Shares of Intra-Cellular Therapies (NASDAQ:ITCI) rose over 178% today after the company announced that the U.S. Food and Drug Administration (FDA) had approved Caplyta (lumateperone) for treating schizophrenia in adults. Regulators had previously set a deadline of Dec. 27 to make a decision on the drug candidate, but investors were unsure of the approval odds heading into this week. Now they have their answer.
Today's news will allow Intra-Cellular Therapies to end 2019 on a high note. Shares of the company had underperformed the S&P 500 index since the beginning of the year, but they've now gained 188% year to date.
As of 10:39 a.m. EST, the pharma stock had settled to a 168% gain.
As an antipsychotic drug, Caplyta will come with a warning notifying elderly patients of side effects that can lead to injury or death. Investors are relatively unfazed by that development given the relatively clean safety profile of the drug. In clinical studies, patients taking the drug were more likely to report sedation and dry mouth than those taking placebo. The former could lead to falls, which is a concern for elderly people.
Intra-Cellular Therapies expects to launch Caplyta at the end of the first quarter of 2020. The company ended September with $255 million in cash -- more than enough to support market launch -- but the business reported an operating loss of $112 million in the first nine months of 2019. That makes it important to find market traction and begin generating revenue as quickly as possible.
Investors are understandably thrilled with the news of marketing approval for Caplyta. It will become the first commercialized asset of Intra-Cellular Therapies, which is an important milestone for the prerevenue company. Now the business must execute and live up to its new $1.8 billion market valuation.