Intercept: Increase Of Ocaliva Sales And A Few Catalysts

Summary

  • Final data from the phase 3 REGENERATE study, using Ocaliva for the treatment of patients with NASH fibrosis, is expected any day now.
  • If all goes well with clinical data, Intercept expects a pre-submission meeting with the FDA in June of 2022.
  • Results from the phase 3 REVERSE study using Ocaliva for the treatment of patients with compensated cirrhosis due to NASH are expected in Q3 of 2022.
  • Two studies are being done testing the fixed dose combination of Ocaliva and bezafibrate for the treatment of patients with primary biliary cholangitis.
  • Licensing deal made with Advanz Pharma for Ocaliva brought in $405 million as an upfront payment and the potential to earn $45 million upon a condition being met; from there, it will be eligible for royalties on net sales.
  • Looking for higher risk/reward options trading ideas? I offer this and much more at my exclusive investing ideas service, Biotech Analysis Central. Learn More »

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Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) is a great speculative biotech to keep an eye on. That's because it has seen a slight increase in worldwide Ocaliva sales year over year of 8%. It has also been able to license out its drug Ocaliva for the treatment of patients with primary biliary cholangitis (PBC) to markets outside of the United States. This gave it upfront cash once the deal was closed and then certain conditions being met after.

Two key catalysts coming up could be a huge turning point for the biotech. It is almost done compiling the final results from the phase 3 REGENERATE study, which is using Ocaliva for the treatment of patients with non-alcoholic steatohepatitis (NASH). It also is expecting to have a possible pre-submission meeting with the FDA in June of 2022.

Sales of Ocaliva have increased slightly, and there might be a possibility to improve the efficacy of it when used in combination with another drug. Another shot on goal exists just in case the other two programs don't go as planned. This involves the use of Ocaliva for the treatment of patients with compensated cirrhosis due to NASH in Q3 of 2022. With the sales increase of Ocaliva, licensing partner for it, plus several other key milestones rapidly approaching, Intercept may offer a good speculative opportunity for traders/investors.

Sales Of Ocaliva Increasing Slightly

The thing is that Intercept Pharmaceuticals is an established pharmaceutical company, because it is already generating sales with its drug Ocaliva. It has done pretty well with the drug, even though there was only a slight increase in total sales.

It generated $88.6 million in total revenue in Q1 of 2022 thanks to sales of Ocaliva. The significance of this is that there was an increase in sales year-over-year by 8%. In the same quarter the prior year, it only generated total revenue of $81.7 million. This is not too bad, especially when you consider that the economy hasn't been the best the past year due to Covid-19 and other economic issues.

As of March 31, 2022, Intercept Pharmaceuticals had cash, cash equivalents, restricted cash, and investment debt securities available for sale of approximately $406.9 million, according to the 10-Q SEC Filing. The thing is that the biotech had licensed out Ocaliva for territories outside the United States. It formed a licensing deal with Advanz Pharma. Intercept received an upfront payment of $405 million and then potential to earn an additional $45 million upon achieving a specific event.

Such an event would be if Ocaliva receives an extension of pediatric orphan exclusivity in Europe. This would trigger than additional $45 million, which would be very good for cash on hand. This extra cash provides a great cushion for Intercept to push forwards through a few of the upcoming catalysts that are coming up. Not only does this licensing deal give it upfront cash to fund its pipeline, but then it would be eligible for royalties on any future sales as well. The cash position should be good for this year, since it has obtained the upfront payment from Advanz Pharma. I don't see a need for it to raise any additional cash in the near term.

REGENERATE Study Data Rapidly Approaching For Next Move

It has been a long time coming, but Intercept is getting to the point where it is close to reporting a final data analysis from the phase 3 REGENERATE study. This is a double-blind, randomized, placebo-controlled study using Ocaliva for the treatment of patients with NASH Fibrosis. There will be about 2,480 patients enrolled and it will confirm once and for all if this drug is efficient in treating this patient population.

There are going to be about two primary endpoints for this study. The first is the proportion of Ocaliva treated patients relative to placebo achieving at least one stage of liver fibrosis improvement with no worsening of NASH. The second primary endpoint is the proportion of Ocaliva-treated patients relative to placebo achieving NASH resolution with no worsening of liver fibrosis. The thing is that a pre-submission meeting with the FDA is set for June. This leads me to believe that results from the phase 3 REGENERATE study should be out any day now. If they are indeed good, that would be one catalyst, but then a positive meeting thereafter would be another. That's because Intercept tried to obtain FDA approval of Ocaliva for NASH fibrosis just based on an interim analysis of the REGENERATE study.

However, the FDA at that time didn't want to approve the drug based on a surrogate endpoint. In essence, the FDA wanted a lot more data in order to approve it and thus the company received a Complete Response Letter (CRL). This goes back to why this upcoming data readout is so important, in that it will be the final analysis of the study. The FDA might not have wanted to grant accelerated approval with limited interim analysis data, but with the full data set that will be a different story. As long as the study meets both primary endpoints, then the biotech will be in good shape. If one of the primary endpoints is met, then regulatory approval from the FDA might still be possible but harder to achieve.

Two Additional Advancements To Unlock Value For Shareholders

The thing is that Intercept Pharmaceuticals doesn't just have Ocaliva for PBC and then also for NASH fibrosis. For starters, it is hoping to expand the use of Ocaliva for PBC by attempting a few combination studies. One study is being done in the United States and the other study is being done in Europe. The first patient for the U.S. study was dosed on May 11, 2022. Both of these studies are phase 2 and are using Ocaliva with bezafibrate fixed-dose combination for the treatment of patients with PBC. These are patients who had failed to achieve an adequate response to ursodeoxycholic acid.

The primary endpoint of the study is the evaluation of the reduction of alkaline phosphatase (ALP) over 12 weeks, followed by long-term safety thereafter. The reason why is because ALP is a surrogate endpoint in which regulators accept as part of the approval process for this patient population. The hope is that this fixed-dose combination achieves superior efficacy compared to Ocaliva alone.

There is another reason for exploring this combination. That reason is that bezafibrate might help reduce itching for patients, which has been an issue for Ocaliva. If this combination ends up with the ability to reduce itching, then it would be a major win for Intercept. Then, you have another shot on goal with respect to Ocaliva.

Intercept is running the phase 3 REVERSE study using this drug for the treatment of patients with compensated cirrhosis due to NASH. Results from this study are expected to be released in Q3 of 2022.

Risks To Business

The biggest risk of all for Intercept Pharmaceuticals would be the upcoming release of final data from the REGENERATE study. That's because there is no guarantee that the study will have a successful outcome.

Even if the data does end up being good, the biotech has to bring it to the FDA for the pre-submission meeting with it. Only the FDA may give a clear signal to Intercept that it's okay to file so the submission process may proceed.

This is another risk that traders/investors should be worried of. If the data doesn't turn out good, then expect the stock to be cut in half at least from the current share price of $17.96 per share. The stock may or may not recover depending upon how well the following data turns out. This would be the upcoming readout of the phase 3 REVERSE study which is expected Q3 of 2022.

The hope is that Ocaliva does indeed work in patients with compensated cirrhosis due to NASH. However, it is still a huge gamble on whether or not this study ultimately succeeds.

Conclusion

The final conclusion is that Intercept is a good speculative biotech to look into. I think there is a good chance for submission of Ocaliva for patients with NASH, but that's not to say that if the data doesn't live up to expectations things can't go south quickly.

I would say it is nice that this biotech has other shots on goal. For instance, I think that results from the fixed-dose combination study of Ocaliva and bezafibrate for PBC should end up being well. An additional drug candidate in the pipeline is INT-787, which is also being developed for liver diseases. It has shown to be a more selective FXR agonist compared to Ocaliva.

In addition, it has shown potential as an anti-fibrotic and anti-inflammatory drug in animal models. If this can translate well to humans, then the company has another shot on goal to go after various types of liver diseases. The downside is that it is still very early for it in the clinical process.

A comprehensive study is ongoing for INT-787, and an IND is expected in the 1st half of 2022. Intercept will announce the first indication for this drug later this year. With Ocaliva sales growing slightly, a few catalysts rapidly approaching, and additional drugs being developed, these are the reasons why I believe it is a good speculative biotech to look into.

This article is published by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical service on Seeking Alpha Marketplace. If you like what you read here and would like to subscribe to, I'm currently offering a two-week free trial period for subscribers to take advantage of. My service offers a deep-dive analysis of many pharmaceutical companies. The Biotech Analysis Central SA marketplace is $49 per month, but for those who sign up for the yearly plan will be able to take advantage of a 33.50% discount price of $399 per year.

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