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Here's Why Intercept Pharmaceuticals Changed Course Today

Cory Renauer, The Motley Fool

What happened

Shares of Intercept Pharmaceuticals (NASDAQ: ICPT) jumped in premarket trading yesterday after the company announced relatively positive results from a long-running clinical trial. A closer look at the top-line results, though, left investors with a lot of important questions about safety signals. As a result, the stock lost 15.8% on Wednesday.

So what 

Non-alcoholic steatohepatitis (NASH) threatens the livers of perhaps 20 million Americans, and there aren't any available treatments. Intercept Pharmaceuticals stock skyrocketed at the beginning of 2014 after reporting the first positive results from a potential NASH treatment in midstage clinical trials. 

A stock trader looking at computer screens with his hands on his head, looking frustrated.

Image source: Getty Images.

Intercept shareholders have seen the company's stock price decline by around three-fourths since a peak in 2014, largely due to safety concerns for Ocaliva that weren't soothed by the top-line clinical trial results the company released yesterday. Although the Regenerate study achieved an efficacy goal that could support an approval, there were some safety concerns.

Bile acids that leak from damaged livers often cause severe itching, or pruritus, which is why it's taken very seriously. A disturbing 9% of patients receiving a high dose of Ocaliva were ejected from the study early after reporting cases of severe itching, but it probably wasn't due to liver damage. Ocaliva is a more potent version of a naturally occurring bile acid, which means most of the pruritus cases it causes can probably be resolved with a lower dosage.

Now what

Ocaliva crossed some pretty high hurdles, especially when you consider the number of patients who discontinued treatment due to pruritus and were scored as non-responders. There are at least a million NASH patients with stage 2 and stage 3 fibrosis in the U.S. and EU, and Ocaliva is the first drug to significantly improve fibrosis scores in a late-stage clinical trial.

That gives Ocaliva a pretty good shot at approval and blockbuster sales, but further safety concerns could still derail this train. Less than 1% of patients experienced a hepatic adverse event, but the number was numerically higher among patients receiving the effective 25 mg dosage. In decades past, the Food and Drug Administration pulled several drugs from the market after they were associated with a handful of severe liver injuries occurring among less than 1 in 5,000 patients treated.

Intercept will present more details from the Regenerate study at a medical conference this April, and all eyes will be looking for elevated liver enzymes that could snuff out Ocaliva's potential as a NASH drug before it begins.

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.