Intercept shakeup continues as CMO, former NASH chief resigns. Is the NASH biotech abandoning its flagship disease?
First, they said goodbye to their founding CEO after 18 years. Now, Intercept is losing its CMO too, an executive who led the company’s flagship NASH program for much of its clinical development.
Intercept revealed in an SEC filing Monday that Jason Campagna tendered his resignation and will leave the company on March 5. His departure comes three months after the company abruptly announced they were replacing longtime CEO Mark Pruzanski with COO and former Sanofi commercial chief Jerry Durso.
Intercept said Campagna was leaving for other opportunities, emphasizing there was no “disagreement regarding any matter related to the Company’s operations, policies, or practices,” but analysts suggested his departure could be part of a broader shift as the company continues to game out its future, after the FDA rejected their long-watched NASH drug last June.
Campagna led the company’s NASH program after he was hired from The Medicines Company in 2016. His departure, along with the decision to replace Pruzanski with a CEO whose expertise is on commercializing, rather than developing, drugs could signal that Intercept thinks it will be difficult to collect the NASH data the FDA wants and is instead deciding to focus on its already approved PBC program.
“We would expect a reasonably smooth transition,” RBC Capital’s Brian Abrahams wrote to investors Monday, noting that acting CMO Gail Cawkwel worked closely with Campagna. “That being said… we believe the company may be increasingly recognizing the potential NASH regulatory challenges and is reinforcing the core PBC franchise to optimize value and sustainability, with the possibility of a prolonged or more onerous NASH path – which may become increasingly likely as time progresses.”
It’s enough volatility to convince Abrahams to sit “on the sidelines” until they give further clarity. Intercept’s stock $ICPT was down 6% before the bell from $29.86 to $27.91. The stock was valued at just over $90 a year ago.
In an email, an Intercept spokesperson denied that there was any shift, saying that they were “laser-focused” on coming to an agreement with the FDA on how to resubmit their NDA. He added that a readout from another Phase III NASH trial is also do out before the end of the year.
SVB Leerink’s Thomas J. Smith, though, noted the company also recently said goodbye to US commercial & strategic marketing vice president Richard Kim and promoted to commercial chief Linda Richardson, who had previously run their cholestasis programs, which includes PBC.
“The near and perhaps medium-long term focus may be on maximizing the value of this rare cholestatic liver disease franchise, rather than expanding aggressively into the broader NASH commercial arena,” he told investors. “While ICPT managements’ recent comments have suggested a continued desire to pursue NASH approval pending alignment with the FDA on a path forward for obeticholic acid (OCA) NDA resubmission, we believe some investors may read these personnel moves as a signal of a larger strategic shift within ICPT away from NASH.”
Intercept was one of the first companies to bring NASH, a fatty liver disorder believed to afflict more than 10 million Americans, onto the drug development scene, presenting data at JPM 2014 that sent their stock skyrocketing. The biotech, though, did not emerge unscathed from the same clutch of clinical failures that subsequently plagued a series of small biotechs and larger companies such as Gilead.
In 2019, their Phase III trial produced mixed results, hitting on one primary endpoint related to fibrosis but missing the primary endpoint around NASH itself. They believed that was enough for approval, and Pruzanski lashed out at the FDA when their decision came over a year later, accusing the agency of moving the goalposts.
Intercept has options outside of NASH. The same drug they were trying to get approved for the blockbuster indication is already approved for PBC, or primary biliary cholangitis, an autoimmune disease that affects the liver. The pipeline beyond those two indications, however, is mostly bare.
At their Q3 earings, the company said they were in the midst of downsizing to maximize their PBC business, which grossed $80 million that quarter, and were still in discussions with the FDA over NASH. Another update is expected Thursday, when Durso delivers his first annual report.