Alfasigma reaches deal to buy Intercept for $800m

After two FDA rejections for non-alcoholic steatohepatitis (NASH) therapy obeticholic acid (OCA), Intercept Pharma has agreed to be taken over by Italian drugmaker Alfasigma in a deal that values the company at around $800 million.

The company’s $19-per-share valuation reflects its diminished value, resulting from the failure of OCA to get over the finishing line for NASH, although, it does sell another formulation with the same active ingredient – known as Ocaliva – which is the only second-line treatment for the liver disease primary biliary cholangitis (PBC).

Intercept is predicting sales of between $320 million and $340 million from Ocaliva this year from its use in PBC, but approval in NASH would have unlocked a much bigger market, given that the disease affects around 5% of all people in the US, according to American Liver Foundation (ALF) figures.

Privately-held Alfasigma said the agreement would boost its presence in the US market and grow its portfolio in liver diseases and digestive system disorders. Adding Ocaliva will be a significant boost to its turnover, which was reported to be a little less than €1 billion in 2020.

The Italian company’s offer is an 82% premium on Intercept’s closing price of $10.44 yesterday, and not too far off its 52-week high of almost $22. The deal is expected to close by the end of this year.

“Today’s proposed acquisition is aligned with our strategy to build presence in the US market, with a focus in our core gastroenterological area, while adding another important asset to our innovation pipeline,” remarked Alfasigma's board chairman, Stefano Golinelli.

Intercept may have given up on NASH, but it is still working on an Ocaliva line extension in PBC, a fixed-dose combination of the drug in combination with bezafibrate, which is in phase 2 testing and generated positive results at the EASL congress in Vienna earlier this year.

Jerry Durso, Intercept’s chief executive, said that Alfasigma’s offer “delivers significant value to shareholders” and “recognises the value of our portfolio, R&D, and commercial capabilities, and our talented people across the organisation.”

The company is in the throes of a restructuring drive announced in June, when it confirmed it was abandoning all NASH-related R&D and cutting its headcount by around a third with the aim of saving around $140 million in operating costs.

It was once at the front of the NASH development queue, but weak results for OCA in clinical trials scuppered its chances of approval. Now, rivals including Madrigal Pharma with its resmetirom candidate – currently under review by the FDA – as well as Gilead Sciences, Viking Therapeutics, and Terns Pharma are vying to bring the first drug for NASH to market.