Zogenix shares were down 45 percent at $1.30 in morning trade on the Nasdaq. They touched an all-time low of $1.26 earlier in the session.

"We do not anticipate that Zogenix will receive approval by the March 1, 2013 review date, with potential approval likely delayed until abuse risks are mitigated," Christopher Holterhoff of Oppenheimer and Co wrote in a note to clients.

Holterhoff downgraded the stock to "perform" from "outperform," and withdrew his $3 price target.

In an 11-2 vote on Friday, an independent panel of experts said the San Diego-based company had met regulatory targets for safety and efficacy, but worried that the Zohydro could become a drug of choice for people addicted to opioid painkillers.

Zohydro is a single-entity, extended-release product containing the narcotic painkiller hydrocodone with no other pharmaceutical ingredient such as acetaminophen that can cause liver damage if used too often.

However, the active ingredient hydrocodone is already the most widely abused drug in an opioid class linked to a prescription-drug-abuse epidemic that has ballooned over the past 20 years.

Stifel Nicolaus analyst Annabel Samimy said that even though "timely approval still remains a viable possibility, we are more skeptical of Zohydro's ultimate contribution."

Samimy also downgraded the stock to "hold" from "buy."

(Reporting by Esha Dey in Bangalore; Editing by Sreejiraj Eluvangal)

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