Intercept Pharmaceuticals (ICPT) added over $1 billion to its market value in after-hours trading on Thursday on news that lead drug candidate obeticholic acid (OCA) received a Breakthrough Therapy Designation from the FDA for the treatment of nonalcoholic steatohepatitis (NASH) with liver fibrosis. That may seem steep, but the designation carries more weight this time than it would for most other companies. Intercept and its obeticholic acid for NASH were steeped in controversy for much of 2014, and the designation lightens a major overhang in the eyes of investors.
Intercept has been guiding for a phase III trial in NASH to begin sometime in the first half of the year but has been retiscent to say whether they have, or when they will, meet with the FDA to settle on an appropriate phase III endpoint. NASH is a large indication (analysts think it could be worth more then $3 billion at peak) but one that has yet to see a drug approved. What exactly the FDA will want to see in a phase III trial (length, size, endpoints) has been up in the air, leaving ICPT – and investors – in limbo. The Breakthrough Therapy Designation offers validation from the FDA that this is truly an unmet need – and more importantly, there’s a regulatory path forward.
Add to that a 15% short interest in ICPT and Thursday evening’s price action starts to make sense.
