The US Food and Drug Administration (FDA) has approved Intra-Cellular Therapies’s investigational drug to treat schizophrenia, the company said on Monday, sending its shares soaring 40%.

The treatment, Caplyta, is the drug developer’s lead candidate that has shown to regulate three neurotransmitter systems — serotonin, dopamine and glutamate — linked to severe mental illnesses. The approval comes with a boxed warning, the FDA’s harshest, saying the drug is not for the treatment of patients with dementia-related psychosis...

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