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Intercept Pharma Drops On Downgrade, Despite FDA Panel’s Yes Vote

Shares of Intercept Pharmaceuticals ( ICPT ) were falling Friday after Morgan Stanley downgraded the stock, saying that a positive FDA panel vote nonetheless pointed toward a restrictive label for its lead drug. Trading in Intercept stock was halted all day Thursday as the advisory committee discussed obeticholic acid, now branded Ocaliva, eventually resulting in a 17-to-0 vote in favor of approving the drug to treat a rare liver disease called primary biliary cholangitis (PBC). The FDA will make a final decision on the drug, and what recommendations will be on its label, by May 29. Morgan Stanley analyst Andrew Berens wrote in a research note that issues raised during the panel discussion could limit the potential market. “The panel unanimously recommended to approve the drug based on the surrogate endpoint used in the phase 3 trial, but failed to endorse usage in advanced PBC patients given the lack of data supporting efficacy, as well as safety concerns,” Berens wrote as he downgraded Intercept stock to underweight from equal weight and lowered his price target to 80 from 100. “According to external consultants, the primary unmet medical need in this patient population is in patients with advanced or aggressive disease, so this lack of an endorsement by the panel has important commercial implications in our opinion, especially if the label is similarly restrictive,” Berens wrote. Berens added that the panel also expressed reservations about using the drug in patients with advanced cirrhosis, or scarring of the liver, due to signs of liver toxicity at high doses. He wrote that this could have implications for Ocaliva’s much-anticipated future launch in non-alcoholic steatohepatitis (NASH), a market that could potentially bring in billions. “We had previously assumed usage of Ocaliva in up to 20% of cirrhotic patients,” Berens wrote. “Given the concerns voiced by the clinicians and the FDA, we have decreased our penetration into NASH patients with cirrhosis to 5% at peak.” Intercept stock, which rose more than 8% Wednesday to a nearly four-month high, fell by as much as 10% in the stock market today . Shares were down 5.5% midday Friday, near 155. Other analysts generally stuck by their ratings on the stock. RBC Capital Markets analyst Michael Yee wrote that the possible PBC restrictions were in line with his below-consensus sales estimates for that indication, but he added that the company could still be an interesting buyout target for a big pharma name like AstraZeneca ( AZN ) or Sanofi ( SNY ). Credit Suisse analyst Alethia Young still says the PBC launch could beat expectations and wrote that the severe cases may not be that much of the market. “We think perhaps at worst the severe population is 15% of patients,” she wrote in her research note affirming an outperform rating. “Based on the super-group study, Intercept thinks 12% may be a high watermark.”

Feeling Tired Of Facebook And Posting Less? You’re Not Alone

In what could be a nightmare scenario for Facebook ( FB ), users are feeling weary about posting personal reflections and updates on their daily lives. A report published by The Information  Web news site says Facebook is trying to reverse a double-digit decline in “original” posts by users, items about their personal lives for friends to see. The decline is a long-term threat to Facebook’s primary moneymaker, the central portion of its website, called News Feed, where user posts appear — and which is infused with ads. The report said personal posts were down 21% from mid-2014 to mid-2015. Overall sharing reportedly fell 5.5% during that period, the article said, citing four people with knowledge of the situation Original posts are a core element of Facebook because they bring the most engagement. They’re classified differently than posts such as links to websites or content that people share. The Information said it had viewed “confidential company data” about several types of content sharing that happens on Facebook. It said Facebook has set up a team in London to help develop a strategy to stop the double-digit decline. Facebook downplayed the issue in a comment to The Information: “People continue to share a ton on Facebook; the overall level of sharing has remained not only strong, but similar to levels in prior years.” According to an article by Bloomberg , CEO Mark Zuckerberg has spoken at Facebook staff meetings this year about the need to inspire personal sharing. It said Facebook has tried several tactics to encourage more of these posts, such as an “On This Day” feature launched last year that brings up memories from past years that users might want to talk about again. It’s also why Facebook is heavily promoting its Live streaming feature, which has attracted strong engagements. The decline in sharing isn’t necessarily a sign of doom for Facebook. User growth has risen steadily year after year, and daily active users numbered 1.04 billion, up 17%. The company also soundly beat fourth-quarter earnings expectations on booming mobile ad revenue. But in the long term, a decline in personal sharing could be a problem for keeping people highly engaged on the world’s largest social networking website. Facebook stock was down 2%, near 111, in morning trading in the stock market today .

‘Egregious’ Depomed Soars After Activist Starboard Targets Drugmaker

Shares of specialty drugmaker Depomed ( DEPO ) jumped Friday after an activist investor took a stake in the company and challenged the management. Starboard Value LP, which has led high-profile efforts to shake up Darden Restaurants ( DRI ) and Yahoo ( YHOO ), announced that it had acquired a 9.8% stake in Depomed and sent a scathing letter to the company’s CEO, James Schoeneck, and the board of directors. “Specifically, we have significant concerns regarding serious corporate governance deficiencies, questionable capital allocation decisions, and egregious actions taken by the board to stymie strategic interest in acquiring Depomed,” wrote Starboard member Jeffrey Smith in the letter. The last item referred to the board’s poison-pill provision adopted last year when Horizon Pharma ( HZNP ) attempted a hostile takeover, which was ultimately foiled . That seemed to be at the root of Starboard’s complaint, and Smith charged that Depomed’s board is making further moves to limit shareholder power. Smith cited a proposal to reincorporate Depomed, currently headquartered in Newark, Calif., in the state of Delaware, mentioned in the recent  notice of the annual shareholder meeting to be held May 18. “Upon further review, we identified unconventional provisions that indicate management and the board are using the reincorporation proposal as a tactic to further entrench themselves by suppressing shareholder rights that currently exist under Depomed-California,” Smith wrote. Starboard filed a Record Date Request Notice asking to call a special shareholder meeting. Depomed issued a brief response saying that the company “welcomes open communications with its shareholders” but that it hadn’t received any communication from Starboard before the letter. It urged shareholders to take no action. The moved came three days after Smith resigned as chairman of Darden Restaurants, a position he gained in 2014 after leading a similar, successful fight to replace Darden’s board. Starboard is also currently attempting to replace the board of Yahoo. Depomed stock shot up more than 12% in morning trade on the stock market today , near 17. The stock had been trading for less than half its 52-week high — 33.74 back on July 21 — an unusually big drop, even by drug stock standards. Yahoo stock rose fractionally intraday, while Darden Restaurants was little changed.