Intercept Pharma Prices 1M Share Offering, Shares Down - Analyst Blog

Intercept Pharmaceuticals, Inc. ICPT shares fell 9.61% after the company priced a public offering of 1 million shares of its common stock at $320.00 per share. Additionally, underwriters have been granted a 30 day over-allotment option for an additional 150,000 shares. The offering is slated to close on Apr 9.

In the offering, 60% of the shares were sold by Intercept Pharma, while the remaining 40% were sold by certain institutional stockholders. Intercept Pharma expects to raise net proceeds of $183.3 million through this offering.

As of Dec 31, 2013, the company had a cash and equivalents balance of about $144.8 million. Based on the company's anticipated level of operating expenditure, this amount would have been sufficient to run operations through the third quarter of 2015. The newly raised funds should be enough to fund operations for an additional two years. However, expenses may accelerate due to increased commercialization activities and investment in pipeline.

Use of Funds

With the funds from the offering, the company plans to expand its infrastructure to match a planned increase in its scale of operations and invest in its pipeline. Remaining funds, if any, will be used for general corporate purposes.

Intercept Pharma's lead pipeline candidate is obeticholic acid (OCA) – the company expects to file for regulatory approval of OCA by year end for primary biliary cirrhosis (PBC). The funds will come in handy for the commercialization of the candidate, once it is approved.

In Mar 2014, Intercept Pharma had reported positive results from the phase III POISE study evaluating OCA for the treatment of PBC.

The company also plans to continue evaluating OCA for the treatment of nonalcoholic steatohepatitis (NASH). In Jan 2014, shares of Intercept Pharma surged a whopping 281% after the company announced that the phase IIb FLINT study was stopped early as it met its primary endpoint. However, in March, the company announced that the Data Safety Monitoring Board (DSMB) had expressed concerns regarding hyperlipidemia and the occurrence of serious cardiovascular events, both of which were higher in patients receiving OCA compared to placebo though not statistically significantly different. Final results from the study are expected in Jul 2014.

Apart from the PBC and NASH indications, the company is also developing OCA for other indications including cirrhosis, primary sclerosing cholangitis (PSC), portal hypertension, alcoholic hepatitis and bile acid diarrhea. OCA enjoys orphan drug designation in both the U.S. and Europe for PBC and PSC indications.

Intercept Pharma currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Alexion Pharmaceuticals, Inc. ALXN, Alkermes ALKS and Amgen Inc. AMGN. All these stocks carry a Zacks Rank #1 (Strong Buy).