Intercept Pharmaceuticals' experimental NASH treatment failed in patients with liver cirrhosis, leading ICPT stock to plummet Friday.
The company tested its drug, Ocaliva, in patients with advanced nonalcoholic steatohepatitis, or NASH. Doctors measure fibrosis in stages 14. Patients in Intercept's study had the worst level of fibrosis, stage 4. This means their livers had extensive scarring, known as cirrhosis. Generally, their only option is a liver transplant.
RBC Capital Markets analyst Brian Abrahams said the Street had low expectations for success. Intercept is hoping to gain approval in earlier-stage NASH treatments. The results in more serious patients should not have an impact on regulatory discussions for Ocaliva in stage 2-3 patients, he said in a note to clients.
"However, it is also a missed opportunity to improve perceptions around Ocaliva's modest (effectiveness) profile and safety/tolerability trade-offs into FDA review and potential launch," he said.
On today's stock market, ICPT stock tumbled 15% to 13.95.
ICPT Stock: Historical Challenge
To gain FDA approval in NASH treatment, a company has to show one of two things. The medicine must improve fibrosis by one stage without leading to worsening NASH symptoms. Or, it must improve NASH symptoms without any worsening in fibrosis.
After 18 months, two doses of Ocaliva led to fibrosis improvement for 11.1%-11.9% of patients. In comparison, 9.9% of placebo patients improved.
"These numbers are much lower in comparison to the fibrosis improvement demonstrated in fibrosis stage 2-3 NASH patients with Ocaliva," Abrahams said. This "does not come as a great surprise, as demonstrating histological benefits in cirrhotic fibrosis stage 4 NASH has been historically challenging."
He kept his sector perform rating on ICPT stock, but cut his price target by 2 to 15.
Safety Is Key For NASH Treatment
Safety appeared consistent between earlier- and later-stage NASH patients who received Ocaliva.
In general, side effects include itching and a higher incidence of gallstones. On a positive note, Intercept didn't find a heightened number of cardiovascular issues in the older, sicker and cirrhotic patients.
Abrahams cut his expectations for the NASH treatment by $200 million. He now expects roughly $600 million in long-term sales for Ocaliva in NASH.
The news sent ICPT stock close to a two-month low. Shares are now well below their key moving lines, according to MarketSmith.com. IBD Digital shows Intercept stock has a strong Relative Strength Rating of 93. This puts the stock's performance in the top 7% of all stocks in terms of 12-month performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
