Good day, ladies and gentlemen, and welcome to the Nektar Therapeutics Second Quarter 2014 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) I would now turn the call over to your host, Jennifer Ruddock, Vice President, 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 this call, we expect to make forward-looking statements regarding our business, including potential regulatory approval decisions and commercial launch timings, the timing of future clinical results, clinical developments plans, the economic potential of our collaboration partnerships, the therapeutic and market potential of our drug candidates and those of our partners, our financial guidance for 2014, and certain other statements regarding the future of our business. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes that are difficult to predict and many of which are outside of our control. Important risks and uncertainties are set forth in our Quarterly Report on Form 10-Q, which is filed with the SEC on May 8, 2014 and our Form 8-K which is filed today, both of which are available at 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 Nektar’s website at nektar.com. With that, I would like to now hand the call over to Howard. Howard?

Thank you, Jennifer, and thanks to everyone for joining us this afternoon for our second quarter financial results call. Today I would like to focus on our late-stage programs which have significant upcoming milestones over the next six months. These are Movantik for opioid-induced constipation; BAX 855 for hemophilia A; NKTR-102 for advanced breast cancer; and NKTR-181 for chronic pain. I will also update you on two of our early-stage candidates, NKTR-171, a peripherally-acting oral sodium channel blocker, which is in Phase 1 studies, and NKTR-214, a cancer immunotherapy, which we are preparing to enter the clinic next year. Then John will review financials and remind you of our financial guidance for the second half of this year. First, I would like to take the opportunity to introduce Dr. Ivan Gergel, our new Senior Vice President of Drug Development and Chief Medical Officer, who is joining us on today’s call. Many of you have had the opportunity to meet Ivan in the past several weeks. Ivan brings over 25 years of drug development experience to Nektar with an impressive track record. During his tenure, heading R&D at both, Endo and Forest, Ivan was responsible for a number of late-stage development programs and product approvals. This includes BEMA Buprenorphine, which just achieved successful outcomes in Phase 3 studies for chronic pain and Abuse-Deterrent Opana ER for chronic pain. At Forest, his successful approvals included Celexa and Lexapro for depression, as well as Namenda for Alzheimer’s disease, Combunox for acute pain and Savella for fibromyalgia. Ivan’s contributions to our clinical strategy will be invaluable, as we advance our pipeline of wholly-owned compounds. As most of you know, the June FDA Advisory Committee meeting resulted in a highly positive outcome for Movantik. The majority of panel members recommended in a 22 to two…

Thank you, Howard, and good afternoon, everyone. I will start with reiterating our financial guidance for 2014, which remains unchanged from our 2013 year-end call. For 2014, we plan to end the year with approximately $225 million in cash and investments, representing a net use of cash of approximately $155 million. As Howard said, if approved, we anticipate the launch of Movantik both in the U.S. and the EU in the first part of 2015, which would trigger launch milestones to Nektar of $100 million in the U.S. and $40 million in Europe. As a result, our 2014 year-end cash balance projection does not include these $140 million of launch milestones. Revenue for the full-year 2014 is still expected to be between $190 million and $195 million, including $20 million of non-cash royalty revenue from UCB’s CIMZIA, and Roche’s MIRCERA. This guidance includes the anticipated recognition of two significant milestones in the third quarter of 2014, pursuant to the agreement with AstraZeneca signed in last August. The $70 million milestone payment that we received from AstraZeneca in Q4 2013 and the potential $35 million milestone payment from AstraZeneca, both of which are related to FDA confirmation that a significant pre-approval cardiovascular safety study for Movantik will not be required. For the full-year, we expect to recognize additional milestones related to other collaborations of approximately $70 million. We received the recognized $9 million in Q2 and expect the remaining milestones in Q4. Other than the milestones discussed, we expect the remaining revenue for the year will be approximately evenly split between the last two quarters. Our R&D expense guidance is still between $165 million and $175 million, with approximately $16 million of this is non-cash items such as stock-based compensation and depreciation expense. 2014 G&A is still anticipated to be between…

Thank you. (Operator Instructions) Our first question comes from Jonathan Aschoff with Brean Capital. Your line is open. Jonathan Aschoff – Brean Capital: Thank you. Hi Howard, I was wondering if you could please describe what Astra and/or Nektar has done already to define what it believes is an adequate post-marketing observation study for Movantik including the expecting costs of that. And then secondly on that drug, could you describe what AstraZeneca’s pre-launch commercial activities to-date have been?

Sure. Hi Jonathan, I think – well, to take your first question, we have not designed that with AstraZeneca yet. And I think AstraZeneca certainly believes that the FDA will provide a lot of guidance on this. And there are certain FDA systems that are currently being put in place that may actually make those observational type studies easier to perform. I don’t think anybody believes that these observational studies are particularly onerous or complex. I think they are pretty straight forward. And while we don’t have any idea of really what an observational study would cost in detail, I think – we think about this in terms of somewhere in the $10 million to $20 million range for the total cost of the study. So I can also tell you that Nektar is responsible for about a third of that. So if you look at the cost of the study and observational study being $10 million to $20 million, Nektar’s liability for that study is about a third. You could see that it’s relatively small compared to the cost of the program, and I don’t consider a major obstacle at all. In terms of what AstraZeneca has been doing to get prepared for the market, I talk to them and the Nektar Group talks to them with some regularity. And they are very, very active in preparing for this launch. I know their commercial organization is meeting regularly to get set-up for the commercial launch, and we are frequently participating in those discussions with them. I think they are – as I said, they are looking forward to launching this as soon as possible after approval, but of course we all have to wait for the routine DEA de-scheduling process. And I think I can’t tell you whether that is a two month or a five month or six month process. And that’s why AstraZeneca and Nektar have said, look, it will be in the first quarter. It could be early in the second quarter, can’t tell you whether it’s February or April. I mean that would be too difficult to call. But I can tell you that they are very, very active in preparing to launch this product, and we are frequently having those discussions with them. So I think it’s in very good hands and I think AstraZeneca is quite committed, and my discussions with them make me feel very comfortable. Jonathan Aschoff – Brean Capital: All right. Great. Thank you, Howard.

Our next question comes from Cory Kasimov with JPMorgan. Your line is open. Matt Lowe – JPMorgan: Hi there. It’s actually Matt Lowe in for Cory today. Just a quick one. I guess if you could just give us some detail on how you see the market opportunity for BAX 855, given the competitive landscape just how you view that, and if you could remind us of Nektar’s economics on that program? Thank you.

Yes, look I think – as I said, ADVATE is a $2 billion drug. And it is clearly the gold standard and the market leader. And yes, I think certainly Biogen will be out there discussing their product and marketing their product, but I think most people, most physicians, most patients are very, very familiar with ADVATE. And as you know, it is a very, very safe drug. And our PEGylation Technology, which has been in multiple drugs in hundreds of thousands of patients is of course quite proven. So I think one of the things that will define that market is just how safe Biogen’s drug is, and I don’t think that’s been fully determined in the marketplace yet. So at this point, I think I am very comfortable that Baxter has an important position in the market. They will maintain that position and they will grow that position. And I believe that, should the data be successful and I am hopeful that it will be, they will launch ADVATE – PEGylated ADVATE and become – remain the dominant force in that market. In terms of our royalty rate, it starts in the mid-single-digits and goes up in range to the low-teens. So you could estimate that in any way you like, but it’s still fairly substantial for Nektar. And if you look at PEGylated ADVATE BAX 855 as a $1 billion drug, then certainly for us the economic potential is significant. Matt Lowe – JPMorgan: Okay. That’s helpful. Thank you.

Our next question comes from Robert Hazlett with Ladenburg. Your line is open. Robert Hazlett – Ladenburg Thalmann: Thank you for letting me to take the questions. I actually have a couple, first on NKTR-102. Assuming success with BEACON, Howard, do you intent to keep that program internally or is that an out-of-life candidate? And then when do you make the decision on glioma or other indications?

Well, a good question. First of all, let’s take the second part first. I think we’re very hopeful that we see positive results in the metastatic breast cancer study, in the BEACON study. However of course these are completely different diseases, and moving the drug forward in treating gliomas is somehow independent of what it looks like in metastatic breast cancer, although I am very hopeful that it shows promising results in both. To your first point, we haven’t made those strategic decisions yet, but quite frankly, I think there is an awful lot of merit to Nektar moving forward with a drug like NKTR-102 ourselves if we’re successful with the metastatic breast cancer study. And while we’re still having those interesting discussions and they are still partnering discussions that take place, I am looking more and more hopeful to perhaps taking that drug forward ourselves. Robert Hazlett – Ladenburg Thalmann: Okay.

So we’re excited about it. If it works, it’s a very important therapy, because it is a completely different mechanism in treating of HER2-negative disease. And we have to continue to have those discussions, but I’ll keep you posted. Robert Hazlett – Ladenburg Thalmann: Thank you. And then just on 181, could you – thank you for the solidification of your thoughts regarding Phase 3 and the study design. Could you talk a little bit more about the timing of when will you start the program, and maybe when the Phase 3 will complete? And then this is a fast track molecule I believe, and is there an ability to run one single Phase 3 study here and get it through, or are you contemplating two separate studies? Maybe I missed that.

Okay. So I think we are certainly having discussions with the FDA around the Phase 3 design. And we do expect to start to have that locked up and start the IRB approval process this year. Now we also want to design into it, as I said, an interim analysis that allows us to make mid-course corrections, and also give us some information and give the investors information as to how the trial is going. I think it’s certainly going to require two trials. It’s not going to be a single trial. It’s going to require two trials. And we are currently evaluating how we proceed with that, how we time that. Do we do two trials from the beginning? Do we wait and get some information and then start the second trial, that hasn’t been determined yet. Let me turn this over to Ivan for a moment. Let him comment on this.

Yes, hi Bert. Look, I absolutely agree with everything Howard said. Essentially, we are going to try and submit to IRB at the end of this year. It looks like it will be a two phase program – two study program, because it is on fast track, but it’s also a NCE. And I think the fact that it’s an NCE and the molecule itself is designed to be abuse resistant is what makes it attractive. Certainly in the past and going forward, we’ve had great, sort of interactions with FDA, and we envisage that would be very, very collaborative going forward. We know they are keen on this product. So I think it’s going to move quickly once we start and we do intent to be starting the program towards the end of this year. Robert Hazlett – Ladenburg Thalmann: Thank you for the color. I just have one more quick one, just on R&D expenditures, $75 million for the first half. To get to the low end of the range, John, it looks like you’re going to spend $90 million in the second half. Is that reasonable figure or – I mean that seems like a lot now that BEACON is kind of winding through. Should we be thinking towards the lower end of the range for the R&D expenditure?

Yes. Well, Bert, the thing you have to remember okay is you have BEACON winding down, right, so which means we will be buying products for the physicians choice for Europe, right. But on the other hand, we’re geared up for the start of the Phase 3 for 181, and we also have the multi-dose that will be going on for NKTR-171. And on top of that, we’re still spending money on NKTR-061 for the Amikacin program, and we still have amount of work that has to be done for NKTR-181 from a CMC standpoint and also for NKTR-214 from a CMC standpoint. So that’s kind of the reason why we’re guiding the way we are guiding right now. Robert Hazlett – Ladenburg Thalmann: Okay, thank you.

Bert, this is Howard again. I want to just also clarify one finally. You asked a very good question about whether Nektar would take NKTR-102 forward commercially. And I said something we’re considering certainly for ex U.S. you would find a partner. And we’re certainly having those discussions and we’ve been having those discussions. What I should have said more clearly is that for the purposes of United States, this is certainly something that we would consider, although we haven’t made a decision yet as to taking it forward ourselves. Robert Hazlett – Ladenburg Thalmann: Thanks for that.

(Operator Instructions) Our next question comes from David Steinberg with Jefferies. Your line is open. David Steinberg – Jefferies: Thanks. I don’t think you touched on it, but given the very significant collaboration with Novartis I think in May, so Fovista has moved more into the limelight. Could you talk a little bit about your collaboration on that product and what’s some of your expectations are? And then I was going to ask question Bert asked, so on commercialization. I’ll just broadening it a little bit which is, if you do decide to market one or two yourself, creating a lot of your products that have been licensed, but what are your general thoughts down the road about marketing more of your proprietary drugs given the value proposition? Thanks.

Okay, good question. Well first of all on Fovista. All I can comment on Fovista is that we get mid-teens figure. This answer better [ph]. So I think Fovista, it can be a potentially very, very important drug. I think interesting aptamer could, in my mind be a $1 billion drug. And I think it’s especially in used in combination with other drugs like Lucentis, there is lots of potential. We get mid-single-digit royalties on that. So I am actually pretty happy about that. With regard to how you move forward with a drug like NKTR-102 for a company with size of Nektar? Look, it’s the kind of thing where the market in oncology does not require tremendous commercialization average. Sure you have to have a sales organization or being it could be relatively small, you have to have an organization of scientific liaisons, but I think a company of the size of Nektar could easily handle that, especially if you look at the cash flow that could be coming from drugs like Movantik. So well I said, we haven’t made the decision yet, I think launching the drug or bringing the drug forward commercially like NKTR-102 is entirely within our capabilities. Now let’s see how the drug look and let’s see what the data looks like and we’ll make some better decisions at a later point. I think at some point – your question is a very important strategic one. At some point, Nektar has to shift from a royalty company to a product company. And I think we will. And whether that’s with a drug like NKTR-102, whether that’s a drug like NKTR-181 a few years down the road, I don’t think we have to make that decision now, but I don’t think you should be thinking of Nektar as a royalty company, you need to think of Nektar as a company that’s developing proprietary drugs and will eventually market them. David Steinberg – Jefferies: Helpful. Thank you very much.

Thank you. At this time, this does conclude the Q&A session. I would now turn the call back over to Howard Robin for closing remarks.

Well, thank you everyone. I mean, clearly this year could be transformational one for Nektar with multiple products advancing to Phase 3 data and beyond. I want to thank our employees for their hard work and dedication. We wouldn’t be here without them. And thank you for your time today and your continued support. I look forward to seeing many of you when we’re in Boston and New York next week. Thank you very much.

Thank you. Ladies and gentlemen, that does conclude today’s conference. You all disconnect and everyone have a great day.