Intra-Cellular Shares May Double on Bipolar Depression Data

(Bloomberg) -- Intra-Cellular Therapies Inc. shares could double if the company shows positive data in a pair of late-stage studies in bipolar depression next week, according to two analysts.

Wall Street will want to see both trials reach their main goal of improving depression symptoms for shares to move higher, Cowen analyst Ritu Baral wrote in a July 1 note. She pegs the chance of succeeding at just over 50% for each study. Baral predicts shares could at least double if both studies succeed, but an investor survey suggests the stock may fall as much as 15% if only one does, she said. Both studies failing may send shares down 50% or more, she said.

Drug development in neurological disorders like depression is fraught with pitfalls. Despite some recent successes in the field, investor skepticism has cost Intra-Cellular almost a third of its market value over the past 12 months. Analysts are more optimistic, with all nine tracked by Bloomberg holding a buy recommendation on the shares.

The study results will be reported the week of the July 8, Sharon Mates, Intra-Cellular’s chief executive said last month.

The Food and Drug Administration may consider approving the therapy, called lumateperone, even if only two of the three ongoing studies meet their goal, according to Cowen. Results from the third study aren’t expected until next year. Regulators are also reviewing the drug as a treatment for schizophrenia, and a panel of experts will discuss that application later this month with a verdict from the FDA due in September.

RBC analyst Brian Abrahams last month estimated that Intra-Cellular had a 60% chance of hitting the primary endpoint on at least one study, and that could lead to a 50% share gain, “assuming at least positive trends in the other study” given the FDA’s “amenability to mixed data.” If Intra-Cellular were able to deliver in bipolar disorder as well as schizophrenia approval, that could drive a four-fold gain for the stock, Abrahams said.

SVB Leerink’s Marc Goodman said the shares could fall by $2, or about 15%, on mixed data or by $6 if both studies failed. Both studies hitting their goal may add $7, or about 50%, to the stock price, Goodman said. He estimates lumateperone sales in bipolar depression could reach $500 million a year, while schizophrenia may bring in as much $400 million.

Options investors are also bracing for a big move. July call options with the highest levels of open interest include $22.50 and $20 strikes, compared to the last closing price of $13.61. July puts with the highest level of open interest include $12.50 and $10 puts, or an open interest weighted average of $11.09, implying a downside of about 18% from the last closing price.

Current drugs approved for treating bipolar depression include Sumitomo Dainippon Pharma Co.’s Latuda and AstraZeneca Plc’s Seroquel, as well as Allergan Plc and Gedeon Richter Nyrt’s Vraylar. Sage Therapeutics Inc. is also developing a new treatment for the depressive symptoms of bipolar disorder.

©2019 Bloomberg L.P.

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