Intercept Pharmaceuticals Inc (ICPT) Stock Could Be Biotech’s Grand Slam

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The market has begun 2017 trading sideways, but don't let that fool you into thinking there aren't opportunities out there, especially in biotech. We're in a period of a consolidation, which means as profits are being taken and forcing stocks lower in some parts of the market, cash is coming off the sidelines to buy the dips. Eventually, it will spark the next move higher.

As many of you may know by now, I like to make sure my portfolio is well positioned ahead of that move by investing in only the best companies out there. One such company - which is trading at a discount right now - is Intercept Pharmaceuticals Inc (NASDAQ: ICPT ).

I've talked about ICPT before. It's a biopharmaceutical company focused on treating progressive non-viral liver diseases, and millions of Americans suffer from fatty liver disease.

That sort of market opportunity gives this biotech the potential to be a grand slam, in my opinion. Fatty liver disease is when fat accounts for more than 5% to 10% of the organ's weight . I think it's the American health crisis of the 21st century, and it's simply the result of Americans becoming fatter.

Intercept's lead product is Ocaliva. It was granted accelerated approval by the Food and Drug Administration in May 2016 for the treatment of primary biliary cholangitis (PBC), and is the first PBC therapy that targets the farnesoid X receptor (FXR).

The company is also currently evaluating Ocaliva - or obeticholic acid (OCA) - for potential uses across a variety of additional chronic liver diseases, including nonalcoholic steatohepatitis (NASH), primary sclerosing cholangitis (PSC) and biliary atresia. Intercept owns the worldwide rights to OCA outside of Japan, China and Korea.

Now I will add the caveat that this biotech stock is a higher-risk idea. It's likely gotten ahead of itself over the years, but the fact that the shares rallied to $460 in 2014 underscores the ultimate potential here.

Sure, there will be competition. And there have definitely been some execution issues. However, I think the company will clear those hurdles in time with three applications (PBC, PSC and NASH) currently in or beyond Phase II and III FDA trials.

The stock is currently in a double-bottom formation, and a bounce through $125 could lift ICPT up toward $175 in the next year. Over the very long term, and certainly with some bumps along the way, I still think this could be a $400 stock.

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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.

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

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