For biotech stock Intercept Pharmaceuticals (NASDAQ:ICPT), bad news came at the wrong time to do its share price any good. While the news wasn’t as hard-hitting as it might have been, it was still enough to cast a pall on its operations. Intercept closed down over 14% in Wednesday’s trading, and it all traces back to bad news from the FDA.
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This time around, the FDA had some unpleasant things to say about Intercept’s Obeticholic Acid, or OCA, a treatment for liver disease. Specifically, OCA targets nonalcoholic steatohepatitis or NASH. The Gastrointestinal Drugs Advisory Committee was set to meet in just days to discuss whether OCA should be approved to tackle NASH, and a final decision won’t be issued until June 22. OCA is already in use under the brand name Ocaliva, being used to treat primary biliary cholangitis, an autoimmune disease.
However, the early word doesn’t look good for Intercept. Briefing documents have already emerged, and the FDA noted that OCA comes with “…modest benefits and serious risks…” when used in treating NASH. Further, OCA comes with “…multiple off-target effects…” that would take “…multiple risk mitigation strategies with low likelihood of effectiveness” to address.
Even worse, FDA staffers noted an “…imbalance in the acute kidney injuries” connected to OCA use. There was even what was described as “…increased risk of sludge formation in the gall bladder…” and “…imbalance of certain lipids…” That suggests that OCA may ultimately do more harm than good, and that doesn’t bode well for OCA to come away with an expansion in its use cases.
Despite this likely setback, analysts are split on their overall outlook for ICPT stock. With five Buy ratings and four Holds, consensus opinion calls Intercept Pharmaceuticals stock a Moderate Buy. However, it offers investors 117.93% upside potential thanks to an average price target of $30.14.
