Intra-Cellular Therapies Inc. (NASDAQ: ITCI) saw its shares absolutely crash on Thursday following the results from its late-stage schizophrenia trial. The company announced the top-line results from its Phase 3 clinical trial of ITI-007, which did not separate from the placebo, essentially meaning it did not meet the primary endpoints.

In the words of the company, “neither dose of ITI-007 separated from placebo on the primary endpoint, change from baseline on the Positive and Negative Syndrome Scale (PANSS) total score, in the pre-defined patient population.”

Christoph Corell, M.D., Professor of Psychiatry at Hofstra Northwell School of Medicine, offered an explanation for the results:

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. 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.

In this trial, ITI-007 was statistically significantly better than risperidone on key safety and tolerability parameters and exhibited a safety profile similar to placebo. This replicates the safety and tolerability findings of a previous study (Phase 2 Study ‘005) in which the efficacy of ITI-007 60 mg and risperidone, the active control, were similar.

Intra-Cellular believes ITI-007 did not separate from placebo on the pre-specified primary endpoint in Study ‘302 in part due to an unusually high placebo response at certain sites that disproportionately affected the trial results and contributed to the efficacy outcome of this study compared to two previous positive efficacy studies.

Despite this setback, the company did say that it is still committed and adequately resourced to continue the development of ITI-007 for the treatment of schizophrenia. Intra-Cellular believes the ITI-007 late-stage clinical development program, including two large, well-controlled positive studies and supportive evidence from this Study ‘302, collectively provide evidence of the efficacy and safety of ITI-007 for the treatment of schizophrenia.

Looking ahead, the company plans to request a meeting with the U.S. Food and Drug Administration’s (FDA) Division of Psychiatry Products to discuss the regulatory path for this first-in-class investigational agent.

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Shares of Intra-Cellular closed Wednesday at $42.35, with a consensus analyst price target of $65.50 and a 52-week trading range of $22.41 to $59.96. Following the announcement, the stock was down more than 63% at $15.56 in early trading Thursday.

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