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It has been about a month since the last earnings report for Intercept Pharmaceuticals (ICPT). Shares have added about 0.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Intercept due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Intercept's Q4 Loss Wider than Expected, Sales Miss
Intercept incurred a loss of $1.58 per share in fourth-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $1.55 but narrower than the year-ago quarter’s loss of $2.99.
Total revenues of $83.3 million in the quarter missed the Zacks Consensus Estimate of $84 million but increased from $71.5 million in the year-ago quarter.
Quarter in Detail
The total revenues generated in the quarter comprised only Ocaliva (obeticholic acid or OCA) net sales. Net sales came in at $64.9 million in the United States and $18.4 million outside the country.
OCA is approved under the brand name, Ocaliva, for treating primary biliary cholangitis (PBC) in combination with ursodeoxycholic acid (UDCA) in adults with an inadequate response to UDCA alone or as a monotherapy for adults intolerant to UDCA.
Research and development expenses decreased to $51.9 million from $64.6 million in the year-ago quarter due to lower non-alcoholic steatohepatitis (NASH) development program costs, including the conclusion of enrollment activities for the REGENERATE and REVERSE studies.
Selling, general and administrative expenses decreased to $70 million from $93.7 million in the year-ago quarter, primarily driven by reductions in spending resulting from the delay of the potential approval and commercialization of OCA for liver fibrosis due to NASH.
As of Dec 31, 2020, Intercept had cash, cash equivalents, restricted cash and marketable securities of $477.2 million.
Intercept is conducting the phase III REVERSE study in NASH patients with compensated cirrhosis, with readouts from the double-blind phase expected by the end of the year.
In June 2020, the FDA had issued a Complete Response Letter (CRL) regarding the company’s New Drug Application (NDA) for OCA for the treatment of fibrosis due to NASH.
Meanwhile, some newly identified safety signal (NISS) was found during routine post-marketing safety monitoring by the FDA. It was classified as a potential risk for liver disorder in a subset of PBC patients with cirrhosis. Based on the company’s interactions with the agency to date, it will ultimately result in a labeling change regarding patients with the most advanced stages of PBC.
Ocaliva net sales are projected between $325 million and $355 million for 2021.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 5.36% due to these changes.
At this time, Intercept has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Intercept has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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