Will the FDA Approve Chelsea's Northera?

The third Food and Drug Administration decision in three days is scheduled for tomorrow, when the agency is scheduled to decide on the fate of Chelsea Therapeutics' (Nasdaq: CHTP  ) Northera, a treatment for neurogenic orthostatic hypotension, or NOH.

The advisory panel recommended approval of the drug by a margin of 7-4, with one panelist abstaining and another deciding not to vote at all. Despite the positive recommendation, clearly the panel wasn't gung-ho about approving the drug, which will weigh on the agency that was already questioning the safety profile before the meeting.

NOH causes patients to become lightheaded and even faint when standing because of a sudden decrease in blood pressure. The only approved drug for the indication, Shire Pharmaceuticals' (Nasdaq: SHPGY  ) ProAmatine, doesn't appear to work that well, so it's not surprising doctors on the panel would want it as an option, despite potential safety and efficacy concerns.

The situation reminds me of InterMune's (Nasdaq: ITMN  ) Esbriet, another orphan drug that the FDA panel seemed to recommend on hope rather than scientific rigor. The FDA went against its panel and turned down the drug.

I think the FDA is being a little ridiculous in worrying about Northera. It's been on the market in Japan for more than two decades. But based on what we've seen from the agency, I'm not expecting an approval tomorrow.

I wouldn't recommend shorting the shares either, though. Chelsea has a market cap of only $250 million, well below where it was before the advisory panel; clearly investors aren't very confident in approval. If the FDA issues a surprise endorsement, shares are going to take off like Larry King's high blood pressure. Who knows where they'll land, but multibagger returns aren't out of the question once Northera is on the market. Acorda Therapeutics (Nasdaq: ACOR  ) , with one orphan drug that's expected to bring in less than $275 million this year, sports a $1 billion market cap.

What's your take? Let us know by voting in the poll below.

Fool contributor Brian Orelli holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On March 27, 2012, at 9:03 PM, dillon888 wrote:

    <I think the FDA is being a little ridiculous in worrying about Northera. It's been on the market in Japan for more than two decades. But based on what we've seen from the agency, I'm not expecting an approval tomorrow>

    So why are you predicting rejection? Safety issues were hardly mentioned at all at the pre review. CHTP got ambushed by the write up that caused senior members of the FDA to attend the hearing thus getting approval. Safety issues are the least of their concerns getting approval. A short term trial is another issue however. But it did get an SPA. I predict an approval with post marketing trials. The drug works as explained by patients at the review hearing.

  • Report this Comment On March 29, 2012, at 1:02 AM, cowpok1027 wrote:

    Should we trust the FDA to do the right thing -- approve? Clearly the answer is NO, just look at what Dendron went through!

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