Analyst: Intercept's NASH Drug Could Launch Sans Competition After Gilead Trial Failure

With Gilead Sciences, Inc. GILD's NASH setback, Intercept Pharmaceuticals, Inc. ICPT's Ocaliva, which is being evaluated in a late-stage study for NASH with fibrosis, is taking the spotlight. 

A clinical readout from the trial is expected this quarter.

The Analyst

Raymond James analyst Steven Seedhouse maintained a Strong Buy rating on Intercept Pharma. 

The Thesis

In an update on the REGENERATE Phase 3 study at clinicaltrials.gov, Intercept defined the study's secondary endpoints, Seedhouse said in a Tuesday note. 

Given that the trial data was blinded when the endpoints were defined, the analyst said the listed endpoints should not be overinterpreted as being suggestive of the actual trial results.

"The list of endpoints offers insight into what may ultimately frame the 'totality of the data' in support of Ocaliva's efficacy, assuming one or both primary endpoints also hit statistical significance," Seedhouse said.

Hepatocellular carcinoma, or HCC, was removed from the seven-year clinical efficacy outcomes, according to Raymond James. 

This may have to do with the FDA's stance of not considering HCC as part of the composite clinical outcome endpoints for confirmatory NASH studies, the analyst said. 

Seedhouse said he expects a statistically significant outcome on one or both primary endpoints, with benefit across secondaries likely to be the main driver of the stock after the data release. 

Following Gilead's failed STELLAR-4 study and the likelihood of STELLAR-3 study also failing, the analyst said he expects Ocaliva to launch in NASH unencumbered by competition.

"Therefore, safety/tolerability questions that we know will be apparent (lipid changes and pruritus) likely won't overshadow an efficacy win, especially in top-line data." 

The Price Action

Intercept Pharma shares were down 0.63 percent at $110.35 at the time of publication Wednesday. 

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