Intercept (ICPT) Q4 Earnings & Sales Lag on Dull Ocaliva

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Intercept Pharmaceuticals, Inc . ICPT reported disappointing results for fourth-quarter 2017 on account of drab Ocaliva sales. The company reported a loss of $4.43 per share in the fourth quarter, wider than the Zacks Consensus Estimate of $3.57 but narrower than the year-ago loss of $4.84.

Intercept Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Intercept Pharmaceuticals, Inc. Price, Consensus and EPS Surprise | Intercept Pharmaceuticals, Inc. Quote

Quarterly revenues were $37.7 million, up significantly from $13.8 million in the year-ago quarter but missed the Zacks Consensus Estimate of $38.3 million.

Quarter in Detail

In fourth-quarter 2017 Ocaliva recorded $37.3 million of sales, down from $40.9 million recorded in third-quarter 2017. Revenues from international markets were $5.3 million. Ocaliva was approved in the United States, 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 who are unable to endure UDCA in 2016. The drug was also granted conditional approval by the European Commission.

Sales from the United States markets came in at $32.0 million, down from $36.2 million recorded in the third quarter as prescriptions continue to grow.

Research and development expenses increased 6.8% year over year to $57.5 million primarily driven by increases in clinical development programs for Obeticholic acid ("OCA") and infrastructure to support such programs.

Selling, general and administrative expenses increased to $84.3 million, up from $73.9 million in the year-ago quarter.

2017 Results

Sales came in at $130.9 million in 2017, missing the Zacks Consensus Estimate of $132.4 million. Ocaliva sales came in at $129.2 million in 2017. Loss per share came in at $14.38, wider than the Zacks Consensus Estimate of $13.52.

2018 Outlook

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

Pipeline Update

OCA is being evaluated for other indications including non-alcoholic steatohepatitis ("NASH") and primary sclerosing cholangitis ("PSC").

The FDA has earlier approved a redesign of the phase III trial, REGENERATE on OCA 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 as compared with the earlier target of achieving both. Enrolment of the interim analysis cohort was completed in the trial and results are expected in the first half of 2019.

Earlier in the month, Intercept initiated a phase III trial, REVERSE, on OCA. The randomized phase III study will evaluate the efficacy and safety of OCA, in subjects with compensated cirrhosis due to NASH in approximately 540 patients with a biopsy-confirmed diagnosis of cirrhosis. The primary endpoint of the study is the percentage of subjects with histological improvement in fibrosis by at least one stage using the NASH Clinical Research Network ("CRN") scoring system after 12 months of treatment. Patients enrolled in the trial are being randomized in a 1:1:1 ratio to one of the three treatment arms - once-daily dosing of OCA 10 mg, once-daily OCA 10 mg with titration to 25 mg at three months, or placebo. The patients who successfully complete the double-blind phase of REVERSE will be enrolled in an open-label extension phase for up to 12 additional months.

Intercept expects to submit marketing authorization for OCA as a treatment option for NASH patients with compensated cirrhosis, in the United States and international markets based on the positive results from the study. A subsequent outcome trial is also in the cards to confirm the clinical benefit on a post-marketing basis in a broader population of NASH patients with cirrhosis.

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.

Our Take

Intercept's fourth-quarter results missed expectations as sales of Ocalive declined due to safety issues reported earlier. While the updated label should help the stock turn around, it might be a while before the sales start to recover. First-quarter 2018 is expected to be a transitional quarter.

Intercept's stock has tumbled 57.8% over a year compared with the industry 's decline of 2.5%.  The company's stock has been bearing the brunt of the safety guidelines issued regarding the approved drug Ocaliva.

Given the challenges faced by the drug in recent times, the label expansion of OCA will boost the growth prospects.

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.  However, bigwigs like Novartis AG NVS and Gilead Sciences GILD have FXR agonists in phase II or earlier stages of clinical or preclinical development that can be used to treat PBC, NASH and the other liver diseases.

Zacks Rank & Key Pick

Intercept currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the healthcare sector is Exelixis EXEL which currently carries a Zacks Rank #2 (Buy).  You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Exelixis' earnings per share estimates increased from 72 cents to 77 cents for 2018 over the last 60 days.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: NVS , GILD , EXEL , ICPT

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