Intercept (ICPT) Gains On Earnings And Revenue Beat In Q3

Shares of Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) gained 10.1% after the company posted better-than-expected third-quarter 2018 results, following an increase in Ocaliva sales.

Notably, Intercept’s stock has gained 41.2% in the year so far, against the industry ’s decline of 7.6%.

Intercept reported a loss of $2.18 per share in the third quarter, narrower than the Zacks Consensus Estimate of a loss of $2.65 and the year-ago loss of $2.89.

Quarterly revenues were $47 million, up from $41.3 million in the year-ago quarter. Revenues also surpassed the Zacks Consensus Estimate of $46.6 million.

Quarter in Detail

Ocaliva recorded $46.6 million of sales, up from $43.2 million recorded in the second quarter of 2018 and $40.9 million in the year-ago quarter. Net sales in the United States came in at $36.7 million, while the ex-U.S. Ocaliva net sales came in at $9.9 million.

Ocaliva in combination with ursodeoxycholic (UDCA) was approved in the United States for the treatment of primary biliary cholangitis (“PBC”) in adults with an inadequate response to UDCA, or as monotherapy in adults who are unable to endure UDCA, in 2016. The drug was also granted conditional approval by the European Commission. In February 2018, Ocaliva’s label was updated in the United States, to include a boxed warning and a dosing table that reinforced the existing dosing schedule in PBC patients with Child-Pugh Class B or C, or decompensated cirrhosis.

Research and development expenses increased 4.1% year over year to $47.9 million, primarily driven by increases in clinical development programs for Ocaliva. Selling, general and administrative expenses however decreased 7.5% to $56.8 million.

2018 Outlook Reiterated

Ocaliva’s net sales are expected between $170 million and $185 million in 2018. Intercept continues to expect operating expenses to be $390-$410 million in 2018.

Pipeline Update

Ocaliva is also being evaluated for other indications, including non-alcoholic steatohepatitis (“NASH”) and primary sclerosing cholangitis (“PSC”).

The phase III NASH program includes the REGENERATE trial among patients with advanced liver fibrosis and the REVERSE trial among patients with compensated cirrhosis. The FDA earlier approved a redesign of the phase III REGENERATE trial on Ocaliva for the safety and efficacy in treating NASH patients with liver fibrosis. The company now needs to achieve only one co-primary endpoint, either fibrosis improvement or NASH resolution compared with the earlier target of achieving both. Results from the REGENERATE trial are expected in the first half of 2019. The REVERSE trial is designed to evaluate the efficacy and safety of Ocaliva in NASH patients with compensated cirrhosis. The trial is currently enrolling.

Our Take

Intercept’s third-quarter results were encouraging, with the company beating on both top and bottom-lines. Sales had earlier taken a hit due to the safety issues regarding Ocaliva. Nevertheless, management’s efforts to increase awareness about the updated level and promote Ocaliva, thereafter, is reaping results. Solid growth in new patient enrollment should lead to stronger sales in the fourth quarter.

Moreover, the company is looking to expand the drug’s label in the promising NASH space. Per estimates, NASH is expected to surpass hepatitis C as the leading reason for liver transplants in the United States and Europe. NASH market has huge potential and a tentative approval will boost Ocaliva’s prospects, further.

The NASH space has been in focus in 2018, with shares of a few companies soaring on positive data on their NASH candidates. Bigiwig Gilead Sciences Inc. (NASDAQ:GILD) has a promising late-stage NASH candidate. Israel-based Galmed Pharmaceuticals (NASDAQ:GLMD) earlier reported positive data on its NASH candidate, Aramchol. Madrigal Pharmaceuticals (NASDAQ:MDGL) also has a promising candidate for NASH.

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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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Written By: Zacks Investment Research