Nektar’s latest PhII flop threatens to unravel $400M-plus deal with Eli Lilly – Endpoints News
Eli Lilly is slamming the Phase III door on the lead program from its six-year-old deal with Nektar Therapeutics after their partner autoimmune drug failed to outperform the current standard of care in lupus.
The Phase II study in patients with moderately to severely active systemic lupus erythematosus was the first mid-stage study among several to be read out. Nektar said it is discussing “the next steps” with Lilly about the other studies planned as part of their deal, for which Lilly repaid $150 million in cash and promised $250 million in milestones in 2017, in addition to the Funding of a large portion of Phase II development.
The big top-edge failure mocks the breach at a time when Nektar is still trying to win back investors after making the joint decision with Bristol Myers Squibb on a $3.6 billion IL-2 pact resolve multiple test flops. The company had made the program in question, NKTR-358 or Rezpegaldesleukin, a focus of its turnaround plan.
In premarket trading, Nektar shares plummeted 41% to $1.74.
Rezpegaldesleukin, or Rezpeg for short, is an IL-2 conjugate designed to induce regulatory T cells. Lilly and Nektar had planned to start a Phase IIb trial in atopic dermatitis in the first half of 2023, but analysts noted the failure left the drug’s future uncertain.
“We do not see negative outcomes in lupus as a driving force for atopic dermatitis given different disease mechanisms and unique challenges in lupus, but we believe there is a possibility that LLY may choose not to continue the program,” wrote Mizuho’s Mara Goldstein.
Lupus is the second clue that Lilly chose not to move forward with rezpeg, which she also dubbed LY3471851, according to Jefferies’ Roger Song. In 2022, the pharmaceutical giant closed a planned Phase II trial in ulcerative colitis.
Nektar highlighted positive aspects of the results, including numerical improvements in multiple measures of disease activity and biomarker data indicative of Treg proliferation. But the primary endpoint was clear: it didn’t help enough patients achieve a four-point reduction in the SLEDAI-2K score to stand out from standard of care, which includes corticosteroids, antimalarials, and nonbiologic immunosuppressants.
In addition, the company tested three doses, and only the median dose of 900 mcg every two weeks showed these numerical improvements, which were not statistically significant. Even then, analysts added (citing an investor call) that rezpeg remained below the threshold that Lilly set internally for the program.
“Management appears disappointed with Lilly’s decision as there are signs of efficacy at the 900 mcg dose; However, Nektar will also not conduct its own Ph-3 study due to limited resources,” Song wrote.
The biotech, which slashed its headcount by 70% in October, ended 2022 with $505 million in cash and a catwalk through 2025. Brief deal talks with PureTech were cut short after a required disclosure from PureTech appeared to garner more attention had than the company wanted.