Nektar Therapeutics (NASDAQ:NKTR) is down 17% in early trading after a joint advisory panel for the Food and Drug Administration unanimously voted down the company's opioid medication, oxycodegol, yesterday. While the FDA is not obligated to follow the advice of its independent panels, it would be highly unusual in this case, as nobody on the committee thought the drug should be approved.

Hours after the ruling, Nektar said the company was withdrawing its new drug application and discontinuing its program for the drug.  

FDA Not Approved

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Opioids are dangerous

The harsh response from the advisory committee isn't surprising, and many observers rightly thought the drug would have difficulty passing review. Opioids are highly addictive, having killed hundreds of thousands of people -- and the resulting lawsuits are staggering. Given the billion-dollar liability opioid manufacturers now face, it begs the question of why Nektar wanted to bring a new opioid pill to market.

The company believed that its pill was different. Oxycodegol is designed to slowly pass through the blood-brain barrier, and thus people on the drug would not get the immediate "high" that causes abuse problems and health issues. 

The joint advisory committee disagreed. One study showed a "high rate of euphoria" of 17%, even at the approved dosage. A committee member said, "you need data that (show) the benefits outweigh risks, but we didn't see those data. It was all speculation, and we can't approve a potential blockbuster opioid in the middle of a public health opioid crisis based on speculation." 

While Nektar was disappointed by oxycodegol's fate, the company has a strong pipeline with multiple drugs in clinical trials. Its lead molecules are Onzeald, in phase 3 trials for breast cancer, and NKTR-214, another phase 3 drug being tested in a cocktail with Opdivo from Bristol-Myers Squibb for a variety of cancers. While the stock is down sharply today, it's actually up 10% for the year, as the stock ran up last week due to its expanded collaboration with Bristol-Myers Squibb.

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