Shares of Intra-Cellular Therapies (ITCI -3.18%) fell as much as 13.6% today after the company announced the pricing of a public stock offering. The pharmaceutical company will offer up to 11.5 million shares at $29.50 apiece, which will raise up to $339.5 million in gross proceeds.
While the business ended September with $255 million in cash, it reported an operating loss of $112 million in the first nine months of 2019. After receiving a surprise approval for Caplyta in the final week of December, the company is simply padding the balance sheet as it prepares for market launch.
As of 10:26 a.m. EST, the pharma stock had settled to a 11.3% loss.
Today's news isn't too surprising. Shares of Intra-Cellular Therapies gained 253% last month after the U.S. Food and Drug Administration (FDA) approved the company's antipsychotic drug Caplyta as a treatment for schizophrenia in adults. Considering operating losses, the soaring stock price, and the need to prepare for market launch and ramp-up activities, the public offering is a wise move by management.
Although the stock price has tumbled below the offering price, investors need to be cautious. Analysts think Caplyta could generate $60 million in revenue in 2020, but it would need to have a smooth launch in the first half of the year to have a shot at that level of early success. If Intra-Cellular Therapies can gain approval in additional psychiatric indications, analysts think the drug could reach peak annual sales of $400 million. Before getting carried away with the possibilities, though, investors should wait to see if the company can execute.