Intercept Pharmaceuticals Inc's (ICPT.O) drug to treat liver disease caused by fat buildup was found effective in a trial, paving the way for it to become the first approved treatment for the chronic condition.
The company's shares nearly quadrupled to a life high of $305 on Thursday on the Nasdaq, valuing the company at about $6 billion.
Intercept said it had stopped the trial after the drug showed statistically significant improvement in patients, compared with a placebo, in a review by an independent safety committee.
The trial tested the drug, obeticholic acid, in patients with non-alcoholic steatohepatitis (NASH), a form of liver inflammation.
Intercept Chief Executive Mark Pruzanski said the study data had come almost a year early, and that the company had not had yet discussed the trial results with U.S. and European health regulators.
Analysts said the news came as a surprise to investors, who had previously focused on the drug as a treatment for primary biliary cirrhosis, an autoimmune disease in which bile ducts in the liver are destroyed. The drug is being tested for that condition in a late-stage study.
"It's a huge opportunity for the company as there are over 10 million (NASH) patients worldwide," Wedbush analyst Liana Moussatos said.
She said Intercept could conduct a late-stage trial for the drug, either with partner Dainippon Sumitomo Pharma (4506.T), which is testing the drug in Japan, or through a tie-up with Big Pharma.
"Our intention right now is to hold on to our ex-Asia worldwide rights ... We've demonstrated that we can very capably take this compound forward in a number of indications," CEO Pruzanski said on a conference call with analysts.
He did not, however, rule out a future partnership.
Oppenheimer & Co analyst Akiva Felt said the drug's value could be best captured through an acquisition of the company.
"Gilead (GILD.O) would probably be most likely (to acquire the company). Other companies with a big presence in the liver disease space would be AbbVie (ABBV.N) and Brisol-Myers (BMY.N)," he said.
Obeticholic acid, Intercept's lead drug, is also being tested in mid-stage studies to treat bile acid diarrhea and portal hypertension - high blood pressure in veins that transport blood from the gastrointestinal tract and spleen to the liver.
The drug's structure is similar to that of a naturally occurring human bile acid.
Intercept said the safety committee made the recommendation to stop the trial after reviewing liver biopsy data from about half of the 283 patients enrolled in the mid-stage trial.
There is currently no specific treatment for NASH, according to the U.S. National Institutes of Health.
To manage the disease, patients are recommended to maintain a healthy weight, follow a balanced diet, increase physical activity and avoid alcohol.
Intercept shares closed up 281 percent at $275.87.
(Reporting by Vrinda Manocha in Bangalore; Editing by Kirti Pandey, Anthony Kurian)