Biotech Movers: Versartis, Inc. (NASDAQ:VSAR) and Intercept Pharmaceuticals Inc (NASDAQ:ICPT)


It has been a tough close to the week for a number of biotech companies. Disappointing clinical trial data, as well as some unexpected input from the US Food and Drug Administration (FDA), has dominated the news in the space and the companies affected have taken a hit as a result.

Here are the two companies impacted the most with a look at what is moving each and where we expect them to go next.

The two companies in our crosshairs are Versartis, Inc. (NASDAQ:VSAR) and Intercept Pharmaceuticals Inc (NASDAQ:ICPT).

So, let’s kick things off with Versartis.

This one is a trial data related move. On Thursday, the company put out data from one of its lead investigations – a trial set up to try and demonstrate that a drug called somavaratan could be both safe and effective in the treatment of pediatric growth hormone deficiency (GHD). This is a condition with very few treatment options and one for which those treatment options that do exist basically don’t work that well. However, with the study that is in focus here, all that Versartis had to do was to demonstrate that somavaratan was non-inferior to the current standard of care treatment.

And unfortunately for the company and its shareholders, it was unable to do even that.

As per the latest release, Versartis reported that the trial did not meet its primary endpoint of non-inferiority and that the company is evaluating its options going forward with the asset. In the biotechnology space, and especially on the back of failed clinical trial, this is generally rhetoric that suggests it is the end of the line for this asset, at least in this indication, and as sponsored by this company.

Markets are understandably viewing the development as very negative for Versartis and, at last count, the company was trading at an 85% discount to its prerelease market capitalization and a share price of $3.50 a share.

In line with the depreciation, we have also seen another company affected by the news. The company is Ascendis Pharma A/S (NASDAQ:ASND). Ascendis is carrying out its own late-stage trial in the same indication, GHD, and the two companies have long been seen as competitors in this space. With Versartis and somavaratan now seemingly out of the picture, the door is wide open for Ascendis to jump in and beat its competitor to the post. In light of this, markets are trading up on Ascendis, with the company jumping close to 40% ahead of the open on Friday.

Next up, Intercept.

This one is drug-related and is negative from a company perspective but it’s not rooted in an ongoing trial – instead, Intercept has taken a hit on the back of the issuance of an FDA warning for an asset that’s already at0market. Intercept developed and now markets a drug called Ocaliva (obeticholic acid) in an indication of liver disease and, as per the latest development, the FDA is concerned about some of the practices associated with dosing in patients taking the drug.

Here is a quote from the letter:

“Nineteen cases of death were identified, of which eight provided information about the patient’s cause of death. The cause of death was reported to be worsening of PBC disease in seven cases, with cardiovascular disease cited in the other case. Seven of these eight cases described patients with moderate to severe decreased liver function who received Ocaliva 5 mg daily, instead of a dose no greater than 10 mg twice weekly as recommended in the label prescribing information for patients with this extent of decreased liver function.”

Basically, then, some patients are receiving a far higher dose of the drug than is recommended and this has been shown (according to the numbers above) to be a cause of death in a portion of the patients in question.

Of course, as a drug maker, you never want to see an asset in your portfolio be responsible for patient deaths. With that said, however, the deaths are due to physician error in dosing as opposed to the drug itself (well, it is due to the drug, but at higher levels than are recommended). This means that, while the company’s shares slid around 25% on the news, there’s a good chance we’ll see Intercept recover moving into the close of this month and, beyond, into October.

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