Shares of Intercept Pharmaceuticals, Inc. ICPT declined 37.4% year to date against the industry’s gain of 15.4%. In particular, shares have plunged 40.4% over a month due to safety issues regarding approved drug Ocaliva.
Per a recent news article, prescriptions of the drug have fallen by 25%. The FDA issued a guideline regarding incorrect dosing of Ocaliva. The FDA reported 19 deaths due to Ocaliva, approved for primary biliary cholangitis (PBC) and stated that the drug may also affect the liver.
However, Intercept conducted an analysis and concluded that that these patients were prescribed once-daily doses of Ocaliva, which is seven times higher than the recommended weekly dose. The analysis was conducted in consultation with the FDA. The company concluded that deaths occurred due to overdosing.
Consequently, Intercept issued the Dear Healthcare Provider letter. Thereafter, the FDA issued their own safety communication to reinforce recommended label dosing. Intercept is also working in tandem with the FDA to develop Ocaliva’s label for safety purposes.
We note that Ocaliva was approved in the United States in May 2016 (and subsequently in the European Union and Canada) for the treatment of PBC with an inadequate response to or intolerant to the standard of care, UDCA.
The dose recommended for earlier stage PBC patients with no or mild hepatic impairment was 5 mg once daily, which was increased after three months to 10 mg once daily based on tolerability and treatment response. On the other hand, in late stage patients with moderate or severe hepatic impairment (Child Pugh B or C cirrhosis), recommended dosing starts at 5 mg once weekly, with the possibility to gradually increase to a maximum of 10 mg twice weekly.
The warning comes a major setback for Intercept and we expect the company’s sales to be hurt in the third quarter due to the same. The company expected the drug’s sales to improve in 2017 as international demand was projected to pick up in the second half. Ocaliva is the company’s only approved drug and such side-effects will limit the sales potential.
Zacks Rank & Key Picks
Intercept currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the health care sector are ACADIA Pharmaceuticals Inc. ACAD, Celgene Corporation CELG and Aduro Biotech, Inc. ADRO. All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ACADIA’s loss per share estimates have narrowed from $2.82 to $2.57 for 2017 and from $2.07 to $1.90 for 2018 over the last 60 days. The company delivered positive earnings surprises in two of the trailing four quarters with an average beat of 7.97%.
Celgene’s earnings estimates for both 2017 and 2018 have inched up 0.7% in the past 90 days. The stock has rallied 20% this year, outperforming the industry.
Aduro Biotech’s loss per share estimates narrowed from $1.36 to $1.29 for 2017 over the last 30 days. The company delivered positive earnings surprises in two of the four trailing quarters with an average of 2.53%.
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