Nektar Therapeutics Stock Rises After $90 Million Jury Verdict Against Lilly

Nektar Therapeutics shares moved higher after a U.S. jury awarded the clinical-stage biotechnology company $90 million in damages in its contract dispute with Eli Lilly over the development of the experimental drug rezpegaldesleukin.

The verdict gave Nektar a significant legal boost, although the award is far smaller than the roughly $1 billion in damages the company had sought. The judgment is also not final: post-trial proceedings remain, and an appeal is possible.

The case is important for investors for another reason. Nektar has regained full rights to rezpegaldesleukin and is now financing its own late-stage development program. The company is moving the drug into Phase 3 trials for autoimmune and inflammatory conditions, making the legal award potentially relevant to its cash position at an important point in the drug's development.

Why Did Nektar Win $90 Million From Lilly?

The dispute goes back to a collaboration between Nektar and Lilly covering rezpegaldesleukin.

Nektar filed its lawsuit in August 2023, alleging breach of contract and breach of the implied covenant of good faith and fair dealing under their licensing agreement. The case went to trial in the U.S. District Court for the Northern District of California beginning September 8, 2026.

On September 24, the jury found that Lilly breached the implied covenant of good faith and fair dealing and awarded Nektar $90 million in damages. Interest will be determined by the court.

The finding does not mean Lilly has accepted the verdict. A Lilly spokesperson said the company intends to seek a reversal and believes the appropriate damages amount is zero. Lilly also said the jury awarded only a small fraction of what Nektar had sought.

That disagreement means the legal process is likely to continue.

Why Was Rezpegaldesleukin the Source of the Dispute?

Rezpegaldesleukin is Nektar's lead drug candidate and is designed to stimulate regulatory T cells, or Treg cells, which help regulate immune responses.

The drug is being investigated across several autoimmune diseases, including moderate-to-severe atopic dermatitis and severe-to-very-severe alopecia areata. Nektar is also collaborating with TrialNet on a Phase 2 study in people with newly diagnosed stage 3 type 1 diabetes.

Nektar previously depended on Lilly to help develop the drug.

In 2023, after a Phase 2 lupus study failed to meet its primary endpoint, Lilly decided not to advance rezpegaldesleukin into Phase 3 development for systemic lupus erythematosus. Nektar subsequently regained the full rights to the program and took responsibility for its future development costs.

The legal dispute developed from the disagreement surrounding Lilly's handling of the collaboration and development of the drug.

The $90 Million Comes at an Important Time for Nektar

The timing of the verdict matters because Nektar is entering a substantially more expensive stage of drug development.

In July 2026, the company began the first two global registrational Phase 3 trials of rezpegaldesleukin in moderate-to-severe atopic dermatitis. A third Phase 3 study, ZENITH AD-3, is planned for patients with previous biologic or systemic JAK-inhibitor treatment experience. Nektar also plans to start a Phase 3 study in alopecia areata in early 2027.

Phase 3 trials are generally larger and more expensive than earlier-stage studies because they are designed to provide the evidence needed for potential regulatory approval.

That makes additional capital particularly valuable for Nektar.

The company reported $1.023 billion in cash and marketable securities as of June 30, 2026, compared with $245.8 million at the end of 2025. Nektar also reported a $85.5 million net loss for the first half of 2026.

Nektar said its cash runway extended into the third quarter of 2028, beyond the initial Phase 3 data readouts it expected in mid-2028.

The jury award, if ultimately upheld and collected, could therefore provide additional financial flexibility while the company funds its pipeline.

What Is Happening With Nektar's Stock?

Nektar shares gained in premarket trading following news of the verdict. Reuters reported the stock was up about 4% at $61.80 before the U.S. market opened on September 25, while the shares had already risen around 40% year to date at the previous close.

Other market reports showed the premarket move at roughly 3.6% to 5%, illustrating the immediate positive reaction to the legal outcome.

However, the stock reaction should not be interpreted as evidence that the $90 million is already available to Nektar.

The verdict remains subject to post-trial proceedings, and any resulting judgment could be appealed.

For a clinical-stage biotechnology company, share prices can also be highly sensitive to clinical-trial results, regulatory developments and financing expectations. The legal award is therefore only one part of the investment story.

The Bigger Catalyst Is Still Rezpegaldesleukin

The lawsuit provides a near-term financial and legal catalyst, but Nektar's longer-term value remains closely tied to whether rezpegaldesleukin can successfully progress through clinical development.

That is particularly important because Nektar has increased spending as the drug moves into Phase 3.

The company's R&D expense reached $74.8 million in the first half of 2026, compared with $60.4 million in the same period of 2025. Nektar said the increase was primarily related to the Phase 3 atopic dermatitis program and manufacturing activities for rezpegaldesleukin.

The company also reported positive Phase 2b results in its autoimmune programs. In August, Nektar announced publication in The Lancet of 16-week induction results from the REZOLVE-AD study, while the Phase 3 ZENITH AD program is now underway.

Those clinical developments could ultimately matter much more to the company's valuation than the litigation award.

What Does the Verdict Mean for Eli Lilly?

For Lilly, the $90 million award is relatively small compared with the company's overall scale.

More importantly, Lilly is disputing the verdict and intends to seek a reversal.

The case also relates to a program Lilly no longer controls. Nektar regained the rights to rezpegaldesleukin in 2023, meaning the drug's subsequent development is now being funded and managed by Nektar.

The financial impact for Lilly will therefore depend on the final judgment and any appeal rather than simply the jury's initial award.

Key Risks for Nektar Investors

The positive legal outcome does not eliminate the major risks associated with investing in a clinical-stage biotechnology company.

Clinical-trial risk

Rezpegaldesleukin still needs to demonstrate sufficient safety and efficacy in Phase 3 trials. A promising Phase 2 result does not guarantee success in late-stage development.

Regulatory risk

Even successful clinical trials do not automatically result in regulatory approval. Nektar will ultimately need to satisfy regulators before commercialization.

Cash-burn risk

Phase 3 development and manufacturing are expensive. Nektar expects R&D spending to rise significantly as its late-stage programs expand.

Litigation risk

The $90 million verdict remains subject to post-trial proceedings and potential appeals. Investors should not treat the full award as guaranteed cash proceeds yet.

Concentration risk

Rezpegaldesleukin is central to Nektar's strategy. Failure of the drug could materially affect the company's prospects and valuation, a risk Nektar itself highlights in its regulatory filings.

What Investors Should Watch Next

The immediate focus will be on the final judgment, interest calculation and any appeal by Lilly.

Beyond the lawsuit, investors should pay close attention to enrollment and progress in the Phase 3 ZENITH AD trials, future data from the REZOLVE programs and the planned alopecia areata Phase 3 program.

The company's cash balance and spending rate are also important. Nektar has strengthened its balance sheet substantially, but advancing several late-stage clinical programs will require continued investment.

Most importantly, investors will eventually need evidence that rezpegaldesleukin can translate its earlier clinical results into successful Phase 3 outcomes.

Bottom Line

Nektar Therapeutics received a $90 million jury award against Eli Lilly after a California federal jury found that Lilly breached the implied covenant of good faith and fair dealing in their former rezpegaldesleukin collaboration. The award is a significant legal development, but Lilly plans to challenge the verdict and the case is not yet finished.

For Nektar, the timing is notable because the company is now funding Phase 3 development of its lead drug itself. Its strong cash position provides a substantial financial cushion, while the $90 million award could potentially add further resources if it survives the remaining legal process.

However, the central investment question remains clinical rather than legal: whether rezpegaldesleukin can successfully navigate Phase 3 trials and eventually reach the market.

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This article is for informational and educational purposes only and should not be considered investment advice.