Intercept (ICPT): Stock Likely To Disappoint In Q1 Earnings
Zacks Investment Research | May 02, 2016 10:43PM ET
Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) is scheduled to report first-quarter 2016 results on May 5, after the market closes.
Intercept has a disappointing track record so far, with the company missing estimates in three of the last four quarters. The company has posted an average negative earnings surprise of 0.19% over the last four quarters. Let’s see how things are shaping up for this announcement.
Factors at Play
Since Intercept does not have any approved product in its portfolio, its revenues mainly comprise fees derived from collaborative agreements for the development and commercialization of its pipeline candidates. In this scenario, investor focus will remain on pipeline updates.
Last month, the FDA’s Gastrointestinal Drugs Advisory Committee voted unanimously (in the ratio of 17 to 0) in favor of the company’s lead pipeline candidate, Ocaliva (obeticholic acid). The committee recommended accelerated approval of Ocaliva for the treatment of patients suffering from primary biliary cholangitis (PBC) (previously known as primary biliary cirrhosis).
In Dec 2015, the FDA extended the Prescription Drug User Fee Act (PDUFA) date for priority review of Ocaliva by three months. The agency was previously supposed to give a decision by Feb 29, 2016. However, it requested additional clinical data analyses, which Intercept has submitted. Consequently, the FDA now requires additional time for a full review of the submission and has extended the PDUFA date by three months to May 29, 2016.
Although the FDA is not bound to abide by the Advisory Committee's recommendation, it generally takes the same into consideration while reviewing candidates. The candidate is also under review in the EU and a decision is expected in late 2016.
Meanwhile, the company has also initiated a phase III trial, REGENERATE, on Ocaliva in nonalcoholic steatohepatitis (NASH) patients suffering from advanced liver fibrosis. Moreover, the candidate is in a phase II trial, CONTROL, which will evaluate its effect, in combination with statin therapy, on lipid metabolism in patients with NASH.
Hence, Intercept expects operating expenses in the range of $360–$400 million (higher in the second half of the year than the first half), much higher than the 2015 level. The increase will primarily be due to the clinical development program on Ocaliva in PBC and NASH; higher Ocaliva manufacturing activities; and continuation of the development of INT-767 and other preclinical programs.
What Our Model Indicates
Our proven model shows that Intercept is not likely to beat estimates this quarter. This is because a stock needs to have both a positive Zacks Investment Research
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