Analyst: Intercept safety concerns overblown
- Shares of Intercept Pharmaceuticals Inc. fell 15% in midday trading on Tuesday after the biotech issued a "Dear Health Care Provider" letter regarding its liver drug Ocaliva.
- While investors seemed concerned about the safety warning, analysts declared the stock sell-off to be an "overreaction."
- The letter warns that liver complications including liver failure and death have been reported in primary biliary cholangitis (PBC) patients with moderate or severe hepatic impairment when Ocaliva is given at higher-than-recommended doses.
The letter, which is included in the health care provider area of the Ocaliva’s (obeticholic acid) product website, is really a reminder to doctors to start certain patients on a lower dose to avoid complications.
PBC patients with moderate or severe hepatic impairment should be started on a 5 mg dose per week instead of the 5 mg daily dose.
The label goes on to note that patients should be increased to a 5 mg dose twice weekly if they are tolerating the drug after three months of use and have not reached certain levels of liver enzymes that would indicate liver problems.
The letter also addresses the best ways to treat or monitor patients that experience adverse events, and how to report any issues.
While the contents of the letter are serious, all of the included information is also on the label of the drug.
Jefferies analyst Michael Yee believes the stock reaction is overblown. "We believe the sell off as the result of the 'Dear Healthcare Provider Letter' is an overreaction and believe risk/benefit of OCA remains favorable," he wrote in a Sept. 12 note to clients.
PBS is a rare disease with a small patient population. Yet, Intercept is currently testing Ocaliva in patients with non-alcoholic steatohepatitis (NASH). A Phase 3 study of the drug in this much larger patient population is expected to readout in early 2019.
"Based on feedback the drug has been very well tolerated, received and adopted (sales exceeding expectation) in the appropriate patient population (i.e., vast majority of PBC patients), therefore this does not change our thesis because it’s a niche population and Intercept is being conservative in reminding physicians of this patient population," added Yee, who recommends the stock with a 'Buy' rating.
- Intercept Pharmaceuticals Dear Health Care Provider
Follow Lisa LaMotta on Twitter