Intercept's Ocaliva To Experience 'Sluggish Uptake,' Investment Thesis Now 'Rapidly Shifts' To Execution In PBC

Morgan Stanley's Andrew Berens maintained Intercept Pharmaceutical Inc (NASDAQ: ICPT)'s Underweight rating with a price target of $80. The initiation came after the FCC granted accelerated approval to Intercept's Ocaliva product for treating patients with primary biliary cirrhosis (PBC).

"While approval was widely expected given the unanimous vote by the FDA advisory panel on April 7th, we think ICPT shares will initially react favorably to the label," said Berens. The analyst expected a "rapid" shift to commercialization raising concerns on the drug's "significant tolerability issues" and lack of data to support usage in the PBC market.

Looking forward, Berens stated that since the label provides "broad discretion for clinicians with the exception of dosing," demand will be "predominantly driven by anecdotal experiences, patient acceptance, and payer endorsement." In combination with tolerability concerns and lack of definitive outcomes data, the analyst believes the drug will experience a "sluggish uptake."

Shares of Intercept Pharmaceuticals were up more than 12 percent at $159 in Tuesday's pre-market session.