What happened

Intercept Pharmaceuticals (NASDAQ:ICPT), a mid-cap liver disease specialist, saw its shares rise by a healthy 40.3% over the course of April, according to data from S&P Global Market Intelligence. Most impressively, the biotech's shares even outperformed the broader iShares Nasdaq Biotechnology ETF in April, which gained a respectable 19.5% last month. 

Why did investors flock to this name in April? Intercept's shares seemed to take flight for two reasons. 

A 3D holographic image of a human body with the liver highlighted in red.

Image Source: Getty Images.

So what

First, the biotech's stock was hammered in March by the COVID-19 induced sell-off. Since Intercept hasn't announced any major supply-chain issues or a dip in sales for its primary biliary cholangitis medicine Ocaliva as a result of the viral outbreak, investors presumably felt comfortable buying this biotech stock on the cheap last month. 

Second, Ocaliva's highly anticipated label expansion for liver fibrosis due to nonalcoholic steatohepatitis (NASH) is currently set for June 9. Given that this second indication could push Ocaliva into mega-blockbuster territory (greater than $5 billion in annual sales), it's not exactly surprising to see investors warming up to this mid-cap biotech ahead of this major catalyst. 

Now what

Can Intercept's shares keep up their recent momentum? The answer is a resounding yes. While the Food and Drug Administration could still reject Ocaliva's NASH indication because of its well-known safety issues, the drug arguably stands a better than average chance at grabbing a second approval before the end of summer.

That's a big deal because Ocaliva would be the only FDA-approved medicine specifically for NASH, a condition that afflicts between 2% and 5% of the U.S. adult population. Intercept's shares should have a lot more room to run if Ocaliva gets a green light from the FDA for NASH.