Chelsea smiles as Northera gets not-so-accelerated approval

Chelsea has been working towards US approval of Northera for some time, redesigning its trials and resubmitting the application after it was rejected a year ago, so the fact that yesterday’s green light came under the agency’s accelerated approval programme is pleasingly wry.

The company’s shares have risen 37% so far today as investors mull Chelsea’s potential to hook a partner for Northera or, better yet, a buyer. But the warnings on Northera’s label, its limited patient population and concerns over pricing might make this more of a challenge than many investors realise.

Price

Northera, which has the generic name droxidopa, has been cleared for the treatment of symptomatic neurogenic orthostatic hypotension, a rare form of low blood pressure which can cause light-headedness in patients with conditions such as Parkinson’s disease. But the approval came with a caveat: the drug’s label will carry a black box warning concerning supine hypertension, itself a risk factor for stroke. Doctors are instructed to monitor the patients’ supine blood pressure and remind them to sleep with the head elevated.

This is a nasty blow to Chelsea; it had believed it would get away without such a warning (Event – Optimism returns to Chelsea with dizzying speed, January 3, 2014). The only other drug in this space, a generic product called midodrine, has the same black box on its label. Northera’s assumed advantage has been whipped away.

Further, the label states that effectiveness data on Northera does not extend past two weeks. After that, doctors must assess whether the drug is still working.

Chelsea says it has not yet decided where it will price Northera, though estimates point to a cost of around $40 per patient per day. New data on midodrine are likely to affect this. The FDA has tried to withdraw midodrine from the market saying – interestingly, since it was also granted accelerated approval – that its clinical benefit had never been demonstrated.

Midodrine is now being trialled by Shire, its original developer, in an effort to prove its long-term effect and thus keep it on the market. Results from the trials are due in the first half of 2014. If the studies show a long term benefit for the generic, Northera’s price may be forced down.

Partner

If Northera is to be a success, Chelsea will need to find a partner. The company raised $21m in November bringing its cash reserves to $42m, which will enable it to fund the initial launch of the drug, but its expenses are greater than this. The accelerated approval obliges the company to conduct a postmarketing trial 1,400 patients strong to prove long-term efficacy.

And not just any old partner: the right partner. Acorda Therapeutics’ Ampyra, approved in 2010 to improve the walking ability of multiple sclerosis (MS) patients, might provide an example of how to do it. Ampyra was licensed to Biogen Idec in 2009 for sale as Fampyra in ex-US territories, causing Acorda’s shares to fall; investors had been hoping for a takeover.

Though shareholders were initially disappointed, the deal has turned out to be a success. The drug has sold well, despite not being disease-modifying – just like Northera – and Acorda’s market cap has grown to $1.45bn as a result.

Purchase

Acorda succeeded after finding a partner rather than a buyer, so perhaps Chelsea can too. Nonetheless, its investors will still be gunning for an acquisition. Leaders in Parkinson’s disease such as AbbVie or UCB might be in the frame.

In any case, companies considering buying Chelsea or licensing Northera might be well advised to wait until midodrine’s long-term utility becomes clear.

To contact the writer of this story email Elizabeth Cairns in London at elizabethc@epvantage.com or follow @LizEPVantage on Twitter

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