Biotech Stock Mailbag: Chelsea Therapeutics

The Biotech Stock Mailbag is open.

Randall H. writes, "You recently did an article on rheumatoid arthritis. Have you looked at the drugs coming out from Chelsea Therapeutics(CHTP Quote)? They have two drugs, CH1504 and CH4051 that are similar to methotrexate, but without the liver toxicity due to them being metabolically inert. Do you feel either of these drugs have a shot?"

Methotrexate is a standard and widely used treatment for rheumatoid arthritis. The drug is also generic. All these factors present a challenge for any drugmaker seeking to develop a methotrexate alternative.

Chelsea's CH1504 is in phase II studies, while CH4051 recently completed a phase I study. Safety data from both drugs suggest better tolerability and less toxicity than methotrexate; it's still a bit early to determine whether either drug has superior efficacy. (Only CH1504 has early efficacy data collected.)

I think both drugs have potential, and one or both will probably be partner-worthy at some point. A concern I'd have is apathy. As I said, methotrexate is generic and widely used, so any drug seeking to replace it will have to demonstrate a significant advantage in either safety or efficacy, perhaps even both.

Chelsea shares have moved sharply higher since April, from $1 to more than $4. Some of that is probably tied to CH1504 and CH4051, but I'd think investors would be more focused on the coming phase III results from the company's lead drug droxidopa.

Results are expected this quarter from the first of two phase III studies of droxidopa in patients with orthostatic hypotension, a condition in which blood pressure drops when a patient stands up, causing dizziness and other symptoms.