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Why Is Intercept (ICPT) Up 12.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for Intercept Pharmaceuticals (ICPT - Free Report) . Shares have added about 12.2% in that time frame, outperforming the S&P 500.

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

Intercept Beats on Q4 Revenues, NASH Study in Focus

Intercept incurred a loss of $2.97 per share in the fourth quarter, wider than the Zacks Consensus Estimate of a loss of $2.42 but narrower than the year-ago loss of $4.43.

Quarterly revenues were $53.3 million, up from $37.7 million in the year-ago quarter. Revenues also surpassed the Zacks Consensus Estimate of $51.7 million.

Quarter in Detail

Ocaliva recorded $52.9 million of sales, up from $46.6 million recorded in the third quarter of 2018 and $37.3 million in the year-earlier period. Net sales in the United States came in at $41.1 million while the ex-U.S. Ocaliva net sales summed $11.8 million.

Ocaliva in combination with ursodeoxycholic (UDCA) was approved in the United States during 2016 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. The drug was also granted a conditional approval by the European Commission. In February 2018, Ocaliva’s 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 10.1% year over year to $63.3 million, primarily driven by more clinical development programs for Ocaliva. However, selling, general and administrative expenses decreased 15.8% to $71 million.

2019 Outlook

Ocaliva’s net sales are expected between $225 million and $240 million in 2019. Intercept continues to expect operating expenses to be $450-$470 million in 2019.

Pipeline Update

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

Earlier in 2019, Intercept announced positive top-line results from its pivotal phase III REGENERATE study of OCA on patients with liver fibrosis due to NASH.  The company stated that the primary endpoint of the study — fibrosis improvement without worsening of NASH at 18 months — was achieved with the 25 mg daily dose of OCA.

Also, a numerically greater proportion of patients in both OCA treatment arms (taking doses of 10 mg and 25 mg) met the primary endpoint of NASH resolution with no deterioration of liver fibrosis as compared to placebo.

However, this did not reach statistical significance. Nevertheless, the study was required to attain one of the two primary goals per the FDA which it did.

Intercept plans to file for an approval of OCA as a NASH treatment both in the United States and in Europe during the second half of 2019. The company will also release data from the REGENERATE analysis at the European Association for the Study of the Liver (EASL) conference in April.

The REVERSE study is designed to evaluate the efficacy and safety of Ocaliva on NASH patients suffering compensated cirrhosis. The probe is currently enrolling patients, which is expected to be complete by the end of 2019.


 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.69% due to these changes.

VGM Scores

At this time, Intercept has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

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

Outlook

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


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