Amid a rough day on Wall Street, Intercept Pharmaceuticals (NASDAQ:ICPT) represented a bright spot, with shares swinging up 75% before slightly adding to those gains. Catapulting the biopharmaceutical specialist was the announcement that Italy-based Alfasigma will acquire Intercept, seeking to leverage its lead therapeutic Ocaliva. Despite the significant pop in ICPT stock, the overall performance has been disappointing.
According to the accompanying press release, Alfasigma will acquire Intercept for $19 per share in an all-cash deal. Further, the statement revealed that the anticipated transaction will materially expand Alfasigma’s gastrointestinal and hepatology portfolio. As well, the deal should lift the Italian biopharma’s presence in the U.S. market.
As stated earlier, Intercept’s lead medicine is Ocaliva, a farnesoid X receptor agonist approved in the U.S. and several other jurisdictions for the treatment of primary biliary cholangitis (PBC). Ocaliva serves as a second-line treatment — an alternative therapy if the primary fails, stops working or imposes intolerable side effects — for adult patients with an inadequate response to or intolerability toward ursodeoxycholic acid (UDCA).
Per the press release, Ocaliva is the only approved second-line therapy for PBC. As well, it has experienced double-digit year-over-year growth.
ICPT Stock Bids Caps off a Compelling but Also Frustrating Journey
Naturally, Alfasigma insiders expressed satisfaction with the buyout of ICPT stock. In particular, Alfasigma CEO Francesco Balestrieri stated that the buyout “marks another important milestone in Alfasigma’s growth path, particularly with regard to the U.S. market in which we have significant development objectives.”
In addition, Balestrieri highlighted the synergy of the deal to expand Alfasigma’s core business areas of gastroenterology and hepatology. On the other end, Intercept President and CEO Jerry Durso emphasized that the buyout recognizes the value of its portfolio, research and development and commercial capabilities.
On the scientific end, Tuesday’s lift in ICPT stock symbolizes hopes for patients with PBC and other rare and serious liver diseases. According to Allied Market Research, the global PBC therapeutic market reached a valuation of $684 million last year. By 2032, experts project that the sector will hit $1.4 billion, thus underscoring the viability of the acquisition.
Still, that might not be good enough for those who acquired ICPT stock in an earlier time period. Inclusive of today’s pop, shares only gained about 20% in the trailing one-year period.
Why It Matters
As one critical voice pointed out in an internet forum, ICPT stock at one point featured a triple-digit price tag. Prior to the buyout, ICPT carried a lackluster moderate buy rating, breaking down as four buys, six holds and one sell. Yesterday, B.Riley Financial issued a downgrade, which makes the current consensus a hold at three buys, five holds and one sell.
On the date of publication, Josh Enomoto did not have (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.
