Intercept Pharm (ICPT) Posts Q2 Loss of 79c/Share; Issues Positive FLINT Data

Intercept Pharm (NASDAQ: ICPT) reported Q2 EPS of ($0.79), which may not compare with the analyst estimate of ($0.12). Revenue for the quarter came in at $405.4 million versus the consensus estimate of $400 million.

Included in net income for the second quarter of 2014 is a $55.8 million non-cash gain recorded for the revaluation of all outstanding warrants which were exercised in April 2014.

Cash Position

As of June 30, 2014, Intercept had cash, cash equivalents and investment securities available for sale of approximately $299.0 million. In April 2014, Intercept completed an underwritten public offering of 1,000,000 shares of common stock, of which 600,000 shares were sold by Intercept and 400,000 shares were sold by certain selling stockholders, at a public offering price of $320.00 per share. Intercept received net proceeds of approximately $183.5 million, after deducting underwriting discounts and estimated offering expenses.

Recent Developments

NIDDK recently provided us with a draft manuscript intended for publication that describes the results from the FLINT trial. This trial was a double blind, placebo-controlled trial of a once-daily dose of 25mg of OCA or placebo given for 72 weeks in 283 patients with biopsy-proven NASH. The draft manuscript presents histological data from the primary intention-to-treat population comprised of the 219 patients who were eligible for a repeat biopsy after completing the 72-week treatment phase of the trial and non-histological secondary endpoints from all patients who went on to complete the post-treatment follow-up visit which took place 24 weeks after the conclusion of the treatment phase. For purposes of this trial, p-values of 0.05 or lower indicated statistical significance. As the manuscript is in draft form and is expected to undergo peer review, it is subject to further modification prior to publication. The top-line information about the FLINT trial results described below is based on the draft manuscript provided to us by NIDDK.

Primary Endpoint

The proportion of patients meeting the FLINT primary histological endpoint, defined as a decrease in the NAFLD Activity Score (NAS) of at least two points with no worsening of fibrosis, was 46% in the OCA treatment group and 21% in the placebo treatment group (p < 0.001, n=219). Subgroup analyses showed a numerically higher response rate in OCA-treated patients with more advanced NASH, as assessed by NAS, fibrosis staging or co-morbid type 2 diabetes. The mean pre-treatment baseline NAS for patients in the OCA treatment group was 5.3 of a total possible score of 8 (comprised of hepatocellular ballooning 0 – 2, lobular inflammation 0 – 3 and steatosis 0 – 3).

Secondary Efficacy Endpoints

More patients in the OCA treatment group also experienced improvements in the following histological secondary endpoints (n=200):

Portal inflammation, which is not a component of the NAS and is typically mild in adult NASH patients, was also assessed as a secondary histological endpoint. There was essentially no improvement in portal inflammation with no difference observed between the two groups (12% of OCA patients vs. 13% of placebo patients (p=0.76)).

The histological improvements observed in OCA-treated patients versus placebo were accompanied by significant reductions in the serum liver enzymes alanine aminotransferase (ALT), aspartate aminotransferase (AST) and gamma-glutamyl transferase (GGT), each of which had been abnormally elevated at the time of treatment initiation. A modest but statistically significant decrease in bilirubin and increase in alkaline phosphatase (ALP) were also observed, both remaining within typical normal limits. These five biochemical parameters tended to return to pre-treatment values at the end of the 24-week follow-up phase after the stopping of OCA treatment. The changes in serum liver enzymes observed in FLINT patients on OCA were generally consistent with results observed in a previously published, six week trial in diabetic patients with non-alcoholic fatty liver disease, or NAFLD [Mudaliar S, Gastroenterology 2013; 145; 574-582].

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