Shares of Intercept Pharmaceuticals fell more than 10% Tuesday following a decision by the company’s board of directors to cut 25% of its headcount/ The job cuts follow the failure to gain regulatory approval for its treatment of fibrosis due to nonalcoholic steatohepatitis (NASH).
In an 8-K filing with the U.S. Securities and Exchange Commission, Intercept Pharmaceuticals said it will eliminate approximately 170 employees as part of an effort to streamline the company’s operations and reduce operating expenses. Even as it undergoes a streamlining process, Intercept maintains the cuts will allow the company to preserve the “critical resources needed” to support the continued development of its programs for NASH and primary biliary cholangitis.
Despite the CRL, Intercept said it intends to continue to pursue regulatory approval of obeticholic acid for the treatment of liver fibrosis due to NASH. In June, the U.S. Food and Drug Administration issued a Complete Response Letter to Intercept Pharmaceuticals for its NASH treatment, obeticholic acid (OCA). According to a statement put out by Intercept, the CRL indicated that the FDA could not approve obeticholic acid due to uncertainty about the efficacy of the treatment. Also, the FDA raised concerns that the Intercept-developed drug may be too risky to provide to these patients. The FDA recommended that Intercept submit additional post-interim analysis efficacy and safety data from an ongoing study in support of potential accelerated approval and that the long-term outcomes phase of the study should continue.
Intercept sought regulatory approval of OCA following positive data from the Phase III REGENERATE study. The company said that a once-daily treatment of OCA 25 mg met the primary endpoint of fibrosis improvement with no worsening of NASH at the planned 18-month interim analysis. Intercept said that in the primary efficacy analysis, a numerically greater proportion of patients in both OCA treatment arms compared to placebo achieved the primary endpoint of NASH resolution with no worsening of liver fibrosis. The news regarding both arms failed to reach statistical significance, the company said. However, by the design of the study, only one of two primary endpoints was required to be met, Intercept said this morning. The OCA 25 mg arm did just that, as BioSpace previously reported.
NASH is a serious progressive liver disease caused by excessive fat accumulation in the liver that induces chronic inflammation, resulting in progressive fibrosis that can lead to cirrhosis, eventual liver failure, cancer and death. Advanced fibrosis is associated with a substantially higher risk of liver-related morbidity and mortality in patients with NASH, and the disease is projected to become the leading cause of liver transplants in the United States.
The cuts are expected to begin in the third quarter of the year and will mostly be complete by the end of 2020. Intercept expects it will incur aggregate charges of approximately $18.0 million, consisting primarily of severance pay and related termination costs. Additionally, Intercept said that amount includes approximately $3.5 million with respect to non-cash stock-based compensation. The costs are expected to be incurred during the third quarter, the company said in the filing.