It has been about a month since the last earnings report for Intercept Pharmaceuticals (ICPT). Shares have lost about 16.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Intercept due for a breakout? 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 catalysts.
Intercept's Q2 Earnings and Revenues Beat Estimates
Intercept incurred a loss of $1.92 per share in second-quarter 2020, narrower than the Zacks Consensus Estimate of a loss of $2.94 and the year-ago quarter’s loss of $2.28.
Total revenues of $77.2 million in the quarter beat the Zacks Consensus Estimate of $71.14 million. Revenues also surged 16.5% year over year, primarily owing to higher sales of lead drug, Ocaliva.
Quarter in Detail
The total revenues generated in the quarter comprised only Ocaliva (obeticholic acid or OCA) net sales. Net sales came in at $59.6 million in the United States and $17.6 million outside the country.
We remind investors that OCA is already 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 or as a monotherapy for adults intolerant to UDCA.
Ocaliva sales were driven by strong end-market demand and the company continues to see significant total prescription growth.
Research and development expenses decreased to $34 million from $59.6 million in the year-ago quarter due to lower nonalcoholic steatohepatitis (NASH) development program expenses and costs.
Selling, general and administrative expenses were $93.4 million, up from $69.7 million in the year-ago quarter, primarily driven by activities associated with the preparation for the potential approval and commercialization of OCA for liver fibrosis due to NASH.
As of Jun 30, 2020, Intercept had cash, cash equivalents, restricted cash and marketable securities of $540.6 million compared with $657.4 million as of Dec 31, 2019.
In June 2020, the FDA had issued a Complete Response Letter (CRL) regarding our New Drug Application (NDA) for OCA for the treatment of fibrosis due to NASH. As a result, the company does not expect to launch OCA for NASH in 2020.
The phase III REGENERATE and REVERSE studies have been fully enrolled.
Ocaliva net sales are projected between $300 million and $320 million in 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 30.83% due to these changes.
At this time, Intercept has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been 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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