Nektar Therapeutics (NASDAQ: NKTR) may have just burned a serious bridge for its future. The company is developing drugs for pain management and for cancer, and now its investigational drug for chronic pain turned out to miss a primary endpoint in Phase II studies. This hits hard because the stock was on its way to being up 100% (some 86% exactly) so far in 2013 before the news broke.
The drug in question is NKTR-181 and it was supposed to be a slow absorbing drug that was resistant to abuse or addiction like other opioid painkillers. Patients did experience lower levels of pain, but the placebo group somehow failed to have higher levels of pain. What stands out the most is that it obvious that Nektar is still going to take this drug to market if it is allowed: “We are committed to bringing NKTR-181 to patients suffering from chronic pain.”
The company said, “Of the 295 patients that entered the study, only 9 (3%) patients were unable to achieve meaningful pain relief with NKTR-181. 53 (18%) patients discontinued treatment during the titration period because of adverse events, most of which are those commonly associated with opioids. A total of 213 patients achieved an average 40% reduction in pain and entered the randomized phase of the study.”
Nektar is maintaining that this test result is not uncommon in opioid development. The company also went on to note that NKTR-181 does provide pain relief on par with existing opioids with a favorable safety profile that differentiates it from standard opioids.
Nektar’s stock price was down over 25% earlier today, but the stock was down almost 21% at $10.97 in late-Friday trading. Its 52-week trading range is $5.65 to $14.47, and the 5.7 million shares which had traded by 1 p.m. was over 5-times larger than normal trading days. This was the largest one-day drop in what looks to be over five years.
Nektar’s market cap is almost $1.3 billion. Sales in 2012 for the whole company were $81 million, and the Thomson Reuters estimates were $192 million in 2013 and $229 million in 2014. We have seen some light defense in the stock by analysts but most firms are trimming expectations and we will have to see what happens on Monday after the firm’s conference call on Friday afternoon before pegging specific sales expectations ahead.