An Undervalued but High Uncertainty Biotech Firm
Intercept's NASH treatment could be approved years ahead of competition.
Anna Baran: We believe that Intercept, an emerging biotechnology company, is very undervalued by the market. We think that Intercept could have the first approved drug for a very serious but common liver disease known as NASH. I'll mention two points.
First, its timeline: Intercept is significantly ahead of its competitors. It just filed for approval for its drug OCA in the United States. And if the company gets priority review, it could have an approval as early as six months. This is years ahead of its competition. We predict that its competitors won't be entering the market until 2022 and 2023.
Second, we think that the market is overly concerned about the drug's side effects, which we view as manageable. We think that OCA could be taking the majority of patient share early on to do with strong efficacy and a limited number of other treatment options. This would mean that Intercept would enjoy strong returns for several years before other competitors come in and start gaining share.
Overall, while we give Intercept a very high uncertainty rating, due to its strong reliance on this one drug, we see ample upside from the stock's current levels.
Anna Baran does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.