NEW YORK (TheStreet) -- Shares of Intra-Cellular Therapies (ITCI) - Get Report were plunging 63.47% to $15.47 on heavy trading volume late Thursday afternoon after the biopharmaceutical company's phase III trial of its schizophrenia drug was unsuccessful.
The ITI-007 drug failed to lessen patients' schizophrenia symptoms when compared to a placebo. A third set of patients were given risperidone, an approved schizophrenia drug, and saw their symptoms improve.
TheStreet's Adam Feuerstein said it's likely that the FDA will tell Intra-Cellular to conduct a third, phase III study to collect more data.
JMP Securities downgraded the stock to "market perform" from "market outperform" based on the trial's results.
"In our view it is challenging to overcome the interpretation of the trial as negative for ITI-007 given the statistical separation of the positive control arm from placebo," the firm said in an analyst note earleir today.
JMP added it could become more constructive on the stock based on how its discussions go with the FDA. The agency could choose to accept its new drug application (NDA), but it may be "more feasible" to pursue another round of testing, JMP said.
RBC Capital Markets analysts said investors should buy on the stock's weakness, according to TheFly.
The firm cut the New York-based company's price target to $49 from $74 and maintained its "outperform" rating.
Intra-Cellular's drug is safer than competing treatments, and if it receives FDA approval, that could serve as a catalyst for the stock in 2017, RBC added.
About 14.36 million of the company's shares have changed hands so far today vs. its average volume of 498,705 shares per day.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
TheStreet Ratings team rates Intra-Cellular Therapies as a Sell with a ratings score of D+. This is driven by a number of negative factors, which it believes should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks it covers. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and generally disappointing historical performance in the stock itself.
You can view the full analysis from the report here: ITCI