Intra-Cellular; Long-Term To Own With A Few FDA Approvals And Ability To Expand

Summary

  • CAPLYTA has been approved by the FDA for the treatment of adults with schizophrenia and adults with bipolar depression.
  • Total revenues for CAPLYTA was $83.8 million for the full year 2021, which compares to $22.8 million for full-year 2020; This was a year over year increase of 267%.
  • There is a possibility that CAPLYTA could be expanded for use to treat patients with Major Depressive disorder and MDD/bipolar depression with mixed features.
  • Other drugs in the pipeline include ITI-1284-ODT-SL, PDE1 inhibitors and ITI-333 for potential added value.
  • I do much more than just articles at Biotech Analysis Central: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

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Intra-Cellular Therapies (NASDAQ:ITCI) is a great long-term biotech to own. The reason why I state this is because it has achieved multiple wins with respect to FDA approvals. Matter of fact, its main drug in the pipeline lumateperone (CAPLYTA), has already been approved for the treatment of both schizophrenia and bipolar depression. If this was all it had, then I wouldn't be so keen on it. However, lumateperone (CAPLYTA) is actually being expanded to target other neurological disorders. That is, it holds the ability to expand to a larger market and another one that targets specific patients in two different populations. The former being the ability to expand the use of CAPLYTA as an adjunctive treatment for patients with major depressive disorder (MDD) and the latter being bipolar depression/MDD patients with mixed features. The adjunctive MDD population would be the better expansion opportunity, because it is estimated to target about 21 million patients. As far as the 2nd one I mentioned here of bipolar/MDD with mixed features that would go after about one-third of patients in each population, which is still very good. Net product revenues of CAPLYTA were $25.5 million for Q4 of 2021, which was a bigger increase compared to revenues of only $12.4 million in the same time period in 2020. This represented a year over year increase of product revenues of 106%. With the ability to expand to other neurological disorders in the pipeline, huge growth of CAPLYTA revenues year-over-year and other drugs in development it holds the ability to become a great long-term biotech to own.

Two FDA Approvals For CAPLYTA Means Huge Sales Growth In Coming Years

Intra-Cellular Therapies has already received FDA approvals for CAPLYTA in two indications. These two indications are adults with schizophrenia and then adults with bipolar depression. FDA approval was given for 42 mg of CAPLYTA as a monotherapy for adults with schizophrenia based on two placebo controlled studies. Both of these studies showed that those who received 42 mg of CAPLYTA achieved a statistically significant improvement in the primary endpoint of the Positive and Negative Syndrome Scale (PANSS) total score. The other FDA approval of CAPLYTA for the treatment of adults with bipolar depression was given on the basis of two placebo-controlled late-stage studies. Such regulatory approval was given by the FDA for CAPLYTA as a monotherapy and adjunctive therapy with lithium or valproate in adults with bipolar depression. This includes both bipolar I and bipolar II depression that these patients had. The studies that were done were as follows:

  • Phase 3 study 404 had 381 patients that were assigned to receive 42 mg lumateperone alone as a monotherapy or placebo
  • Phase 3 adjunctive study 402 had 529 patients that were assigned to receive 42 mg, 28 mg, or placebo - patients given mood stabilizers of lithium or valproate

The primary endpoint for both of these studies was to achieve a statistically significant improvement in depression from baseline to week 6 assessed by the Montgomery-Asberg Depression Rating Scale (MADRS). A secondary endpoint was to achieve a statistically significant improvement in the Clinical Global Impression Scale for Bipolar for Severity of Illness-Depression subscale ((CGI-BP-S)). The dose of 42 mg of lumateperone (now marketed as CAPLYTA) had met the primary and secondary endpoints of both studies.

These two FDA approvals were huge wins for Intra-Cellular Therapies. Especially, when you consider that it has been able to use CAPLYTA in targeting two large market indications. The first of which adults with schizophrenia targets a 2.4 million patient population. The other FDA approval of adults with bipolar depression was a much bigger win for two reasons. The first reason is that it goes after a much larger 11 million patient population. The second reason is because before FDA approval of CAPLYTA, there was only one other drug approved which was Latuda (Lurasidone). Even then, it was only approved by the FDA as a monotherapy. Whereas, CAPLYTA can be given both as a monotherapy and as an adjunctive therapy.

Having said that, it is clear that the bipolar depression market is much better for Intra-Cellular therapies. The reason why is because there was a huge increase in Rxs following the launch of CAPLYTA for bipolar depression. Still, the company had been doing quite well with just the FDA approval for only adults with schizophrenia as well. Regardless, the company was able to see a huge increase in revenues of CAPLYTA sales in Q4 and full-year 2021. In Q4 of 2021 sales of the drug came in at $25.5 million, which was a year-over-year increase of CAPLYTA sales of 106%.

Expansion Opportunities For CAPLYTA In Other Neurological Indications Can signify More Gains

Intra-Cellular Therapies holds the ability to expand the use of CAPLYTA towards two other indications. These are the two indications which I have noted above, which are adjunctive Major Depressive Disorder (MDD) and MDD/Bipolar depression with mixed features. MDD is a mood disorder in which someone has a constant feeling of sadness or loss of interest in activities. It is very severe in that it affects how a person thinks or reacts to certain situations. You may have trouble achieving daily activities and feeling depressed all the time. It's not something that you can get out of easily either, it requires long-term treatment options such as medication or psychotherapy. There are several symptoms that these patients can experience, which are:

  • Feeling sadness and hopeless
  • Lost of interesting in activities that are fun
  • Frustrated over small issues
  • Anxiety
  • Trouble thinking
  • Thoughts of suicide

These are just to name a few of the problems that are associated with this disorder. As I noted above, this is a much larger market opportunity for Intra-Cellular. If it can eventually receive FDA approval of CAPLYTA to treat patients with MDD, then it can really see a surge in revenues of the drug. Why would that be the case? That's because it is estimated that there are about 21 million adults in the United States that have had at least one major depressive episode. It is estimated that the major depressive disorder (MDD) market will grow from $3.97 billion in 2019 to about $7.87 billion by 2029 across the 8 major markets. There are two ongoing studies which are hoping to prove that CAPLYTA can successfully be used as an adjuvant treatment for this patient population. That is, it is hoping to see that in one of these studies treatment with CAPLYTA being given with standard of care (SOC) therapy can help these patients relieve their depression. The two phase 3 adjunctive double-blind placebo controlled studies treatment studies are known as Study 501 and Study 502. They each will enroll a total of 470 patients who will be treated for a total of 6 weeks. The thing here is that CAPLYTA will be given alongside another anti-depression therapy. This will not be an easy study, because these are MDD patients who have had an inadequate response to antidepressant therapy (ADT). In other words, when given ADT monotherapy these patients have less than 50% of improvement of their depression symptoms. The primary endpoint for each study will be the change in MADRS total score at Week 6. The MADRS scale is a 10 item diagnostic questionnaire which is used by psychiatrists to determine the severity of depressive episodes.

This is just one of the expansion opportunities that is possible with CAPLYTA. The other one lies with the ability to target MDD or bipolar depression patients with mixed features. That is a depressive episode of both depression and mania/hypomania at the very same time. This is another large population for which Intra-Cellular Therapies is going after. That's because mixed features are found in one-third of MDD/Bipolar depression patients. The use of CAPLYTA is being explored in a phase 2 study known as Study 403. This drug is being used as a monotherapy to treat these patients. In addition, this particular study carries the same primary endpoint as the other one I have discussed above. The primary endpoint for this study will be a change in MADRS total week score at Week 6.

Pipeline De-Risked With Additional Assets

Besides CAPLYTA being developed to treat several neurological indications, Intra-Cellular has many other drugs in the pipeline targeting different diseases. These are several of the other assets that could possibly ultimately yield value:

  • ITI-1284 ODT-SL = A deuterated form of lumateperone for treatment of agitation in patients with probable Alzheimer's Disease
  • Lenrispodun = phase 2 development for treatment of Parkinson's Disease (PD) - possibility to fight cancer as well
  • ITI-333 = 5-HT2A agonist for treatment of opioid use disorder and acute & chronic pain

These are other drugs in the pipeline which are being developed. It's hard to say if any of these other drugs will be successful, but I believe that Intra-Cellular Therapies is de-risked anyways since it has already received FDA approval for CAPLYTA in two indications.

Financials

According to the 10-K SEC Filing, Intra-Cellular Therapies had cash, cash equivalents and investment securities of $412.3 million as of December 31, 2021. On January 7, 2022 it had enacted a public offering where it sold a total of 10,952,381 shares of common stock at an offering price of $42 per share for aggregate proceeds of $460 million. After deducting expenses, net proceeds were $433.7 million. Even with this newly added cash it states in its 10-K SEC Filing that it will be able to fund its operations for at least the next 12 months. But if it just raised cash in January of 2022, why would the cash only last for roughly 1 year? It is because it believes it will spend up to $500 million on marketing and commercialization of CAPLYTA, clinical trials of lumateperone and other regulatory activities during the year.

Risks To Business

The biggest risk facing Intra-Cellular Therapies would be sales of CAPLYTA for schizophrenia and bipolar depression. While it has seen remarkable growth of CAPLYTA sales from 2020 to 2021, with an increase of 267%, there is no guarantee that such growth will be similar or better in the coming year. Depending on the economy and how the markets will be, sales could fluctuate and or change. The second risk pertains to the ongoing study using CAPLYTA as an adjuvant for the treatment of patients with MDD. While the drug has proven itself in two neurological disorders, there is no guarantee that a similar outcome will be achieved in the MDD indication. The final risk would be the cash position. As I have stated above, even though a large sum of cash was raised, it is going to burn about $500 million for many of its business activities during the year. It is going to burn cash fast and as such, that's why it guided in its 10-K SEC Filing that it estimates 12 months' worth of cash to fund its operations.

Conclusion

The final conclusion is that Intra-Cellular Therapies is a good long-term biotech to own. I state this on the basis that it has already received FDA approval of CAPLYTA for adults with schizophrenia and for adults with bipolar depression. Not only that, but it hopes to be able to expand to the other neurological disorders I described above. The most notable one being the ability to use CAPLYTA as an adjunctive treatment for MDD. Again, this is the biggest opportunity because it is estimated that there are 21 million adults with MDD. Then, there is the potential to target segments of both MDD and bipolar depression patients who have mixed features. With the potential of these additions for CAPLYTA and an expansive pipeline of other drugs, these are the reasons why I believe that Intra-Cellular Therapies is a long-term buy.

This article is published by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical service on Seeking Alpha Marketplace. If you like what you read here and would like to subscribe to, I'm currently offering a two-week free trial period for subscribers to take advantage of. My service offers a deep-dive analysis of many pharmaceutical companies. The Biotech Analysis Central SA marketplace is $49 per month, but for those who sign up for the yearly plan will be able to take advantage of a 33.50% discount price of $399 per year.

This article was written by

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