Chelsea Therapeutics: My Valentine's Day Dream Date?

| About: Chelsea Therapeutics (CHTP)

The wild ride of emotions we have experienced with Chelsea Therapeutics (NASDAQ:CHTP) is set to write a new chapter later this month, presumably on February 14, 2014, when the FDA will decide whether the lead drug of Chelsea Therapeutics, Northera, will at last be approved for market, ending a wild ride of emotions for company management and shareholders.

Chelsea and its loyal shareholders have been in this position before, when an FDA advisory panel in 2012 gave a majority vote of confidence for Northera, only to be disappointed when the FDA went against the panel's recommendation and decided not to approve the drug.

But, this time around, the data presented looks more promising, as does the vote of confidence by the advisory panel, this time giving a vote of 16-1 in favor for approval. But, even with that panel vote in Chelsea's pocket, the next week will still be filled with anxious anticipation as years of clinical study and research are at stake. I am not suggesting that this is a do or die moment for Northera, but, it would certainly be an enormous and deflating factor as it relates to its lead drug and market candidate.

I know that there is no significance that the FDA will reportedly announce on February 14, 2014, but, I, as a shareholder, am preparing to send one of those neat little valentine cards to management telling them that "I'm not a lion, tiger, Northera got approved".

It's true, the FDA can be awfully surprising and inconsistent in their decisions, often ignoring significant data points and panel recommendation. However, I feel hard pressed to believe that Northera will be denied a dozen roses from the FDA this time around. It just makes little sense for the FDA to leave this medical need unmet. They even lowered the bar for approval, however, they will expect additional data as to the duration of Northera effectiveness.

For background purposes, Northera, the lead drug for Chelsea, is the trademark name for droxidopa, a drug that has been widely used in Japan since 1989 and its primary use has been to address the treatment of frozen gait and dizziness associated with Parkinson's Disease. Droxidopa also treats Shy-Drager Syndrome and Familial Amyloidotic Polyneuropothy. The drug received additional and extended approvals in the year 2000 to treat vertigo, dizziness and weaknesses associated with orthostatic hypotension and hemodialysis patients.

Chelsea Therapeutics further developed drioxidopa, under the trademark name Northera, to treat symptomatic neurogenic orthostatic hypotension, or nOH, in patients with primary autonomic failure.

Wow, it's difficult pronounce some of these conditions, even phonetically. So, let me simplify it for the non- medically trained readers of this piece.

Northera is designed to help treat a rare form of blood pressure disorder (nOH), causing dizziness and potential falls when left untreated. These episodes are associated with autonomic nervous system disorders as well diabetic neuropothy and Parkinson's Disease. In simpler terms, it helps people stop from falling down due to sudden fluctuations in blood pressure.

It has not been an easy road toward approval for Chelsea and Northera. In 2012, the company was ready to deliver its acceptance speech only to be denied approval, even after positive data and a slim majority of the advisory panel gave the drug a polite nod of approval.

Although Northera offered the FDA some valid data, the decision to deny was based on the fact that Northera did not offer statistically significant data to warrant approval.

However, the FDA is not all bad, they did recognize that the conditions that Northera addressed represents an unmet medical need with very few available treatments, if any, from drugs with current indications for specific treatment of nOH. Thus, the FDA will consider all the data from the ongoing trials.

With the data in and a date set, the team at Chelsea feels bolstered with support. On January 14, 2014, Chelsea reported that the FDA's Cardiovascular and Renal Drugs Advisory Committee voted 16-1 to approve Northera. As we learned in the past, however, the FDA is certainly not bound by the opinion of the panel.

Adding to my bullish sentiment for a favorable decision is that the FDA commented that they are willing to let the drug on the market with a lower standard of proof because dropidoxa has Orphan Drug status and there is not a current treatment for Northera's indication.

I see approval this time around for Northera because the FDA is certainly eager to get something on the market to treat these conditions. Although not a multi-billion dollar drug candidate for Chelsea Therapeutics, approval will certainly bolster the future for Chelsea and provide needed capital and leverage as it seeks approval for additional drugs in its pipeline.

Chelsea management estimates that Northera will address a current market size of approximately 300,000 patients and generate revenue potential between $300 - $375 million dollars per year within five years of launch. Such revenue and FDA approval would make Chelsea, at these current price levels, a take out candidate as well.

I have liked Chelsea for quite a while, tucking it away since 2012, disappointed but never losing hope. Finally, a new decision date is upon us and I feel extremely confident that long term investors will be rewarded.

If approved on February 14, 2014, my expectation is that the stock will easily eclipse the 52 week high of $5.78. Traders will abound and although I would expect some profit taking, the stock should stabilize and continue in an uptrend as analysts rework their estimates and ratings.

I have my box of chocolates ready ... but, with the FDA, you never know what you're gonna get. However, I am saving that big flavorful piece right in the middle of the box for a special occasion, which I think will happen on Valentine's Day, approval for Northera.

Disclosure: I am long CHTP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.