Chelsea Therapeutics (OTCBB: CHTP) soars as FDA panel backs key drug

Orlando, FL 2/23/12 (StreetBeat) -- Shares of Chelsea Therapeutics International Ltd (OTCBB: CHTP) rose as much as 76 percent on Friday after a committee of independent experts recommended the approval of its hypotension drug in the United States.

The FDA panel voted 7 to 4 in favor of the drug's approval on Thursday. Its recommendation will now be taken into consideration by the FDA, which is expected to make a decision on the drug by March 28.

Wedbush Securities analyst Liana Moussatos said she sees more than an even chance of the drug being approved by the action date, and the company's stock price at least doubling if the approval comes through.

Last week, the company received briefing documents from the U.S. Food and Drug Administration raising questions related to the short duration of clinical studies and the limited size of the study population given the orphan status that the drug, Northera, has.

Orphan status is granted by the U.S. health regulator to drugs that treat a rare condition affecting less than 200,000 Americans and guarantees a marketing exclusivity of seven years.

But analyst Moussatos cautioned that there was still a risk that the FDA may seek additional trials on the drug.

Northera, which has been in use in Japan since 1989, has shown some post-marketing safety issues, and is being tested in an ongoing trial -- Study 306b. Results from the study are expected in the third quarter of 2012.

Leerink Swann analysts said despite the potential utility of the 306b study, additional trials would be required.

"Nearly all panelists noted the desire for additional clinical trials, preferably in longer durations, to be required in the post-marketing setting," they said.

Northera is being studied to treat neurogenic orthostatic hypotension -- a disorder resulting from the deficient release of a neurotransmitter used by autonomic nerves to send signals to regulate blood pressure.

Needham analyst Alan Carr said approval by the FDA action date would prove a challenge.

"The agency may discount the (advisory panel) advice and insist on additional pre-approval trials anyway."

Even if the FDA follows the panel's recommendation, there is little time to agree on label and post-approval trial requirements ahead of the action date, Carr said.

Shares of Charlotte, North Carolina-based Chelsea, which have fallen 52 percent since the company received the briefing documents last week, were trading up 52 percent at $3.67 on Friday on the Nasdaq.

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