Saunders, 29, returned an adverse finding in a Voluntary Anti-Doping Association (Vada) test in August.

The Massachusetts State Athletic Commission (MSAC), which was due to sanction his title defence in Boston on 20 October, has denied him a licence.

The WBO says Saunders has the right to appeal to retain his title belt.

But if the Englishman fails to satisfy the WBO appeal, it says it will "declare the title vacant".

Saunders was set to meet Andrade at Boston's TD Garden in the fourth defence of the world title he claimed in 2015.

Eddie Hearn, who promotes Andrade, has said he would look to secure a bout for the vacant title in the event Saunders is stripped by the WBO.

The Matchroom boxing boss said he has "signed a contract" for Namibian Walter Kautondokwa to face American Andrade.

Saunders returned an adverse finding for stimulant oxilofrine.

Under World Anti-Doping Agency (Wada) and Ukad rules, oxilofrine is only banned in competition, meaning a fighter is only in breach of rules if it is found in his system on the day of a bout.

But it is prohibited at all times by Vada, who tested Saunders on 30 August.

Saunders insisted he is a "clean fighter to the bone", while his promoter Frank Warren said the substance was in a "common decongestant nasal spray".

He was expected to still be able to contest the title as the MSAC adheres to the Wada prohibited list rather than Vada rules.

BBC Sport has contacted the MSAC for comment and is awaiting a response.

In September, Saunders was fined £100,000 by the British Boxing Board of Control for misconduct after a video was posted on social media in which the fighter offers a woman £150 worth of drugs to perform a sex act. Saunders apologised for the video and described it as "banter" that "went wrong".