Chelsea Notes 'Abnormal Trading Activity' Surrounding Today's PDUFA Action
Shares of Chelsea Therapeutics International (NASDAQ: CHTP) have been volatile throughout Friday, halting three times on a circuit breaker before 11:35 a.m. EST. Investors are positioning themselves ahead of a very important PDUFA date for Northera (droxidopa), expected out sometime Friday afternoon.
The PDUFA action for a candidate like Northera is extremely important the FDA will decide if the pharma company will make-it or break-it, so to speak, with the pending drug for the short-term. According to fda.gov, the PDUFA allows the FDA to "collect fees from companies that produce certain human drug and biological products."
Overwhelming Support from FDA Advisory Panel
In a press release on January 14, Chelsea announced that the FDA's Cardiovascular and Renal Drugs Advisory Committee (CRDAC) voted 16-1 to recommend the approval of Northera. Even though the FDA is not bound by this recommendation, as noted in the release, the Food and Drug Administration will "take it into consideration."
Adam F. Chimes in on Odds of Approval
On Wednesday, Adam Feuerstein, Wall Street's definitive biotech source, reported his prediction on the odds that the FDA will approve the experimental drug Northera. Feuerstein estimates that Northera has a 70 percent chance of passing on Friday. The source noted his concern on the "small chance FDA delays the Northera decision given the short amount of time between Friday's approval decision date and last month's positive advisory panel. A short delay for administrative reasons -- meaning no requirements for additional clinical data -- won't matter much and may actually benefit Chelsea since the orphan indication clock doesn't start ticking until approval."
Wild Price Action
Heading into the last hour of the morning session, shares slowly rose to a session high at $5.63 (up about 11 percent), before plunging around 14 percent to a low at $3.65. Shares were halted by a circuit breaker over the course of this sharp move lower. Trading was halted again almost immediately after resumption as shares dipped another 15 percent. At the low, the stock was down more than 26 percent from Thursday's close. Chelsea Therapeutics shares were halted once again around 11:29 a.m. EST -- this time on the upside.
Given the above price action, many traders assumed a decision had been released. Such action, however, is often seen in the stock's of company's awaiting a PDUFA decision. The term "bear raid" comes to mind: bears who believe an unfavorable decision is coming will start moving the stock in an attempt to shake out the bulls.
Chelsea Responds in 8-K Filing
Chelsea Therapeutics released an 8-K filing on its response to the "Abnormal Trading Activity." The company reported that no decision regarding Northera has been received as of 11:45 a.m. EST.
Northera Drug History
Chelsea's Northera is an experimental drug for the treatment of neurogenic orthostatic hypotension (NOH), a disease characterized by low blood pressure. Although the drug has been received favorably by the FDA, the reviewer has concerns surrounding Northera's clinical trials. Chelsea Therapeutics and its investors also remain concerned over the possible FDA label that would limit the drug's use to 1-2 weeks.
Interim CEO of Chelsea Therapeutics Joseph G. Oliveto previously commented, "Chelsea is committed to improving the lives of patients with nOH, a debilitating disorder which often severely limits a person's ability to perform routine daily activities. We are appreciative of the FDA bringing our Northera NDA before the Cardiovascular and Renal Drugs Advisory Committee, and for the Committee's thoughtful discussion of the application."
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