Here's Why Barclays Is Bullish On Intercept Pharma

Intercept Pharmaceuticals Inc’s ICPT liver drug Ocaliva has been granted accelerated approval by the FDA. Barclays’ Jonathan Eckard maintained an Overweight rating for the company, while raising the price target from $200 to $205. The analyst commented that the NASH opportunity may prove to be “a more meaningful value driver for the stock.”

Expected Pricing

Intercept Pharma has indicated an annual WAC price of $69,350, or $5,700 per month, above the consensus expectation of $65,000. “We currently model a net $50K/year price given the uncertainty around gross-to-net adjustments, which could ultimately be impacted by the mix of commercially insured patients (~37% of the 15,000 available patients), and Medicare,” analyst Jonathan Eckard wrote.

Expected Launch

Intercept Pharma expects the launch to begin in 7-10 days, with marketing focusing on Tier 1 physicians over the first 30 days of the launch. This represents a market of about 700 patients. Tier 2 physician targeting, which represents an additional 4,000 patients, is planned for the subsequent 90 days.

Analyst’s Take

Intercept Pharma may witness “a paced uptake of Ocaliva given the orphan pricing and unfamiliar setting with no new drug for PBC in decades,” Eckard said. He added that although Ocaliva’s approval is a milestone for the company, the NASH opportunity may boost shares more meaningfully.

“We see potential approval in the EU at the end of the year with additional updates from the NASH lipid study CONTROL in early '17 as potential catalysts. Additionally, weekly and monthly script updates will begin to guide investors on the pace of uptake,” the analyst stated. He added that expectations were low and the potential to beat these could prove to be an important catalyst.