- Intercept Pharmaceuticals will sell rights to its liver disease drug Ocaliva outside of the U.S. to U.K.-based Advanz Pharma, which agreed to pay Intercept $405 million upfront in a deal announced by the companies Thursday.
- Intercept could receive another $45 million from Advanz should European regulators grant Ocavlia an extension of pediatric orphan drug exclusivity. Advanz will also pay Intercept royalties on any non-U.S. sales of Ocaliva in another liver condition known as non-alcoholic steatohepatitis, or NASH, for which it's currently being studied.
- As part of the deal, the "majority" of Intercept employees located outside of the U.S. will transfer over to work for Advanz. Intercept employed 437 staff at the end of last year, 118 of whom were based internationally.
The upfront payment Advanz will exchange for ex-U.S. rights to Ocaliva is nearly equivalent to Intercept's market value at Wednesday's market close and will substantially increase the biotech's available cash on hand.
In a statement, Intercept CEO Jerry Durso said the deal would help Intercept continue to invest in its U.S. business and to fund further drug development, such as in NASH.
Intercept's first and only approved drug, Ocaliva is cleared in the U.S. and Europe to treat primary biliary cholangitis, an inflammatory liver disease that particularly affects bile ducts. Sales totaled $363 million in 2021, with $102 million coming from European countries.
NASH, a widely prevalent but slow-developing disease that can lead to liver scarring, is viewed by the company and analysts as a broader opportunity for Ocaliva. But proving the drug can work to treat the disease, which can be challenging to definitively diagnose, has been a long road for Intercept.
Encouraging early study results sent Intercept shares skyrocketing in value, but they've steadily sunk since, as the Food and Drug Administration wasn't convinced the benefits reported in follow-up testing outweighed the drug's risks. Other NASH drug developers reported clinical trial failures, too, raising doubts about how easily NASH could be treated.
To Brian Abrahams, an analyst at RBC Capital Markets, Thursday's deal gives Intercept additional capital to pursue NASH drug development in the U.S.
"We believe the deal likely reflects [management]'s confidence in continuing to pursue the NASH indication, based on its ongoing work," Abrahams wrote in a May 5 note to clients.
Selling Ocaliva rights also gives Intercept new funding at a time when biotech stocks have retreated in the sector's sharpest market downturn in years, limiting opportunities for companies to raise money through secondary stock offerings.
Shares in Intercept rose by more than 10% Thursday morning on news of the deal, contrasting with a nearly 3% decline in the XBI, a widely followed biotech stock index.
Intercept plans to hold a conference call on Friday to discuss the deal and its earnings for the first quarter.