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Intercept (ICPT) Stock Loses Sheen in 2017: What Lies Ahead?

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Shares of Intercept Pharmaceuticals, Inc. have declined 42.3% in 2017 as against the industry’s 5.2% rally.

 

 

Intercept’s lead drug, Ocaliva was approved in the United States, in combination with ursodeoxycholic (UDCA) for the treatment of primary biliary cholangitis (PBC) in adults with an inadequate response to UDCA, or as monotherapy in adults who are unable to endure UDCA in 2016. The drug was also granted conditional approval by the European Commission.

The initial uptake of the drug was encouraging. In third-quarter 2017 Ocaliva recorded $40.9 million of sales, up from $30.4 million recorded in the second quarter.

However, prescription demand softened following the Dear Health Care Provider letter and the FDA safety communication on Ocaliva. The FDA reported 19 deaths due to Ocaliva and stated that the drug may also affect the liver. However, Intercept conducted an analysis and concluded that these patients were prescribed once daily doses of Ocaliva, which is seven times higher than the recommended weekly dose. The analysis was conducted in consultation with the FDA. Consequently, Intercept issued the Dear Healthcare Provider letter. Thereafter, the FDA issued their own safety communication to reinforce recommended label dosing. Intercept is also working with the FDA on further updates to Ocaliva’s label for safety purposes.

Thus, such news are likely to dent the sales potential.

Meanwhile, Ocaliva is being evaluated for other indications including non-alcoholic steatohepatitis (NASH) and primary sclerosing cholangitis (PSC). The company has earlier stated plans to initiate a phase III trial on Ocaliva in NASH patients with cirrhosis in the second half of 2017. We expect the trial to start in 2018.

The FDA has approved a redesign of the phase III trial, REGENERATE on Ocaliva for the safety and efficacy in treating NASH patients with liver fibrosis. The company now needs to achieve only one co primary endpoint- either fibrosis improvement or NASH resolution as compared with the earlier target of achieving both. The sample size of the trial has also been reduced to approximately 750 patients or about 250 patients per arm. The company completed enrolment for the interim analysis cohort in the REGENERATE trial (data readout in the first half of 2019). 

NASH market has huge potential and a tentative approval will boost Ocaliva’s prospects.  However, bigwigs like Novartis AG (NVS - Free Report) and Gilead Sciences, Inc. (GILD - Free Report) have FXR agonists in phase II or earlier stages of clinical development that can be used to treat PBC, NASH and the other liver diseases.  Gilead is conducting multiple phase III trials in NASH patients of various disease severity with selonsertib, an inhibitor of the apoptosis signal-regulating kinase 1. The company is also exploring additional studies in NASH for GS-0976, a small molecule allosteric inhibitor that acts at the protein-protein homodimer interface of acetyl-CoA carboxylases acquired from Nimbus Therapeutics, LLC, and an FXR agonist known as GS-9674. Gilead is also studying a number of compounds in other liver diseases including PBC and PSC.

Allergan Plc also has an ongoing phase III trial of cenicriviroc, an immunomodulator that blocks C-C chemokine receptor type 2 and type 5, for the treatment of NASH. Thus this can pose a stiff competition to Intercept.

It is unlikely that the stock will turnaround in 2018. A tentative approval in NASH might boost investore sentiment though.

Zacks Rank

Intercept currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks (Strong Buy) here.

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