Intercept Pharmaceuticals (ICPT) became biotechnologically famous in 2014 with its stock blasting off financially to a place no liver therapeutics stock had ever been. Since then, this mid-cap ($3.52B) biopharma has had to deal with the clinical scrutiny that typically occurs after the famous moment has eased off. I first provide overview of why Intercept found clinical fame and then the clinical scrutiny that it cannot "shake off" at least until the imminent results are announced and proven successful with good safety and tolerability signals.
The Data Safety Monitoring Board recommended an early halt of the FLINT Phase 2b trial being conducted by Intercept/NIH/NIDDK due to perceived clinical efficacy and benefits of obeticholic acid (OCA) therapy in patients diagnosed with NASH. This perceived clinical importance of OCA was also reflected in the stock price value as seen by a rapid stock price appreciation from $70s to a peak of $460s in ensuing days/weeks/months.
Subsequently, Intercept commented on adverse events being observed in biopsied NASH patients that received and responded to OCA treatment. Specifically, the adverse events of pruritus (i.e. intense itching) and dyslipidemia (i.e. high LDL-C) were reported. Some folks have speculated that these adverse events could be clinically managed. In fact, I also commented in my earlier articles that was plausible. So, why did I have a change of heart? I did what most folks with scientific background would do - which is to critically reanalyze the good, bad, and ugly aspects of the scientific data. Next, I then asked myself the question of why, and if these adverse events were peculiar to OCA therapy.
What If Adverse Events Persist?
Everyone has heard or read that NASH is a 'silent' progressive chronic liver disease with many causal pathogenic factors. We all know that the pathogenic effects of NASH in the body are not silent at all (or asymptomatic), with steatosis (i.e. fatty liver), inflammation, fibrosis, and cirrhosis being increasingly recognized as characteristics of biopsied NASH. The major underlying trigger for NASH is fat overload (>5%) in the liver. So, as a potential therapy for NASH, the adverse event of dyslipidemia in response to OCA treatment is clinically problematic for these patient population. Intercept has reported that treating these patients with a statin in the presence of OCA improves dyslipidemia.
This leads to the next question: aren't most of the patients already on some form of anti-dyslipidemic treatment? Intercept's exclusion criteria are:
BMI >45 kg/m2 with at least 1 of the following comorbidities:
Hypertension with blood pressure ≥140/90 mmHg if <60 years, ≥150/90 mmHg if ≥60 years, or on antihypertensive medication
Hyperlipidemia defined as LDL cholesterol ≥160 mg/dL, total cholesterol ≥200 mg/dL, or on lipid lowering medication
Type 2 diabetes per 2013 American Diabetes Association criteria
Based on this, I will deduce that patients in the Phase 3 NASH fibrosis trial did not have any of above mentioned clinical signs. However, patients diagnosed with NASH typically have dysregulated lipid parameters as part of the metabolic syndrome. As a matter of fact, most of these patients may be on anti-dyslipidemic medication prior to the diagnosis of NASH. In the absence of Intercept confirming that, it is all my speculation.
If the patients in the Phase 3 NASH trial were not on anti-dyslipidemic medication prior to OCA therapy, we now know that some of these patients had to be treated for that clinical indication due to OCA side effects. This begs the question as to why would OCA improve NASH whilst dysregulating the lipid profile? This answer lies in the mechanisms of OCA and it is peculiar to agonists of the pharmacological target, Farnesoid X receptor (FXR). My new thesis on this was recently discussed with members of my marketplace, Liver Therapy Forum.
Pruritus, typified by intense itching, is a devastating symptom that is normally associated with cholestatic liver diseases, primary biliary cholangitis (PBC) and primary sclerosing cholangitis. OCA therapy is currently approved by the FDA for PBC and it does not alleviate pruritogenic responses. In NASH, OCA therapy was associated with pruritogenic responses. My question is how do you effectively manage perceived pruritus in NASH when clinicians still have difficulty managing this awful symptom in patients with PBC? Some may say it is better to have the OCA therapy with the itch than the prospect of mortality. You make a point. But pruritus could speed up that mortality since patients with PBC that have pruritus may have suicidal tendency.
The safety and tolerability signals of OCA in NASH would determine its potential approval by the FDA, not its clinical efficacy:
Dyslipidemia and pruritus and other adverse events would be documented in NASH patients in the Phase 3 trial. My opinion is that OCA gets FDA approved with a "black box warning" for treatment of early NASH. OCA's adverse events in the clinic is associated with the mechanism of its pharmacological target, FXR.
With Gilead (GILD) also filing for NDA application in H2/2019 for selonsertib in NASH fibrosis and compensated NASH cirrhosis, it is my viewpoint that Gilead would capture a sizeable share of the addressable market for NASH therapeutics for late phase NASH over Intercept. Genfit (OTCPK:GNFTF) is expected to capture a good share of the addressable market for early phase NASH since that is what elafibranor is being assessed for.
Financials And Risks
Intercept has multiple shots on goal. OCA is a front-runner in the clinical development of anti-NASH therapeutics. OCA is expected to be clinically successful in achieving its primary endpoint. This could lead to the 2014 price rally seen after the clinical success of the Phase 2b NASH trial. I must also caution that the clinical extent and management of potential adverse events would be key to the commercial success and broad therapeutic application of OCA in NASH. On the other hand, clinical failure of OCA in NASH would be catastrophic for Intercept both clinically and financially since OCA is its lead investigative drug candidate.
Intercept reported a 14% increase in global ocaliva sales revenue of $46.6M in Q3/2018 compared to $40.9M in Q3/2017. Cash, cash equivalents, and marketable securities were $489.1M in Q3/2018 compared to $538.2M in Q2/2018. Intercept generated total revenues of $43.6M in Q2/2018 compared to $30.9M in Q2/2017. Net loss was $64.5M in Q3/2018. Cash burn was $49M in Q3/2018 versus Q2/2018. 2018 guidance for ocaliva net sales is estimated to be $170-185M.
Intercept has done clinical wonders for the scientific and clinical communities by bringing liver research and therapeutics to the forefront. Intercept gave a clinical voice to orphan diseases and diseases of great unmet needs, an area of medicine that big pharma typically stayed away from due to perceived lack of profitability. I expect OCA would make clinical history that would be outpaced by its competitors. Its stock market rally would be short-lived.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.