Whoa! Chelsea Therapeutics and Hercules Offshore Rolled Higher

The Dow Jones Industrial Average rose 66 points Friday, closing out a week that saw the index move 1.4% higher. Strong earnings continued to undergird a sense of improvement, despite ominous signs out of Europe. While the stocks below strapped on rocket packs and went even higher, resist the urge to high-five everyone in the cubicles next to you. Smart investors won't celebrate until they know why their stock surged. Without a fundamental basis for the bounce, these stocks can quickly make the return trip down.

Enough to raise your blood pressure
The bounce in Chelsea Therapeutics (NAS: CHTP) won't mollify the trial lawyers who have pounced on the company. It was a surprise to begin with when the FDA's advisory panel recommended its blood pressure medication Northera be approved and sent its shares soaring, so the fact that the full regulatory body rejected the med on the first go-round doesn't seem all that actionable. There's still reason to believe Northera will ultimately be approved.

The letter sent to Chelsea says the agency wants to see how the therapy works over two to three months. It's already got a trial underway for 10 weeks, and though that might not be enough for the FDA, it's a hopeful spot to be in. Along with a black-box warning, I'd say these aren't insurmountable problems and it's a common enough refrain from the agency.

Exelixis (NAS: EXEL) had to go through the regular approval process for its prostate-cancer drug cabozantinib rather than be allowed to take a shortcut, despite seemingly positive developments. VIVUS' (NAS: VVUS) once-rejected Qnexa recently got overwhelming 20-2 advisory panel support only to see a three-month delay by the FDA. Chelsea's path through the approval process is not abnormal, and these lawyers serve as a distraction to the company and waste already limited resources.

While Northera was the nearest-term catalyst for Chelsea, the biotech has other developments in its pipeline that interest investors, like CAPS All-Star zzlangerhans, who's something of a sector guru for the investor community:

The real reason for the green thumb is the possibility of a rebound ahead of topline phase II data for antifolate CH-4051 in rheumatoid arthritis, which is expected in June. CH-4051 intended to have similar efficacy to methotrexate in inflammatory conditions with lower toxicity. The potential market for CH-4051 is enormous and interim data from the phase II trial late last year seemed very solid. I've always seen CH-4051 rather than Northera as Chelsea's most viable pathway to profitability.

Add Chelsea to the Fool's free portfolio tracker and tell me in the comments section below or on the Chelsea Therapeutics CAPS page if you think this biotech is still headed north.

A wide gulf between them
Drilling activity in the Gulf of Mexico is picking up again after a two-year lull following the Macondo well blowout and the ensuing moratorium. While most of the drilling seems to be in the deepwater regions where Big Oil companies like Chevron and BP (NYS: BP) ply the waters, if you look at the fleet status report Hercules Offshore (NAS: HERO) just issued, you'll see conditions are improving in the shallows as well.

It's not a wildly dramatic pickup, as utilization rates in the Gulf are still below 50% for its rigs, but revenue per day for its lift boats rose 5% to $8,225 in the latest period, while operating days jumped 12%. Even though its total average dayrate fell to $14,700 due to international segment weakness, the prospects for growing Gulf activity gave investors hope the strongman's stock will recover to its post-disaster highs.

Over on CAPS, more than 1,650 members have weighed in on the offshore driller, and 96% of them believe it will come back to beat the Street. Let us know on the Hercules Offshore CAPS page if you agree this is a hopeful sign, or tell us in the comments section below if international markets will take away any benefit the Gulf is giving. Add the driller to your watchlist to be notified if a tidal wave of work comes its way.

Going into orbit
These two companies may have divergent futures despite their short-term bounce, so check out for free the one stock The Motley Fool thinks will break all the rules to win. Hurry though, because the free look at the new report "Discover the Next Rule-Breaking Multibagger" is available for a limited time only.

At the time this article was published Fool contributorRich Dupreyholds no position in any company mentioned.Click hereto see his holdings and a short bio.The Motley Fool owns shares of Exelixis.Motley Fool newsletter serviceshave recommended buying shares of Chevron and Exelixis. The Motley Fool has adisclosure policy.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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