Nonalcoholic steatohepatitis (NASH) is liver inflammation caused by a buildup of fat in the liver. Many people live with fatty livers, but in some of them only, the fat causes chronic inflammation of the liver - fibrosis – cirrhosis – liver failure and death. The disease is called Nonalcoholic steatohepatitis because its complications are similar to the liver disease that is caused by long-term, heavy alcohol drinking, but without being alcohol abusers. Currently there are no approved drugs to treat NASH.
Studies have shown that over a ten year period at least 10% of NASH patients will develop cirrhosis. Liver-related mortality due to NASH is ten-fold that of the general population.
Recent studies estimate that approximately 12% of the U.S. adult population has NASH, while 2.7% (potentially more than six million patients) are believed to have advanced liver fibrosis or cirrhosis due to progression of the disease. The proportion of liver transplants attributable to NASH has increased rapidly in past years and over the next decade the disease is projected to become the leading indication for liver transplant ahead of chronic hepatitis C and alcoholic liver disease.
The cause of the disease is still unclear. But an effective treatment seems to be on its way to the market to save millions of patients from debilitation and death and bring back the integrity and importance to the biotech sector, which, in our opinion, is still underestimated and overlooked by traditional industries’ investors.
Intercept’s (ICPT) drug for (NASH) is obeticholic acid (OCA) and the FLINT trial that has the outstanding results is sponsored and conducted by the National Institute of Diabetes & Digestive & Kidney Diseases (NIDDK), a part of the National Institutes of Health, at eight leading US academic hepatology centers comprising the NIDDK's NASH clinical research network (CRN).
Data Safety Monitoring Board (DSMB) has ordered stopping the trial with the drug after reviewing liver biopsy data from before and at the end of the treatment period in approximately half of the 283 randomized patients, The DSMB analysis demonstrated that OCA resulted in a highly statistically significant improvement (p=0.0024 on an intention-to-treat [ITT] basis) in the primary histological endpoint, defined as a decrease in the NAFLD Activity Score (NAS) of at least two points with no worsening of fibrosis, as compared to placebo. The patients who had not yet completed the trial and therefore did not have a second biopsy were treated as non-responders in the ITT analysis. The pre-defined threshold of statistical significance for stopping FLINT was p < 0.0031.
Intercept discussed NASH and the FLINT trial in a conference call yesterday. The replay of the call is now available on the Intercept website at http://ir.interceptpharma.com for two weeks.
Intercept's collaborator Dainippon Sumitomo Pharma is currently conducting a NASH trial in Japan. This trial is evaluating the safety and efficacy of a once-daily dose of OCA as compared to placebo, with a targeted enrollment of 200 patients. Enrollment is projected to be completed by the end of January 2014 with top-line results expected by the end of 2015.
The stock started an unprecedented rally a few minutes following the announcement of the news. The rallying continued after the conference call and before today’s hours and is still continuing. Citigroup has raised the target to $400 saying it still sees value in the stock despite yesterday's 300% gain. Citi believes the company's $5.4B market capitalization does not reflect its multi-billion dollar opportunity in non-alcoholic steatohepatitis/ liver fibrosis. The firm thinks Intercept's obeticholic acid could top $5 B. a year in sales and keeps a BUY rating on the stock. Oppenheimer raised the target to $360. Both targets have been crossed as the stock, which was trading at $72.39 is trading now at $427. One target that has yet to be reached is $872 by BofA/Merrill.
The news means a lot to the agonizing patients and the healthcare budget, which spends billions of dollars in liver cirrhotic patients’ hospitalization, liver transplants, transplant complications, failures and antirejection treatments.
It also means a lot for those who relate to the biotech industry, including the firms themselves, the shareholders, the venture capital firms and the analysts. It will shift the notion of high risk/low reward to acceptable risk vs. extremely high reward, shifting investors’ attention from what the biotech sector cannot offer, or can do wrong, to what it can uniquely accomplish and how far its stocks can soar. This is especially true at a time when advancements in biological sciences, and capabilities are flying at the speed of light, turning the impossible into possible in what relates to human body diseases or traumatic irreparable injuries and central nervous systems pathologies.
For 25 years now we lived with, and invested in biotech firms that own future technologies. Our portfolio generated huge profits even in the bad market years. We continue to pick large and small sophisticated firms with very promising technologies. You can see them all in our Prohost Letters.
We missed the Intercept train. But the missed stock has tremendously increased our confidence in our choices, beginning with our choice of the biotechnology sector as the best investment vehicle in the stock market today.
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