Chelsea Therapeutics' (Nasdaq: CHTP) Shares Fall on FDA Rejection of Drug

Shawshank, VA 3/29/12 (StreetBeat) -- Chelsea Therapeutics’ (Nasdaq: CHTP) stock is dropping in early trading after the Food and Drug Administration said it won’t approve the company’s treatment Northera for low blood pressure in Parkinson’s patients.

Shares of the company dropped 28% to $2.66 in premarket trading Thursday. The company said Wednesday night that the FDA wants additional research to show that Northera works and that it remains effective for more than a month. The agency also is suggesting that if the drug is approved, it may require a label that warns of potentially serious side effects.

Northera is designed to treat neurogenic orthostatic hypotension, or NOH, in patients with Parkinson’s disease and similar neurological conditions. NOH is common in Parkinson’s patients and can cause fainting, dizziness, fatigue, blurred vision and other conditions. It’s also seen in people with multiple system atrophy and pure autonomic failure.

Acknowledging that the rejection is “indeed a setback,” CEO Simon Pedder said on a conference call that he believes his drug is effective and addresses an important unmet medical need.

Pedder says he thinks data from an ongoing study of Northera may satisfy the FDA’s request for additional data. He cautions, however, that the company hasn’t had discussions with the agency since it turned down its drug application. He said the company may be able to produce more data for the FDA by the first quarter of next year.

In addition to the concerns about effectiveness, the FDA also is worried about the safety of the product. Specifically, Chelsea says that the FDA is considering a warning label that advises of the risk of hypertension while a patient is lying down. Previously, FDA staff raised questions about the drug’s safety in a public report in February, a disclosure that caused Chelsea shares to drop by more than a third. (See Chelsea Therapeutics Shares Plunge on Drug Study Concerns) Following that report, Chelsea said its clinical trials “established robust safety and efficacy data for Northera.”

But a positive vote from a panel of FDA expert advisers seemed to calm some investors’ worries. Yet the panel didn’t give Northera a unanimous approval. Yesterday’s news that the FDA turned down the application for market approval illustrates the difficulty in predicting when a drug will get a green light from the agency. (See Betting on the FDA: Another Round of Approval Decisions Coming for Drug Companies) Trading at almost $5 a share before the February plunge, the stock was never able to recoup its loss from the negative FDA staff report.

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