Intercept's Obeticholic Acid Gets Fast Track Status - Analyst Blog

Shares of Intercept Pharmaceuticals ICPT have been on a rollercoaster ride this year due to mixed updates on the company's lead pipeline candidate, obeticholic acid (OCA). Shares of the company were hammered a week ago after a report from The Street disclosed that the company had information about the occurrence of abnormal cholesterol levels in its phase IIb study on OCA when it came out with a press release on Jan 9, 2014. The trial was sponsored and conducted by the National Institute of Diabetes & Digestive & Kidney Diseases (NIDDK).

We remind investors that on Jan 9 Intercept Pharma had announced that the FLINT (Farnesoid X Receptor Ligand Obeticholic Acid in Nonalcoholic Steatohepatitis Treatment) trial on OCA was stopped early after the study met its primary endpoint. The study was evaluating the efficacy and safety of OCA for the treatment of nonalcoholic steatohepatitis (NASH). Shares of Intercept Pharma had skyrocketed 281% following the news.

However, the company did not disclose the fact that the NIDDK terminated the FLINT study early partially due to the serious safety issues. According to The Street article, the NIDDK had informed the company about the disproportionate finding on lipid abnormalities (increased total cholesterol with increased low-density lipoprotein/LDL and decreased high-density lipoprotein/HDL cholesterol), which Intercept Pharma withheld in its press release.

Currently, we expect the shares to be positively impacted following the U.S. Food and Drug Administration's (FDA) decision to grant Fast Track status to OCA for treating patients suffering from primary biliary cirrhosis (PBC). Shares of the biopharmaceutical company were also positively impacted in March this year following the news that OCA met the primary endpoint in a phase III study (POISE) in PBC patients.

Intercept Pharma intends to complete its new drug application (NDA) submission to the FDA for OCA in the PBC indication by the first half of 2015. The submission will be based on data from the POISE trial in addition to positive data from 2 phase II studies. We believe Intercept Pharma stands a better chance of success with OCA in the PBC indication than in the NASH indication. We expect investor focus to remain on updates regarding OCA going forward.

Intercept Pharma currently carries a Zacks Rank #3 (Hold). Stocks like Allergan AGN, Gilead Sciences GILD and Alexion Pharmaceuticals ALXN are better ranked in the health care space. While Allergan and Gilead are Zacks Rank #1 (Strong Buy) stocks, Alexion holds a Zacks Rank #2 (Buy).