Last week, Pain Therapeutics (NASDAQ:PTIE) reported positive results from another phase 3 trial of its pain reliever, Oxytrex, showing that its version of oxycodone eased back pain without nearly as many side effects as "plain" oxycodone, which is more commonly known as privately held Purdue Pharma's Oxycontin.

Oxycodone sales total about $2 billion annually, but the drug, like all opioids, has its problems, chiefly tolerance, physical dependence, drowsiness, and severe constipation. However, oxycodone and other chemical cousins of morphine continue to be the world's best painkillers. Pain Therapeutics significantly reduced those side effects by introducing into its pills minuscule amounts of an ingredient that counter them but kept the analgesic properties of oxycodone.

Usually successful phase 3 trials for drugs that address multibillion-dollar markets cause investors to pile on to a biotechnology stock in a feeding frenzy reminiscent of, say, Genentech's (NYSE:DNA) rise after it was announced that lung cancer patients benefit from Avastin treatment. In fact, the market for oxycodone might even be bigger than $2 billion, given that physicians can be reluctant to prescribe it because of its side effects. But Pain Therapeutics' stock barely budged. What gives?

I have to admit, I don't know. Perhaps investors don't understand that achieving the same pain relief with less oxycodone and fewer side effects does equal superiority to the FDA, which is required for approval.

Perhaps investors were spooked by the high dropout rate in the trial. In a placebo-controlled trial, however, where some patients in pain are given only a sugar pill, a high dropout rate is expected, since these patients are not necessarily going to tolerate their pain for the entire trial duration. Also, some patients would not withstand the "washout" period before the trial, where they abstained from their pain relievers for four to 10 days.

Pain Therapeutics trades at a small $157 million in enterprise value, $257 million in market cap, as it has nearly $100 million in cash. While the market capitalization is greater than the last time I wrote about it, the stock price is about the same because of the dilution to shareholders from an 8 million-share stock sale in 2004. The company has burned through about $33 million in the past 12 months.

Considering that management plans to bring the new drug application to the FDA in the next year, it should have sufficient cash to fund operations through that time without further stock sales. I must admit that with a drug candidate that addresses a multibillion-dollar market chugging through phase 3 trials, and possibly only a year away from approval, Pain Therapeutics seems like a good buy at these prices. And I'm not even counting its other products in the pipeline for an "abuse-proof" oxycodone and a pill for irritable bowel syndrome, both of which are also in phase 3 trials.

If I were a corporate strategy suit at a pharmaceutical company that has suffered a series of body blows to my pain product portfolio -- hello, Merck (NYSE:MRK), hello, Pfizer (NYSE:PFE) -- I would be lobbying my bosses to scoop up Pain Therapeutics at its relatively inexpensive price. Perhaps an even better fit would be Cephalon (NASDAQ:CEPH), a purveyor of Actiq, a different opioid for severe pain in cancer patients. I don't like to count on acquisitions of my investments, but pharmaceutical companies seem to be in acquisitive moods lately, and Pain Therapeutics sure seems like a steal.

Fool contributor David Nierengarten , Ph.D., holds shares of Pfizer and Pain Therapeutics and wishes they were less painful to his portfolio. You can often find him on the Fool's Biotechnology discussion board.