The Food and Drug Administration will likely reject Intercept Pharmaceuticals' highly watched liver disease treatment, analysts said Monday as ICPT stock crashed.
Their assessment followed a negative advisory committee meeting on Friday. Just two panelists out of 16 said the benefits of Intercept's drug outweigh the risks for patients with nonalcoholic steatohepatitis, or NASH. Twelve said Intercept's obeticholic acid is too risky. Two abstained.
Bearishly, 15 panelists said obeticholic acid shouldn't receive an accelerated approval. Just one panelist voted in support of a speedy approval.
Intercept says it will take three years to tease out the benefits of obeticholic acid in a confirmatory study. But the company might scrap the study — forgoing a traditional approval as well — if it doesn't win accelerated approval, SVB Securities analyst Thomas Smith said in a note to clients.
On today's stock market, ICPT stock plummeted 29.7% to close at 9.53.
ICPT Stock: Improvement In Fibrosis
Intercept and its peers have faced an uphill battle in NASH, the second leading cause of liver transplants. There are no approved treatments. It's also hard to diagnose as patients don't experience symptoms. So, the presence of NASH must be confirmed through an invasive and expensive liver transplant.
NASH leads to damage on the liver called fibrosis, which is measured in four stages. To gain approval, a treatment must either lead to a one-stage improvement in fibrosis with no worsening in NASH — defined as presence of fatty liver disease. Or, a drug can resolve fatty liver disease, but can't lead to worse fibrosis.
In Intercept's study, 8%-12% of patients who received obeticholic acid had at least a one-stage fibrosis improvement with no worsening in fatty liver disease, SVB's Smith said. But there were also a number of side-effects, including liver toxicity and injury to the liver. He has a market perform rating on ICPT stock.
The advisory committee's vote on Friday seems to be the final nail for obeticholic acid in NASH, analysts said. Obeticholic acid already sells under the name Ocaliva for patients with another liver disease called primary biliary cholangitis.
"The FDA does not have to follow the advisory committee's recommendation, though in this case, we believe there is no reason for the agency to overrule," William Blair analyst Andy Hsieh said in his note to clients.
A Blessing In Disguise?
RBC Capital Markets analyst Brian Abrahams said the advisory committee's vote could be a blessing in disguise for Intercept. He has a sector perform rating and 17 price target on ICPT stock.
Further, he noted there are several competitors coming from behind with promising NASH treatments. Those include Madrigal Pharmaceuticals and Viking Therapeutics.
"Identifying and monitoring patients eligible to start and stay on (obeticholic acid) would likely have been cumbersome, patient adherence likely would have been poor, the drug would have almost certainly been quickly outmoded by competitors and it could have been pulled a few years in if the confirmatory study failed," Abrahams said in a note.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
