Intercept Pharmaceuticals (ICPT) Stock: Should You Be Worried About Declines?

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Intercept Pharmaceuticals Inc (NASDAQ: ICPT)

Intercept Pharmaceuticals is having a rough day in the market today. However, after yesterday’s strong movement in the market, a big question is popping up for many. Should investors be concerned about the declines we’re seeing on ICPT today? Today, we’ll talk about why we saw strong gains on the stock yesterday, why we’re seeing declines today, and whether or not investors should be concerned about ICPT. So, let’s get right to it…

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ICPT Posts Strong Gains On FDA Announcement

As mentioned above, yesterday was an incredibly strong day for Intercept Pharmaceuticals, and for good reason. The company has been working on a liver drug. The drug is obeticholic acid and is designed as a therapy for patients not responding to normal treatment. Yesterday, it was announced that Food and Drug Administration staff reviewers support the work the company is doing on the liver drug. While the drug is still in the clinical phase, the announcement that the FDA is backing the company’s work was overwhelmingly positive, sending the value of ICPT up in a big way yesterday. Here are the comments from the FDA staff reviewers:

The U.S. Food and Drug Administration’s staff reviewers on Tuesday supported the use of Intercept Pharmaceuticals Inc’s liver drug as a monotherapy in patients who did not respond to standard-of-care treatment. The drug, obeticholic acid, is being reviewed for use in patients with primary biliary cirrhosis, a rare liver disease resulting from an autoimmune destruction of the bile ducts. The FDA staff reviewers said they were unable to assess the drug’s safety in more severely affected patients and recommended a less frequent starting dose for such patients. A panel of outside advisers to the FDA is scheduled to meet on Thursday to vote on the drug. The FDA is not obliged to follow the advice of its advisory panels but it usually does so.”

Why We’re Seeing Declines Today

While the news of backing on the treatment from the FDA sent ICPT skyrocketing into positive territory yesterday, the movement we’re seeing on the stock today is quite different. Unfortunately, we’re seeing declines. Currently (11:01), the stock is trading at $153.51 per share after a loss of $10.32 per share or 6.30% thus far today. Once I saw the declines, I decided to search the news to see if there was any negative fundamental news that would support the declines. There was nothing to be found. However, it’s important to keep in mind that price movements in the market tend to happen through a series of overreactions. As such, the declines are relatively easy to explain. While the news was overwhelmingly positive yesterday, investor overreactions sent the value of ICPT far higher than it should have gone. As a result, we’re seeing declines on the value of the stock today, bringing it down to a more sustainable rate before growth can continue.

What We Can Expect To See From ICPT Moving Forward

Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from Intercept Pharmaceuticals. The reality is that the company is working on a treatment that has a large demand in the medical space. However, obeticholic acid isn’t the only reason that I’m bullish on ICPT. The reality is that the company has a long list of approved products that are already driving strong revenue. On top of that ICPT has an impressive pipeline, which will likely lead to more approved products and larger revenues down the road. All in all, with strong products, both approved and in the pipeline, in combination with a strong management team and impressive financials, I don’t see any reason to expect declines on ICPT to last very long. Gains are coming!

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What Do You Think

Where do you think ICPT is headed moving forward? Let us know your opinion in the comments below!

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