Nektar Therapeutics shares crash on PhII pain drug trial flop

Shares of Nektar Therapeutics ($NKTR) took a nasty plunge Thursday evening after the biotech failed to convince investors that the Phase II flop of a top pain drug didn't tarnish the program's promise.

Investigators for the San Francisco-based biotech said that patients taking NKTR-181--its follow-up program behind the late-stage therapy naloxegol--experienced a reduction in pain. The problem was that the placebo arm didn't reflect an expected spike in pain, as they had expected. And about one in 5 of the patients with osteoarthritis of the knee stopped therapy due to adverse events over the course of the short, 21-day study.

Nektar tried to put the best spin possible on the outcome for the mu-opioid agonist, which is designed to avoid abuse by patients.

"I have worked with NKTR-181 since this new molecule entered the clinic, and I believe that NKTR-181 could be an important advance in analgesia, maybe even a breakthrough," said Dr. Lynn Webster, the chief medical director of CRI Lifetree. "Although this Phase II study did not achieve its primary endpoint, this is not uncommon in opioid development. What is important is that the large majority of patients in this trial were able to achieve meaningful and long-lasting pain relief from NKTR-181. Providing analgesia without the pronounced CNS effects and euphoria of standard opioids is the future of analgesic development."

But it didn't prove very effective. The company's stock immediately crashed, losing 30% of its value.

Nektar this week also spelled out a possible $70 million payday if the FDA accepts AstraZeneca's ($AZN) NDA for naloxegol, filed on Monday. The full set of milestones could be affected, though, by the FDA's timing on a potential cardiovascular safety study. 

- here's the press release