A federal jury in the Northern District of California awarded Nektar Therapeutics (Nasdaq: NKTR) $90 million, plus interest yet to be set by the court, in its breach-of-contract suit against Eli Lilly (NYSE: LLY) — one-tenth of the $1 billion the company had sought — and the stock finished Friday essentially flat, closing down 4% at $57.06 from Thursday's $59.38.

The jury agreed with Nektar that Lilly breached the implied covenant of good faith and fair dealing in the companies' up-to-$400 million agreement to co-develop rezpegaldesleukin (rezpeg), Nektar's lead autoimmune candidate. The verdict ends, for now, a dispute that began when Lilly terminated the 2017 collaboration in 2023 after rezpeg missed its primary endpoints in two Phase II trials, including the ISLAND study in systemic lupus erythematosus.

"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. Lilly had not responded to a request for comment at deadline.

The math behind the muted market reaction

Pre-market buyers pushed Nektar up roughly 4.92% early Friday, according to Canaccord Genuity managing director Edward Nash, but the shares reversed at the open, falling 4.6% from $60.00 to $57.22 by 9:48 a.m. Against 34.14 million shares outstanding, the award works out to thin coverage.

"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 wrote in a research note.

Canaccord is keeping the payout out of its model entirely. The verdict remains subject to post-trial proceedings and a likely appeal: "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's paid," Nash wrote. He noted the award, if collected, would be a non-dilutive capital addition Nektar does not need to fund its pipeline.

Rezpeg data underpinning the pivot to pivotal trials

The court outcome lands as Nektar advances rezpeg, a first-in-class agonist of the CD25 sub-receptor in the IL-2 receptor complex designed to proliferate regulatory T cells, into pivotal development.

In August, Nektar researchers published data in The Lancet from the 16-week induction period of the 52-week REZOLVE-AD trial (NCT06136741) in moderate-to-severe atopic dermatitis. Mean EASI reductions from baseline at Week 16 were dose-dependent: 61% at 24 μg/kg every two weeks, 58% at 18 μg/kg every two weeks, and 53% at 24 μg/kg every four weeks (p<0.0001, p<0.0001 and p=0.0002, respectively), versus 31% for placebo.

Maintenance-period data released in February nearly doubled the stock. Among 55 patients on 24 μg/kg monthly dosing, 71% (36 patients) achieved EASI-75; of those, 80% (18) reached EASI-90. The response rate rose to 83% among 56 patients dosed quarterly. Itch resolution occurred in 75% of monthly-dosed patients and 77% of quarterly-dosed patients.

In alopecia areata, Nektar reported April data from a blinded 16-week extension of Phase IIb REZOLVE-AA (NCT06340360). From week 36 to 52, 29% of 14 low-dose (18 μg/kg) patients and 31% of 13 high-dose (24 μg/kg) patients achieved new SALT Score ≤20 responses — 80% or more scalp hair coverage — versus none on placebo. A pivotal AA study is now initiating, and the company targets a 2029 BLA submission in AD.

"It's not an inhibitor. It's healing your immune system, and it's allowing you to resolve inflammation naturally," Nektar CSO Jonathan Zalevsky, PhD, told GEN in June at the 2026 BIO convention, arguing the mechanism explains rezpeg's durability beyond its pharmacokinetics.

The original dispute traces to the ISLAND lupus failure; Nektar alleged Lilly under-recruited for that trial and miscalculated AD and psoriasis data presented at the 2022 EADV Congress — Lilly denied the recruitment claim but confirmed the data miscalculation. Nektar also alleged, and Lilly strongly denied, that Lilly sought to undermine the partnership after acquiring Dermira and its IL-13 antibody lebrikizumab, now FDA-approved as Ebglyss. Judge James Donato presided over the trial, which opened September 8, 2026 after a shutdown delay.

Anthropic's enzyme discovery rattles gene editing stocks

In a separate development, Anthropic — which has filed for an IPO reportedly valuing the company at $2 trillion — announced that its Claude model "discovered a novel enzyme system with properties reminiscent of CRISPR, with only high-level direction from our scientists." CEO Dario Amodei described on X "a molecular machine that we suspect could represent a new gene editing mechanism," while cautioning that its function and utility remain unclear.

Investors sold gene editing stocks on the news. Between Tuesday and Friday, Prime Medicine (PRME) fell 18% to $2.90, Q32 Bio (QTTB) dropped 17% to $8.77, Editas (EDIT) shrank 12% to $2.58, CRISPR Therapeutics (CRSP) slid 8% to $54.23, Intellia (NTLA) lost 7% to $11.75, Beam (BEAM) slipped 6% to $24.27, and Lenz (LENZ) dipped 5% to $3.92.

Leerink's Puneet Souda argued the selloff misreads the signal: Anthropic's AI-driven biology work should benefit life sciences tools companies, naming Twist Biosciences (TWST) — which has reported triple-digit growth in order ramp — as "the single most important beneficiary today from growing Bio AI efforts." Nektar, meanwhile, awaits post-trial rulings and a possible Lilly appeal before any of the $90 million reaches its balance sheet.