3 Reasons Goldman Sachs Still Neutral On Intercept Pharma

Shares of Intercept Pharmaceuticals Inc (NASDAQ: ICPT) rose 10 percent in the pre-market trading after FDA approved its drug Ocaliva to treat a rare liver disease.

Ocaliva (obeticholic acid) is approved for the treatment of primary biliary cholangitis, previously known as primary biliary cirrhosis (PBC), in combination with ursodeoxycholic (UDCA) in adults with an inadequate response to UDCA or as monotherapy in adults unable to tolerate UDCA.

However, Goldman Sachs remains on the sidelines.

"We maintain a Neutral rating given the likely slow PBC launch, ICPT's cash needs, and limited drivers until pivotal NASH (nonalcoholic steatohepatitis) data in 2H18+," analyst Salveen Richter wrote in a note.

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

On the upcoming conference call, the analyst will look for details on pricing, payor feedback, the launch and confirmatory studies (COBALT).

"We model for $60K/year (step-down to $15K in 2019 on NASH approval) and U.S./EU5 prevalence of ~15K/13K. Due to the chronicity of PBC and infrequent (1&mndash;2/year) physician visits, we model for a slow launch (GSe 2Q/3Q/4Q16 sales of $0.9/$4.6/$11.0 million vs. consensus $1.9/$5.3/$13.0 million) with 2026 WW peak sales of $170 million," Richter noted.

Richter, who expects a CHMP opinion in the fourth quarter, has a price target of $128 on the stock.

The conference call is scheduled for May 31 at 8:30 a.m. ET.

According to TipRanks, Richter has a success rate of 70 percent with an average return per recommendation of +31.2 percent. The analyst is ranked 53 out of 3,972 analysts.

Shares of Intercept closed Friday's regular trading session at $141.77. At time of writing, the stock was up 6.16 percent in Tuesday's pre-market.