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Intercept Looks to Be First in Lucrative Market

But the pipeline of competing drugs is full, so we don’t see a moat for the biotech.

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 Intercept Pharmaceuticals (ICPT) is an emerging biotechnology company with one of the most advanced pipeline candidates for nonalcoholic steatohepatitis, or NASH, a massive market with high unmet need. Obeticholic acid, or OCA, is already approved in primary biliary cholangitis, a rare liver disease, which provides the company with steady revenue but is limited to a small patient population. Intercept’s valuation depends heavily on OCA’s potential in NASH.

NASH is a common but serious liver disorder linked to obesity and diabetes, with limited treatment options. Liver fat buildup leads to fibrosis, the thickening and scarring of liver tissue, which could progress to cirrhosis, liver failure, heart disease, and death. OCA has shown impressive efficacy in improving fibrosis in phase 3 trials, but its side effect profile, which includes severe itching and increased bad cholesterol, leaves room for competition down the road. However, given its advanced stage in the pipeline, Intercept has a high likelihood of being first to the lucrative NASH market in 2020.

Anna Baran does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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