Stick With the Intra-Cellular Rally for Another 25% Upside, Says Analyst

In the biotech world, positive clinical data readouts can be the spark that ignites the flame. Case in point: Intra-Cellular Therapies (ITCI) shares skyrocketed over 70% in Wednesday's trading session, following positive results from a Phase 3 trial evaluating 42mg lumateperone (Caplyta) in patients with bipolar depression (BPD).

The Caplyta arm of the trial was statistically significant on both the primary endpoint of change in total MADRS score and in the key secondary endpoint of CGI-BP-S Depression Score. To this end, ITCI is set to file an sNDA in late 2020 or early 2021.

Writing for SVB Leerink, analyst Marc Goodman likes what he sees. Based on the encouraging clinical results, Goodman increased the probability of success of Caplyta in BPD to 95%. Accordingly, the analyst lifted his price target on ITCI from $32 to $40, indicating confidence in a 25% upside, and backing his Buy rating. (To watch Goodman's track record, click here)

"There is still room for follow through in the name as investors consider the importance of this indication to the commercial success of the product,” Goodman noted. “We believe that this indication validates Caplyta as a $1 billion-plus sales opportunity.”

Turning to the KOL on the conference call, the effect size, 0.27, was deemed very “clinically meaningful in this high unmet need population (only 4 drugs approved in BPD) and especially as it covers both bipolar I and II patients.”

“The KOL explained that it is common for the effect size in adjunctive trials to be lower vs in monotherapy trials, as it is harder to show improvement on top of an established agent, and thus he is not surprised by Caplyta’s lower effect size of 0.27. We believe that the effect size of 0.27 is still meaningful and basically in line with prior clinical data from Latuda and Vraylar,” Goodman noted.

As both this study and the prior BPD study included bipolar I and II patients, management expects a broad label covering the full bipolar I/II population and including both monotherapy and adjunctive treatment with the same 42mg dose, which “should simplify prescribing and drive uptake,” in Goodman’s opinion.

Additionally, the KOL pointed out this data is so important because it is “the first time in psychiatry when a drug generated replicative positive trial data in both monotherapy and adjunctive use in both bipolar I and II (prior BPD agents focused on either bipolar I or II, only Seroquel is approved in both).”

What does the rest of the Street have to say? Only Buy ratings, 4 in fact, have been issued in the last three months, so the consensus rating is a Strong Buy. In addition, the $58.50 average price target is more aggressive than Goodman’s and suggests 81% upside potential from current levels. (See ITCI stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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