Why Chelsea Therapeutics Shares More Than Doubled

Chelsea Therapeutics shares soar after the FDA's advisory panel delivers a surprise. Here's why investors shouldn't be sold on this move just yet.

Jan 15, 2014 at 4:12PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of clinical-stage pharmaceutical company Chelsea Therapeutics (NASDAQ:CHTP)skyrocketed as much as 151% shortly after the opening bell following a positive recommendation from the Food and Drug Administration's advisory panel on the symptomatic neurogenic orthostatic hypotension drug, Northera.

So what: Chelsea Therapeutics said in a press release after the closing bell yesterday that the FDA panel voted 16-1 in favor of recommending Northera for approval. This news comes in stark contrast to fears last Friday about the panel's decision, based on briefing documents that alluded to a complex decision based on Northera's significant short-term effectiveness and iffy long-term effectiveness. Although the FDA isn't required to follow the panel's advice, it does more often than not, giving Northera a better than 50-50 chance at approval at this point.

Now what: I'd be lying if I said that the overwhelming support for Northera didn't shock the heck out of me, especially after all the questions surrounding the longer-term efficacy of the drug designed to abate dizziness in Parkinson's disease patients. The real test here will be whether the FDA will approve Northera given its checkered past and, if approved, if physicians will opt for the medication considering that it only appears to offer a statistically significant, but short-term benefit. Don't get me wrong; this is clearly a win for Chelsea Therapeutics, but I'd also suggest keeping your optimism in check and considering the shaky history and data behind Northera before bidding shares even higher.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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