Intercept Pharma Notches 2 Upgrades On Ocaliva Prospects

Intercept Pharmaceuticals Inc ICPT reported top- and bottom-line beats last week that prompted two Street analysts to upgrade the stock.

The Rating

Goldman Sachs analyst Salveen Richter upgraded Intercept from Sell to Buy and more than tripled the price target from $46 to $157.

Wedbush analyst Liana Moussatos reiterated an Outperform rating and raised the price target from $203 to $217.

The Goldman Thesis

Goldman anticipates 60-percent upside driven by positive Phase 3 results for Ocaliva for nonalcoholic steatohepatitis due in the first half of 2019, Richter said in the upgrade note. (See the analyst's track record here.) 

Richter expects Ocaliva to achieve at least one of two primary endpoints considering positive read-through from the Phase 2 trial; a diminished standard for clinical efficacy; and the support of key opinion leaders for Ocaliva’s NASH profile.

With a successful trial, “we expect Ocaliva’s clinical profile, differentiated mechanism and first-mover status to provide an 18-month to two-year advantage prior to the second-generation therapeutics entering the NASH market,” the analyst said. 

Richter predicted $3.7 billion in global peak sales following a 2020 launch in the U.S. and Europe.

The Wedbush Thesis

Wedbush was equally inspired by Ocaliva’s prospects.

“Q2 OCALIVA net sales growth (22.8 percent quarter-over-quarter) suggests to us that the overhang on OCALIVA sales is lifting after Q1 revenues temporarily stagnated due to improper dosing of fragile patients,” Moussatos said. (See the analyst's track record here.) 

“Management reiterated guidance of $170 million to $185 million in 2018 OCALIVA net sales, giving us further confidence in sustained growth.”

They expect Intercept’s cash to last through anticipated Ocaliva launches for NASH in 2020 and for primary sclerosing cholangitis in 2021.

Price Action

Intercept shares were rallying 14.34 percent to $111.21 at the time of publication Monday. 

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