Intra-Cellular tanks on PhIII schizophrenia failure

Intra-Cellular Therapies ($ITCI) shed about $1.2 billion in market cap on the top-line data on a Phase III trial for its ITI-007 to treat schizophrenia that missed the primary endpoint. The company worked to blame the miss on an unusually strong placebo response, but an active control arm with risperidone actually outperformed both the placebo and the treatment groups.

Last September, the company skyrocketed on mixed Phase III results from the first trial in which the high dose of ITI-007 met the primary endpoint of significantly improving schizophrenia symptoms compared with placebo but the low dose in the study did not. At that time, IntraCellular shot up more than 75%; now it’s dropped off again by roughly two-thirds.

The company remains undeterred and it expects to meet with the FDA to discuss a regulatory path for ITI-007, based on the argument that across three trials the high dose of 60 mg has consistently improved symptoms of schizophrenia with the same magnitude of change from baseline in the primary endpoint.

“It is not uncommon in the field of psychiatry for studies to be challenged by high placebo response and there has been great variability in the effects observed from one study to the next,” said Dr. Christoph Corell, professor of psychiatry at Hofstra Northwell School of Medicine, in a company statement. “Taken together, the ITI-007 schizophrenia program supports ITI-007 as a unique medication with an unprecedented safety and tolerability profile. Moreover, efficacy has been demonstrated in two large-scale schizophrenia studies to date. In one of these studies, ITI-007 and risperidone, the active control, had similar efficacy. In light of the results to date, I believe that ITI-007 represents a unique investigational medication which has the potential to advance the treatment of patients suffering from schizophrenia.”

Despite the questionable data, Intra-Cellular remains committed to developing ITI-007 not only in schizophrenia, but also in bipolar depression and agitation associated with dementia, including Alzheimer’s disease and other neuropsychiatric indications.

The 5-HT2A serotonin receptor antagonist is the company’s lead. Intra-Cellular expects that it can address these neurological disorders with various doses of ITI-007 that allow for different levels of inhibition.

One Wall Street analyst, Seamus Fernandez of Leerink, even as he slashed his price target to $29 from $95 per share on the news, called the stock market reaction “overdone.” Intra-Cellular was trading at less than $16 early on Sept. 29.

He argued that the company is trading at near-cash levels, which would be $13 to $14 per share; it had $442 million in cash at the end of last quarter. Fernandez suggested that value lies in the company pursuing the option to file in schizophrenia, as well as in other Phase III trials in bipolar depression and behavior disturbances.