Intra-Cellular Therapies has earned an ‘Outperform’ rating in its initial coverage from Baird analysts who believe the biotechnology company’s strong sales are poised to continue for its lead therapy Caplyta, which is approved for the treatment of schizophrenia and bipolar depression.
They also awarded the stock a US$83 price target. Shares traded hands on Wednesday at US$70.
In a note to clients, the analysts highlighted that Caplyta sales reached an annual run rate of $503 million in the third quarter, up 76% from the year-ago quarter.
“This accelerated trajectory appears to us to be well-positioned to continue for the coming quarters because in recent weeks vendors have reported Caplyta hitting NRx (new script) all-time highs,” they wrote.
“This could at least be driven in part by two large Medicare Part D plans changing their utilization criteria for Caplyta from a prior authorization and two step edits to unrestricted status around the end of the third quarter 2023.”
The analysts are also bullish on the stock ahead of data readouts for Phase 3 trials of Caplyta for depression in the first and second quarters of 2024 which they believe will be successful.
“Our view on this is largely driven by the positive placebo-controlled results in patients with major depressive disorder (MDD) with mixed features from Study 403 that were announced in March 2023,” they wrote.
“We do expect a somewhat smaller magnitude of benefit in the phase 3 trials than seen in Study 403, however, given that Study 403 was a monotherapy trial while the Phase 3 trials are of Caplyta as an adjunctive (add-on) therapy.”
They added that they see a 10% upside to 40% downside heading into the Phase 3 results.
“Valuation does appear to have gotten a bit stretched over the last couple of months of 2023, reducing some of the upside that might otherwise be expected from the Phase 3 MDD trials, in our view,” the Baird analysts commented.
They pointed to strong scripts trends for Caplyta as reported by vendors, investor positioning around the year-end, and mergers and acquisitions (M&A) speculation as reasons behind the run-up in Intra-Cellular Therapies’ stock price over recent months.