Intercept Pharmaceuticals (NASDAQ:ICPT) really needed some good news. Its shares have plunged by more than 70% year to date, with most of the decline coming after the Food and Drug Administration gave a thumbs-down to obeticholic acid (OCA) as a treatment for non-alcoholic steatohepatitis (NASH).
The drugmaker announced its third-quarter results before the market opened on Monday, and it delivered at least some good news for investors. Here are the highlights.
By the numbers
Intercept reported revenue of $79.5 million, a 28% year-over-year jump. This result topped the average analysts' estimate of $78.6 million.
The company announced a Q3 net loss of $66.5 million, or $2.01 per share, based on generally accepted accounting principles (GAAP). This was better than Intercept's GAAP net loss of $84.8 million, or $2.59 per share, in the prior-year period. However, it still underperformed the consensus Wall Street estimate for a net loss of $1.93 per share.
Another important financial metric for Intercept is its cash position. The company ended the quarter with cash, cash equivalents, restrictive cash, and investment debt securities of $496.8 million. This was down from its cash stockpile of $657.3 million as of Dec. 31, 2019.
Behind the numbers
Primary biliary cholangitis (PBC) drug Ocaliva generated all of Intercept's net sales in the third quarter: $58.6 million in U.S. net sales and $20.9 million in international sales. The company's bottom-line improvement stemmed in large part from the increased sales of Ocaliva, as well as from lower spending.
It cut its selling, general, and administrative (SG&A) expenses by 8% year over year to $70.6 million. Intercept attributed most of that reduction in spending to the delay of the potential approval for OCA in treating NASH. The company's research and development expenses also fell by nearly 19% year over year to $48.9 million. This decline stemmed mainly from lower NASH drug development costs.
Intercept narrowed its full-year guidance. The company now expects net sales for Ocaliva in 2020 will be between $310 million and $320 million, compared to its previous forecast range of $300 million to $320 million, and anticipates adjusted operating expenses of between $460 million and $480 million. Management's previous guidance projected adjusted operating expenses in the range of $460 million to $500 million.
The best news of all for investors in this biotech stock, though, is that the prospects are now better for an eventual FDA approval of OCA in treating NASH. CEO Mark Pruzanski stated that the company had a "constructive" meeting with the FDA, and asserted that Intercept could potentially resubmit its regulatory filing for OCA in the NASH indication next year.
Intercept had hoped to be the first on the market with a treatment for NASH. Other companies have also encountered setbacks with their programs to develop treatments for the liver disease, and some remain well behind Intercept. For example, Viking Therapeutics recently stated that it is enrolling patients in a phase 2b study of its lead NASH candidate, VK2809. Thus, there's still a possibility that Intercept's OCA could be the first FDA-approved treatment for NASH.