Nektar Therapeutics is in the mix of companies developing new atopic dermatitis drugs that could bring dosing and efficacy advantages compared to currently available treatments. But the biotech finds its biological drug behind others in the chase and for that, it blames former partner Eli Lilly.

Lilly had taken the lead on developing the Nektar drug, rezpegaldesleukin (typically shortened to “rezpeg”), a potential treatment for a wide range of autoimmune diseases. The alliance ended earlier this year after disappointing clinical trial results and the drug’s rights reverted to Nektar. But the San Francisco-based biotech says there’s more involved in this outcome than a failed clinical trial. Nektar contends Lilly miscalculated clinical data for the drug in atopic dermatitis and psoriasis, erroneous results that scuttled its development. In a complaint filed on Monday in federal court for the Northern District of California, Nektar alleges that Lilly took this action to favor a different atopic dermatitis drug it had added in a $1.1 billion acquisition.

Speaking during a Tuesday evening conference call to discuss financial results for the second quarter of this year, Nektar President & CEO Howard Robin said he would not comment on active litigation. But in general terms, he alluded to the negative impact Lilly’s alleged actions have had on rezpeg’s development.

“We take this lawsuit very seriously,” he said. “It’s significant, it’s substantial. If you look at the development of rezpeg, rezpeg could have likely been in a Phase 2 study in atopic dermatitis a year ago, a year and a half ago, so we take this lawsuit very seriously.”

Lilly did not respond to a message seeking comment.

In atopic dermatitis, also known as eczema, the biologic treatment that dominates the market is Dupixent, a product from partners Sanofi and Regeneron Pharmaceuticals. This blockbuster drug targets and blocks IL-13 and IL-14, two signaling pathways associated with inflammation in atopic dermatitis and other autoimmune disorders. Dosing of the injectable drug ranges from every other week to every four weeks, but some biotechs are developing biologic drugs that require less frequent dosing.

In 2017, Lilly began a partnership with Nektar on rezpeg, paying $150 million up front. The drug works in a different way, targeting the IL-2 pathway in order to stimulate the proliferation of regulatory T cells, also called Tregs. These immune cells tamp down excessive immune responses. The deal called for Nektar to complete Phase 1 testing and for the partners to share in Phase 2 development, with Lilly shouldering most of that responsibility.

In the complaint, Nektar notes that Lilly’s $1.1 billion acquisition of Dermira in 2020 happened a few months after the pharma giant started tests of rezpeg in eczema and psoriasis. Dermira’s lead drug candidate, lebrikizumab, is also a biological drug, an antibody designed to block IL-13. Currently under FDA review, lebrikizumab is one of four drugs that Lilly had identified as key to the company’s revenue growth in 2023.

“After purchasing lebrikizumab, Lilly’s interest and effort in developing Rezpeg waned dramatically, as if it had forgotten it had independent and continuing contractual obligations to Nektar to act ‘in good faith’ and use ‘Commercially Reasonable Efforts to develop, receive regulatory approval for, market and sell’ Rezpeg,” Nektar said in the complaint.

The complaint further alleges that Lilly “sloughed” certain Rezpeg development work to at least one contractor, then failed to properly oversee or validate the subcontracted work. Nektar alleges that this Lilly conduct resulted in a “botched” analysis of the trial data in eczema and psoriasis.

Nektar contends that Lilly failed to correctly set up its statistical algorithm to evaluate eczema data from the Phase 1b study. The result is what the complaint describes as “botched math” and incorrect scores as measured according to a widely used scale for assessing eczema severity. Consequently, the results underreported the clinical efficacy of rezpeg in the study. Lilly then compounded the error by publishing the data and undermining rezpeg’s prospects, the complaint said.

The data that Nektar contends is false reported that about 29% of patients had a 75% or greater improvement in score after 12 weeks of treatment with the high-dose. But Nektar said that the true measure in this cohort was actually higher at about 41% of patients. The complaint alleges that Lilly made similar miscalculations when scoring psoriasis patients.

Nektar did not know about the miscalculations because Lilly did not share the raw clinical data until after the alliance was terminated in April. According to the complaint, Lilly “has since conceded that it botched the data analysis from the Eczema Study.”

The partnership agreement called for Lilly to return to Nektar materials related to rezpeg, including clinical data. Nektar’s own analysis of those data uncovered Lilly’s alleged miscalculations. The company went further and had an independent statistical firm analyze the raw data and the clinical trial plan. Robin said this firm came up with the same numbers as Nektar.

Nektar is pressing forward with rezpeg’s development, first in atopic dermatitis and then potentially in other autoimmune indications, Chief Research & Development Officer Jonathan Zalevsky said during the conference call. He added that the reanalyzed data show a “rapid and steep” drop in eczema severity scores after two doses, results that suggest a durable effect that could support less frequent dosing. Zalevsky said the hypothesis is that stimulating Tregs reeducates the immune system by treating the underlying pathology rather than the symptoms of the disease.

“These clinical data provide for the first time a novel clinical finding demonstrating that the Treg mechanism can translate into, effectively, what looks like memory of the immune system, resulting both in long-term durability and strong efficacy in atopic dermatitis,” he said.

Nektar aims to advance rezpeg to a Phase 2b study starting in October. The company plans to discuss details about the clinical trial design during an investor meeting in coming weeks.

According to the lawsuit, Nektar is seeking compensatory damages in an amount to be determined at trial by jury. The company is also asking for payment of all money owed to it according to the agreement, payment of all costs associated with the legal action, punitive damages, and restitution for all the money and resources “lost as a result of Lilly’s unfair competition.”

The case is Nektar Therapeutics v. Eli Lilly & Co., case no. 3:23-cv-03943-JCS.

Photo: Kuzma, Getty Images