This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

Intercept Looks to Be First in Lucrative Market

Morningstar

Contributor:
Morningstar
Visit: Morningstar

By:

Equity Analyst On The Healthcare Team For Morningstar

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

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.

The stakes in NASH are high, with a crowded pipeline contending for a slice of the $30 billion-plus market opportunity. We believe the potential segmentation of the NASH market will support multiple therapies and combinations, with later-stage NASH presenting a more lucrative opportunity. Closely following Intercept’s OCA is Genfit’s (GNFTF) elafibranor, with phase 3 data likely read out by the end of 2019 and a potential launch in late 2020. Other NASH competitors include Allergan’s (AGN) cenicriviroc, Madrigal Pharmaceuticals’ (MDGL) MGL-3196, Galectin Therapeutics’ (GALT) GR-MD-02, Galmed Pharmaceuticals’ (GLMD) Aramchol, Viking Therapeutics’ (VKTX) VK2809, and Gilead Sciences’ (GILD)  combination therapy, which could launch between 2022 and 2023.

Gilead reported disappointing trial results for selonsertib in cirrhosis in early 2019, slightly improving the playing field for Intercept, but its combination therapy remains a contender. We believe that competition (that is, drugs with strong efficacy and minimal side effects) will probably erode Intercept’s market share in NASH after 2023, but its first-mover status provides the company with a strong advantage.  

Read the full article: Intercept Looks to Be First in Lucrative Market

Disclosure: Morningstar

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal, or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Morningstar and is being posted with permission from Morningstar. The views expressed in this material are solely those of the author and/or Morningstar and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

trading top