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Intercept's (ICPT) Q4 Loss Wider than Expected, Sales Miss

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Intercept Pharmaceuticals, Inc. ICPT 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.

Other Updates

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.

2021 Guidance

Ocaliva net sales are projected between $325 million and $355 million for 2021.

Our Take

Intercept reported disappointing results for the fourth quarter. While Ocaliva’s sales were up 25% in the year, an expected safety label might affect sales.

Shares were down 19.4% following the results. Intercept’s shares have lost 6.7% in the year so far against the industry’s growth of 3.5%.

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. Meanwhile, Viking Therapeutics VKTX is enrolling in the phase IIb VOYAGE study evaluating VK2809 in 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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