Monthly Archives: February 2014

Lesson Learned on CHTP (Northera) Case

CHTP Northera FDA results:

  1. A clean approval: FDA approved Northera with very little negative comments: saying long term effect is not understood.
  2. Stock price: 3.7 -> 4.5 -> 3.5 -> 2.3 -> 4.5~5 -> 6.8

Some thoughts:

FDA:

FDA evaluation is based on Risk (Safety) vs. Benefit (Efficacy). Northera is very safe; its long term safety was the very reason why it got CRL in Feb 2012. It has very clear short term benefit; its long term efficacy was the focus of discussion. The market was expecting bad things such as restrictions. It turns out to be not so bad (surprise, as always!) Most importantly, the only competitor, Midodrine, is such a bad drug with strong side effects that FDA cannot wait to withdraw it from market and drug maker Shire PLC rather not bother doing phase IV trial. So it was so clear that we (the market, patient, FDA, and us) need a better drug to replace Midodrine.

The most dramatic aspect of this case is its path to success: first CRL (panel 7-4) -> Second submission (technical error) -> very negative reviewer briefing (recomm. CRL) -> Advisory panel 16-1 -> Approval.

Stock price:

  1. First CRL had very bad impact on stock price. 5->0.5? This is the most important information: negative sentiments.
  2. Lots of negative sentiments and doubts among people
  3. Long term efficacy and FDA briefing.

All these was cleared by a positive surprise: a clean approval.

Future: Sentiments are still negative. I personally disagree and expect two future positive surprises: 1) withdrawl of Midodrine 2) Buyout of company.

PSIC club operation:

  1. As a group, we are more efficient at information collection than as individuals
  2. As a group, we are more subjective, more critical, and less biased.
  3. I feel more peace of mind , less emotion in trading when stock price collapsed. Because I know why I am buying, I trust what I’ve studied in the evaluation process.
  4. Doing the research ourselves is very important. I will never be confident if I only read analyst’s report without doing it myself.