Intercept Sees Weakness in Earnings Result - Analyst Blog

Intercept Pharmaceuticals, Inc.'s ICPT shares fell approximately 11.9% on Mar 17 following dissapointing fourth quarter 2013 financial results and pipeline related news. The company reported an adjusted loss of 72 cents per share for the fourth quarter, wider than the Zacks Consensus Estimate of a loss of 60 cents and the year-ago loss of 43 cents per share.

More than the wider loss, it was the company's statement about the occurrence of cardiovascular serious adverse events in its FLINT (Farnesoid X Receptor Ligand Obeticholic Acid in Nonalcoholic Steatohepatitis Treatment) study which caused the shares to tumble. The phase II study is evaluating the efficacy and safety of Intercept Pharma's pipeline candidate, obeticholic acid (OCA), compared to placebo, for the treatment of nonalcoholic steatohepatitis (NASH). The study is being sponsored and conducted by the National Institute of Diabetes & Digestive & Kidney Diseases (NIDDK).

As per a recent safety data from NIDDK, 10 serious cardiovascular adverse events were observed in 7 patients across both treatment groups. The Data Safety Monitoring Board (DSMB) of the FLINT study stated that hyperlipidemia and the occurrence of serious cardiovascular events were numerically more in the OCA arm of the study compared to that of the placebo arm. Full results from the FLINT study are expected in Jul 2014.

Intercept Pharma intends to discuss the FLINT study results with the regulatory authorities in the U.S. and EU to begin a phase III program on OCA in the NASH indication in the first half of 2015. We are disappointed by the study findings. OCA is the lead candidate at Intercept Pharma. The successful development and commercialization of the candidate is important for the company.

Meanwhile, Intercept Pharma reported positive results from its other study, the phase III POISE study on OCA. The POISE study is evaluating OCA for the treatment of primary biliary cirrhosis (PBC). Results from the study revealed that the candidate met its primary objective of a reduction in serum alkaline phosphatase from baseline and a normal bilirubin level post 12 months of therapy. Intercept Pharma intends to file regulatory applications for OCA in the PBC indication in both the U.S. and EU by the end of 2014.

We believe that updates regarding OCA's development in the NASH indication are of greater interest to investors. In January this year, shares of Intercept Pharma surged a whopping 281% after the company announced that the FLINT study was stopped early as it met its primary endpoint.

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 Gilead Sciences Inc. GILD. All these stocks carry a Zacks Rank #1 (Strong Buy).