Shedding light on Intercept’s opaque disclosure

Intercept last week added to its woes after a sharp-eyed investor noticed that modified boilerplate language in the company’s quarterly filing implied further toxicity problems for Ocaliva. The revelation, missed by all the sellside, knocked 8% off the company’s already battered stock price last week.

Without further information about the precise toxicities that the US FDA has apparently been looking into since May it is impossible to quantify the possible problem, but the safety database Advera Health Analytics sheds important light on the matter. Meanwhile, during a major biotech boom, Intercept stands off 68% on the year.

The group’s big knockback, of course, occurred in June when the FDA handed Ocaliva a complete response letter for Nash, apparently citing concerns that activity based on a surrogate histopathologic endpoint might not outweigh potential risks (The dream is over for Intercept, June 29, 2020).

Deeper problems

Already the risk of hepatobiliary events was known, casting doubt over whether Ocaliva’s label would be extended from its narrow approved use in primary biliary cholangitis (PBC) to a broad indication like Nash. However, the latest problems suggested that the problems were deeper still.

In last week’s 10-Q filing Intercept slipped out the fact that the FDA had “begun to evaluate a newly identified safety signal regarding liver disease for Ocaliva ... as a potential risk”. Remarkably, this review had begun in May, but had not been mentioned publicly until now.

Advera, which gets its data from the FDA’s FAERS adverse event reporting system and adjusts for a number of factors to add context and remove duplication, shows several active liver toxicity signals not already cited on Ocaliva’s label.

These include liver failure and portal hypertension, all derived from adverse event reporting from in-market use of Ocaliva for PBC.

In terms of frequency of these events, the relevant metric is the risk odds ratio (ROR). An ROR score above 1 indicates a higher than expected reporting rate for a given adverse event, and while there is no widely accepted benchmark regarding the level triggering a safety signal many in the industry assume that results above 2.0 warrant attention, Advera says.

One caveat is that all of these issues could be related to the underlying disease, since PBC affects the liver, but the higher the ROR the less likely it seems that this would explain away the adverse event seen.

Whatever the reason for Intercept not mentioning the FDA review until last week, the fact that this started in May fits chronologically with the Nash adcom postponement. Investors will now want to know whether the new toxicity signals were behind the June CRL, and whether they presage further restrictions on Ocaliva's approved PBC indication; the label already has a black boxed warning.

But the bigger opportunity in Nash is most at risk. For now the sellside remains incredibly bullish, with 2026 consensus at $2bn, according to EvaluatePharma, even with mounting evidence that this drug is not going anywhere fast.