It has been about a month since the last earnings report for Intercept Pharmaceuticals . Shares have lost about 14.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Intercept due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Intercept's Q3 Loss Wider Than Expected, Sales Beat
Intercept incurred a loss of $2.01 per share in third-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $1.96 but narrower than the year-ago quarter’s loss of $2.59.
Total revenues of $79.5 million in the quarter beat the Zacks Consensus Estimate of $77 million and increased from $61.9 million in the year-ago quarter, primarily owing to higher sales of lead drug, Ocaliva.
Quarter in Detail
The total revenues generated in the quarter comprised only Ocaliva (obeticholic acid or OCA) net sales. Net sales came in at $58.6 million in the United States and $20.9 million outside the country.
OCA is approved under the brand name, Ocaliva, for treating primary biliary cholangitis (PBC) in combination with ursodeoxycholic acid (UDCA) in adults with an inadequate response to UDCA alone or as a monotherapy for adults intolerant to UDCA.
Research and development expenses decreased to $48.9 million from $60.2 million in the year-ago quarter due to lower nonalcoholic steatohepatitis (NASH) development program costs, including the conclusion of enrollment activities for the REGENERATE and REVERSE studies.
Selling, general and administrative expenses decreased to $70.6 million from $76.8 million in the year-ago quarter, primarily driven by reductions in spend resulting from the delay of the potential approval and commercialization of OCA for liver fibrosis due to NASH.
As of Sep 30, 2020, Intercept had cash, cash equivalents, restricted cash and marketable securities of $496.8 million compared with $657.3 million as of Dec 31, 2019.
Other Updates
In June 2020, the FDA had issued a Complete Response Letter (CRL) regarding the company’s New Drug Application (NDA) for OCA for the treatment of fibrosis due to NASH.
Intercept recently had a Type A end-of-review meeting with the FDA to discuss the agency's benefit-risk assessment in the CRL based on its review of the available data. The company had prepared for this meeting with the objective of reframing its efficacy and safety data supporting benefit-risk of OCA in NASH patients with advanced fibrosis based on the phase III REGENERATE 18-month interim analysis and a refined risk management approach for appropriate patient selection and monitoring. Per the company, the meeting was constructive. Intercept has obtained FDA guidance regarding supplemental data that it can provide to further characterize OCA's efficacy and safety profile, which could support a resubmission based on its 18- month biopsy data together with a safety update from the ongoing studies.
The company plans to hold additional meetings with the agency, with the goal of achieving sufficient alignment to proceed on this basis and potentially resubmit its NDA next year.
The company is also conducting the phase III REVERSE study in NASH patients with compensated cirrhosis, with readouts from the double-blind phase expected by the end of next year.
Guidance
Ocaliva net sales are now projected between $310 million and $320 million (previous guidance: $300-$320 million) for 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 15.61% due to these changes.
VGM Scores
At this time, Intercept has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Intercept has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Intercept (ICPT) Down 14.4% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Intercept Pharmaceuticals . Shares have lost about 14.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Intercept due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Intercept's Q3 Loss Wider Than Expected, Sales Beat
Intercept incurred a loss of $2.01 per share in third-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $1.96 but narrower than the year-ago quarter’s loss of $2.59.
Total revenues of $79.5 million in the quarter beat the Zacks Consensus Estimate of $77 million and increased from $61.9 million in the year-ago quarter, primarily owing to higher sales of lead drug, Ocaliva.
Quarter in Detail
The total revenues generated in the quarter comprised only Ocaliva (obeticholic acid or OCA) net sales. Net sales came in at $58.6 million in the United States and $20.9 million outside the country.
OCA is approved under the brand name, Ocaliva, for treating primary biliary cholangitis (PBC) in combination with ursodeoxycholic acid (UDCA) in adults with an inadequate response to UDCA alone or as a monotherapy for adults intolerant to UDCA.
Research and development expenses decreased to $48.9 million from $60.2 million in the year-ago quarter due to lower nonalcoholic steatohepatitis (NASH) development program costs, including the conclusion of enrollment activities for the REGENERATE and REVERSE studies.
Selling, general and administrative expenses decreased to $70.6 million from $76.8 million in the year-ago quarter, primarily driven by reductions in spend resulting from the delay of the potential approval and commercialization of OCA for liver fibrosis due to NASH.
As of Sep 30, 2020, Intercept had cash, cash equivalents, restricted cash and marketable securities of $496.8 million compared with $657.3 million as of Dec 31, 2019.
Other Updates
In June 2020, the FDA had issued a Complete Response Letter (CRL) regarding the company’s New Drug Application (NDA) for OCA for the treatment of fibrosis due to NASH.
Intercept recently had a Type A end-of-review meeting with the FDA to discuss the agency's benefit-risk assessment in the CRL based on its review of the available data. The company had prepared for this meeting with the objective of reframing its efficacy and safety data supporting benefit-risk of OCA in NASH patients with advanced fibrosis based on the phase III REGENERATE 18-month interim analysis and a refined risk management approach for appropriate patient selection and monitoring. Per the company, the meeting was constructive. Intercept has obtained FDA guidance regarding supplemental data that it can provide to further characterize OCA's efficacy and safety profile, which could support a resubmission based on its 18- month biopsy data together with a safety update from the ongoing studies.
The company plans to hold additional meetings with the agency, with the goal of achieving sufficient alignment to proceed on this basis and potentially resubmit its NDA next year.
The company is also conducting the phase III REVERSE study in NASH patients with compensated cirrhosis, with readouts from the double-blind phase expected by the end of next year.
Guidance
Ocaliva net sales are now projected between $310 million and $320 million (previous guidance: $300-$320 million) for 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 15.61% due to these changes.
VGM Scores
At this time, Intercept has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Intercept has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.