Chelsea Therapeutics International Ltd plans to repitch its once-rejected hypotension drug Northera in the second quarter after a review by U.S. health regulators determined that the company could use its original data for the resubmission.
Shares of Chelsea were up 93 percent at $1.48 in heavy volume trading on Wednesday on the Nasdaq. The stock traded around the $4 levels before the FDA rejection.
"(Wednesday's news) was surprisingly positive given what the FDA reviewers earlier said," Liana Moussatos of Wedbush Securities said.
The FDA's guidance was in response to a formal appeal by the company to the Director of the Office of New Drugs of the FDA, after the Cardiovascular and Renal Products committee denied approval to the drug last March, asking for another study to show long-term benefit.
This means the FDA believes the data Chelsea had submitted last year for approval can serve as the basis for a resubmission of the marketing application of Northera, analyst Moussatos said.
Northera is being tested for symptomatic neurogenic orthostatic hypotension, or a chronic drop in blood pressure on standing up that is most often associated with Parkinson's disease. The drug has an orphan drug status, or a seven-year marketing exclusivity from the day of approval.
"We now have a regulatory path forward, including the potential for an approval of Northera later this year," said Chelsea's interim Chief Executive Joseph Oliveto.
However, risks still remain as the Cardiovascular and Renal Products committee of the FDA, which rejected the drug last year, will be the one reviewing it after Chelsea resubmits its application, Moussatos added.
Since the first rejection, Chelsea has cut jobs, reduced officer compensation and abandoned the development of a rheumatoid arthritis drug to cut costs and focus on Northera, its most advanced clinical product.
The Charlotte, North Carolina-based company had cash and cash equivalents of about $28.4 million as of December 31. Chelsea said it expects this money would fund its operations into the third quarter of 2014.
"The company will continue to explore options for new capital, including various partnering and financing options," the company added.
Moussatos said British drugmaker Shire Plc and California-based BioMarin Pharmaceuticals Inc could be among companies potentially interested in partnering Chelsea.
"The disease that they are treating is common in Parkinson's patients, so potential partners could be any big pharma or a company that is interested in orphan drugs," Moussatos said.
In August, Chelsea changed the main goal of its earlier study, codenamed 306B, and re-reported results in December.
Chelsea said on Wednesday the FDA guidance suggests data from its 306B study strongly showed short-term clinical benefit, but the regulator could ask for a post-approval study to verify Northera's long-term clinical benefit.
The company said it plans to start a new clinical trial in the fourth quarter to test for long-term benefits.
However, it added that its current cash reserves would not be sufficient to complete the post-approval study, which is likely to run into 2015.
(Reporting by Zeba Siddiqui and Pallavi Ail in Bangalore; Editing by Roshni Menon)