Chelsea Therapeutics International Ltd. (CHTP) PT Raised By DB

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This week, Chelsea Therapeutics International Ltd. (NASDAQ:CHTP) received accelerated approval from the Food and Drug Administration for its drug Northera, which treats neurogenic orthostatic hypotension, a disorder that causes fainting spells. That approval caused Wedbush analysts to speculate that an acquisition of the company might be near. However, not all analysts are ready to get in on the drug maker.

Hold rating on Chelsea Therapeutics maintained

Deutsche Bank analysts raised their price target for Chelsea Therapeutics International Ltd. (NASDAQ:CHTP) to $8 per share, although they maintained their Hold rating on the company. Analysts Robyn Karnauskas and Alethia Young of Deutsche Bank say they see an unmet need for Northera in the market and that the approval removes some of the uncertainty surrounding the company. They estimate that sales of the drug could peak at $460 million.

However, they would remain on the sidelines with Chelsea Therapeutics International Ltd. (NASDAQ:CHTP) because they think its stock is fairly priced.

Chelsea Therapeutics details Northera plan

Chelsea Therapeutics International Ltd. (NASDAQ:CHTP) plans to launch Northera in the second half of this year. The company still needs to complete a trial of approximately 1,400 patients, which it estimates will take about six years to enroll. As it rolls out the drug, Chelsea plans to target neurologists, cardiologists and primary care doctors who typically treat patients who suffer from neurogenic orthostatic hypotension.

Specifically, they would be looking for patients who are currently taking Midodrine or fludrocortisone to treat their condition. The drug maker needs a sale force of between 100 and 110 people to market the new drug. The Deutsche Bank team sees Chelsea Therapeutics International Ltd. (NASDAQ:CHTP)’s post-marketing requirements as being  manageable.

Chelsea considers strategic possibilities

Chelsea Therapeutics International Ltd. (NASDAQ:CHTP) also said this week that there are some strategic possibilities in terms of partnering with other drug companies in light of the FDA approval of the drug. The Deutsche Bank team said because Chelsea now has an approved product, companies which are in the neuro space might find a partnership with it as being attractive and could offer an NPV neutral deal. However, they believe that if Chelsea gives away about 20% of the economics in such a deal, the company’s fair value would be lower—around $6 a share—than their price target.

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