'Underwhelming' Intercept Data Hurts CymaBay Bear Thesis, Says Piper Jaffray

One of the major constituents of the CymaBay Therapeutics (CBAY) bear thesis has been that pricing for Intercept Pharmaceuticals' (ICPT) Ocaliva would get cut significantly with success in nonalcoholic steatohepatitis and consequently lower the eventual market opportunity for CymaBay's seladelpar in primary biliary cholangitis, Piper Jaffray analyst Tyler Van Buren tells investors in a research note.

The analyst, however, believes Intercept's Ocaliva data in NASH yesterday was "underwhelming" as the "fibrosis improvement was mild, no significant effect on NASH was observed, and worrisome safety and tolerability issues remain." Questions regarding the commercial viability of Ocaliva in NASH are now likely to persist, says Van Buren. He now believes Intercept will have to target the most severe patients, "significantly narrowing" the drug's addressable population. This should lead to more stable Ocaliva pricing than many currently assume and keep seladelpar's $750M-plus market opportunity in PBC "largely" intact, contends the analyst.

Bottom line is that a major constituent of the CymaBay bear thesis has now been removed, he writes. Van Buren keeps an Overweight rating on the shares with a $30 price target.

CymaBay Therapeutics closed yesterday up 34c to $10.29. 

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