Nektar Therapeutics (NKTR) announced disappointing initial top-line results from a phase II study on NKTR-181. The candidate is being developed for the treatment of moderate-to-severe chronic pain in patients suffering from osteoarthritis of the knee.

The phase II, double-blind, placebo-controlled, randomized withdrawal study evaluated the efficacy, safety and tolerability of NKTR-181. Patients entering this phase of the study were randomized equally to either continue to receive NKTR-181 or placebo.

Although patients treated with NKTR-181 showed a reduction in pain scores throughout the randomized phase of the study, patients under placebo failed to show the expected increase in pain scores observed in enriched enrolment, randomized withdrawal studies of similar nature. The company stated in its press release that the lack of a placebo rebound was unusual. As a result, the study failed to meet its primary objective.

The primary objective of the study was based on the average change in pain scores from pre-randomization baseline to the end of the double-blind, randomized therapy period of the study. The failure to meet its primary end point is indeed disappointing.

Nektar also intends to review its placebo arm of the study and will be designing other pivotal trials on the candidate as well. We remind investors that NKTR-181 currently enjoys fast track designation in the U.S. for the treatment of moderate-to-severe chronic pain.

We expect the share price of Nektar to be negatively impacted by the news. We also remind investors that the market for chronic pain has big companies like Johnson & Johnson (JNJ) and Pfizer Inc. (PFE).

Nektar presently carries a Zacks Rank #4 (Sell). Stocks such as Actelion Ltd. (ALIOF) currently look attractive with a Zacks Rank #1 (Strong Buy).

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