Why Intercept Pharmaceuticals, Inc. Shares Imploded

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Intercept Pharmaceuticals (NASDAQ: ICPT  ) , a biopharmaceutical company developing therapies to treat chronic liver diseases, fell as much as 36%, or $129 per share – it's fourth consecutive intraday move of at least $129 -- following comments made by its CEO called into question the future of its lead drug, obeticholic acid (OCA) for nonalcoholic steathohepatitis (NASH).

So what: Following Intercept's presentation at the JPMorgan Healthcare Conference yesterday, CEO Mark Pruzanski noted that his company may need the assistance of a larger drug maker (i.e., a partner) to help bring OCA to market. This only further complicates what has been a boom-and-bust past week for Intercept which exploded higher by more than 500% at the end of last week following the stoppage of a mid-stage trial for OCA on statistically significant efficacy. Intercept, however, has been slowed by a flat tire this week as cholesterol levels in those patients, specifically the bad kind, saw a marked increase and will need further investigating.

Now what: And I thought the five-day chart made me dizzy yesterday -- you should see it now! There are really a handful of variables at play here includes the safety of OCA as it relates to the increase in lipid levels, the efficacy as it relates to a largely unmet disease that could affect between 5 million and 6 million people in the U.S., and Intercept's need to have a larger pharmaceutical partner share development costs as well as handle an eventual commercial rollout if the drug is approved. In other words, with the share price having moved a minimum of $129 in each of the past four days, your best course of action is likely to stick to the sidelines and to let things settle down first.

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Comments from our Foolish Readers

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  • Report this Comment On January 14, 2014, at 3:30 PM, marp11 wrote:

    ARNA 10 bagger this year

    eom

  • Report this Comment On January 14, 2014, at 4:29 PM, TheStockDoctor wrote:

    The CEO is wise to be cautious. The FDA just took down a notch a great small company AEGR, pretending the CEO was too aggressive in the claims he made in a CNBC interview. Now the FDA has the DOJ involved with a subpoena that has helped knock share prices down more than 40% from their high half a year ago.

    So ICPT should learn from the problems of others and keep all comments tempered with the full disclaimer and legal-ese that makes life difficult for everyone.

  • Report this Comment On January 15, 2014, at 12:45 PM, TruffelPig wrote:

    To our talented fool Sean: (a) Do you know where cholesterol comes from? (b) the LDL story is a hype - I mean, compared to dying of a liver disease your LDL level increases modestly? Wow, tough choice, to die or to have a higher LDL?

    Please remain on the sidelines - write less of these "why a sack of rice fell in China" things and focus on something important. This is just promo stuff leading to NOTHING. This type of activity make me not renew my MF subscriptions (I HAD 4). In the maentime I make some money on this extremly promising company!

    Best.

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