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Why Is Intercept (ICPT) Down 5.2% 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 lost about 5.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Intercept due for a breakout? 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 Q1 Earnings Miss Estimates, Revenues Beat

Intercept reported wider-than-expected loss but beat estimates for sales.

The company incurred a loss of $3.03 per share in the first quarter, wider than the Zacks Consensus Estimate of a loss of $2.57 but narrower than the year-ago loss of $3.22.

Quarterly revenues were $52.2 million, up from $35.9 million in the year-ago quarter. Revenues marginally surpassed the Zacks Consensus Estimate of $52 million.

Quarter in Detail

Ocaliva recorded $51.8 million of sales, down from $52.9 million recorded in the fourth quarter of 2018 but up from $35.2 million in the year-earlier quarter. Net sales in the United States came in at $38 million, while ex-U.S. Ocaliva net sales were $13.8 million.

Ocaliva in combination with ursodeoxycholic (UDCA) was approved in the United States in 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, the drug’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 19.9% year over year to $58.4 million, primarily due to more clinical development programs of Ocaliva for NASH. However, selling, general and administrative expenses increased 23.5% to $77.2 million.

2019 Outlook

For 2019, Ocaliva’s net sales are expected between $235 million and $245 million. Intercept continues to expect operating expenses of $470-$500 million for the year.

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 the pivotal phase III REGENERATE study of OCA in 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 (receiving doses of 10 mg and 25 mg) met the primary endpoint of NASH resolution with no deterioration of liver fibrosis 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.

In April 2019, additional supportive REGENERATE data were presented during the Opening Ceremony of the International Liver Congress 2019, the 54th Annual Meeting of the European Association for the Study of the Liver (“EASL”). The data showed that OCA demonstrated robust efficacy across a range of additional histologic and biochemical parameters.

Intercept plans to file for an approval of OCA as a NASH treatment both in the United States and Europe in the third and fourth quarters, respectively.

The REVERSE study is designed to evaluate the efficacy and safety of Ocaliva in NASH patients suffering from compensated cirrhosis. The study is currently enrolling patients. Enrollment is expected to be completed by the end of the year.


How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -7.54% due to these changes.

VGM Scores

Currently, Intercept has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, 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.


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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