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Good news for micro-cap Chelsea Therapeutics International Ltd. (Nasdaq: CHTP) – and its investors. The company's drug to treat a rare type of low blood pressure has received accelerated U.S. Food and Drug Administration approval.
The welcome news came Monday after the close. Nearly 14 million shares changed hands during Monday's regular trading session as investors awaited approval news.
Shares of the Charlotte, N.C.-based company were halted after-hours as the decision loomed. When the stock resumed trading, shares surged 37%, or $1.87, to $6.79.
Chelsea's (Nasdaq: CHTP) Long Wait for Northera
Northera is Chelsea's first approved drug.
It's used to treat patients with neurogenic orthostatic hypertension (nOH), a rare and lingering type of low blood pressure. nOH is commonly experienced by those with certain neurological disorders, including Parkinson's disease. Some 300,000 patients presently suffer from nOH in the United States and European Union combined.
Also known as droxidopa, Northera works like a chemical messenger. It sends signals to blood vessels and the heart to regulate blood pressure and prevent things such as light-headedness, dizziness, blurred vision, fatigue, poor concentration, and fainting upon standing.
This was the second time Chelsea looked for an okay from the FDA for Northera. The company first filed for approval of Northera in 2011. The FDA rejected the drug in 2012, asking for more information.
Anticipation had been building for weeks in hopes of an FDA nod.
In January, an advisory panel to the FDA recommended approval for Northera in a near-unanimous 16-1 vote. But it also suggested the company conduct a follow-up study to prove long-lasting benefits. Northera was shown to be effective after a week's treatment, but effectiveness over a longer period was difficult for the panel to determine.
Nonetheless, news of the panel's recommendation sent CHTP shares soaring 120% on Jan. 15.
While the FDA isn't bound by the advisory group's advice, it does take its guidance into consideration and frequently follows it.
Frenzy mounted as the decision, expected Friday, was delayed until the next business day as weather caused some government offices to close. CHTP opened at $5 on Friday and traded as low as $3.65 and as high as $5.63 before ending at $4.73 on volume of more than 22 million.
This time, thanks to additional data on its effectiveness, the FDA approved the drug on a fast-track basis. The FDA grants accelerated approval of new drugs undergoing clinical trials that show promise in treating serious, life-threatening medical conditions for which no other drug exists or works as well.
Confident of its long-term advantages, Chelsea reached a preliminary agreement with the FDA to conduct a post-market study of 1,400 patients to show that Northera has durable benefits.
"We do not see the post-approval trial commitment as a major impediment for drug adoption and/or potential collaboration or M&A activity," Ladenburg Thalmann analyst Juan Sanchez wrote in a note.
Now Northera is just one of the reasons analysts are bullish on CHTP…