Intra-Cellular Therapies Inc (NASDAQ:ITCI) is being investigated by shareholder rights attorneys at Johnson & Weaver, LLP. The probe comes immediately after the company reported that it failed to obtain the results it wanted in a Phase 3 study of its lead pipeline candidate ITI-007.

The investigation concerns with whether Intra-Cellular treated investors to false and misleading statements that can constitute violations of federal securities laws. Specifically, the probe seeks to find out if statements that Intra-Cellular made about the prospects of the candidate ITI-007 didn’t have full disclosure that would have helped investors to avoid losses.

Immediately news entered market that the Phase 3 study of ITI-007 was unsuccessful, Intra-Cellular stock fell sharply. The stock declined 68% in the after-hour trading on Wednesday, the day the news came out, and the downward spiral in the stock continued on Thursday with the stock falling 64%.

The collapse of the stock price of Intra-Cellular caused losses for many investors, prompting Johnson & Weaver to look around to see if there was a foul play somewhere.

There is no guarantee that the investigation will unearth a violation that could see Intra-Cellular and its officers and directors held responsible. However, in the event that the probe discovers a foul play, Intra-Cellular could face a class action lawsuit that could result in compensation for investors who suffered losses.

What happened in the clinics?

Intra-Cellular’s ITI-007 failed to meet the primary goal of the study, which was reduction of schizophrenia symptom severity. The study used an approved risperidone drug as an active control and a placebo was also included. Intra-Cellular hinted that extraordinary patient response to placebo treatment may have contributed to the missed primary study endpoint.

 “There was an unusually high placebo response at certain sites which disproportionately affected the trial results,” the company said.

Safety comparable to placebo

As for safety, ITI-007 fared well. Intra-Cellular said that the candidate exhibited safety and tolerability profile similar to placebo, which means that ITI-007 performed better than risperidone in safety measure.

Intra-Cellular is not willing to discontinue work on ITI-007. As such, the company plans to seek audience with the FDA to chart the way forward.