What happened

Intercept Pharmaceuticals (NASDAQ:ICPT), a mid-cap liver disease specialist, saw its shares sink by a whopping 24% last month, according to S&P Global Market Intelligence. What spooked investors so much?

Intercept's shares sank in response to the biotech industry's widespread downturn in October that was seemingly triggered by President Trump's escalating trade war with China. In brief, investors apparently decided to shun risky biotech stocks last month because of the uncertainty surrounding Trump's back-and-forth with China over tariffs.   

A doctor cupping his hand underneath a 3D image of a liver.

Image source: Getty Images.

So what

Prior to last month's sell-off, Intercept's shares were in the midst of long-tailed rally, sparked by the strong commercial performance of its primary biliary cholangitis drug, Ocaliva, this year. Even after this October swoon, for example, Intercept's shares are still up by over 86% for the year at the time of writing.

Now what

Can Intercept regain its footing? The answer to this all-important question seems to be a resounding "yes." Intercept, after all, is expected to roll out Ocaliva's initial late-stage data for its next major indication, nonalcoholic steatohepatitis (NASH), in the first half of next year.

The big deal is that NASH is a potentially fatal liver disease that reportedly afflicts upwards of 5% of all adults in the United States. Even so, there currently is no approved treatment for NASH -- potentially setting the stage for Ocaliva to become the first drug to market for this unmet medical need. Intercept is thus staring down a multibillion-dollar market opportunity with Ocaliva's NASH indication. That kind of monstrous commercial opportunity should eventually reignite Intercept's nearly yearlong rally. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.