Intercept to sell in $800M cash buyout after second NASH rejection sank hopes

Intercept Pharmaceuticals plans to hand over its liver disease drug Ocaliva and other pipeline projects to Italian pharma Alfasigma in a $19 per-share cash deal after grappling with repeat FDA rejections for its NASH drug candidate.

The deal offer is an 82% premium to Intercept’s closing price of $10.44 on Monday and is expected to close by year’s end, the companies said Tuesday. The acquisition is worth about $750 million to $800 million, “which we view as fair for ICPT holders,” Jefferies analyst Michael Yee wrote in a note shortly after the deal’s disclosure.

Intercept’s shares $ICPT soared about 77% shortly after the markets opened on Tuesday.

Intercept had already shuttered its plans in nonalcoholic steatohepatitis (NASH), putting an end to its R&D work for the fatty liver disease in June after a second FDA rejection of obeticholic acid. The FDA first nixed the drug’s chances in NASH in 2020.

But Alfasigma will still get its hands on a commercial product: Intercept secured approval of the drug in 2016 to treat patients with primary biliary cholangitis (PBC), an autoimmune disease that hampers the liver. Sold as Ocaliva, it reeled in about $152 million in the first half of this year. Intercept is also testing obeticholic acid in combination with the lipid-lowering treatment bezafibrate in a Phase II trial in patients with PBC.

Jefferies’ Yee called Ocaliva “an interesting product” because Intercept “basically negotiated all the generic filers to a settlement for 2031 now, so there should be good protection now for 8 more years.”

There are two other PBC drugs in late-stage development. Genfit and Ipsen revealed Phase III data on elafibranor in June, and CymaBay Therapeutics presented Phase III data on its candidate seladelpar earlier this month.

Jerry Durso

“We are pleased to announce this transaction with Alfasigma, which delivers significant value to shareholders. Importantly, it recognizes the value of our portfolio, R&D and commercial capabilities and our talented people across the organization,” Jerry Durso, president and CEO of Intercept, said in a press release.

Alfasigma CEO Francesco Balestrieri said the deal will add to the company’s gastroenterology and hepatology portfolio and expand its growth in the US, where the drugmaker has “significant development objectives.”

Francesco Balestrieri

Aside from gastroenterology, Alfasigma also focuses on vascular diseases and neuroscience. With a little more than €1 billion in 2021 revenue — the most recent financials available — the company is majority-owned by the founder’s family and employs about 3,000 people around the world, according to its website.

Intercept’s work in NASH led a surge in drug development for the tricky condition, which has yet to receive an FDA approval. However, the regulator is expected to make a decision on Madrigal Pharmaceuticals’ resmetirom in March of next year. The field could also face some competition from the emerging class of diabetes and weight loss drugs, some of which are being tested in NASH as well.

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