Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) Q2 2023 Earnings Call Transcript

Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) Q2 2023 Earnings Call Transcript August 2, 2023

Intercept Pharmaceuticals, Inc. misses on earnings expectations. Reported EPS is $-0.68 EPS, expectations were $0.56.

Operator: Hello, and thank you for standing by. Welcome to Intercept Pharmaceuticals Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to your speaker Nareg Sagherian. Sir, you may begin.

Nareg Sagherian: Good morning and thank you for joining us on today’s call to review Intercept’s second quarter 2023 financial results and key business updates. Our second quarter 2023 press release and accompanying slides are now on our website at intercept pharma.com. Before we begin our discussion, I’d like to note that during our call we will be making forward-looking statements, including statements regarding our approved product and clinical development program, certain regulatory matters and our strategy, prospects, financial guidance and future commercial and financial performance. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this call, and we undertake no obligation to update such statements except as required by law.

These forward-looking statements are based on estimates and assumptions that, although believed to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. Some, but not necessarily all of the risk factors that could cause our actual results to differ materially from our historical results or those anticipated or predicted by our forward-looking statements are discussed in this morning’s press release and in our periodic public filings with the SEC. Today’s call will begin with prepared remarks from our President and CEO, Jerry Durso; Chief Financial Officer, Andrew Saik; Chief Commercial Officer, Linda Richardson; and our President of Research and Development and Chief Medical Officer, Dr. Michelle Berrey.

We will then open the call for questions. Let me now turn the call over to our CEO, Jerry Durso.

Jerry Durso: Thanks, Nareg, and good morning, everyone. Thank you for joining us on our second quarter 2023 earnings conference call. In the second quarter, Ocaliva business in PBC again performed well, delivering double-digit growth for the fourth consecutive quarter. The $83.7 million in Ocaliva net sales was 17% growth over the prior year quarter. This outstanding sustained performance is a result of the execution of our commercial team and the trust and value that hepatologists and gastroenterologists place in Ocaliva. With more than seven years on the market positive patient and physician experience and strong outcomes data in multiple real world analysis Ocaliva’s role as a preferred improvement second line agent for PBC continues to expand.

Linda will share more about the dynamics driving our sales growth, as well as our positive outlook on the Ocaliva business. Turning to our pipeline. We continue to prioritize investment in our OCA and bezafibrate combination program in PBC. We were pleased to share positive data from the first of our two Phase 2 studies at the EASL Congress this past June. These data illustrate the combination’s best-in-class potential to deliver biochemical responses across a range of biomarkers that predict improved clinical outcomes at PBC. We look forward to sharing more details from this program and expect to have all the necessary data to submit a request in 2023 for an end of Phase 2 meeting with the FDA. Finally, we are aggressively implementing the plan that we communicated on June 23 to restructure our business, strengthen our focus on rare and serious liver diseases, and deliver profitability quickly.

We have discontinued all Nash related investment and fully expect to meet our targeted reductions in operating expenses. We are making rapid progress in evolving our organization in reducing our cost basis. Andrew will discuss our progress in more detail shortly. The shift we have made puts Intercept in the best position to create value for shareholders, while supporting our patient-driven mission. We believe that the actions, which are now well underway, will improve our ability to drive long-term growth and leadership for our PBC business, develop innovative new medicines, and achieve meaningful profitability in 2024. With that, I’ll now turn the call over to Andrew.

Andrew Saik: Thank you, Jerry, and good morning, everyone. I will begin with an update on our cost reduction efforts and organizational restructuring that we announced in June. As previously discussed, this work is aimed at significantly reducing our cost structure by discontinuing all Nash related investments and reducing the size of our company to support our focus on rare and serious liver diseases. These actions will allow us to pivot to profitability by year-end, which will help ensure our long-term growth and provide us with strategic flexibility as we take the company forward. The closeout process for the REGENERATE study is well underway and is expected to be substantially complete by the end of this year. We expect to have all clinical sites shut down by year-end with some final activities and spend extending into the first quarter of 2024.

Since our restructuring announcement, we have stopped all other NASH related spending throughout the company. The removal of these costs from our operating expenses is an important contributor to our ability to move toward profitability as quickly as possible. With regard to reducing our workforce, we have completed the first wave of notifications, which impacted commercial and general administrative functions. The second wave of notifications, which will impact the R&D and medical affairs functions will be completed in the next few weeks and a reorganization will be materially finished by the end of this year. As previously stated we plan to maintain the scale of our current field sales organization to support the growth of Ocaliva. With respect to OpEx this year, in June, we lowered guidance for 2023 non-GAAP adjusted operating expenses to $350 million to $370 million.

This guidance includes expenses to wind down the REGENERATE study and all other NASH related activity, as well as estimated one-time charges related to our workforce reduction. As a result of these changes and after the restructuring activities are complete, we expect to achieve meaningful profitability in 2024 and to be in a position to grow our PBC franchise with a significantly lower cost structure than our current run rate. Specifically, we are targeting a net reduction in annual non-GAAP adjusted operating expenses of approximately $140 million relative to our updated 2023 non-GAAP adjusted operating expense guidance. Our new cost structure will be effective on completion of the restructurings and closeout of the REGENERATE study, which is expected to be materially complete by the end of 2023.

Turning to revenue, we are raising the lower-end of our guidance range and have updated our full-year 2023 Ocaliva net sales guidance to $320 million to $340 million. As Jerry mentioned, we are pleased with our strong sales performance this quarter for Ocaliva, recording $83.7 million in net sales, compared to $71.8 million in the prior year quarter. This represents 17% growth as our fourth consecutive quarter with double-digit growth. Selling, general and administrative expenses were $53.3 million in the second quarter of 2023, compared with $40 million in the prior year quarter. The increase in Q2 was primarily driven by NASH-related spending, which has now been removed from our expense base. As a direct result of the actions taken last year to strengthen our balance sheet and reduce our outstanding debt interest expense in the quarter ended June 30th, 2023 was $2.8 million, down from $6.7 million during the same period last year.

We reported a net loss from continuing operations of $5.8 million in the second quarter of 2023, a decrease compared to a net loss from continuing operations of $20.3 million in the second quarter of 2022. As of June 30th, 2023, Intercept had cash, cash equivalents, restricted cash and investment securities available for sale of $415 million, and the company was net cash positive by approximately $80 million. As previously disclosed, the 2023 convertible notes matured on July 1st, and we made a cash repayment for the total principal amount due of $109.8 million. For a more detailed summary of our financial results I encourage you to look at our press release for the second quarter ended June 30th 2023. In closing I’m proud of our performance this quarter and a strong underlying financial foundation of the company.

Both of those factors are important enablers of our ability to reshape Intercept and achieve meaningful profitability in 2024. I will now turn the call over to Linda.

Linda Richardson: Good morning, everyone. As Jerry and Andrew have noted, our commercial performance this quarter was very strong. We reported Ocaliva net sales of $83.7 million in the second quarter, representing a 17% in increase, compared to the same period last year. Several factors are driving our repeated double-digit sales growth. First, we continue to attract new first time Ocaliva writers. Specifically five out of 10 prescribers of new patients in the second quarter of 2023 were first-time Ocaliva writers. Second, we continue to see volume growth. New to brand prescriptions grew nearly 25% during the same time period, as reported by IQVIA’s National Prescription Audit. And during this quarter, we reached an all-time high and monthly unit demand.

Clearly, our field sales force is delivering messages that resonate with PBC prescribers. These important factors show that we continue to expand our Ocaliva prescriber community and add new patients to our base business. Among patients, we maintain a strong on-time refill rate of approximately 90%. This dynamic is driven by support from our Interconnect test programs and specialty pharmacy network as well as on the ground with our field reimbursement manager team. These established capabilities will continue to be valuable drivers, even with the potential for new therapeutic options in the future. I’d like to now share new insights from recent prescriber and patient market research that provide support for our confidence in the future of Ocaliva in PBC.

Recent patient feedback shows that satisfaction on Ocaliva remains high with approximately 86% being satisfied to extremely satisfied with their therapy. We also found that 92% of patients enrolled in Interconnect, our patient support program, indicated that they expected to continue on Ocaliva and 70% were still on Ocaliva at 12-months. As important background, approximately three and four Ocaliva patients are enrolled in Interconnect. These customer insights demonstrate high levels of satisfaction with Ocaliva. And we know that patients who are satisfied with their therapy are typically inclined to remain on it, despite the potential for new options. This belief is supported by persistency data for patients taking Ocaliva. Persistency for Ocaliva is in line with, and in some cases, better than multiple analogs for chronic disease therapies.

This includes products in diabetes, dyslipidemia, notably statins, and stroke prevention at intervals from three months through two years. Moving forward, one of our key promotional platforms will be to highlight recent scientific presentations, which emphasize that the amount of time a PBC patient remains above target levels for select liver biomarkers leads to an incremental risk of hepatic decompensation and liver transplant or death. In the second-half of 2023, we will emphasize the totality of Ocaliva’s impact on these additional biomarkers, such as AST, ALT, GGT, and total bilirubin. As cited in our corporate presentation, Ocaliva has a beneficial impact on these same biomarkers, all of which contribute to assessing total liver health.

ALP is an important factor in PBC management, but just one of several elements of total liver health that should be monitored. Of course, what matters most in PBC are outcomes. In another current market research study, approximately 85% of HCP survey stated that preventing disease progression and avoiding the longer term complications from liver disease are the most important attributes of a PBC therapy. Real world evidence has shown Ocaliva’s ability to slow disease progression and help patients avoid long-term complications. In fact, there are now five independent real world datasets that show this improved survival. Utilizing appropriate avenues to create greater awareness of this real world evidence supporting the use of Ocaliva and PBC is an important differentiator versus future competitors and part of our long-term strategy to demonstrate the unique benefits of Ocaliva.

The data that I review today illustrates the stability and durability of our base business and the commercial team’s ability to drive further adoption of Ocaliva. Building on our momentum in the first-half of 2023, I am confident in the strength of Ocaliva’s market position and our plans to continue growing our PBC franchise. I’ll now turn the call over to Dr. Michelle Berrey for regulatory and clinical updates, including how our long-term opportunity in PBC is amplified by our OCA-bezafibrate Combination Program.

Michelle Berrey: Thank you, Linda, and good morning, everyone. I’ll start with an update on our OCA and bezafibrate combination program, which we believe offers the potential to establish best-in-class clinical benefits. We know that the most important goals in PBC treatment remain improved, transplant free, and decompensation free survival. Outcomes that have been demonstrated in multiple analyses from real world patients taking Ocaliva. Early data from the Phase 2 combination program of OCA and bezafibrate have shown that achieving vital chemical remission in more than half of patients with PBC is possible, with the potential to prevent progression to these clinical outcomes in the future. We have two Phase 2 studies exploring a range of therapeutic doses for this combination.

We have now completed enrollment of both studies and have shared data from a planned interim analysis of our first study, Study 213 at EASL in Vienna. We’re very encouraged by these initial data, which show that the combination of OCA and 400 milligrams of specified rate was effective in normalizing key biochemical markers associated with PBC induced liver damage. Most significant was that nearly 60% of patients in the higher dose combination arm achieved biochemical remission, that is patients in this group saw normalization of all key biomarkers, AFP, total bilirubin, ALT, AST, and GGT. These compelling data demonstrate the potential synergy between FXR agonists and PPAR agonists, which we believe could reframe the parameters for efficacy in PBC.

Analyses from both of our Phase 2 studies in addition to our large Phase 1 study and preclinical data will serve as the basis for an end of Phase 2 meeting with the FDA. We expect to have data in hand to submit a request in 2023 for this important meeting. We look forward to sharing more information about this program including the planned interim analysis from our second Phase 2 study, Study 214, later this year. Turning now to Ocaliva. As previously communicated in an alignment with the FDA, we remain on track for submission of our sNDA this year and support a fulfilling post marketing requirements. This submission will include data, from our post-marketing study COBALT, which will likely be the FDAs primary basis for evaluation, as well as supplementary real world evidence from large data sets in the U.S. and Europe.

As we’ve discussed previously, we believe that COBALT was a flawed study due to feasibility challenges, and did not provide a placebo controlled group that reflects a well-known natural history of PBC. Our analyses of real world data sets were completed in accordance with all requirements specified by the FDA’s issued draft guidance. Importantly, these analyses demonstrate a consistent improvement in transplant free and decompensation free survival the ultimate goals, and PBC treatment. We believe that the population and guidance in our current label reflects a positive benefit risk for patients with PBC. We are committed to working with the FDA regarding our post-marketing commitments and have been engaged with the agency. Finally, within our earlier stage pipeline, we continue to progress our proof-of-concept fresh study, evaluating 787 in patients with severe alcohol associated hepatitis, also known as FAH.

We are encouraged by the efficacy of INT-787 as demonstrated in preclinical assessments and the safety and tolerability in our single and multiple ascending dose first in human study. We look forward to sharing additional updates as this program advances. In closing, I’m proud of the progress being made by our R&D group. With that, I’ll turn back to Jerry.

Jerry Durso: Thank you, Michelle. For the fourth consecutive quarter, Intercept delivered strong double-digit sales growth for Ocaliva. We also make considerable progress with the OCA bezafibrate combination program, including presenting new data that suggests best-in-class potential in PBC. This exceptional performance along with our restructuring plan to significantly reduce costs, as Intercept well on the way toward quickly achieving profitability, while advancing our leadership in rare and serious liver diseases. I’ll now turn it over to the operator for questions. Operator?

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from the line of [Technical Difficulty] Piper Sandler. [Technical Difficulty]

Yasmeen Rahimi: Good morning, team. Thank you so much for the update. Just wanted to understand a little bit more about, what are the possible outcomes as you guys are having your end of Phase 2 meeting with the FDA in regards to the fixed dose combo? Is there an opportunity to maybe expedite, you know, the Phase 3 development. Just maybe walk us through, you know, sort of the scenarios? And I know that we don’t — we will get more color over that coming months, but we’d love to hear how we should be thinking about what the next communication will be around that discussion? And what could be sort of a best case scenario. And I’ll jump back into the queue for a follow-up. And thank you again.

Jerry Durso: Good morning. Yes, good morning, Yasmeen. Thanks for the question. Obviously, from our prepared remarks, we’re encouraged by what we’ve seen thus far from the initial data set on those combinations as Michelle outlined. More to come, Michelle, maybe you can give a little more color around how we’re looking at the accumulation of the data and the opportunity to get with the agency on end Phase 2.

Michelle Berrey: Sure, yes. Thanks, and good morning, Yas. So we do plan to have all of the data pulled in from the PK and drug-drug interaction data from our large Phase 1 study, as well as the planned interim analyses from 213 and 214. As you know, we’re looking at biochemistries, we’re looking at tolerability and some key safety parameters, including lipids for those patients. The plan for the end of Phase 2 meeting, we do have a proposed Phase 3 design and we hope that we can come to alignment with the agency during that into Phase 2 meeting. We have already begun them making preparations to identify sites, so that as soon as we get that study design finalized, we’re off and running for enrollment in 2024. So very excited about the opportunity to explore this combination.

We have had initial conversations with the agency about expected endpoints and what based on what we’re seeing in the Phase 2, what they anticipate that we may be thinking about for a potential endpoint. Clearly, the expectations are high for this combination given what we’ve seen so far in Phase 2, we’re all looking forward to those discussions.

Yasmeen Rahimi: Thank you so much, team. I’ll jump back into the queue.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Mayank Mamtani with B. Riley Securities. Your line is open.

Mayank Mamtani: Good morning team. Thanks for taking my questions and congrats on the strong quarter. So we were studying the OCA beza Phase 2 PBC protocols, and we’re hoping if you’d comment how you might be measuring pruritus, you know, their endpoints like NRS, VAS, core, things like that incorporated. And then I have a quick follow-up on the financials.

Jerry Durso: Hey, Michelle you take the first one, and then I’m sure we’ll take the follow-up on the financials with Andrew and I.

Michelle Berrey: Yes, good morning for the — and thanks for the question. So yes, we are incorporating a couple of different assessments in our 213 and 214, so that we do have comparability across, the monotherapy trials, as well as some of the prior trials conducted in the combination. So we look forward to sharing those data from both of the studies, at 12-weeks from the 214 study, the planned interim analysis, as well as the longer term data from 213, the study that we shared at EASL.

Mayank Mamtani: Okay, great. And then maybe I missed this. How do you characterize this, you know, growth you have in the PBC business between, you know, contribution of penetration versus persistence to revenue growth and as you think about full approval, you know, how do you think of the drivers to, you know, growth here and sort of related should there be an outcome expected, around your — you know, full approvals or PBC, sNDA submission next year. Are you guys expecting there to be an outcome on PBC next year?

Jerry Durso: So maybe I’ll start with that and then I will — we can describe a little bit more about the growth. So, we could expect an AdCom in the process. It could be a reasonable option. We haven’t had any specific commentary on that directly from the agency, but it wouldn’t be, unforeseen that there could be an AdCom that the agency could ask for, but obviously we’ll get more insight on that once the submission goes in and we have more of that, that dialogue. On the growth this quarter, Mayank, if I understood your question, one, I think overall, are encouraged that we continue to see the level of growth that we reported out and that we clearly expect to continue, with our sales guidance and the revision that we made on that, underlying that, as I believe, Linda mentioned in her prepared remarks, good demand growth, so good prescription and unit growth underneath.

It was our largest quarter in terms of the generation of demand, which is utilization of Ocaliva by more physicians with more patients than at any given time. And we’re really continuing to focus on both sides on expanding new patients and on ensuring that the ones that are on therapy, we’re doing everything we can to keep them on. And we are encouraged that satisfaction is high, and while we do see some dropout, as you would expect with chronic medications again, it’s in the range with — we did include in the prepared remarks, some of the analog work that we’re doing. And really, while there’s a lot of discussion around what happens to patients on the Ocaliva journey, we do see patients stay on, at least as well. Some of the chronic drugs that are typically considered, good adherence like statins, like anti-diabetic medication, we thought that, that comparison was useful for you to think about how we’re kind of looking at that picture of adherence over time.

Mayank Mamtani: Great. Thanks for taking our questions.

Jerry Durso: Thanks, Mayank.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Ed Arce with H.C. Wainwright. Your line is open.

Ed Arce: Great, thank you. Good morning, and congrats on the strong quarter. A couple of questions from me. First, I just wanted to clarify, on the OCA-bezafibrate combination. Firstly, the pruritus measurements that you mentioned before, a couple of different measurements. Could you expand on what those are if it’s NRS or something else just in terms of comparability with your own prior data and other studies? And then secondly, on the 58% complete remission, just wondering how you came to that number. Is that eight out of 15 or nine out of 15? And then I have a follow-up. Thanks.

Jerry Durso: Michelle?

Michelle Berrey: Hi, yes. Good morning, Ed. We are using the VAS in the adjustment of pruritus. We are also, excluding patients with severe pruritus, consistent with other large trials in the PBC space. The 58, I believe, was nine out of 15, I have to pull that up and double check on that across all those measures. I will mention we have an additional three patients, who were very close to normalization. So well over half of the patients, I think, again, those are small data sets and we look forward to bringing a larger data set both from the remaining patients from 213, as well as, versus the planned interim analysis, and then the full analysis from 214 we should have, all those data in hand in time for our — to request them in the Phase 2 meeting at the end of the year.

Ed Arce: Great. Thank you for that and then, with the studies 213 and 214, and I recognize, 213 would have longer term data. These interim analyses, later this year, is it possible to get any further granularity on the timing, perhaps at a medical meeting such as ASLD? Thank you so much.

Michelle Berrey: Certainly, that would be a great opportunity as we’re all together later in this year, but it’s hard to say definitively where we’ll be able to present those data. I can’t say, with some assurity we will be sharing at a minimum the top line data from that study, as well as from the longer term data. As you point out, we now have data from more than 12-months, for many of the patients in the 213 study, given that it was initiated about 18, 24-months ago for the majority of patients.

Ed Arce: Great. Thank you.

Michelle Berrey: Thank you.

Jerry Durso: Thanks, Ed.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Brian Abrahams with RBC Capital Markets. Your line is open.

Brian Abrahams: Hey, guys. Good morning. Thanks for taking my questions. Maybe for Linda, curious if you could walk us through how you expect the PBC market dynamics to play out with potential new entrants. Wondering if there’s going to be, if you’re thinking about any changes to your commercial strategy or if your market research is really suggesting that the patients, who kind of naturally drop off of OCA would really be the ones, who would be trying a new therapy? And then maybe for Michelle, what’s the most important things that you think you’ll need to do to combat any potential FDA skepticism around the use of real world data to support Ocaliva’s maintenance on the market in PBC? Thanks.

Jerry Durso: Okay. So we’ll start with Linda on the commercial work that, as you say, Brian, that we’re deep in.

Linda Richardson: Yes. So thanks for the question and good morning. I think that what we’re seeing are several really important things in the marketplace. We are confident that we have certain competitive advantages overall that I can touch on. But first, we would expect the overall PVBC market to grow. We’ve done some analog work and looked at that. And we are anticipating probably about a 10% to 15% increase in the number of PBC patients receiving treatment. And that’s great across the board. In that, we’ll also see what we believe to be an emergence of third line market. This will be evident, because there is no one product that even with the rates and efficacy rates we’re seeing, no one product is necessarily going to be right for everyone.

So if folks move through that paradigm, there’ll be a third line market that begins. We believe strongly from the market research and patient satisfaction scores and asking patients directly, we expect that the majority of our existing patients to express high satisfaction and a willingness to stay on therapy will be on therapy. And this is also supported by the persistency data and an additional patient satisfaction rate that we’ve showed before. So third, we expect to continue driving new prescribers and new patients by increasing the awareness of the data that we uniquely have. We talk about the efficacy on five different biomarkers, the efficacy that we see emerging in the real world evidence, and we’ll continue to talk about those things as an organization.

And lastly, we believe that we have leverageable incumbency moments and expertise that we’ll be able to continue to drive our sales force has done a phenomenal job, across the board, but particularly this quarter. And then we look at our established to specialty network that’s expanding and our existing relationships with the HEP and GI community. Those are things that we have well established I think the totality of those four things will help secure our business.

Jerry Durso: Michelle?

Michelle Berrey: Yes. So moving over to the real world evidence, I think the three things that are going to be helpful in addition to the draft guidance that’s been issued by the FDA, which we are following and interacting with the agency on those specifics. The three things that I think will make a big difference are replication of the data, advocacy and the evolution of the standard of care. So first, the replication of datasets, which we have seen across multiple analyses now, as Linda pointed out initially with the — poise open label extension, which was compared with both the U.K. PBC and the global PBC patient registries, the fully real world Komodo claims database analysis, which we call HEROES, which showed a superimposable benefit, 70% benefit in a decreased risk of progression to liver transplant or death.

And finally, we’ve seen this replicated across a completely independent analysis that was presented in early June before EASL by the Italian patient registry group called Recapitulate, which again has shown this consistency. Scientifically, being able to replicate the exact same benefit across these multiple databases, patient types, health care systems is even more confirmation of the benefit, the survival benefit that we know is critical to patients. Second is patient advocacy and physician advocacy both on the individual basis, as well as the societies we’ve heard over and over again from clinicians that they’re unwilling to put their patients on placebo for long-term follow-up, for progression to outcomes. And third, the standard of care evolution.

And since 2017 and 2018, Ocaliva has been indicated as the only second line therapy. We know that the — that is the basis for second line therapy and it now has that additional benefit of showing these outcomes, would only compound that has been able to demonstrate that, because we have that long-term follow-up, not modeled real data, now across multiple different datasets. So as the standard of care has evolved, we have to be looking realistically about what we are asking patients to do for these longer term studies to get to outcomes.

Brian Abrahams: Thanks so much for all the detail. That’s really helpful.

Jerry Durso: Thank you, Brian.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Jay Olson with Oppenheimer. Your line is open.

Jay Olson: Oh, hey, congrats on the quarter and thank you for taking the questions. Based on the early efficacy data that you’ve seen for the OCA plus Beza combination. Would you consider running a pivotal trial in first line treatment of PBC? And maybe from a more philosophical perspective, do you think it’s possible to replace UDCA in the first line setting?

Jerry Durso: Michelle, maybe you start there?

Michelle Berrey: Yes. So it’s a great question. And certainly one that we have discussed not just for the fixed dose combination, but really with the continued emergence of survival data clearly, it is important to look at getting patients quickly on therapies that we know improve those outcomes. The decisions on first or second line really will be driven by data, so we will have to hold off until we get the full datasets. We get our planned interim analysis, which, of course, we’re all — are really encouraged by and look forward to those discussions with the agency. I think our — what informs us at this point, though, is the survival data that we have seen is in the setting of that combination. So moving patients quickly to Ocaliva, whether that’s in addition to or so when we’re in patients who were intolerant, I think has been a key message.

And I think that’ll carry forward for the fixed dose combination with even more urgency, getting folks on to Ocaliva, so they can reap the full benefit as early in their disease as possible.

Jay Olson: Thank you.

Jerry Durso: Thank you, Jay.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Michael Yee with Jefferies. Your line is open.

Unidentified Analyst: Hi, good morning. Thanks for taking our questions. This is [Jenna] (ph) on for Mike. With regard to the potential new product coming to PBC, how should we think about the profile of your combo versus the others. And specifically, could the OCA as a combo potentially shows priority on pruritus? Thank you.

Jerry Durso: Michelle, you want to say that?

Michelle Berrey: Yes, sir. We are watching the space, I do think that we’ll have those data, again, coming out in the fall. It is something that we are looking into and are certainly encouraged by the early data that we have seen. And as we’ve discussed, there are multiple ways to achieve, approvals and fixed-dose combination, improvements on efficacy, which we’ve certainly seen initial implications for with improvements across the biochemistries. But also improvements in tolerability and safety. So we are looking at pruritus, we saw very encouraging rates for the initial, 213 study, which we reported out in June are continuing to collect those data in a way that will allow us to do those comparisons as much as, as appropriate. I think the short-term answer is patients are staying on therapy, and we’re very encouraged by those data. So we look forward to sharing more in the fall.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Jon Wolleben with JMP. Your line is open.

Jon Wolleben: Hey, congrats on the progress and thanks for taking the questions. Just hoping you could characterize what you consider meaningful profitability in 2024? Thanks.

Jerry Durso: Yes, John. Thanks for the question. As we indicated, all things are progressing. We had referenced that $140 million savings target in the last call. And as we framed, we’re well on track, in terms of the savings plan. Andrew, maybe you can sketch out a little bit how we’re thinking as we progress through this period of execution of the savings plan towards next year where we’ll be at a more steady state once things finish.

Andrew Saik: Yes, sure. Thanks, Jerry, and thanks for the question, Jon. So, yes, as we look to next year, Jon, and obviously, we haven’t given guidance yet, we don’t intend to give guidance until the end of the year in our normal course. But having said that, you know, with four quarters of consecutive growth, we anticipate Ocaliva growing into next year. We have current guidance range of $3.20 to $3.40. Obviously, we’re not giving guidance on next year, but we expect to continue to grow. With regard to expenses, we indicated $140 million savings off our current estimate of $3.50 to $3.70 next year. That should give you some pretty good visibility into what we expect our spend to be next year, that number includes things like a Phase 3 study in fixed dose, right? So we feel like we’re headed for a very good year. We want to generate meaningful EBITDA, next year and we think it’s achievable given where we are.

Jon Wolleben: Helpful color. Thanks guys.

Jerry Durso: Thanks, Jon.

Operator: Thanks you. Please standby for our next question. Our next question comes from the line of Thomas Smith with Leerink Partners. Your line is open.

Thomas Smith: Hey, guys. Good morning. Thanks for taking our questions. Just on Ocaliva pricing, it looks like you took a 5.9% list price increase here on August 1st, which is the second price increase, I think, this year. I don’t think there’s been a year since Ocaliva launch where you’ve taken two price increases in same calendar year. So can you just talk about, what prompted that and how we should think about your pricing strategy going forward?

Jerry Durso: Yes, Thomas, thanks for the question. Obviously, we don’t comment in detail on our pricing strategy. Obviously, we’re looking on an ongoing basis set the value that Ocaliva offers and prices accordingly. You did capture the action that we took and probably not more comment from me on that at this point.

Thomas Smith: Okay. And, I guess if I could sneak in one on the OCA-Beza combo, it just — it seems like the Europe study took, I think, about 2.5 years to enroll 72 patients. Can you just comment on some of the things that may have impacted enrollment there and then talk about how you’re thinking about driving enrollment into a potential Phase 3 program, in a world that obviously has commercially available Ocaliva, but then also potentially multiple competitor products.

Michelle Berrey: Yes. Happy to address that one. Yes, we did have a slowdown in the European enrollment on 213 in the pandemic, specifically, that saw that pickup over the last year. And then what I will say is after the presentation of the planned interim analysis at EASL, we’ve had a dramatic pickup completed enrollment in our second Phase 2 and have already had folks signing up for the Phase 3, we’ve had lots of discussions, as you might imagine, about how to optimize enrollment, looking at site performance, looking at various countries for their enrollment. How we can maximize our efficiency, recognizing that this is a rare disease and that we need to go where the patients are. I think we’ve seen across therapeutic areas, though, one thing that is very consistent in driving Phase 3 enrollment is excitement about a real shift, probably best characterized by [Indiscernible] quote that, he’s always excited when you get in a therapeutic area where you can finally cross that 50% mark and really start to see more than half of patients who are realizing substantial benefits and a shift in their disease progression.

I think that has really driven a lot of the interest, and we’re excited about getting the program up and running.

Thomas Smith: Got it. That makes sense. Thanks guys.

Michelle Berrey: Thank you.

Jerry Durso: Thanks, Thomas.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Eliana Merle with UBS. Your line is open.

Eliana Merle: Hey, guys. Thanks so much for taking the question. Just in terms of some of the commercial trends you’re seeing, what’s the average duration of patients being on OCA. And I see that you, and you have, in your size, have 72 persistency rate at six months. Just curious if you can provide any color over a longer period of time? And then just a second question. Can you comment on what portion of patients at OCA are still experiencing pruritus, even just as part of the underlying PBC disease and any info on the severity? Thanks.

Linda Richardson: So I’ll just start with persistency, if that’s okay. I think that what we see across the board with our persistency is greater than 50% at — we have 50% of patients on the drug at two years, which is very comparable. In fact, superior to the average of the lot of classes looking at MS, stroke prevention, Type 2 diabetes and statins. So we do have that dynamic going on for us. And we’re quite close to what you would see as just a normal, kind of, patient dynamic across many chronic conditions. We are impacted by that as I think, a country compared to some of the other factors that you see in, ex-U.S. countries. So there’s just that dynamic in general. Now when you talk about pruritus, remember that pruritus is about 70% of patients, who have PBC also report pruritus.

So we see that dynamic as part of the condition. When we have the vast majority of pruritus that was seen in trials with Ocaliva is mild to moderate and can be managed. And when you see it in the real world, it’s half of that. It’s about 29% and then you get to the management techniques that you can implement at any time, if someone’s having a, you know, a period of pruritus. You can cut down on the dosing. You can go off for two weeks. There are various management strategies articulated in the label itself, have knowing how many, it depends on how bothersome it is. The people who have really intolerable pruritus for any reason, I would imagine, aren’t on the product. So I can’t really speak to how many people who are continuing to be on the drug have that issue.

I would imagine if it was something that was rate limiting, they wouldn’t stay on for two years.

Eliana Merle: Got it. Thanks so much for the color.

Michelle Berrey: You’re welcome.

Jerry Durso: Thanks, Eli.

Operator: Please standby for our next question. Our next question comes from the line of Brian Skorney with Baird. Your line is open.

Unidentified Analyst: Hey guys, good morning. This is [Charlie] (ph) on for Brian. We had a question about the potential pivotal study for the bezafibrate combination. Specifically, when you’re looking at the comparator arms would you have arms of OCA naive patients, each starting OCA, and then one arm also getting, bezafibrate? And then one getting placebo? Or would you do patients already on OCA with inadequate responses as your patient population? Just kind of how are you thinking about those enrollment criteria? Thanks.

Jerry Durso: Thanks, Charlie. Michelle?

Michelle Berrey: Hi, good morning. Yes, we do anticipate, that in order to fulfill all the requirements for a fixed dose combination that you have sufficient data showing the contributions of each independent agent. Now whether or not that has to come from your Phase 3 or from the Phase 2 studies or from other sources is something we’ll be discussing with the agency. I think our going in assumption is that at least one arm of monotherapy, probably the bezafibrate monotherapy, but we may have two arms of monotherapy, as we go in. The placebo study, again, that’s a big topic in PBC where patients, you know, whether that’s placebo or placebo plus ortho, again, with the changing standard of care over the last seven years, it’s difficult to ask patients to stay on placebo certainly for more than the 12-months double blind portion. So stay tuned on that, but, yes, I would expect at least one monotherapy arm.

Unidentified Analyst: Great. Thank you.

Jerry Durso: Thank you, Charlie.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Steve Seedhouse with Raymond James. Your line is open.

Ryan Deschner: Good morning. This is Ryan Deschner on for Steve Seedhouse. Just wanted to get your current thoughts on how you’re seeing potential impact mechanism that specifically target pruritus in the PBC space, such as IBAT inhibitors? And then also wanted to ask if you have any updated guidance on what sort of a timeline you could expect to see data from the outcomes portion of REGENERATE? Thanks.

Jerry Durso: So maybe I’ll take the first one and then Linda can take the second one on the IBAT, where I think it’s a little early yet, but obviously, we’re working on that in the background. So as we said in our announcement to discontinue the work with REGENERATE will capture the available data and communicate appropriately at the right time on that. So again, the focus of the work of the team is on all of the important closeout activities. As we said, we do anticipate that the sites will be closed and the material costs will end this year. There might be a little bit of some final things that flow into the beginning part of next year. But part of the closeout is to appropriately capture the data. Of course, we’re working with the sites to make sure that the all is clear as the closeout. And as we capture that data, we would communicate back appropriately based on good practices. Linda?

Linda Richardson: I think the IBAT story is an interesting 1 in that if you’re addressing a symptom — I’m not an expert on IBATs by any means or all the details of their programs that they may have in the future. But I do think that with the incidence of pruritus as part of the disease state in PBC, having something that can help patients moderate or address that — it is an important quality of life element. And if that were to come to bear in the marketplace, I’m not aware that at this point, they’ve shown disease-modifying opportunities. So it would be something to address the disease, but you may still need something to really look at lowering ALP AST, ALT, bilirubin and other markers. So while it could pave the way to improve that kind of symptom of PBC, I imagine right now, there’s still a need for therapy to look at lack of stopping the progression of the disease itself.

So at this point, I think that could be potentially beneficial to Ocaliva that became part of an ongoing strategy to address that part of patients’ experience on PBC.

Ryan Deschner: Got it. Thank you very much.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Ritu Baral with Cowen. Your line is open.

Ritu Baral: Good morning, guys. Thanks for taking the question. Michelle, I just wanted to round back on something you mentioned in some of the prior questions about what will serve as the control arm for the Phase 3 combination, at least as you will propose it going in. You mentioned there would be a monotherapy arm. I think you left open the possibility that there could be at least a shorter-term placebo arm, which one at this point do you think would serve as the control for statistical analysis of the primary endpoint? And I guess, if it was placebo, would that have to change with full approval — I’m sorry, full approval of Ocaliva [Indiscernible] accelerating?

Michelle Berrey: Right, right, right. So, yes, you do bring up a good point that while you’re still under accelerated approval, it cannot serve as the only comparator. You have to continue to compare back to placebo. Should we get to a full approval with fulfilment of our post-marketing requirement, and that does shift your standard of care. And one of the interesting questions in PBC, though is the utility of external controls as we have continued to build out these patient registry and claims databases, but really the multiple patient registries where we have now established the natural history of the disease. We have the data and to be able to pull some of those data, which we’ve seen some great presentations on how to incorporate external controls, either as a basis for powering the study or even within the study.

So I think this is an evolving space. And when that hopefully decreased the proportion of patients, who would have to go on to placebo for that Phase 3, again, hopefully, that could just be for the short double-blind portion and not require patients to be on placebo through to liver transplant or decompensation or death. I think that’s a shifting expectation in the field and one that we’re happy to be supporting being creative on those designs.

Ritu Baral: Got it. And a very quick follow-up, Linda, you mentioned something about having bilirubin data in the real world to support Ocaliva use. Can you elaborate a little bit on what sort of bilirubin benefit or data you’ll have in hand for commercialization — I’m sorry, for continued competitive commercialization?

Linda Richardson: Well, we have data from both 12-weeks and 52-weeks where you can look at that and knowing bilirubin is a very important element of progression of disease. So if you start to see that move, that’s not good for a patient. And even in our open-label extension, we showed that we were able to not only maintain fibrosis, but also bilirubin without progression. So these are things that are very important to physicians. Michelle, anything else that you can think of on Bili?

Michelle Berrey: Yes, I think it’s part of this overall appreciation that the story is not just about ALP, that it is important to look at the other elements, the other biochemistries and in particular, in patients who are in a — who’ve progressed more, so who were perhaps not started on it kind early enough, who are already starting to see some burnout in their ALP and elevation in their total bilirubin, so it’s really part of a bigger story of looking at the contributions of all biochemistry. ALP doesn’t tell the whole story. We know that looking at GGT and bilirubin are also really critical elements. We now have those data across 5, 6, 7 years both from the open label extension that these large patient registries. So we look forward to sharing additional data on that front and how that correlates with the improved outcomes that we’ve demonstrated for Ocaliva.

Ritu Baral: Great, thanks.

Operator: Thank you. Please standby for our next question. Our final question comes from the line of Salveen Richter with Goldman Sachs. Your line is open.

Matthew Dellatorre: Hi, thanks. This is Matt on for Salveen. On the $140 million expense guidance, could you give any more details on the breakdown between SG&A and R&D? And then could you just remind us how far the OCA plus beza combo would extend IP? Thank you.

Jerome Durso: Yes. So maybe I’ll take the first 1 on IP and then Andrew can handle. So look, the OCA-bezafibrate has always been a twofold opportunity for us. One is the therapeutic opportunity, and it’s great to see that the data that we’re starting to read out points to the real potential for best-in-class here. Second was yes on life cycle management. So as a reminder, bezafibrate is a new chemical entity in the U.S. market as it’s never been filed or approved here. We have the first patents issued roughly 36 on the combination, which covers a broad range of doses in PBC. We would anticipate both additional IP and probability for patent term extension beyond. So again, if we think about that as a real long-term incremental opportunity for us. Andrew, maybe you take the last question on OpEx.

Andrew Saik: Yes, sure. So with regard to the OpEx reductions for next year, the way I would think about it, our NASH R&D spend has always been about one-third of our expense. To extrapolate that out, it’s about $60 million in NASH spend on the R&D line this year. The rest of it would be a combination of reductions throughout the SG&A line.

Matthew Dellatorre: Got it. Thank you.

Jerry Durso: Thank you, [Salveen] (ph).

Operator: Thank you. Ladies and gentlemen, I’m showing no further questions in the queue. That concludes today’s conference call. Thank you for your participation. You may now disconnect.