With Intercept (ICPT) preparing to release Phase 3 results from its REGENERATE study in Non-Alcoholic Steatohepatitis (NASH) patients, Gilead (GILD) announced yesterday that its top late-stage NASH drug selonsertib has hit the finish line, and is in some serious trouble. Specifically, GILD’s Phase 3 clinical trial, STELLAR-4, evaluating selonsertib in NASH patients with compensated cirrohosis did not meet the primary endpoint of a = 1-stage histologic improvement in fibrosis without worsening of NASH.
Should Intercept investors be concerned? Cantor analyst Alethia Young says ‘no,’ as she doesn’t see a read-through to REGENERATE from Gilead’s trial failing.
Young noted, “The mechanisms of action are different between the two GILD and ICPT NASH assets, and studies are in two different NASH populations (cirrhotics vs. bridging fibrosis). ASK1 inhibition and FXR agonism work in different ways. We think FXR agonism remains one of the most de-risked mechanisms of actions for NASH based on the 283-patient FLINT study. Of course the pushback could be that FLINT was randomly lucky, but we would disagree. GILD has a gut-restricted FXR, but we have not seen histology data yet. We also don’t know if the cirrhotic liver requires different therapeutic interventions,”
“GILD still has a F3 study under way with the same asset, though we think the chance of success is now lower. This does not lower our confidence in Intercept’s Ph3 study with OCA expected to readout in 1Q19. We also think if unpartnered OCA is successful in Ph3, it may increase the potential for an acquisition. Of course a Ph3 NASH failure by GILD could increase overall caution in Ph3 NASH trials, but we see meaningful differences between the two assets and studies. We remain confident heading into 1Q data,” the analyst continued.
Young reiterates an Overweight (i.e Buy) rating on ICPT stock, with price target of $170, which implies about 54% upside potential from current levels. (To watch Young’s track record, click here)
The drug maker now looks like a very compelling investing opportunity, as TipRanks analytics showcasing ICPT as a Strong Buy. With an average price target of $156.90, analysts are predicting an upside potential of 42% for the stock. In total, the stock has received 11 ‘buy’ ratings vs. just 1 ‘hold’ rating in the last three months. (See ICPT’s price targets and analyst ratings on TipRanks)