What happened

Shares of Intercept Pharmaceuticals (NASDAQ:ICPT), a biopharmaceutical company, were up 48.9% in November, according to data from S&P Global Market Intelligence. An interim analysis of the company's big non-alcoholic steatohepatitis (NASH) trial provided the lift last month.

So what 

Since 2015, Intercept has been running a trial with its only commercial-stage drug, Ocaliva, and NASH patients with fibrosis. There still aren't any drugs available to halt the progression of NASH, but the Food and Drug Administration has clearly stated that it's willing to approve one that can reduce fibrosis or resolve the inflammation that damages the liver. 

Person drawing an upward sloping chart.

Image source: Getty Images.

In November, Intercept reported 18-month results from about half of the trial's advanced-stage NASH patients with stage 2 or stage 3 fibrosis, and it looks like Ocaliva will probably become the first FDA approved NASH treatment for this group. After 18 months of treatment, 23% of patients receiving the higher dose of Ocaliva exhibited fibrosis improvement, compared with just 12% of the placebo group.

Now what

Although Ocaliva is probably going to become the first drug approved by the FDA to treat NASH, access will probably be limited to those with advanced-stage fibrosis for a couple of reasons. First, it didn't significantly improve patients' chances of achieving NASH resolution. Second, a whopping 51% of patients treated with the effective dosage reported chronic itching, which could be a sign of bigger problems over the long term.

Intercept expects Ocaliva sales to reach between $245 million and $250 million in 2019 as a treatment for primary biliary cholangitis (PBC). Unfortunately, operating expenses driven by developing Ocaliva for NASH are expected to reach between $480 million and $500 million this year. 

At the end of September, Intercept had a large $712 million cash balance. While that could be enough to keep the lights on until the company is ready to submit a NASH application, any hint of a delay could bring Intercept's $3.6 billion market cap crashing down.