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Shares of Intra-Cellular Therapies ITCI rallied 14.9% on Friday after the company announced that it has entered into a settlement agreement with Sandoz SDZNY regarding the Caplyta (lumateperone) patent litigation.
The settlement agreement resolves the patent litigation brought by Intra-Cellular on Sandoz for submitting an abbreviated new drug application to the FDA seeking marketing approval for a generic version of Caplyta in the United States before applicable patents expire. The litigation is currently pending in the U.S. District Court in New Jersey.
Caplyta is approved in the United States for the treatment of schizophrenia in adults. Later, its indication was expanded to treat bipolar depression in adults. Intra-Cellular’s Caplyta is currently the only approved treatment, both as monotherapy and as adjunctive therapy with lithium or valproate, for depressive episodes associated with bipolar depression in adults.
In 2022, the FDA approved two new dosage strengths of Caplyta, 10.5 mg and 21 mg for patients concomitantly taking strong or moderate CYP3A4 inhibitors and 21 mg for patients with moderate or severe hepatic impairment.
In the past three months, shares of Intra-Cellular have gained 28.5% against the industry’s 12.7% decline. The stock has gained 35% in the pre-market hours today after Johnson & Johnson announced signing a definitive agreement with ITCI to acquire the latter for approximately $14.6 billion.
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More on ITCI’s Litigation Settlement Terms With Sandoz
The settlement agreement allows Sandoz to start selling generic versions of Caplyta on July 1, 2040, or earlier under specific conditions. In compliance with legal requirements, Intra-Cellular Therapies will submit the agreement to the U.S. Federal Trade Commission and the U.S. Department of Justice.
Meanwhile, similar patent litigation initiated by Intra-Cellular Therapies against other parties is still ongoing in the U.S. District Court of New Jersey.
This is a huge win for Intra-Cellular as it protects the company’s Caplyta sales from generic erosion in the U.S. market for treating other central nervous system diseases. The drug is the only marketed product in ITCI’s commercial portfolio and hence the primary source of revenue generation. Net product sales of Caplyta in the first nine months of 2024 was $481.3 million, representing an increase of 46% compared with the year-ago figure on the back of strong prescription uptake.
Please note that Sandoz used to be a part of Novartis as its generic and biosimilar unit. In 2023, Novartis completed the spin-off of Sandoz, following which, Sandoz became an independent company.