Eli Lilly and Nektar Therapeutics have signed a pact to co-develop the latter’s experimental immunotherapy NKTR-358 for a range of autoimmune and other chronic inflammatory conditions under a deal valued at $400 million.

NKTR-358 is a potential first-in-class resolution therapeutic currently in Phase I development that researchers hope might address an underlying immune system imbalance in patients with many autoimmune conditions.

The drug targets the interleukin (IL-2) receptor complex to stimulate proliferation of regulatory T cells, with the aim of bringing the immune system back into balance. According to the firms, “this could lead to a profound clinical impact and healthy organ function in autoimmune conditions”.

As per the terms of the deal, Nektar will bank an initial payment of $150 million and is eligible for up to $250 million in additional development and regulatory milestones, as well as future double-digit royalties on any sales.

Nektar is responsible for completing Phase I clinical development, the parties will then share Phase II development costs 75 percent Lilly and 25 percent Nektar. Nektar also has the option to take part in Phase III development on an indication-by-indication basis.