Nektar Therapeutics (NASDAQ:NKTR) NKTR-181 is a new opioid pain killer that passes through the blood brain barrier more slowly than existing opiates, and that means it produces less of the euphoria that causes opioid dependency. With phase 3 data on hand and the hunt for a collaboration partner ongoing, NKTR-181 might become a viable alternative to traditional opioids in treating conditions like chronic back pain.

In this clip from The Motley Fool's Industry Focus: Healthcare podcast, Todd Campbell joins analyst Kristine Harjes to discuss NKTR-181's future.

A full transcript follows the video.

This video was recorded on April 12, 2017.

Kristine Harjes: We talk about the mu-opioid receptors as compared to the kappa-antagonists. The mu ones are pretty much going to be more effective than targeting kappa every time; it's just the nature of the biology there. So CR845 probably won't ever completely replace mu receptors, but there is a company out there called Nektar Therapeutics that is trying to develop a mu-opioid receptor-targeting drug that crosses the blood-brain barrier, but it does so slowly. The point there is to reduce the euphoria and also lessen the risk of abuse.

Todd Campbell: Right. It's also more selective in how it's targeting those mu receptors. It's targeting more selectively; it's passing more slowly through the blood-brain barrier. And as a result, you're getting a similar efficacy of pain relief, but you're also getting less of the likelihood of the euphoria. In tough-to-treat pain cases, chronic pain cases, that could be a major advantage for this company. Now, we've already seen a positive read-out in late-stage studies for this drug. The company itself has a history, a strategy, where it likes to license these drugs out to other larger players, and it has said that it's going to be evaluating its options with this drug now. So perhaps they announce a licensing deal over the course of the coming months. Then, once that's done, maybe this drug gets filed for FDA approval relatively shortly thereafter.

Harjes: Right. It seems like they're all done testing it. They have proven it's very effective, and at this point, they're just looking for a partner. And at that point, it will file with the FDA. When and if it gets there, we can probably expect around a mid-teens royalty. That seems to be fairly typical for this company. It's kind of an interesting strategy in general. I would say it probably makes the upside a little bit more contained, but it's also less risky.

Campbell: It's less risky, and it keeps the dollars flowing in for them to work on other projects they have going on. I think it's an interesting company. The stock has moved a lot since it announced the results from its chronic-back-pain study last month. Investors have to recognize that it's maybe not as cheap as it was four or six weeks ago. But certainly something to keep an eye on, especially given the fact that you could get some news in a not very long period of time of somebody is signing on to commercialize it.

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