On Monday, the US Food and Drug Administration announced a proposition to pull ProAmitine (Midodrine) from the market due to Shire (SHPGY) not conducting post-approval studies to prove that the drug has a benefit.
Midodrine is currently the only FDA-approved drug for Orthostatic Hypotension. It was approved in 1996 as part of a shorter approval process under the condition that Shire conduct post-approval studies. Midodrine never was a big seller for Shire, and post-approval studies were never conducted. Midodrine was bringing in around $60M/yr as of 2005. FDA stated that around 100,000 patients filled prescriptions for brand or generic Midodrine in 2009. Take note that if the FDA withdraws the medicine's approval, generic companies including Mylan Pharmaceuticals (NASDAQ:MYL), Impax Laboratories (NASDAQ:IPXL), and Novartis (NYSE:NVS) unit Sandoz must stop selling their generic versions of Midodrine.
The company that benefits from this decision is Chelsea Therapeutics (NASDAQ:CHTP). Chelsea is developing Northera (droxidopa) for the treatment of Orthostatic Hypotension, with pivotal phase 3 trial results due in September.
Furthermore in Chelsea’s favor, Needham & Co analyst Alan Carr said the FDA action could help:
"The potential removal of midodrine may create a greater market opportunity for Droxidopa in the U.S.," said Carr in a research note.
If Midodrine is removed from the market, and Chelsea’s Northera study (Study 302) succeeds, the stock should most definitely be higher than it is now (if stock price rises to market potential, $6-$7 is very possible).