After a run-up to $1.44 last week, Chelsea Therapeutics (NASDAQ:CHTP) has been giving up gains as momentum ebbed and the company released no major updates to the Northera (droxidopa) development program. CHTP is trading around $1.25 on Tuesday. You can see last week’s story, in which we discuss the short-lived rally, by clicking here. Investors were hoping for news at the company’s Rodman & Renshaw presentation on Monday pertaining to the treatment for neurogenic orthostatic hypotension. CHTP received a Complete Response Letter (CRL) in March after a New Drug Application was submitted in September of 2011. Chelsea originally hoped its ongoing 306b trial would be enough to quell concerns, but the FDA disagreed and requested an additional trial with a longer testing period. The FDA made no mention of any outstanding safety issues with the drug.
The company has been re-strategizing for Northera’s development since the CRL, and on Monday outlined three steps for moving towards a new trial. First, the company is planning for the next clinical study, but will not make a decision until they see final 306b data to inform a more comprehensive redesign; management believes that will be available at the end of the year. Second, Chelsea will communicate with the FDA before commencing the pivotal trial design to insure the trial will meet the agency’s expectations. To save time, they do not plan to look for a special protocol assessment. Finally, Chelsea wants to conserve cash. The company had roughly $41M dollars in cash at the end of 2Q; expects to have about $25M at the end of 2012; and believes the company can operate into 3Q13 at its current burn rate. None of the news shocked investors, however, and shares continue to be weak on Tuesday as the potential for Northera to reach the market gets pushed further into the future.