Hello and thank you for standing by. Welcome to the Nectar Therapeutics second quarter 2026 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Vivian Wu from Nectar Investor Relations to kick things off. Please go ahead.

Thank you, Crystal, and good afternoon, everyone. Thank you for joining us today. On today's call, you will hear from Howard Robin, our President and Chief Executive Officer, Dr. Jonathan Zalevsky, our Chief Research and Development Officer, and Linda Rubinstein, our Chief Financial Officer. Dr. Mary Tagliaferri, our Chief Medical Officer, will also be available during the Q&A. Before we begin, I would like to remind you that we will be making forward-looking statements regarding our business, including statements related to therapeutic and commercial potential and development plans for Raspeg-Aldis-Lukin, the timing and expectations for clinical trials, clinical data presentations, and regulatory submissions. Regulatory interactions are expected cash runway and other statements regarding the future of our business. Because forward-looking statements relate to the future, There are subject uncertainties and risks that are difficult to predict, and many of which are outside of our control. For a discussion of these risks and uncertainties, please refer to our filings with SEC, including our most recent Form 10-K and subsequent filings. We undertake no obligation to update these forward linking statements, except as required by law. Live webcasts and replay of this call will be available on the impact relations section of our website at NACDR.com. With that, I will hand the call over to Howard.

Thank you, Vivian. Thank you to everyone for joining us this afternoon. In July, we achieved yet another important milestone in Nectar with the initiation of the Global Zenith AD Program, Phase III AD Program for a ResPag-Aldisleukin, also known as ResPag, in moderate to severe ectopic dermatitis. We're excited to be advancing this very important novel medicine towards registration, and the first of several potential indications. Following our end of phase two meeting with the FDA, we also finalized the design of a single registrational phase three study for RESPEG in alopecia areata, which we plan to initiate in early 2027. The registrational study designs for RESPEG build on the positive clinical data we've generated in the first half of this year in patients with ectopic dermatitis and alopecia areata, and also reflects input from our completed regulatory meetings. Jay-Z will talk more about these designs later on during the call. And importantly, with the first phase three studies in ectopic dermatitis now underway, we expect top line data from these studies in mid-2028. And if positive, expect to submit a BLA in 2029. As a novel Treg agonist mechanism, Respeg works fundamentally different by acting upstream of multiple inflammatory pathways to restore immune balance. And to that end, we continue to evaluate new indications for expansion of Respeg's developments in the future. Through TrialNet, we're evaluating its potential in type 1 diabetes in an ongoing phase 2 study. We also believe there are other autoimmune conditions where a Treg mechanism could benefit patients, and we therefore view Respeg as a potential pipeline and a product. Importantly, the market opportunity and patient need in each of our two lead indications are substantial. More than 15 million people in the United States have moderate to severe ectopic dermatitis and currently fewer than 10% are treated with a systemic therapy. We believe that this market will grow with the introduction of novel mechanisms of action as was the case in the psoriasis market, and that RESPEC is highly differentiated from the other novel MOAs approved or in development. We know that roughly half of the patients on currently available IL-13-based agents, including Depixent, either don't respond to therapy or lose their response over time. This leaves a large unmet need for a new therapeutic option. We believe RESPEC has the potential to alter the treatment paradigm in this indication by offering a differentiated efficacy and safety profile with a long-term, highly attractive monthly or quarterly maintenance dosing regimen. We recently completed extensive market research, which included our 52-week maintenance data for RESPEC. The research reinforces our commercial thesis in ectopic dermatitis. We interviewed and surveyed 151 high-volume prescribers and key opinion leaders in the United States and Europe. A recurrent theme that came up in the research was physician enthusiasm for a novel mechanism of action as compared to overlapping mechanisms of action in the IL-13 class. The resolved AD data was viewed highly positively, including EZ-75 and itch and arrest responses. The quarterly dosing schedule for maintenance and the easy 100 rates were called out as notable and differentiating. The data in comorbid asthma was also cited as a key differentiator as physicians see patients with a range of other autoimmune and allergic comorbidities, which could benefit from a Treg therapeutic approach. Notably, safety was viewed as a key differentiator with no increased risk for infection and no conjunctivitis observed in the RESPEC treatment arms in our Phase IIb Resolve AD study. Importantly, 150 out of the 151 physicians interviewed said that injection site reactions were not a hindrance to prescribing or a barrier for patients and actually preferred a self-resolving short-lived ISR over managing longer duration conjunctivitis. It was clear that physicians would welcome a novel immune modulating mechanism like RESPEG in the treatment paradigm and that RESPEG would likely be prescribed across first, second, and third line populations. The research supports our decision to pursue a label with our registrational program in ectopic dermatitis that captures both treatment naive and experienced patients. Turning to the opportunity in alopecia areata, nearly 6.7 million people in the United States are affected by the disease, and the large majority currently go untreated. There are well-known safety challenges associated with JAK inhibitors, which is the only approved class to treat severe patients, and that has limited their use. In spite of that, the market for agents currently approved for alopecia areata is still projected to grow to $5 billion in 2033. But more than half of dermatologists are not comfortable describing these agents, given their boxed warnings and an ongoing monitoring burden. Our RESPEC market research with physicians in alopecia areata reaffirms this hesitation to prescribe JAK inhibitors. And in addition to RESPEC's safety profile observed to date and its novel MOA, physicians and patients in our research cited RESPEG's twice monthly dosing for alopecia areata patients as more attractive than once daily oral dosing. Physicians also noted the ability to ensure patient compliance with treatment is much higher with an injectable twice monthly regimen. The research reaffirms our belief that RESPEG has the potential to become a preferred and many more. Before I hand the call to Jay Z, I will note that we ended the quarter in a strong financial position with over $1 billion in cash and investments, and our cash runway extends into the third quarter of 2028, past the initial Phase III ectopic dermatitis data readouts in mid-2028. Our team is laser-focused on successful execution of our phase three programs in advancing RESPEG to BLA submission as quickly as possible. With that, I'll turn the call over to Jay Z.

Thank you, Howard, and good afternoon, everyone. Everything we have learned about RESPEG from the data from the clinical programs today points to a consistent and we believe differentiated clinical profile, meaningful efficacy, a favorable safety profile with dosing as infrequent as once a quarter, and responses that continue to deepen over time. As Howard stated, RESPEG works upstream of the currently approved agents and the diseases we are targeting. It stimulates regulatory T cells and gets closest to natural causal biology to restore the immune balance that is disrupted in autoimmune and inflammatory disease, rather than blocking a single target or even multiple targets downstream. Respeg is able to correct TH1, TH2, TH17, and other upstream inflammatory dysfunctions that can drive disease pathology across atopic dermatitis, alopecia areata, and other autoimmune diseases. Because regulatory T cells target the underlying immune imbalance of inflammatory and autoimmune diseases, we have seen Respeg produce very high durability over time. This was our key hypothesis when we developed RASPEG, and it is supported by the data we reported from our monthly and quarterly dosing regimens in our Phase IIb program. In our first Phase I study, following a 12-week treatment cycle, we observed durability of clinical responses for approximately nine months off treatment, which we have previously published. As Howard mentioned, Zenith AD Our global phase three program in atopic dermatitis is now up and running. The first two studies, both in biologic and JAK inhibitor naive patients, were initiated and we started randomizing patients back in July. The planned study in treatment experience patients is set to start by the end of September. As a reminder, each of the two pivotal biologic naive studies will enroll 510 adolescent and adult patients age 12 and older randomized two to one to respag at 24 micrograms per kilogram every two weeks or placebo. There is a 24-week induction period followed by a 28-week maintenance period through week 52, during which we will evaluate both monthly and quarterly dosing. The third phase three study in treatment experience patients has the same design and is expected to support a second line and later usage in the label. Taken together, the studies are designed to support a potential label in this patient population that captures both naive and experienced patients spanning first line, second line and later line usage. The studies are designed to support US and global registration with an IGA related primary endpoint for the US and co-primary endpoints at EASY 75 and IGA for significant territories outside the U.S., along with multiplicity-protected secondary endpoints for key patient-reported outcomes, such as itch numerical rating scale, or NRS, skin pain NRS, and atopic dermatitis sleep scale, or ADSS. As you know, many patients with atopic dermatitis also have other comorbidities. including asthma and allergic rhinitis. As a Treg-based mechanism, ResPeg is designed to work upstream of targeted patients. ResPeg is uniquely positioned to simultaneously address multiple autoimmune and inflammatory manifestations at once. And to that end, we also include a number of multiplicity-protected secondary endpoints that will help us explore this benefit. The first being ACQ5, which measures improvements in patient-reported asthma symptoms. Approximately 25% of patients with moderate to severe atopic dermatitis also have asthma. And in our Phase IIb study, RESPECT produced statistically significant improvements in ACQ5 versus placebo, including in patients with uncontrolled asthma at baseline. A second endpoint we've included is the Sinonasal Outcome Test 22. This is referred to with the acronym SNOP22, a validated patient-reported measure of sinonasal symptoms. Rhinitis is a type two inflammatory comorbidity found in patients with atopic dermatitis. And that's a 30% of patients with atopic dermatitis also have a comorbidity of allergic rhinitis. On this endpoint in our Phase IIb study, We measured SNOT22 for patients with self-reported symptoms and which extended also into patients who had self-reported asthma with rhinitis. We are including SNOT22 as a secondary endpoint in our Phase 3 studies, and we are excited to share with you that we plan to present the SNOT22 data from the RESOLVE-AD study at a future medical meeting. Our strong RESOLVE-AD Phase 2b data underlies a design of our Phase 3 program. In Resolve AD, we saw a rapid onset of skin clearance and itch relief early in treatment, and we saw those responses deepen over time rather than plateau. With less frequent monthly and quarterly maintenance dosing, we achieved high rates of complete skin clearance, including up to a five-fold increase in easy 100 rates during the 36-week maintenance treatment period, a level of response rarely achieved. As Howard said, we expect the first data from the Phase III program in mid-2028, and if positive, expect to submit a BLA in 2029. Turning to alopecia areata, we recently held our end-of-Phase II meeting with the FDA, and we received alignment to conduct a single registrational Phase III study, which we are calling Zenith AA. In the pivotal study we have finalized, 850 adolescent and adult patients age 12 and older will be randomized to receive respag at 24 micrograms per kilogram every two weeks or placebo with treatment continuing through 52 weeks. The study will include patients that have a current episode of alopecia areata of up to eight years. This was the inclusion criteria for all of the JAK inhibitor phase 3 trials as well as our Phase IIb randomized placebo-controlled study. We will include both patients who are naive to systemic treatment, including biologics and JAK inhibitors, as well as those who have been treated with a prior systemic agent, provided they have undergone an extended washout period. The primary endpoint will be a SALT score of 20 or less at Week 52, which corresponds to 80% or more scalp hair coverage. This is the established registrational endpoint for patients with severe to very severe alopecia areata baseline. Key secondary endpoints include SALT scores of 10 or less and 30 or less, along with 50%, 75%, and 90% SALT reductions for baseline, which capture increasing degrees of hair regrowth. You'll recall that we observed improvement with RESPECT treatment across all these endpoints in our Phase IIb trials. Patients from the study will also have the ability to roll over into a long-term extension, which will allow us to characterize durability of response on treatment and long-term safety. We plan to initiate the Phase III alopecia areata study in early 2027, and we expect data in the second half of 2029, and if positive, would expect to seek approval in alopecia areata as the second indication shortly following our planned submission in atopic dermatitis. We expect to have data from the 24-week off-treatment period of the Phase IIb Resolve AA study in alopecia areata in the fourth quarter of this year. Our objective for measuring patients in the off-treatment period is to determine a maintenance dosing regimen beyond 52 weeks. Whether we continue to dose it twice promptly or offer additional once a month regimen. As you know, we already have an advantageous dosing schedule of twice monthly as compared to a daily JAK inhibitor. As Howard pointed out earlier, our market research has reinforced for us that both physicians and patients would prefer a less frequent injectable regimen as opposed to daily oral administration. When you couple this dosing regimen advantage with the safety profile observed to date, We believe RESPAG has the potential to become an important first-line treatment for this indication. In addition, datasets from both our lead programs in atopic dermatitis and alopecia areata have been accepted for oral presentations at the European Academy of Dermatology and Venerology, or EADV, Congress to take place in Vienna in October. These presentations will feature the RESOLVE-AD maintenance data covering both the patients who maintain their response and those who develop new and deepening responses over time, including complete clearance, as well as the RESOLVE-AA Week 52 data. We're grateful for the opportunity to present these data at this important meeting. Beyond our two lead indications, the Phase II study of RasPag and new-onset type 1 diabetes sponsored and funded by TrialNet is ongoing. As a reminder, this is the same consortium that ran the foundational studies for teflizumab, the only approved therapy in this setting. And they bring expertise and a deep commitment to finding better options for patients with this disease. We're looking forward to the data from the first cohort of patients in this type one diabetes study in 2027. As this program matures, We continue to evaluate additional opportunities for RESPEG and other potential indications. And as I mentioned earlier, RESPEG is fundamentally different from therapies that block a single downstream inflammatory mediator. RESPEG acts upstream by expanding regulatory T cells and enhancing their suppressive function, thereby restoring immune tolerance and reestablishing regulatory control over pathogenic immune responses.

Our objective is to start a clinical study prior to year-end, which would allow us to evaluate RESPEG's activity in a new indication.

Turning to our earlier pipeline programs, we are continuing our development of our TNFR2 programs. Nectar 0165 is our bivalent TNFR2 agonist antibody, a molecule with very high specificity for signaling through TNFR2 on Tregs to enhance their ability to regulate the immune system. We believe this mechanism has potential across a range of indications, including MS, ulcerative colitis, and vitiligo. Because NEXTER-0165 demonstrated strong monomeric activity, we realized the TNFR2 molecule could be incorporated in the design of bispecific and trispecific constructs in combination with validated targets. Therefore, we are designing a pipeline of TNFR2 containing bispecific molecules that pair TNFR2 agonism with other antibody targets. The first of these programs, Nectar 0166, is a bispecific molecule that combines a TNFR2 agonist epitope with an antagonist epitope previously validated in rheumatology. This dual mechanism gives Nectar 0166 the potential to modify disease pathogenesis across multiple autoimmune settings. We are continuing our research in both TNFR2 programs and will share more as they progress. With that, I will turn the call over to Linda to review our financial results. Linda?

Thank you, Jay-Z, and good afternoon, everyone. On today's call, I'll review our quarterly financials for the second quarter of 2026 and our 2026 financial guidance. We ended the second quarter of 2026 with $1.02 billion in cash and investments with no debt on our balance sheet. In April, we completed an underwritten public offering resulting in approximately $350 million in net proceeds. We are increasing our cash guidance for year end 2026, and we now expect to end 2026 with approximately $815 to $840 million in cash and investments. Turning to the income statement, Our second quarter 2026 non-cash royalty revenue totaled $10.1 million. Full year revenue for 2026 is still expected to total $40 to $45 million. Our R&D expenses were $39.1 million for the second quarter of 2026. And we now anticipate full year R&D expense to range between $210 and $230 million including approximately five to $10 million of non-cash depreciation and stock-based compensation expense. As a reminder, we expect R&D expense to increase on a quarterly basis in 2026 as our phase three clinical studies and supporting CMC activities progress. Our G&A expenses were $12.8 million for the second quarter. We continue to expect G&A expenses for the full year 2026 to be between $60 and $65 million including approximately $5 million of non-cash depreciation and stock-based compensation expense. Non-cash interest expense for the second quarter was $7.2 million and we expect non-cash interest expense to total approximately $30 to $35 million for 2026. Our net loss for the second quarter was $40.6 million, or $1.23 basic and diluted net loss per share. And as I stated earlier, we now expect to end 2026 with between $815 and $840 million in cash and investments. Our financial position is strong, enabling us to continue investing in our RESPEC, atopic dermatitis, and alopecia areata programs. as well as advancing our TNFR2 agonist antibody program, which includes Nectar 0165 and Nectar 0166. I'll now turn it over to the operator for Q&A.

Thank you. As a reminder, to ask a question, please press star 111 on your telephone and wait for your name to be announced. To withdraw your question, please press star 111 again. In the interest of time, we do ask that you please limit yourself to one question at this time. And our first question will come from Yasmine Rahimi from Piper Sandler. Your line is open.

Good afternoon, team. Congrats on getting the alignment of the Zenith AA setting, kicking that off, so congrats, and great updates. You guys do always a wonderful job helping us think about the next catalyst in terms of you know thinking about timing the type of data we will get and the expectation and I would love to do that ahead of the next important data readout which will be the withdrawal data that is going to come in the fourth quarter. Could you maybe talk about what your expectations are in terms of what is the size of the cohort, what do you expect to see That would be in whether any of that off-treatment AA data inform in any way sort of the data collection that will be ongoing in your Phase 3 study.

Yeah, thank you. That's a great question. I'll let Mary take that question.

Great. Hi, Yasmeen, and thank you so much for congratulating us on having our Phase 3 program in atopic dermatitis kick off. We're very excited. about that as well. So as you know, we have a 24-week follow-up off-treatment period in the RESOLVE AA study. This is an ongoing part of our trial, and in the fourth quarter, we will have the data. We enrolled 92 patients total into the trial, and then of those 92, 31 went on into our 16-week extension. We do follow every patient who was enrolled into the study for that 24 week off treatment. And with respect to the phase three, the most important for us is after 52 weeks of treatment on the phase three alopecia areata registrational study, we will continue to follow those patients in a long term extension study. And these data will really help to instruct should treatment continue to be on an every two week basis or can we extend that frequency in a maintenance period to a longer time point such as dosing once a month. So we're really excited to look at those data so we can have more clarity on treatment after 52 weeks in our phase three program. Likewise, in the first quarter of next year, We will have 52-week off-treatment data for our atopic dermatitis Phase IIb study. And in that, again, we're really looking to instruct what should the dosing be after 52 weeks of treatment. And, you know, should or are there patients that experience durability of responses beyond, say, a dosing interval that we evaluated in the Phase IIb such as Q monthly and every three monthly. We did see of course in our Phase IIb that patients experienced great durability and many experienced a deepening of response. Now we want to look at in this 52 week off treatment how those responses are maintained and the durability of those responses to see if it's feasible to extend that dosing interval beyond quarterly.

Thank you so much, Mary, for the thoughtful color.

Thanks, yes.

Thank you. Our next question comes from Samantha Semenko from Citi. Your line is open.

Hi, good afternoon. Thanks very much for taking the question. And thank you for all of the details in the recent market research that you shared in Atopic Derm. I'm just wondering if you can elaborate a bit more on how physicians are thinking about prescribing Respeg in the first line setting. Are there certain patient population or patient characteristics that physicians are identifying that are best suited for RESPEG? And did your market research give any indication on the breakdown of proportion that would be candidates say for first line versus second line or later? Thanks very much.

Yeah, very good question. Look, the market research that we did was extensive and we want to understand how to position our drug because at some point it is a completely novel mechanism and everybody thinks that there's going to be, have to be a step through through IL-13s to ultimately get to something like a Treg mechanism. And we don't find that to be the case. I think overall, as I said earlier, there's only about 10% of the population with ectopic dermatitis that's being treated with systemic therapies. So it's an enormous upside market potential and and even the patients that are getting IL-13s, which is sort of the gold standard right now. I think those patients, about half of those patients either don't respond or fail after a year or so. So there's lots of opportunity for RESPEG as a first line indication. Clearly as a second line indication, it fits that definition perfectly since we know how many patients fail IL-13 and with a quarterly maintenance dosing regimen, it makes it a very easy drug to take for those patients. But I do think we'll get a significant share of the first-line market as well once patients get experience. Remember, it doesn't cause any infection, it doesn't cause conjunctivitis and those problems, those side effects are potentially much more serious than mild to moderate self-resolving ISRs. So overall, we're pretty happy about getting our first-line market share.

Thanks very much.

Thank you. Our next question comes from Jay Olson from Oppenheimer. Your line is open.

I'm sorry, I barely heard that question. Could you say it again louder?

Thank you, and we'll take our next question.

Our next question comes from Cha Cha Yang from Jefferies. Your line is open.

Hi, team. This is Cha Cha on for Roger. Thank you so much for the updates. It's always very informative and very colorful. I was wondering if you could give us some comments on the pretrial that happened last week, any color that you can give on the outcomes of that, and then what impact you expect those outcomes to have on your upcoming September trial. Thank you.

Yeah, look, always a good question. But of course, we can't really comment on an ongoing litigation. I can tell you that the trial is scheduled, a jury trial is scheduled in federal court in San Francisco for September 8th. And we believe we have a very strong position. And that's unfortunately all I can tell you about it at this point. So I'd love to give you more, but it's difficult to comment on ongoing litigation.

Thank you. Our next question comes from Arthur Hay from HC Wainwright. Your line is open.

Hey, Howard and team. Congrats on progress. And Mary, congrats. Get the single trial for the AA study sign off. So for that part, I just wonder for the off drug data in the fourth quarter, For the patients who only finished the 36-week, are we also looking to the data from that part of patients there?

Yeah. Hi, Arthur. Yes, we will be looking at those patients as well as those patients that completed the 52 weeks of treatment. Obviously, I think what will be most instructive and valuable to our decision-making will be those patients. There were 31 of them. that went into the long-term extension, went into the 16-week extension. But we will be looking at all the 92 patients that we randomized into the study and providing an update on the totality of the findings.

Okay, thanks. So just one quick spacing. So when you're talking to the FDA, do they put some requirements for a medium or minimal duration for the current episode for the alopecia patient?

Yeah, thank you for asking. We will be following the same convention as JAK inhibitors and our study design did provide for patients that have up to eight years of their current episode. We do know that there are some other people who've looked at a more enriched patient population that only have a current episode of up to four years. duration of their current episode and however you know we don't think that reflects the actual population of patients with alopecia areata and we want to have a very broad label so we did design a study that will include both patients who are JAK inhibitor naive and JAK inhibitor experienced. We'll have adolescent patients as well as adult patients and we will be looking at patients who have a duration of of their current episode less than four years and four to eight years. We think having the broadest label has the greatest commercial potential as well as serving the broadest proportion of patients and certainly a study that's in line with the prior JAK inhibitor studies.

Awesome. Thanks, Mary.

Thanks, Arthur.

Thank you. Our next question comes from Mayak Mamtani from B. Reilly Securities. Your line is open.

Yes, thanks for taking your questions and I appreciate all the level of detail. Two-part question. On the EADV, what's the incremental data set that's, you know, we should expect and if there's a chance off-treatment resolved AA data could also be presented because it's October 1st, technically fourth quarter. And I also could help with the, you know, enthusiasm for enrollment in your global alopecia phase three. and on the maintenance atopic derm data, should, you know, just based on your Phase 1b where we got EZ75 up to nine months, can you just highlight what are the differences in this off-treatment versus what we saw in your Phase 1b and should we also, you know, expect to see some of the EZ100 responders, you know, keep that off-treatment remission?

Great. Thanks, Mayank, for your questions. Certainly, as Jeezy mentioned, we're really pleased to have the two oral presentations accepted at EADV. I think this really highlights the promise of our novel mechanism of action and, of course, the strength of our clinical data. When we submitted the abstracts, of course, we did not have the 24-week follow-up data, and therefore, of course, our abstract doesn't include This portion of our study. The study is still ongoing and blinded. Now, that being said, it is possible that we could include the 24-week data. As you mentioned, this could be very valuable and of significant interest. We cannot make that decision today. If we do have the data readout in time and we are ready, we would love to include those data as well in our oral presentation by Dr. David Rosemarin at EADV. But again, at this time, we can't make that commitment because the trial is still ongoing and we haven't even locked that part of the database. But thank you for asking. It is a possibility, but again, it's not in our abstract. With respect to your second question about the maintenance data and the data 52 weeks off treatment for the Phase IIb and atopic dermatitis, you're correct, we did show off treatment data from our Phase Ib for nine months. The difference here is now we'll have three additional months of follow-up post-withdrawal from drug. And we think that this is extremely important to us to look at, again, that durability of those responses. And, again, we'll be able to look at the EZ-75 and, as you mentioned, the EZ-100 and the EZ-90. You know, we did see consistently that patients continued to improve with ongoing RESPEC treatment, and we did see this deepening of response. Now we want to look at, you know, these patients being off treatment and we will be able to look at the nine-month time mark like we did in the Phase 1b as well as 52 weeks off treatment and this will be extremely valuable to look at the optimal dosing and after 52 weeks of treatment, can patients have less frequent maintenance dosing and for some patients that could be longer than every three months. So we're really excited to look at those data and really closely examine the durability of those responses. So thank you for asking those two questions.

Very helpful and comprehensive. Thank you.

Thank you. Our next question comes from Julian Harrison from BTIG. Your line is open.

Hi, thank you for taking the questions and congrats on all the recent progress. First, I'm wondering if you have any updated views on RESPEC's competitive positioning in alopecia areata in light of a recent data set last month from another non-JAG treatment option in development in the broader space. And then taking a step back, keeping in mind RESPEC's pipeline and product potential, I'm wondering if you've thought at all about supporting any signal-seeking efforts on an IIT basis. I'm sure you've gotten some investigative requests. Is that something you're open to? Are future trials best to keep full control of at Nectar? Thank you.

Yeah, two very good questions. So first of all, regarding competition in alopecia areata, Look, the study that was just released, data that was just released, and I'll let Mary comment a little more on this, a little difficult to interpret. And, you know, it was also a single arm study, so it wasn't a blinded study, a little difficult to interpret. And quite frankly, it had a patient population that was much less severe or much earlier on in their disease than what we're planning. I think Mary did talk about the difference between four years and eight years. and I'll let her comment on that in a moment. And to your second question about looking at other indications, yeah, we are in the process of considering which indications we would like to do some pilot studies to get some proof of concept studies. Look, we were very successful in the lupus study when we looked at the data on a weight-based dosing rather than a fixed-based dosing. and I think there's a potential for working in cutaneous lupus as well and there's a number of other indications just as we're doing in type 1 diabetes that could warrant a, you know, whether it's an investigator-sponsored trial, you lose a little bit of control there perhaps, or it's our own pilot studies. I do think that to support the value of a Treg mechanism, I do think there's other indications that we will be looking at. I'll let Mary come back to your first question for some more insight.

Yeah, sure. Hi, Julian. You know, Howard mentioned this in our prepared remarks. We view the alopecia areata market as very large, and, you know, certainly these patients are underserved by JAK inhibitors. So I think as seasoned biotech executives, clinicians, and scientists, we love innovation, and we love to see innovation in a space where there's, you know, huge potential for growth. Now that being said, as Howard mentioned, the Q32 results are really difficult to interpret. It was a small, only 33 patients, open label study with no placebo, and as we've mentioned now twice, enrolling a selective patient population and restricting eligibility really skews results in the favor of any drug that's being tested. By contrast, our Phase IIb study was randomized. It was placebo-controlled. We looked at more than one dose. We allowed a broad patient population that was consistent with JAK inhibitor studies, so the generalizability has greater potential. And we had a very standard Phase IIb trial that then was recognized by the FDA. as being sufficient to move forward into a phase three study. So ultimately, we remain very encouraged by our efficacy and safety profile and I know the dermatology community at large is really looking forward to beginning enrollment in our study in the first quarter of next year for these reasons. So thanks for asking.

Thank you. Our next question will come from Mark Fromm from TD Cowan. Your line is open.

Hi, thanks for taking my questions and congrats on all the progress and getting the phase three up and running. Maybe just, Howard, you touched a little bit about the different unmet needs in the AD market, particularly as you think about treatment naive versus experienced patients. How do you Do you guys view that as likely to kind of impact the relative enrollment pace for these Phase 3s and the two different kind of flavors of Phase 3? You know, different patient sizes, but also, you know, different levels of unmet needs.

Yeah, good question. I certainly think, look, with the absence of OX40s, it certainly limits the opportunities for new mechanisms of action. And I think, you know, RESPEG is obviously unique in that sense. So I don't think patient enrollment will be an issue there. I think it'll actually go fairly quickly. I can't tell you exactly what it'll look like. We just started the studies, but I'm hopeful that it goes fairly quickly, recognizing that as a new mechanism goes, there's really nothing else at the moment. We'll see what the STAT6 data looks like, upcoming data, but I don't think that's as complete a mechanism as... I can let Jay-Z comment on that a little bit if you'd like. But overall, I think the market, I don't think people understand how large this market is. Let's assume the market by 2033 is probably $35 billion, and that's 10% of the patients getting treated. So I think, look, there's other good drugs out there. I mean, Apogee's drug is certainly a good drug. I think STAT6 could be a very important mechanism. but the fact of the matter is the market is enormous and if you have a novel mechanism, you should be able to get a reasonable market share of a market that at 10% of the patients being treated is already planned to be $35 billion. I'll let Jay-Z comment a little bit on why we think ResVag is probably one of the best opportunities in treating a disease like AD.

Yeah. Hey, Mark. Thanks, Howard. Yeah, I mean, I think that this point was touched on briefly at first. I mean, one of the things that our market research showed us is that we would have good first-line penetration. And that's really because pretty much the entirety of the available approaches that physicians have, and even the pipelines, including agents like STAT6, they're really all targeting the same pathway, right? They're in a very Th2-dominant

Thank you very much.

even strengthening, you know, on where we saw the greatest differentiation in our phase two data. And they're pushing that even more to give RegPag a really big opportunity for a very highly differentiated label at the end of this registration program. Thanks for the question.

Thank you. Our next question comes from Jessica Phi from JP Morgan. Your line is open.

Hey guys, good afternoon. Thanks for taking my questions. Can you expand a little bit on your expectations for RESPEG's effect size in biologic-experienced patients compared to biologic-naive patients in AD? And how should we think about benchmarking the biologic-experienced AD Phase III trial that you're running? Is EBCLS a good comp there? Or if not, what should we think about? Thank you.

Okay, thank you for the question. It's a very good question. I'll let either Jay-Z or Mary answer it in a little more detail, but I can tell you that we looked very closely at whether there's any biological reason, any mechanistic reason why a patient who fails IL-13 would not respond to a completely different mechanism, and we couldn't find one. So I think we should be successful in treating experienced patients. I'm going to let Jay-Z and Mary comment a little more on that.

Yeah, I could just start, and Jay-Z can finish. Yeah, Jessica, I think you're bringing up a very important point. Leberkizumab was studied in the ADAPT study. and these were patients treated with Leberkizumab after Dupixent and there was no diminution of efficacy. 57% of the Dupy-exposed patients who were treated with Leberkizumab had EZ75 at week 16 and in the Lebry Phase III studies, the Advocate 1 and the Advocate 2, the EZ75 at week 16 was 52% and 59% in that naive population. So, you know, we and the ADAPT study did include patients who also had an inadequate response to DUPI. So, you know, given this precedence, this trial data, and the RESPEG mechanism of action that augments the regulatory networks rather than just blocking a single downstream inflammatory mediator, we do expect the efficacy in the biologic JAK inhibitor experience patients to be very similar to the naive patients. and I'll let Jay-Z expand further if you want on the mechanism of action, Jay-Z.

No, thank you. And I think you touched on a lot of the key points that our mechanism with the Treg induction, if anything, is meant to really help patients for whom inhibition of IL-13 or IL-4 and 13 is no longer adequate to control their disease. This is one of the greatest features of a Treg approach is it acts upstream of all of those factors. And we look forward to continuing to elaborate on this. You raise a very important point, which is that while the ADAPT study is useful, as Mary explained, it's an open-label, single-arm study. And so there hasn't really been a true benchmark published, for example, for placebo in this patient population. So all of these are all things that are going to be components of some potential data to be reported. If Sanofi reports the results of their litlamab study in this patient population, that was designed as a randomized control trial. That will create one important piece of information from the placebo. But overall, we're extremely excited to have this third study as part of our registrational program. We expect ResPag has a very, very good opportunity to be efficacious in this patient population for all the reasons we've explained. and with the study like that under RESPEC's belt as part of our BLA, it really allows us to have a much more differentiated label for RESPEC.

Thank you. Thank you.

And our next question will come from Andy Shea from William Blair. Your line is open.

Oh, great. Thanks for taking our question. So, Howard, you mentioned about the physician survey that you did. It's super helpful for you to share with us. I'm curious if you have probed the group about durability as a means for differentiation. Is there a time that these physicians are looking at either the three-month or six-month timeframe? And my second question has to do with the type 1 diabetes Thank you. Sure, very good questions.

I'll let Mary answer the question regarding the TrialNet Type 1 Diabetes Study. I can tell you from our market research, time duration for onset of action was important, but the most important thing is is long-term durability. And you could see that if you look at our maintenance data, the results keep getting stronger and stronger. And I expect that they'll continue that way. I think one of the other things that was very important to physicians was a manageable side effect profile. And as I said, ISRs didn't concern them at all. They were actually much more concerned about infections and conjunctivitis than they were ISRs. But overall, a durability of response that continues to improve was very important to the physicians. Mary, do you want to take the question on the type 1 diabetes trial?

Thanks, Howard. I'll actually do that. So yes, I want to describe a little bit about how that study is designed. So if you recall the teplizumab studies, you know, the CD3 antibody. So, you know, the way that works is it's a very short treatment course, right? It's just a few cycles at the very beginning. But that actually is enough to alter the whole trajectory of the disease. So Tronet was very excited that they could dose longer with ResPeg than they did with teplizumab. So that was exciting for them. And so they selected a six-month course. The mixed meal tolerance test and C-peptide levels, they're measured throughout, through a year. So they're measured both during the treatment as well as the six months after the treatment. But again, the whole theory and understanding of the disease, its progression, and the worsening that people have is it's well understood that a course of intervention will change the whole slope Thank you. And I'm showing no further questions from our phone lines. I'd now like to pass it back to Howard Robin for any closing remarks.

Thank you everyone for joining us today. It's not often that a company develops a new MOA that has the potential to greatly help patients in need. I want to thank our employees for their diligence and commitment and also our shareholders for their continued support. Stay tuned and thank you very much again. Good afternoon.

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