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Chelsea Therapeutics Shares Plunge on Drug Study Concerns

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The FDA is concerned about safety and effectiveness of an experimental drug to treat low blood pressure in patients with Parkinson's diseases and other disorders. The company loses more than a third of its market value Monday morning.

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The prospects for Chelsea Therapeutics' (CHTP) experimental drug to treat low blood pressure in people with Parkinson's disease and other disorders aren't looking good.

The company says today that US officials are concerned about the safety and effectiveness of the drug Northera, which is scheduled next week to face a panel of government expert advisers who will weigh the pros and cons of approving the treatment.

Shares of Chelsea dropped 36% to $3.21 in early trading Monday. The drop erased all the stock's gains over the past year.

Three deaths were noted in a company trial of Northera "as being possibly related to the study drug." The drug aims to treat neurogenic orthostatic hypotension, or NOH, a condition common in patients with Parkinson's disease and related disorders. NOH is often characterized by dizziness, fatigue and fainting. The company has asked the Food and Drug Administration to approve the treatment for sale in the US. The FDA advisory panel, which is scheduled to meet February 23, is a prelude to a possible approval. The panel advises the FDA on the merits of a drug that's being considered for sale in the US.

It's rare for a company to come out prior to an advisory meeting with these kind of details. Generally, FDA staff puts out a report a couple of days before the meeting, giving the public an insight into the agency's thinking. Chelsea executives cited these FDA briefing documents in making its announcement about the agency's concerns.

"We wanted to take this opportunity to update our shareholders on several lines of inquiry that have emerged as significant components of the benefit-risk analysis of Northera," Chelsea CEO Simon Pedder says in a statement. "A number of these questions relate to previously discussed issues identified by our development program, namely the short duration of our clinical studies, the limited size of our study population given the orphan indication and the challenges in quantifying symptomatic and clinical benefits.

"FDA has, however placed increased emphasis on safety data" from research conducted in Japan, he adds. While Chelsea is analyzing Northera for cardiovascular risk, the company says it has not found "meaningful evidence" that the treatment caused deaths or serious events.

Pedder also speaks before a biotech-industry sponsored event in New York this morning.

The new details add up to much more scrutiny over Northera than many investors expected. The FDA staff briefing documents likely will tear into the company's application. FDA advisers probably will be more inclined to heavily scrutinize the drug, and that raises questions whether the product can be approved.

Twitter: @brettchase

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No positions in stocks mentioned.
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