Nomura Remains Buyers of Intercept Pharmaceuticals (ICPT) Following Meetings with Management

Nomura Securities analyst M. Ian Somaiya reiterated a Buy rating and $440 price target on Intercept Pharmaceuticals (NASDAQ: ICPT), saying they remain buyers of the stock following investor meetings they hosted with management.

Somaiya commented, "Genfit’s Phase II GOLDEN trial was a topic of conversation but we believe GFT505’s lack of fibrosis benefit eases competitive pressures and cements Intercept as the premier NASH story in biotech. Our meetings also focused on OCA’s label expansion opportunities as well as the emerging precommercialization strategy. We believe OCA’s fibrosis benefit is increasingly unique, potentially supporting upside to our $7bn peak sales estimate if the competition continues to disappoint. We believe ICPT should continue to move higher as competitive fears ease and P3 trial design is announced (2Q)."

The analyst highlighted:

• Thinking about Genfit post-GOLDEN. We believe disappointing GOLDEN results cement Intercept as clear NASH leader. We believe GFT505’s lack of fibrosis benefit further increases uniqueness of OCA’s profile. We believe definition of NASH resolution in P3 could be closer to that of FLINT (versus GOLDEN) as FDA and EMA are considering FLINT while developing the standardized definition (Fig. 1). Given FDA’s focus on delaying progression to cirrhosis as criteria for full approval, we continue to wonder how Genfit will run a Phase III trial that satisfies this endpoint with a drug that appears not to have a fibrosis benefit. Increases in creatinine also remain a concern given high rate of diabetics that also have NASH.
• Future trials point to label expansion opportunities. The next study will be in cirrhotics, similar to Gilead’s P2 simtuzumab study. We see this trial as incrementally de-risked given OCA’s positive results from PESTO, where ~50% of patients showed clinically significant reduction in HVPG (Fig 2). We believe GFT505’s lack of fibrosis benefit could keep Genfit from pursuing this indication. Investigators have also expressed interest in studying OCA in Hepatitis B, where it has generated positive preclinical data. HBV could be a significant driver of upside given the multi-billion dollar mkt opportunity.
• Pre-commercialization strategy coming into focus. Intercept plans to use a specialty sales force of ~125 reps to promote OCA, leveraging 2016 PBC launch to build a foundation for NASH. While confirmation of a CV benefit will resonate most strongly with payors given the increasing number of NASH patients ineligible for liver transplants due to CV comorbidities, our model assumes just ~$10k annual treatment cost, leaving ample room for upside. Higher rates of NASH screening (due to HCV awareness) could also support upside to our estimates on faster ramp.

For an analyst ratings summary and ratings history on Intercept Pharmaceuticals click here. For more ratings news on Intercept Pharmaceuticals click here.

Shares of Intercept Pharmaceuticals closed at $282.69 yesterday.

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