Intra-Cellular Therapies is staring down a $1.7 billion opportunity in depression treatment, an analyst said Tuesday as the biotech stock surged on positive final-phase test results.
The company already sells Caplyta as a treatment for schizophrenia and depressive episodes tied to bipolar disorder. Now, Intra-Cellular says Caplyta has succeeded in two Phase 3 studies as a treatment for major depressive disorder.
Patients who received Caplyta in addition to standard antidepressants improved by 14.7 points on a 60-point scale of depression symptoms. In comparison, placebo recipients had just a 10.3-point improvement. That 4.5-point difference replicates an earlier study in which Caplyta outperformed a placebo by 4.9 points.
"We believe today's positive Phase 3 (study) clears a straightforward path for approval and commercialization of Caplyta in major depressive disorder, which can be as much as a $1.7 billion additional opportunity and bring the drug's total U.S. sales potential to greater than $3 billion," RBC Capital Markets analyst Brian Abrahams said in a report.
On the stock market today, the biotech stock soared 9.6% to 75.48.
Biotech Stock: A Leading Antipsychotic?
Abrahams says Caplyta could become the leading antipsychotic to treat depression.
On the same 60-point scale, competitor Vraylar, from AbbVie, led to a 2- to 2.5-point improvement in symptoms compared with a placebo. Rexulti, another antipsychotic from Otsuka Pharmaceutical and Lundbeck, outperformed the placebo by 2 to 3.2 points.
Importantly, side effects were in line with previous studies of Caplyta and included dizziness, dry mouth, sleepiness, nausea and fatigue. But tremors were not common among Caplyta recipients, which could help it differentiate from other antipsychotic drugs.
Intra-Cellular Therapies is now planning to ask the Food and Drug Administration to approve Caplyta as a depression treatment in the second half of 2024.
$3 Billion Sales Opportunity
Abrahams kept his outperform rating on the biotech stock. He raised his price target to 103 from 96.
"With consistent, strong positive data from their second MDD Phase 3 (study) and $3 billion-plus annual sales potential ahead of them, we are adjusting our model to better reflect this Caplyta opportunity and see continued appreciation potential for shares to better reflect the value and scarcity of their de-risked, likely multi-blockbuster asset in the neuropsych space," he said.
He also sees a potential takeover down the road. Fellow psychiatry-focused biotech companies Karuna Therapeutics and Cerevel Therapeutics nabbed deals worth $9 billion to $14 billion. And that was before they had commercial products.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
