Nektar Therapeutics Shares Surge Amid Buyout Rumors, Ongoing Lawsuit with Eli Lilly

Nektar Therapeutics' stock price experienced a significant uptick following speculation of a potential acquisition, with rumors pointing to pharmaceutical giant Eli Lilly as the prospective buyer. This development comes against the backdrop of an ongoing legal dispute between the two companies, centered around the analysis of clinical trial data for the atopic dermatitis drug rezpegaldesleukin (rezpeg).

Acquisition Rumors Fuel Stock Price Surge

Shares of Nektar Therapeutics jumped as much as 12% on Friday, with the upward trend continuing into Monday's premarket trading. The biotech company's stock was trading at $62.49, marking an 8% increase from Friday's closing price of $54.96. The surge in stock price was triggered by acquisition rumors circulating on social media, as reported by the Betaville blog.

Despite the breakdown of their partnership over rezpeg, industry speculation suggests that Eli Lilly could be the potential buyer. This comes as a surprise to many, given the contentious history between the two companies.

Rezpeg: A Contentious History

The relationship between Nektar and Eli Lilly dates back to July 2017, when they entered into a partnership for the development of rezpeg, a T cell stimulator. Lilly made an upfront payment of $150 million and promised up to $250 million in milestones for co-development and co-commercialization rights.

However, the collaboration soured following the presentation of Phase Ib data by Lilly in September 2022. While the drug showed dose-dependent improvements in disease burden, its efficacy fell short of statistical significance. This led to Lilly backing out of the partnership in April 2023, returning the rights of rezpeg to Nektar.

Legal Battle and Data Discrepancies

The situation took a dramatic 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 subsequently filed a lawsuit against Lilly, accusing the pharmaceutical company of "botching" the data analysis of rezpeg and delaying "development and commencement of additional trials." Nektar also alleged that Lilly was "fabricating excuses for why the drug was not likely to be a commercial success." The lawsuit is currently ongoing in the U.S. District Court of San Francisco.

Rezpeg's Potential and Market Outlook

Despite the legal challenges, Nektar remains optimistic about rezpeg's potential. The drug, designed for subcutaneous injection, targets receptors on regulatory T cells to address immune dysregulation in diseases like eczema. Recent data presented by Nektar showed a 61% improvement in Eczema Area and Severity Index scores with rezpeg treatment, compared to 31% in placebo groups.

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

As the pharmaceutical industry watches this unfolding drama, the potential acquisition of Nektar by Eli Lilly, if realized, could significantly reshape the landscape of atopic dermatitis treatment development and spark further discussions about data integrity in clinical trials.