By Bhanvi Satija and Puyaan Singh

Nov 12 (Reuters) - The U.S. Food and Drug Administration

on Tuesday declined full approval for Intercept Pharmaceuticals'

liver disease drug, raising questions about its future in the

market.

The drug, Ocaliva, will continue to be available in the U.S.

under the accelerated approval status, the company said.

Under the accelerated pathway, the FDA mandates additional

trials that verify the drug's benefits. If the data from the

trials do not show the drug's effectiveness, the regulator could

ask the company to withdraw the drug from the market.

Ocaliva received the FDA's accelerated approval in 2016 to

treat patients with primary biliary cholangitis, a rare disease

that causes inflammation of small bile ducts in the liver and

can eventually destroy them.

Recruitment to the drug's confirmatory trial was stopped

early due to difficulties in enrolling rare disease patients.

Less than 200,000 cases of primary biliary cholangitis are

recorded in the U.S. every year, according to the American Liver

Foundation.

Intercept said the health regulator will continue reviewing

safety data for the drug.

The FDA's decision is in line with the recommendation made

by a panel of independent experts in September, which said

available data does not clearly prove the drug's effectiveness

or remove doubts about its safety.

"I think the future of the drug is now largely up to the

applicant and potential patients who would enroll in new

trials," said Julia Wattacheril, associate professor at Columbia

University Vagelos College of Physicians and Surgeons, ahead of

the decision.

Wattacheril added it was unclear if there was a desire to

invest more resources in collecting further data for the drug.

Ocaliva and ursodeoxycholic acid were among the first few

treatments for the disease to be approved in the U.S. Since

then, several others, including Gilead's Livdelzi, have

become available for patients.

In June, the European medicines regulator revoked Ocaliva's

conditional authorization and said the benefits had not been

confirmed.