Credit Suisse Initiates Intercept Pharma With Outperform, $200 Target

Credit Suisse’s Alethia Young initiated coverage of Intercept Pharmaceuticals Inc ICPT with an Outperform rating and price target of $200.

Attractive Entry Point

Young mentioned that the company is developing OCA, its lead asset for the treatment of two liver indications, NASH and PBC.

Young also stated that the current stock valuation offers an attractive entry point, given that there could be “PBC de-risking on the horizon.”

“On a fundamental basis, NASH provides downside protection from any potential risks associated with PBC,” the analyst pointed out.

Value Opportunity

Young estimated that NASH alone could be worth $154/share, based on peak sales assumptions of $6.5 billion, while PBC could be worth $71/share, assuming no price cuts are made to the launch price expectations of $65,000.

Young explained that this reflected an 11 percent discount rate and NASH spend through Phase 3 trials. “This would suggest about ~$50/share of value in for NASH,” the analyst said.

With the upcoming FDA panel for approval in PBC, the analyst believes that Phase 3 NASH data would offer downside protection in the event that PBC is not approved or performs below expectations.

“NASH is still a blockbuster opportunity for Intercept, but we believe the near-term catalysts are driven by PBC,” the Credit Suisse report added.