Intercept, Madrigal Tumble As FDA Doubts Method Of Testing Drugs

Biotech stocks Intercept Pharmaceuticals (ICPT) and Madrigal Pharmaceuticals (MDGL) were slugged Thursday after the Food and Drug Administration cast doubt on a method of evaluating some liver disease drugs.

On today’s stock market, Intercept stocktoppled 5.7%, to 79.58. Madrigal slipped 5.5%, to 91.13. Viking Therapeutics (VKTX), another player in the market, dipped 3.9%, to 7.71. Allergan (AGN) and Gilead Sciences(GILD) both skidded 1.1%.

The FDA said an improvement in liver damage, known as fibrosis might not be enough to prove the success of drugs that treat nonalcoholic steatohepatitis, or NASH. RBC Capital Markets analyst Brian Abrahams suggested the biotech stocks’ plunge was overdone.

“Given our belief that the share price (of Intercept stock) does not nearly reflect the derisked long-term opportunity in the overall NASH population, we see the move as an overreaction and a buying opportunity,” he said in a report to clients.

Biotech Stocks Test NASH Treatments

Intercept is currently testing a NASH treatment in Phase 3 studies. It’s further along than the other biotech stocks, which are now in mid-stage testing.

NASH is a severe form of nonalcoholic fatty liver disease. In this condition, fat builds up in the liver, causing damage called fibrosis. The worst level of fibrosis is stage 4. Healthier patients have a lower stage of fibrosis.

In February, Intercept said its NASH treatment improved fibrosis without worsening symptoms in patients in stages 2 and 3. The biotech stock also is studying the impact of its NASH treatment in stage 4 patients in a study called Reverse.

On Thursday, the FDA said there’s no evidence to suggest improvement in fibrosis will lead to better outcomes for NASH patients. Further, the administration believes a total reversal in fibrosis “may not be feasible.”

As a result, “the FDA expects to evaluate drugs for the treatment of compensated NASH cirrhosis under the traditional approval pathway,” the administration said in its guidance.

Can Intercept Stock Change The FDA’s Mind?

RBC’s Abrahams expects Intercept to grab approval for a NASH treatment in patients with stage 4 fibrosis in 2023. It’s also possible the biotech stock could change the FDA’s mind, he said.

“FDA’s position seems, in part, based on the implicit assumption that fibrosis improvement in stage 4 patients may not be possible,” he said. “However, if the were shown to be possible in Reverse, this may be compelling evidence for the FDA to change its position.”

He kept his out perform rating on Intercept stock.

https://www.investors.com/news/technology/biotech-stocks-topple-fda-doubts-method-evaluate-nash-treatments/