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Intercept (ICPT) Q1 Loss Narrower Than Expected, Sales Beat

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Intercept Pharmaceuticals, Inc. ICPT incurred a loss of $1.22 per share in first-quarter 2021, narrower than the Zacks Consensus Estimate of a loss of $1.53 as well as the year-ago quarter’s loss of $2.86.

Total revenues of $81.7 million in the quarter beat the Zacks Consensus Estimate of $81 million and also increased from $72.6 million in the year-ago quarter.

Intercept Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Intercept Pharmaceuticals, Inc. Price, Consensus and EPS Surprise
Intercept Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Intercept Pharmaceuticals, Inc. price-consensus-eps-surprise-chart | Intercept Pharmaceuticals, Inc. Quote

Quarter in Detail

Total revenues generated in the quarter comprised only Ocaliva (obeticholic acid or OCA) net sales. Net sales came in at $57.3 million in the United States and $24.4 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 $50.8 million from $56.7 million in the year-ago quarter on lower nonalcoholic steatohepatitis (NASH) development program costs.

Selling, general and administrative expenses decreased to $59.3 million from $98.6 million in the year-ago quarter, driven by actions taken to decrease expenses in relation to the launch-preparation activities associated with the potential approval and commercialization of OCA for liver fibrosis due to NASH following the complete response letter, which was received in 2020.

As of Mar 31, 2020, Intercept had cash, cash equivalents, restricted cash and marketable securities of $418.6 million.

Other Updates

In June 2020, the FDA had issued a Complete Response Letter (CRL) regarding the company’s New Drug Application (NDA) for OCA to treat fibrosis due to NASH. Intercept is gearing up for a safety update that will double patient exposure to OCA. This in relation to the first submission for the candidate.

The late-stage REVERSE study in patients with compensated cirrhosis due to NASH is ongoing and a top-line read-out is expected to be available by the end of 2021.

In May 2020, the FDA began to evaluate a newly-identified safety signal (NISS) regarding liver disorder for Ocaliva. This was classified as a potential risk by the regulatory agency after evaluating a subset of the cirrhotic or more advanced PBC patients who took Ocaliva.

Intercept is working with the FDA to assess the safety data and discuss potential safety labeling changes. Management believes that an update on Ocaliva prescribing information will come in the form of a safety labeling change with respect to patients with PBC with decompensated cirrhosis and another subset of patients with compensated cirrhosis.

2021 Guidance

The company narrowed its sales guidance following its latest dialogue with the FDA, which will see a label update restricting the use of Ocaliva in patients with decompensated cirrhosis and in a subset of patients with compensated cirrhosis.

Ocaliva net sales are projected between $325 million and $340 million (earlier projection:$325-$355 million for 2021).

Our Take

While Ocaliva’s sales increased in the first quarter, an expected safety label might affect the metric.

Shares of the company were down 10.7% following the company’s earnings results. The stock has slumped 29.7% in the year so far compared with the industry’s loss of 5.9%.

The CRL for OCA was disappointing as the candidate was a frontrunner in receiving approvals for the treatment of NASH.

While the NASH market promises potential, it is quite challenging as well. Bigwigs like Novo Nordisk NVO and Gilead Sciences, Inc. GILD are also evaluating candidates for NASH. Another company, Viking Therapeutics VKTX, is enrolling in the phase IIb VOYAGE study to evaluate VK2809 for biopsy-confirmed NASH and fibrosis.

Intercept currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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