Nektar Therapeutics has been awarded $90 million in damages after a jury sided with the biotech, which had accused Big Pharma Eli Lilly of “botching” an analysis of their formerly partnered autoimmune drug.
Eli Lilly has been ordered by a jury to pay Nektar Therapeutics $90 million in damages over a broken partnership to develop the biotech’s lead autoimmune and inflammatory disease medicine. The result falls well short of the $1 billion Nektar had been seeking in the lawsuit.
The long-running battle, which was brought to the courts in 2023, involves the regulatory T cell agent rezpegaldesleukin, or rezpeg for short. The one-time partners began working together in 2017 to develop the asset in a number of autoimmune and inflammatory diseases, primarily eczema.
The partnership went sideways in 2020, however, when Lilly struck a deal to buy rival Dermira for $1.1 billion. The biotech focused exclusively on chronic skin conditions and had an asset that would compete directly with rezpeg.
Nektar accused Lilly of working to undermine the progress of rezpeg and even “botching” an analysis of early-stage trials for the drug.
Lilly ultimately terminated its participation in rezpeg’s development, handing the asset back to Nektar.
Nektar announced the verdict in a Thursday SEC filing. The trial began earlier this month in California, with the jury on Thursday siding with Nektar on the matter. Lilly had indeed “breached the implied covenant of good faith and fair dealing” in the licensing deal, the filing read. The matter is still subject to appeal.
Lilly intends to appeal the decision, a spokesperson for the pharma confirmed to BioSpace on Friday morning. “We believe that the correct amount is zero and that there is no liability and no damages should have been awarded. We intend to seek reversal.”
Besides determining that Lilly had indeed breached the contract, the court did confirm that the pharma developed the drug in accordance with the contract, the spokesperson pointed out.
“The jury confirmed that Lilly used commercially reasonable efforts to develop Rezpeg as required by the contract and awarded only a small fraction of the damages Nektar sought in this trial based on a secondary claim,” the spokesperson said.
While rezpeg has scored some recent clinical successes, Nektar has struggled to come back from the Lilly drama, with shares never returning to the heights they reached when the partnership was underway. In total, Nektar’s stock has fallen nearly 80% in five years.
The price had dipped slightly to $58.39 as of 10 am EST Friday.
The company reported in February that rezpeg maintained disease control in the Phase 2b REZOLVE-AD study of patients with atopic dermatitis, the most common type of chronic eczema. The trial also showed a deepening response to both monthly and quarterly dosing over the course of a year.
While analysts had previously brushed off rezpeg, the results turned things around for William Blair. The firm said at the time that the findings showed differentiation in a crowded disease space.
Rezpeg is now in a pivotal study for atopic dermatitis and a Phase 3 trial called ZENITH-AA for patients with alopecia areata is expected to start in early 2027, according to the company’s second quarter earnings report in August. The company had $1 billion in cash available at the end of the second quarter, enough to fuel operations into the third quarter of 2028, William Blair estimated after the earnings report.
The drug is also under development for type 1 diabetes.
Meanwhile, Nektar is advancing several assets in preclinical development, including NKTR-0165 for ulcerative colitis, vitiligo and multiple sclerosis.
