FDA rejects Intercept’s pitch for NASH as CEO fires back at the agency’s ‘evolving’ guidelines
In a major setback for an already ailing field, the FDA has rejected obeticholic acid, the Intercept Pharmaceuticals compound that would have been the first drug specifically approved to treat NASH.
The Intercept drug had, in February of 2019, yielded the first positive Phase III results for the obesity-related liver condition and its subsequent NDA submission was closely watched around the industry as the first test for how regulators would treat the nascent but fast-growing field.
Yet confidence that an approval would come had been waning for months. The drug was scheduled for an advisory committee hearing on April 22, but in March Intercept announced the meeting was delayed to June 9th due to Covid-19. Then in May, Intercept said that hearing was postponed again to “accommodate the review of additional data requested by the FDA.” Intercept didn’t specify what data the FDA wanted, but shares flagged and analysts were divided over how ominous the delay was. SVB Leerink’s Thomas Smith wrote it “injects additional uncertainty” on “potential approval/label/timing.”
Now, Intercept says, the FDA rejected the drug because they were uncertain if the surrogate endpoint from their Phase III trial — reduction in liver fibrosis — would actually translate into benefit for patients. The FDA invited them to re-submit with longer term data from the Phase III trial, but Intercept spoke harshly against the decision.
In a statement that could lay the groundwork for an appeal, CEO Mark Pruzanski criticized the agency for canceling the advisory committee hearing, said their review as “incomplete,” and argued the agency repeatedly moved the goalposts for approval in a way that could prevent the development of new therapies.
At no point during the review did the FDA communicate that OCA was not approvable on an accelerated basis, and we strongly believe that the totality of data submitted to date both meet the requirements of the Agency’s own guidance and clearly support the positive benefit-risk profile of OCA. We are disappointed to see the determination the Agency has reached based on an apparently incomplete review, and without having provided medical experts and patients the opportunity to be heard at the anticipated Adcom on the merits of OCA, which is a designated Breakthrough Therapy. The FDA has progressively increased the complexity of the histologic endpoints, creating a very high bar that only OCA has so far met in a pivotal Phase 3 study. On behalf of the hepatology community, we are very concerned that the Agency’s apparently still evolving expectations will make it exceedingly challenging to bring innovative therapies to NASH patients with high unmet medical need.
Shares of the company nosedived on the news from $77 to to $48, shaving off over a $1 billion in market cap. Projecting Intercept to trend toward $50, Jefferies’ Michael Yee called the news “a surprise downside scenario that was not expected and unfortunately leaves investors in a prolonged period of challenging uncertainty now.”
On a conference call Monday morning, Pruzanski told analysts that the last he heard from the agency was that they would get back to Intercept about rescheduling an advisory hearing. Then on the PDUFA date of June 26, they received a letter that an improvement in fibrosis — which, Intercept said, the FDA had indicated would be enough for approval — wasn’t enough to prove the drug was worth its risk.
“What’s new here is the questioning — without really substantiation, as far as we could tell — on the benefit side,” Pruzanski said. “It’s hard to know what’s going on.”
Although mixed in their reactions to the news, analysts expressed expressed broad surprise the FDA and Intercept would be on such markedly different pages, given that the drug had achieved a breakthrough designation that is supposed to open close channels between the parties. The fracture, they said, could be specific to Intercept, but could also point to where the bar will be for future NASH submissions.
“It is unclear at this point how significantly the CRL affects OCA’s regulatory path forward in NASH,” Smith wrote in a note following the news, “nor are the broader implications on the regulatory pathway for other drugs being developed in NASH clear at this time.”
The rejection is the latest in a series of struggles for the NASH field. NASH, or nonalcoholic steatohepatitis, refers to fat buildup in the liver that causes inflammation and scarring. It was little known in the biotech world before the 2014 JP Morgan conference, when Intercept released a batch of Phase II data that sent their stock soaring. With millions of Americans potentially suffering from the condition, the disease has since attracted significant buzz, but in the past year, it’s seen a string of trial failures, most notably from Gilead.
Although numerous drugmakers have early-stage candidates in the pipeline, the Intercept CRL could push the first approval back significantly. The other major late-stage effort, from the French biotech GenFit, failed in May.
Although it’s impossible to know the precise guidance the FDA gave Intercept and other companies, significant questions did exist for the efficacy of their drug and other NASH compounds. Companies have largely focused on testing to see if their medicines can halt fibrosis or fat accumulation, but they have not yet proven that those will then lead to improved survival or prevent cirrhosis.
In a note, Stifel’s Derek Archila argued the CRL was a result of a single adverse event: raised LDL cholesterol, which in turn raised cardiovascular risk. That, he said, could’ve tipped the risk-benefit profile calculus for the agency.
Analysts will be watching closely to see what data the FDA asks for and its implications for all NASH developers, but there will be immediate implications for Intercept. The company hired a sales team in preparation for an approval and, Yee noted, is currently burning through $300 million per year, with only $554 million and $690 million in debt.
“As we prepare to meet with FDA, we will simultaneously begin planning to make sure we’re in a good position financially,” Pruzanski said on the call.