Intercept Pharmaceuticals reached a settlement with Amneal Pharmaceuticals that delays a generic version of its only product. In response, ICPT stock surged Wednesday.
Amneal now must wait until April 2034 to launch a generic version of Ocaliva, Intercept's treatment for primary biliary cholangitis. Also known as PBC, the condition affects the bile ducts in the liver.
Other deals with Dr. Reddy's Laboratories and Optimus Pharma prevent their Ocaliva generics from launching until October 2035 and April 2034, respectively.
The deals with Amneal and Dr. Reddy's likely put other settlements on the table, RBC Capital Markets analyst Brian Abrahams said in a note to clients on ICPT stock. There are still three potential companies angling to launch Ocaliva generics as soon as 2027. But two use the same law firm that advised Dr. Reddy's to settle. One is using the same attorneys that represented Amneal.
"With Amneal now having settled, we should see more settlements before the court date," Abrahams said.
On the stock market today, ICPT stock jumped 14.4% and closed at 18.55. That put Intercept shares at a four-month high.
ICPT Stock: Patents At Center Of Debate
Intercept currently has patents that protect Ocaliva until 2033-36. But the generic companies argue that these parents "are invalid and unenforceable," Abrahams said. The matter is currently headed for court on Feb. 27, unless the remaining three generic companies reach settlements with Intercept.
Settling with the potential generic rivals would keep intact Intercept's roughly $300 million per year in Ocaliva sales as a PBC treatment. In the third quarter, Intercept netted more than $77.5 million in sales of Ocaliva. But ICPT stock has remained below its key moving averages until earlier this month.
The company is also testing Ocaliva for different liver conditions. The Food and Drug Administration is reviewing Ocaliva as a treatment for liver fibrosis tied to nonalcoholic steatohepatitis, or NASH. The FDA is due to make its approval decision by June 22.
Abrahams kept his sector perform rating and 15 price target on ICPT stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
