NEW YORK (AP) -- Shares of Intercept Pharmaceuticals rose Monday after a Wedbush analyst raised her price target on the stock, saying she sees another potential use for its liver disease drug candidate.
THE SPARK: Analyst Liana Moussatos said Intercept plans to start a new study of the drug candidate obeticholic acid, or OCA, in March. That study will evaluate the drug as a treatment for alcoholic hepatitis. Moussatos said Intercept could get $3 billion a year from sales of OCA as a treatment for that condition.
The Mayo Clinic says alcoholic hepatitis is liver inflammation caused by alcohol consumption, and people who continue to drink after being diagnosed with the condition face a high risk of serious liver damage and death.
Moussatos kept an "Outperform" rating on the stock and raised her price target to $493 per share from $449.
Intercept went public in October 2012, and it doesn't have any approved drugs.
THE BIG PICTURE: in January Intercept Pharmaceuticals Inc. reported successful results from a study of OCA as a treatment for nonalcoholic steatohepatitis, or NASH. NASH is a chronic liver disease that can cause inflammation and scarring, which may lead to cirrhosis, liver failure and death. The company's shares surged from the $60 range to more than $400 a share on that news. But its shares later slipped after Intercept said "lipid abnormalities," including higher levels of "bad" LDL cholesterol, were more common in patients treated with its drug than with a placebo.
Intercept is studying OCA as a treatment for other illnesses.
Moussatos thinks OCA will reach the market in late 2015. She said the drug could bring in $3 billion as a treatment for NASH, and she said the New York drugmaker could get billions in additional revenue from OCA as a treatment for other conditions.
SHARE ACTION: Shares of Intercept Pharmaceuticals rose $22.82, or 6.5 percent, to $374.38 in afternoon trading Monday. The stock finished 2013 at $68.28 and traded as high as $497 on Jan. 10.