Bhavneesh Sharma

Top 20 Ranking (28.2% Avg Return) --TipRanks

Eyeing Intercept Pharmaceuticals On New Drug Application to Treat Fibrosis Due to NASH


Intercept Pharmaceuticals (NASDA: ICPT) submitted a New Drug Application (NDA) last week for its obeticholic acid (OCA) treatment for patients with fibrosis due to nonalcoholic steatohepatitis (NASH). The treatment has a breakthrough therapy designation in this indication. The company has requested a Priority Review from FDA which would reduce the anticipated review period to six months.

Data for OCA in NASH with liver fibrosis:

Total number of NASH patients across the three treatment arms: 931 (biopsy-proven), F2, F3 fibrosis stages.

Intervention: OCA 10 mg oral daily, OCA 25 mg oral daily, placebo.

Total treatment duration: 18 months.

Liver biopsy was performed at 18 months (which is the gold standard to diagnose NASH and liver fibrosis unlike some competitors who are using non-invasive measures like MRI).

  • In the primary efficacy analysis, once-daily OCA 25 mg met the primary endpoint of fibrosis improvement (≥1 stage) with no worsening of NASH at the planned 18-month interim analysis (p=0.0002 vs. placebo). The fibrosis improvement in 10 mg arm just achieved statistical significance with a p-value of 0.0446. 

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  • In the primary efficacy analysis, a numerically greater proportion of patients in both OCA treatment arms compared to placebo achieved the primary endpoint of NASH resolution with no worsening of liver fibrosis, but this did not reach statistical significance. 

It is important to remember here that FDA has mandated meeting one of two primary endpoints for the approval of NASH drugs since NASH is a disease with a broad spectrum ranging from fat deposition in the liver to fibrosis, and ultimately cirrhosis in the end-stage. Clinical trials trying to improve liver cirrhosis have not been successful so far, which is not surprising considering that it is similar to trying to heal a scar. Companies like Genfit are targeting earlier stages of NAFLD, i.e. NASH. Intercept’s OCA is targeting the later stages of NASH, i.e. the one with liver fibrosis. In the phase 3 trial, OCA met one of the FDA mandated requirements of at least one stage improvement in liver fibrosis (with no worsening of liver fibrosis). The results are significant since just improvement in NASH can even be achieved by interventions like control of dyslipidemia, glycemic control, weight loss, etc., however, liver fibrosis is a more advanced stage of this disease and also a strong predictor of mortality in this population. 

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(Association of different stages of NASH related fibrosis with liver-related events and mortality)

In the additional efficacy data released a few months later, an improvement in liver fibrosis stage by 2 stages or more was seen in 13.3% patients, approx. 3x that seen in the placebo (p=0.0008). 

Is this efficacy data clinically meaningful? I listened to a KOL call (Slingshot Insights, academic hepatologist) who considered the efficacy data as clinically meaningful and mentioned that he was excited about it. He also mentioned that fibrosis improvement is more important to him than NASH improvement which is consistent with what the medical literature says. He also mentioned that he would prescribe it in more than 50% of his eligible patients. A second KOL mentioned that she would use it in 25-30% of F2 fibrosis patients and 50-60% of F3 fibrosis patients.  Considering that liver fibrosis is almost like a scar, I consider the improvement in liver fibrosis by one stage with OCA as a remarkable result. Another KOL (academic hepatologist) mentioned that the proportion of NASH with fibrosis patients can be further improved to up to 40% if the patients lose 5%-10% weight in addition to OCA 25 mg.

Safety data: The issue with pruritus?

The biggest reason the stock price has been under pressure is the high incidence of pruritus (itching) in 25 mg arm (51%) and 28% in 10 mg arm. However, investors should remember that most of this pruritus was mild to moderate. Severe pruritus was seen in 5% of patients in 25 mg dose arm, higher than <1% in the placebo. However, I consider study drug-related discontinuations as a better measure when analyzing safety data since it reflects treatment tolerability. Study discontinuations in the primary efficacy analysis population were comparable across the three treatment arms: 16% in placebo, 17% in OCA 10 mg and 15% in OCA 25 mg. A second KOL call on Slingshot Insights that I listened to also mentioned that the fact that the discontinuation rate due to pruritus was comparable across the 3 study arms was encouraging. 

Is the pruritus due to OCA manageable in clinical practice?

The answer is yes. And it comes from the clinical experience of experts like gastroenterologists and hepatologists who have been treating patients with primary biliary cirrhosis, PBC with OCA (where it has been approved since 2016). The abstract from the paper from the BMJ Gastroenterology is given below. The authors who formed this panel were from reputed academic centers like Baylor-Houston, Scripps Clinic (San Diego, CA), Stanford, etc.

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From the same paper, this table shows the various treatment modalities that clinicians have effectively used in treating pruritus due to OCA in PBC patients. 

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The maximum dose of OCA which has been tested in PBC is 10 mg, and pruritus was found to be manageable with this dose by clinicians with discontinuations seen in 10% of patients. The panel in this paper also suggested that titrating the dose of OCA to allow tolerability of pruritus symptoms can be done in clinical practice effectively. Another important point to consider for this paper is the pruritus can also have a psychological component and focusing attention on symptoms of pruritus can exacerbate the symptoms in some cases. 

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The above algorithm shows a clinical judgment guideline for daily dosing process in OCA titration to manage pruritus symptoms from the above BMJ paper. 

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(Algorithm for the Management of Pruritus in OCA-Treated patients with PBC, from the above BMJ paper)

Applying a similar OCA-related pruritus management guideline to NASH with fibrosis, I expect the practising clinicians to start OCA dose at 10 mg (which still achieved the primary endpoint of liver fibrosis improvement by at least one stage in mean 17.6% NASH patients), discuss preventive pruritus management with the patient, review different pruritus management strategies with the patient using various treatment modalities as mentioned above, and up titrate the dose to 25 mg if the patient is tolerating the 10 mg dose. I also attended a KOL conference at this year’s Cowen’s investor Conference where the KOL (an academic gastroenterologist) mentioned that he believes that pruritus due to OCA in NASH-fibrosis patients is manageable. 

What is the issue with increased LDL cholesterol due to OCA? Is it manageable?

OCA treatment was associated with an increase in LDL cholesterol in the above Phase 3 data. A peak increase of 22.6 mg/dL was seen at 4 weeks and subsequently reversing and approaching baseline at month 18 (4.0 mg/dL increase from baseline) (in REGENERATE trial, patients were allowed to be on statin titration to control LDL-C). In the CONTROL trial, Intercept already showed that LDL increase due to OCA is easily manageable with stains. Moreover, CONTROL trial also showed that the increase in LDL cholesterol due to OCA is primarily driven by an increase in large buoyant LDL particles rather than the small dense LDL particles. It is well-known that small dense LDL particles are markers of atherosclerosis. Moreover, the mild increase in LDL cholesterol seen with OCA resolved with time and returned almost to baseline by month 18 in the REGENERATE trial. Considering these factors, I am not worried about the increase in LDL cholesterol seen with OCA.

How is the potential competition doing?

Drugs in Phase 3:

Genfit: Elafibranor did not show an improvement in liver fibrosis by at least one stage in Phase 2b.

Allergan/Tobira: In a Phase 2 study for Cenicriviroc, the proportion of patients achieving at least one stage improvement in liver fibrosis in NASH was 20% in the drug arm compared to 10% in the placebo arm (p=0.02). However, I expect this proportion to go down in Phase 3 AURORA study as we have seen with Intercept’s data. Estimated study completion date, October 2021. The closest competition to Intercept’s OCA but had a lower proportion of patients achieving the fibrosis stage reduction endpoint in Phase 2 than Intercept’s Phase 2 data. 

Madrigal Pharmaceuticals (MDGL): MGL-3196 Is targeting an earlier stage of NASH, i.e. NASH resolution, though 50% of patients who showed NASH resolution in phase 2 also had a significant resolution in liver fibrosis. Not a direct competitor to Intercept in addressing the NASH with liver fibrosis. 

Intercept’s unique selling proposition in NASH with liver fibrosis:

  1. Time lead, biggest asset. Likely the first drug in the market for NASH with liver fibrosis, the most vulnerable population in NASH where intervention is still possible. 

  2. KOLs well aware of Intercept’s Phase 3 data, are convinced with its efficacy and consider it clinically meaningful and willing to consider it in a majority of eligible patients.

  3. Pruritus due to OCA is not significant enough to result in significant discontinuation. Mild-moderate pruritus is manageable using a stepwise dose escalation and the treatment algorithm mentioned above.

  4. Well-funded, expected to have approx. $700M in cash reserves at Q3 end.

  5. OCA is already in the market to treat PBC, so the company has already built relationships with general gastroenterologists and hepatologists. The company can utilize its sales force to expand its reach further to specifically target hepatologists with a high volume of NASH patients.

  6. The company is also conducting a combination study of benzafibrate with OCA in NASH to address both NASH and liver fibrosis, thus having a shot at expanding its target market. 

What happens next, now that the NDA is submitted?

In the absence of any other approved NASH therapy, I expect the NDA to be assigned Priority review, and PDUFA in Q1 end 2020. I am optimistic about a positive outcome, and thus expect OCA to be in the market in this indication in H1, 2020. The short interest is 21% and the stock is quite depressed. I expect short-covering to start following the news of NDA submission. The stock was up 3.6% on Friday despite a down day for the biotech sector indexes. I expect the upward momentum to continue over the next few months.

Target market assessment:

  • NASH prevalence in the U.S. = 5% of the population.

  • 20% of all NASH patients have F3, F4 liver fibrosis.

  • Estimated target market for OCA in NASH = 20% of all NASH patients or $3 million people in the U.S.

  • Estimated annual price per patient for OCA in this indication = $5000-$10,000.

  • Using lower end estimate of pricing of $5K/year, 90% probability. and 20% peak market share, estimated peak risk-adjusted revenue for OCA in NASH with liver fibrosis (U.S.) = $2.6 billion.

  • Evaluate Pharma consensus peak OCA sales by 2024 =  $2 billion.

  • Using cost of capital of 15%, estimated risk-adjusted NPV for OCA in NASH-fibrosis indication = $4.3 billion.

  • Current market cap for Intercept Pharmaceuticals = $2.1 billion

  • I have not included the future revenue for OCA in PBC indication where it is already approved and had $177.8M in sales IN 2018.

Estimated stock price target  = $130 (minimum 1-2 years timeframe).  Rating Buy. Suggested allocation = 2% of the capital.

Risks in the investment include future capital raise by the company which may put downward pressure on the stock price, revenue estimates not being met due to slow uptake, better results from other existing or new competition, etc. Investing in biotechnology companies may not be suitable for all investors as the stock price can be volatile. 


This article represents my own opinion and is not a substitute for professional investment advice. It does not represent a solicitation to buy or sell any security. Investors should do their own research and consult their financial advisor before making any investment. Investing in equities, especially biotech stocks has the risk of significant losses and may not be suitable for all investors. While the sources of information and data in this article have been checked, their accuracy cannot be completely guaranteed.

I/we have no position in ICPT but will buy the stock on Monday.

Bhavneesh Sharma covers biotech as one of the original contributing analysts at FATRADER. A market expert with a medical degree and MBA, he is ranked among the top 15 financial bloggers and top 100 overall financial experts (including Wall Street analysts) on TipRanks.
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