Shares of Zogenix (NASDAQ:ZGNX) took an awful 20% haircut today, on news emerging from a potential competitor. Zogenix's new super painkiller, Zohydro, is extremely potent and effective, normally a positive thing for a drug, but an advisory panel overwhelmingly rejected the drug, because of its potential for abuse. Despite the rejection recommendation, the FDA approved the drug, which up until now has had no abuse-resistant alternative.
Now, however, private company Purdue Pharma, best known for making oxycontin, has an abuse-resistant version of Zohydro. The company did the same thing for oxycontin, which kept non-abuse-deterrent generics of the drug off the market.
In this video, Motley Fool health-care analyst David Williamson outlines two major possible concerns from here for Zogenix and its drug. The first is that doctors would be more likely to prescribe Purdue's version of the drug because of the added anti-abuse feature, and the second is that with all of the backlash around Zohydro, the FDA may consider rescinding its approval of the drug. Zogenix's stock has seen a huge run, but with its fate now partially out of its hands, David sees this as a stock to avoid.
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David Williamson and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.