In its 10-K on Friday, Intercept (ICPT) disclosed that patients with nonalcoholic steatohepatitis, or NASH, taking its liver drug obeticholic acid, or OCA experienced cardiovascular serious adverse events.

On Sunday, the biotech followed up with positive news that a phase 3 trial testing OCA in another liver disease, primary biliary cirrhosis, or PBC, was positive.

The 10-K news won the battle with shares trading down 12% today.

I'm not sure how damning the cardiovascular events were -- more on that in a bit -- but the positive data in PBC didn't help that much because the results were fairly expected, especially compared to Intercept's one-day jump of more than 500% in January when the biotech announced positive data in the NASH trial.

The phase 2 PBC trial completed in 2011 was highly statistically significant with a p-value of less than 0.0001. Or in other words, there was a 0.01% chance that the observed difference between OCA treatment and placebo happened because of chance alone. With more patients in the phase 3 trial, the likelihood of success was even higher.

The phase 3 trial, dubbed POISE, met its endpoint of reducing alkaline phosphatase and having a normal bilirubin level, biochemical markers used to diagnose the disease. A solid 47% of patients taking the high dose of OCA met the designated criteria compared to just 10% in the placebo group. A third group was tittered from a low dose to the high dose if the low dose wasn't working, which worked just as well with 46% of patients meeting the endpoint.

There's never a 100% certainty with drug regulators, but Intercept looks like it has the efficacy data to get OCA approved for PBC. Considering the current treatment, ursodiol, only works in up to half of the patients, there's plenty of unmet need, which tends to make regulators more lenient on safety issues.

Back to those potential side effects
Intercept disclosed that there were 10 cardiovascular severe adverse events in seven patients in its NASH trial that was stopped early in January because an interim peak at the data showed that OCA was working extremely well.

The number of events was higher in patients taking OCA compared to placebo, but the difference wasn't statistically significant. More than half of the patients in the trial were diabetics, who are more likely to undergo cardiovascular events so it's possible that OCA isn't causing the cardiovascular events. Unfortunately, Intercept didn't disclose the p-value, so we don't know how likely that the observed increase in cardiovascular events in the OCA group happened by chance alone.

There were two cardiovascular serious adverse events in the PBC trial -- one in the placebo and one in the titration group. For this trial, at least, the rate of cardiovascular events is actually lower for patients on drug since there were more patients on drug in the trial given the two dosing arms.

Off label use
Intercept isn't going to start its NASH trial until the first half of next year, so an approval is still a ways away. But doctors could use OCA off-label once it was approved for PBC given the unmet need in NASH -- there aren't any drugs approved for the disease, although Conatus Pharmaceuticals (CNAT), Gilead Sciences (GILD -0.01%), and Isis Pharmaceuticals (IONS 1.46%) are working on drugs of their own.

We haven't seen the full phase 2 data in NASH, but it seems likely the efficacy data will be compelling considering the trial was stopped early. Unfortunately with cardiovascular events -- even if they might only be happening by chance -- doctors might be a little more cautious in prescribing OCA off label, potentially killing OCA's chances to get established well ahead of Conatus, Gilead and Isis.