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Intercept Pharma Shares Higher on Positive Fatty Liver Drug Data

By: Adam Feuerstein | 08/11/14 - 05:29 PM EDT

Stocks in this article: ICPT

Intercept Pharmaceuticals (ICPT) shares are moving higher in Monday's after-hours trading session following the disclosure of highly anticipated results from the phase IIb "FLINT" study of the experimental therapy OCA in patients with nonalcoholic steatohepatitis (NASH). 

My quick take: Intercept's OCA data look good. I don't see anything in the FLINT study results which scream, "RUN AWAY!" This is what some investors feared and caused the company's stock price to fall recently. Intercept shares are up 65% to $392 tonight, which reflects a sense of relief that OCA can head into a registration-worthy phase III study next year with less risk. Intercept closed Monday's regular trading session at $237.

Let's dive into the details, included in Intercept's 10Q for the second quarter. As a guide, you can refer back to this column I wrote in July previewing the OCA Flint study results

On the study's primary efficacy endpoint, a reduction in the NAFLD Activity Score (NAS) of at least two points with no worsening of fibrosis, 46% of NASH patients responded to OCA versus 21% in the placebo group. The benefit of OCA therapy was statistically significant. 

NASH resolution, or clearance, is probably a more clinically meaningful endpoint because it means patients are no longer considered to have NASH i.e. serious fatty liver disease. On this secondary endpoint, 22% of OCA-treated patients reported NASH resolution versus 13% of placebo patients. This result, however, was not statistically significant. 

Fibrosis reduction: The big, positive surprise from the FLINT study. Thirty-five percent of OCA-treated patients reported a reduction in liver fibrosis, or scarring, compared to 19% of placebo-treated patients. Statistically significant. Few people expected to see a statistical significant benefit on fibrosis reduction favoring OCA. Let's throw one caveat into this good news: The mean reduction in fibrosis score was only 0.2 points from baseline in the OCA patients compared to an increase from baseline of 0.1 points for placebo patients. This is a small benefit, but again, still statistically significant and relatively unexpected for a study lasting only 72 weeks. 

OCA's safety was a concern going into the FLINT study results, with the previously disclosed increases in LDL (bad) cholesterol causing an overhang. In fact, the study did show a statistically significant increase in LDL cholesterol and reduction in HDL (good) cholesterol during the 72 weeks of the study, but the issue resolved itself in the 24 weeks of post-treatment follow up. Cholesterol levels basically returned to baseline levels. These safety data are a sigh of relief for Intercept bulls. 

Intercept held a conference call Monday night but didn't elaborate at all on the OCA FLINT data because they will be presented in the fall at the American Association for the Study of Liver Disease annual meeting. The data will also be published in a medical journal. 

The company intends to start a phase III study of OCA in NASH in the first half of 2015. The design of the study has been a source of some controversy and speculation, mainly because everyone is still waiting for the FDA to decide if biomarkers like NASH resolution or fibrosis reduction can be used as primary endpoints instead of the (more difficult, lengthy and costly) cardiovascular outcome endpoint. My sense of today's updated FLINT study results is that investors will be more confident in Intercept's ability to design a phase III study using surrogate endpoints.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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