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Why Is Intercept (ICPT) Down 2.5% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for Intercept Pharmaceuticals (ICPT). Shares have lost about 2.5% 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 its most recent earnings report in order to get a better handle on the important drivers.

Intercept Q2 Earnings & Sales Beat, NASH in Focus

Intercept 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.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Intercept has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest 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.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. 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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