Nektar Therapeutics shares surged as much as 10% in premarket trade Monday after the company announced a $150 million deal with Eli Lilly & Co. to co-develop its immunological therapy NKTR-358. The deal also includes up to $250 million in additional development and regulatory milestone payments. Eli Lilly expects an charge of about 9 cents per share to 2017 earnings, and expects to reduce its reported earnings per share guidance for 2017 by that amount. Nektar plans to complete phase 1 clinical development, after which Eli Lilly will shoulder 75% of the cost of phase 2 development, with Nektar responsible for the remaining 25%. Eli Lilly will pay for all costs of global commercialization. Nektar has the option to participate in late-stage development on an indication-by-indication basis, could receive royalties that increase depending on its phase 3 investment and product sales and will have the option to co-promote the drug in the U.S., the company said. NKTR-358 may address immune system imbalance for many kinds of autoimmune conditions, Nektar said, and the therapy had its first human dose in early-stage clinical development in March. Eli Lilly shares were not active in premarket trade on Monday. Nektar shares have surged 17.9% over the last three months, compared with a 1.5% rise in Eli Lilly shares and a 4.1% rise in the S&P 500 .
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