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Intercept (ICPT) Q2 Earnings & Sales Beat, NASH in Focus

Zacks Equity Research

Intercept Pharmaceuticals, Inc. ICPT gained 1.40% after the company reported better-than-expected results for the second quarter of 2019.

Shares of the company have lost 39% in the year so far compared with the industry’s decline of 2.5%.

The company incurred a loss of $2.28 per share in the second quarter, narrower than the Zacks Consensus Estimate of a loss of $2.51 and the year-ago quarter’s loss of $2.58.

Quarterly revenues were $66.3 million, up from $43.6 million in the year-ago quarter. Revenues also surpassed the Zacks Consensus Estimate of $59.03 million.

Quarter in Detail

Lead drug Ocaliva (obeticholic acid or OCA) reported $65.9 million in sales, up from $51.8 million in the previous quarter and $43.2 million in the year-earlier quarter. Net sales in the United States came in at $50.7 million, while ex-U.S. Ocaliva net sales summed $15.2 million.

OCA is also being evaluated for other indications, including non-alcoholic steatohepatitis (“NASH”) and primary sclerosing cholangitis (“PSC”).

Research and development expenses increased 25.7% year over year to $59.6 million, primarily driven by higher NASH development program expenses and costs associated with the preparation of the NASH NDA submission.

2019 Outlook

For 2019, Ocaliva’s net sales are expected between $235 million and $245 million. Intercept continues to expect operating expenses of $470-$500 million for the year.

Pipeline Update

The top-line results from the phase III study, REGENERATE, in patients with liver fibrosis due to NASH were positive as observed in an interim analysis at 18 months.  These results should serve as the basis for seeking accelerated approval in the United States and submitting a marketing authorization application (“MAA”) in Europe. The company is on track to submit an NDA to the FDA in the third quarter, followed by an MAA filing in the EU in the fourth quarter.

The REGENERATE study is underway to confirm benefit on clinical outcomes on a post-marketing basis.Target enrollment for the clinical outcomes cohort of the study has been completed. The end-of-study analysis will evaluate the effect of OCA on all-cause mortality and liver-related clinical outcomes as well as long-term safety.

Intercept is also currently conducting another phase III study, REVERSE, of OCA in NASH patients with compensated cirrhosis. The company is expanding the size of the study from 540 patients to approximately 900 and extending the duration from 12 to 18 months. The primary histologic endpoint of fibrosis improvement with no worsening of NASH achieved by OCA in the REGENERATE study will now be evaluated in REVERSE based on the same duration of treatment.  Intercept expects completion of target enrollment in REVERSE by the end of the year.

Our Take

Intercept’s second-quarter results were impressive, as both earnings and sales beat expectations. Management’s efforts to increase awareness about the label update of Ocaliva in 2018 and expand sales force across the United States, thereafter, are yielding results.

The company’s efforts to expand Ocaliva’s label are encouraging as well, given the market potential of NASH. Additionally, biotech bigwig Gilead Sciences, Inc.’s GILD failure of a late-stage study on selonsertib, involving patients afflicted with compensated cirrhosis (F4) due to NASH, increases Ocaliva’s growth prospects. This puts Intercept ahead in the race to get a drug approved for NASH.

Zacks Rank & Stocks to Consider

Intercept currently carries a Zacks Rank #3 (Hold). 

A couple of better-ranked stocks in the same space are Amgen, Inc. AMGN and Biogen, Inc. BIIB. Both stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amgen’s earnings per share estimates have increased from $13.92 to $14.23 for 2019 in the past 60 days.

Biogen’s earnings per share estimates have increased from $29.66 to $32.04 for 2019 in the past 60 days.

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