Failed Drug Study Crushes Chelsea's Stock

After a failed midstage trial for a rheumatoid arthritis drug, Chelsea Therapeutics announced it ended studies on the drug causing the company’s stock to plummet 33%.

The study was comparing Chelsea’s drug, designated CH-4051, to the standard rheumatoid arthritis treatment methotrexate by testing CH-4051 in patients who were not helped by previous treatments of methotrexate.

“The outcome of the trial was confounded by the unexpectedly robust response reported by patients treated with methotrexate,” Simon Pedder, MD, president and chief executive officer of Chelsea, said in a statement.

He went on to say that the company would focus resources on Northera, which prevents falling in patients with conditions like Parkinson’s disease. However, Chelsea hasn’t exactly had good news on that front either. The company asked the FDA to approve Northera in September, but the agency asked for more studies, and now Chelsea “may have to add more patients and change its goal in clinical studies of the drug,” according to the Associated Press.

Click to enlarge

The company’s stock has been on a steep downward slide ever since the news in February that there was safety concerns about Northera and continued to fall at the end of March when the FDA didn’t approve the drug.

The stock, which had hit as high $6.06 during the last year, is now languishing at $1.32.

Choosing to focus on Northera is probably for the best, according to The Motley Fool, since Pfizer’s rheumatoid arthritis drug is close to approval and Rigel Pharmaceuticals and Incyte are close behind.

The information contained in this article should not be construed as investment advice or as a solicitation to buy or sell any stock.

Read more:

Can Teva Turn Around its Four-Week Slide?

Abbott Gears Up for Company Split

No Good News Waiting for Chelsea Investors