This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

AP Pharma, Delcath Systems: FDA 'Acceptance' Run-Up Trades

NEW YORK ( TheStreet) -- The frothy biotech market has traders looking for new and earlier reasons to run stocks higher. For AP Pharma (APPA) and Delcath Systems (DCTH - Get Report), that means traders zeroing in on whether or not FDA will accept their respective drug review applications.

AP Pharma is developing APF530 to treat nausea and vomiting resulting from cancer chemotherapy. FDA rejected APF530 in March 2010, asking for among other things, a new study to assess the cardiac safety of the drug. With the clinical work finally completed, AP Pharma filed a new FDA approval application for APF530 on Sept. 28.

Under new rules established by recently passed federal legislation, FDA has 14 days to accept or reject a New Drug Application (NDA) after a previous Complete Response Letter (FDA jargon for a rejection.) That means AP Pharma should hear back from FDA regarding acceptance of the APF530 application by Friday, Oct. 12.

In a biotech bull market, this passes for a tradable catalyst. AP Pharma is a penny stock (shares closed Monday at 61 cents) making the trade even more irresistible. [Traders tend to ignore AP Pharma's sickly balance sheet: 300 million-plus outstanding shares and a large cadre of stockholders who own shares at 13 cents from a June 2011 financing and are likely selling as fast as they can.]

Next up is Delcath Systems and its ChemoSat liver-tumor treatment system. In early 2011, FDA issued a rare "refuse to file" letter to Delcath, meaning the agency refused to accept the company's new drug application for ChemoSat. It took a long time, but Delcath finally filed a second approval application for ChemoSat on Aug. 15. Delcath requested priority, or six-month, review.

Under FDA rules, the agency has 60 days to notify a company about the acceptance of a new drug application seeking priority review. For Delcath, that means FDA's "acceptance" decision could be announced by Oct. 14. [Since that's a Sunday, the company may hear on Friday, Oct. 12 or wait to make an announcement until Monday, Oct. 15.]

FDA could decide that the re-filed ChemoSat application is acceptable but not for priority review. Under this scenario, FDA has extra time -- 74 days or until Oct. 28 -- to notify the company. If Oct. 15 (Oct. 16 at the latest) passes by without news from Delcath, it's safe to assume that FDA decided on a standard review timeline for ChemoSat.

It's unlikely but Delcath could get a second refuse-to-file letter from FDA. If that happens, FDA would notify the company by Oct. 14.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
APPA $13.07 0.46%
DCTH $0.32 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs