Good day, ladies and gentlemen, and welcome to the Nektar Therapeutics First Quarter 2015 Financial Results Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference may be recorded. I will now turn the call over to your host, Jennifer Ruddock, Vice President of Investor Relations. Please go ahead.

Thank you, Stephanie. Good afternoon and thank you for joining us. With us today are Howard Robin, our President and CEO, John Nicholson, our Chief Financial Officer, Dr. Ivan Gergel, our Chief Medical Officer and Dr. Steve Doberstein, our Chief Scientific Officer. On the call today, we expect to make forward-looking statements including the therapeutic and economic potential of our drug pipeline and those drugs being developed or commercialize by our partners, the timing of future clinical trial results and development plan predictive scientific and medical observations, financial objective and guidance for future period and certain other statements regarding the future of our business. These forward-looking statements are subject to important risks set forth in our Form 10-K for 2014 and the Form 8-K filed on March 17, 2015. Both of which are available at www.sec.gov. We undertake no obligation to update any 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 at nectars website. With that, I would like to turn the call over to Howard. Howard?

Thank you, Jennifer. Thanks to everyone, thanks to everyone for joining us today for our first quarter 2015 financial results call. Over the past seven years, we worked hard to build a late stage and diversified pipeline with significant revenue potential that positions us to move toward the goal of becoming a cash flow positive, sustainable company, not reliant on the markets for equity capital. With the recent launch of MOVANTIK and the anticipated approval of BAX 855 this goal is now in sight. We are proud of the pipeline we built at Nektar, which includes four phase 3 programs, one filed BLA and a recently approved and launched medicine. Our clinical late stage partnered programs combined with the revenue streams from MOVANTIK and BAX 855 could lead to peak royalty revenue of $750 million annually. As strategy, has always been to balance our development risk across multiple drug candidates in therapeutic area. We are currently taking a hard look at our new term development priorities and spend with the goal of advancing our pipeline while at the same time avoiding dilutive financing. As I just said, with the recent launch of MOVANTIK and the upcoming potential approval of BAX 855, we're beginning to see important new medicines emerge from nectar's pipeline. MOVANTIK is a first in class new targeted medicine for patients with OIC and it has the potential to be a multibillion dollar market opportunity. BAX 855 as the next generation ADVATE also has the potential to be a multibillion dollar market opportunity. With respect to NKTR-102, we're working diligently to find regulatory path forward for NKTR-102 in the U.S and Europe based upon the BEACON data alone. NKTR-102 is a promising anti-cancer drug and to illustrate this Dr. Edith Perez of the Mayo Clinic will be presenting…

Thanks Howard. Good afternoon. As Howard mentioned Nektar's technology has enabled us to develop what I think that emerge as an important drug in addressing the major societal problem of opioid abuse. NKTR-181 is particularly interesting, because it is designed to be a revolutionary opioid that could represent the next step in pain medicine. The important fact about this drug is that it is not a formulation. While NKTR-181 acts as a full agonist of the mu-opioid receptor it has a unique absorption and distribution kinetics that are related to the actual structure of the NKTR-181 API. This structure causes it to cross the blood-brain-barrier at a slow rate when compared to traditional opioid therapies. The slow rate of entry has been designed to reduce NKTR-181s potential for euphoria and abuse. And the drug is also being granted fast track by FDA. We began enrolment in the Phase 3 SUMMIT-07 trial in February. The trial compares NKTR-181 to placebo in opioid-naive patients with chronic low back pain with approximately 200 patients being randomized to each arm. Patient's from this efficacy trial will also be eligible to roll into a long term safety study of NKTR-181. The efficacy study includes an interim analysis that will allow for adjustments to the sample size in order to maintain appropriate study power to detect a statistically significant difference between NKTR-181 and placebo. Such an analysis is designed to increase the probability of a successful outcome and we expect the SUMMIT-07 trial to be completed in about 24 months. Now, I want to move on to what we are doing in cancer immunotherapy. As you know this field is revolutionizing treatment for cancer patients and we believe our technology platform could play an important role in the development of next generation immune-oncology therapies. NKTR-214, which…

Thanks Ivan for the clinical update. Based on the progress we’ve made with Nektar-214. We have a continuing research emphasis at Nektar in the area of immunotherapy. We’re focusing on the next generation of agents beyond check point inhibitory anti-bodies, which have dominated the field today. Our objective is developed novel agents that increased stimulation of the immune system in the tumor environment and to reduce for eliminate immune vision by tumor cells. This include new drug candidate to the target more precisely known immune regulatory pathways like -- pathway inhibitor and new side of therapy such as IO 15. With that, I’d like to turn the call over to John for a discussion of our financial results.

Thank you, Howard and good afternoon everyone. I will start with the review our first quarter 2015 financial and then I will go through our annual financial guidance. Total -- Q1 2015 was $108.8 million versus $19.8 million in the first quarter of 2014. This increase was driven by the $100 million milestone we see from AstraZeneca for the first commercial sale of MOVANTIK in the U.S.. In large, we signed a revision today AstraZeneca agreement, which allows next to gain. Certain U.S. price of AstraZeneca for proprietary commercial and marketing information for MOVANTIK. Over the life of the agreement which we not available to Nektar under our original licensing agreement and our typically not available to licensing volume. And exchange with this Nektar agree to contribute a small portion of the MOVANTIK DTC, television advertising campaign over the next two years in the total amount of $10 million of which $5 million in repaid in 2015 and $5 million we pay in 2016. Under these new term and according to ASC 605-50 guidance on revenue recognition, we recognize $90 million of the $100 million launch milestone we receive from AstraZeneca. The revise agreement does not change the $40 million milestone payment all connected for the commercial sale of MOVANTIK and a major European market. Which we expect to see received and recognizing Q3 2015. And the agreement does not change our royalty rates in the U.S., which thought at 20% and escalate and the Europe would started 18% and escalate. With respect to total operating costs and expenses, the first quarter 2015 with $65.8 million versus $56.2 million in the same quarter a year ago. The increase was primarily driven by increased R&D expenses as a result of the initiation of the Nektar-181 day three program. R&D expense in…

Thank you [Operator Instructions] Our first question comes from Jessica Lee with JPMorgan. Your line is open.

I guess my main question is on MOVANTIK and I realize you might not be able to speak for Astra here, but can you talk a little bit about the goals for ultimate levels of tier two coverage. Sounds like you've gotten some wins there already, but what are you trying to get that due over time.

I think that’s a good question. Hi, I think I can't comment specifically on what they're attempting to do, but I think their goal is pretty clear that they want to get broad tier two coverage and I think even with the Copay structure under even tier two or tier three with the kind of whack pricing that they put together even with a tier two or tier three Copay situation it probably cost less than to the patient than the cost of laxatives at the supermarket. So I think they've got a good structure. I think they're working very hard to get this as broad as they can. And we've been very happy with their thinking on this.

Okay. You talked about DTC as well and I think there is a few DTC sensitive category, but should we be looking for an inflection for encrypt when that starts happening or can you set some expectations there.

Look, I think clearly director consumer advertising and television advertising is very important for a drug like this. There is no doubt about it. And we -- as you know with 38 million patients that are taking opioids, the vast majority doesn’t develop OIC and some of them respond but clearly they need to go to the physician's office and ask for help, and they want to ask for help. So the Director consumer advertising, in particular the television advertising is without a doubt going to, I think drive sales. I can't comment on how that will change the ramp rate. It's up to only, and I know AstraZeneca has plans for direct-to-consumer television advertising. And it will be a number of months before that kicks in. But I would expect to see a change in the ramp rate based on that. And yes, I think, this is a market that is very much driven by the patient who is suffering with OIC, and of course laxatives really aren't going to work. The three over drug like MOVANTIK is that it deals with the biology of the situation. It deals with the underlying biology, it un-paralyses the bowel and laxatives are not going to do that. So I think it's a very good -- it's a nice story. It's a very clean science. When AstraZeneca sales reps talked to the physicians, it's very easily understood and appreciated and I do think with the patients asking their physician for help after seeing some direct-to-consumer advertising, I think that will have an effect on sales. So we're pretty happy about that.

Our next question comes from Jonathan Aschoff with Brean Capital. Your line is open.

How would you -- you're saying that you would use the BEACON alone for reg path, Howard, meaning you definitely will not do another 102 trial?

At this point, we're not going to commit any further studies in NKTR-102 without having substantial regulatory discussion. There's lots of possibilities to host regulatory discussion. It depends on the results of the discussions. But at this point we said we will have our regulatory discussions by the end of the year. I have no plans to start any studies this year.

Okay, is there anything you can tell us about 181 enrollment, how it's proceeding now?

Ivan, will take that, go ahead Ivan.

Well, it's off to a good start. Actually I was talking with the team today. It's proceeding slightly ahead of plan in fact. I mean it's obviously early days. We've got about a quarter of the sites up and running. We are getting a good distribution of the doses as we look at it. So the patients getting randomized across the dose range more towards this sort of high-doses, which we thought would be the case and which is pretty typical for these types of studies. So I'm actually pretty pleased with how it's going.

And I kind of recall the prior trial, where the naïve are washed out, or what were they?

Yes, the prior studies, they were naïve, but you'll recall it was a very-very different from this study, and it's much as, it was in osteoarthritis, and patients were on concomitant nonsteroidal anti-inflammatory drugs. And as we said previously on quite a few occasions there were several potential issues that we identified with that study and we believe that we are optimized the design of this study. It's pretty consistent with this, so the state of the art, if you like, in the field at this time.

And last for, John, can you just tell me where the rest of the 100 million went in 1Q, there is 96.7 in that accounts [indiscernible] often on that line, and the 100 million, I'm just trying to figure that out?

Yes, Jonathan, basically what I said was that from a revenue standpoint, basically the $10 million is going to go to DTC. So even though we will pay $5 million in this year, and we began our $5 million in 2016 that $10 million has to be accounted for in the first quarter of this year.

Our next question comes from Bert Hazlett with Ladenburg, your line is opened.

I guess, a follow-up John, with regard to the DTC payments and the, let's call it the modest restructuring of the deal, are there any other residual obligations and all that Nektar is responsible for?

Now, Bert, the only thing we are still responsible for, and we have to do this last year is that, for the study that's going to be done by AZ basically to look, if there is any cardio affects based upon MOVANTIK, that basically we would have to share in that, and that basically we would share in third-party expenses on that. Other than that, in the $10 million, you know we mentioned in the call today that there is nothing else.

Okay thank you. Just a follow-up even further --

Bert, this is Howard, I would add that long-term study is capped and we had a very small obligation, I think $10 million maximum over the life of the study. And I think that study runs for something like 10 years.

Okay thank you for that color. As the MOVANTIK franchise moves forward globally, how do we think about 119, and is there any particular, or are there any particular clauses in terms of the specific timing where AZ needs to make a decision for 119, or any other structures that we should be aware of with regard to the combinations?

Yes, they do have an obligation to develop 119. However, I think they were -- we said, and I completely understand this; that they want to see the development of MOVANTIK before they do that. And I would do the same thing if I were them. I think it makes absolute sense to develop 119 with the success of MOVANTIK launch. But I think we have to wait and see when the start that.

Our next question comes from Steve Byrne with Bank of America, your line is opened.

Can you comment on how many reps Daiichi is going to be using to promote MOVANTIK and what other drugs they will be promoting at the same time?

Yes, I can't comment specifically on what other drugs they'll be promoting, but clearly I believe that they consider this an important part of their portfolio. I know that in the past we have given out -- we have said that AstraZeneca would be putting approximately 500 sales reps that are specialty sales reps, approximately 200 sales reps that are primary care and Daiichi will be joining them with a positively 500 sales reps in primary care. So we have said that the approximate number of total sales reps is 1200. We said that in the past. That of course could be modified on an as needed basis. But that should give you some sense of where they are. And I think we discussed this last time as well.

And AstraZeneca is not pulling back on their number of reps that they’ve committed to, to use post agreement with Daiichi?

No, not at all. The purpose of the agreement with Daiichi was to expand the sales organization. I know, AstraZeneca few weeks ago had of course had their significant and very-very impressive sales launch meeting with all their sales reps. They are absolutely committed. They have, as I can tell, some of their finest sales reps in their organization promoting and detailing MOVANTIK. And the main reason for joining together with Daiichi Sankyo, was that we already have an excellent relationship with the company. I believe that Daiichi markets, Nexium for them in Japan. And in addition to that the desire to extend the reach to the primary care physician was very-very important. And they should be a great partner for this. They have a real desire to build their franchise there. So I think the two companies combined are just tremendous for MOVANTIK.

Okay, and then a question on 214, just wanted to drill into that a little more. Ivan can you talk a little bit about some of your preclinical studies and that what indications do you think that there would be an opportunity here i.e., an indication were you're likely they have the factor cells that are dormant, that could respond to a stimulant like this?

Hi Steve, this is Steve Doberstein. When we look across the preclinical models and then the emerging field of biomarkers in immunotherapy, I think there's a couple of places where people look. Of course melanoma has traditionally been the mainstay of that exploratory trials in this field. And that's because they have a large number of infiltrating lymphocytes and they have a fairly high mutational load. And I think if I would look forward into indications that might very well respond to the kind of immunotherapy we are thinking about here, it goes to the two things that I would point towards are those tumors that are known to have a fairly high number of lymphocytes, those include things like lung cancer, renal cell carcinoma, it falls into that category of course. And then those tumors, are you have some of the interesting emerging science about the total mutational load of those tumors and the higher the number of mutations including sequences, the more the more likely patients are to respond to immunotherapy in general. I think that's the binary of emerging research that could lead to some perspective biomarkers as well. So it's kind of things that we're going to be looking for -- we're looking at very closely in phase 1, and keeping track of the science on that. Yes, I have to say that I'm not sure that the preclinical models really help us predict the human tumors very well. And that's because, of course you know mouse models are overly protective up to a point in protecting human responses. But I think we're pretty excited about the prospects your because the checkpoint inhibitors are of course carrying the load of directing the science right now. But the unique ability of NKTR-214 to stimulate and change that T cell response as Ivan talked about that earlier, I think that leads us to some specific tumors that will be looking at in expansion course in phase 1 and phase 2.

In the combination with the checkpoint inhibitors, sure, it seems logical. Have you published any of that?

Yes, we have published some of that in posters already. And they'll be of course continuing to talk about those results future scientific meetings. But I think if you look on our website, you'll find some of that early work on the anti-CTLA 4 and NKTR-214 combinations in particular, as well as I think some of the data on the anti-PD-1 combinations as well. You'll find them on our website.

There are no further questions. I will now turn the call back over to Howard Robin, President and CEO for closing remarks.

Well, again thank you everyone for joining us this afternoon. I also want to thank all of our employees for doing such a fantastic job. We are very pleased at the launch of MOVANTIK. It's off to a strong start. Baxter is looking forward for its approval of BAX 855 later this year. We are proud of the pipeline we built which includes four phase 3 programs and file BLA in a recently approved and launched medicine. As I said earlier our clinical late stage partner programs combined with revenue stream from MOVANTIK and BAX 855 could lead to peak royalty revenue of $750 million per year for Nektar. So we're very excited that we are on our path for it's becoming quite a sustainable company. I would like to invite everyone to our R&D DAY on October 8th, in New York to showcase our new programs and to percent the phase 1-II clinical study design for NKTR-214. Everyone have an enjoyable evening. Thank you very much.