Acquisition Rumors Spark Nektar Therapeutics Stock Surge Amid Ongoing Eli Lilly Lawsuit

Nektar Therapeutics' shares experienced a significant uptick following rumors of a potential acquisition, with speculation pointing to Eli Lilly as the prospective buyer. This development comes against the backdrop of a complex history between the two companies, including a terminated partnership and an ongoing lawsuit.

Stock Performance and Acquisition Rumors

Nektar Therapeutics' stock saw a dramatic increase, jumping as much as 12% on Friday after acquisition rumors circulated on social media. The biotech company's shares continued to rise in premarket trading on Monday, reaching $62.49, an 8% increase from Friday's closing price of $54.96.

The deal-focused blog Betaville was cited as the source of the acquisition rumors, with many industry observers speculating that Eli Lilly could be the potential buyer. This speculation is particularly intriguing given the companies' recent history of collaboration and conflict.

Nektar-Lilly Partnership: From Collaboration to Controversy

The relationship between Nektar Therapeutics and Eli Lilly dates back to July 2017 when they entered into a partnership focused on rezpegaldesleukin (rezpeg), Nektar's T cell stimulator. The initial agreement included a $150 million upfront payment from Lilly, with the potential for up to $250 million in milestone payments.

However, the partnership began to unravel following the presentation of Phase Ib data for rezpeg in September 2022. While the drug showed dose-dependent improvements in disease burden for atopic dermatitis, the efficacy results fell short of statistical significance. Consequently, Lilly terminated the partnership in April 2023, returning the rights to rezpeg to Nektar.

Legal Battle and Data Discrepancies

The situation took a contentious turn in August 2023 when Nektar alleged that Lilly had miscalculated rezpeg's efficacy. After gaining access to raw data files, Nektar claimed to have discovered that the drug was significantly more effective than Lilly's analysis had indicated, meeting the threshold for statistical significance.

Nektar's reanalysis also revealed discrepancies in a separate Phase Ib study, suggesting a stronger treatment effect on psoriasis severity than initially reported. These findings led Nektar to file a lawsuit against Lilly, accusing the pharmaceutical giant of "botching" the data analysis and delaying further development of rezpeg.

The lawsuit, filed in the U.S. District Court of San Francisco, alleges that Lilly was "fabricating excuses for why the drug was not likely to be a commercial success." As of June 12, the legal proceedings were ongoing.

Rezpeg's Potential and Market Position

Despite the controversy, Nektar continues to see promise in rezpeg. The drug, designed for subcutaneous injection, targets receptors on regulatory T cells to address immune dysregulation in diseases such as eczema. In June, Nektar reported that rezpeg treatment resulted in a 61% improvement in Eczema Area and Severity Index scores, compared to 31% in placebo groups.

While Nektar's CEO Howard Robin described these mid-stage results as "compelling," analysts have been more cautious. William Blair noted that rezpeg's point of differentiation "remains unclear" in the competitive atopic dermatitis market.

As the pharmaceutical industry watches this unfolding story, the potential acquisition of Nektar by Eli Lilly – if realized – would add another layer of complexity to an already intricate narrative of collaboration, conflict, and clinical development in the pursuit of innovative therapies.