What happened

The Food and Drug Administration told Intra-Cellular Therapies (NASDAQ:ITCI) that it doesn't plan to hold an advisory committee meeting to review Intra-Cellular's marketing application for lumateperone as a treatment of schizophrenia.

There's two ways to interpret that:

  1. The FDA thinks the meeting is a waste of time, because it's already planning on rejecting the drug and doesn't think its outside advisors will be able to change the agency's opinion.

  2. The agency doesn't have any issues with the marketing application and is planning on approving the drug, so why waste its outside advisors' time?

Investors seem to have had both opinions today, having sent shares down over 18%, only to bid them back up into the black.

A U-turn arrow painted on cement

Image source: Getty Images.

So what

The FDA had previously scheduled an advisory committee meeting for the end of July, but the agency canceled it after Intra-Cellular submitted additional nonclinical information. At the time, Intra-Cellular said the FDA canceled that meeting "to allow sufficient time to review this new and any forthcoming information."

Intra-Cellular submitted even more nonclinical results that the FDA asked for. The company thinks the data support the idea that animals and humans metabolize the drug differently, so safety issues seen in animals aren't relevant to humans. Without seeing the data, investors have to trust management's interpretation; that's generally an issue when investing in most biotech companies, and it may account for the difference in opinions today.

Now what

The FDA is scheduled to make a decision about whether to approve lumateperone on or before Dec. 27. Given the holiday week, the agency may make a decision early, giving Intra-Cellular an early Christmas present.

Let's hope it's not a lump of coal.