Is Intra-Cellular Therapies Stock A Buy?

While large chunks of the biotherapeutic industry are focused on developing coronavirus vaccines, some are still pushing ahead on pre-existing conditions that already plagued us. This includes Intra-Cellular Therapies Inc (NASDAQ:ITCI), which develops treatments for nervous system disorders.

Its most recent late-stage clinical evaluation is being performed on lumateperone for two separate indications – bipolar disorder and schizophrenia. The news has investors and analysts wondering is Intra-Cellular stock a buy?

To answer this question, we need to dive into the company, its treatment pipeline, and how the market is reacting to the company’s progress. Let’s start with some background on the company itself.

Intra-Cellular Treats Neurological Diseases

Intra-Cellular Therapies develops drugs designed to treat neuropsychiatric and neurologic diseases and disorders. Its research focuses on the central nervous system (CNS), which includes your brain and spinal cord.

This part of your body is responsible for movement, thought, awareness, memory, speech, and more. Because it’s so centralized, one treatment can technically affect multiple problems within your body. The most prominent product in its drug pipeline is Caplyta, the brand name for lumateperone.

Caplyta is a 42 mg oral capsule that is proposed for a variety of psychiatric disorders, including schizophrenia, for which it’s currently approved by the Food and Drug Administration (FDA).

It’s also been approved to open clinical trials to test it in the treatment of bipolar disorder. Phase 3 trials have it used in conjunction with lithium or valproate to level depressive episodes.

Schizophrenia accounts for 45.2 percent of the global antipsychotic market, followed by bipolar disorder, unipolar depression, and dementia at the top of the nearly $20 billion in annual antipsychotic sales.

It does also have other drugs in its pipeline, including a PDE inhibitor called ITI-214 which treats Parkinson’s and heart failure, along with ITI-333, which is meant to treat substance abuse and mood disorders.

Of course, just because the market is huge doesn’t mean Intra-Cellular is guaranteed to it. In fact, it represents a relatively small piece of the pie. Let’s dive into its financials.

Is Intra-Cellular Stock A Buy?

The consensus is split among investors, but more than a third place ITCI in the Buy to Strong Buy category.

Much of this is because of the FDA approvals for Caplyta, which happened as the company recorded a $112 million operating loss for 2019.

FDA clinical trials aren’t cheap, and the company doesn’t have the spending cash that larger competitors do. This is what led to a September 9, 2020 announcement that the company is offering $350 million of common stock shares.

This announcement put the share price back up in the $30 range, giving the company a market cap of about $2.5 billion. It has plenty of room to grow, as outlined above – there are 2.3 million Americans diagnosed with bipolar disorder every year alone.

It’s more than the 1.5 million people diagnosed with schizophrenia annually. This is why some investors aren’t shy about pulling the trigger, even with prices inflated from the announcement, and the rest agree to hold what you already have.

However, there are still inherent risks to purchasing stocks, so let’s discuss them.

Intra-Cellular Hasn’t Had Blockbuster Sales… Yet

Now that they’ve released the extra $350 million in extra shares, the market has already reacted and the price of ITCI reflects it.

An investor looking to gain profit on Intra-Cellular needs for its drug pipeline to start generating over $1 billion in annual sales, according to RBC Capital Markets analyst Brian Abrahams and Fierce Pharma.

While FDA approvals help, it hasn’t proven any blockbuster sales from its treatments yet to justify the market value.

Caplyta only brought in $1.9 million in sales during the second quarter of 2020, according to the company’s earnings reports.

This falls far short of the $2.9 million of income forecasted, despite the company reaching nearly all Medicare Part D and Medicaid patients for its current indication.

As more indications are approved, these multi-faceted antipsychotics also run the risk of being overprescribed, an issue that affected opioid- and benzodiazepine-based treatments.

Intra-Cellular should shore up some cash from its most recent investment round to ensure it can cover any issues that come up, which includes pressure from the competition.

ITCI Vs BMY VS JNJ: Competitors Galore

There is no shortage of antipsychotics already on the market, including:

·       Abilify from Bristol-Myers Squibb (NYSE:BMY)

·       Clozaril from HLS Therapeutics (TSE:HLS)

·       Latuda from Lupin Limited (NSE:LUPIN)

·       Zyprexa from Eli Lilly and Co (NYSE:LLY)

·       Risperdal from Johnson & Johnson (NYSE:JNJ)

Many of these companies are massive and have access to much more cash and resources. Intra-Cellular launched an ad campaign by mid-September, and it’s working to build its brand recognition to match some of those bigger hitters.

This includes a TV commercial and social media ads across Facebook and Instagram, along with a partnership with e-psychiatry.com.

By 2021, it could have Caplyta approved for treatment of bipolar disorder, and that’ll strengthen its position. It’ll need to turbo charge its sales if it really wants to make a dent in pharmaceuticals though.

Is Intra-Cellular Stock a Buy? The Bottom Line

Intra-Cellular Therapies is a pharmaceutical company that focuses on CNS disorders. Its drug pipeline includes three main treatments in various stages of clinical research. Each is being studied to treat multiple disorders, and this covers a full spectrum of antipsychotic uses. Its biggest blockbuster so far is Caplyta, which is FDA-approved to treat schizophrenia and undergoing clinical trials for bipolar disorder.

The company released more stock in September 2020, and this drove the price up. It’s still a solid buy so long as it can increase its sales figures, which shouldn’t be hard to do. The company has an ad campaign in the works, and it’s targeting a growing population of people diagnosed with serious illnesses. That’s why most analysts rate ITCI as a Buy.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.