What happened
Shares of Intercept Pharmaceuticals (ICPT) were jumping 9.7% higher as of 10:40 a.m. EST on Thursday after moving as much as 14.3% higher earlier in the day. Investors reacted positively after the biotech reported its fourth-quarter and full-year 2018 results before the market opened.
Intercept announced Q4 revenue of $53.3 million, easily topping the consensus Wall Street estimate of $52.3 million. However, the biotech's Q4 net loss of $2.97 per share was worse than the $2.49 loss per share expected by analysts.
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So what
Why would Intercept stock jump so much on mixed Q4 results? At this stage for the company, sales are more important than the bottom line.
Most of Intercept's revenue comes from Ocaliva, which is currently approved for treating the liver disease primary biliary cholangitis (PBC). The biotech reported that sales for Ocaliva in the fourth quarter were $52.9 million. The remainder of Intercept's revenue stemmed from licensing.
Intercept also announced full-year 2019 guidance that projected Ocaliva net sales between $225 million and $240 million. Investors seemed to be unconcerned that the upper end of that range fell well below the average analysts' revenue estimate of $254 million.
In the big scheme of things, though, Intercept's Q4 performance and its 2019 guidance aren't all that important. What really matters the most for Intercept is winning approval for Ocaliva in treating additional indications, especially nonalcoholic steatohepatitis (NASH). On Feb. 19, 2019, the company reported that obeticholic acid (Ocaliva) achieved the primary endpoint of a pivotal phase 3 clinical study in patients with liver fibrosis due to NASH.
Check out he latest Intercept Pharmaceuticals earnings call transcript.
Now what
Intercept plans to file for U.S. and European regulatory approval of Ocaliva as a treatment for NASH in the second half of this year. The biotech could be on track to have the first approved NASH drug on the market.
Even if approved, Ocaliva might not be the only NASH drug on the market for long. Several other companies are developing NASH drugs that could give Intercept a run for its money in the future.
