A drug that had been expected to become the first to win regulatory approval for the fatty liver disease nonalcoholic steatohepatitis may not be hitting the market anytime soon.

New York-based Intercept Pharmaceuticals said Monday that it had received a complete response letter – essentially a notice of rejection – from the Food and Drug Administration for its application seeking approval for obeticholic acid, or OCA, which it has been developing to treat fibrosis due to NASH. In the letter, the FDA stated that the predicted benefit of the drug, based on a surrogate endpoint, remains uncertain and does not sufficiently outweigh the drug’s potential risks. Consequently, the company has been told to submit additional safety and efficacy data after a post-interim analysis of the Phase III REGENERATE trial.

Shares of Intercept were down 39.5% on the Nasdaq in midday trading following the news.

Expressing disappointment at the FDA’s decision, CEO Mark Pruzanski said the company will meet with the FDA to discuss the CRL, but added that the company is “very concerned” that the agency’s “still evolving expectations” will make bringing NASH drugs to market exceedingly challenging.

“At no point during the review did the FDA communicate that OCA was not approvable on an accelerated basis, and we strongly believe that the totality of data submitted to date both meet the requirements of the agency’s own guidance and clearly support the positive benefit-risk profile of OCA,” Pruzanski said in a statement. “We are disappointed to see the determination the agency has reached based on an apparently incomplete review and without having provided medical experts and patients the opportunity to be heard at the anticipated [advisory committee meeting] on the merits of OCA, which is a designated breakthrough therapy.”

The news follows the announcement last month that the FDA had requested additional data for the drug, thereby delaying the advisory committee meeting back from its previously anticipated date of June 9 and also likely delaying the agency’s approval decision, which had been expected to occur on June 26. Also last month, another contender for near-term approval in NASH, France’s Genfit, fell out of the race when it announced that the Phase III study of its drug, elafibranor, had failed.

REGENERATE, a randomized and placebo-controlled trial of 2,480 patients, has two primary endpoints: One measures the proportion of patients who achieve at least one stage of improvement in liver fibrosis without worsening of NASH while also measuring NASH resolution without worsening of fibrosis; another measures death from any cause and liver-related clinical outcomes.

In a note to investors, RBC Capital Markets analyst Brian Abrahams wrote that the CRL for Intercept appears reflective of deeper concerns regarding OCA’s risk-benefit profile that could be challenging from the company, though not insurmountable. However, he wrote that anticipates a potential delay in approval of one and a half to two years. Another analyst, B. Riley FBR’s Mayank Mamtani, expressed the view that the FDA’s review of Intercept’s application may have been incomplete, based on the fact that it was made without rescheduling the advisory committee meeting.

Photo: FDA, via Flickr (free of copyright protection)