Today, Intercept Pharmaceuticals (NASDAQ:ICPT) disclosed data from its clinical study of a proposed treatment for patients with liver fibrosis due to nonalcoholic steatohepatitis (NASH). Reportedly, the primary endpoint was met in the study. Of course, this would generally be considered good news. However, ICPT stock fell hard this morning.
Intercept is focused on advancing treatments for progressive non-viral liver diseases, a category that includes NASH. This condition can result in “progressive fibrosis (scarring) that can lead to cirrhosis, eventual liver failure, cancer and death.”
So, under normal circumstances, Wall Street should be glad to receive positive clinical results from Intercept. In the new analysis of the Phase 3 study of obeticholic acid (OCA) to treat NASH, a 25 milligram dose “met the agreed primary endpoint of improvement in liver fibrosis without worsening of NASH at 18 months.”
This result is consistent with an older analysis announced in February 2019. That analysis, much like the newly announced one, showed that 25 milligrams of OCA had a “statistically significant effect on fibrosis improvement.”
What’s Happening With ICPT Stock?
ICPT stock declined quickly today in spite of these positive results. At one point, the stock was down by 10%. Now, shares are barely trading in the green.
This all might seem like a counterintuitive response. As Intercept President and CEO Jerry Durso says, the results “demonstrate the antifibrotic effect of OCA,” highlighting that the candidate could be “an important treatment for people living with fibrosis due to NASH.”
Why did ICPT stock decline on this news? Well, Intercept issued another update this morning. The company revealed that it will be resubmitting its application for its NASH treatment to the U.S. Food and Drug Administration (FDA).
Presumably, Intercept is doing this in the wake of the new, positive clinical results. Notably, the FDA had declined to approve OCA in 2020. At that time, the agency said the benefits of OCA were “uncertain” and did not “sufficiently outweigh the potential risks to support accelerated approval.”
So, given the price action, it’s possible that current ICPT stock investors are worried the FDA will decline to approve OCA yet again. If that happens, it would be a major blow to Intercept Pharmaceuticals.
Still, Durso remains confident. Sooner or later, sell-side traders will learn whether their bearish bet was right, or whether Intercept Pharmaceuticals will prevail.
On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.