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Barry Cohen
Barry Cohen
Articles (226) 

Anti-Depressant OK Could Boost Intra-Cellular Drug into Blockbuster Territory

Shares of New York biotech soar on tests results, but analysts say the company still has plenty of upside

September 11, 2020 | About:

Shares of a New York City biotechnology company shot up nearly 73% Wednesday, sparked by news that a drug it's testing could hit sales of more than $1 billion, earning it blockbuster status.

Intra-Cellular Therapies Inc. (ITCI) reported that late-stage test results showed that Caplyta, in combination with either lithium or valproate, led to significant improvement in depression over placebo in patients with bipolar disorder.

Based on these findings, RBC Capital Markets analyst Brian Abrahams estimated Caplyta could eventually hit $1.2 billion in global sales across several indications, according to an article in FiercePharma. In a note to clients, he wrote that with approval to use the drug for in treating bipolar disorders, revenues could hit $450 million to $700 million annually in just the U.S.

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As Abrahams sees it, Caplyta's efficacy compares "reasonably well" to other existing bipolar depression meds, including Allergan's (AGN) Vraylar and Sunovion's Latuda. Plus, the drug's safety profile "will be an important differentiator and driver of Caplyta's future commercial success," he said.

Intra-Cellular's stock has retreated since Wednesday to about $27, still well below its year-to-date high. It has traded as low as about $7.50 since the start of 2020. The boost this week gives the company a market cap approaching $2 billion, heady territory for a firm that reported a worse-than-expected net loss of $63.7 million, or $0.96 per share, in the second quarter of 2020. For the same period in 2019, Intra-Cellular had a net loss of $37.4 million, or $0.68 per share.

Caplyta sales are light years away from achieving the magic $1 billion mark. The drug generated revenues of only $1.9 million in the second quarter, a shortfall of $1 million from what was forecast. Of course, keep in mind that Caplyta is now only approved to treat schizophrenia, so its market opportunity is only a fraction of what it will be if the drug gets the okay to treat depression.

A big plus is that Caplyta has reached coverage of over 95% of patients in Medicare Part D and Medicaid, the two largest markets for the treatment.

This year, Intra-Cellular also plans to start a clinical trial of Caplyta in major depressive disorder and start testing an injectable form of the drug that lasts longer.

SVB Leerink analyst Marc Goodman is bullish on the company's prospects. TipRanks reported he upped his price target from $32 to $40. Goodman is one of four analysts with a Buy rating on the stock. His colleagues see even greater upside, assigning the company an average target price of $58.50.

Disclosure: The author holds no position in any of the companies mentioned in this article.

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About the author:

Barry Cohen
Barry Cohen has nearly 40 years experience in communications and marketing, the majority in senior positions at large international health care companies, including Abbott Laboratories and Bayer Inc.

He has contributed to a number of financial websites, writing primarily about the stocks of health care companies.

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