Biotechnology company Chelsea Therapeutics International's (Nasdaq: CHTP) drug Northera failed to get Food and Drug Administration approval for the treatment of symptomatic neurogenic orthostatic hypotension or NOH. The disappointing news has CHTP down nearly 25% this Thursday morning.
As expected by a section of analysts, the FDA advised the company to go in for an additional study to support the drug efficacy. The regulator also advised that the trial should be formulated in such a way that Northera was effective over a period of two to three months.
The company indicated that FDA has provided draft recommendations for labeling, but these are subject to Chelsea completing additional studies to be reviewed by FDA. CHTP disclosed that it would seek a meeting with FDA to address the issues raised by the regulator. Chelsea seeks recommendations for an additional study to help get approval for Northera.
Since FDA officials raised doubts about the safety of the drug, clouds of uncertainty over the fate of Northera has strengthened. This was quite evident when the stock nosedived 21.2 percent on February 21. Prior to the 21st crash, the stock got hammered by 37.7 percent on February 1, dragging shares of Chelsea to $3.11 from $4.99.
The initial drop followed news that FDA questioned the company's clinical studies duration, and small size of the study population that is normally given to orphan status. As much as 11.24 million shares changed hands during that day, compared to 3-month average volume of 456K shares.
However, on February 23, an advisory panel met and voted 7 to 4 in favor of the drug. Shares of Chelsea surged following the vote. On February 24, the stock jumped more than 70 percent at one point and closed with a gain of 61 percent at $3.88 on significant volume of 20.86 million shares.
Roughly 180K patients are currently suffering from their blood pressure dropping. It is called neurogenic orthostatic hypotension or NOH. No treatment has received FDA approval for treating NOH. However, Midodrine from Shire plc (Nasdaq: SHPGY) is available for treating orthostatic hypotension. This is the only FDA approved therapy currently available. Shire got the approval for this product in 1996.
During the final clinical trial stage, Chelsea's Northera demonstrated improvement, and has indicated safety and tolerance. However, the FDA staff questioned the risk-benefit profile of Chelsea's Northera.
With the FDA favoring additional study, the ball is in Chelsea's court, The company will have to persuade the regulator that the drug is safe and effective. In the meantime, CHTP is sure to be under pressure in the near-term.