Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares in Intercept Pharmaceuticals (NASDAQ:ICPT) slid by more than 10% earlier today after the company announced the design of its upcoming phase 3 trial for obeticholic acid, or OCA, for the treatment of nonalcoholic steatohepatitis, or NASH.

So What: The clinical stage biotech company announced that it has concluded discussions with FDA and EU regulators regarding the design of this key phase 3 trial.

The trial is expected to enroll up to 2,500 patients -- a bit higher than some industry watchers were expecting -- to assess OCA's ability to help NASH patients. The trial includes a pre-planned interim look at data across 1,400 patients after 72 weeks. That interim look will serve as the basis for a potential FDA and EU application for approval.

Patients enrolled in this trial are at high risk for disease progression, and the primary endpoints of the trial include fibrosis improvement without NASH worsening and NASH resolution without a worsening of fibrosis. Those endpoints should offer up the best chances for proving that OCA can reduce liver damage that would otherwise lead to liver transplant; however, they're slightly different from the primary outcomes sought in OCA's successful phase 2 Flint study. This difference, combined with the larger-than-expected trial size, is likely the catalyst behind today's drop. 

Now What: Although cardiovascular risks are common in NASH patients, the company says that the FDA will not require a separate cardiovascular outcome study of OCA in order to win approval, which should save Intercept Pharmaceuticals some time and money and help improve odds of an eventual regulatory green light.

In January, the FDA granted OCA breakthrough status that should accelerate the drug's timeline toward such a potential approval. However, large, late-stage studies are incredibly expensive, and there's no certainty that OCA will duplicate its prior success from mid-stage trials, especially given the size of this new trial and the slightly different endpoints.

For that reason, Intercept Pharmaceuticals is a bit of a high-risk bet. The company already has a $7.5 billion market cap, which could indicate that a lot of OCA's eventual value is already reflected in its shares price. Certainly, the market for treating liver disease, such as NASH, is big, and the success of hepatitis C drugmakers indicate that liver disease drugs can be a big commercial success, but given this stock's current valuation, I'm still unwilling to step in and buy it on this drop.