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I understand why the U.S. Food & Drug Administration has moved so slowly on a decision on Nektar Therapeutic’s (NKTR) new non-addictive opioid NKTR-181. The last thing the FDA wants to do in the midst of epidemic of opioid addiction is to approve a drug that might be one part of a solution to the problem only to have it turn out to have harmful side effects or ineffective or, maybe worst of all, itself addictive.

But the delay–I remember looking for an advisory committee vote last summer has been torture for any one who holds the stock. Shares of Nektar were down 34.33% in 2019 on top of a 44.96% loss in 2018.

The stock is up 24.72% for 2020 to date–raising hopes that the corner has finally been turned. But investors who have been with Nektar for a while (and I’m one) have seen this glimmer of hope before only to have it extinguished.

Is it different this time? I’d say, with fears of jinxing the stock, a tentative yes.

Tomorrow, January 14, two FDA advisory committees, the Anesthetic and Analgesic Drug Products Advisory Committee and the Drug Safety and Risk Management Advisory Committee, will hold a joint meeting and then vote on NKTR-181. The options before the committee are to recommend against approval, to vote for a narrow approval, or to vote for broad approval. I think the structure of this vote and the nature of the scientific evidence to date points to a likelihood of vote for a narrow approval.

The documents filed before the meeting indicate that Nektar has performed one pivotal efficacy study, the Biovest’s Medical Technology Stock Letter,  notes and says that the questions in the document point to  desire by the FDA to know if that one efficacy study is enough to justify a broad approval. To me, and to the Medical Technology Letter, that question points to a vote for a narrow approval. Nektar itself has applied for narrow approval. The inclusion of an option to vote for a broad approval sets up, to my mind, a vote for narrow approval as a middle-of-the-road option.

A narrow approval would put NKTR-181 on the market and it would almost certainly be accompanied with a FDA request for a large Phase IV trial after the approval. That would be a very favorable outcome for Nektar since it would put the drug on the market with the promise that successful Phase IV trials would result in  broader approval in the future for the drug and the possibility that NKTR-181 would grow to a multi-billion dollar drug.

I advise continuing to hold until the committee’s vote on the likelihood that the vote will give NKTR narrow approval for the drug.

The Medical Technology Stock Letter says that even a No vote–if it came with a schedule for additional trials–would be a positive. I’m not sure I’d go that far in the short-term because I would expect the market to react negatively to a No vote no matter what the positive implications in the longer term.

Nektar shares closed up 1.78% today to $27.40.