H.C. Wainwright Upgrades Intercept Pharmaceuticals (ICPT) to Neutral

H.C. Wainwright analyst Ed Arce upgraded Intercept Pharmaceuticals (NASDAQ: ICPT) from Sell to Neutral with a price target of $21.00 (from $25.00).

The analyst comments "We downgraded ICPT to Sell on February 23 when it traded at about $30 per share (prior close $29.86). The shares hit a multi-year low of $19.33 on March 4, and are now close to $21, largely on recent macroeconomic optimism, in our view. Our underlying thesis (NASH program has little to no risk-adjusted value, and PBC franchise faces substantial risks) has not changed. However, given the drop in the shares, we believe the stock is now at fair value, based on the marketed PBC franchise. That said, we continue to see a number of regulatory and commercial uncertainties that remain unresolved at this time. We are quite cautious on the approvability of obeticholic acid in NASH, and believe that even if the drug is approved next year, the sales trajectory is likely to be more modest than some project. The PBC franchise faces several headwinds, in our view. First, Intercept's ongoing interactions with the FDA continue regarding the newly identified safety signal (NISS) for liver disorder in a subset of PBC patients with cirrhosis. The company has indicated that an update to the Ocaliva label is expected. Second, as we have previously noted, we expect the competitive environment by 2025 to include two new potential novel therapies on the market with better overall clinical profiles, likely taking market share from Ocaliva. Third, we note several Paragraph IV abbreviated NDA (ANDA) filers for Ocaliva in PBC, including Apotex (private), Lupin (NSE: LUPIN; not rated), Amneal (AMRX; not rated), Optimus Pharma (private), MSN Pharma (private), and most recently (December 2020), Dr. Reddy's Laboratories (RDY; not rated). In the context of the risks to both the NASH program and PBC franchise, we continue to be concerned by what we regard as a high expense structure and substantial debt load. Lastly, we note that the exodus of executive talent continues, most recently with CFO Sandip Kapadia, who has resigned effective March 26, in order to pursue other opportunities. We upgrade our rating on ICPT shares to Neutral and lower our one-year price target to $21, from $25 previously."

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 $20.77 yesterday.

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