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Eli Lilly Pays Nektar $150M Up Front For Autoimmune Drug Rights

Xconomy Indiana — 

Nektar Therapeutics has been buoyed of late by the progress of a potential pain drug, but another, much earlier program has caught the eye of Eli Lilly, which has agreed to write the San Francisco company a $150 million check to help bring the therapy through clinical testing.

Depending on the progress of the drug NKTR-358, which is being developed for a wide range of autoimmune diseases, Eli Lilly (NYSE: LLY) could pay Nektar (NASDAQ: NKTR) up to $250 million more in milestones. If the drug is approved, Lilly would own worldwide rights; Nektar would receive royalties from sales. Lilly will pay for all commercialization costs, though Nektar has the option to co-promote the drug in the U.S. “under certain conditions” that weren’t specified.

In autoimmune disorders, the immune system mistakenly attacks healthy tissue. The American Autoimmune Related Disease Association estimates that more than 50 million Americans suffer from autoimmune diseases such as lupus, psoriasis, and rheumatoid arthritis.

NKTR-358 is meant to help by addressing an “imbalance” among different types of immune cells that occurs in many patients with autoimmune conditions. By blocking a molecular target called interleukin-2, the drug is supposed to stimulate the production of inhibitory immune cells called regulatory T cells, which Nektar says might restore balance to the immune system. (This approach is similar to the one taken by Cambridge, MA, startup Delinia, which was acquired by Celgene (NASDAQ: CELG) for $300 million in January.)

The Nektar drug, an injectable that patients can administer themselves either once or twice a month, began a 50-patient Phase 1 trial in March. By the end of this year, the company expects to start a broader Phase 1 study that will test the drug in patients with autoimmune conditions such as psoriaris and lupus.

According to the agreement, Nektar will run the Phase 1 trial. Eli Lilly will shoulder 75 percent of the costs of Phase 2 studies. Nektar will have an option to participate in the Phase 3 studies on a disease-by-disease basis.

For Nektar, the deal comes a week after the company released additional data showing its opioid pain-killer NKTR-181, which the company hopes will provide an alternative to addictive opioids, did not produce as fast or as strong a high in patients who describe themselves as recreational drug users. Nektar shares now trade at $22.52 apiece, near the stock price’s 52-week high of $23.47 per share.

Lilly’s partnership with Nektar, meanwhile, follows the FDA’s rejection of baricitinib (Olumiant), a rheumatoid arthritis treatment that the Indianapolis company developed in partnership with Wilmington, DE-based Incyte (NASDAQ: INCY). The FDA cited safety questions about the drug.

Lilly isn’t giving up on baricitinib, which is approved in Europe, and it has pledged to resubmit its drug application after discussing the matter with the FDA. But the Nektar deal adds another potential autoimmune disease drug to its pipeline.

Photo by Flickr user Roland Tanglao via a Creative Commons license.