Chelsea Therapeutics International Ltd.: CHTP

I AM NOT A FINANCIAL ADVISER! This is my attempt to better understand the cause/effect relationship of FDA Advisory Committee (AdComm) meetings on BioTech/Pharm stocks. This is for my own education, not to serve to advise or recommend any path for others. If looking for advice look elsewhere. If trying to understand the same stuff I’m trying to understand, please draw your own conclusions… mine are nuts, and would likely put you in the poor house.

Yahoo Finance Quote
FDAAC Meeting on Jan 14, 2014
Twitter Conversation
Meeting Materials

RECOMMENDED APPROVAL

Webcast from Start of Meeting to Morning Break
Webcast from Morning Break to Lunch Break
Webcast from Lunch Break to Afternoon Break
Webcast from Afternoon Break to End of Meeting

The recommendation led to an increase of 3.46 (150.434%) from the close at 2.3 on 1/13 to open at 5.76 on 1/15, and of 2.11 (91.739%) to the close at 4.41 om 1.15.

Date Open High Low Close Change from Prior
1/10/2014
Materials 1/9
2.50 2.72 2.26 2.50 -1.03 (-29.178%)
1/13/2014 2.61 2.62 2.27 2.3 -0.20 (-8%)
1/14/2014 Trading Halted for AdComm
1/15/2014 5.76 5.78 4.28 4.41 2.11 (91.739%)
1/16/2014 4.40 4.80 4.16 4.70 0.29 (6.576%)
1/17/2014 4.75 4.85 4.62 4.76 0.06 (1.277%)
1/21/2014 4.85 5.02 4.64 4.79 0.03 (0.63%)
1/22/2014 4.81 4.85 4.55 4.645 -0.145 (-3.027%)
5-day 5.76 5.78 4.16 4.645 2.345 (101.96%)
  • There was a 29.178% drop from the Close of the Materials Release date to the Close after we had access to the info.
  • Best results would have been to have bought on the 10th, two trading days before the AdComm
  • The first trading day post-vote High was 0.3% higher than the Open.
  • The first trading day post-vote Low was 25.7% lower than the Open.
  • The first trading day post-vote Close was 24% lower than the Open.
  • The five-day High was the High of the first trading day.
  • The five-day High was 0.347% higher than the five-day Open.
  • The five-day Low was the Low of the second trading day.
  • The five-day Low was 12.539% lower than the five-day Open.
  • The actual HIGH was in After-Hours of the afternoon of the vote, at over 6.30… After-hours is a pretty terrific exit point.

This suggests selling at Open and shorting from the Open to cover at 20% of Open (or could suggest NOTHING, you greedy pig!). Still, shorting at all is just scary for me at the moment. In the future I’ll be happy to exit in after-hours, but might go a little short for the experience at that time… certainly not the same position size.

UPDATE! FDA Final Approval was announced on 2/19/2014, about a month after the AdComm recommendation. CHTP went from a 2/18 Close of 4.95 to 2/19 Open of 6.65. An increase of $1.70 (34.34%). It then Closed on 2/19 at 6.16, down 0.49 (7.368%).

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