Intercept Pharmaceuticals Inc (NASDAQ:ICPT) reported financial results for the three months ended March 31, 2017 and provided other general business updates.
“I’m very pleased with our commercial and development progress thus far in 2017, and look forward to building on the positive momentum as a leader in progressive non-viral liver disease,” said Mark Pruzanski, M.D., President and CEO of Intercept. “In the U.S., we have seen strong execution on our launch plans for Ocaliva, as evidenced by steady quarter over quarter growth. In Europe, we remain focused on market access and are enthusiastic about the rapid reimbursement decision for Ocaliva from the highly regarded UK regulatory body NICE.”
“In our NASH program, we achieved a major milestone with the completion of enrollment of our interim analysis cohort in REGENERATE, the first and largest Phase 3 trial in NASH,” added Dr. Pruzanski. “As we look to the middle of the year, we expect to announce top-line data from two additional Phase 2 trials of OCA: CONTROL, assessing combination statin therapy in NASH patients, and AESOP in primary sclerosing cholangitis.”
Ocaliva Commercial Update
Intercept recorded $20.6 million of global net Ocaliva sales in the first quarter of 2017.
Net U.S. Ocaliva sales were $19.8 million for the first quarter of 2017.
Ocaliva was approved by the U.S. Food and Drug Administration (FDA) in May 2016 for the treatment of primary biliary cholangitis (PBC) in combination with ursodeoxycholic acid (UDCA) in adults with an inadequate response to UDCA or as monotherapy in adults unable to tolerate UDCA. Intercept commercially launched Ocaliva in the United States in June 2016 and in conjunction launched Interconnect®, a comprehensive, personalized program that connects patients with dedicated care coordinators who help them understand their disease and provides treatment support and, for eligible patients, financial assistance options.
Net ex-U.S. Ocaliva sales were $0.8 million for the first quarter of 2017.
Ocaliva was granted conditional approval by the European Commission in December 2016 for the treatment of PBC in combination with UDCA in adults with an inadequate response to UDCA or as monotherapy in adults unable to tolerate UDCA. We commenced our European commercial launch in January 2017.
Anticipated 2017 Milestones
- PBC Program
- Ongoing U.S. Ocaliva launch
- Launch Ocaliva in key European markets and seek regulatory approval in other target international markets
- Continue enrollment of Phase 4 COBALT trial evaluating the effect of Ocaliva on clinical outcomes in PBC
- NASH Program
- Report CONTROL top-line results in mid-2017
- Initiate Phase 3 trial in NASH patients with cirrhosis during 2H 2017
- Report AESOP top-line results in mid-2017
- Initiate Phase 2 trial for INT-767, a dual FXR/TGR5 agonist, in NASH patients with fibrosis during 2H 2017
Intercept announced today that David Ford will be appointed as Chief Human Resources Officer effective May 8, 2017.
Mr. Ford brings over 25 years of experience in a variety of Human Resources roles across the United States, Europe, Latin America and New Zealand. Prior to joining Intercept, Mr. Ford spent nearly 15 years at Sanofi where most recently he served as Vice President Human Resources for the Sanofi Genzyme global business unit and, prior to that, Vice President Human Resources for the Sanofi North American businesses. Mr. Ford joined the pharmaceutical industry in 2002 as the HR Director — United Kingdom and Republic of Ireland for Sanofi-Synthelabo. Mr. Ford holds a master’s degree in business administration from INSEAD, Fontainebleau (France).
Financial Results for the Three Months Ended March 31, 2017
For the three months ended March 31, 2017, Intercept reported a net loss of $89.9 million. GAAP operating expense for the three months ended March 31, 2017 was $105.0 million. Non-GAAP adjusted operating expense1 for the three months ended March 31, 2017 was $90.1 million, which excludes non-cash stock-based compensation expense of $14.1 million and depreciation expense of $0.8 million.
Intercept recognized $20.6 million of net sales of Ocaliva for the first quarter 2017. Intercept currently recognizes revenue using the sell-through method (i.e., when its specialty pharmacies dispense Ocaliva to patients, not when products are sold to the specialty pharmacies). Revenue recognition will transition from the sell-through method to the sell-in method once a sufficient period of commercial experience has occurred to enable Intercept to estimate product returns.
Intercept recognized $0.4 million and $0.4 million of license revenue related to the amortization of the up-front and milestone payments under the collaboration agreement with Sumitomo Dainippon for the three months ended March 31, 2017 and 2016, respectively.
Costs of goods sold (COGS) was negligible for the first quarter of 2017. Prior to the FDA approval of Ocaliva, Intercept had expensed costs related to the manufacturing and buildup of commercial launch supplies of OCA. Therefore, COGS was only reflective of packaging and labeling costs incurred during the period. Intercept expects COGS to remain negligible until previously expensed supplies of OCA are sold.
Selling, general and administrative expenses decreased to $61.1 million for the quarter ended March 31, 2017, down from $95.9 million for the quarter ended March 31, 2016. The decrease from the prior period was primarily driven by the one-time net expense of $45.0 million attributable to the settlement of a purported securities class action lawsuit in the quarter ended March 31, 2016, offset by expenses due to an increase in Ocaliva commercialization activities and additional personnel-related costs.
Research and development expenses increased to $43.8 million for the quarter ended March 31, 2017, up from $32.0 million for the quarter ended March 31, 2016. The increase over the prior period was primarily driven by increases in clinical development programs for OCA and infrastructure to support such programs.
Interest expense for the quarter ended March 31, 2017 was $7.2 million. The interest expense is related to the 3.25% convertible senior notes due 2023 issued in July 2016.
1 Adjusted operating expense, as presented above and elsewhere in this press release, is a non-GAAP financial measure. Adjusted operating expense excludes stock-based compensation and other non-cash items from GAAP operating expenses. A table reconciling historical adjusted operating expense to GAAP operating expense is included below under the heading “Reconciliation of GAAP to Non-GAAP Operating Expense.”
As of March 31, 2017, Intercept had cash, cash equivalents and investment securities available for sale of approximately $608.0 million, compared to $689.4 million as of December 31, 2016.
Intercept continues to project non-GAAP adjusted operating expenses of $380 million to $420 million for the fiscal year ending December 31, 2017. This guidance excludes non-cash items such as stock-based compensation and depreciation. These expenses are planned to support the continued commercialization of Ocaliva in PBC in the United States and other markets, continued clinical development for OCA in PBC and NASH and the continued development of INT-767 and other pipeline programs.
Intercept anticipates that stock-based compensation expense will represent the most significant non- cash item that will be excluded in adjusted operating expenses as compared to operating expenses under GAAP. Adjusted operating expense is a financial measure not calculated in accordance with GAAP. A reconciliation of projected operating expense calculated in accordance with GAAP to non- GAAP adjusted operating expense is not available on a forward-looking basis without unreasonable effort due to an inability to make accurate projections and estimates related to certain information needed to calculate, for example, future stock-based compensation expense.
Shares of Intercept Pharmaceuticals are currently trading at $123.04, up $10.32 or 9.16%. ICPT has a 1-year high of $177.93 and a 1-year low of $96.63. The stock’s 50-day moving average is $113.21 and its 200-day moving average is $114.26.
Sentiment on the street is mostly bullish on ICPT stock. Out of 9 analysts who cover the stock, 5 suggest a Buy rating , 3 suggest a Hold and one recommends to Sell the stock. The 12-month average price target assigned to the stock is $186.86, which implies an upside of 66% from current levels.
Intercept Pharmaceuticals is a biopharmaceutical company, which engages in the research, development, and commercialization of novel therapeutics in treating chronic liver diseases. Its product pipeline is OCALIVA which is used for the treatment of primary biliary cholangitis, nonalcoholic steatohepatitis, primary sclerosing cholangitis, and biliary atresia.