Intercept Pharma Gets Dueling Initiation Reports As FDA Panel Nears
Shares of biotech Intercept Pharmaceuticals ( ICPT ) were up in twice-average volume Wednesday, after two analysts launched coverage ahead of a crucial FDA panel vote. Credit Suisse’s Alethia Young initiated with a buy rating, while Salveen Richter at Goldman Sachs initiated with a neutral rating, though they agreed on the general outlines of the investment thesis. Intercept’s lead drug candidate, obeticholic acid (OCA), is up for an FDA advisory committee discussion on April 7 as a treatment for primary biliary cholangitis (PBC), a rare, chronic liver disease. If approved by the FDA’s May 29 deadline, it would be Intercept’s first commercial product. Young estimates that annual sales for obeticholic acid could hit $259 million in 2018, though Richter forecasts it at only $170 million at peak. Both analysts, however, agree that the really big potential market for OCA is in nonalcoholic steatohepatitis (NASH), a much more common liver disease without a current treatment. That could draw $3.5 billion a year, Richter estimates, but that’s a ways in the future: The next batch of data from the NASH clinical trial isn’t expected until 2018. Between the panel meeting and the NASH data, Richter sees “a dearth of catalysts” to drive Intercept’s stock, leading him to set his price target at 114. Young, however, says approval and launch for treatment of PBC, both in the U.S. and Europe, could provide more upside for the stock. Her peak sales estimate in NASH is almost twice Richter’s at $6.5 billion. She set her price target at 200. Intercept stock rose 5% in early trading on the stock market today , but by early afternoon it was up 1%, near 125.50. Shares hit a 19-month high above 314 last May.