Citi Downgrades Intercept, Says NASH Launch Is Appropriately Priced In

Shares of Intercept Pharmaceuticals Inc ICPT, which is considered the frontrunner in the race for a non-alcoholic steatohepatitis, or NASH, drug, are fairly valued at current levels, according to an analyst at Citigroup.

The Analyst

Joel Beatty downgraded Intercept from Buy to Neutral and increased the price target from $85 to $140.

The Thesis

Intercept shares are now about 95% higher since September vis-à-vis the 11% gain for the S&P 500 Index during the same timeframe, Beatty said in a Thursday note. The analyst believes the NASH launch is appropriately priced in.

The price target hike, according to Beatty, reflected incremental conviction in the NASH opportunity and the discontinuation of rival CymaBay Therapeutics Inc's CBAY Seladelpar in primary biliary cholangitis, or PBC, an autoimmune liver disease.

The analyst had viewed Seladelpar as a real threat to the PBC market share.

The next major catalyst for Intercept is the Adcom meeting scheduled for April 22, Beatty said. The analyst assigns a 90% probability for the approval coming through.

Upside on a potential approval could be a modest 10-15%, although downside if rejected could be a steeper 80%.

"….many investors owning into the approval may not want to own into a relatively uncertain NASH launch," Beatty wrote in the note.

Intercept shares were slipping 5% to $117.49.

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