This past week, Nektar Therapeutics (Nasdaq: NKTR) offered an uncommon example of victory in court translating into defeat on Wall Street.

Nektar’s shares finished Friday flat, dipping 4% from $59.38 to $57.06 despite a jury siding with the San Francisco biotech over Eli Lilly (NYSE: LLY) in a three-year-old legal dispute over the pharma giant’s terminating a collaboration agreement to co-develop Nektar’s lead pipeline candidate rezpegaldesleukin (rezpeg).

A jury in the Northern District of California awarded Nektar $90 million, plus additional interest to be determined by the court, after agreeing with Nektar that Lilly breached a covenant of good faith and fair dealing implied through the companies’ up-to-$400 million agreement to co-develop rezpeg, initially for autoimmune and other chronic inflammatory conditions.

“We are pleased with the jury’s verdict in Nektar’s favor finding that Lilly breached the implied covenant of good faith and fair dealing in the license agreement,” Nektar said in a statement to GEN and other news outlets.

At deadline, a Lilly spokesperson had not responded to a GEN query seeking comment on the Nektar jury verdict.

The legal victory was ultimately viewed as anything but by investors, since Nektar had sought a verdict of $1 billion against Lilly. True, pre-market investors sparked a mini-buying surge that was enough to send Nektar shares rising ~4.92% early on Friday, Edward Nash, a managing director and senior biotechnology analyst with Canaccord Genuity, reported in a research note.

But when the opening bell sounded, Nektar shares swung back down, slipping 4.6% from an opening price of an even $60 a share the first minute of trading down to $57.22 at 9:48 a.m. That is below expectation based on the 34.14 million outstanding Nektar shares as of Friday morning.

“A judgment of $90M represents $2.64 in cash per share and would imply a 4.4% move upward in the stock compared to [Thursday]’s closing price of $59.38,” Nash explained.

Silver lining

Nash did see a silver lining behind the proverbial cloud of Nektar’s failure to surge on the good legal news.

“While the company was seeking $1B in damages and the $90M falls short of this number, our model does not include any windfall from the case. Importantly, the company also did not require any monies from the case in order to continue developing their pipeline assets,” Nash commented. “Therefore, any sum awarded in the case represents a non-dilutive capital addition to the balance sheet which we have not been factoring into our valuation.”

Because the jury’s verdict is still subject to post-trial proceedings and an all-but-expected appeals process, Canaccord Genuity has left out a jury verdict payout from its model for Nektar: “If Lilly appeals the verdict, it could be months or years before Nektar would receive any payment. We will move to include the sum in our model when and if it is paid.”

Nektar said rezpeg is a first-in-class therapeutic designed to target the CD25 sub-receptor in the interleukin-2 (IL-2) receptor complex to stimulate proliferation and growth of regulatory T cells (Tregs). By activating these cells, Nektar reasons, rezpeg could restore balance between Tregs and effector T cells (Teffs) and thus address the underlying immune system imbalance seen in many autoimmune and inflammatory conditions.

Dose-dependent AD improvement

In August, Nektar researchers published data in The Lancet from the 16-week induction period of the 52-week REZOLVE-AD trial (NCT06136741) assessing rezpeg in patients with moderate-to-severe atopic dermatitis (AD). Patients treated with rezpeg showed statistically significant, dose-dependent improvement in mean percent reduction in Eczema Area and Severity Index (EASI) from baseline at Week 16: 61% of patients dosed at the 24 μg/kg once every 2 weeks (q2w) arm; 58% of patients at the 18 μg/kg q2w arm, and 53% of patients dosed at 24 μg/kg once every 4 weeks (p<0.0001, p<0.0001, and p=0.0002, respectively), vs. 31% for placebo.

Nektar shares nearly doubled in February after it announced positive data from the 36-week blinded maintenance period of REZOLVE-AD. Among 55 patients dosed at 24 µg/kg every month, 71% (36) achieved EASI score reductions of at least 75% (EASI-75). Half those patients (18, or 80%) achieved EASI-90. The percentage climbed to 83% among the 56 patients receiving the same dosage of rezpeg every three months. Of those, 63% (21) maintained validated Investigator Global Assessment of Atopic Dermatitis (vIGA-AD) 0/1 response after quarterly dosing, as did 85% (14) of patients dosed monthly.

Perhaps most encouraging to patients, 75% (25) of patients dosed monthly stopped itching—a percentage that rose to 77% (17) among those who were dosed every quarter.

AA durability data

In its Friday statement, Nektar said it recently advanced rezpeg into pivotal studies in AD and is initiating a pivotal study in alopecia areata (AA), where the company reported positive data in April from a blinded 16-week treatment extension period in its Phase IIb REZOLVE-AA trial (NCT06340360).

From week 36 to week 52, 29% of 14 patients at low dose of 18 µg/kg and 31% of 13 patients at high dose of 24 µg/kg achieved new SALT Score ≤20 responses as compared to none in the placebo arm. A SALT Score ≤20 is achieved when a patient has 80% or more of their scalp covered by hair.

“For me, as a scientist, this is really exciting, because most drugs are inhibitors,” Jonathan Zalevsky, PhD, Nektar’s chief research and development officer, told GEN in June in an interview during the 2026 Biotechnology Innovation Organization (BIO) International Convention, held in San Diego. “Inhibitors work at the beginning, and then they get worse, because it’s just how biology works. We always have escape pathways to any single inhibition. Repression requires workaround; that’s just basic biology. But rezpeg doesn’t work that way. It’s not an inhibitor. It’s healing your immune system, and it’s allowing you to resolve inflammation naturally, the way you’re normally meant to.”

“We think that might be one of the things we’re seeing reflected in the durability of rezpeg. It really seems much more durable than other mechanisms, and it has an activity that really preserves itself, and it long outlasts its own pharmacokinetics. That’s something we’re very excited about,” Zalevsky added.

The company has said it aims to submit a Biologics License Application (BLA) for rezpeg in AD in 2029.

“We remain focused on delivering this important potential new treatment as quickly as possible to patients battling chronic auto-immune conditions,” Nektar stated.

Relationship sours

Nektar’s relationship with Lilly soured in February 2023, soon after rezpeg failed the Phase II ISLAND trial (NCT04433585) in its initial development indication of moderately-to-severely active systemic lupus erythematosus (SLE). Lilly halted its collaboration immediately in that indication, followed by the companies determining whether to move forward in AD.

Two months later, Lilly handed back to Nektar all rights to rezpeg (which Lilly labeled LY3471851) in all indications, including AD and psoriasis. That ended a collaboration launched in 2017, when Lilly agreed to pay Nektar $150 million upfront and up to $250 million tied to achieving development and regulatory milestones toward rezpeg, then called NKTR-358.

Nektar responded to the termination in August 2023 by suing Lilly in U.S. District Court for the Northern District of California in San Francisco, alleging breach of contract and breach of implied covenant of good faith and fair dealing: “This case involves the all-too-familiar story of a large pharmaceutical company elevating profits over all else,” Nektar stated in its initial complaint.

In that complaint, Nektar asserted that Lilly failed to recruit enough patients for the ISLAND trial in lupus, leading to its failure. Nektar also alleged that Lilly incorrectly calculated data from the companies’ AD and psoriasis trials of rezpeg that was presented at the 2022 European Academy of Dermatology and Venereology (EADV) Congress; Lilly has denied the allegations on recruitment failures yet confirmed that the data were incorrectly calculated for both AD and psoriasis trials.

Clash over Dermira acquisition

Nektar also alleged—and Lilly has strongly denied—that the pharma giant soured, then sought to undermine, their collaboration after Lilly agreed to acquire Dermira for approximately $1.1 billion in 2020. Dermira focused on developing a pipeline of dermatological drugs led by lebrikizumab, a monoclonal antibody designed to bind IL-13 with high affinity. Today Lilly markets that drug under the name Ebglyss® (lebrikizumab-lbkz), following FDA approval in 2024 in moderate-to-severe AD.

Lilly then tried to get Nektar’s lawsuit dismissed—but when it couldn’t do so, it counter-sued, alleging breach of specified confidentiality provisions and defamation–a countersuit the pharma giant was allowed to voluntarily dismiss in October 2025.

A jury trial was initially scheduled to begin on October 27, 2025, was postponed due to the federal government shutdown, and instead began September 8, 2026. The case, Nektar Therapeutics v. Eli Lilly & Co (3:23-cv-03943), was assigned to Judge James Donato, who was appointed by President Barack Obama and confirmed by the U.S. Senate in 2014.

“In May 2023, after rezpeg failed to meet its primary endpoints in two separate Phase II trials, Lilly terminated its collaboration with Nektar and returned the rights to rezpeg at Nektar’s request,” Lilly told GEN in February 2026 through a spokesperson. “Our decision was consistent with Lilly’s normal practices and was made following a review of the compound’s competitive profile, including a high incidence of injection site reactions, which were also reflected in Nektar’s REZOLVE-AD trial.”

“The litigation between Lilly and Nektar remains ongoing, and we stand behind our decision to terminate the collaboration,” Lilly added at the time.

Anthropic’s “reminiscent of CRISPR” discovery dents gene editing stocks

Anthropic, the artificial intelligence (AI) giant that has filed for an initial public offering (IPO) that would value the company at an eye-popping $2 trillion, wreaked some havoc on gene editing stocks this past week after making global headlines with its announcement that its Claude large-language model “discovered a novel enzyme system with properties reminiscent of CRISPR, with only high-level direction from our scientists.”

The discovery emerged from a research group formed earlier this year “to see whether general AI models can systematize and accelerate discoveries capable of revolutionizing biology and medicine,” as Anthropic explained in its announcement. “Our focus is on fundamental biology research using Claude: exploring datasets of DNA to identify uncharacterized protein families, generating hypotheses at scale, and testing them through experiments in the lab.”

In one of the group’s first research programs, Claude autonomously discovered a novel enzyme system that is associated with an array of DNA repeats—what the company called “a pattern reminiscent of CRISPR.”

“Although we don’t yet know its function, the system that Claude discovered has a set of characteristics that have only ever been found together in a handful of other systems, all of which are programmable and perform operations like cutting, copying, and pasting DNA,” Anthropic explained.

Anthropic CEO Dario Amodei elaborated further in a post on X, describing the novel enzyme system as “a molecular machine that we suspect could represent a new gene editing mechanism. Its precise function, biotechnological utility (if any), or level of significance is not yet clear, but at minimum it is work I would have been proud to do as a PhD student.”

“Mostly” by Claude

“The work was done mostly, though not entirely, by Claude: our life sciences team suggested a broad area of research, Claude read through the literature and a bunch of genome data and discovered something interesting, then Claude proposed experiments to verify the discovery and our team carried them out,” Amodei added.

Anthropic’s statement and Amodei’s elaboration led investors to briefly sell off shares of gene editing company stocks on Wednesday, resulting in declines in high single digit percentages that day. The declines slowed down or turned into single digit gains Thursday, but the stocks all slid again Friday, albeit by low single digits.

Here’s how seven gene editing stocks performed between Tuesday and Friday:

• Beam Therapeutics (Nasdaq: BEAM)—Slipping 6% from $25.93 Tuesday to $24.37, finishing the week at $24.27.
• CRISPR Therapeutics (Nasdaq: CRSP)—Sliding 8% from $59.03 to $55.76, finishing at $54.23.
• Editas Medicine (Nasdaq: EDIT)—Shrinking 12% from $2.92 to $2.69, finishing at $2.58.
• Intellia Therapeutics (Nasdaq: NTLA)—Dropping 7% from $12.69 to $12.33, finishing at $11.75.
• Lenz Therapeutics (Nasdaq: LENZ)—Dipping 5% from $4.13 to $3.76, finishing at $3.92.
• Prime Medicine (Nasdaq: PRME)—Tumbling 18% from $3.54 to $3.13, finishing at $2.90.
• Q32 Bio (Nasdaq: QTTB)—Falling 17% from $10.57 to $9.56, finishing at $8.77.

Puneet Souda, senior managing director, life science tools and diagnostics and a senior research analyst with Leerink Partners, wrote in a research note that Anthropic’s discoveries along with other biotech-focused AI research would prove beneficial to life sciences tools companies—especially Twist Biosciences (Nasdaq: TWST), citing an earlier July 16 research note reporting that Twist has said its growth ramp of orders for its tools has grown by triple digits.

“We see TWST as the single most important beneficiary today from growing Bio AI efforts but expect all LST [life sciences tools] names to benefit in the long run as the need for automation and large-scale data grows (driven largely by industry funding vs academic),” Souda observed.