Intercept Pharma: From $17 to $500
Board: Value Hounds
This is quite a story.
Intercept focuses on liver diseases. They have a bile acid medication called obeticholic acid that binds to a protective receptor in the liver preventing cirrhosis and fibrosis from primary biliary cirrhosis. PBC is an autoimmune inflammatory disease more common in women with an incidence near 5 in 100,000. It's currently treated with Ursodiol and Intercept's drug would be second line treatment. Really not a lot of opportunity in that and the price while high ran between $50-$70 for a year or so.They don't make money yet.
A couple of days ago, clinical trials were stopped for their new indication for OCA. The new trial was investigating OCA used in non-alcoholic steatohepatitis. This is inflammation, fatty liver and eventual fibrosis. It's indolent and takes years to decades to progress and some studies show the entire course can be benign. Don't know the incidence
Anyway, news of the "successful" trial Phase III (not complete) sent the stock to $500 in just two days. This company has no income and no drugs in the approval stage. It has a few in Phase II and III and two preclinical.
I was amazed that the price hit levels indicative of a stable full of blockbusters and good news from this trial for a condition that is not easy to diagnose in early stages, is largely asymptomatic and may never progress. It will be given orphan status and that will bestow a big price tag. Will insurance cover it? NASH is largely a life style disease more common in diabetics, obesity inactivity metabolic syndrome and poor eating habits.
This analyst loves them and recommends going for it at any price:
"As they say, timing is everything! In the last week, while there wasn’t an acquisition, what happened was the surprise announcement of the clinical trial results I was expecting, albeit earlier than anyone expected.
In fact, the multi-center, double-blind, placebo-controlled clinical (FLINT) trial was actually stopped by the Data Safety Monitoring Board (DSMB) because of such positive results after reviewing the study patients’ liver biopsy data. The company announced that the trial for patients with nonalcoholic steatohepatitis (NASH), a serious chronic liver disease, was stopped early due to “highly statistically significant improvement” in measures of liver health. The trial was sponsored and conducted by the National Institute of Diabetes & Digestive & Kidney Diseases (NIDDK), a part of the National Institutes of Health, at eight leading US academic hepatology centers comprising the NIDDK’s NASH clinical research network (CRN)."