What's In Store For Intercept (ICPT) This Earnings Season?

Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) is expected to report first-quarter 2018 results on May 3.

In the last reported quarter, the company incurred a wider-than-expected loss. Let’s see how things are shaping up for this announcement.

Intercept’s stock has gained 11.9% in the last six months against the industry’s decline of 8.8%.

Surprise History

Intercept’s track record is pretty mixed, with the company reporting a narrower-than-expected loss in three of the last four quarters while incurring wider-than-anticipated loss in one. The company delivered an average positive earnings surprise of 3.60% over this period.

Factors at Play

Intercept received a major boost with the FDA’s approval (in May 2016) of its lead drug, Ocaliva, in combination with ursodeoxycholic (UDCA), for the treatment of primary biliary cholangitis (PBC) in adults with an inadequate response to UDCA or as monotherapy in adults unable to bear with UDCA. In December 2016, the European Commission also granted conditional approval to Ocaliva for the same indication.

The initial uptake of Ocaliva was encouraging. However, prescription demand has softened following the Dear Health Care Provider letter and the FDA safety communication on Ocaliva. Some deaths were in PBC patients with moderate or severe hepatic impairment (Child Pugh B or C cirrhosis) were reported. The FDA reported 19 deaths due to Ocaliva and stated that the drug may also affect the liver. However, Intercept conducted an analysis and concluded that these patients were prescribed once daily doses of Ocaliva, which is seven times higher than the recommended weekly dose. The analysis was conducted in consultation with the FDA. The company concluded that deaths occurred due to overdosing. Consequently, Intercept issued the Dear Healthcare Provider letter. Thereafter, the FDA issued their own safety communication to reinforce recommended label dosing.

The company also announced an updated label for Ocaliva in the United States, reinforcing appropriate dosing in PBC patients with Child-P Class B or C or decompensated cirrhosis.

Thus, such side effects are expected to limit the sales in the first quarter.

Meanwhile, Ocaliva is being evaluated for other indications including non-alcoholic steatohepatitis (NASH) and primary sclerosing cholangitis. The company initiated a phase III study (REGENERATE) on Ocaliva for the treatment of non-cirrhotic NASH in patients with advanced liver fibrosis.

Enrolment for the interim analysis cohort in the REGENERATE trial was completed. Intercept initiated a phase III trial, REVERSE, on OCA.

Intercept expects operating expenses in the range of $390-$410 million in 2018 due to continued commercialization of Ocaliva in PBC in the United States and other markets.

We expect investors to remain focused on Ocaliva and pipeline updates during the first-quarter earnings call.

Earnings Whispers

Our proven model doesn’t show that Intercept is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat earnings. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -0.60%. This is because the Most Accurate estimate is pegged at a loss of $3.42 while the Zacks Consensus Estimate is pegged at a loss of $3.40.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter..

Zacks Rank: Intercept currently carries a Zacks Rank #3 which when combined with a negative ESP makes surprise prediction difficult.

Note that, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stock to Consider

Here is one company that you may consider, as our model shows that it has the right combination of elements to deliver a beat this quarter.

Emergent Biosolutions Inc. (NYSE:EBS) has an Earnings ESP of +61.8% and a Zacks Rank #2. The company is scheduled to release Q1 results on May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) has an Earnings ESP of +25% and a Zacks Rank #2. The company is scheduled to release first-quarter results on May 2.

Adverum Biotechnologies, Inc. (NASDAQ:ADVM) has an Earnings ESP of +6.9% and currently carries a Zacks Rank #3. The company is expected to release first-quarter results on May 8.

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