Can Nektar Therapeutics Beat Pfizer Inc.?

The development of effective medications for the management of chronic pain has been difficult for many pharma companies. Pfizer (NYSE: PFE  ) and Pain Therapeutics (NASDAQ: PTIE  ) have gotten close with tamper resistant versions of Oxycodone. Nektar Therapeutics (NASDAQ: NKTR  ) , however, has been sneaking up from behind with a more innovative approach. Let's take a closer look and see which offers investors the best opportunity to profit by filling this unmet need.

If at first you don't succeed...
Pfizer and its partner Pain Therapeutics appeared within reach with their drug Remoxy, only to receive a complete response letters (CRL), or rejection, from the FDA. It seems Remoxy has taken a backseat to Pfizer's wholly owned pain drug, ALO-02, but the company does intend to apply for approval again in 2015. Pfizer has had some luck recently with ALO-02, its own abuse-resistant formulation of oxycodone. Recently, the drug met its primary efficacy endpoint in a late-stage trial. The drug significantly lowered self-reported pain ratings, but that's the easy part. Convincing regulators that the drug's potential for abuse is low is the real challenge.

The danger
There's a chance Pfizer and Pain Therapeutics could win an approval, only to have market share snatched from their fingers by generic competition. Last year, for example, Endo Health Solutions (NASDAQ: ENDP  ) failed to convince the FDA that its tamper-resistant formula of high-powered painkiller, Opana ER, was significantly better than previous versions at deterring abuse. Although a supply disruption is partly to blame for lower Opana ER sales, resulting generic competition also limited its market opportunity. During the first nine months of 2013, sales of Opana ER dropped 26% compared to the same period a year previous.

Now for something completely different
Both Remoxy and ALO-02 are basically oxycodone with abuse deterrent features. Remoxy is difficult to crush into a powder. ALO-02 is a bit more interesting; it contains an opioid antagonist that remains inactive if taken orally as intended. If the combination is tampered with, the antagonist should negate the effects of oxycodone.

Unlike Remoxy and ALO-02, NKTR-181 from Nektar Therapeutics, is a completely new molecule. In theory, it shouldn't require tamper resistance because it moves from the bloodstream to the central nervous system very slowly. This way, it provides pain relief, but doesn't cause the intense euphoric sensation that makes oxycodone so addictive.

Highly effective... placebo?
Nektar faced a set-back last September when NKTR-181 failed a phase 2 efficacy study. At the beginning of the trial, all patients received NKTR-181 for about a week. The average patient self-reported a 40% decrease in pain. Then, half the patients continued taking the painkiller, and the other half a placebo. The problem was that the placebo group didn't return to a significantly higher level of pain.

The painkiller appears to be effective, but, without the rebound in the placebo group, the study failed to meet its endpoint. Luckily, Nektar is going to move forward with a phase 3 trial. More importantly, the company will apply what it learned from mistakes made during the failed trial.

This time will be different
One of the biggest issues with testing pain medication is that the level of relief provided is mostly subjective. During the failed trial, patients recorded pain scores in their own diaries. During the upcoming phase 3 trial, pain scores will be recorded according to a more rigorous scale by physicians in the clinic.

Also, background medications may have skewed results during the failed trial. Patients in both groups were free to take other medications to reduce pain. It's not hard to imagine patients in the placebo group upping the dosage of their other painkillers to make up for the loss of NKTR-181. Patients in the placebo group of the upcoming phase 3 trial should be completely free of other pain medication for 12 weeks.

What to watch for
At this time it's difficult to say which company is in a better position. Pfizer has already passed a late stage trial with ALO-02, but might need to further prove that its abuse deterrent system is highly effective. Pfizer can easily absorb a loss here, but Pain Therapeutics has been losing money for years. Nektar looks like it could have a winner on its hands. Its slower acting drug should gain traction with physicians. Still, it would be smart to wait for some successful data from the upcoming trial before jumping into this stock.

Incredible growth stock to get on your radar right now
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2820424, ~/Articles/ArticleHandler.aspx, 4/19/2014 2:05:33 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement