What happened

After a big rally higher in March, following positive phase 3 trial results for the company's treatment for lower back pain, shares in Nektar Therapeutics (NASDAQ:NKTR) retrenched 19.2% in April, according to S&P Global Market Intelligence.

So what

Nektar Therapeutics reported results from phase 3 trials evaluating NKTR-181 as a treatment for chronic back pain on March 20, and those results suggest that NKTR-181 could provide an effective and safe alternative to existing opioid medications, including Oxycontin.

A man leans against a wall holding his back in pain.


The trial delivered a statistically significant improvement in pain relief compared to placebo, with average pain scores dropping by 65% from baseline. NKTR-181 also successfully met its secondary trial endpoints, with statistically significant outperformance versus placebo in reducing pain by 30% and 50%, and improvement in patient quality of life.

Importantly, NKTR-181 seems to provide that pain relief without the same risk of abuse as oxycodone. In studies, NKTR-181 was rated similarly to placebo in "drug liking" and "feeling high" scores.

Now what

Over $12 billion is spent on opioid pain medication worldwide each year, and with a major push to develop drugs that don't pose the same risk of abuse as they do, NKTR-181's market opportunity could be big.

Nektar Therapeutics has a history of developing drugs and then licensing commercialization rights to them, and it appears that will be the path forward for NKTR-181. The company is exploring its options, so investors might have to wait a bit to find out how management will proceed from here.

Overall, this is a blockbuster opportunity, and a major reason Nektar Therapeutics may be able to make good on its lofty goal of delivering sales of between $375 million and $450 million by 2021. If it can hit that target, it should be able to turn a profit, because operating expenses were $279 million last year. Given the market opportunity, and the long-term guidance, risk-tolerant investors might want to consider picking up this stock on sale.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.