Please ensure Javascript is enabled for purposes of website accessibility

Why Intra-Cellular Therapies Took a Big Hit Today

By Eric Volkman – Jan 4, 2022 at 12:55PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company is floating at least $400 million worth of its common stock.

What happened

Intra-Cellular Therapies' (ITCI -1.23%) stock could have used a little financial therapy on Tuesday. The neurologic drugs-focused biotech saw its shares decline by over 14% on the day, following news that it is entering a new round of capital-raising.

So what

After market hours on Monday, Intra-Cellular announced that it is floating a $400 million issue of its common stock. The underwriters of the issue -- which include JPMorgan Chase unit J.P. Morgan and Bank of America Securities -- have been granted a 30-day option to collectively purchase up to an additional $60 million worth of the shares.

A medical professional using a microscope.

Image source: Getty Images.

Intra-Cellular gave quite a bit of detail as to how it would utilize the funds raised in the offering. They will be deployed to fund the commercialization efforts of the company's Caplyta, a treatment for schizophrenia and bipolar depression. Some will also be channeled toward furthering the development of its pipeline drugs.

The company did not specify exactly how many shares would be offered in the flotation. Monday's closing stock price was $52.01; at that level, $400 million plus the potential $60 million for the underwriter option would equate to over 8.8 million shares.

Now what

At the moment, Intra-Cellular has nearly 81.5 million shares outstanding. So while the new stock issue isn't overwhelmingly dilutive compared to others that have been floated in the biotech sector, it isn't exactly small, either.

The new financing move could also illustrate for some investors that the company is struggling with key fundamentals; it continues to be in the red on the bottom line, with deeper-than-expected losses in recent quarters.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.