IPO Preview: Intercept Pharmaceuticals

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Based in New York, NY, Intercept Pharmaceuticals (NASDAQ:ICPT) scheduled a $60 million IPO with a market capitalization of $210 million at a price range mid-point of $14, for Thursday, October 11, 2012.

Ten IPOs are scheduled for the week of October 8. The full IPO calendar is available here.

S-1A filed September 27, 2012

Manager, Joint Managers: BofA Merrill Lynch.
Co Managers: BMO Capital Markets; Needham; Wedbush; PacGrow Life Sciences; ThinkEquity.

ICPT is a biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat chronic liver disease.

Several biopharma companies that recently tried to IPO have gone on a day-to-day basis, which means they may not IPO, including GlobeImmune (NASDAQ:GBIM). And Regulus Therapeutics (NASDAQ:RGLS) recently IPO'd at a 43% discount from the price range mid-point market capitalization.

The problem is no one knows when and if Phase III clinical trials will be successful. Therefore, we would watch ICPT from the sidelines.

ICPT is a biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat chronic liver disease utilizing expertise in bile acid chemistry. ICPT product candidates have the potential to treat orphan and more prevalent liver diseases for which there currently are limited therapeutic solutions.

ICPT's lead product candidate, obeticholic acid, or OCA, is a bile acid analog and first-in-class agonist of the farnesoid X receptor, or FXR, which ICPT believes has broad liver-protective properties.

ICPT is developing OCA initially for the second line treatment of primary biliary cirrhosis, or PBC. PBC is a chronic autoimmune liver disease that, if inadequately treated, may eventually lead to cirrhosis, liver failure and death.

ICPT is conducting a Phase 3 clinical trial of OCA in PBC, which ICPT calls the POISE trial, that ICPT anticipates will serve as the basis for seeking regulatory approval in the United States and Europe.

ICPT currently expects results from the trial to be available by mid-2014. OCA has received orphan drug designation in the United States and Europe for the treatment of PBC.

In March 2011, ICPT entered into an exclusive licensing agreement with Dainippon Sumitomo Pharma Co. Ltd., or DSP, for the development of OCA in Japan and China.

Under the terms of the agreement, ICPT received an up-front payment of $15.0 million and may be eligible to receive up to approximately $300 million in additional payments for development, regulatory and commercial sales milestones for OCA in Japan and China.

In August 2011, ICPT entered into a collaboration agreement with Les Laboratories Servier and Institut de Recherches Servier, or collectively Servier, for the discovery, research and development of bile acid-derived agonists, or substances that bind to receptors of cells and trigger responses by those cells, for a dedicated bile acid receptor called TGR5.

Under the terms of the agreement, ICPT received an up-front payment from Servier of $1.4 million. Servier may be required to pay us ICPT to an aggregate amount of €108 million (equivalent to approximately $135.0 million as of June 30, 2012) upon the achievement of specified development, regulatory and commercial sale milestones, as well as royalties on sales, based on the successful outcome of the collaboration.

Genextra S.p.A, 69%
OrbiMed Private Investments IV, LP, 17%

ICPT expects to net $54.5 million from its IPO.
Proceeds are allocated to fund:

  • The continued clinical development of OCA in PBC, including a Phase 3 POISE trial and other studies and work necessary for anticipated FDA and EMA filings;

  • The continuation of the long-term safety extension portion of the POISE trial and the Phase 3 clinical outcomes trial after the anticipated FDA and EMA filings;

  • Certain pre-commercialization activities of OCA for PBC;

  • Further preclinical development work on INT-767 and, if warranted, Phase 1 clinical trials of INT-767;

  • If warranted, initiation of a Phase 2 clinical trial for an additional indication for OCA, such as portal hypertension;

  • Any remaining amounts will be used for general corporate purposes, general and administrative expenses, capital expenditures, working capital and prosecution and maintenance of our intellectual property.

Disclosure: I 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. I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: This ICPT IPO report is based on a reading and analysis of [ticker]'s S-1 filing which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.