May 31, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Rumors are heating up again that New York-based Intercept Pharmaceuticals is a hot takeover target.
That’s not new. There were rumors in April that Foster City, California-based Gilead Sciences was interested in buying Intercept. Much of the crystal ball-gazing in April was sparked by an April 7 vote by the U.S. Food and Drug Administration (FDA)’s Gastrointestinal Drugs Advisory Committee that unanimously recommended accelerated approval of Intercept’s Ocaliva (obeticholic acid) to treat primary biliary cirrhosis (recently renamed primary biliary cholangitis, or PBC). If approved, the drug would be the first to hit the market for PBC in 20 years.
And in February, it was rumored that AstraZeneca was eyeing the company. And before that, rumors floated that Dublin, Ireland-based Shire might buy Intercept, and GlaxoSmithKline has also been mentioned.
On May 27, the FDA granted Ocaliva accelerated approval for patients with PBC in combination with ursodeoxycholic acid (UDCA) in adults with inadequate response to UDCA or as monotherapy in adults unable to tolerate UDCA.
“Ocaliva fills an important unmet need for the many patients with PBC who have an inadequate response to or are intolerant of UDCA, which until now has been the only approved treatment,” said John Vierling, professor of Medicine and Surgery at Baylor College of Medicine, in a statement. “Ocaliva has demonstrated a clinically meaningful improvement in lowering ALP, a liver enzyme and biomarker that is used to track disease progression in patients with PBC. Importantly, Ocaliva maintained durable ALP reductions, which is critical for treatment of a chronic disease like PBC.”
PBC is a fairly rare condition that primarily affects women between the ages of 30 and 60. Although the FDA’s approval of Ocaliva for PBC is a positive thing, the big money may lie elsewhere.
Bloomberg’s analysts’ consensus suggested that Ocaliva could bring in sales of $1.6 billion by 2020. Alethia Young, an analyst with Credit Suisse, estimates that the drug’s sales for 2016 could hit $13 million and in 2017, could reach $108 million.
Good, but not dazzling. The big money is the possibility the drug might be approved for nonalcoholic steatohepatitis, or NASH. Unlike PBC, which is fairly rare, NASH is found in about 2.5 percent of the U.S. population and there are no approved drugs on the market. Most analysts project the market for a NASH drug as up to $35 billion.
Intercept isn’t the only company aiming at the NASH market, though. Gilead (GILD) and Shire (SHPG) are also working on compounds.
Andrew Berens, an analyst with Morgan Stanley, went out on a limb and projected Ocaliva could generate sales of about $292 million from PBC, but could have peak revenue for NASH of about $8.6 billion in the U.S. and Europe. That’s if the drug is approved for NASH, which is not a sure thing. “We model NASH probability of success of 45 percent,” Bidnessetc reported Beren observing, “with peak revenues of $4.1 billion in the U.S. and Europe.”
That’s the optimistic forecast. The bear scenario has the drug hitting sales of $2.9 billion in both NASH and PBC.
Writing for Bidnessetc, Aliya Kaleem says, “Gilead could be one of the drug-makers to eye Intercept and Ocaliva. The biotech company faces risk of declining revenue due to maturing sales of its HCV franchise. Gilead is already interested in the NASH treatment market and Ocaliva could be a key asset to help the biotech giant in its efforts in the said treatment area.”
Intercept Pharmaceuticals is currently trading for $141.77.
