Nestled away off Johnston Road in the Ballantyne area, Chelsea Therapeutics represents the next big evolution of the pharmaceutical industry. A far cry from drug giants like Pfizer and Merck, this small band of entrepreneurial-minded scientists, physicians and business executives are focused on a virtually untapped market.
“We’re going to develop drugs for patients who represent a high unmet medical need and improve their lives,” says CEO Joe Oliveto. He refers to those historically ignored by the pharmaceutical power players because there simply aren’t enough of them.
Chelsea Therapeutics has found its niche in what are called orphan drugs—those developed to treat rare, often little-known medical conditions or orphan diseases. By definition, the population of those suffering from orphan diseases numbers less than 200,000 and can be as little as a few thousand in the case of “ultra-orphans.”
Acknowledging the difficulty and lack of incentive to develop and market these medications, the Food and Drug Administration (FDA) helped pass the Orphan Drug Act of 1983 to encourage the development of rare disease drugs. The act provides sales exclusivity for seven years, possible clinical trial tax incentives, and modifies Phase III clinical trial testing mandates as it literally may be impossible to test the number of patients required under current standard guidelines because they simply may not exist.
Finding Success in a Limited Population
Leaving the humanitarian aspect alone for the moment, servicing such small segments of the population doesn’t mean there isn’t money to be made in this sector. Traditional thinking was that too few patients equaled too little opportunity for return on investment. Oliveto says that there has been a movement toward looking at orphan diseases because of the high unmet medical need and the opportunity to realize a financial return.
Thus, a new generation of smaller companies like Chelsea Therapeutics is emerging and venturing into this underserved market. That is not to say that the big boys are content to sit on the sidelines. There are now large pharmaceutical companies that are also focused on the orphan drug space and even ultra orphan drug space which may serve only tens-of-thousands of patients.
Chelsea Therapeutics has a mere 20 employees—specialists, really—who have come together armed with an entrepreneurial spirit and a deep passion to make an individual difference. As Rachel Couchenour, Chelsea Therapeutics’ director of medical affairs, is fond of saying, “There’s no tall grass here. There’s nowhere to hide.”
Oliveto confirms the sentiment saying, “Here, you’re one-twentieth of the organization! You look around and realize, ‘This is it.’ You quickly find out you’re on your own and there’s not a large safety net like at the larger companies. We attract a particular mindset—risk takers and entrepreneurs.”
Chelsea Therapeutics was founded in Charlotte in 2004 by Simon Pedder, Ph.D., who remains engaged with the organization in the role of consultant. Oliveto jokes that Pedder, who lived in Charlotte at the time, was simply tired of his then weekly commute to New Jersey. More seriously, Pedder saw Charlotte as an excellent location to start and grow a company—a place where one could attract other key players to live and work.
Oliveto notes, “I’ve worked in places where nobody wanted to come, even when the job was a great one. We don’t have that problem here in Charlotte.”
Pedder worked to assemble a group of investors and took the company public almost immediately as part of the initial business model. In the last year Chelsea Therapeutics watched its stock (NASDAQ: CHTP) jump over 200 percent from trading below a dollar to north of $3.00 per share as of late September.
The company has high hopes of celebrating its 10th anniversary in 2014 with FDA approval of Northera (droxidopa), a drug developed for the treatment of neurogenic orthostatic hypotension (nOH), a condition that can affect patients with underlying neurodegenerative disorders such as Parkinson’s disease, multiple system atrophy, and pure autonomic failure. Basically, nOH causes a consistent drop in systolic blood pressure causing a myriad of problems including lightheadedness, dizziness when standing, and generalized weakness.
Bringing Successful Drugs to the U.S. from Abroad
Droxidopa was initially developed by the Japanese company Dainippon Sumitomo Pharma Co., Ltd. Chelsea Therapeutics acquired the global development and commercialization rights to droxidopa (save Japan, Korea, China and Taiwan) in 2006.
Granted orphan drug status by the FDA in January 2007, Chelsea believes Northera has the potential to be the first safe and effective drug that will treat symptomatic nOH without leading to significant supine hypertension, thereby improving the quality of life for patients suffering from the disorder.
One of the challenges for companies in the orphan drug space is the difficulty of accurately assessing how many patients suffer from a given orphan disease due to the extreme lack of data and studies available. Regarding nOH, Oliveto says, “While it’s hard to pinpoint an exact number, we anticipate about 10 percent of Parkinson’s patients are suffering from the disorder and believe the overall number of patients suffering from symptomatic nOH to be around 140,000 to 150,000.”
With such a small potential population of users, the obvious question becomes the price tag. It would seem inevitable that orphan drugs would be more expensive than their mass-produced counterparts.
“Usually that’s the case,” responds Oliveto, “because you have to make your money back at some point and show a return.” But he also points out that Congress understands the need for incentives and through the Orphan Drug Act eliminates user fees normally paid to the FDA to help fund the review of new drug applications.
Often, a foreign company lacks the capacity to navigate the FDA’s roadmap to drug approval and that keeps an orphan drug out of the U.S. market. In the case of Northera, in 2006 Dainippon Sumitomo simply did not have the infrastructure in place to understand FDA regulations and procedures.
Oliveto explains, “This underutilized gem was serving patients well in Japan for years, but no one had the resources to bring it to the U.S. This is the niche that companies like Chelsea Therapeutics have significant opportunities to step in, license the drug, see it through FDA approval, and ultimately get it to market.”
Currently Chelsea Therapeutics is in Phase III (final confirmation of safety and efficacy) of the FDA clinical research process for Northera as a treatment for symptomatic nOH. The FDA Cardiovascular and Renal Drugs Advisory Committee voted to approve Northera in February 2012 and the following March the FDA asked Chelsea Therapeutics to submit data from an additional study.
The company resubmitted a New Drug Application (NDA) in August of this year and in September the FDA officially accepted the NDA resubmission.
None of this is new to Oliveto, who has played a significant role in the success of multiple NDA filings during his tenure with Hoffmann-La Roche. To hear him describe it, the process seems exhaustively complex: “I have seen semi trucks full of boxes and boxes of paper heading to Washington, all to try to get approval for a single drug.”
A Defender of the FDA
Yet, Oliveto remains a fierce defender of the FDA, noting that while it is not uncommon for NDAs to be rejected during their first review, he believes the rigorous procedures and practices are anchored in a genuine desire to protect the public. He also characterizes the Administration as progressive in their efforts to safely expedite the delivery of new drugs to market and sympathizes with their plight, explaining that from his perspective, the FDA is at a disadvantage.
While it may take a drug company a decade to prepare and assemble hundreds of thousands of pages of data regarding a new drug, the FDA has only one year to review it—or in the case of orphan drugs—only six months. Chelsea Therapeutics’ FDA decision date on Northera, known as the PDUFA date (named for the Prescription Drug User Fee Act), is Valentine’s Day 2014—a day Oliveto hopes will be a very special day for those who suffer from nOH.
“When you’re a company as small as we are, and as focused on one disease, you really take the unmet medical need personally,” notes Oliveto. “The patients’ needs are both heartbreaking and the ultimate motivator to achieve success. We never forget for a day what our goal is and who we are fighting for. Their pain and suffering is never lost on a single person here. We are all about the patients and improving their quality of life.”
Unfortunately, for participants, at some point the clinical trials end. When the Northera clinical trials ended, patients contacted Chelsea Therapeutics requesting continued access to the drug. Oliveto explains, “When the drug has worked well for patients, it’s hard to go back to a life without it. These are heartbreaking stories and the patients become very vocal.”
Vocal patients have become an important part of the learning process for the company and potentially the FDA. Oliveto notes, “Unless you really understand the patients and what they’re going through, you don’t have much hope of being successful in developing the drug.”
Fortunately, through the support of the patients’ treating physicians, Chelsea Therapeutics has been able to provide Northera through an expanded access program allowed by the FDA.
Chelsea Therapeutics has also been conducting Phase II trials for the use of Northera to treat fibromyalgia and intradialytic hypotension (IDH), the latter of which can preclude the delivery of adequate doses of dialysis for patients with kidney disease. Another compound, CH-4051, is in Phase II development for use in the treatment of rheumatoid arthritis.
For Chelsea Therapeutics, 2014 stands to be a game-changing year. A development stage company for the last nine years, Oliveto and his team hope to make the successful transformation into a commercial stage company active in production, marketing and sales. If that happens there will be no shortage of larger companies, stressed to fill their commercial pipelines, who will aggressively come knocking.
While not part of their original business model per se, Chelsea Therapeutics has been very open publically and with investors that they are seeking and evaluating opportunities for partnerships with other companies, and even prospects for acquisition.
Oliveto says, “The only thing that’s for certain is that we will not stay the same. We will grow.” He adds, “It is certainly possible today for a small company to come to the orphan market, where they’re not competing with the Pfizers of the world, and actually grow and commercialize a product.
“But for us, everything is on the table and we have to return value to our investors. Ultimately, we are about getting the drug to the patients. Whatever is the best path forward to accomplish that goal is what we will do.”