Jury Awarded Nektar $90 Million in Contract Breach Case
Biotech firms should review co-development agreements to ensure clear alignment on drug trial timelines.
Updated on Sept. 24, 2026 in Healthcare
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A California federal jury ordered Eli Lilly to pay $90 million to Nektar Therapeutics after finding the drugmaker breached an implied covenant of good faith and fair dealing. The dispute centered on the co-development of the autoimmune drug Rezpeg.
Why it matters
This verdict highlights the legal risks inherent in collaborative drug development, where disagreements over execution can result in significant litigation costs for participating firms. The outcome underscores the necessity for precise contractual obligations regarding partner expectations.
A federal jury awarded Nektar Therapeutics $90 million following the breach of a co-development agreement. This figure represents a fraction of the $1 billion in damages the company originally sought in its suit against Eli Lilly.
The players
Nektar Therapeutics
A biopharmaceutical company focused on the discovery and development of novel therapeutics for autoimmune and cancer indications.
Eli Lilly
A global pharmaceutical firm known for developing and commercializing human health medicines across multiple therapeutic areas.
The details
The litigation focused on the collaborative development of Rezpeg, an autoimmune therapy. Jurors concluded that Eli Lilly failed to uphold its implied covenant of good faith and fair dealing, which governs the mutual obligations of partners in complex R&D arrangements. The ruling emphasizes the legal exposure businesses face when strategic priorities shift during long-term clinical development partnerships.
Timeline
September 24, 2026: A California federal jury issued the verdict.
Market Landscape
This verdict underscores the application of the implied covenant of good faith and fair dealing to high-stakes pharmaceutical co-development deals. It follows a recurring pattern in contract law where partnerships between large-scale and specialized firms face judicial scrutiny.
Operators in collaborative industries should audit existing development agreements to ensure contractual definitions of performance are exhaustive. Management teams should consult counsel to assess whether current R&D governance protocols sufficiently mitigate risks of litigation regarding implied duties.
The takeaway
This case highlights the importance of clearly defining development milestones within joint ventures to avoid vague claims of bad faith. Business leaders should review their co-development contracts with counsel to ensure operational duties remain explicit rather than implied.
Further reading
For broader trends in pharmaceutical legal developments, see Healthcare.
Source note: This article includes information reported by Law360.
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