Over the past week, it felt like BioX (BioTwitter) was back to its old, vibrant self, and we have Nektar Therapeutics (Nasdaq: NKTR) to thank for that. The discussion started earnestly at the beginning of the year with Adam May’s thesis on Nektar, which explained why REZPEG had a strong chance of success in its Phase 2b study for moderate to severe atopic dermatitis. The conversation gradually gained momentum as we approached June’s top-line data release. Bulls and bears were actively debating everything from the likelihood of clinical success to the credibility of the company, as well as whether there was any significance to the stock consolidation a few weeks prior to the top-line data. The highly encouraging top-line results reported last week have only intensified the discussion, shifting the debate from the viability and credibility of Nektar to where REZPEG might fit within the large and competitive atopic dermatitis market.
Dupixent Remains King, But Market Can Support Multiple Players
Nektar’s Phase 2b data were promising across numerous reported endpoints. Most notably, high-dose (24 μg/kg) REZPEG was statistically better than placebo on the primary baseline EASI endpoint and all key secondary endpoints, including EASI75, EASI90, vIGA, and NRS Itch. REZPEG’s results fell short of matching or exceeding the market leader, Sanofi/Regeneron’s blockbuster Dupixent. It joins other biologics, both FDA-approved and in development, that have fallen short of the efficacy bar set by the AD market leader. However, being less effective than Dupixent did not stop Leo Pharma (Adbry/tralokinumab) or Eli Lilly (EBGLYSS/lebrikizumab) from pursuing and gaining FDA approval for biologics with similar mechanisms to Dupixent. Nor has inferior efficacy to Dupixent prevented Sanofi or Amgen from advancing Phase 3 trials with their novel OX40 biologics.
***Phase 2b REZOLVE-AD Topline Results from 16-Week Induction
Big biopharma clearly believes the AD market can support multiple successful biologics beyond Dupixent. Analysts estimate that Leo’s Adbry and Lilly’s EBGLYSS, both with Dupixent-like mechanisms of action (MOA), are expected to reach over $1 billion in peak sales. Galderma has guided that its biologic, Nemluvio (nemolizumab), approved by FDA in December 2024 for AD, will reach $2 billion in sales by the end of 2027. Interestingly, Nemluvio arguably has the weakest EASI data among its peers, but because it has a novel MOA and a differentiated benefit in rapid itch relief, Galderma is confident it can thrive in the highly competitive AD market. While Sanofi and Amgen are investing heavily in their OX40 assets, with expectations of $1 billion+ franchises.
***Pharmaceutical Technology June 5, 2025
Based on its Phase 2b data, REZPEG has a competitive profile, and Nektar and its investors should be emboldened in its probability of success in Phase 3. REZPEG has a differentiated MOA and may offer additional benefits, such as faster onset of action and perhaps greater durability (data available early 2026). There doesn’t seem to be any immediate threat to Dupixent’s crown, but the AD market is large enough to support multiple billion-dollar products.
Platform Appeal
It was interesting to see Nektar describe REZPEG as a “regulatory T-cell (Treg) proliferator” in the title of their press release announcing the June 24th top-line data release. Including REZPEG’s MOA in the headline was undoubtedly to highlight this key differentiation from its AD peers, but it also underscores the platform potential for REZPEG in other T-cell-driven disorders. The most notable is alopecia areata (AA), a condition in which Treg deficiency is thought to play a significant role. Nektar has completed enrollment in an 84-patient severe-to-very-severe AA study, with top-line data expected in December. The positive results from the Phase 2b AD study, which showed a six-fold increase in total Tregs in the high-dose group, should boost confidence in a favorable outcome for the upcoming AA trial. During the Phase 2b call, Dr. David Rosmarin from Indiana University shared his optimism that REZPEG could benefit AA (his comments start at 1:06:25), but he qualified his optimism by saying “the big question…is not will it work, but how well will it work.”
Perhaps encouraged by the positive data in AD, Nektar also openly discussed the potential for REZPEG in various other dermatologic and autoimmune indications, including vitiligo, and may even revisit systemic lupus, an indication previously tested by its former partner, Lilly.
Speaking of Lilly
We have been writing about the Nektar Lilly litigation for nearly two years. In our September 2023 note, we highlighted that in their claim, Nektar alleges Lilly acknowledged the data calculation error(s) in the Phase 1b atopic dermatitis and psoriasis studies, which form the basis of Nektar’s complaint. Then, during their 2Q2022 conference call, Nektar’s CEO, Howard Robin, reiterated this, stating, “The internal statistical and clinical teams in charge of these two studies at Lilly were made aware that Nektar discovered the data errors and Lilly confirmed the errors in writing — in written communications with Nektar.” Having acknowledged the error, it appeared to us—based on our non-legal opinion—that Nektar was entitled to some modest monetary damages and that Lilly should be motivated to resolve the issue quickly and move on. Instead, Lilly dug in, and at a minimum, seemed to want to see the results of the Phase 2b AD study before reaching any settlement. However, following the positive AD data, it appears that REZPEG is a viable drug, and Lilly’s calculation error may have cost Nektar something very valuable in drug development: time. Losing a year or two in development for REZPEG—potentially resulting in a similar delay in commercial availability—could place Lilly in the crosshairs of a sizable settlement or judgment. The court case is scheduled for October, but it wouldn’t surprise us to see this settle on the courtroom steps.
Balancing Act
It didn’t come as a surprise to see Nektar announce a financing yesterday, but we thought the company would have raised more than $100 million and at better terms than $23.50. The company will require additional capital to fund its Phase 3 AD program, with a stated cost of between $300 million and $400 million, as well as its ambitious platform plans for REZPEG. Perhaps the company opted for a smaller raise because it has visibility on a Lilly settlement? The company has also openly expressed an interest in potentially partnering (not licensing) with a larger company for REZPEG’s future development. Perhaps they have confidence that a deal can be consummated in the near term? Otherwise, this $100 million raise only extends its cash runway by a year (or less). It may temporarily alleviate the financing overhang that was weighing on the stock, but the company will likely need to return to the market within the next six months, around the time of the AA data.
Big Bet Pays Off?
In our last note on Nektar, we stated, “It may seem hyperbolic, but Nektar is betting the company on REZPEG and the outcome of the Phase 2b AD study this month.” If the study failed, there would be no more AD studies, no platform, no potential for a significant settlement with Lilly, and nothing to do but wind down the business. Instead, the company delivered very good data. The potential for REZPEG to establish a role in the lucrative AD market looks promising. The platform potential for REZPEG in AA and beyond seems real. The potential for a lucrative Lilly settlement appears more likely. Yet, trading at a $450 million market cap, it still seems like Nektar hasn’t been properly rewarded for winning its big bet.
When Good Isn’t Good Enough
Last month, Compass Therapeutics (Nasdaq: CMPS) announced top-line results from its first Phase 3 trial with COMP360, its psilocybin-based treatment for treatment-resistant depression (TRD). COMP360 met the study’s primary endpoint, showing a statistically significant 3.6-point improvement in MADRS at week six compared to placebo. However, the treatment effect in Phase 3 was notably smaller than the 6.6-point improvement seen in Phase 2b, disappointing investors. In Compass’s second Phase 3 trial, patients will receive two doses of COMP360, which could enhance the treatment effect. However, these data will not be available until 2H2026.
While Compass’s data may have underwhelmed investors, its psychedelic TRD peer, atai Life Sciences (Nasdaq: ATAI), which delivered Phase 2b results this week, did not. Atai’s intranasal 5-MeO-DMT, BPL-003, demonstrated a statistically significant 5.3-point (12mg) and 6.3-point (8mg) improvement in MADRS at week 4 versus a subtherapeutic control arm. It is worth reminding investors that these data from atai look very similar to those reported by Compass in their earlier Phase 2b study, which showed a 6.6-point improvement in MADRS at week 3 compared to subtherapeutic control. Regardless, both atai’s and Compass’s data reinforce that psychedelic therapy is consistently showing a benefit in TRD. It also reinforces how competitive TRD has become, with J&J’s Spravato already approved, and Compass, atai, and GH Research (Nasdaq: GHRS) all with mid/late-stage assets in development.
Carving Its Own Path
Compass’s data confirms psilocybin’s benefits in depression, but they weren’t strong enough to generate momentum for other psilocybin drug developers. Cybin (Nasdaq: CYBN) is one such company that could have benefited from more robust data from Compass. Nonetheless, among its psychedelic peers, Cybin is in a unique position of not being in the TRD arms race, focusing instead on the less crowded indications of major depressive disorder (MDD) and generalized anxiety disorder (GAD). Cybin’s CYB003 (a deuterated psilocybin analog) is the most advanced psychedelic asset in development for MDD. The company’s first Phase 3 MDD study, APPROACH, is ongoing, with top-line data expected 2H2026, and its second, EMBRACE, is set to start soon. This week’s announcement of a $50 million convertible debenture financing with High Trail Special Situations LLC, which includes up to an additional $450 million, should ensure that the company is fully funded for its Phase 3 program(s) and beyond.
Afterthought
In our previous notes on Cybin, we discussed how the company’s second asset, CYB004 (deuterated DMT), receives little investor attention. Yet, it will be the source of the company’s next data catalyst, with a Phase 2 36-patient GAD study expected to be completed at any time (the company states that the study will be completed by mid-2025). The data from this GAD study have been slightly delayed, initially scheduled for late 1H2025, and this delay may have been balance sheet-related. With the balance sheet now in good health, the company appears poised to report data from the GAD study in the coming months. If successful, Cybin should have the financial resources to fully fund a Phase 3 GAD program as well.
Head Scratcher
The final June data readout we will discuss is Ventyx Bioscience’s (Nasdaq: VTYX) recent Phase 2a results with its CNS-penetrant NLRP3 inhibitor, VTX3232. Investors received precisely what we expected from a small, open-label biomarker study, as we wrote a few weeks ago: “…this type of open-label, biomarker-focused study typically generates data that the company finds provocative enough to justify advancing the asset.” What investors didn’t get, and something they were promised, was a conference call to review the data. In his Jefferies fireside chat earlier in the month, CEO Raju Mohan, when discussing the impending data, said to the Jefferies analyst, “I’m going to promise you a PR and I am going to promise you a call.” A call is the right thing to do, especially when you are reporting biomarker data from a study that will be open to interpretation. Instead, investors received a press release with a substantial amount of biomarker data, some of which appeared encouraging, while others were less so; however, there was no call, no opportunity for the company to talk investors through the data or to make its case as to why these data warrant advancing the asset into additional trials. There was also no chance for analysts to ask questions. Investors were left to interpret the data on their own, and the stock reacted accordingly, as if it didn’t know whether the news was good or bad.