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Intercept (ICPT) Up 3.8% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Intercept Pharmaceuticals, Inc. (ICPT - Free Report) . Shares have added about 3.8% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is ICPT due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Intercept Q1 Loss Narrower Than Expected, Sales Lag

Intercept reported mixed results for first-quarter 2018. The company reported a loss of $3.22 per share in the first quarter, narrower than the Zacks Consensus Estimate of $3.41 and the year-ago loss of $3.61.

Quarterly revenues were $35.9 million, up significantly from $21.1 million in the year-ago quarter but missed the Zacks Consensus Estimate of $37.8 million.

Quarter in Detail

Ocaliva recorded $35.2 million of sales, down from $37.3 million recorded in fourth-quarter 2017. Net sales in the United States came in at $28.5 million while the ex-U.S. Ocaliva net sales came in at $6.7 million.

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. In February 2018, the Ocaliva label was updated in the United States to include a boxed warning and a dosing table that reinforced the existing dosing schedule in PBC patients with Child-Pugh Class B or C or decompensated cirrhosis.

Research and development expenses increased 11.1% year over year to $48.7 million primarily driven by increases in clinical development programs for Obeticholic acid (“OCA”) and infrastructure to support such programs.

Selling, general and administrative expenses increased to $62.5 million from $61.1 million in the year-ago quarter.

2018 Outlook

Ocaliva net sales are expected between $170 million and $185 million in 2018. Intercept continues to expect operating expenses in the range of $390-$410 million in 2018.

Pipeline Update

OCA is being evaluated for other indications including non-alcoholic steatohepatitis (“NASH”) and primary sclerosing cholangitis (“PSC”).

The FDA earlier approved a redesign of the phase III trial, REGENERATE on OCA 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. Enrolment of the interim analysis cohort was completed in the trial and results are expected in the first half of 2019.

Earlier, Intercept initiated a phase III trial, REVERSE, on OCA. The randomized phase III study will evaluate the efficacy and safety of OCA, in subjects with compensated cirrhosis due to NASH in approximately 540 patients with a biopsy-confirmed diagnosis of cirrhosis. The primary endpoint of the study is the percentage of subjects with histological improvement in fibrosis by at least one stage using the NASH Clinical Research Network (“CRN”) scoring system after 12 months of treatment. Patients enrolled in the trial are being randomized in a 1:1:1 ratio to one of the three treatment arms — once-daily dosing of OCA 10 mg, once-daily OCA 10 mg with titration to 25 mg at three months, or placebo. The patients who successfully complete the double-blind phase of REVERSE will be enrolled in an open-label extension phase for up to 12 additional months. The trial is currently enrolling.

Intercept expects to submit marketing authorization for OCA as a treatment option for NASH patients with compensated cirrhosis, in the United States and international markets based on the positive results from the study. A subsequent outcome trial is also in the cards to confirm the clinical benefit on a post-marketing basis in a broader population of NASH patients with cirrhosis.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter compared to one lower.

VGM Scores

At this time, ICPT has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. The stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Notably, ICPT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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