Will Intercept Pharmaceuticals' (ICPT) Q3 Loss Narrow? - Analyst Blog

Intercept Pharmaceuticals, Inc (ICPT) is slated to report its third-quarter 2014 results on Nov 7. In the last quarter, the company reported a positive earnings surprise of 237.27%. Let's see how things are shaping up for this announcement.

Factors Influencing This Quarter

Intercept Pharma's lead product candidate, obeticholic acid (OCA), is being developed for for a variety of chronic liver diseases including primary biliary cirrhosis (PBC), non-alcoholic steatohepatitis (NASH), and primary sclerosing cholangitis (PSC).

We note that OCA enjoys orphan drug designation in both the U.S. and Europe for the treatment of PBC and PSC.  OCA met its primary efficacy endpoint in a phase III trial, POISE, for patients suffering from PBC. Intercept Pharma anticipates to completethe completion of its New Drug Application (NDA) and Marketing Authorisation Application (MAA) filings in the first half of 2015. The FDA has granted a fast track designation for the treatment of patients with PBC.

Intercept Pharma ended the second quarter with $299 million of cash, equivalents and investments. The potential launch of PBC in North America, Europe and other countries, along with development of OCA for other indications, will increase the cash requirements of the company.

Earnings Whispers?

Our proven model does not conclusively show that Intercept Pharma is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate Estimate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at a loss of $1.10.

Zacks Rank: Intercept Pharma carries a Zacks Rank #2 (Buy). Though a Zacks Ranks Rank #1, 2 or 3 increase increases the predictive power of an ESP, the company's ESP of 0.00% makes a surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some other companies you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat this quarter::

Mallinckrodt (MNK) has an earnings ESP of +3.73% and carries a Zacks Rank #2. It is expected to report fourth-quarter results on Nov 19.

Merrimack Pharmaceuticals, Inc. (MACK) has an earnings ESP of +437.50% and carries a Zacks Rank #1 (Strong Buy). It is expected to report third-quarter results on Nov 10.

Dendreon Corp. (DNDN) has an earnings ESP of +38.89% and carries a Zacks Rank #2. Dendreon is expected to report its third quarter results on Nov 11.

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