Nektar Therapeutics (NKTR) Q3 2021 Earnings Call Transcript

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Nektar Therapeutics (NKTR -4.35%)
Q3 2021 Earnings Call
Nov 4, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the Nektar Therapeutics Third Quarter 2021 Financial Results Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Jennifer Ruddock, Head of Corporate Affairs. Please go ahead.

Jennifer Ruddock -- Senior Vice President, Strategy and Corporate Affairs

Thank you, Crystal, and good afternoon, everyone. Thank you all for joining us today. With us on the call are Howard Robin, our President and CEO; Gil Labrucherie, our COO and CFO; Dr. Jonathan Zalevsky, our Chief of Research and Development; and Dr. Dimitry Nuyten, our Chief Medical Officer. On today's call, we expect to make forward-looking statements regarding our business, including clinical trial enrollments and clinical trial results, timing and plans for future trials, timing and plans for future clinical data presentations, the therapeutic potential of our drug candidates, outcomes and plans for health authority regulatory actions and decisions, financial guidance and certain other statements regarding the future of our business.. Because these forward-looking statements relate to the future, they are subject to inherent uncertainties and risks that are difficult to predict and many of which are outside of our control. Our actual results may differ materially from these statements. Important risks and uncertainties are set forth in the Form 10-Q that was filed on August 6, 2021, which is available at sec.gov. We undertake no obligation to update any of these forward-looking statements, whether as a result of new information, future developments or otherwise. A webcast of this call will be available on the IR page of Nektar's website at nektar.com. Before turning the call over to Howard, I'd like to remind you that we are dialing in from different locations. I will moderate the Q&A session for our team, so we can avoid technical issues during the session, and we appreciate your patience.

With that said, I would like to hand the call over to our President and CEO, Howard Robin. Howard?

Howard W. Robin -- President and Chief Executive Officer

Thank you, Jennifer. Thanks to all of you for joining us today. This quarter, we continued to advance both our IO and immuno-oncology pipeline. Our progress has set the stage for what is expected to be a transformative period for Nektar, starting with a series of anticipated key registrational and key mid-stage data readouts across our portfolio throughout 2022, with the most anticipated data from our Phase III study for BEMPEG in melanoma coming in the early part of 2022. So let me begin today with BEMPEG, our most advanced clinical program. Our IL-2 pathway agonist is being developed in combination with checkpoint inhibitors, NIVO and PEMBRO in multiple large frontline and adjuvant tumor settings. Together with our partner, BMS, we're advancing 5 ongoing registrational studies of BEMPEG and NIVO under our joint development plan. Three of these studies are on track for top line data readouts in the first half of 2022. In October, BMS informed us that they completed enrollment in the Phase III study of BEMPEG plus nivo in previously untreated metastatic melanoma. The current forecast for timing for the ORR and PFS analysis from this study is sometime in the early part of 2022. Additionally, we anticipate data from the Phase III study in renal cell carcinoma and the Phase II accelerated approval study in cisplatin-ineligible bladder cancer in the first half of 2022 after the melanoma top line data. Positive data from these 3 studies would support a series of BLA filings for BEMPEG, followed by commercial launches for the combination treatment of BEMPEG plus nivo beginning as early as late 2022 or early 2023. The registrational program with BMS also includes 2 additional large Phase III studies, one in adjuvant melanoma and one in muscle invasive bladder cancer. These indications offer an opportunity to significantly expand the patient populations that can be served by BEMPEG and to potentially benefit patients by treating them earlier in the course of their disease.

We're particularly excited about the adjuvant melanoma study, which is ahead in its enrollment projections, with almost half of the target enrollment of 950 patients reached as of the beginning of November. These studies have longer timelines associated with them as they are in earlier settings with larger target enrollment sizes. Data from these studies are expected beginning in 2024. In addition, BMS is conducting a Phase II study in renal cell carcinoma for BEMPEG plus nivo with the TKI to pave the way for future development of a TKI inclusive regimen building on their recent successful approval of nivo plus cabo. In addition, we also had a sixth registrational program, which is a combination study of BEMPEG plus pembro in head and neck cancer. The Phase II/III study in head and neck cancer is now enrolling patients. We're excited about the potential of this doublet to increase and deepen responses versus pembro alone in this immune sensitive cancer. Pembro has about 70% of the market share in the first-line setting for treatment of PD-L1 positive head and neck cancer patients, and we believe there is a unique opportunity to improve outcomes by combining our ILT mechanism with a leading checkpoint inhibitor in this setting. As we stated in the past, our initial strategy with BEMPEG in combination with pembro is centered on the largest settings where pembro is the gold standard of care. It had neck cancer, as I just described. And then in non-small cell lung cancer, we are running a Phase II study called PROPEL. For the PROPEL study, we plan to present the initial data from the Phase II study at the ESMO IO meeting in December and Dimitry will provide an update on this study on this call. These initial data will include approximately 60 to 70 patients treated with BEMPEG plus PEMBRO doublet, with varying PD-L1 expression levels. At ESMO IO, we will host an analyst call with Dr. Daniel Johnson of the Ashner Medical Center in Louisiana, and I will let Dimitri talk more about this upcoming presentation in a moment. We've now advanced the PROPEL study with the addition of chemotherapy arms to the bempeg plus PEMBRO treatment regimen in both squamous and non-squamous patients with PD-L1 expression levels under 50%.

The combination with chemotherapy allows us to consider a registrational strategy for BEMPEG in non-small cell lung cancer in these populations that currently have the highest unmet need for better therapeutic options. As you know, non-small cell lung cancer is not as immune-sensitive as tumorous melanoma. So the chemotherapy combination with PEMBRO has emerged as a standard of care for these patients in order to overcome this more immune resistant setting. In particular, the under 1% patient population is one that we are highly focused on as a future potential registrational strategy for BEMPEG because of its mechanism of upregulation of PD-L1 in combination with a checkpoint and its ability to potentially increase depth of response and duration of response, which we know could lead to longer survival. Additionally, while PEMBRO and chemotherapy has improved overall survival in PD-L1 negative patients with non-small cell lung cancer, its benefit is still limited to under 2 years. We've also made notable progress with our second immuno-oncology candidate, NKTR-255, an IL-15 agonist that has demonstrated its ability to expand natural killer cells, CD8 positive T cells and memory T cells. Given these unique attributes, NKTR-255 could address treatment needs in both liquid and solid tumors. Our development plan is initially focused on combining NKTR-255 with antibodies that use antibody-dependent cellular toxicity or ADCC to kill cancer cells as these antibodies require functional NK cells for their mechanism of action. Next week at SITC, we will share our first early data from patients in the initial dose escalation cohorts of the ongoing Phase I solid tumor study, which is evaluating NKTR-255 plus cetuximab in patients with either colorectal or head and neck cancer. We are still dose escalating in this study, but we are pleased that the data were selected as a late-breaking abstract, and we'll be hosting a conference call next Friday, November 12 at 12 noon Eastern Time with Dr. Alan Tan from Rush Medical Center to review these data in more depth.

We also announced today that data from the ongoing dose escalation stage of the Phase I study in hematological malignancies were accepted for presentation at ASH in December as well. The pharmacodynamic data in the abstract released today shows a sustained increase in NK and CD8+ T cells, but also a proliferative ability of T cells. We look forward to providing more details at ASH. In September, we announced our first collaboration for NKTR-255 with Merck KGA and Pfizer. The collaboration expands the program for NKTR-255 into its first comparative trial in an on-label indication for Mergevilumab as maintenance therapy in bladder cancer. Unlike other approved anti-PD-L1, bilumab has shown in preclinical studies to reduce lysis of tumor cells via the ADCC mechanism. So we and Merck are excited to explore its potential synergies when combining with an NK cell stimulator such as NKTR-255. Merck will evaluate NKTR-255 plus avelumab as part of the Phase II JAVELIN bladder Medley umbrella trial. We're excited that NKTR-255 was chosen for this umbrella study, and it is the only IL-15 agent that will be included. Merck will be responsible for conducting the study, which is set to begin in the first quarter of 2022, and Nektar will supply NKTR-255. JZ will discuss the trial in more detail momentary. The third cytokine in our portfolio is NKTR-358, which we are developing in partnership with Eli Lilly to address a broad range of autoimmune and inflammatory conditions. NKTR-358 targets the IL-2 receptor complex to stimulate proliferation of powerful inhibitory immune cells known as regulatory T cells, and thereby bringing the immune system back into balance. We are proud of this program, and we're the only company to have reported a multiple dose effect of our agents on target T regulatory cells in patients. Together with our partner Lilly, we're leading in this space with the advanced clinical stage of NKTR-358 program and with respect to the broad scope of development being executed in parallel across multiple significant autoimmune indications.

As planned from the start of our collaboration with Lilly, the development program, including manufacturing, is now transferred to them. Lilly currently has NKTR-358 clinical trials underway, 4 clinical trials underway: a Phase II study in lupus; a Phase II study in ulcerative colitis; and 2 ongoing separate Phase Ib studies in psoriasis and atopic dermatitis. We expect data readouts from these Lilly run studies over the next 6 to 12 months, and Lilly is also planning to add 2 additional Phase II studies to the program in the near future. Beyond our deep clinical portfolio, we continue to invest in the area of immune science and cytokine biology to drive the next wave of ILD candidates. From an operational perspective, we have an exceptionally strong balance sheet and expect to end the year with over $800 million in cash. This cash position, together with the support of our strategic collaborations and potential for up to $1.4 billion in regulatory approval and sales milestones for BEMPEG in the US, Europe and Japan, provides us with the financial foundation to execute our robust development strategy. We're all eagerly awaiting with anticipation the registrational study readouts for BEMPEG in melanoma, RCC in bladder cancer in the first part of next year.

Let me now turn the call over to our Chief Medical Officer, Dr. Dimitry Nuyten. Dimitry?

Dimitry S. A. Nuyten -- Senior Vice President and Chief Medical Officer

Thank you, Howard. I will provide a quick update on the BEMPEG program and the timing for registrational studies, which are tracking in line with our prior guidance. First, for the 760 patient Phase III first-line metastatic melanoma study which is being run by our partner, BMS. We and BMS are very much looking forward to completion of the study and future data. As Howard stated, BMS informed us in October that the study was fully enrolled. BMS has an excellent track record in melanoma, with multiple successful registrational trials for IO agents under their belt. Melanoma has proven to be a very immune-sensitive tumor setting and the promise of BEMPEG, an agent that can deepen responses and extend responses for these patients is very exciting. The BEMPEG plus nivolumab combination received a breakthrough therapy designation from the FDA in August 2019 based upon this panel in melanoma patients. If the Phase III study results are similar, we envision a unique opportunity for the BEMPEG nivolumab doublet to emerge as new standard of care in this setting. As we noted last quarter, BMS has told us they intend to conduct their first analysis of data for both ORR and PFS endpoints and a number of defense, as outlined in the statistical analysis plan for PFS endpoint are reached. Current projections from BMS indicates that this data analysis could occur in the early part of 2022. Given the breakthrough therapy designation I mentioned earlier for this indication, we believe that we would be able to move rapidly toward a regulatory filing, if warranted by the data. Of course, since PFS analysis is an event-driven analysis, a number of factors, including the actual rate of PFS defense might impact the timing of the analysis. The next study, which Nectar is running, is a 620 patient Phase III first-line renal cell carcinoma study comparing BEMPEG plus nivolumab versus a TKI agent of physician's choice, which can be either sunitinib or cabozantinib.

We expect that we could reach our first interim analysis for the primary endpoint of overall survival sometime in the second quarter of 2022. BMS and Nektar are taking a comprehensive approach to the development of BEMPEG plus nivolumab in this particular tumor type. Additionally, BMS is conducting a 250-patient randomized Phase II study in RCC that combines BEMPEG plus nivolumab with Exelixis cabozantinib, which allows us to compare it to the treatment of nivolumab cabozantinib to pave the way for a TKI inclusive regimen in RCC with BEMPEG and nivolumab. Earlier this year, BMS and Nektar expanded the strategy in RCC to include a new collaboration with Exelixis, who will be conducting a study evaluating BEMPEG plus nivolumab with their novel next-generation TKI-XL92. The study will also include other geo cancers, including urothelial cancer. With respect to the Phase II study in first line eligible urothelial carcinoma, which Nektar is running, the study is designed to serve as basis for a potential filing for accelerated approval. The study includes about 110 cisplatinum ineligible urothelial carcinoma patients who have a baseline CPS score of 10 or lower as a measure of PD-L1 expression. The primary endpoint for this trial are overall survival -- sorry, overall response and duration of response as determined by central radiology review. For this study, we are looking to achieve a median follow-up of 18 months for measuring the duration of response, and we expect our first data from this study to come in the first half of 2022 as well. As Howard noted earlier, the BEMPEG nivolumab program has also large Phase III studies in muscle invasive bladder cancer and adjuvant melanoma. The Phase III periadjuvant muscle invasive bladder cancer, which is being run by BMS, is enrolling approximately 540 patients who will receive BEMPEG plus nivolumab or nivolumab monotherapy, first in a neoadjuvant setting prior to radical cystectomy and then in the adjuvant setting for a 12-month treatment period following their surgery. As this study treatment is a longer period, we expect the first data readout to be in 2024 or 2025.

This study is also designed to serve as a confirmatory study for our planned potential accelerated approval in metastatic cis-ineligible urothelial carcinoma setting. Second, the Phase III adjuvant melanoma trial, which Nektar is running. This study is enrolling a total of approximately 950 patients with a 12 month treatment period post-surgery and an endpoint of recurrence-free survival by blinded independent central refuel. This study continues to rapidly enroll and as Howard stated earlier, enrollment is now ahead of schedule. As of November 1, we have enrolled 450 patients, which we believe reflects physicians' and patients' enthusiasm for the potential of BEMPEG plus nivolumab in melanoma. The adjuvant study is designed to position BEMPEG as standard of care for the treatment of melanoma, building upon the recent approval of nivolumab in this setting. Initial data from the study are expected in 2024. I will now turn to the PROPEL study evaluating BEMPEG plus pembrolizumab in non-small cell lung cancer. As Howard stated, we plan to present the initial data from PROPEL multiple cell lung cancer for patients who received the BEMPEG plus pembrolizumab doublet at ESMO-IO in December. The abstract submitted and accepted at ESMO-IO was a placeholder only and did not include any data beyond the initial evaluation. This is because at the time of the abstract submission to date, the blind independent review of the data set from PROPEL have not been completed yet. As Howard stated, we will host an analyst event around ESMO-IO, which will include the invited investigator, Dr. Daniel Johnson from the Arsenic Cancer Center, who enrolled a number of patients both in the dose escalation portion of the trial and also in the non-small cell lung cancer expansion portion of the study, and he has observed a positive experience with the doublet. As a reminder, this presentation will include data of approximately 60 to 70 patients with squamous or nonsquamous non-small cell lung cancer. The patients are spread across 3 separate PD-L1 expression subgroups.

The study was designed as a single-arm study to evaluate the benefit of the doublet compared to historical overall response rates achieved with single-agent pembrolizumab, which are well documented across 2 registrational trials. In non-small cell lung cancer, which is not typically recognized as an immune-sensitive cancer, we know that baseline tumor PD-L1 expression status dictates the expected clinical benefit of pembrolizumab. As a benchmark, we call the pembrolizumab monotherapy results in an overall response rate of approximately 8% in patients with PD-L1 tumor expression of less than 1, about 15% in patients at PD-L1 tumor expression of 1 to 49 and for patients with a PD-L1 tumor expression greater or equal to 50% single agent pembrolizumab delivers approximately an overall response rate of 40% to 45%.Although, this was an open-label study, as we have stated in the past, we determined that we should be blinded to the efficacy data until the time of completion of the blinded independent review. We recently completed database lock for the initial analysis of the study and received the aggregate efficacy data with detailed efficacy evaluation for patients in the study from the blinded independent review for the doublet in non-small cell lung cancer arms of the PROPEL study. I'd like to share some initial observations from this report ahead of the ESMO-IO Congress. First, we are pleased with a number of takeaways that reinforce for us that the additive benefit that BEMPEG provides to single-agent pembrolizumab. We observed a notable depth and duration of responses in various cohorts, including the number of patients that achieved complete responses and also patients who achieved 100% tumor volume reduction, which is not common with single agent pembrolizumab and even with the combination of chemotherapy and pembrolizumab.

Because we enrolled patients prior to the completion of an independent baseline PD-L1 assessment, we overenrolled the under 1% and the 1% to 49% cohorts with approximately 28 efficacy evaluable patients for cohort versus our original targets of 20 and 18 patients, respectively. In the greater than 50% population, we had a total of 15 efficacy evaluable patients. In the under 1% or negative population for PD-L1 status, we doubled the single agent response rate for pembrolizumab. Notably, 2 of the patients in this cohort achieved 100% reduction in their resi target lesions. One patient experienced this at the first on-treatment scan. The second patient experienced this gradually over time. The median duration of response in this cohort has not been reached, and the current median depth of response is notable at 77% tumor volume reduction for the responders in this cohort. We are very pleased that we saw both the doubling and a depth of response for patients with PD-L1 negative tumors, which historically have seen limited treatment effect from a single agent checkpoint therapy. In the 1% to 49% cohort, although we had over half of the patients in this cohort achieve extended stable disease, the overall response rate was in the low single digits, which we were surprised by that result. Although we were surprised by the results, it is important to note that we did observe 3 key differences in the patient population enrolled into the 1 to 49 cohort versus the single agent pembrolizumab studies. First and most notably, we discovered that in this cohort of 1% to 49%, 25% of patients had had prior chemotherapy for either Stage 3 disease or as adjuvant treatment for stage 1 or 2 disease before coming on to the study. This was allowed per protocol with a minimum interval of 6 months. In the KEYNOTE studies, this percentage of patients, however, was much lower at 4% to 6%. Furthermore, this cohort also enrolled patients with the highest baseline median and mean tumor burden in our study, and we had a higher proportion of patients with squamous histology in this cohort as compared to the single agent pembrolizumab studies.

We believe the combination of these factors might have impacted the surprising overall response rates we saw in this cohort. For the over 50% population cohort with 15 efficacy alliable patients, we are pleased to see 13% of patients experiencing a complete response with the doublet treatment. As we previously said, we did not expect to see any notable increase in overall response rate in this cohort as pembrolizumab single agent overall response rate is already pretty high and in such a small patient population. In this case, in 15 patients, the overall response rate was 40%, which we knew it could be challenging to show the difference. So our demonstrated ORR was consistent with what we expected from the trial. However, we were hopeful going into the study that we could see even in a small patient set a higher quality of responses than we typically see with single agent pembrolizumab. With several complete responses, we achieved this and the patients with complete responses continue to be responders and stay on treatment for over 1 and over 2 years, respectively. Overall, across the non-small cell lung cancer cohort, we had a median depth of response for all responders of 72%, as mentioned by blind independent review, and this too was something we had hoped to see in the study. Overall, we are pleased with the key number of observations from PROPEL. First, the overall response rate and the depth of response in the under 1% was notable. We saw a doubling of ORR in patients that respond to experience a notable depth of response. Second, across cohorts, the depth and duration of response was notable here with an overall median depth of response of 72% and a median response not yet reached. In the 50% cohort, we observed a 13% complete response rate, and this speaks to the phenomenon we have observed with BEMPEG. In other tumor types, complete responses with either chemotherapy IO or IO alone in lung cancer are not common.

Notably, there were some factors that made the patients in the study overall more challenging population for treatment and the keynote studies, such as high tumor burden and prior chemotherapy for metastatic disease, most notably in the 1 to 49 cohorts. For PROPEL, we are also treating patients with a higher dose of 0.01 milligrams per kilogram of BEMPEG in combination with pembrolizumab. While the cohort is still early and ongoing, we have observed AE increases with the dose, but most patients are too early in their scan cycles to assess efficacy. We are continuing to monitor this cohort, but due to the standard of care in first-line non-small cell lung cancer, mostly being a chemotherapy inclusive backbone and the history of successful treatment of non-small cell lung cancer with chemotherapy, our development focus will be on chemotherapy combination arms in the PROPEL study to guide future development in this setting. Hence, given how well tolerated BEMPEG is at the 0.006 milligram per kilogram dose and the signal we have seen in the doublet BEMPEG is being combined with pembrolizumab and chemotherapy at the 0.006 milligram per kilogram dose. To that end, as Howard stated earlier, we also recently added a chemotherapy combination arm to the PROPEL study. We did this in order to allow us to potentially develop a registrational path that captures the appropriate standard of care for patients in the under 50% PD-L1 category. Over 70% of patients have tumors with an expression level of less than 50% and these patients mostly receive a chemotherapy inclusive regimen. IO monotherapy is uncommonly used in this setting. As we know only that also in the over 50% group only about half of the patients are receiving pembrolizumab monotherapy.

The chemo combo part of the study can provide us with initial data sometime in the middle of 2022. And we will use the totality of the data from PROPEL to determine a comprehensive registrational of path for BEMPEG in non-small cell lung cancer. For our new registrational Phase II/III trial in head and neck cancer, we recently opened enrollment, and we expect to randomize our first patient before the end of the year. We have collaborations in place with both Merck and SFJ Pharmaceuticals for this study, and we are very excited about this opportunity to address a large patient population in the frontline setting. The 500-plus patient trial is designed to support the potential global registration of BEMPEG plus pembrolizumab in head and neck cancer. It includes an interim analysis of overall response rate after 200 patients are enrolled. If the overall response rate bases a prespecified futile boundary, the study will continue and the remaining 300 patients will be enrolled to the Phase 3 portion of the study. For the Phase 3 portion of -- a total of 500 patients will be evaluated for the primary endpoint of overall response rate and overall survival. Given the favorable competitive landscape, we see this as a unique opportunity for us to establish BEMPEG as first IL-2-based mechanism for the treatment of head and neck cancer.

So, let me now turn over the call to JZ, who will review the NKTR-255 program and our NKTR-358 program. JZ?

Jonathan Zalevsky -- Chief Research and Development Officer

Thank you, Dmitry. Let me start with NKTR-255, an agent that engages the full biology of the IL-15 pathway to provide functional activation and homeostatic control of IL-15 responses of immune cells, namely natural killer cells, CD8 T cells, and immune memory subsets. And as an agonist of the full IL-15 pathway, NKTR-255 can therefore be combined with multiple mechanisms, ranging from targeted agents to cellular therapies and even immunological checkpoints to potentially improve their efficacy. As Howard mentioned, our initial strategy is focused on combining with antibodies that function through an ADCC mechanism of action. And we have a robust clinical program in place in both liquid and solid tumors. Our recent clinical collaboration with Merck KGaA and Pfizer is a further extension of that strategy. Avelumab is the only immunotherapy treatment to demonstrate a survival benefit in patients with locally advanced or metastatic urothelial carcinoma who have not progressed on first-line platinum-containing chemotherapy and so it has rapidly established the dominant market position in this setting. And we are very excited to combine NKTR-255 with the market leader and look forward to leveraging Merck and Pfizer's collective expertise to broaden our NKTR-255 development program. The JAVELIN Bladder Medley study is a global multicenter Phase 2 umbrella trial that will evaluate Avelumab monotherapy versus the doublet of Avelumab and NKTR-255 in this maintenance setting. The NKTR-255 combination arm of the study plans to recruit 72 patients and will be compared to the 36 patients Avelumab arm. Findings from this trial will help determine whether there is a registrational pathway for NKTR-255 in this setting where Avelumab is already approved. The Avelumab alliance between Merck and Pfizer are sponsoring the trial and Merck taking the lead. Merck is on track to initiate the study in the first quarter of 2022.

Our two ongoing studies for NKTR-255, one in liquid tumors and one in solid tumors, are advancing and we look forward to sharing data from these studies in the coming weeks. At SITC next week, we will provide the first data from patients in initial dose escalation cohorts of our study, evaluating NKTR-255 in combination with cetuximab in two distinct groups of highly refractory late-line patients, one group with metastatic colorectal cancer and the other with head and neck cancer. As Howard stated earlier, we are still dose escalating in this study. We will be hosting an Analyst Event on Friday, November 12, during the SITC Congress. The event will feature an invited key opinion leader, Dr. Alan Tan of Rush Medical Center to join us for the event. For our Phase 1/2 study of NKTR-255 in patients with Relapsed/Refractory Hematologic Malignancies, the agent has been very well-tolerated as a monotherapy and we dosed -- as we've continued dose escalation in the study. As a result, dose escalation is ongoing, and we now expect to complete the dose escalation phase of the study in the first part of 2022. We are also exceptionally pleased that the dose escalation data were accepted for presentation at ASH this year, which is being held in Atlanta in December. The data build on our observations presented in SITC 2020 for NKTR-255 in hematological malignancies and set the stage for the combination of NKTR-255 with ADCC agent rituximab and daratumumab in patients with non-Hodgkin's lymphoma and multiple myeloma, respectively. And following dose escalation, we will expand into additional arms. A first arm in the study will evaluate NKTR-255 as monotherapy or in combination with rituximab in third line or later follicular lymphoma or low-grade non-Hodgkin's lymphoma. The second arm will evaluate NKTR-255 as a monotherapy and in combination of DARZALEX FASPRO in third line or greater multiple myeloma.

And finally, a third arm will evaluate NKTR-255 as a monotherapy for non-Hodgkin's lymphoma patients who have previously progressed following approved CD19 CAR T cell therapy. And also at ASH, researchers from the Fred Hutchinson Cancer Research Center will present initial data from safety and pharmacodynamic analysis of CAR T cell persistence after treatment with NKTR-255. And although preliminary, these data provide promising safety and tolerability and also evidence of CAR T cell rescue after treatment with NKTR-255, showing the potential of using NKTR-255 to enhance proliferation of CD8 T cells and therefore, prolong the persistence of CAR T cell therapy. And let's turn now to our immunology program, NKTR-358. As Howard said earlier, we are very pleased with the broad scope of development and overall advancement of NKTR-358 program being executed by our partner, Eli Lilly, many autoimmune and inflammatory disorders, including systemic lupus and ulcerative colitis are associated with decreased Treg numbers, reduced Treg function and/or reduced production of IL-2. And with NKTR-358, our goal is to address these Treg abnormalities and to develop an IL-2-like molecule that could selectively stimulate Tregs in a more effective manner as low dose IL-2. Lilly is conducting two Phase 2 studies, one in lupus and one in ulcerative colitis. Lilly also continues to advance two separate Phase 1b studies in psoriasis and atopic dermatitis. The Phase 2 lupus trial is progressing very nicely. As a reminder, 280 patients are being randomized to one of three doses of NKTR-358 or placebo, administered every two weeks for a treatment period of 24 weeks. The primary endpoint is the percentage of patients achieving at least a four-point reduction in the SLE disease activity index or the SLEDAI scale. Standard clinical composite endpoints used in lupus studies, including BICLA are also included in the secondary endpoints.

We expect this that to be completed within the next 12 to 18 months. Earlier this year, Lilly began enrolling patients in a Phase 2 randomized placebo-controlled trial in patients with ulcerative colitis. The study will evaluate multiple dose levels during the initial induction period using adaptive design. Total enrollment is planned to be 200 patients. And the trial endpoint is a percentage of patients with clinical remission after induction treatment at 12 weeks. In addition, Lilly is planning to continue to grow the development program for NKTR-358. There are plans for two additional Phase 2 studies to be initiated in new indications in the near future. And finally, we look forward to the potential presentation from the Phase 1b work ongoing in psoriasis and atopic dermatitis, with data from at least one of these studies to be presented at a medical meeting in the next year. We are pleased with Lilly's commitment to NKTR-358 and the rapid advancement of the clinical development program and their desire to develop this agent very broadly in inflammatory and autoimmune diseases.

And with that, I will turn the call over to Gil.

Gil M. Labrucherie -- Chief Operating Officer and Chief Financial Officer

Thank you, JZ, and good afternoon, everyone. On today's call, I'll review our 2021 financial guidance, which includes a reduction of our full year projected GAAP R&D expense and a commensurate increase in year end cash position. We ended the third quarter in an exceptionally strong financial position, with $955 million in cash and investments and no debt on the balance sheet. We now expect to end the year with over $800 million in cash and investments, an increase of $50 million from our prior guidance of $750 million. Our full year GAAP revenue guidance is unchanged at approximately $100 million and includes $15 million to $20 million of product sales and $80 million to $85 million non-cash royalties. Our guidance for full year GAAP R&D expense is now anticipated to be between $425 million and $430 million. Our registrational trials for BEMPEG are on track, with enrollment for first-line metastatic melanoma, RCC and bladder studies all completed. And we are very pleased with the pace of enrollment in the adjuvant study, and that enrollment is now open in the head and neck study. Our R&D expense guidance includes approximately $85 million of non-cash expenses, arising from stock compensation, depreciation and the expense related to the head and neck cancer study that is being funded by SFJ. Our G&A expense guidance is still projected to be between $120 million and $125 million and includes $35 million of non-cash depreciation and stock compensation expense. Our non-cash interest expense is expected to be between $50 million and $60 million, arising from previously completed monetization of our royalty streams. Additionally, our non-operating expense includes approximately $15 million for the accounting of the contingent success based payments to SFJ as a derivative liability.

And with that, we will open the call for questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] And our first question comes from Chris Shibutani from Goldman Sachs. Your line is open.

Chris Shibutani -- Goldman Sachs -- Analyst

This is CJ Zopf on for Chris tonight. Thanks for the update on the PROPEL data. Just to be clear, it pembro based on the data as a chemo sparing option. And then when do you think we would be able to see a first look at some of those chemo cohorts that are going to be starting soon?

Jennifer Ruddock -- Senior Vice President, Strategy and Corporate Affairs

Hi, CJ. It's Jennifer. I'm going to ask Dmitry to answer those two questions. Did you have another part? Sorry, I cut you.

Chris Shibutani -- Goldman Sachs -- Analyst

No, that was it. Thanks.

Jennifer Ruddock -- Senior Vice President, Strategy and Corporate Affairs

Okay, great. Thank you. Dimitry?

Dimitry S. A. Nuyten -- Senior Vice President and Chief Medical Officer

Hi. Thanks for the question. So we just received the final data from the independent report on PROPEL in the past week. So we do need additional time to review the data in more detail. There will be continued follow-up also on 15 patients still on treatment in the study as well as, let's say, the generation of data for BEMPEG plus pembrolizumab and chemotherapy. So with this totality of the data, we will be, let's say, making a fully informed decision about the lung cancer strategy. We have a number of very interesting observations from Propel, especially on the metrics, which are difficult to find evidence for in non-small cell lung cancer, the depth of response that we observed. And we want to make sure we leverage BEMPEG's advantage in our development plan. We are currently heavily focused on the chemotherapy combination options in the low expressors because the chemotherapy backbone is the appropriate regulatory path for these patients and the standard of care. As you know, there have been several Phase III failures recently in this space even within the last 30 days, and many several of that before us.

Recently, a chemo-sparing treatment option from ESA's Phase III, the LEAP 7 trial evaluating pembrolizumab and afatinib in patients greater than 1% expression. This study was discontinued early at the DMC review for, let's say, interim analysis by the DMC. And we know these results will be presented at ESMO-IO. So we definitely want to look at the data in detail. We're also running a chemotherapy combination trial known as the LEAP 6 trial, and we are expecting results next year. Secondly, Novartis just announced the Beovu trial, which was evaluating pembro plus IL-1 beta inhibitor canakinumab plus chemotherapy versus pembro chemotherapy, and the study was announced is not meeting primary endpoints, OS and PFS, both in squamous and non-squamous, but Novartis noted that they were clinically meaningful improvements in a number of subsets. So that's something we definitely want to look at. But combining, let's say, my answer and coming back to the core of your question, we are most interested in the chemotherapy combination option in low expressors as a path forward.

Operator

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

Jay Olson -- Oppenheimer -- Analyst

Hey. Thanks for taking the question and thanks for the update on the PROPEL study. Could you share with us any potential read across you may have from your initial learnings after looking at that data, any potential read across to other studies for BEMPEG? Thank you.

Jennifer Ruddock -- Senior Vice President, Strategy and Corporate Affairs

Thanks, Jay. Dimitry, would you like to answer that question?

Dimitry S. A. Nuyten -- Senior Vice President and Chief Medical Officer

Sure. I think the read-through to other tumor types would be would be limited for now. I think the read-through that we can see are some of the positives we have seen what we know BEMPEG do deepening of responses and generating CRs. But I think we have to be careful in translating results from one tumor type to the other tumor type. Non-small cell lung cancer and melanoma, for example, are very differently, as I stated on the call, melanoma is a very immune-sensitive tumor, where we know that non-small lung cancer is not as immune-sensitive and traditionally has always been treated by chemotherapy. And even now, chemotherapy is still the backbone of treatment in the majority of patients. On the other hand, if you look at melanoma, there is a significant tremendous predictable history of IL agents performing very well IL-2 itself has been approved in melanoma. And prior to the development of IL agents, mostly notably, the checkpoint inhibitors over the last years, chemotherapy in melanoma specifically was really an inferior treatment option. And chemotherapy has been a viable option for non-small cell lung cancer as standard of care. So we are really looking at these two different types as two different settings. And let's say, with the PROPEL data, of course, we are looking at the ability of BEMPEG to drive deep and durable responses. So that's something that might translate as a general mechanism but the overall immune sensitivity is very different. And as a reminder, for example, the results that we have already published for our melanoma cohort with a 29-month follow-up was an overall response rate of 53% and a complete response rate of 34%. And then, let's say, the median change in the size of target lesions was almost 80%, and so I think a very, very different data set there.

Operator

Thank you. Our next question comes from Jessica Fye from JPMorgan. Your line is open.

Daniel Wolle -- JPMorgan Chase -- Analyst

Hi. Good afternoon. This is Daniel for Jessica. Thanks for taking our question. Did I hear correctly that the chemo final data is anticipated in mid-2022 with the prepared remarks? And if so, will you have to -- will you need to wait until that point to make a decision on the path forward?

Jennifer Ruddock -- Senior Vice President, Strategy and Corporate Affairs

Thanks, Daniel. I'm going to ask Dmitry to share his thoughts on that. Dimitry?

Dimitry S. A. Nuyten -- Senior Vice President and Chief Medical Officer

Yeah. So that's correct. We are expecting I would first -- let say, a full safety data set in the first efficacy in the middle of 2022. Looking at that data, of course, will be critical for informing our Phase 3 strategy. But as I also said, we do have a lot of data already from PROPEL, and that's something we'll be analyzing more. So in the meantime, we'll be working on different, let's say, plans moving forward and then use the final data on the chemotherapy combination to flush out a strategy.

Operator

Thank you. Our next question comes from Greg Harrison from Bank of America. Your line is open.

Greg Harrison -- Bank of America -- Analyst

Hey, guys. Thanks for taking the question. What steps are you taking at this point to start preparing for BEMPEG launch, given that best case scenario could put it on the market in about a year?

Jennifer Ruddock -- Senior Vice President, Strategy and Corporate Affairs

I'm going to ask Gil to answer that question. Thanks, Greg.

Gil M. Labrucherie -- Chief Operating Officer and Chief Financial Officer

Thanks for the question, Greg. Yeah, we're taking a number of steps, as Howard said in his opening remarks, with data coming in the first part of 2022, we got a commercial launch as early as the end of 2022. So we've been working together with our team and BMS to kind of stage appropriate way set up all the infrastructure for distribution, patient support and all the things that go into having the drug available, both in the US and in Europe. So we feel like we're in a really good position. We've made the right investments, the right stage approach for our investments, and we've worked with Bristol and prepare for the launch. So we feel really good about the position that we're in as we get the data next year.

Greg Harrison -- Bank of America -- Analyst

Great. Thanks.

Operator

Thank you. And our next question comes from Andy Hsieh from William Blair. Your line is open.

Andy Hsieh -- William Blair -- Analyst

Thank you for taking my questions. So Dmitry, I just was curious, the company you mentioned before that the FDA conducted an analysis basically looking at the depth of response correlating that with the durability of response, particularly for checkpoint IO agents. Just curious if that's kind of a trend that you saw also with PROPEL. And maybe if you don't mind, I do have a question for JZ, in particular to the ASH abstract about 255, you mentioned about the CAR-T potential combination and kind of reactivation of these CAR-T cells. Just curious if you have any hypothesis about the optimal temporal administration of 255 to really maximize this response.

Jennifer Ruddock -- Senior Vice President, Strategy and Corporate Affairs

Great. Thanks, Andy. JZ, I'm going to ask you to take the 255 question first, and then Dmitry, if you can address Andy's question about depth of response correlating with other metrics. Go ahead, JZ.

Jonathan Zalevsky -- Chief Research and Development Officer

Andy, thanks for the question. Yes, so one of the things that we've observed, if you recall, going back to the preclinical studies is that in animals, where we gave the same CD19 CAR that's used as an approved agent, that the application of NKTR-255 could induce a persistence of those cells. And the net effect of that wasn't just an increase in cell numbers with time, but also with an increased efficacy in regards to the tumor killing potential of those cells. And so that was the preclinical realm. And what we did in this ongoing heme study is we allowed patients that had a suboptimal response to CAR-T, so essentially like a CAR-T failure, patients that did not have those durable CRs to also be enrolled into that study, and then we treated them with NKTR-255 as one of the patient populations. And so we have a number of patients in the study that are post CAR-T. And since the last year at 2020, remember, we showed one example of a case study, where one of these patients had taken a CAR-T therapy four months prior before beginning treatment with NKTR-255. And that patient saw an increase in the amount of CAR-T cells after application of NKTR-255.

So we're very excited to extend those observations at ASH this year. We now have more patients, additional patients that have been enrolled that have been treated with 255. And so we have many more patients to add to that analysis in the post CAR-T setting. So that's been a very exciting thing and a unique niche, as you know, in the treatment landscape for these patients. And then to your other part of your question, which is the temporalness, that's very much something that we're thinking about very, very deeply. Obviously, in this setting, in this first-in-human study, we're treating patients that are CAR-T failures. So they're coming in well after CAR-T setting. But as we advance NKTR-255 in a CAR-T combination or even other cell therapies, we're actually very actively exploring the kind of temporal dosing relative to the two agents with each other. We have a lot of preclinical data that gives us an understanding of that by both the sequencing and time intervals between doses. And then that's the kind of thinking that we'll put into the study when we do that. Thanks, Andy.

Jennifer Ruddock -- Senior Vice President, Strategy and Corporate Affairs

Thanks, JZ. Dmitry, can you take Andy's question on correlation of depth of response with other clinical benefit in lung cancer?

Dimitry S. A. Nuyten -- Senior Vice President and Chief Medical Officer

Absolutely. Yes, thank you for the question. As you stated, the FDA has done extensive analysis to correlate, let's say, these endpoints and to make the point that, let's say, the quality of response is a very important metric. That's one of the reasons why it's something we carefully analyzing our data and the number of statements that I made about it with the depth of responses we've seen the number of CRs, than a number of patients who have 100% tumor volume reduction in their target lesions. So they are partial responders if they still have a target lesion that has completely disappeared. But obviously, that's also a much deeper response and someone with lower volume reduction. So those are the things we know. That's why we are excited about a number of findings in the trial. I can concretely answer your question with the note that needless to say, our study would be immature for overall survival, given the amount of follow-up and the fact that the median hasn't been reached. But in highly exploratory analysis given the time of where we are in the trial with the relatively short follow-up for survival, we do see, let's say, a trend in the right direction with a correlation for the depth of response for both PFS and OS. And again, I'd like to emphasize within a small trial and limited follow-up obviously, this is a strictly exploratory analysis, but we are able to see that correlation.

Operator

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

Howard W. Robin -- President and Chief Executive Officer

Well, thank you, everyone, for joining us today. And we're certainly approaching a very busy and exciting period for Nektar. We hope you can join us for our [Indecipherable] presentation. And we're looking ahead to the registrational readouts for BEMPEG beginning with the highly anticipated melanoma data in the early part of next year. I'd like to thank all of our employees for their efforts in helping us achieve these milestones during this very, very challenging period. And I want to thank our shareholders for their continued support. We look forward to providing you with updates on our progress. So please stay tuned. Thanks very much.

Operator

[Operator Closing Remarks]

Duration: 56 minutes

Call participants:

Jennifer Ruddock -- Senior Vice President, Strategy and Corporate Affairs

Howard W. Robin -- President and Chief Executive Officer

Dimitry S. A. Nuyten -- Senior Vice President and Chief Medical Officer

Jonathan Zalevsky -- Chief Research and Development Officer

Gil M. Labrucherie -- Chief Operating Officer and Chief Financial Officer

Chris Shibutani -- Goldman Sachs -- Analyst

Jay Olson -- Oppenheimer -- Analyst

Daniel Wolle -- JPMorgan Chase -- Analyst

Greg Harrison -- Bank of America -- Analyst

Andy Hsieh -- William Blair -- Analyst

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