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Intercept Sinks on Cholesterol Issue - Analyst Blog

Posted: 5/21/2014 5:12:00 PM
Referenced Stocks: NASH;AGN;ALXN;GILD;ICPT

Intercept Pharmaceuticals, Inc. 's ( ICPT ) shares tumbled 14.1% after a report from The Street disclosed that the company had information about the occurrence of abnormal cholesterol levels in its phase IIb study on its lead pipeline candidate, obeticholic acid (OCA) when it came out with a press release on Jan 9.

The trial was sponsored and conducted by the National Institute of Diabetes & Digestive & Kidney Diseases (NIDDK).

Based on emails made public through the Freedom of Information Act, it appears that not only did the company fail to disclose these concerns to investors, it also lobbied government scientists conducting the trial to downplay the safety issue associated with the use of OCA.

We remind investors that on Jan 9, 2014, Intercept Pharma had announced that the FLINT (Farnesoid X Receptor Ligand Obeticholic Acid in Nonalcoholic Steatohepatitis Treatment) trial on OCA was stopped early after the study met its primary endpoint. The study was evaluating the efficacy and safety of OCA for the treatment of nonalcoholic steatohepatitis (NASH). Shares of Intercept Pharma skyrocketed 281% following the news.

However, the company chose not to disclose the fact that the NIDDK terminated the FLINT study early partially due to the serious safety issues. According to The Street article, the NIDDK had informed the company about the disproportionate finding on lipid abnormalities (increased total cholesterol with increased low-density lipoprotein/LDL and decreased high-density lipoprotein/HDL cholesterol), which Intercept Pharma withheld in its press release.

Later in Mar 2014, the company had issued a statement about the occurrence of cardiovascular side effects in the FLINT study. The company stated that 10 serious cardiovascular adverse events were observed in 7 patients (2.5% of the total population) across both treatment groups.

The Data Safety Monitoring Board (DSMB) of the FLINT study was of the opinion that hyperlipidemia and the occurrence of serious cardiovascular events were numerically more in the OCA arm of the study compared to that of the placebo arm. Full results from the FLINT study are expected in Jul 2014.

We believe that investor focus will remain on updates regarding OCA's development for the NASH indication.

Intercept Pharma currently carries a Zacks Rank #3 (Hold). Stocks like Allergan ( AGN ), Gilead Sciences ( GILD ) and Alexion Pharmaceuticals ( ALXN ) are better ranked in the health care space. While Allergan and Gilead are Zacks Rank #1 (Strong Buy) stocks, Alexion holds a Zacks Rank #2 (Buy).

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