Intra-Cellular Slumps to 2-Year Low as Schizophrenia Study Fails

  • Drug was in the third and final stage of testing for approval
  • Shares down as much as 65%, biggest intraday drop ever

Intra-Cellular Therapies Inc. shares plummeted to their lowest level in almost two years after its lead drug, an experimental pill for treating schizophrenia, failed to help patients in a key late-stage study.

The stock fell 63 percent to $15.69 at 10:21 a.m. in New York, after declining as much as 65 percent, the biggest drop since the drugmaker sold shares in a December 2013 initial public offering.

Patients given Intra-Cellular’s medication, ITI-007, fared no better than those getting a placebo regardless of which dose they received, the New York-based company said in a statement Wednesday night after the markets closed. The 696 patients in trial were divided into four groups, two getting different doses of ITI-007 and a third receiving placebo. A group treated with risperidone, the active ingredient in Johnson & Johnson’s Risperdal, saw some benefit in the study.

Intra-Cellular blamed the setback on an unusually high number of responses seen in patients treated with placebo, a relatively common phenomenon in psychiatric clinical trials. The company said it’s committed to the medication, which showed superior safety to risperidone in the study and positive results in two other large trials. It plans to request a meeting with U.S. regulators to discuss its next steps.

Several analysts said that while the study is a setback, the drug itself may still succeed in the future.

It’s “challenging to overcome the interpretation of the trial as negative,” although there were “confounding factors,” Jason Butler, an analyst at JMP Securities, said in a note to clients. More data is needed to understand the potential success of the drug in future trials, said the analyst, who cut his rating on the stock to the equivalent to hold from the equivalent of buy.

Although the trial didn’t reach its primary endpoint, more information is needed to fully understand the efficacy of the trial, Ritu Baral, an analyst at Cowen and Co. said in a note.

Expectations for the drug have been high since it appears to have fewer side effects than most medications for schizophrenia.

“Should the question of ’007 efficacy resolve favorably, the drug would likely prove to be the safest, most tolerable schizophrenia treatment to date,” said Baral, who kept her rating at the equivalent of a buy.

“We remain committed to the development of of ITI-007 for the treatment of schizophrenia, bipolar depression, agitation associated with dementia, including Alzheimer’s disease and other neuropsychiatric indications,” Chief Executive Officer Sharon Mates said in the statement.

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