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Big Opportunity in Liver Treatment for Intercept Pharmaceuticals

The firm's key program for treating NASH is well positioned, but the space is becoming increasingly crowded.

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 Intercept Pharmaceuticals (ICPT) is focused on developing and commercializing therapeutics for chronic liver diseases using its proprietary bile acid chemistry. Its key program, obeticholic acid, or OCA, is being developed in the potential megablockbuster indication of nonalcoholic steatohepatitis, or NASH. OCA received approval as Ocaliva in the orphan indication of second-line treatment of primary biliary cholangitis, or PBC, in patients with an inadequate response to, or unable to tolerate, ursodiol, the only other approved therapy for this indication. While PBC is an attractive opportunity in its own right, the clear value driver for the firm is NASH. As such, the phase 3 interim results expected in 2019 are the key focus for investors.

NASH is a potential $30 billion market opportunity as it is a common but serious liver disorder closely linked to obesity and diabetes; it has limited treatment options currently. While many firms are vying to address this disease, we think Intercept’s OCA is one of the most advanced drugs in clinical development and appears relatively well positioned based on strong phase 2 results. However, its less-than-ideal side effect profile--it increased patients’ LDL cholesterol levels and caused severe itchiness--leaves an opening for future competition and potential combination treatments. Indeed, Gilead (GILD), which has an earlier-stage portfolio targeting various mechanisms of the disease, and other players like Genfit (GNFTF), Novo Nordisk (NVO), and Allergan (AGN) have potential products that could be longer-term winners in this emerging therapeutic area.

Kelsey Tsai does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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