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A development stage pharmaceutical company that seeks to acquire and develop innovative products for the treatment of a variety of human diseases.
Chelsea is shooting up today on word that the company plans to submit the NDA for Northera for orthostatic hypotension in early 2011. The street seems to have interpreted this decision, coming after a meeting with the FDA, as some form of implicit FDA approval of the application. But long-term biotech groupies understand the wide gulf between concepts such as an SPA, an NDA acceptance, and FDA approval.The critical quote from the company PR is as follows: the FDA agreed that the proposed NDA for Northera could be submitted based on combined data from Chelsea's two completed Phase III studies in NOH, Study 301 and Study 302, without the need for any further efficacy studies.Remember that this is PR released by the company, not by the FDA. We only have the company's version of what the FDA thinks of their impending drug application. If you ever applied to college or graduate school, you know the difference between a completed application, an accepted application, and a college acceptance. What the company doesn't mention is that the first of their two phase III efficacy trials, study 302, failed to meet primary endpoints and the second trial, study 301, only met endpoints after they were changed mid-trial (with FDA agreement). Regardless, first-pass approval is far from a slam dunk. In their PR the company seems to be encouraging an overly positive reaction to recent developments and it isn't hard to see why. With 18M in the bank and a quarterly burn of 6-10M, the company will need to dilute soon. The higher the share price gets before dilution, the fewer shares will need to be added.Expect a large dilutive financing soon, and a price drop back into the 6's.
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