Editors' pick: Originally published April 1.

Welcome back to the Biotech Stock Mailbag. This week's stocks: Intercept Pharmaceuticals (ICPT - Get Report) , Acadia Pharmaceuticals (ACAD - Get Report) (an acquisition target?), Keryx Biopharmaceuticals (KERX) and Galena Biopharma (GALE) . Read on, please!

Helen W. writes, "Thank you for the live blog covering Acadia Pharmaceuticals. I hope you do the same for Intercept Pharmaceuticals next week. Do you also expect this [Intercept] panel to end with a positive vote?"

I will live blog the Intercept FDA advisory panel on Thursday, April 7, probably the afternoon session, like I did with Acadia on Tuesday.

And like the affirmative outcome of the Acadia panel, I expect the experts sitting on the Intercept advisory panel to recommend the approval of obeticholic acid, or OCA, for the treatment of patients with primary biliary cholangitis, or PBC, a rare and progressive liver disease.

My sense, speaking to health care investors this week, is that an Intercept win at next week's FDA advisory panel is pretty much the consensus view.

PBC is a rare, chronic disease that slowly destroys the bile ducts in the liver. Bile is a digestive enzyme produced in the liver which flows through the bile ducts into the small intestine, where it aids in digestion. In patients with PBC, the bile ducts are gradually destroyed, which causes the bile to accumulate in the liver. Over time, the buildup of bile kills liver cells, leading to cirrhosis and liver failure.

Diagnosis of PBC is difficult because the disease progresses slowly and many patients don't have early symptoms. The most common symptom of PBC is intense itching of the skin, or pruritis. PBC patients also have elevated liver enzyme levels indicative of liver malfunction. There is one approved drug to treat PBC, ursodeoxycholic acid, or urso, although approximately one-third of patients don't respond to it.

Intercept is seeking approval of OCA for PBC patients who do not respond to, or cannot tolerate, urso.

The company conducted a single phase III study in which 46% to 47% of PBC patients responded to OCA treatment for one year compared to 10% of placebo patients -- achieving the primary endpoint with high statistical significance. OCA also demonstrated a significant positive effect on secondary efficacy endpoints.

Response in the Intercept phase III study was defined as a lowering of elevated levels of the liver enzyme alkaline phosphatase, or ALP, combined with normal bilirubin, a waste product. This is a surrogate endpoint believed to correlate with long-term benefit for PBC patients such as reduced mortality or prevention of liver failure.

Intercept argues that using a surrogate efficacy endpoint to get OCA approved is necessary because PBC progresses too slowly to use a more definitive measure of patient benefit. The clinical relevance, or meaningfulness, of Intercept's surrogate endpoint is expected to be an issue debated at next week's FDA advisory panel. (Again, similar to what happened this week with Acadia and the data on Nuplazid in Parkinson's psychosis.)

Expect the FDA panel to also spend a good bit of time next week debating the safety of OCA. Pruritis is the most pronounced side effect caused by OCA, which also happens to be the manifest symptom of PBC. The phase III study also showed OCA tied to increases in bad cholesterol and a drop in good cholesterol.

I keep going back to this week's Acadia panel, but I do see a lot of similarities with how I see the Intercept panel playing out. The FDA's briefing document reviewing OCA study data (you'll see it on April 5) will probably read skeptically, raising concerns. There will be some intense questions and debate thrown at Intercept during at the April 7 panel, but ultimately, the vote will likely be to recommend the drug's approval.

The FDA approval decision date for OCA in PBC was pushed back to May 29 from February 29 because Intercept submitted additional clinical data analyses requested by the agency. These late-submitted data pertain to the rationale for using a surrogate endpoint to reasonably predict a clinical benefit. Hopefully (for Intercept's stake) the FDA agrees.

A brief word on potential OCA sales in PBC: modest relative to Intercept's current valuation. Current sell-side consensus has OCA sales pegged at $21 million, $106 million and $276 million in 2016, 2017 and 2018, respectively, according to Leerink. Those estimates have come down significantly since last year. Intercept's market value is more wrapped up in the potential for OCA to be approved later as a treatment for nonalcoholic steatohepatitis, or NASH, better known as fatty liver disease.

@adamfeuerstein Any thoughts on $GALE and coming NeuVax data? 70th event FINALY hit https://t.co/rSeRUf00TW

— Ultimate Piker (@UltimatePiker) March 30, 2016


I'm not a fan of Galena Biopharma. This shouldn't come as a surprise since it was my reporting on the company's sleazy, stock-promoting tactics authorized by Galena executives and directors (who then profited by selling Galena stock at inflated prices) which led to the firing of CEO Mark Ahn and triggered the still-ongoing SEC investigation.

In April 2012, I wrote a column, "Galena's Breast Cancer Vaccine Doomed to Fail." You should read it, if you haven't already. In the column, I analyze Galena's failed phase II study of NeuVax. The rationale for the ongoing phase III study of Neuvax in breast cancer patients is built on the flimsy foundation of a "positive" retrospective subgroup analysis from the phase II study. That's not going to work.

The upcoming interim analysis of the NeuVax phase III study is meaningless. At best, the independent data monitors will tell Galena to proceed with the study to the final analysis. There's a significant chance the NeuVax study is stopped for futility.

Back to reader questions about Acadia Pharma:

@adamfeuerstein Adam, thank you. The last couple of yrs you were kind of jerky Re: $ACAD but your liveblog today was great. Thank you

— Biostockpicks (@biostockpicks) March 29, 2016


Aw, shucks. Thanks!

@adamfeuerstein when do you expect fda to make a ruling on nuplazid?

— MZrai (@rai354) March 30, 2016


The FDA's "PDUFA" -- approval decision -- date is May 1. A decision could come sooner but I'd expect it on May 1. FDA will very likely approve Nuplazid based on the positive recommendation from the advisory panel Tuesday.

I'd also expect Nuplazid to carry a black-box safety warning on its label. The FDA might also take steps -- a patient registry or additional language in the label -- so that use of Nuplazid is restricted as much as possible to the approved indication of Parkinson's psychosis. Several experts on Tuesday's panel voiced concerns that Nuplazid, if approved, would be used off label as a broader antipsychotic. They wanted FDA to restrict use as much as possible.

Last Acadia question for now: Marcus P. writes, "I think the chances are now greater than before [Tuesday's FDA panel] that Acadia is acquired by a larger company. Do you think such a deal is a possibility?"


I'm a terrible predictor of biotech acquisitions, so I don't know how to quantify the odds Acadia is bought. However, if you believe Nuplazid is getting approved (and I do), then the drug becomes a "de-risked" neurological asset which could be attractive to Big Pharma with existing treatments for schizophrenia, Parkinson's, major depression or Alzheimer's disease.

A comparable deal would be the Japanese drugmaker Otsuka, which sells the schizophrenia drug Abilify, acquiring Avanir Pharmaceuticals for $3.5 billion in 2014. Avanir's approved drug at that time was Nuedexta, used to treat uncontrollable laughing and crying associated with various neurological diseases.

Acadia owns all rights to Nuplazid, so perhaps the company seeks out a partner to market the drug instead of putting itself up for sale. Or, maybe Acadia doesn't want to sell itself, believing it can market the drug on its own successfully. The company raised almost $300 million in January in a follow-on stock offering.

Why raise that kind of money if you're for sale? An interested suitor could make an unsolicited offer for Acadia, which is apparently what happened to Medivation recently.

Another potential hitch to a sale: the ongoing clinical trial investigating Nuplazid in patients with Alzheimer's-related psychosis. This is a high-risk study and results are expected later this year. If Acadia does want to sell out before the Alzheimer's data are known, a deal could be negotiated with a contingent value right offering protection or upside based on the outcome of the Alzheimer's indication.

@adamfeuerstein Iron supplements did not treat iron deficiency for the trial patients. Your jaded comment is rude to the sick.

— Dstarson (@DaveStarchild) March 29, 2016


I've heard the arguments for why Keryx Biopharmaceuticals will do better selling Auryxia in the non-dialysis chronic kidney disease market than it has selling the drug in the dialysis setting. I concede some (not all) of the Keryx bull thesis make sense. The suggestion that existing oral iron supplements are ineffective in non-dialysis chronic kidney disease patients is a bit of an exaggeration.

The problem, of course, is the Keryx bull argument relies on the company's ability to execute. Given the actual track record of dismal Auryxia sales to date, why have any confidence in the company's ability to do a better job with an expanded label?

The muted reaction in Keryx's stock price to the announcement of the positive non-dialysis study results tells you investors are in a "show me" mood.


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.