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Intercept's (ICPT) Q3 Loss Wider Than Expected, Sales Beat

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Intercept Pharmaceuticals, Inc. (ICPT - Free Report) incurred a loss of $2.01 per share in third-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $1.96 but narrower than the year-ago quarter’s loss of $2.59.

Total revenues of $79.5 million in the quarter beat the Zacks Consensus Estimate of $77 million and increased from $61.9 million in the year-ago quarter, primarily owing to higher sales of lead drug, Ocaliva.

Quarter in Detail

The total revenues generated in the quarter comprised only Ocaliva (obeticholic acid or OCA) net sales. Net sales came in at $58.6 million in the United States and $20.9 million outside the country.

OCA is approved under the brand name, Ocaliva, for treating primary biliary cholangitis (PBC) in combination with ursodeoxycholic acid (UDCA) in adults with an inadequate response to UDCA alone or as a monotherapy for adults intolerant to UDCA.

Research and development expenses decreased to $48.9 million from $60.2 million in the year-ago quarter due to lower nonalcoholic steatohepatitis (NASH) development program costs, including the conclusion of enrollment activities for the REGENERATE and REVERSE studies.

Selling, general and administrative expenses decreased to $70.6 million from $76.8 million in the year-ago quarter, primarily driven by reductions in spend resulting from the delay of the potential approval and commercialization of OCA for liver fibrosis due to NASH.

As of Sep 30, 2020, Intercept had cash, cash equivalents, restricted cash and marketable securities of $496.8 million compared with $657.3 million as of Dec 31, 2019.

Other Updates

In June 2020, the FDA had issued a Complete Response Letter (CRL) regarding the company’s New Drug Application (NDA) for OCA for the treatment of fibrosis due to NASH. 

Intercept recently had a Type A end-of-review meeting with the FDA to discuss the agency's benefit-risk assessment in the CRL based on its review of the available data. The company had prepared for this meeting with the objective of reframing its efficacy and safety data supporting benefit-risk of OCA in NASH patients with advanced fibrosis based on the phase III REGENERATE 18-month interim analysis and a refined risk management approach for appropriate patient selection and monitoring. Per the company, the meeting was constructive. Intercept has obtained FDA guidance regarding supplemental data that it can provide to further characterize OCA's efficacy and safety profile, which could support a resubmission based on its 18- month biopsy data together with a safety update from the ongoing studies.

The company plans to hold additional meetings with the agency, with the goal of achieving sufficient alignment to proceed on this basis and potentially resubmit its NDA next year.

The company is also conducting the phase III REVERSE study in NASH patients with compensated cirrhosis, with readouts from the double-blind phase expected by the end of next year.

Guidance

Ocaliva net sales are now projected between $310 million and $320 million (previous guidance: $300-$320 million) for 2020.

Our Take

Intercept reported mixed results for the third quarter. The company’s efforts to expand Ocaliva’s label are encouraging as well, given the market potential of NASH.

Shares were up 23.7% following the results. However, shares of Intercept have slumped 71.9% in the year so far compared with the industry’s decline of 2.2%.

The CRL for OCA was disappointing as the candidate was a frontrunner in receiving approvals for the treatment of NASH.

While the NASH market promises potential, it is quite challenging as well. Clinical-stage biopharmaceutical company, Galmed Pharmaceuticals Ltd. (GLMD - Free Report) , is developing Aramchol for patients with NASH and fibrosis. Meanwhile, Viking Therapeutics (VKTX - Free Report) is enrolling in the phase IIb VOYAGE study evaluating VK2809 in biopsy-confirmed NASH and fibrosis.

Intercept currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the space is BioMarin Pharmaceutical Inc. (BMRN - Free Report) , which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BioMarin’s earnings estimates have increased 10 cents for 2020 and 11 cents for 2021 in the past 30 days.

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