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Why Is Intercept (ICPT) Down 9.4% 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 9.4% 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's Q1 Earnings and Revenues Beat Estimates

Intercept incurred a loss of $2.86 per share in first-quarter 2020, narrower than the Zacks Consensus Estimate of a loss of $2.94 and the year-ago quarter’s loss of $3.03.

Total revenues of $72.7 million in the quarter beat the Zacks Consensus Estimate of $68 million. Revenues also surged 39% year over year, primarily owing to higher sales of lead drug, Ocaliva.

Quarter in Detail

The total revenues generated in the quarter comprised only Ocaliva (obeticholic acid or OCA) net sales. Net sales came in at $50.8 million in the United States and $21.9 million outside the country.

We remind investors that OCA is already 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 or as a monotherapy for adults intolerant to UDCA.'

Ocaliva sales were better than anticipated in the PBC business, driven by continued strong total prescription trends and modestly higher-than-expected inventory demand toward the end of the quarter, as certain customers responded to the uncertainty of the early COVID-19 period.

Research and development expenses decreased to $56.7 million from $58.4 million in the year-ago quarter due to lower nonalcoholic steatohepatitis (NASH) development program expenses and costs.

Selling, general and administrative expenses were $98.6 million, up 27.6% year over year, primarily driven by organizational growth and additional activities associated with the preparation for the potential approval and commercialization of OCA for liver fibrosis due to NASH.

As of Mar 31, 2020, Intercept had cash, cash equivalents, restricted cash and marketable securities of $554 million compared with $657.4 million as of Dec 31, 2019.

Other Updates

The FDA has set a Prescription Drug User Fee Act (“PDUFA”) target action date of Jun 26, 2020, for the completion of the review of the NDA seeking approval of OCA for liver fibrosis due to NASH.

The company did not provide any sales guidance due to the uncertainty related to the coronavirus outbreak.  

 

How Have Estimates Been Moving Since Then?

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

VGM Scores

At this time, Intercept has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the fifth 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 trending upward for the stock, and the magnitude of these revisions looks promising. 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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