On Friday, BofA Securities analyst Jason Gerberry increased the price target on Intra-Cellular Therapies (NASDAQ:ITCI) to $118 from the previous $110, while maintaining a Buy rating for the company's stock. The adjustment follows Intra-Cellular's announcement of a favorable settlement regarding the patent for its drug Caplyta with generic pharmaceutical company Sandoz (SIX:SDZ). According to InvestingPro data, analyst targets for ITCI now range from $87 to $135, with the stock currently trading near its 52-week high at $97.20.
Gerberry highlighted the settlement's significance, noting that Sandoz agreed to terms that allow for market entry in July 2040, which acknowledges the value of Intra-Cellular's terminal formulation patent expiring in December 2040. This development is seen as a positive step for Intra-Cellular, as it had been previously assumed that the salt form patent, expiring in 2034, was the primary defense against generic competition.
The market responded well to the news, with Intra-Cellular Therapies' stock price rising by 13.5%, in contrast to the broader biotech index (XBI), which fell by 3%. This surge reflects investor optimism, as the patent settlement was unexpectedly favorable. The company, now valued at over $10.2 billion, has demonstrated impressive revenue growth of 46% over the last twelve months. InvestingPro analysis shows the company maintains a GREAT financial health score, with multiple additional insights available to subscribers.
The analyst also adjusted the expected date of loss of exclusivity (LOE) for Caplyta from 2034 to 2036, which contributed an additional $18 to the stock's price target. Gerberry reiterated his Buy rating, expressing confidence in the underappreciated market opportunity for Caplyta. The company's strong market position is further supported by its solid balance sheet, with InvestingPro data showing more cash than debt and a healthy current ratio of 7.66.
Despite this positive development, there remains a degree of risk, as Intra-Cellular must still negotiate with the remaining six ANDA filers to reach similar settlement terms. The recent patent settlement with Sandoz, however, has set a precedent that could potentially streamline the process for future agreements.
In other recent news, Intra-Cellular Therapies has been making significant developments. The company has reached a patent litigation settlement with Sandoz, allowing the latter to sell generic versions of Caplyta, a bipolar depression medication, starting from July 1, 2040. Intra-Cellular Therapies will submit the agreement to the U.S. Federal Trade Commission and the U.S. Department of Justice.
The company's stock has been rated Outperform by Mizuho (NYSE:MFG), following a 13% stock rise post-earnings. Analysts have noted Intra-Cellular's strong financial position, with $1 billion in cash and investments as of September 30, 2024. The company's Q3 2024 net sales of its flagship product, CAPLYTA, totaled $175.2 million, marking a 39% surge compared to the same quarter in the previous year. This growth led the company to raise its full-year 2024 net sales guidance to a range of $665 million to $685 million.
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