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Intercept (ICPT) Reports Narrower-than-Expected Q2 Loss
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Shares of Intercept Pharmaceuticals, Inc. were down 5% after the company reported second-quarter 2016 results. The company posted a loss of $3.14 per share in the second quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of $3.76 but wider than the year-ago loss of $1.99.
The company generated revenues of $5.5 million, down significantly from $0.4 million in the year-ago quarter and much higher than the Zacks Consensus Estimate of $61,000.
Quarter in Detail
In May 2016, Intercept’s lead drug, Ocaliva, was granted accelerated approval in the U.S., in combination with UDCA, for the treatment of primary biliary cholangitis (PBC) – previously known as primary biliary cirrhosis – in adults with inadequate response to UDCA or as monotherapy in adults who are intolerant to UDCA. The FDA has approved Ocaliva under its accelerated approval program based on a reduction in alkaline phosphatase (ALP), since an improvement in survival or disease-related symptoms has not been established yet. Continued approval in this indication may be contingent upon the verification and description of clinical benefit in confirmatory studies.
The company generated net sales of $75,000 in the second quarter. Research and development expenses shot up 46.1% year over year to $41.3 million primarily due to increased staff and respective expenses as well as higher activities related to the research and development program for Ocaliva.
General and administrative expenses increased to $42.3 million from $21.0 million in the year-ago quarter driven by infrastructure expansion to support corporate and pre-commercial activities related to Ocaliva, along with increased market research for supporting pre-launch activities in preparation for commercialization.
Intercept expects operating expenses near the lower end of the previously provided range of $360 million to $400 million (higher in the second half). These expenses would support continued clinical development programs for Ocaliva in PBC, nonalcoholic steatohepatitis (NASH) and Primary Sclerosing Cholangitis (PSC), increased manufacturing activities, continued development of INT-767 and other preclinical programs, as well as commercial activities in the U.S. and pre-commercial activities internationally. The company is also gearing up for an initial launch in key European countries in 2017.
Pipeline Update
A phase IV study, COBALT on Ocaliva is ongoing for confirmatory outcomes. A marketing authorisation application for the product for the treatment of PBC was accepted by the European Medicines Authority (EMA) in Jun 2015 and is currently under review. A decision is expected around 2016 end.
Meanwhile, Intercept is evaluating Ocaliva for other indications including NASH and PSC. The company initiated a phase III study (REGENERATE) on Ocaliva for the treatment of non-cirrhotic NASH in patients with advanced liver fibrosis. Enrolment is currently ongoing and the study would be fully enrolled by the first half of 2017 while interim results are expected in 2019.
Intercept also initiated a phase II study, CONTROL (Combination OCA aNd sTatins for monitoRing Of Lipids), on OCA. The study is being conducted to evaluate the effect of OCA, in combination with statin therapy, on lipid metabolism in patients with NASH. Enrolment in the study is expected to be completed by 2016 end. A double-blind phase II study, AESOP, for PSC is also ongoing. Enrolment in the AESOP study for the PSC indication is expected to be complete by the end of this year. Apart from these, the company initiated a phase I study on INT-767 and expects to complete the study by 2016 end.
Our Take
Intercept’s narrower-than-expected loss in the second quarter of 2016 was encouraging. The FDA’s approval of Ocaliva for PBC in May 2016 was a major boost for Intercept and will improve the company’s growth prospects. A potential approval in Europe around 2016 end will further boost Intercept’s portfolio and enable the company to record its first international sales in 2017. However, expenses are expected to remain high as the company invests in commercial activities related to Ocaliva.
Intercept currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare sector include Actelion Limited , Agenus Inc. (AGEN - Free Report) and Biogen Inc. (BIIB - Free Report) . All three stocks carry a Zacks Rank #2 (Buy).
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Intercept (ICPT) Reports Narrower-than-Expected Q2 Loss
Shares of Intercept Pharmaceuticals, Inc. were down 5% after the company reported second-quarter 2016 results. The company posted a loss of $3.14 per share in the second quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of $3.76 but wider than the year-ago loss of $1.99.
The company generated revenues of $5.5 million, down significantly from $0.4 million in the year-ago quarter and much higher than the Zacks Consensus Estimate of $61,000.
Quarter in Detail
In May 2016, Intercept’s lead drug, Ocaliva, was granted accelerated approval in the U.S., in combination with UDCA, for the treatment of primary biliary cholangitis (PBC) – previously known as primary biliary cirrhosis – in adults with inadequate response to UDCA or as monotherapy in adults who are intolerant to UDCA. The FDA has approved Ocaliva under its accelerated approval program based on a reduction in alkaline phosphatase (ALP), since an improvement in survival or disease-related symptoms has not been established yet. Continued approval in this indication may be contingent upon the verification and description of clinical benefit in confirmatory studies.
The company generated net sales of $75,000 in the second quarter. Research and development expenses shot up 46.1% year over year to $41.3 million primarily due to increased staff and respective expenses as well as higher activities related to the research and development program for Ocaliva.
General and administrative expenses increased to $42.3 million from $21.0 million in the year-ago quarter driven by infrastructure expansion to support corporate and pre-commercial activities related to Ocaliva, along with increased market research for supporting pre-launch activities in preparation for commercialization.
INTERCEPT PHARM Price and EPS Surprise
INTERCEPT PHARM Price and EPS Surprise | INTERCEPT PHARM Quote
2016 Outlook
Intercept expects operating expenses near the lower end of the previously provided range of $360 million to $400 million (higher in the second half). These expenses would support continued clinical development programs for Ocaliva in PBC, nonalcoholic steatohepatitis (NASH) and Primary Sclerosing Cholangitis (PSC), increased manufacturing activities, continued development of INT-767 and other preclinical programs, as well as commercial activities in the U.S. and pre-commercial activities internationally. The company is also gearing up for an initial launch in key European countries in 2017.
Pipeline Update
A phase IV study, COBALT on Ocaliva is ongoing for confirmatory outcomes. A marketing authorisation application for the product for the treatment of PBC was accepted by the European Medicines Authority (EMA) in Jun 2015 and is currently under review. A decision is expected around 2016 end.
Meanwhile, Intercept is evaluating Ocaliva for other indications including NASH and PSC. The company initiated a phase III study (REGENERATE) on Ocaliva for the treatment of non-cirrhotic NASH in patients with advanced liver fibrosis. Enrolment is currently ongoing and the study would be fully enrolled by the first half of 2017 while interim results are expected in 2019.
Intercept also initiated a phase II study, CONTROL (Combination OCA aNd sTatins for monitoRing Of Lipids), on OCA. The study is being conducted to evaluate the effect of OCA, in combination with statin therapy, on lipid metabolism in patients with NASH. Enrolment in the study is expected to be completed by 2016 end. A double-blind phase II study, AESOP, for PSC is also ongoing. Enrolment in the AESOP study for the PSC indication is expected to be complete by the end of this year. Apart from these, the company initiated a phase I study on INT-767 and expects to complete the study by 2016 end.
Our Take
Intercept’s narrower-than-expected loss in the second quarter of 2016 was encouraging. The FDA’s approval of Ocaliva for PBC in May 2016 was a major boost for Intercept and will improve the company’s growth prospects. A potential approval in Europe around 2016 end will further boost Intercept’s portfolio and enable the company to record its first international sales in 2017. However, expenses are expected to remain high as the company invests in commercial activities related to Ocaliva.
Intercept currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare sector include Actelion Limited , Agenus Inc. (AGEN - Free Report) and Biogen Inc. (BIIB - Free Report) . All three stocks carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>