Tomahawk, WI 01/16/2014 (BasicsMedia) – Chelsea Therapeutics International Ltd. (NASDAQ:CHTP) almost doubled on Wednesday following the positive vote the company received from FDA advisory committee for its drug, Northera. The stock which closed the regular session on NASDAQ at $4.41 rose to a new high of $5.78, attained 92 percent gain over the previous closing.

What happened to the stock on Wednesday was a clear indication that investors are keeping a close eye on the company, especially as regards its candidate drug NOH drug Northera. It thus came as a vote of confidence when the FDA advisory committee voted 16-1 in favor of the drug.

While it is good news that Northera received such an overwhelming support of the advisory committee, without the approval of FDA the whole project will be back to the drawing board. The question that we should now be asking is how FDA will play its cards when Northera is presented before it.

Note Northera is not new to advisory committee approvals. It has been through the committee before but suffered in the hands of FDA. Will this time around be different?

The review of the drug by FDA is expected in February 14.  However, it could also be pushed back by several weeks. That FDA is not bound by the recommendation of its advisory panel makes it hard to predict how the regulatory agency would judge Northera. However, it is not hard to see that it won’t be easy for the drug to sail through given that there have not been indications that the agency is warming up to the drug.

With that in mind, investors should be awake to the fact that the gain noted on the stock this week will be nothing more than an opportunity to adjust upward after the stock plunged 29 percent when FDA turned down the approval of Northera.

Approval challenges

Northera failed to sail through FDA even after the advisory penal recommended it because the regulatory agency requested for more data. That was back in March 2012 and today a lot has changed especially in perception regarding the drug. It is believed that the drug’s success with patients and caregivers are the reasons that made it an easy sell before the advisory committee.

It remains to be seen if FDA will this time around see the same picture as its independent advisory panel regarding Northera.

Northera is proposed for the treatment of a rare type of low blood pressure which usually manifests in dizziness, fainting and body weakness. While analysts agree that the drug will have impressive impact on Chelsea Therapeutics International Ltd. (NASDAQ:CHTP)’s revenue when finally approved, securing its approval is the biggest challenge and the stock might continue going up and down for the time being.

Financial position

Chelsea Therapeutics International Ltd. (NASDAQ:CHTP) is not in its best financial position at the moment. The company’s spending on the drug has apparently impacted its balance sheet and it relies on Northera’s approval to stabilize this position.

Investors should be cautious trading CHTP before February 14 when FDA is expected to review Northera. Nonetheless, some analysts are already upgrading the stock with hopes that this time around it will be an easy sell before FDA. But such optimism need to be taken with a grain of salt as they lack sold backing.

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