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FDA Warning Letter Buckles Intercept Pharma Shares; Wells Fargo Downgrades

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FDA Warning Letter Buckles Intercept Pharma Shares; Wells Fargo Downgrades

The U.S. Food and Drug Administration sent a letter to doctors highlighting potential negative side effects from Intercept Pharmaceuticals Inc (NASDAQ: ICPT)'s liver disease medicine called Ocaliva.

The FDA said in its letter that if it is incorrectly dosed in patients with moderate to severe decreases in liver function, it could result in "an increased risk of serious liver injury and death." The letter resulted in a 25 percent selloff in Intercept's stock on Thursday, and some Wall Street analyst's felt it prudent to take action.

Wells Fargo's Jim Birchenough downgraded Intercept's stock rating from Overweight to Market Perform with a price target slashed from $265 all the way down to $95 as the letter goes beyond a previous warning.

The FDA's letter contains new pieces of information that weren't included in the prior "Dear Healthcare Provider Letter," the analyst highlighted. For example, 19 separate deaths have been identified since Ocaliva's launch in May 2016. The cause of death was worsening primary biliary cholangitis in seven of these cases, cardiovascular disease in one case, with the other cases being unknown.

Among the eight cases with a known cause of death, seven of the patients received an incorrect dose, Birchenough continued. In addition, the FDA highlighted 11 cases of serious liver injury, of which six patients were given an incorrect dose resulting in three of the 19 deaths.

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"We believe that serious events in patients with mild or no baseline liver disease, treated with correct doses of OCALIVA, and the recommendation for increased monitoring could dramatically impact OCALIVA adoption in PBC, and introduces a potential overhang on the development for non alcoholic steatohepatitis (NASH), with phase 3 data not expected until early 2019 and potential increased risk of imbalance in serious adverse events (SAE's)," the analyst wrote.

At time of publication in Friday's pre-market session, shares of Intercept were down 5.97 percent at $69.30.

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Latest Ratings for ICPT

DateFirmActionFromTo
Nov 2019MaintainsBuy
Nov 2019MaintainsOutperform
Oct 2019MaintainsStrong Buy

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