Intercept Pharmaceuticals, whose NASH drug candidate went from frontrunner to also-ran, is being acquired for $794 million by an Italian company that sees the biotech’s remaining assets as a way to broaden its portfolio and expand its U.S. presence.

Alfasigma has agreed to pay $19 cash for each Intercept share, which is an 82% premium to the New York company’s closing stock price on Monday. Shares of Intercept rose more than 78% after the deal was announced Tuesday. The companies expect the transaction to close by the end of this year.

Intercept’s main asset is obeticholic acid, an analog of a bile acid found in humans. The drug binds to a receptor in the liver and intestines that plays a role in inflammation, fibrosis, and metabolism. The FDA approved obeticholic acid in 2016 as a second-line treatment for treating primary biliary cholangitis. It’s marketed under the brand name Ocaliva for this rare bile duct disorder. But Intercept believed the molecule’s mechanism of action could also address NASH, a more prevalent disorder that, so far, has no FDA-approved drugs.

Clinical tests of obeticholic acid in NASH yielded encouraging clinical data, and Intercept was widely expected to become the first company to win an FDA approval for a NASH drug. But in 2020, the FDA turned down Intercept’s application seeking accelerated approval, saying it’s unclear the drug’s benefits outweigh its risks. The regulator asked for more clinical data from an ongoing Phase 3 study. Intercept produced more safety and efficacy data, and then proceeded with a resubmission. This past June, the FDA rejected that application, again asking for more Phase 3 data. But Intercept opted to stop work in NASH and return its focus to rare liver diseases.

Ocaliva is Intercept’s only commercialized product. The drug accounted for $151.6 million in sales in the first half of this year, a 15.8% increase compared to the same period in 2022. A fixed-dose combination of obeticholic acid and bezafibrate is in Phase 2 testing for primary biliary cholangitis. The Intercept pipeline also includes INT-787, which is in mid-stage clinical development as a potential treatment for severe alcohol-associated hepatitis. Those programs will expand Alfasigma’s presence in key therapeutic areas.

“The acquisition of Intercept marks another important milestone in Alfasigma’s growth path, particularly with regard to the U.S. market in which we have significant development objectives,” Alfasigma CEO Francesco Balestrieri said in a prepared statement. “Intercept represents a compelling fit with Alfasigma’s core business areas of gastroenterology and hepatology, and we believe that the transaction represents a transformational opportunity for both companies.”

Alfasigma, based in Bologna, is one of Italy’s largest pharmaceutical companies. The privately held firm says its 2021 revenue topped €1 billion from sales of products in gastroenterology, vascular diseases, and metabolic disorders as well as nutraceuticals and medical foods. The company also provides contract manufacturing services. Alfasigma employs about 2,900 people worldwide. The company maintains U.S. sites in Louisiana and New Jersey.

Intercept’s acquisition by Alfasigma represents a homecoming of sorts. The biotech was based on the research of Roberto Pellicciari, a University of Perugia professor and a co-founder of the company. Pellicciari’s research at the Italian university focused on the rational design of compounds that selectively bind to bile acid receptors. Intercept’s regulatory filings credit Pellicciari as the inventor of obeticholic acid.

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