Intercept stock falls after FDA AdCom snub for NASH therapy

Sena Yiğiter

Intercept Pharmaceuticals (NASDAQ:ICPT) fell ~28% on Monday as its shares resumed trading after a group of independent experts at the FDA declined to recommend its liver disease therapy obeticholic acid (OCA) for nonalcoholic steatohepatitis (NASH).

Only two members of the FDA’s Gastrointestinal Drugs Advisory Committee voted that OCA – already approved for autoimmune disease primary biliary cholangitis as Ocaliva – indicated benefits more than risks as a treatment for NASH. Twelve members voted against its approval and two abstained.

While the FDA’s advisory committees issue non-binding recommendations, the agency typically follows them before giving a final decision on marketing applications which, in the case of OCA, is expected on or before June 22, 2023.

With an $8 per share target on Intercept (ICPT), H.C. Wainwright downgraded the stock to Sell from Neutral after the setback, while Baird lowered its price target to $18 from $35 per share despite an Outperform rating.

“The FDA does not always follow the committee’s advice, but it usually does, especially when the vote is decisive,” Seeking Alpha analyst Stephen Ayers wrote, reiterating the Sell rating on ICPT stock after the vote.

However, Ayers cites potential upside for the stock if REGENERATE, the company’s ongoing Phase 3 trial for OCA, generates positive data in NASH, leading to a potential approval for the farnesoid X receptor.

Meanwhile, Baird analyst Brian Skorney argues that the company should halt and unblind the trial “to see if there are any encouraging signals in the larger dataset that would leave a door open for a potential submission for full approval.”

Absent positive data, Intercept (ICPT) should streamline operations and focus on the commercialization of Ocaliva alongside its studies for OCA as a combination therapy with bezafibrate for PBC, the analyst added.