Intercept Pharmaceuticals (NASDAQ:ICPT) continued its downward slide on Thursday, falling another 6% after Wednesday's 7% decline. Given those declines, you'd think that the small biotech would have had to release news that spelled major trouble for a major treatment in development. Yet in reality, Intercept's drop only proves that investors in high-flying sectors like biotech can get twitchy at the faintest sign of bad news.

ICPT Total Return Price Chart

Intercept Total Return Price data by YCharts

What's driving Intercept lower?
Investors have been extremely optimistic about the prospects for the company's obeticholic acid, which is Intercept's primary treatment in development. Right now, Intercept Pharmaceuticals has run phase 3 trials on obeticholic acid's use in treating primary biliary liver cirrhosis, and it is also running a phase 2 trial for the treatment's use for nonalcoholic steatohepatitis or NASH.

So far, obeticholic acid's performance has been extremely encouraging. Late last month, the Food and Drug Administration granted Intercept Pharmaceuticals fast-track status for obeticholic acid as a liver cirrhosis treatment. By earning fast-track status, Intercept Pharmaceuticals gets a closer relationship with the FDA throughout the process of reviewing the treatment, and it also earns priority review for obeticholic acid when the company submits an application for approval. Based on that designation, Intercept Pharmaceuticals expects to file an application for approval within the next year, with the hope that it will be approved by the end of 2015.

Source: Idaho National Laboratory, Flickr.

Yet investors have been waiting anxiously for further study data on obeticholic acid's effectiveness for NASH, and at an investor conference yesterday, a key Intercept executive said that new data from its FLINT phase 2 study would probably not be available in July as initially expected. Even as some analysts speculated that the delay probably wouldn't last more than a month, investors nevertheless kept pushing the stock lower today.

Does the delay matter?
Investors in Intercept Pharmaceuticals are concerned about the phase 2 study because the sales potential of obeticholic acid for NASH patients is much higher than for liver cirrhosis. What they'd like to see is unqualified proof supporting the use of the treatment, and the sooner they see it, the more confident they'll be about the stock's future prospects.

In the grand scheme of things, a short delay doesn't matter much for Intercept's long-term prospects. The fear, though, is that the delay could signal a problem with the data that the company is hoping will work itself out before releasing overall results. The longer investors wait, the more uncertainty there'll be about the results.

Yet some have argued that Intercept's delay might actually be good news. One analyst suggested that the delay could give Intercept Pharmaceuticals the chance to get FDA designation as a breakthrough therapy, which would open the door to additional benefits for the company going forward. Waiting through a short delay would be more than worth it if it leads to Intercept getting breakthrough therapy status for obeticholic acid.

For the most part, all Intercept Pharmaceuticals' big decline over the past couple of days proves is that investors are impatient when it comes to getting the news they want. In the long run, those who are patient enough to hold onto their shares could well be rewarded handsomely if the treatment proves to be effective.