Eli Lilly has agreed to co-develop Nektar Therapeutics’ autoimmune disease candidate NKTR-358, through an up-to-$400 million collaboration that is the pharma giant’s third business development deal this year.

NKTR-358 is designed to target the body’s interleukin (IL-2) receptor complex to stimulate proliferation of regulatory T (Treg) cells. NKTR-358 is a Nektar-discovered novel immunological therapy being developed as a first-in-class treatment for an underlying immune system imbalance in patients with many autoimmune conditions.

On July 9 at the 13th Annual World Congress on Inflammation, Nektar trumpeted several positive preclinical results for NKTR-358, saying the therapy induced profound Treg effects and suppressed inflammation in multiple preclinical models:

  • In rodents, NKTR-358 led to “significant” Treg mobilization in blood and spleen following a single subcutaneous administration, with increases in regulatory T cells sustained for 7 to 10 days.
  • In nonhuman primates, a single NKTR-358 administration led to increases in Treg mobilization and activity sustained for over 14 days—a response “greatly superior” in magnitude, duration, and specificity to an equivalent dose of recombinant human IL-2 administered daily for five days.
  • In a mouse model of cutaneous hypersensitivity, NKTR-358 significantly suppressed antigen-induced inflammatory responses, an effect that was antigen-specific and associated with establishment of Treg memory. Similar results were achieved in an analogous model using nonhuman primates.
  • In a spontaneous mouse model of systemic lupus erythematosus (SLE), NKTR-358 administration over 12 weeks resulted in sustained Treg elevation with corresponding significantly reduced blood urea nitrogen. 

NKTR-358 also resulted in a return to normal of urine protein levels and kidney histopathology in the treated animals, Nektar said.

“It has the potential to have a profound effect on a number of immune and inflammatory disorders, including lupus, inflammatory bowel disease (IBD), rheumatoid arthritis (RA), psoriasis, multiple sclerosis (MS), type 1 diabetes and even allergy,” Nektar president and CEO Howard W. Robin told analysts on the company’s Q1 conference call on May 13, according to a transcript published by Seeking Alpha.

Clinical Trial Launched

During the first quarter, Nektar said it launched the first clinical trial of NKTR-358, already completing the first dose cohort of the Phase I trial as of May.

“With an asset that has this much broad potential in so many indications, we believe the right strategy for NKTR-358 is to seek a co-development and co-promotion partnership with a company that has a strong leadership position in immunology and importantly shares our vision for the broad development of NKTR-358. Our goal is to enter into partnership this year,” added Robin.

Also in May, Nektar announced its appointment of Brian L. Kotzin, M.D., to head clinical development of NKTR-358. Dr. Kotzin came to Nektar with more than 30 years of expertise in inflammation and immunology in both research and industry, including 11 years leading immunology R&D at Amgen from 2004 to 2015.

Lilly has agreed to pay Nektar $150 million upfront and up to $250 million tied to achieving development and regulatory milestones. Nektar has agreed to oversee development through completion of Phase I, while Lilly has agreed to fund 75% of Phase II development costs, with the remaining 25% coming from Nektar.

Nektar will have the option to participate in Phase III development on an indication-by-indication basis, and is eligible for double-digit royalties that increase based on its Phase III investment and product sales. Nektar will also have an option to co-promote NKTR-358 in the U.S. under certain conditions, while Lilly will be responsible for all costs of global commercialization.

“We are very pleased to enter into this collaboration with Lilly as they have strong expertise in immunology and a successful track record in bringing novel therapies to market,” Robin added in today’s statement.

Building Immunology Presence

Lilly’s immunology products include moderate-to-severe plaque psoriasis treatment Taltz® (ixekizumab), launched in the U.S. last year. Taltz generated $113.1 million in sales last year, more than half of which ($61.3 million) came during the fourth quarter. Since then, Taltz gained $96.6 million in Q1; Lilly is set to release Q2 results tomorrow.

The company’s immunology pipeline is led by baricitinib, an Incyte co-developed once-daily oral rheumatoid arthritis drug approved in Europe as Olumiant®, but whose FDA review ended in April with a Complete Response Letter requesting additional clinical data.

Just last month, Lilly agreed to acquire from KeyBioscience worldwide rights to develop and commercialize its pipeline of dual amylin calcitonin receptor agonists (DACRAs) for type 2 diabetes and other metabolic disorders, for $55 million upfront plus additional undisclosed payments tied to achieving development, regulatory, and commercialization milestones, as well as tiered royalties on future sales.

And in January, Lilly disclosed plans to acquire CoLucid Pharmaceuticals  for up to $960 million, a deal completed March 1, giving the buyer the late clinical-stage migraine therapy candidate lasmiditan.

Lilly’s deal with Nektar is subject to clearance under the Hart–Scott–Rodino Antitrust Improvements Act and other customary closing conditions.

Lilly said it expects its reported earnings per share (EPS) guidance in 2017 to shrink by approximately $0.09 per share, the amount of an acquired in-process R&D charge to earnings the company anticipates incurring as a result of the collaboration. Lilly previously projected reported EPS of $2.60 to $2.70, up 1% to 5% from 2016, so the revised guidance would range from $2.51 to $2.61.

Lilly is not revising its non-generally accepted accounting principles (GAAP) EPS guidance, which the company has projected at between $4.05 and $4.15, up 15% to 18% from 2016.