SAN FRANCISCO Mar 6, 2020 (Thomson StreetEvents) -- Edited Transcript of Nektar Therapeutics earnings conference call or presentation Thursday, February 27, 2020 at 10:00:00pm GMT

* Gilbert M. Labrucherie

* Howard W. Robin

Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst

Ladies and gentlemen, thank you for standing by, and welcome to the Nektar Therapeutics Fourth Quarter 2019 Financial Results Conference. (Operator Instructions) Please be advised that today's conference is being recorded.

(Operator Instructions) I would now like to hand the conference over to your speaker today, Ms. Jennifer Ruddock, Head of Corporate Affairs. Ma'am, you may begin.

Thank you, Crystal. Good afternoon, everyone, and thank you for joining us today. With us are Howard Robin, our President and CEO; Gil Labrucherie, our COO and CFO; Dr. Jonathan Zalevsky, our Head of R&D; and Dr. Wei Lin, our Head of Development.

On today's call, we expect to make forward-looking statements regarding our business, including clinical trial results, timing and plans for future clinical trials, timing and plans for future clinical data presentations at medical meetings, 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 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.

Important risks and uncertainties are set forth in our Form 10-Q that we filed on November 7, 2019, which is available at sec.gov.

We undertake no obligation to update any of these 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 Nektar's website at nektar.com.

With that, I will now hand the call over to our President and CEO, Howard Robin. Howard?

Howard W. Robin, Nektar Therapeutics - CEO, President & Director [3]

Thank you, Jennifer, and thank you to everyone for joining us on the call today. On today's call, we will provide an update on our pipeline compounds, which include our I-O pipeline of Nektar IL-2, IL-15 and TLR agonist candidates and our immunology program NKTR-358. We will also review our planned upcoming milestones for these programs and provide our financial guidance for 2020. But before I discuss the advancements we made with our I-O and immunology portfolio, I'd like to briefly cover some challenges we faced this year that are outside of the core focus of our pipeline.

Starting with NKTR-181. As you know, we made a strategic decision last month to withdraw the NDA for NKTR-181. The NKTR-181 ADCOM was the first of several that week that were negative for the opioid class, and it became clear from these discussions that the bar for approval of any opioid compound is much higher than what was established by approvals in the past.

Additionally, since that time that we submitted our NDA, the liability in the opioid class has become a significant consideration, with numerous lawsuits filed against opioid manufacturers and distributors. And based upon all of these factors, we made a business decision that further investment could not be justified for a medicine in this class, which would have been at the expense of sacrificing important developmental work for our immuno-oncology pipeline. As we look back at our successful development efforts for this program, I want to thank our team for their hard work, thank the patients and physicians who participated in our clinical trials, some of whom came to speak at the ADCOM. We did not take this decision lightly, but believe it is the appropriate action to take as we focus on the advancement of our I-O and immunology pipeline.

Secondly, as you know, we were conducting the ATTAIN study for our chemotherapy agent, ONZEALD, in advanced breast cancer patients who also have brain metastases, which compared ONZEALD to a chemo agent of choice in these patients.

The ATTAIN study was being partially funded from a former partnership we had with Daiichi Sankyo. And you'll recall that the ATTAIN study was designed based upon a doubling of survival that we saw in a subset of patients from the earlier BEACON study of ONZEALD in advanced breast cancer patients with brain mets as compared to chemotherapy of physician's choice.

The primary analysis of the ATTAIN study was completed late last week. And while ONZEALD performed at least as well as the physician's choice standard of care for PFS and OS, the study endpoint of improvement in overall survival was not met. As a result, we're planning no further clinical work on ONZEALD, and we're grateful to the patients and their families who participated in the ATTAIN study.

With these actions behind us, our company is highly focused in the core areas of immuno-oncology and immunology, where we believe we have the potential to create transformative medicines for patients. Our I-O portfolio is highly differentiated with 2 strong cytokine programs, IL-2 with bempeg and IL-15 with NTKR-255 and a small molecule TLR agonist program. This unique portfolio allows us to capture opportunities that span both solid and liquid tumors. In immunology, NKTR-358 is advancing into several clinical studies in multiple autoimmune conditions, the first of which are lupus, atopic dermatitis and psoriasis, and I'll talk more about those later on the call.

Let me first start with bempeg, our IL-2 pathway program in T cell stimulator. Earlier this year, we announced a revised collaboration agreement with our partner, BMS. Under the new joint development plan, we expanded the BMS-Nektar active registrational programs for the doublet of bempeg and nivo from the 3 studies that were underway to now include 7 studies in first-line and adjuvant settings, across 4 tumor types with more than 3,000 patients. The new registrational program builds upon the opportunity in melanoma, bladder cancer and renal cell carcinoma, and also adds plans for a Phase II study in first-line non-small cell lung cancer.

In addition to the 3 ongoing Registrational Trials in first-line metastatic melanoma, first-line cis-ineligible metastatic bladder cancer and first-line metastatic RCC, we've already launched a new Phase III study in muscle-invasive bladder cancer, and we are initiating a Phase III study in adjuvant melanoma. I will let Wei cover the design of these new Phase III studies in a moment.

The economics of the revised agreement reflect BMS's continued commitment to the collaboration. At a high level, if you look at BMS's share of clinical costs for the new joint development plan associated with the 7 studies, it is approximately $1.2 billion. There were also some enhancements to the economics for Nektar, which provide additional and accelerated near-term milestone payments. This includes a $25 million accelerated milestone payment that we received in Q1 of this year with the initiation of the MIBC study. It also includes a new $25 million milestone for Nektar at the start of the adjuvant melanoma study, which we expect will occur in Q3 of this year. In addition, the new agreement includes $75 million accelerated milestone payment at the start of the first Phase III registrational non-small cell lung cancer study with nivo. The rest of the economics are unchanged. BMS funds 2/3 of the development cost, Nektar contributes 1/3. Nektar books global revenues. The profit split is 65% Nektar, 35% to BMS. We're also entitled to $650 million in total milestone payments upon the first approvals of bempeg in U.S., Europe and Japan, and then $260 million per each of the next 3 approved indications for bempeg.

As many of you know, BMS is currently enrolling patients in our Registrational Trial in first-line metastatic melanoma, and all the investigator sites are now up and running. Last year, we obtained an FDA breakthrough therapy designation for bempeg plus nivo in patients with metastatic melanoma, based on the positive data, including complete response rate from our PIVOT-02 study. The Phase III study enrolling in this setting has 3 endpoints: ORR, PFS and OS. The current projected earliest time line for reaching the follow-up time period needed on the number of patients required for the first interim ORR endpoint is the end of Q4 2020 this year.

The PFS endpoint is projected to occur roughly 6 to 7 months later. But as a reminder, this is event-driven, and the timing could change. For both OOR and PFS, the results will be analyzed by blinded independent radiology review. So also keep in mind that this process will affect timing for the completion of any data analysis. So the first data readout will most likely be Q1 of '21. As we head closer, we should be able to refine this time line. As a reminder, ORR is designed as an accelerated approval endpoint. We spent only a small amount of alpha on this, and PFS is the full approval endpoint.

With the breakthrough designation, the potential for the doublet in melanoma is quite promising. And as part of our amended agreement with BMS, our 2 companies are excited to expand our development efforts into the adjuvant melanoma setting. This essentially doubles the number of patients that could potentially benefit from this doublet in melanoma and represents a significant opportunity for bempeg. Given BMS has the leadership position with nivolumab across all lines of therapy in melanoma, we're pleased that bempeg with nivolumab has the potential to further advance the standard of care in both early and advanced stage melanoma.

In bladder cancer, we are enrolling a 200-patient study in first-line cis-ineligible bladder cancer, which is intended to support a potential accelerated approval pathway in this setting, specifically in patients with PD-L1 low expression as defined by a CPS score under 10. We expect the first potential data on the ORR endpoint from this trial in Q2 or Q3 of '21. And to build on this opportunity in bladder cancer, we've also initiated a confirmatory Phase III study in patients with cis-ineligible muscle-invasive bladder cancer. This gives us the ability to capture the opportunity in both early and late-stage bladder cancer, expanding the potential for bempeg and nivo to help even more patients.

In metastatic first-line renal cell carcinoma, BMS and Nektar have chosen a comprehensive approach that positions the doublet with a TKI sparing and a TKI inclusive regimen. Our Phase III Registrational Study evaluating bempeg and nivo versus a TKI in first-line RCC is now enrolling nicely, and we are on track to potentially have the first interim OS readout in the first quarter of 2022.

The TKI inclusive regimen development work will start mid-year under the new BMS agreement and is designed to support a registrational path forward in a first-line metastatic RCC study with this triplet.

We will conduct a Phase I/II dose escalation and expansion study to evaluate bempeg plus nivo in combination with axi in first-line RCC to establish the dose and administration schedule for a future Registrational Trial.

Finally, BMS and Nektar agreed on a development path for the doublet in first-line non-small cell lung cancer that we believe positions bempeg nicely for a flexible registrational path forward in non-small cell lung cancer. BMS will run a dose optimization and expansion study to identify the appropriate dose regimen, and BMS is paying 100% of the cost of that program. And we will continue our work evaluating pembro with bempeg in non-small cell lung cancer in our PROPEL trial, which is currently enrolling patients. This gives us the flexibility in the future to evaluate moving forward with either nivo or pembro in non-small cell lung cancer.

We're pleased to have the renewed agreement in place and look forward to this phase of our collaboration. This structure also removes certain exclusivity restrictions from the old agreement for a list of indications for bempeg and so provides us enhanced flexibility to pursue other combinations for bempeg.

Along those lines, we're exploring the potential of bempeg with other checkpoint inhibitors and other mechanisms and expanding this work is a key role for us this year.

In collaboration with Pfizer, we have an ongoing Phase Ib/II study in head and neck cancer and castration-resistant prostate cancer. The study will evaluate bempeg and nivolumab in head and neck cancer and also evaluate 2 triplet combinations, bempeg plus avelumab plus talazoparib; and bempeg and avelumab and enzalutamide in prostate cancer.

We're very excited to work with Pfizer on this because of the opportunity in these 2 solid tumor settings for bempeg, particularly in patients with PD-L1 negative tumors. We also started a study in head and neck cancer in partnership with Vaccibody. The study combines bempeg with their personalized vaccine approach and could pave the way for a novel treatment regimen with bempeg in this tumor setting.

In addition, we have plans to start a study with BioXcel, combining their molecule, bempeg and Pfizer's avelumab in pancreatic cancer. As you can see, the bempeg program is emerging as 1 of the largest registrational and development programs in immuno-oncology, and we're excited about the potential of this novel agent to combine with checkpoints and other mechanisms.

Turning to our next immuno-oncology candidate, NKTR-262, our TLR7/8 agonist, our Phase I/II REVEAL study is advancing, and we recently achieved our recommended Phase II dose of NKTR-262 with bempeg. You'll recall that because this was a novel-novel combination, we had to evaluate staged dosing of NKTR-262 with bempeg in dose escalation. We've observed high levels of TLR activation in the tumor microenvironment and the dose escalation allows us to understand PK/PD and then characterize safety for NKTR-262.

Our current plan is to take the recommended Phase II dose of NKTR-262 into a focused expansion in at least 1 tumor type, starting with 24 relapsed and refractory melanoma patients. Based upon the biology of the innate and adaptive immune system interaction, we will now evaluate simultaneous dosing of the TLR and bempeg to explore the combination's potential in the I-O relapsed/refractory melanoma setting.

The scientific community is beginning to recognize the importance of natural killer cell biology in the treatment of cancer. And as many of you know, this area of research is generating much excitement.

So let me now turn to our newest clinical candidate, our IL-15 agonist program known as NKTR-255. NKTR-255 is designed to capture the full biology of the IL-15 pathway to cause both proliferation of NK cells and the expansion of CD8 memory cells, which provides us with a wide range of potential development pathways for NTKR-255.

Given the product profile, we're advancing towards forward on multiple fronts with this program and JZ will provide more details on the data emerging from this program, but let me provide a high-level overview of the progress on this promising mechanism. First, we're enrolling patients into our first-in-human clinical trial of NKTR-255, which began last year. The study is evaluating NKTR-255, first as a monotherapy, and then in combination with dara or rituximab in multiple myeloma and non-Hodgkin's lymphoma, respectively. In addition, we have 2 research collaborations ongoing with partners who are entirely funding the research. First, Janssen is conducting preclinical studies of NKTR-255 in combination with a number of their internal oncology mechanisms. And separately, in virology, Gilead is exploring the potential of NKTR-255 in nonhuman primate studies, in combination with a number of antivirals in their portfolio. So NKTR-255 has the potential to have many applications in oncology as well as, potentially, virology, and we look forward to its progress.

Moving on to NKTR-358, our Treg stimulatory program, which is partnered with Lilly. We reported significant progress with this program in 2019. Last year, first-in-human data in healthy volunteers were reported at EULAR, and these data demonstrated the candidate's dose-dependent and selected proliferation of Treg cells. We recently completed the Phase Ib multiple ascending dose study in lupus patients, and we have submitted these data to be presented at this year's EULAR meeting.

Our partner, Lilly, also recently initiated Phase Ib studies in 2 new autoimmune indications of psoriasis and atopic dermatitis, and these studies are ongoing and enrolling patients. Our partner, Lilly, also has plans to start a Phase II dose-ranging study in lupus in the middle of this year, and they plan to add another Phase II autoimmune indication to the development program this year.

So we're very pleased with their commitment and the broad nature of this development program, which reflects the potential of this novel mechanism to treat autoimmune diseases. And with that, I'd like to turn the call over to Wei to review the Phase III study design for bempeg. Wei?

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Wei Lin, Nektar Therapeutics - SVP & Head of Development [4]

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Thank you, Howard. I'd like to discuss briefly the comprehensive plan we've developed with our partner, BMS, for the doublet of bempeg plus nivolumab in the melanoma setting, an area where the IL-2 pathway has already been validated. As Howard stated, we have generated breakthrough designation-worthy data in first-line metastatic melanoma from our PIVOT-02 study of bempeg plus nivo. At a median follow-up of approximately 18 months, 34% of patients had a complete response as determined by blinded independent central review; 42% had a 100% reduction in target lesions; and 47%, almost half, had a greater than 75% reduction in target lesions.

The significance of deep responses in metastatic melanoma and its association with survival have recently been demonstrated by the FDA in a metanalysis they presented at ASCO 2019. Based on this analysis, patients who achieved a 75% or greater tumor shrinkage in their RECIST targ lesions, including patients that achieved a complete response, had very high likelihood of having the greatest improvement in progression-free survival and overall survival, especially if they were treated with immunotherapy. So objective response is very highly correlated with survival in melanoma with I-O agents.

With that context, our data from the PIVOT-02 study showing that nearly 1/2 of the melanoma patients had a 75% or greater response reinforces our confidence in the doublet in melanoma. And indeed, as we presented in November at SITC 2019, with approximately 18 months of follow-up, median PFS had not been reached. We plan to share updated data from this cohort at a future meeting in the second half of this year.

Our confidence in the potential clinical benefit that bempeg plus nivo may offer in melanoma has led us and BMS to initiate a study in the adjuvant setting. In this study, we evaluate the extended treatment of post-surgical patients with bempeg plus nivo with an endpoint of event-free survival.

The treatment duration will be 12 months. We estimate that the study will enroll between 900 and 1,000 patients and will compare the doublet of bempeg plus nivo to a single-agent nivolumab. We are finalizing the protocol with BMS and expect to start this trial in the second half of this year. Due to the long duration of adjuvant melanoma studies, we expect a potential first readout in 2024.

With the ongoing Phase III metastatic melanoma study and the new adjuvant study, BMS and Nektar now have a comprehensive approach to expanding the transformative potential of the bempeg/nivo doublet to more patients with melanoma. In addition, as Howard stated, in January, BMS started the new Phase III bladder cancer study, which is enrolling patients with muscle-invasive disease in the peri-adjuvant setting.

Our ongoing metastatic study in urothelial carcinoma is in the cisplatin-ineligible patients. And this new Phase III study extends our doublet into earlier disease for essentially the same patient population. In addition, the trial will also serve as the confirmatory study for a potential accelerated approval filing planned with our ongoing metastatic trial.

In the muscle-invasive study, we will stratify patients by stage and PD-L1 status. During the new adjuvant pre-surgical phase, 540 patients will be randomized into 3 arms to receive treatment with either bempeg plus nivo or nivo or no treatment at all, which is the current standard of care. Then after cystectomy, they will continue on the same pre-surgical treatment regimen for a 12-month period.

The primary endpoint will be pathologic complete response and event-free survival.

Again, this is a longer study and our first potential readout is expected to be in 2024. With that, I'll hand the call to JZ to discuss more on our NTKR-255 program.

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Jonathan Zalevsky, Nektar Therapeutics - Chief Research & Development Officer [5]

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Thanks, Wei. I'd like to spend a little more time discussing the IL-15 program, NKTR-255, as it is the next large cytokine program in our pipeline that is generating significant interest. NKTR-255 was designed to capture the full biology of the IL-15 pathway. Specifically meaning that NKTR-255 is designed to capture all the receptor ligand interactions available through targeting the IL-15 agonist pathway. As a consequence, NKTR-255 functions as a significant expander of natural killer cells and an agent that promotes the survival and expansion of memory CD8 T cells. The clinical and research community is increasingly recognizing the importance of NK cells and memory cells in the I-O cascade.

Now as I just stated, a key differentiating factor for NKTR-255 is that we have engineered it to bind to all forms of the IL-15 receptor versus other mutein proteins in development that only bind to beta gamma receptors. We believe that this will translate to enhanced efficacy. For example, we know that in order to support NK cell-mediated cellular killing, you need to induce intracellular granzyme B and data presented at SITC 2019 showed that we get maximal granzyme B production versus other muteins and even more than native IL-15.

Additional preclinical data we generated to date highlights the various combination opportunities for this candidate. First, we see an opportunity to combine with antibodies such as daratumumab and rituximab that work through an antibody-dependent cellular cytotoxicity or ADCC mechanism of action. In the ADCC reaction, antibodies bind to the target cell surface via the antigen recognition portion of the antibody. This coating of a cell with antigen recognizing antibodies is an immune process called opsonization. These opsonized cells are then recognized by NK cells via the Fc gamma receptors on the NK cells binding to the Fc region of antibodies on opsonized cells. The clustering of Fc gamma receptors promotes degranulation of the NK cells, leading to killing of the opsonized cells. In this way, the targeted antibody is able to selectively and specifically kill opsonized cells via the action of NK effector cells. However, one of the limitations of the ADCC reaction is that NK cells, the effector cells that actually promote the killing of opsonized cells, are consumed and themselves depleted in the ADCC reaction, consequently, limiting efficacy of the targeted antibody. If we are able to enhance the proliferation and function of NK cells by NKTR-255 and combine that with ADCC antibodies, we can see a very profound effect.

In nonclinical studies, NKTR-255 exhibited antitumor activity and substantially enhanced in vivo proliferation and activation of NK cells to provide sustained cytotoxic function.

In the preclinical lymphoma model, where single agent daratumumab was ineffective, NKTR-255 treatment in combination of daratumumab increased NK cell numbers and activity in bone marrow tissue and enhanced ADCC mediated tumor cell clearance in the bone marrow compartment. Now this is a very important result because it confirmed that NKTR-255 was able to mobilize functional NK cells in the bone marrow compartment, indicating that with NKTR-255, we can generate not only systemic, but also tissue-dependent effects.

More recently at ASH, we showed that NKTR-255 enhanced the number and function of both NK and CD8 effector memory T cell populations in the peripheral blood from healthy donors and from patients with multiple myeloma. NKTR-255 was also able to revert the inhibitory status of NK cells for multiple myeloma patients and showed synergy with daratumumab and elotuzumab to significantly increase the status of NK susceptibility of the multiple myeloma cells in a dose-dependent manner.

Collectively, these data provide a strong rationale for our first clinical study, which is now underway. The study is evaluating the safety and dose schedule of NKTR-255 as a monotherapy, and then will expand into combination with antibodies that work through an ADCC mechanism, including daratumumab and rituximab. We plan to enroll patients with relapsed or refractory multiple myeloma and non-Hodgkin's lymphoma in this study. The study will also evaluate pharmacokinetic and pharmacodynamic effects as well as antitumor activity. We have also introduced a robust biomarker program into this trial to provide a deep assessment of the NKTR-255 mechanism of action. Besides NK cells, we will also evaluate total and subpopulations of CD4 and CD8 memory T cells to study the effect of NKTR-255 on their expansion, activation and survival.

This biomarker-rich, early clinical development approach allows us to follow the science in the development and planning for NKTR-255. Our goal is to achieve initial results from the first monotherapy phase of this Phase I trial this year. In addition, our partners, Janssen and Gilead, may present data from their respective preclinical efforts with NKTR-255 as well. Now we also see potential for NKTR-255 in combination with CAR-T and other cell therapies. CAR-T is very effective, but only for a relatively short period of time. By adding IL-15 and promoting proliferation of memory T cells, we may be able to get a much more durable duration of response associated with CAR-T therapy. Our collaboration with Fred Hutchinson has yielded some impressive early data also presented at ASH. Specifically, researchers demonstrated NKTR-255 prevented tumor growth and increased survival of CAR-T cells when added to a CD19-targeted CAR-T cell regimen in models of B-cell lymphoma. With that update, let me turn the call over to Gil for a review of the financials.

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Gilbert M. Labrucherie, Nektar Therapeutics - Senior VP, CFO & COO [6]

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Thank you, JZ, and good afternoon, everyone. This afternoon, we announced our full year financial results for 2019 in our earnings press release. On this call, I will provide our annual financial guidance for 2020. Starting with our cash position, we exited 2019 with $1.6 billion of cash and investments. With our exceptionally strong cash position, we have decided to repay the $250 million of outstanding senior secured notes on our balance sheet. This will strengthen our balance sheet and improve our annual cash flow as it will result in approximately $20 million of annual interest savings on a go-forward basis. With respect to cash usage for R&D and operations, we expect to use approximately $350 million in net cash in 2020. This compares to net cash usage of $315 million in 2019. This increase in investment in 2020 is primarily a result of our plans to complete enrollment in the first-line Registrational Studies in melanoma, bladder, renal cell carcinoma as well as begin the 2 new Phase III studies we are initiating this year for the expanded bempeg development program under our BMS collaboration.

After taking account of our plan to repay the $250 million of debt in Q2, we expect to end 2020 with approximately $1 billion in cash and investments.

Now turning to revenue. Our GAAP revenue is expected to be between $140 million and $145 million this year. GAAP revenue includes $50 million of new and accelerated milestone payments from BMS under our expanded agreement. The first $25 million of these milestones will be recognized in Q1 for the start of the MIBC study, which occurred in January of this year. And the second $25 million milestone will be in connection with the start of the adjuvant melanoma study, which is currently planned for Q3. Excluding these milestones, we expect the remaining $90 million to $95 million of GAAP revenue to be fairly ratable over the 4 quarters of 2020, comprised of the following: $40 million to $42 million in cash royalties; $34 million to $36 million of noncash royalty revenue; $11 million to $12 million of product sales; and an additional $5 million in other licensed collaboration revenue outside of BMS.

We anticipate 2020 GAAP R&D expense will range between $475 million and $500 million, which includes approximately $70 million of noncash depreciation and stock compensation expense. We expect R&D expense to be fairly ratable over the 4 quarters of this year.

In addition to the R&D investment in the new trials in the expanded BMS collaboration, I would like to highlight a few other key areas of focus for us in 2020.

In order to meet our planned time line for BLA filing and potential commercial launch of bempeg in 2021, we plan to complete validation of our large-scale commercial manufacturing process and begin manufacture of commercial supplies this year. As a result, bempeg manufacturing costs will continue to be a significant component of our R&D expense in 2020.

Under our BMS collaboration, BMS shares 35% of bempeg manufacturing costs. In addition, we will continue to invest in development of bempeg outside of the BMS collaboration, including our PROPEL study with pembrolizumab in non-small cell lung cancer. And in combination with other modalities under our collaborations with Pfizer, BioXcel and Vaccibody. Our R&D expense also includes the initiation of 2 Phase II studies for NKTR-358, and the ongoing Phase Ib studies in atopic dermatitis and psoriasis. As Howard stated, the first Phase II study in lupus is planned to begin midyear, and the second Phase II study in a new autoimmune disease state will start in the second half of 2020. As a reminder, in our collaboration with Lilly, we are responsible for 25% of these costs.

In addition, we will continue to invest in our Phase I/II work for NKTR-255 and NKTR-262. G&A expense for 2020 is projected to be between $105 million and $115 million, which includes approximately $45 million of noncash depreciation and stock compensation expense. For 2020, GAAP interest income will be approximately $30 million to $33 million. With repayment of our senior notes, we expect 2020 full year interest expense of $7 million to $8 million as compared to $21.3 million in 2019. We also expect to recognize between $26 million and $28 million in noncash interest expense related to the legacy CIMZIA and MIRCERA royalty monetization. In Q1 of this year, we plan to record an impairment charge on our income statement of between $45 million and $50 million related to the discontinuation of the NKTR-181 program. This impairment charge is composed of 2 parts: noncash charges of approximately $20 million and cash payments of $25 million to $30 million, primarily related to certain non-cancelable contract manufacturing commitments.

As I stated earlier, we plan to end 2020 with approximately $1 billion in cash and investments after repayment of our $250 million in senior secured notes.

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

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Chris Shibutani from Cowen.

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Chris Shibutani, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [2]

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With the bempeg programs in lung, can you give us a sense for how enrollment is progressing, both with the program with OPDIVO as well as with pembro? I think historically, there have been some bumps in the road. Can you talk about what initiatives you have put in place that may be helping to engender confidence in your time lines?

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Wei Lin, Nektar Therapeutics - SVP & Head of Development [3]

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This is Wei Lin. I'll take that question. So regarding the -- our bempeg combination in lung, as been stated in the call, our strategy is really 2-prong: in combination with pembrolizumab; as well as combination with nivolumab. First of all, the combination with pembrolizumab, that's being operationalized by Nektar. And we expect -- so that study has started enrollment. And we expect by the end of the year to have 10 to 20 patients' worth of data that has a sufficient follow-up, at least 2 scans, to allow for data assessment of activity. The combination with nivolumab, that's being operationalized fully by BMS. And that study has not opened yet, and we'll provide more details as the year goes along.

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Chris Shibutani, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [4]

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Great. And then with 255, which seems to be an asset that JZ highlighted here, can you give us a sense, maybe frame what kind of efficacy results we may see in the monotherapy setting for those 2 indications that we are likely to see data, the myeloma, et cetera?

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Jonathan Zalevsky, Nektar Therapeutics - Chief Research & Development Officer [5]

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Edited Transcript of NKTR earnings conference call or presentation 27-Feb-20 10:00pm GMT - Yahoo Finance