other options. So they’re not going to go and hold and monitor something that isn’t going to produce and affects that they’re seeking reasonably quickly. So here, you can see that the oxycodone 40 milligrams produces a tremendous lighting effect, 80 plus is a profound effect, but all of the other doses or I should say all of the doses of NKTR-181 did not produce any measurable liking.

There was no statistical difference between placebo and all of the doses, but there was a dose relationship in the factor it looks like there may have been with the Nektar, meaning that the higher dose 400 milligrams produce more liking at a period of one to two hours than at the 100. Not appreciably no difference in really the placebo, but it’s another evidence that there is really something going on, just hasn’t entered the brain yet, you have to get into the brain, remember I said it takes about 2.5 hours to get into the brain. And at this 90-minute, there’s not much into the brain, you can’t release dopamine, you can taste the effect of the wine or the potato chip, it’s not there yet. It’s just still in your blood.

So here is the data, the statistical data across the board, all doses, all time points up to four hours, highly significant. Basically it’s like a placebo for that period of time. That drug high is the second endpoint. Now this is the zero to 100 scale, and you can see the 40 milligram reaches a very high level as well, nearly 80 here, remember it’s 50 to 80 before, zero to 80 now, with drug high or euphoria and yet, you see that with the NKTR-181 there it’s again the same as placebo, but there is some difference between the different 181 doses, suggesting again, there is really something happening just not robustly and by the time it’s entering the brain, the effect of oxycodone has been eliminated, it’s already passed out of the brain and into the system and has been processed by the body to be eliminated.

And again, here is the data for this statistical significance at all time points up to four hours, can get any better. And then you’ve got one of the side effects. As I said, we need safer medications and we need them efficacious, but if we have to choose, we weren’t safer and I hope it has to have some effect, but we would rather have safer as clinician I’m speaking of and sleepiness here you can see is the side effect of the profile and if we prefer not to have any sleepiness, we don’t want any confusion, we don’t want any normal side effects of an opioid and you can see here for the first 90 minutes or first four hours essentially for a long period of time, actually for the 12 hours there is little to know effect on sleepiness.

So the FDA is concerned about this. Jack was just telling me a moment ago that last week at the FDA; we had a major meeting of about the abuse-deterrents and to finish the guides on developing these. The FDA is trying to create incentives for industry to develop safer molecules, safer products. These two statements by Throgmorton and of course with the Commissioner, Margaret Hamburg support that statement. Clearly, there is an interest in the FDA, NIH and NIDA to find safer medications out there.

But what does that mean? So what would be a more ideal product? Whether you set here or you have another company come in next week and you go and you listen to and this is the kind of message you want to be listening to right here. What is the ideal analgesic for us in the future? It’s got be an analgesic, it’s got to relieve pain, but it needs to have a low reward. We don’t want to rewarding or has minimal rewarding properties, and you don’t want a toxicity or at least the toxicity is way beyond the therapeutic window that is the doses that you are going to use for analgesia have to be well defined and toxicity should be at a much higher dose. This is illustrated here.

Let’s take for example, I don’t think I have a way to do this very easily, but all right so, let’s say here at the drug dose you want an analgesic well actually this is where most of the opioids today are where when you take the first dose regardless of how much you almost always have stimulated the limbic system release dopamine and it’s rewarding.

Particularly for that one out of five individuals who is vulnerable. For those people the first dose often unleashes a path that is destructive, so you don’t want that in a drug because you got maybe a therapeutic window all of which is under the umbrella of reward that’s rewarding during the whole analgesic dose range and then you can add a little more and you can stop respiration.

What we really need are drugs that have when they are initiated there is no rewarding effect like NKTR-181 for the first four hours that we showed. No rewarding effect or minimal rewarding effect nothing that drives you to eat the whole bag of potato chips. You can’t stop with eating just one, that’s the whole purpose. And then maybe at very high doses until one day we have no rewarding properties. You might experience some rewarding properties and then at a higher dose you would have respiratory depression or other toxicity issues that are life threatening, that’s a more ideal approach.

So with NKTR-181 as the first in that study, it shows that it is a BID dosing, slow entry into the brain. I get several human pain models at the time showed dose proportional analgesic in the human pain models, clearly they were statistically significant and there was no tolerability issues or significant toxicity issues, same profile that we saw in the Phase 2.

With the Phase 2, we demonstrated an analgesic side-effect in tolerability with a large majority of the patients experiencing a profound reduction in analgesic and it was well tolerated and the abuse I should say in the Phase 2 abuse liability studies clearly show that it is not like comparable to other opioids and that it should be something that if we can demonstrate analgesic in Phase 3 which should be easily done that will have a product out there that will fill that window that Rob talked about a large unmet need before the need of even stronger analgesic, it maybe equally strong has any of them out there, but it appears to be a hell of a lot safer. Thank you.

Unidentified Company Representative

So with that we probably would open the floor to questions on [indiscernible].

Question-and-Answer Session

Jonathan M. Aschoff – Brean Capital LLC

Jonathan Aschoff with Brean Capital. I was wondering given the slow onset, what extent in the Phase 2 did you naturally left for pain tolerant patient and therefore such a placebo response. Could you have a great deal of time before it kicks in, relative to something that acts quickly.

Unidentified Company Representative

I will start with that answer, there is, we see analgesia and Lynn can comment on this. We see analgesia in first dose in a single semi dose trial you see an analgesic dose response on single doses. There is not a lag in analgesic response, is any different from say a sustained release formulation. We also don’t believe that what you are referring to as the placebo response. It’s actually what is operated in the Phase 2 trial. We think the fact that placebo patients fail to rebound, there is a bit different phenomenon perhaps Lynn and Jeff could talk about that.

Lynn Webster

I agree.

Unidentified Company Representative

Lynn, you talk about the Phase 1 data in the onset of analgesia compared to things other things.

Lynn Webster

Well, I was starting to get into that. But we had two or three pain models. And it was early on that is the analgesic effect was demonstrated early. It was sustained and was dosed proportional. So it looked to me like a great analgesic, and by the way, we also we were able to compare that to the pupillometry which suggest that it was entering the brain, but it was delayed. So the pupillometry had a delay. So we always thought there is window. We had analgesia, but we had a window where there was a delay in the pupillometry. So it was entering the brain later even though we had analgesia earlier suggesting it probably has in my view some peripheral effect too.

Jeff Gudin

I will just add in Phase 2 or even from Phase 1 we know the steady state time and that titration phase was over a few week time period. So patients obviously had time to build up to analgesic.

John S. Sonnier – William Blair & Co. LLC

It’s John Sonnier from William Blair. You guys have had the opportunity at this point to digest the data a little bit, I spoke to Steve. I think the day after but, what is this point is the leading hypothesis is to what, what was the primary bias you think in the trial that let the result we saw was there an inform consent where everyone thought they were still on an opioid. And I guess what I want to try to get to the nucleus of this question is was it more of a psychological bias or do you think there is in fact a physiologic phenomena with longer acting opioid hanging out and to assume doing the thing.

Unidentified Company Representative

The simple answer is yes, so we think the energy – never simple. And again I’ll defer to Jeff and Lynn to give you some color on that. But, as Dr. Gudin had mentioned in his presentation, the randomized trial was built perhaps for different purpose and maybe a blunt tool for this particular drug, which is in fact new class of opioids a new way of thinking about it. So there maybe some buyers introduced by that design as well. So and as far as physical one of the things you couldn’t rule out is some carry over effect, which we haven’t seen from central nervous system perspective. We couldn’t rule out and we will peripheral effect and I will ask Dr. Gudin to talk about those potential aspects.

John S. Sonnier – William Blair & Co. LLC

Sure. So we thought of the same issues obviously then what could have possibly be in and obviously we’ve had some bent amongst ourselves. But an interesting question is what if we ask patients what drug do you think about. Right, might be an interesting way to know do those CNS side effects in active drug arm really make a difference in an analgesic trial. So, perhaps looking forward clearly new questions for the study subjects might be important.

Unidentified Company Representative

You know pain is really interesting disorder, disease and so much of a patient’s response to treatment is that in a relationship, that relationship and sometimes that works out over the months. But really just having frequent visits like we have in clinical trials, can maintain, I think an analgesic effect, and trying to figure out how to eliminate that so that we can isolate the analgesic property from the behavioral contribution to analgesia, because of the interpersonal relationships is a real struggle not just with this study, but with all studies. But I personally believe in a short study like this as appose to a 12-week study, that probably was a factor, may not be the major factor, but I think it’s a factor.

John S. Sonnier – William Blair & Co. LLC

And I would also like to ask Dr. Rosen is on our panel, Medical Director of Clinical Research of South Florida, but perhaps more importantly, I mean, he was an investigator, so he has worked closely with the drug. He is also a family practitioner so he is on the frontline of what patients need, and perhaps Dr. Rosen, you can lend some color to the conversation.

Jeff Rosen

My experience as a blinded investigator and a practicing physician, what seemed obvious to us was that that the patients felt better and tolerated the drug. The question is why wasn’t there the primary end point met? That has to do with number of patients who after being randomized withdrawals did still had analgesic effect, which to me is not necessarily a negative, it raises a question, but this is what you want the drug to do. You wanted it to be safe, you wanted it to be effective, that’s what this study show, it raised a question, in my mind, it raises a question was the washout long enough? Maybe these patients just needed to be followed a little bit longer to see when it wore off. Any time a patient goes into a clinical trial, you have to be very careful that you’re over promising what’s going on. And in the pain trial that can have an effect, now our staff has been trained, we were very careful but I think it sill have an effect. And continuing in the trial, patients kind of know that they keep going in the trial that’s a good thing. So while they’re in the trial, there maybe some additional benefit to them. But personally from my experience I would like to see a long withdrawal in the next trial.

Unidentified Company Representative

I may got to comment I can tell I have patients for years who come in and every time you ask that digital analog scale, the 0 to 10 what’s your pain score, it’s always a 9 or it’s always a 10. Yet some months they’re smiling and they’ve been going to soccer practice with their kids and they’re working fulltime and other months they’ve been in bed for few weeks. So it’s a challenge like Lynn started to mention just how subjective pain is to really get an idea and that’s why some of the conversations we’ve been having is can we come up with different efficacy variables that might actually give us a more real life version and what it’s like for them because they’ll say 9 over 10 every time they come to the office despite the fact that they maybe feeling better, they’re global impression of how they’re doing, or they might be functioning better.

Unidentified Company Representative

Next question. I am sorry. I just want to wait for the microphone, we’re webcasting, and if you all remember just do announce your affiliation please.

Anne Anderson – Atlantis Investment Co.

Anne Anderson, Atlantis Investment. You mentioned the use of rescue meds, what were the patients using? What did they have available to them? And was there significant use of that in the placebo group?

Unidentified Company Representative

I can answer the study related question. In this setting of this particular trial, we kept, we did not flayer the patients. We did not take them off their current stable baseline of medications and that was by intent and when you do that you don’t create an imperative to give them rescue medication. So they were supposed to be on stable medication throughout the trial that maybe part of the issue that what we’ve seen, you reduce the amount of pain that patients are having and then their base line pain regiment all the sudden becomes adequate to maintain them for some period of time, which is tied into it Dr. Rosen had mentioned about perhaps in a longer surpassing the difference.

Bert C. Hazlett – ROTH Capital Partners LLC

Hi, it’s Bob Hazlett from ROTH, maybe a little bit unfair but just in terms of next steps, what you think next steps might be to tease out the efficacy of this compound and when do you think you might have a route to regulatory approval or decision?

Unidentified Company Representative

We are meeting very shortly with panel of experts including gentlemen sitting to my right to start that process, and of course been an iterative process of taking a very deep look at all of the data and you go into a Phase 2 trial and both Lynn and Jeff were involved in the panel where we started to design the Phase 2 trial. You build the Phase 2 trial based upon certain assumptions and you know a little bit about your drug at that point but not everything.

Trial like this gives you an enormous amount of additional information and Dr. Gudin has spoken about some of the things your thoughts in things have to do or not do in the next trial maybe you can share some of those.

Unidentified Company Representative

Yeah so, I mean I’ve already kind of given some color as where as the direction I think we should go I mention during my presentation that its my opinion when looking at pain patients its lot easier to study pain on a higher scale so we mentioned one of the thoughts might be to look at patients who’s pain is above five as a baseline. Much more difficult to assess those subtle differences in pain and again if we can come up with an efficacy variable that would – that might float with the regulators and maybe Jack might be able to comment, obviously the agency wants to see typical trial of these primary efficacy end points of visual analog, so that’s going to be one of our challenges to try to overcome.

Unidentified Company Representative

And just one question.

Simos Simeonidis – Cowen & Co. LLC

Simos Simeonidis for Cowen. Rob talking about the regulators, have you submitted a request for a meeting with the FDA. You have Fast Track for this drug, which allows you more quicker interaction. What is the next step in your interactions with the agency?

Robert Medve

We will have an interface to meeting with the agency the packages to the pre-meeting package is preparation, we will submit that request very shortly.

Simos Simeonidis – Cowen & Co. LLC

Thank you.

Robert Medve

So it’s absolutely important to have with Fast Track status that we involve the FDA in these discussions. We know just with Fast Track status that they have an interest in what we are doing, we think it’s important, they think it could be important and being able to partner with them is a big advantage to us on that comes to Fast Track so. And they of course see a lot more information in trails that we don’t ever get to see.

Additional questions? There were – I had a couple of notes I was writing as we were going I thought I would ask one particular question. It was alluded to a meeting that occurred last week, Dr. Webster mentioned talking about the abuse liability guidance and as you’re aware, one of the thing strategically we’ve been thinking about and it is important therapeutically as well particularly if the hydrocodones become rescheduled to Schedule II as the potential for NKTR-181 to have less receptive scheduling. So perhaps Dr. Henningfield, you could comment on what the meeting was last week and any feedback in regard to the field?

Jack Henningfield

Sure. Very quickly my main professional organization, the College on Problems drug dependence has been looking for a delinked pain reliever since 1928 and some of you might have had cough at some time or diarrhea. Did you take morphine or oxycodone, why not? You probably used another opioid, dextromethorphan or imodium where the therapeutic effect is delinked from other effects. What’s exciting about NKTR-181 is it’s in this category of delinked products and FDA is really working hard to promote this.

They issued a guidance in 2010. They’ve talked about it, laid out a little bit of framework, didn’t go very far. They talked about potential [indiscernible] claims. Congress got involved in July of 2012 with the FDASIA Innovation and Safety Act and said be more specific, come up with guidance for abuse-deterrent opioids. FDA has held many meetings on those. Throgmorton from FDA announced in March that they were working with my organization, College on Problems of Drug Dependence to hold a meeting to really flush this out and that occurred last week. It occurred by the way on Monday and Tuesday. You may know the government shutdown on Tuesday.

Well, the White House person couldn’t make it Tuesday. The National Institute on Drug Abuse people couldn’t make it Tuesday. My former institute, the substance abuse people couldn’t make it Tuesday, but 50 FDA people were designated essential employees. If you’ve been in the government, that’s amazing. They were there because this is a really high priority of FDA. And FDAs verge over and over.

We are trying to incentivize industry to come up with labels that will drive prescribing that will change the marketplace from the most abusable products to less abusable products. And their big splash last spring was Oxycontin banning the original from on the basis of two years of data that showed that it makes a difference, 181 goes even further in my opinion because it’s a molecular approach. And so a lot of the issues that have been eluded to today for discuss you have to have meeting.

For example, if you’re an oxycodone with our new formulation, could you be scheduled differently and the answer given at the meeting is basically no or not inhale something freeze is over because of the controlled substances [indiscernible] that if you’re a previously scheduled molecule, you’re going to be scheduled like that. There are very few exceptions of that in history.

On the other hand if you’re a new molecule with lower abuse potential, lower liking scores camper deterrence all of which I’ve been involved in this assessment of this product, the door is open to abuse deterrent labeling and potential differential scheduling, in other words lower scheduling. There is data yet to be collected, but this was an entire meeting involving many in industry, 50 FDA people and it was very exciting because FDA is really determined to change the landscape.

Unidentified Company Representative

Thanks. Any additional questions on 181? So with that, I would actually turn the conversation over to Dr. Doberstein, who is going to present – obviously we’re doing a lot more than just 181. As you saw by this morning with Dr. Doberstein is going to talk about our current research efforts in our analgesic pipeline. I think to find these developments very exciting as well.

Stephen K. Doberstein

Thanks Rob. So what I’m going to do now is walk you through the some upcoming programs that we’re working on in research at Nektar to try and bring even more therapeutic modalities to the treatment of pain and I think that several speakers have talked about this, the fact that after 200 years of chemically-based work on pain, we still have NSAIDs, [indiscernible] and opioids lends us to think that may be there is some different approaches that we could make. And in fact, leads me to believe that our platform may be really uniquely suited to bringing forward additional new analgesics.

So when we think about pain we think about it – I think about it along two axis, one is the length of pain, so acute treatment of pain versus chronic treatment of pain. Did I sprain my ankle, or do I have vascular arthritis for instance? So the length of treatment is important. Also the source of the pain is important. So pain is caused by a very large variety of underlying pathologies and some of those pathologies cause pain towards the molecular mechanisms are shared, some of the pathways are shared and some of them aren’t shared. So there’s a large number of unmet indications here that actually separate out into a very important subsets that we can address through different molecular approaches.

So at Nektar we of course we apply the tools of our powerful platform advanced polymer conjugation, we really I think quite revolutionized this area in the last few years. And you’ve heard us talk a lot about modulating entry across the blood-brain barrier and we think of that in two ways to make it simple, one is we think about peripherally restricting drugs that is trying to eliminate their pharmacology in the brain completely and restrict them to the peripheral tissues. Naloxegol our opioid induced constipation drug that we’ve partnered with AstraZeneca is an example of that or reducing the rate an extent of CNS entry as we’ve done with NKTR-181 to try and ablate some of the abuse potential of drugs that have abuse liability that’s related to that rapid rate of entry.

So I’m going to talk about today for the first time in our pain programs, is a different additional way that we can use our technology platform. You remember when I talked about NKTR-214, I talked about changing the pharmacology, changing the receptor biding of biologics in oncology and we’ve managed to do the same kind of thing conceptually with pain molecules that is changing the way the molecule interacts with his receptor whether that’s a partial agonism, functional selectivity that is influencing different downstream pathways from the same receptor by influencing the way the drug binds to its target, and even engineering drugs that have two mechanism of action that hits two targets at the same time.

So these are the tools that we have at hand to apply to the problem of pain and I don’t intend to read this entire chart to you, you can use it as a program guide to what we are working on in research in pain, but I’ll point out that the indications are quite variable, but we’ve used our technology in different combinations and against different targets in the molecular pathways here that are important in pain to try to bring forward additional important therapeutics.

In particular we’ve heard a lot about NKTR-181 today and what I’m going to talk about first is NKTR-192, which is also new opioid agonist for the treatment of a different indication that is the acute pain. So when we think about acute pain we are talking about the kind of indication where we are thinking about typically short acting kinds of opioids Vicodin and Percocet sorts of drugs were typically used in these indications, and talking about muscle injuries, bone injuries, flares of more chronic pain osteoarthritis flares for instance, but we are thinking about really the short use of opioids.

So NKTR-192 is designed to be a μ opioid agonist that addresses the short acting and rapid onset sort of pain and kind of drug that you would take for that type of indication. So we’ve engineered into the molecule we need of course to address the problem of abuse liability, all of the μ opioid agonist have that problem, and so we address that problem by reducing the rate of entry into the brain, but that that isn’t the whole story and I’m going to tell you today for the first time we are going to look through the data that tells us more about the receptor pharmacology of NKTR-192 and how there is an additional path to reducing abuse liability in addition to reducing the rate of entry into the brain.

I’ll just point out that well on a dollar basis the acute pain sector is actually not the lion share of the market that’s because the drugs that are being used there are typically generics that are very low price, and in fact when you look at the prescriptions that pie chart would be entirely reversed Vicodin for instance maybe the most abused prescription drug that’s available on the market today. And so the idea of bringing low abuse liability solution into this area I think it is very attractive for patients and for doctors.

I will remind you that NKTR-192 is in the middle of its Phase 1 program right now and we’ve seen very good efficacy already in the human models of pain control, this is the cold pressure test from our single dose Phase 1 study we’ve shown this data before and I’ll draw your attention that the way that study works is we have subjects immerse their hand in a ice water temperature water bath, that’s really extraordinarily painful don’t ever sign up for a Phase 1 clinical trial.

It’s extraordinarily painful and in fact patients who aren’t treated with any analgesic you can see down there, they can only keep their hand in that ice bucket for about 35 seconds and that’s pretty good I have to say, I wouldn’t be able to do that. Then we give them a dose of NKTR-192 and then every half hour over the next several hours we ask them to do the same test again. How long can we keep your hand in now? How long can you keep your hand in now and I’ll point out that there is actually rather rapid onset effect over the first hour, we get nearly maximal efficacy out of NKTR-192.

So that represents a commandment for us because remember I told you that the drug is designed to get into the brain with a slow grade of entry and in fact we were able to see that in Phase 1 as well. You probably see these types of graph before if you’re familiar with our work on NKTR-181 but this is a way of directly measuring the rate of entry into the brain and human subjects.

So with oxycodone if you give patients a dose of oxycodone the gold line here on the left graph is a plasma concentration of oxycodone. The blue curve is pupil constriction. So there is a response that all humans have to opioid antagonist that is their pupils get smaller. And that’s not controllable by the subjects. It’s not subjective, it’s a quantitative measure of opioid activity. And you can see that’s a central effect and so you’re looking at the separation between the peaks of the curves. So those peaks of those curves are separated by about 11 minutes that’s called the effect half-life. We can go into more details about the math in a little bit but just sufficed to say that is extraordinary rapid.

Heroin for instance in this kind of assay will probably show – may show no separation at all it’s rate of entry into the brain is essentially limited by the rate of circulation of the bloodstream.

When we look at NKTR-181, I’ll remind you, I don’t have the data on the graph here. But I’ll remind that NKTR-181 has an effective time half life of about three hours, so quite slow entry. So we’ve done with NKTR-192 is to engineer a rather more rapid entry than NKTR-181, but still quite slow relative to the other opioids that are commonly used.

So about – halfway, the time is about 43 minutes. So there’s risk in underarm, we want to wrap it onset of action, but we also want the abuse liability. So how else can we modify. So is that 43 minutes slow enough that we can’t know for sure yet, that will require human abuse liability, so it will be upcoming. but how else can we limit the abuse liability of an opioid.

I think Dr. Webster did a very nice job of pointing out the complexity of opioids signaling. So opioids have a really wide range of pharmacology. It’s very attending to think of him as light switches and they’re not. They’re more like a combination of a rheostat and I don’t know a gasket or a gearshift. So they’re extraordinarily complicated. So there are different opioid agonists, effective receptor and the opioid receptor in different ways.

So there are also multiple downstream pathways in the opioid receptor. What that means is that when you trigger the opioid receptor with an agonist, whether it’s embodiment on your body is making to try to control pain in a sort of natural waste way or whether it’s with the medicine. Those pathways get activated downstream and they’re multiple of them and I think we probably still don’t know all of them, but we do know about several of them, and I’m going to tell you more about that in a minute.

Our goal here is to generate a drug that looks a little bit more from a pharmacological standpoint like what we call biased partial agonist. So we’re going to get into some biochemistry here, I hope you’ll have about chemistry hats on. We’re going get into this in a minute, but a partial agonist is a drug that doesn’t elicit the maximum response in one pathway or another from the new opioid receptor. There’s an example of that, that’s commercially used and used medically it’s called buprenorphine.

Buprenorphine is known to be what’s called bias partial agonist and has relatively low abuse liability as was indicated by the fact that it actually has rather favorable scheduling. It’s limited by a couple of things, one thing is limited by it’s not an orally available drug so you have to use a patch. Okay. So a patch already biases you against rapid onset of action and against short duration of action and takes us outside of the product profile that we’ve been talking about.

But the favorable scheduling is kind of tempting to us. Now what if we could take it? What if we had a drug that had the biochemical character of buprenorphine is orally available and then also had additional reduced abuse liability parameters based on its slow rate of entry into the brain, that might be a really interesting molecule and that’s what we’ve engineered in the case of NKTR-192.

So let’s take a look at the pathways downstream of the new receptor. So when the new receptor is activated by an agonist whether that’s an endogenous agonist or medicationist or medication.

At least two things happened two different downstream pathways are happening inside the cell. So one thing that happens is what the G protein cascade is activated that leaves the inhibition of a enzyme called adenylyl cyclase in reduction in cyclic AMP levels. Cyclic AMP is an intracellular signaling molecule, that effect eventually leads to analgesia, that’s the analgesic pathway through the G protein pathway.

There is a whole separate pathway downstream of the receptor called the beta-arrestin pathway and that pathway well it is a subject of intense research and a little bit of disagreement frankly in the field, looks to be involved in desensitization, internalization of the new opioid receptors.

Once the receptors were internalized inside the cell they can no longer see the drug just trying to bind them and turn them on. And there is some speculation and I think the evidence is mounting now that that pathway is associated with tolerance to the drug which is not good that means you have to increase doses, withdraw from the drug and perhaps the constipation as well.

So the ideal thing to do here would be to bias our activity downstream of the receptor towards G protein activation and away from beta-arrestin signaling. As I indicated before there probably is another pathways as well that we haven’t really learned about or appreciate as much out.

So first let’s talk about partial agonism. So this is a graph that shows biochemical response inside of cells to – that this is the activation of the G protein cascade. This is the first step of that Analgesic pathway. And you can see that as you increase doses the varying compounds on the graph here, you get different responses, DAMGO and fentanyl are at the top, DAMGO is a mimic of your endogenous opioids.

So we use that as mimic the endogenous opioid response. Fentanyl of course you are all aware of highly potent new opioid agonist. Buprenorphine is in blue right in the middle there, so you can see that you get to a point where Buprenorphine dosing where at some point you no longer can get a 100% response of the G protein pathway. And that’s associated with excellent Analgesia that relatively low abuse liability.

You can see with NKTR-192 that’s the gold line right here. This is the first time we’ve been discussing this data. You’ll see with NKTR-192 that we have essentially the same kind of pharmacology of partial agonism that with Buprenorphine. Now I will point out just because some of you can ask me later on. NKTR-192 we haven’t started with the scaffold of Buprenorphine and simply added a polymer to it, that would have been too easy.

In fact, if we talk about the structure of NKTR-192, if you looked at other members of the same molecular family that had the same scaffold. You would find that this is pharmacology that we’ve engineered into the molecule uniquely using our technology. So we’ve actually changed the pharmacology of the peer, of the parent molecule we started with by applying our technology base to it.

So let’s talk about Biased Ligands, so the kind of standard opioids that have commonly used oxycodone, morphine, fentanyl tend to signal through both pathways, not necessarily they have different ratios of selectivity, but they both inspire both pathways. And what we have found with NKTR-192 has been in fact in addition to being a partial agonist, it’s also a biased agonist.

We call this functional selectivity that is the molecule is actually selective at the receptor for one of the downstream pathways and not the other. That is the G-protein side is where bias towards the G-protein side was the analgesic side and away from the beta-arrestin which is the side effect side. So let’s see that, let’s see some pharmacology there.

You can see here at the two graphs at the top are oxycodone and buprenorphine. So you can see oxycodone the red line here is beta-arrestin, is a beta-arrestin cell based assay, the blue line is the pathway being activated and the grey line is that cyclic AMP response. Remember I said cyclic AMP response is downstream of G-protein activation.

So right now you’re asking yourself the same question I did when somebody first showed me these results. Why is partial agonist is good? It sounds like a bad thing, partial – I want full analgesia. Well it turns out that you can partially agonize the new opioid receptor at the level of the G-protein and still get a complete 100% response at cyclic AMP.

And so that’s what NKTR-192 shows you at the bottom there. You can see very low beta-arrestin activity, partial agonist at the receptor and you had to complete 100% response of the cyclic AMP response. So a little bit confounding – little bit counterintuitive maybe but in fact exactly what we would have seen with Buprenorphine which you can see in the upper right hand corner there.

So that should translate of course since a very rapid onset of activity and reduce abuse liability and hopefully reduce side effects as well as we saw with NTKR-181 and in fact we’ve seen all of that in animals, I showed you the human data that showed the rapid onset in the co-pressure test, this is now one of our animal models, I’ll just say that the black line here is animals that are treated with vehicle and the gold lines are two different doses of NTKR-192, the blue line is oxycodone at a very high dose and so you can see is the maximal response would be oxycodone down at their bottom and 300 mg per kg dose of NTKR-192 accomplish is exactly that same maximal level of efficacy and very important it has a very rapid onset of action.

So just exactly what we would hope to see, when we engineer the pharmacology into the molecule. Dr. Webster showed some graphs that conceptionally illustrated the concept of analgesia, abuse liability and side-effects and how you want those curves to be separated from each other, you want the analgesic curve to be shifted to the left on the dose curve and you want the side effects including abuse liability to be shifted to the right.

So these are all base-line animal experiments now that we have done at Nektar and what you can see here in the gold lines is the analgesic response, the green curves are the abuse liability response and the purple curves are a measure of sedation which we use as a general measure of CNS side effects and you can see for oxycodone in this kind of assay the same doses that generate analgesia also generate the abuse response in this animal model.

And the side effects are little bit right shifted from that. So with NKTR-192 now you can see what in these animal experiments, good analgesia in the gold curve and then the abuse liability response in particular, look at how that goes up and then levels off at about 30%.

I think that’s very interesting and very consistent, so it’s well right shifted and then almost never, where we never yet has reached the maximal kind of response. We think that’s associated somehow with the partial agonism that we built into the molecule.

So I think that’s really interesting additional data on NKTR-192 that we haven’t really talked about before. So there is two mechanisms that work here to reduce the abuse liability while still retaining rapid onset of action and short duration of action. So where are we with NKTR-192, we are in the middle of the Phase 1 program.

We’ve done single dose Phase 1 that’s confirmed, the short acting PK profile that we were looking for. It confirmed the slow rate of entry into the CNS, I showed you that data and a confirmed rapid onset of analgesic activity in several different human models of pain.

So we’re starting just this week the Phase 1B study which is the multiple dose study that would proceed Phase 2s. We have to understand how the drug works over time over multiple dosing. So I put up a next step here, I think this is still under discussion with us, but one possible path here would be to go, we know we’ve got analgesic effect to go directly into human abuse liability study and test or hypotheses that this combination of biased partial ligand plus a relatively slow rate of entry to the brain whether that has the reduced abuse liability that we’re looking for.

I wouldn’t just count the possibility since this is acute pain. A relatively small phase to a kind of trial might be appropriate as well to make sure we’ve got the appropriate dose for the health study. So we’ll be working that out over the next month or two as we continue with our multiple dose Phase 1 study.

So that’s NKTR-192 what I would like to introduce you to now is NKTR-171. So now we’ve taken a different manifestation of our technology. With the opioids we want to slow rate of entry into the brain, but we want central effect.

With NKTR-171, the idea is to address peripheral pain in the periphery where the pain signal originates. So neuropathic pain is caused by a relatively wide variety of injuries or diseases, but they’re all characterized by hyperactivity, hyperexcitability of peripheral neurons. Those neurons get injured; they up regulate a bunch of signaling proteins, including sodium channels.

They have a high special sodium channels, among the things that happen to those neurons as they become super excitable, so that a mild touch end ups being very painful for patients. And that’s related to among other things the activity of the sodium channels that are on these injured nerves.

Now the standard of care, here are the gabapentinoids, we look at primarily, it’s a drug that has the advantage of being at least somewhat safe, but thus have some pre-surgery side effects associated with and frankly doesn’t work very well. So what we’re doing, this disease is primarily treated with polypharmacy, and the reason for that is that simply don’t work very well.

There is lots of ways to turned down hyper excited neurons, almost all of those drugs were designed as antiepileptics or anti-seizure medication, so that they all get into the CNS. So that you can turndown the drugs, you can turndown the activity of neurons peripherally, but if you also turn down the activity centrally that’s a real problem.

So the goal of NKTR-171 is to address that problem in the periphery where it occurs. So we will have a sodium channel blocker that was peripherally but not centrally doesn’t get into the CNS to begin with. An importantly we don’t address all the sodium channels in the periphery, the sodium channels in almost every cell in your body. We just want to address the ones that are hyperactive on those nerves that are causing the pain, that’s the goal.

So the way you do that is, by again, by using our technology to address the biochemistry of the molecule in a way that the selective for the pathological neurons and for the sodium channels that are really causing the problem, well ignoring the sodium channels that aren’t causing you a problem and that will cause side-effects if you inhabited them.

So sodium channels of course, those are over expressed in the nerves that have been injured and that causes neurons to be hyperactivatable, that’s the route cause of neuropathic pain. Sodium channel blockers have been shown to be efficaciously in this disease. but in fact, they almost all get into the CNS and when they get into the CNS, they cause really bad dizziness ataxia, somnolence, it’s really sever central nervous side effects and there is actually very few sodium channel blockers that are very little limited use in neuropathic pain, because of the central side effects.

So by designing a drug, we can keep out of the CNS, just exactly the same use of our technology that we invented from lots of goal. We keep the drug in the pro-free and now we don’t have the CNS side effects. So how do we address the other side effects that are potential in the pro-free, we’ve eliminated the CNS once by putting the – keeping the drug out of the brain.

What about the heart? What about the other tissues that have sodium channels? What turns out sodium channel receptor biologies work that really well and there are three states of sodium channels. So iron channels in the normal signaling, they fluctuate back and forth between the activated and resting. so resting is on the left and you could see that little arm folds over, blocks the channels, so sodium can’t get into the south.

And then the activated state that arm was up and sodium can flow in. When the channels are hyperactivated for an extended period of time, the buy has a natural mechanism to try to reduce the amount of sodium that’s getting into the cell and that’s called the inactivated space. So it’s a different molecular change that happens that the molecule actually change its shape, the protein change its shape, in the hyperactivated state to shut itself off.

Now that gives us an advantage, it gives us a hook, because we know that in the tissues and the nerves that are causing the pain, there should be a large number of that sodium channels that are in the inactivated state. And that’s what NKTR-171 is designed to block. So the module counterintuitivly doesn’t block the activated state because the activated state is important in a wide range of tissues plus the inactivated state which is primarily happening in the pathological nerves where the signals are coming from.

So I can show you that data this is biochemical data done with patch clamping and what you can see is that the high gold bars are NKTR-171’s effect on the resting stated of the sodium channel of – of a number of sodium channels, this is a sodium channel blocker that works across at least four different sub-species of sodium channels, so it’s a general activity which I think is important to it’s use.

And then you can see its activity in the lighter bars much lower down. So, profound inhibition of the inactivated state relative to the tonic or normal states. So addressing the pathological tissue, in the part of the body where the pathology is happening is a theme that we keep coming back to again and again at Nektar and that’s where NKTR-171 is going to fit in.

So of course we see in animal models of neuropathic pain that’s it’s a very effective analgesic and in a fact we can achieve better than standard of care analgesia in the animal models. And very good separation of side effects from standard of care. So here is NKTR-171 on the left, the gold curve is the efficacy curve, the red curve is the side effect curve and you can see a big separation between those curves, just like Dr. Webster was looking for before and look at pregabalin where essentially the same dose is the cause efficacy in these animal models also put the rats right to sleep.

So we got a nice separation relative to other drugs that are used to treat this disease and are preclinical models. So for NKTR-171 we are very excited to be bring the drug into the clinic probably in the first month or two of next year. We’ll be filing the IND by the end of this year typically don’t start clinical trials at Christmas time. So we’ll probably wait until January to actually start the trial.

But so far the toxicology is looking excellent the drug availability is looking excellent. And we look forward to seeing the results from our first clinical trial with this compound early next year. So I am going to tell you now just briefly about two more programs that are just emerging from research and this is the first time that we talked about them.

So when I call them programs they are going to add numbers associated with them. But what that means is that we have a handful of compounds that have the – all have the activities that we like and we are starting through them to figure out what truly optimal one to take forward. So we’ll have a lead molecule that will take forward into preclinical development.

First NKTR-195 so we’ve done the NKTR-195 is to make ourselves an orally available Peripherally-Acting Kappa Opioid Agonist. So this is for the treatment of visceral pain. So how does visceral pain work so visceral pain is the kind of pain you experience when there is a distention of a internal organ.

So for example irritable bowel syndrome is probably a classic example of this, with bladder pain your body actually has a pain response that happens when internal viscera are distended or moved out of place and what happens when that happens there is local inflammation that happens and that local inflammation that there is an influx of inflammatory cells and among the things that they secrete into that area of distress or ligands that activate a different opioid receptor called the Kappa Opioid Receptor.

So we’ve been talking all day about Mu or we are going to talk about Kappa. The Kappa Opioid Receptor, the reason is there is to – among the reasons is there, so that inflammatory cells can give a local analgesic effect during inflammation. So the inflammatory cells go to the side of inflammation, they secrete these endogenous Kappa opioids and that binds to the Kappa Opioid Receptor and reduces the peripheral pain that you are feeling because of – about of interstitial cystitis for instance.

So Kappa receptors also occur in the brain and one of the issues that’s happened with Kappa over the years is that, its viewed as a very promising target in this area, but all of the development has been with compounds that had some level of entry into the brain and the central nervous system side effects are quite profound of Kappa agonism that is primarily dysphoria, but sedation happens as well as some other side effects as well.

So the idea is now if we can use our technology as we’ve used it all long. Several times we’ve been talking about this to keep a drug completely out of the brain, and we don’t want any pharmacological effect, and we want all our pharmacology to be directed at the side of injury peripherally. Then we should be able to affect visceral pain, which is an indication – which is an area of which has very little – there is very little treatments to give.

So there aren’t any Kappa agonists on the market right now, there are very few in development, those compounds that are in development are mostly limited to drugs that have been recycled from some of the big pharma companies who found that they’ve made – seen side effects of their drugs were limiting.

So I’ll show you just from one of the representative compounds that we’ve been bringing forward in the NKTR-195 program. You can see the traditional Kappa agonists, you can see the drug gets into the brain and in this case, we are measuring efficacy as the green line in left-hand graph and sedation as the blue line, this is again in an animal model and you can see the lines almost overlap of each other.

So the same doses that cause efficacy are causing sedation that’s exactly what we’ve seen in the clinic with previous aerations of CAP agonist and you can see the kind of separation in those curves, we’re able to get with NKTR-195 on the right hand side between the gold curve and the red curve, an increase of almost 20 fold in therapeutic index with one of our lead molecules here.

So we’re really excited about this as a research program and we’ll be bringing it forward over the next couple months and making our selection what the lead compound is going to be and then eventually what the goal of bringing that into full on preclinical development and preparation of an IND clinical molecule, but we’ll keep you posted as events develop our NKTR-195.

And the last, I’d like to cover, really another new manifestation of our technology through that polymer conjugation is kind of like Phillips-head screwdriver of drug discovery that we can do a lot of stuff with this tool and what we’ve done with NKTR-174 again, we’re trying to apply now to neuropathic pain. And now we want to address multiple mechanisms, multiple targets with the same drug, this happens all the time.

There are lots of drugs and we used to call them the dirty drugs, when I was growing up in the drug discovery business, because everybody wanted a more selective drug, it turns out that sometimes what you wanted do is, have a drug that addresses multiple targets at the same time and that’s what we’re looking for here with NKTR-174.

So it brings out that a neuropathic pain, new opioid agonists were pretty well. we have lot of the side effects associated with new opioid agonist, but another mechanism that seems to work reasonably well is NNDA antagonism, this is another downstream pathway, I’ll tell you more about the pathway biology in a minute, but the idea here is that if we get agonize the new opioid receptor and antagonize the NNDA receptor simultaneously with the same compound, we might be able to dose at very low levels of dosing that would allow us to avoid any side effects associated with either drug.

So for example, when you think about NNDA anti-antagonist, I’m talking about drugs like ketamine. So very serious central side effects associated with ketamine and high re-enforcer as well. So we’d like to do is make a mu-opioid NMDA receptor antagonist combination.

It is not a combination of two drugs but the activity in the same molecule that has a slow rate of entry into the brain to reduce the re-enforcing side effects, the abuse liability side effects that both opioids and some NMDA antagonist share.

So the way the biology works here is that the standard pain signaling is from one neuron to another and glutamate is one of the major neurotransmitters that go between neurons. Glutamate is sensed by the NMDA receptor, so it is downstream in the pain cascade.

And in neuropathic pain that’s one of the mechanism to hyper excitability. So the idea here is to make a drug NKTR-174 that would bind to the mu-opioid receptor and inhibit signaling in that way in the upstream neuron, but also block the NMDA receptor downstream.

So we have two mechanisms going at the same time to reduce the hyper excitability of those neurons. So there are ways to do this. There are actually some drugs already on the market are already in development that have some level of mu-affinity and some level of NMDA affinity. But the issue is that the proper balance hasn’t really been achieved. The ratios that we see of activity are somewhere between 300 X and a 1000 x of the existing molecules like [indiscernible] and methadone.

And so what we would like to do is to bring into balance those two activities. We would like to find out what the optimal balance is and so what you find right now is we’ve got a series of compounds in the NKTR-174 program that range in their activity between the activity of ketamine which is largely NMDA associated and the activity of [indiscernible] which is mostly mu-opioid associated and stand that therapeutic area between point one and a 100 X like that.

What we want to do is get in there and to figure out where the optimal point is and then enter with that kind of compound, because that we believe that that optimal bias between those two activities will allow us to be at the lowest possible dose to have really good efficacy, while reducing side effects.

On top of that of course, we would like to have slow rate of entry into the brain, so we don’t induce the kind of abuse liability issues that we’ve been talking about with other new agonists as well.

So that’s our goal for this program and I think we’ve been asked before whether it doesn’t just compete with your other Neuropathic Pain program. And as I pointed out before, neuropathic pain is a kind of disease that’s typically treated with polypharmacy, there are underlying commonalities in this pathology, but there are differences as well, depending on what’s caused the neuropathic pain. And so I think that we may find that a NKTR-174 type of compound maybe more useful in some states and NKTR-171 type of compound might be useful in another neuropathic pain states. Time will tell that’s the kind of question that has to be answered in the clinic.

So, with that I would like to wrap up and just point out that it’s one of the reasons, it’s not a mistake that we focused a lot of our research effort in the area of analgesics, there’s a giant unmet need, there haven’t been new pain drugs developed in a very long time. So there is a real opportunity here for the kinds of technology base that we have in Nektar that allows us to address these kind of problems and short comings of the existing drugs and really bring the next generation analgesics into existence.

So with that I’ll say thank you for your attention. Thanks for listening to the early stage presentations and thank you to our panelists for some excellent discussion. And we’ll take some Q&A questions for either me or for any members of the panel before we wrap up.

John S. Sonnier – William Blair & Co. LLC

Thanks. It’s John Sonnier. Steve I don’t want to minimize the value of the early stage program, but I think I would be a ever [ph] miss you wouldn’t talk a little bit about Naloxegol.

Stephen K. Doberstein

Oh for sure. So it would be interesting to get the panelist perspective and maybe Dr. Webster in particular talk about your views of safety of the class, there’s been a lot of discussion, a lot of interest in the investment community. And I think a bit of a cloud that’s been cast over the class as a result of the ongoing development with another compound. Talk about your view of the safety of the class? And if you have an opinion on this schedule panel upcoming in the spring of next year that would be helpful. Thank you.

Unidentified Company Representative

Well, yes that constipation is a big problem with what the use of opioids. It’s far more common than actually the literature suggests, so there is a need. And there is a cloud the FDA has generated that cloud largely because as you well know of the Alvimopan originally the Alvimopan problems with cardiac events. And then the other sponsors have had some issues. And I don’t believe naloxegol and certainly in the public information has had really any differential of [indiscernible] the placebo group or in the active group so that’s all public knowledge.

All of the companies I think are very much interested and they’re a whole host of them as you know that are developing products in this area. And I suspect that some of this hopefully it will be worked out when that advisory committee is held in March. So personally I don’t think there is a cardiac issue, I think that it’s such a new area for the FDA to address I mean the analgesia is kind of looking at it and GI I mean that neither of them I mean they have their own unique expertise.

GI doesn’t know anything about opioids, my view. And yet this is an opioid receptor that is being addressed, even though it’s a peripheral bet that antagonist and I mean, that comes out as a Schedule II right now, until it’s re-scheduled for other reasons and that’s what Jack was referring to earlier.

So it happens to workout, in the long run, I don’t believe that there’s – I think that it’s unlikely that this is going to be tagged as having a significant cardiac problem, but that has to be demonstrated. But in my view and I’ve worked with every sponsor I think in this area. I don’t see clinically and I haven’t seen in the data anything that makes me concern that this is a cardiac problem.

Unidentified Analyst

If I can follow-up, just a little bit on that so I think that is precisely the concern of the investment community is that the FDA may have a number, run a trial large enough to see X number of events whatever that number maybe and kind of force on to the sponsors at one size fits all type of protocol. Has there been that type of discussion or do you think its going to be a case-by-case? Thanks.

Unidentified Company Representative

Well I think that there are discussions, so I don’t know where those discussions and how – if its FDA and sponsor, multi-sponsors and multi-sponsored study design, et cetera. I think that those discussions are occurring, but I think that we’re going to probably have to wait until March to probably see what the science says. I think there’s a lot of science out there, that’s just now being presented, will be in the next couple of weeks, I have a couple of posters that are going to suggest that this may not be as big of an issue as some people think.

But I don’t have all the data in the world, I only have some and I’ve looked at a lot of data, but I don’t have it all. And FDA has the lot of resources to go do a lot of things I don’t have so. But on the other hand I think that they’re very cautious and I can understand the investment community being concerned about this until there is some path, some definition and right now as an investigator and advisor and a consultant to many of these companies, we don’t have that, that’s true.

Simos Simeonidis – Cowen & Co. LLC

Simos Simeonidis from Cowen in fact Webster following up on just the same question you mentioned you don’t expect to see a problem do you mean specifically for naloxegol or for Relistor or for the class of drugs where you’re referring specifically to the Nektar drug or to Relistor?

Unidentified Company Representative

Well I don’t want to get into the details of all of this but I think as I class I think that is not as a large of a problem as is being as the concern is by the FDA. I don’t think they match, I’m not saying that there won’t be some data that is has to be answered but I think as a class a peripheral opioid antagonist I personally don’t see this as an issue downstream, I think though I can’t tell you what the FDA is going to require for it to be resolved in their mind but I think it’s a class that I mean the class issue across the board.

I clearly don’t see anything with naloxegol, I mean I’ve seen the data there that’s we’ve already made that public on the earlier studies. There is no difference in the two groups of course the 600 or some may know or may not be the number that the FDA wants. So that’s the question mark do you have to do a 1000, 2000 in each group.

Simos Simeonidis – Cowen & Co. LLC

And I know you can answer for the FDA but in your experience in the past from what you’ve seen the fact that on the one hand you have an uncontrolled single arm study where there are a number of events; on the other hand you have a controlled study where there is no difference between the two arms. I mean Isn’t that a very significant difference regardless of the chemical difference between Relistor and Naloxegol isn’t that at the end of the day the proof that you could clear one case you cannot necessarily disprove that there is a severe risk in the other case.

Unidentified Company Representative

Well, I think we don’t know that’s true I think that there is some data out there that we don’t have access to and we’re going to have to work this out. And all of the products are going to be different and have different profiles and I’m sure that there’s going to be a different risk profile with them, but the umbrella view from me is 30,000 or 60,000 feet is that I don’t believe that there are significant cardiac risk associated with the class. But I have gone before.

Unidentified Company Representative

Any other questions? Great, so I will just wrap up. And I would like to say first of all thank you to three groups. Thanks to all of you for joining us today and spending so much of your time on what’s otherwise a very busy day, I’m sure. And I hope if you look forward is running us for happy hour and just a little bit. I want to say thank you very much for panelists, both in pain and oncology, I think it’s been very clarifying to put all of our programs in the clinical context. And then to my colleagues back at Nektar, who may be listening by webcast, I want to say thank you very much for all of your hard work and for making Rob and I look quite smart.

And I’ll just point out that for lack of time we wanted to dive in quite deeply into the programs that we did dive into. And we talked today about our proprietary pipeline specifically in oncology and in pain, but I’ll remind you and I was glad that I had some opportunity to talk about Naloxegol of our Phase 3 programs that we have partnered with other companies that we didn’t talk about today there is Naloxegol which the NDA has been filed for with AstraZeneca, there is BAX 855 the next generation Factor VIII molecules that we are working with Baxter that’s in its pivotal trial right now and then Amikacin Inhale and Cipro DPI both of which are partnered with Bayer and our Phase 3. So we have a large number of exciting programs that are in late stage of developing now with our partners, but I think add contacts for story as well.

So with that I’ll say thank you very much and I hope to see you down stairs.

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