Shares of Intercept Pharmaceuticals (NASDAQ:ICPT) were down 13% at 3 p.m. EDT on Friday after the company disclosed that the Food and Drug Administration plans to postpone an advisory committee meeting to review obeticholic acid as a treatment for liver fibrosis due to nonalcoholic steatohepatitis (NASH).

The meeting had been tentatively scheduled for June 9, but Intercept plans to submit additional data requested by the FDA within the next week, so the agency wants to push back the meeting to give itself time to review the additional data. The delay will likely cause the FDA to miss the agency's June 26 goal for completing its review of the marketing application.

By itself, the delayed approval, which shouldn't last more than a couple of months, doesn't justify a 13.6% decline in Intercept's valuation. But biotech investors are rightfully discounting the company's shares because the FDA requested additional data, which suggests that an approval isn't a slam dunk.

Expect delays roadsign

Image source: Getty Images.

Obeticholic acid is already approved as a treatment for primary biliary cholangitis (PBC) under the brand name Ocaliva, so the FDA's decision to convene a meeting of outside experts may seem a little weird. The agency typically holds advisory committee meetings for new drugs with new mechanisms of action.

But, in this case, the need for an advisory committee meeting is about the disease, NASH, which doesn't have any approved drugs to treat it. Over the years, the FDA's views have evolved on the matter of the correct way to measure the effectiveness of drugs against NASH, which is a slow-developing disease.

An approval for Ocaliva as a NASH treatment would help Intercept grow revenue substantially given that NASH is a much larger market than PBC, which contributed $72.7 million in sales in the first quarter.