Positive phase III data for Intercept Pharmaceuticals Inc.’s obeticholic acid (OCA) in primary biliary cirrhosis (PBC) and plans for regulatory submissions in both the U.S. and Europe were overshadowed Monday as the market reacted to reports of two serious adverse events (SAEs) from a midstage study testing OCA in nonalcoholic steatohepatitis (NASH), sending shares of the company down 12 percent.

Intercept’s stock (NASDAQ:ICPT), which has seen a meteoric rise since early January when it reported stunning data from the phase IIb FLINT study testing OCA in NASH – had jumped more than 600 percent since then – lost $55.10 to close at $407.16 Monday as investors predictably focused on the bad news.

Disclosed in the firm’s 10-K filing late Friday, the two cardiovascular SAEs stemmed from still-blinded FLINT data and involved patients who suffered from NASH as well as other co-morbid conditions. The first patient, a 73-year-old woman who also had type II diabetes and other conditions, reportedly went on to develop congestive heart failure and pulmonary edema before she experienced a stroke and died. The second patient, a 59-year-old woman, suffered other co-morbid conditions and had a history of multiple prior surgeries, hyperlipidemia, abnormally elevated liver enzymes, diabetes, obesity and hypertension. That patient died of a suspected heart attack about two weeks after her last trial visit, about 60 weeks after initiating OCA therapy.

Full data from the study, which is being conducted by the National Institute of Diabetes and Digestive and Kidney Diseases, are expected in July. Since it remains blinded, “we only have a very limited set of information,” noted Mark Pruzanski, president and CEO of Intercept, during an early Monday conference call.

However, based on OCA’s mechanism of action – the drug stimulates FXR – and clinical safety data accumulated to date, Pruzanski said the SAEs are unlikely to be drug-related. The company does not view those events as “indicative of a safety signal, and the FDA has not reported any concern to us,” he told investors.

Through the end of 2013, a total of 10 cardiovascular SAEs had been reported, for an incidence rate of 2.5 percent, and while more SAEs were reported for patients on OCA vs. placebo, the rate does not reach statistical significance, he explained. The previous eight SAEs were considered unrelated to OCA treatment.

To date, Intercept has more than 550 patient years with OCA treatment, including 19 patients who have remained on treatment for four years or longer on OCA monotherapy, Pruzanski said.

According to Cortellis Clinical Trials Intelligence, the FLINT (Farnesoid X Receptor [FXR] Ligand Obeticholic Acid in NASH Treatment Trial) study enrolled a total of 283 patients. The study was stopped early after hitting its primary endpoint in an interim analysis in January. The data safety monitoring board determined that OCA provided a highly statistically significant improvement over placebo (p = 0.0024) on an intent-to-treat basis in the primary histological endpoint, defined as a decrease in the nonalcoholic fatty liver disease activity score of at least two points with no worsening of fibrosis. (See BioWorld Today, Jan. 10, 2014.)

NASH, a serious chronic buildup of fat in the liver that can lead to cirrhosis and death, is estimated to affect roughly 2 percent to 5 percent of the U.S. population in its most severe form and its increasing prevalence puts it on track to become the leading cause of liver transplants.

Pruzanski said Intercept is planning a study to start in the second half of this year to test OCA’s lipid metabolic effects in NASH patients and is considering a phase II pediatric NASH trial.

The company also is working with the FDA on the design of a phase III program, but that likely won’t launch until 2015 and will require the company to raise additional funding.

REGULATORY FILINGS IN PBC

As of Dec. 31, Intercept had about $145 million on its balance sheet, which Chief Financial Officer Barbara Duncan said should fund operations into the third quarter of 2015, including the NASH trials slated for this year as well as the regulatory filings for OCA in PBC.

The company is aiming for a new drug application and a marketing authorization application by the end of this year, based on data from the phase III POISE study reported Monday, showing that, at both the 10-mg dose and 5-mg dose titrated to 10 mg, OCA bested placebo in achieving a reduction in serum alkaline phosphate after 12 months of therapy – 47 percent of patients in the 10-mg group and 46 percent in the titration group hit the endpoint vs. 10 percent in the placebo group.

Being able to titrate the patients, starting at the 5-mg dose and moving up to 10 mg, appears to also mitigate reports of pruritis, the most commonly reported side effect, Pruzanski said.

The POISE study, which enrolled 217 patients, also hit secondary endpoints, including a range of biochemical liver function parameters. Detailed data will be forthcoming at the International Liver Congress of the European Association for the Study of the Liver meeting next month in London.

Assuming approval, OCA would be the first new treatment approved in nearly 20 years for PBC, an autoimmune liver disease that can progress to cirrhosis and liver failure. It typically affects women, and is estimated at one in 1,000 women older than 40.

The only approved drug, ursodiol, is spotty in terms of producing a therapeutic response in patients, Pruzanski said, with up to half of PBC patients not responding adequately.

Intercept is continuing with a long-term safety extension study for patients completing the double-blind phase of the POISE study, with more than 95 percent of the 198 patients who completed that phase moving on.

Other plans for OCA this year include a phase II trial in primary sclerosing cholangitis, slated to start in the second half of 2014, and the company expects to report data from a proof of concept study in bile acid diarrhea.