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Why Intra-Cellular Therapies Is Surging Today

By Brian Feroldi - Sep 7, 2017 at 9:47PM

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Shares jumped after the company announced some upbeat clinical news and received an analyst upgrade.

What happened

Shares of Intra-Cellular Therapies (ITCI -6.05%), a clinical-stage pharma company focused on diseases of the central nervous system, jumped more than 17% as of 3:15 p.m. EDT on Thursday. The bullish move was caused by the company's release of positive clinical news related to its lead compound lumateperone.

So what

Intra-Cellular announced top-line data from part one of an open-label switching safety study. The 302 patient trial took patients with stable symptoms of schizophrenia off their current standard-of-care antipsychotic medications and switched them to Intra-Cellular's compound lumateperone for six weeks. Afterwards, they were switched back to their standard-of-care therapy and observed for two more weeks.

The results from the study showed that when patients were switched to lumateperone they displayed statistically significant improvements in many parameters. Specifically, favorable changes in body weight, body mass index, waist circumference, total cholesterol, LDL cholesterol, triglycerides, insulin sensitivity, and prolactin were observed during the six-week period. Importantly, these favorable changes reversed themselves once patients were returned to their prior therapy.

What's more, the study participants' schizophrenia symptoms did not worsen when switched to lumateperone. In fact, statistically significant improvements were observed from baseline.

Investors are viewing this update so positively because schizophrenia is a highly competitive disease state. Large companies like Bristol-Myers Squibb, AstraZeneca, and Johnson & Johnson all have launched successful schizophrenia drugs in the past, so lumateperone is going to have to offer healthcare providers and insurers something special in order to stand out. This data helps to show that lumateperone can provide relief from schizophrenia with fewer side effects.

This positive clinical data caught the attention of an analyst at Piper Jaffray. Charles Duncan upgraded his rating on the company's stock to "overweight" and significantly raised his price target from $14 to $33.

Given the upbeat clinical news and Wall Street love, it is easy to understand why shares roared higher in afternoon trading today.

Female doctor giving a thumbs-up

Image source: Getty Images.

Now what

The recent news flow out of Intra-Cellular has been extremely positive. Last month the company let investors know that it had overcome an issue with the U.S. Food and Drug Administration and was on track to submit lumateperone for approval by mid-2018. With today's positive announcement, shares have nearly doubled over the last 30 days.

Does this news mean that it's finally safe for investors to jump on the bandwagon? While I must admit that the last few announcements have made me more optimistic about this company's future, I continue to think caution is warranted, given lumateperone's lackluster phase 3 results. Furthermore, it's worth noting that switching study wasn't measured against a control group of patients, so it might be a mistake to draw conclusions based on the results. For those reasons, I, for one, plan to remain on the sidelines.

Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

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