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Zogenix hits all-time low after panel opposition

NEW YORK (AP) -- Shares of Zogenix tumbled to an all-time low on Monday after U.S. government health experts overwhelmingly voted against a stronger version of hydrocodone.

THE SPARK: On Friday the Food and Drug Administration's panel of pain specialists voted 11-2 with one abstention against Zohydro for moderate to severe chronic pain. The drug was developed as a long-acting pain reliever by San Diego-based Zogenix Inc.

The panelists acknowledged that the pill would likely reduce pain, but worried it would exacerbate the U.S. epidemic of prescription painkiller abuse.

The FDA is not required to follow the group's recommendation, though it often does so. It is scheduled to make its decision on the drug by March 1.

THE ANALYSIS: Oppenheimer's Christopher Holterhoff downgraded Zogenix to "Perform" from "Outperform" and removed its $3 price target.

The analyst said in a client note that he does not anticipate Zogenix will receive FDA approval. He anticipates that the company will continue to work with the FDA on matters of concern in an effort to potentially receive approval for Zohydro in the future.

SHARE ACTION: Zogenix Inc.'s stock fell $1.10, or 46.6 percent, to $1.26 in afternoon trading. Earlier in the session the stock dropped to $1.25, its lowest level since the shares went public in November 2010.