Intra-Cellular submitted its application to the FDA for Caplyta’s approval in major depressive disorder, potentially opening up an additional $1 billion in sales. Still, the stock remains “cheap,” according to Jefferies analysts.
Creating new drugs for central nervous system disorders is a tough business but one notable exception in recent years has been Intra-Cellular Therapies’ Caplyta, approved in December 2019 for schizophrenia and two years later for bipolar disorder. Now the small pharma company is going for a third indication, major depressive disorder (MDD), submitting an application Tuesday to the FDA for its use as an adjunct treatment for the pervasive mental health condition. The new indication could open up a more than $1 billion opportunity for Intra-Cellular, according to Jefferies.
In a note to clients Tuesday morning Jefferies analysts put the likelihood of approval in the range of 90–95% and said the stock is underappreciated—even “cheap.” The company is trading at around $86, up from $70 at the start of the year. If Intra-Cellular rounds out the trio of indications, Jefferies believes the company’s valuation could rise somewhere between $9 billion and $12 billion and even higher if executives’ bull case of $5 billion in peak Caplyta sales comes to fruition. Intra-Cellular currently has a market cap of $9.12 billion.
Caplyta brought in $175 million in the third quarter for its two already approved indications, up more than 8% from the previous quarter and beating expectations of $172 million. Intra-Cellular raised guidance for 2024 to a range of $665 million to $685 million.
With a little less than a month left in the fourth quarter, Caplyta has reached record high prescriptions, according to a Sunday note from Jefferies. This could lead to Q4 sales of “at least” $193 million, the analysts said.
It’s been almost exactly five years since Caplyta was initially approved for schizophrenia. The Jefferies analysts say they believe the company could finally reach profitability in 2025.
Building the Caplyta Franchise
The MDD submission was based on two Phase III trials that showed an improvement in symptoms when Caplyta was paired with an antidepressant, as compared to placebo. Intra-Cellular Chief Medical Officer Suresh Durgam said in a statement that he believes Caplyta could become the first choice add-on therapy for MDD, as more than half of patients do not adequately respond to an antidepressant alone.
Jefferies expects the agency to accept the application by February 2025, followed by a decision in October. Meanwhile, company shares could climb higher in the first half of the year in anticipation of the FDA’s decision.
The FDA will likely compare Caplyta to Otsuka and Lundbeck’s Rexulti, AbbVie’s Vraylar and Johnson & Johnson’ Spravato, each of which have produced what Jefferies called “mixed/inconsistent data” in MDD. Spravato, a form of ketamine called esketamine, is approved for treatment-resistant depression and for depressive symptoms in adults with MDD and suicidal ideation. Rexulti and Vraylar are both approved as adjunctive treatments for MDD.
“Caplyta’s efficacy is clearly robust/superior across two adjunct MDD studies,” Jefferies wrote. “Its safety profile also looks superior to the other antipsychotics.”
CEO Sharon Mates told investors in October that Caplyta stands out on the mood disorder market because of its favorable tolerability profile, as many patients discontinue these treatments due to weight gain, metabolic disturbances and motor adverse events. It’s also a once-a-day pill that can be taken with or without food and there’s no titration when starting treatment.
“We believe Caplyta is well-positioned to become a drug of choice across the spectrum of major mood disorders,” Mates said during the third quarter earnings call.
She also brushed off concerns about a new entrant to the schizophrenia market: Bristol Myers Squibb’s Cobenfy, which was approved in September. Mates said that a new option for patients with schizophrenia is great news but the market has long been defined by dissatisfied patients switching to new entrants. Since its launch, she continued, Caplyta has been a favored option among patients who are unhappy with the side effects of older medicines.
“We don’t see any one product dominating that schizophrenia market,” Mates said, adding that Cobenfy is not heading for Caplyta’s other domains in bipolar disorder or the newly requested MDD space.
Mates said that AbbVie’s expansion of Vraylar from schizophrenia and bipolar into MDD in December 2022 has shown Intra-Cellular that there’s plenty of room on the market for other options.
But Wait, There’s More
Caplyta isn’t the only medicine in Intra-Cellular’s quiver. The company is expecting some key Phase I/II pipeline readouts in 2025 and 2026 for ITI-214 in Parkinson’s disease and ITI-333 for opioid use.
Intra-Cellular is also developing a deuterated form of Caplyta called ITI-1284, an oral disintegrating tablet that can be placed under the tongue. The drug is in Phase II testing for generalized anxiety disorder as well as for agitation and psychosis in patients with Alzheimer’s disease.
Intra-Cellular also recently kicked off two studies of Caplyta in autism for pediatric patients with irritability. There are currently two drugs cleared for this indication, BMS’s Abilify and J&J’s Risperdal, and Jefferies suspects others may be used off label. This could be a $500 million to $1 billion opportunity for Intra-Cellular down the line, as experts have told the firm that Caplyta has a better safety profile than the approved options. The studies are expected to wrap in March 2027.
