Executive Summary / Key Takeaways

• Nektar Therapeutics is undergoing a strategic transformation, pivoting to regulatory T-cell (Treg) science, a field recently recognized by the Nobel Prize, with its lead asset, rezpegaldesleukin (REZPEG), demonstrating compelling Phase 2b efficacy in atopic dermatitis.
• REZPEG is poised to address significant unmet needs in multi-billion dollar markets like atopic dermatitis and alopecia areata, offering a differentiated mechanism of action and a favorable safety profile compared to existing therapies.
• The company has significantly bolstered its financial position through recent equity financings, extending its cash runway into the second quarter of 2027 and enabling critical Phase 3 readiness activities for REZPEG.
• Nektar is actively pursuing strategic partnerships for late-stage development of REZPEG to minimize shareholder dilution while retaining substantial ownership, leveraging upcoming data catalysts in atopic dermatitis and alopecia areata.
• Beyond REZPEG, Nektar is advancing a promising preclinical pipeline of TNFR2 agonist antibodies (NKTR-0165, NKTR-0166) and continuing to explore strategic options for its IL-15 oncology program (NKTR-255).

The Strategic Pivot: Unlocking Immunotherapy's Potential

Nektar Therapeutics, a clinical-stage biopharmaceutical company, is charting a new course, laser-focused on discovering and developing innovative medicines that selectively modulate the immune system. The company's strategic pivot towards regulatory T-cell (Treg) science represents a profound shift, aiming to restore immune system balance in autoimmune and inflammatory diseases. This focus is particularly timely, as the foundational discoveries establishing FOXP3-positive Tregs as key enforcers of immune tolerance were recently honored with the Nobel Prize in Physiology or Medicine, with Nektar's own Phase 1b data for REZPEG cited in the supporting documents for this prestigious award.

Nektar's journey has been marked by significant collaborations and strategic realignments. Historically, the company generated revenue through licensing, manufacturing, and product sales, including early royalty divestitures. A pivotal collaboration with Eli Lilly for rezpegaldesleukin (NKTR-358) and a substantial partnership with Bristol-Myers Squibb for bempegaldesleukin (NKTR-214) underscored its early strategy. However, the discontinuation of bempegaldesleukin development by Bristol-Myers Squibb in 2022 and Eli Lilly's subsequent termination of the rezpegaldesleukin agreement in 2023 prompted Nektar to regain full rights to REZPEG and initiate a lawsuit against Eli Lilly , alleging breach of contract. These events catalyzed Nektar's strategic reorganization and a sharpened focus on its proprietary Treg-modulating pipeline.

At the heart of Nektar's technological differentiation is its proven PEGylation chemistry, a validated approach that has contributed to over 30 approved biologics and small molecules over several decades. This technology is crucial for REZPEG's unique molecular design, enabling it to closely mimic natural human biology by accessing Treg biology through a native sequence IL-2. The tangible benefits of this approach include enhanced stability and efficacy of cytokine-based therapies, potentially leading to improved patient outcomes and the possibility of differentiated products. This proprietary technology forms a key competitive moat, allowing Nektar to pursue targeted therapies that may offer greater specificity in immune response modulation compared to broader biologics from larger competitors.

REZPEG: A Differentiated Mechanism in Autoimmune Disease

Nektar's lead clinical program, rezpegaldesleukin (REZPEG), is a potential first-in-class resolution therapeutic designed to selectively stimulate the proliferation of powerful inhibitory regulatory T cells (Tregs). This mechanism aims to restore the proper balance between T effector cells and T regulatory cells, thereby achieving immune homeostasis. REZPEG is being developed as a once or twice monthly self-administered injection, offering a convenient dosing regimen.

Atopic Dermatitis (AD): Compelling Phase 2b Results and Market Opportunity

The Phase 2b REZOLVE-AD trial, involving 393 patients with moderate-to-severe atopic dermatitis, reported statistically significant data from its 16-week induction period in June 2025. All three dose arms of REZPEG achieved statistical significance on the primary endpoint of mean improvement in EASI (Eczema Area and Severity Index) from baseline versus placebo. Key secondary endpoints, including EASI-75, EASI-90, BSA (Body Surface Area), vIGA-AD (validated Investigator's Global Assessment for Atopic Dermatitis), and Itch NRS (Numerical Rating Score), also demonstrated statistical significance. The study showcased a rapid onset of EASI response and itch relief, suggesting potential differentiation from other systemic therapies.

Importantly, REZPEG's safety profile in the Phase 2b study was consistent with prior results, showing no increased risk of conjunctivitis, oral herpes, or oral ulcers, which are known side effects of some IL-13-based therapies. New data presented at the EADV 2025 Congress demonstrated a deepening of responses in patients who crossed over from placebo to REZPEG in the escape arm, supporting a 24-week induction period for future Phase 3 studies. Furthermore, a preplanned analysis of AD patients with a history of asthma from REZOLVE-AD, presented at ACAAI 2025, showed statistically significant and clinically meaningful improvements in mean ACQ-5 scores. This is a crucial differentiator, as existing IL-13 and OX40 pathway blockers have shown limited potential in addressing asthma symptoms in this comorbid patient population.

The atopic dermatitis market is substantial, with over 15 million people in the U.S. suffering from moderate-to-severe disease, yet fewer than 10% receive biologic treatments. This market is projected to grow significantly, with U.S. sales potentially reaching $30 billion by 2033. REZPEG's novel Treg mechanism positions it as a much-needed alternative to IL-13 and IL-31 based therapies, especially given that approximately 50% of patients fail to respond to IL-13 mechanisms over time. Nektar plans an end of Phase 2 meeting with the FDA by the end of 2025 to discuss Phase 3 plans, aiming for a broad label that includes both biologic-naive and biologic-experienced patients.

Alopecia Areata (AA): A New Paradigm for Hair Loss

Nektar is on track to report topline results from the Phase 2b REZOLVE-AA study in December 2025. This 90-patient trial evaluates REZPEG in severe-to-very severe alopecia areata, a dermal disease where an imbalance in T effector cells and Tregs leads to hair loss. The primary endpoint is the mean percent improvement in SALT (Severity of Alopecia Tool) score at 36 weeks, with SALT 20 and SALT 10 responder analyses as key secondary and regulatory endpoints.

The current treatment landscape for severe alopecia areata is dominated by JAK inhibitors, which carry multiple black box warnings and are associated with high relapse rates upon discontinuation. Physician surveys indicate discomfort in prescribing JAK inhibitors, with many preferring alternative therapies. REZPEG, as a potential first biologic in this space, offers a differentiated mechanism and a more favorable safety profile, with the potential for a sustained treatment effect and maintenance of hair growth, which would be transformative for patients. The alopecia areata market is projected to reach $2 billion by 2033, representing a significant opportunity for REZPEG.

Type 1 Diabetes (T1D): Expanding Treg Potential

REZPEG's potential extends to Type 1 Diabetes, where it aims to slow the progressive loss of insulin-producing beta cells. Nektar has partnered with TrialNet, an international clinical trial network, which initiated a Phase 2 study in 66 patients with new onset stage 3 T1D in Q3 2025. Nektar supplies REZPEG for this NIH-funded study, retaining all rights to the program.

Expanding the Immunology Pipeline: TNFR2 Agonists and Beyond

Nektar is also actively advancing its earlier-stage immunology pipeline. NKTR-0165, a novel TNFR2 agonist antibody program, is progressing through IND-enabling studies with the goal of an IND submission in the second half of 2025 and clinical entry in 2026. Preclinical data demonstrate its high specificity for signaling through TNFR2 on Tregs, enhancing their immunoregulatory phenotype and maintaining Treg lineage stability. A unique aspect of NKTR-0165 is its ability to signal through the TNFR2 multimeric receptor as a single-arm monovalent antibody. This differentiated profile positions NKTR-0165 as a potential first-in-class treatment for autoimmune diseases such as ulcerative colitis, multiple sclerosis, and vitiligo.

Leveraging this innovation, Nektar is designing a pipeline of bispecific molecules, with NKTR-0166 being the first such antibody, pairing TNFR2 agonism with other validated antibody targets. Preclinical studies for NKTR-0166 are underway, with the aim of advancing one of these antibody programs into the clinic next year.

In oncology, Nektar continues to evaluate NKTR-255, an IL-15 receptor agonist. Recent data from an investigator-sponsored study showed NKTR-255, combined with CD19, CD22 CAR T-cell therapy, doubled the 12-month relapse-free survival rate to 67% (versus 38% for historical controls) in B-cell acute lymphoblastic leukemia. It also enhanced complete response rates (73% versus 50% for placebo) in relapsed/refractory large B-cell lymphoma following CD19 CAR T therapy. Nektar is continuing collaborations for NKTR-255 with Merck KGaA (MKGAF) and AbelZeta Pharma, exploring strategic partnership pathways for its continued development.

Financial Health and Strategic Funding for Growth

Nektar Therapeutics has significantly strengthened its financial position, ending the third quarter of 2025 with $270.2 million in cash and investments in marketable securities and no debt on its balance sheet. This robust liquidity was bolstered by a $107.2 million net proceeds public offering in July 2025 and an additional $72.6 million in net proceeds from at-the-market (ATM) sales in September and October 2025. These financings have extended Nektar's cash runway guidance into the second quarter of 2027.

For the nine months ended September 30, 2025, Nektar reported total revenue of $33.425 million, primarily from non-cash royalty revenue, which amounted to $33.125 million. The company no longer recognizes product sales or cost of goods sold following the sale of its Huntsville manufacturing facility in December 2024. Research and development (R&D) expenses for the nine months ended September 30, 2025, were $87.618 million, increasing due to heightened activity in the REZPEG Phase 2b studies. General and administrative (G&A) expenses for the same period were $57.488 million. The net loss for the nine months ended September 30, 2025, was $127.997 million, or $8.14 per basic and diluted share.

Nektar's financial guidance for the full year 2025 anticipates total revenue between $40 million and $50 million, predominantly from non-cash royalties. R&D expenses are projected to range from $125 million to $130 million, including $5 million to $10 million in non-cash depreciation and stock-based compensation, reflecting increased investment in REZPEG's Phase 3 readiness. G&A expenses are expected to be between $70 million and $75 million, with similar non-cash components. The company expects to end 2025 with approximately $240 million in cash and investments.

While Nektar's current financial position supports its near-term pipeline advancement, the company acknowledges it is not in a position to execute a full Phase 3 program for REZPEG without a partner. Management is actively engaged in discussions with potential strategic and financing partners to secure non-dilutive capital, aiming to retain significant ownership of REZPEG. The company also holds an approximate 3% to 4% ownership in dapirolizumab, a UCB (UCBJF) drug in Phase 3 for lupus, which represents another potential source of non-dilutive capital.

Competitive Landscape and Risks

Nektar operates in a highly competitive biopharmaceutical landscape. In atopic dermatitis, REZPEG competes with established IL-13 selective pathway blockers like Dupixent, tralokinumab, and lebrikizumab, as well as emerging OX40 pathway blockers. REZPEG's differentiation lies in its unique Treg mechanism, faster onset of action, and favorable safety profile, particularly its lack of association with conjunctivitis or infections seen with some IL-13 agents. In alopecia areata, REZPEG aims to compete with JAK inhibitors such as Olumiant and Rinvoq, which carry black box warnings and are associated with high relapse rates. REZPEG's potential as the first biologic in this indication, coupled with its safety profile and potential for durable hair regrowth, offers a significant competitive advantage.

Nektar's competitive advantages are rooted in its proprietary PEGylation technology, which enhances drug stability and efficacy, and its strategic partnerships. However, its smaller scale compared to large pharmaceutical companies like Bristol-Myers Squibb (BMY), AstraZeneca (AZN), and Merck (MRK) presents vulnerabilities. These larger competitors possess greater financial, R&D, marketing, and manufacturing capabilities, which can lead to more robust growth rates and established market penetration. Nektar's negative profit margins and free cash flow per share contrast sharply with the positive profitability of its larger rivals, highlighting its development-stage nature and high investment requirements.

Key risks to Nektar's investment thesis include the inherent uncertainties of clinical drug development, particularly the high dependence on REZPEG's success. Delays in clinical trials, challenges in patient enrollment, or issues with manufacturing and supply chain (including reliance on Gannet BioChem for PEG reagents) could significantly impact timelines and costs. Regulatory approval is not guaranteed, and any approvals may come with restrictive terms. The ongoing litigation with Eli Lilly (LLY) also presents a financial and operational risk, with substantial litigation costs and potential liabilities. Furthermore, the increasing use of AI technologies in drug discovery and development, while offering opportunities, also presents risks related to data security, intellectual property, and evolving regulatory burdens. Global economic and political conditions, including ongoing conflicts, could also affect market volatility and supply chains.

Conclusion

Nektar Therapeutics is at a pivotal juncture, leveraging its deep expertise in Treg science and proprietary PEGylation technology to address significant unmet medical needs in autoimmune and inflammatory diseases. The compelling Phase 2b data for REZPEG in atopic dermatitis, coupled with its potential in alopecia areata and type 1 diabetes, underscore a promising pipeline. The company's strengthened financial position and extended cash runway provide a solid foundation for advancing REZPEG into Phase 3 readiness.

While Nektar faces intense competition from larger pharmaceutical players and the inherent risks of drug development, its differentiated mechanism of action and strategic pursuit of partnerships are critical to its future success. The ability to secure collaborations for late-stage development will be paramount in minimizing dilution and maximizing shareholder value. Investors should closely monitor the upcoming topline data for REZPEG in alopecia areata in December 2025 and the 52-week maintenance data for atopic dermatitis in Q1 2026, as these catalysts will further shape Nektar's trajectory in its ambitious biotech rebirth.