Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) Q4 2022 Earnings Call Transcript

Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) Q4 2022 Earnings Call Transcript March 2, 2023

Operator: Good day and thank you for standing by. Welcome to the Intercept Pharmaceuticals Fourth Quarter and Full Year 2022 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. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Nareg Sagherian, Executive Director, Investor Relations. Please go ahead.

Nareg Sagherian: Thank you. Good morning and thank you for joining us on today’s call. This morning, we issued a press release announcing our fourth quarter and full year 2022 results, which is available 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 factor 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; our Chief Commercial Officer, Linda Richardson; President of Research and Development and Chief Medical Officer, Dr. Michelle Berry; and Chief Financial Officer, Andrew Saik. We will then open the call for questions.

Let me now turn the call over to our CEO, Jerry Durso.

Jerry Durso: Thanks, Nareg. Good morning, everyone. Thank you for joining us on our fourth quarter and full year conference call. Intercept made significant progress across the business in 2022, and I’m proud to highlight our achievements today. Looking at our performance in PBC, we again delivered double-digit sales growth for Ocaliva and ended 2022 with total U.S. net sales of $285.7 million. This was 10% growth over 2021. Importantly, in the fourth quarter of 2022, Ocaliva generated $77.2 million in U.S. net sales, which is 13% growth over the prior year quarter. We now look to 2023 as the year to continue driving growth, and we’re more confident than ever in the longevity of our PBC business. We know, there remains a significant number of people living with PBC who can benefit from adding Ocaliva as a second-line therapy.

We added more certainty in the runway of our life cycle with the resolution of our patent infringement case for Ocaliva that was scheduled for trial in the U.S. District Court on February 27 of this year. The settlements protect Ocaliva market exclusivity into the 2030s and reinforce the long-term opportunity we have in PBC. In addition, we continue to progress our next-generation PBC therapy, the fixed-dose combination of OCA and bezafibrate which is another component of our long-term strategy. We look forward to sharing data on our next-generation medicine later this year and are excited about its potential. Turning now to NASH. At the end of the fourth quarter, we resubmitted our NDA for OCA in pre-cirrhotic liver fibrosis due to NASH. Following FDA’s acceptance in January, the agency has signed a PDUFA target action date of June 22.

Reaching this point is the result of hard work and dedication from patients, physicians, study personnel and our team here at Intercept and is a major milestone for the NASH community. OCA has demonstrated a strongly confirmed antifibrotic effect in our rigorous NASH program, but we believe it has the potential to become an impactful therapy. We’re now working through the regulatory review process and are advancing our launch readiness planning while taking a measured approach to investment as we progress through the upcoming milestones. We also made strides in our pipeline program with our next-generation FXR agonist INT-787. In November, we announced the lead indication for this investigational therapy, severe alcohol-associated hepatitis and initiated our Phase 2 FRESH trial.

Michelle will elaborate on this later in the call. Notably, the progress we made last year was complemented by the transformation of our capital structure. As a result of this work, we finished the year with nearly $500 million of cash on hand. 2023 will be a pivotal year for Intercept, and we’re operating from a position of strength. Our balance sheet and foundational PBC business provide us with the financial flexibility and the strategic optionality to drive growth while positioning ourselves for success in NASH. This year, I look forward to working alongside the team as we build on the momentum of last year’s performance and grow our commercial PBC business. As we work through the regulatory review of OCA while preparing for a commercial launch in NASH, and as we progress our pipeline opportunities while continuing to innovate on behalf of people living with liver diseases.

I look forward to sharing updates on our progression of these priorities throughout the year ahead. With that, I’ll now turn the call over to Linda.

Linda Richardson: Thanks, Jerry, and good morning, everyone. I’m pleased to share performance highlights for 2022. It was another strong year for our foundational Ocaliva business, underscoring the strength of Ocaliva’s market position as the only second-line agent approved for use in PBC. We achieved double-digit growth for both the fourth quarter and the full year compared to the same time frame last year. Our performance in PBC was driven by a strong return to growth in the second half of 2022, with a few notable contributing factors. First, our new-to-brand prescriptions grew nearly 30% during the second half of 2022 as reported by IQVIA’s NPA audit. We believe this would be the trend as we passed the one-year mark post label change in June of 2022.

While over 95% of our business is driven by existing patients, it’s good to see solid growth in new patients receiving Ocaliva and speaks to the ongoing need for second-line therapy for many patients with PBC. Second, as a result of our ongoing efforts to reach new prescribers, we continue to see an increase in first-time Ocaliva writers. More specifically, saw a 42% increase in new writers in the second half of 2022 versus 2021, a dynamic we see is very positive and important. Third, our continued investment in patient support services through our award-winning hub and our specialty pharmacy network has resulted in an eight-day improvement in specialty pharmacy time to fill. We want to ensure that appropriate eligible patients can quickly start treatment with Ocaliva.

Simplifying the facilitating processes here help sustain existing patients and initiate new ones. Strong customer engagement and communication of the benefits of Ocaliva remain a focus for our commercial team, in the field at major conferences and with patients. Last fall, we kicked off our new HCP and patient marketing campaigns each with updated messaging designed to drive urgency and demonstrate the need to go beyond ALP management in fully addressing PBC treatment. We recently began to proactively provide to HCPs, the gastroenterology publication that presented in greater detail, some of our strong real-world evidence regarding improved outcomes for patients taking Ocaliva. We anticipate additional publications and presentations of new real-world evidence later this year.

Prescribers recognize the significance of real-world outcomes data when treating PBC. In market research studies, we have seen a significant increase in projected accountable market share once HEPs and GIs were presented with the results from the real-world evidence studies. Turning now to NASH. We are engaging with all key stakeholders as we prepare to execute against our go-to-market commercial strategy. We continue to meet with payers to refine our thinking as we prepare for a potential launch in NASH. We are focused on understanding their needs and concerns, which has allowed us to gain valuable insight into our pricing, reimbursement and overall access strategy. Market research with health care professionals shows that reversal of fibrosis stopping further progression of fibrosis and the prevention of cirrhosis will be the three key drivers of prescribing for NAV patients with advanced fibrosis without cirrhosis.

We believe that the strong and confirmed antifibrotic effects of OCA shown in our REGENERATE trial address all these areas of concern with a unique differentiating mechanism of action. Importantly, our well-established U.S. field presence and broad geographic footprint provide Intercept with a competitive advantage. Based on our analysis, nearly three and four of the highest potential prescribers for NASH already are within our existing PBC customer base, where we’ve been building relationships for the past six years. This overlap will enable us to easily flex to NASH disease awareness messages and then OCA specific ones while also covering our current PBC targets. In the meantime, our disease awareness activities continue. Our unbranded website hosts our NASH Tipping Point campaign, educating providers on the significant risk associated with advanced fibrosis due to NASH.

Photo by Stephen Foster on Unsplash

We will continue our presence at key congresses while also initiating disease awareness programs. In closing, we had strong PBC performance in 2022, and remain confident in our ability to increase Ocaliva market penetration in 2023 and maintain a positive long-term outlook for our PBC franchise. The commercial team is actively and passionately preparing for our future in NASH. I’m proud of the team’s performance and look forward to sharing updates on our progress throughout the year. I’ll now turn the call over to Dr. Michelle Bars.

Dr. Michelle Berrey: Thank you, Linda, and good morning, everyone. In 2022, we made substantial progress in our NASH development program and building out our pipeline. Looking first at NASH, In January, the FDA accepted the resubmission of our new drug application for OCA and pre-cirrhotic liver fibrosis due to NASH. We are thrilled to have progressed to this regulatory milestone one step closer to reaching our goal of delivering the first FDA-approved therapy for this devastating disease. There’s a critical need to address liver fibrosis due to NASH before patients progressed to cirrhosis, a pivotal point in NASH disease progression associated with increased risk of both liver-specific and all-cause mortality. Our NDA is supported by a robust body of evidence from the OCA NASH clinical development program, including two positive 18-month interim analysis from the pivotal Phase 3 REGENERATE study and a large robust safety assessment that includes the 2,477 patients from REGENERATE with nearly 1,000 subjects on study drug for at least four years.

OCA has demonstrated a consistent antifibrotic effect across two studies and multiple analyses of the REGENERATE study that we shared over the course of 2022. Through two independent histologic methodologies, OCA demonstrated fibrosis improvement of at least one stage without worsening of any of the three histologic parameters that comprise the NAFLD activity score, or NAS. In both methodologies, OCA 25 milligrams demonstrated double the response rate of placebo and reducing liver fibrosis stage without worsening of any of the three histologic components. It’s important to note that this endpoint was defined as a result of direct interactions with the FDA prior to finalization of the REGENERATE statistical analysis plan. In addition to robust efficacy data, our safety database, which is the largest in the Nash field with the longest duration of patient exposure shows a well-characterized safety and tolerability profile that supports the potential chronic administration of OCA.

We know that fibrosis is the strongest predictor of clinical outcomes in patients with NASH and we continue to believe that OCA has the potential to become the first approved therapy in this disease. FDA indicated that it considers us a Class II resubmission and has assigned a PDUFA target action date at June 22 for the NDA. We fully anticipate an advisory committee meeting as part of this process, but we do not yet have a confirmed date. We’ll share additional updates as appropriate as we advance through this review process. Turning to PBC. We continue to prepare data from our post-marketing study, COBALT, and supplementary real-world evidence from large data sets in the U.S., U.K. and Europe. These data will be included in a regulatory submission to FDA this year in support of fulfilling post-marketing requirements for Ocaliva and PBC.

The real-world data we have generated to date demonstrates the actual long-term clinical benefits of Ocaliva. Specifically, patients taking OCA had improved transplant-free and decompensation free survival, which we know to be the most important treatment goals both for individuals living with PBC and for their clinicians. Building on our commitment to innovating in PBC, we are making great progress with our fixed-dose combination of OCA and bezafibrate of PPAR agonist. One of our two Phase 2 studies is now fully enrolled, and we’re accelerating recruitment of patients into a second. These Phase 2 studies and our pharmacokinetic analysis will inform dose selection and study design for a Phase 3 trial. We anticipate selecting doses for the fixed dose combination as well as sharing data from planned analyses of the large Phase 1 and Phase 2 studies later this year.

The OCA bezafibrate combination has synergistic mechanisms of action with the potential to further lower key biochemical measures that predict long-term outcomes in PBC and while also improving tolerability. We’re excited to show the potential impact of this combination that we believe has best-in-class potential. Finally, I’m happy to provide updates on our next-generation FXR agonist INT-787, with a lead indication in severe alcohol-associated hepatitis or sAH. For background, alcohol-related liver disease as a cause of chronic liver disease is on the rise. And is currently the leading indication for liver transplant in the U.S. Despite the increasing incidence of sAH in the U.S., there are no approved therapies for people who could develop this disease.

We believe there are several indications in which 787 could make a potential impact. However, sAH provides us with a great initial opportunity for this FXR agonist with a different gut to liver ratio compared to OCA. In November, we announced initiation of our proof-of-concept Phase 2a study called FRESH, evaluating the safety, tolerability, efficacy and pharmacokinetics of INT-787, in patients with AH. Our first fresh site was activated in December 2022, and we’re continuing to add additional sites in the U.S., U.K. and France. As of February 2023, we have completed recruitment for our Phase 1 study. We look forward to sharing additional updates as this program advances. At this point, I’ll turn the call over to Andrew for financial updates.

Andrew Saik: Thank you, Michelle, and good morning, everyone. We have had a very strong 2022, and I look forward to sharing our results and discussing our plans for the pivotal year ahead. I encourage you to please refer to our press release for a detailed summary of our financial results for the fourth quarter and year ended December 31, 2022. For this call, I will focus on the highlights as they relate to 2022, and we’ll also provide guidance for 2023. As I begin, I would like to remind everyone that as you review our fourth quarter and full year financial information, please note that the divestiture of our international business was completed on July 1, and our full year non-GAAP results include the divested business for the first half of the year.

In our financial statements, the divested business has been moved to discontinued operations. Turning to the highlights for the fourth quarter and full year ended December 31, 2022. We were very pleased with the growth of Ocaliva in PBC in 2022. Our fourth quarter net sales growth was 13% over the prior year quarter for Ocaliva in the U.S. For the full year, we reported worldwide Ocaliva non-GAAP adjusted net sales of $343.8 million, with $285.7 million in total U.S. net sales compared to $260.8 million in total U.S. net sales in 2021. Touching on operating expenses for 2022, selling, general and administrative expenses were $55.4 million in the fourth quarter of 2022 compared to $46.3 million in 2021. The period-over-period increase was primarily driven by investment in NASH launch preparation.

SG&A expenses were $176.3 million in full year 2022 and compared to $177.5 million in 2021, with a decrease in personnel-related costs, offset by an increase in NASH launch preparation. Research and development expenses decreased to $40.7 million in the fourth quarter of 2022 from $51.1 million in the prior year quarter. The decrease was primarily driven by lower NASH-related costs and cost sharing reimbursements R&D expense decreased to $176.6 million in 2022, down from $182.7 million in 2021. The decrease was primarily driven by lower NASH costs and cost sharing reimbursements and were partially offset by the recognition of lower R&D tax credits. In 2022, approximately 2/3 of our R&D costs were related to our NASH program spend. 2022 was a year of financial transformation for the Company.

We executed a series of strategic transactions to transform our capital structure, which included the sale of our international business and several private repurchases of senior secured conversion votes. Regarding our convertible notes as a result of the repurchases during 2022, the principal balance of the 20 convertible secured notes was reduced by approximately 78% to $111.1 million. Moreover, the Company dramatically decreased annual cash interest. For 2023, cash interest expense will be $8 million as we anticipate our 2023 notes will be redeemed in July with cash on hand. At year-end, the Company had $491 million in cash and cash equivalents and $336 million in outstanding debt. We ended 2022 with the financial flexibility to move our business forward regardless of the FDA decision on OCA and NASH expected later this year.

Turning to our financial guidance for 2023, we are guiding to $310 million to $340 million of Ocaliva net sales which compares to $285.7 million in 2022. For 2023, non-GAAP adjusted operating expenses, we are guiding to $360 million to $390 million which compares to approximately $325 million in non-GAAP operating expenses in 2022 from our continuing business when excluding the sale of the international business. Similar to what we’ve seen in prior years, we anticipate slightly lower revenue and higher cash utilization in the first quarter of 2023 relative to the rest of the year. We expect that Ocaliva first quarter sales will be impacted by the usual seasonality as patients are faced with insurance plan resets and Medicare coverage gaps at the beginning of the year.

We also anticipate greater cash use in the first quarter due to activities from work related to preparing for a potential approval and launch in NASH and other annual expenses. Finally, we may choose to revise our 2023 guidance later in the year, pending potential regulatory approval for our NDA for OCA in pre-cirrhotic liver fibrosis due to NASH. In summary, we are pleased with our financial performance in 2022 and looking forward to a strong 2023. We are in solid financial position and believe that our current balance sheet and cash on hand gives us the financial flexibility to continue to grow our existing Ocaliva business support a potential launch in NASH and advance our pipeline programs. With that, I’d now like to turn it over to the operator for any questions.

Operator?

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Q&A Session

Operator: Our first question comes from the line of Ritu Baral with Cowen. Your line is open.

Ritu Baral: Michelle has the FDA at any point communicated to you what the topic of the AdCom could be and further any range we should be thinking of for the date of the AdCom. I guess we’re all sort of coming at it, wondering given the since resubmission, are you going to have things like a mid-cycle review meeting where they’re going to tell you these things? Or are you flying blind like last time?

Dr. Michelle Berrey: Good morning, Ritu. So, we do anticipate that the focus of the advisory committee meeting would be focused on overall benefit risk. We have had multiple conversations with the since the CRL and we know that there are some areas of focus for them. We intend to convey those certainly were all addressed in our NDA the specific areas that we have communicated at the AASLD presentation and again at NASH-TAG. We feel that we have addressed all the areas of concern with the confirmation of the antifibrotic benefit and the second analysis and a much more robust safety database with, which we can address any of their earlier concerns specifically around the long-term safety and tolerability of the drive, given that this would be anticipated to be a chronically administered drug. So, it’s important that we have years of therapy in order to demonstrate that safety and tolerability.

Jerry Durso: I guess just one more point to add in there, Ritu, to your question, as Michelle indicated in her prepared remarks, all the prep for the AdCom is ongoing, but we don’t yet have a confirmed date.

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

Mayank Mamtani: I have a few — just maybe following up on the prior question. As part of your acceptance letter on the NDA filing, was it clearly communicated to you by FDA that they are planning to hold an Adcom? And I just wonder the agency does — is increasingly requiring in-person format. So how confident do you purely getting answered by the June 22 PDUFA date? And then I have a couple of follow-ups.

Jerry Durso: Yes. I guess on the AdCom itself, we have every indication that we’ll have an AdCom. We can’t speak to a date as there is none confirmed yet, but we are working in the context of the existing PDUFA date. And typically, those come a handful of weeks prior to the PDUFA date. So, we’re moving forward, we’ll be fully prepared. And of course, will provide any additional information as appropriate if we get it from the agency.

Mayank Mamtani: Okay. And then on the apparently very strong guidance you had on PBC, seems like driven by new prescribers. Could you perhaps share what the overlap you may have with these new hepatologists that you’re having prescribed OCA for PBC, but also they may also care for NASH patients. Do you have that data cap?

Jerry Durso: Yes. So Matt, we do, as you said, feel good about the performance on PBC, both for the quarter and the year where we saw an acceleration in the second half of the year in the growth versus the first half and with a strong 13% growth in the fourth quarter. Clearly, this is a long-term area of focus for us. We have been working with many of the key prescribing physicians for several years now, and Linda can provide some details how we see a large part of that core audience also being really the first potential prescribers for NASH as we do the deep commercial planning in advance of the PDUFA on NASH.

Linda Richardson: Yes, we cover right now from our analysis. Three out of four of the top potential NASH potential prescribers already exist within our PBC call list. So we’re bringing in new PBC prescribers but also have established relationships over the past six years as you know already with Ocaliva in that same target audience. So we feel comfortable that the work we’re — the ground work that we led with PBC will translate very efficiently into a NASH, potential NASH launch.

Mayank Mamtani: Got it. And my final question on the FXR PPAR combination Phase 1/2 data that you intend to report later in the year. Could you just maybe provide some thoughts on what Phase 3 design you might be thinking since you are in a unique position to pursue two currently approved therapies in this drug class. So just I know it’s early, but it would be great to hear your thoughts on the Phase 3 deal?

Jerry Durso: Michelle, do you want to take that one, please?

Dr. Michelle Berrey: Sure. Yes. Great question. We are really excited about the fixes combination of OCA plus bezafibrate. And as you state is we are in a unique position to have two potential therapies in PBC. I hesitate to give much detail on our plans for the Phase 3 until we have those conversations with the FDA to review all the very exciting data coming out of the Phase 2. But we feel we have the potential here with the combination for potential best-in-class for PBC. So again, it really underscores our long-term commitment to innovation in this space.

Operator: Our next question comes from the line of Yasmeen Rahimi with Piper Sandler. Your line is now open.

Unidentified Analyst: This is Emma on for Yas. My question is what are your thoughts on the recent ICER pricing report? And with that, are you still thinking about differential pricing in NASH versus PBC? And what type of payer discussions have you had to support that, if any?

Jerry Durso: Thanks, Emma. Maybe I’ll give some overall view on how we’re thinking about pricing and then Linda can comment on ICER. So as you would imagine, we’re doing all the right work as we prepare for a launch that includes some up-to-date dialogue with our key payers, and those are ongoing will of course take a pricing decision once we have the full information, including final label. But we continue to work towards all the right steps to have optionality on pricing between Ocaliva and OCA and NASH should we choose to execute a pricing strategy that way. So, we would anticipate a separate brand, separate NDC, the things that give us that option. And all the updated work, including those discussions with payers are going to be important inputs.

We’ll share more thinking about our strategy with the with the payer, which will, of course, be foundational for the launch as we get closer to the PDUFA date. And again, I think it’s been several years. We’ve had dialogue with the payers going back to before the first PDUFA date. So we’ve done a lot of in-depth work. We’re revising it with the current context as you would need to and then perhaps Linda, can comment on ICE.

Linda Richardson: Yes, of course. Thanks for the question. Frankly, we disagree with several of the approaches that were used within the model, which generated the draft evidence report, specifically, when we look at the model, it does not define a standard that constitutes an acceptable data set and implies. It kind of applies an inconsistent approach and the exclusion of available data for different therapies. So what do I mean by that? An example is, it includes only Phase 3 data for OCA but put both Phase 3 and Phase 2 data in for Madrigal. And even though the Phase 2 data did not include fibrosis improvement without worsening of NASH, as a primary endpoint, and then furthermore, it does not use the updated available information for OCA.

It doesn’t incorporate all data that are publicly available, notably the full and robust safety data set we have to REGENERATE. We presented this at AASLD in November 22. And frankly, it doesn’t present the new analyses that we shared at NASH-TAG in January 2023. So there’s kind of a lack of consistency in approach that we are recognizing and we’ll see how it goes from there. But we have some returns with the model.

Operator: Thank you. Our next question comes from the line of Jon Wolleben with JMP Securities. Your line is now open.

Jon Wolleben: Primarily wanted to ask about OpEx guidance. I’m wondering, how much incremental NASH SG&A is included there? And if it’s not fully included, how much more do you think would be necessary? And then I think, Andrew, you said that 2/3 of 2022 R&D was for NASH. I’m wondering if that’s the same proportion you expect for 2023.

Jerry Durso: Thanks, John. We are continuing to manage with, I think, the right intersection of ensuring we have the right investments as we prepare for NASH, but also paying a lot of attention to making sure that we’re managing our OpEx in a responsible way, Andrew, maybe you can go into how we’re thinking about the NASH investment in context of the guidance that you gave earlier.

Andrew Saik: Yes, sure. Thanks for the question, John. Yes, so probably the right way to think about it and the reason I gave sort of our continuing cost from last year, our last year spend was around $325 million when you don’t count the international operations that we sold in July. So, the way to think about it is the increase year-over-year is really 100% related to NASH launch then. So, you’ve got about $50 million to $60 million that we’ve targeted is prelaunch NASH. And that’s basically external, right? So, we’re looking at things like payers, we’re looking at pricing. We’re looking at disease education. We’re not adding a lot to infrastructure in the meantime until we get to our PDUFA date. So, it’s all going to be external spend that we could ratchet up or ratchet down sort of as we go.

With regard to R&D, we’re continuing to evolve our pipeline, as you know. So reverse is done, which means that our spend on NASH is going to be reduced this year relative to last year. Overall R&D spend will be slightly down but materially flat, but you’re going to see more like 50% NASH and 50% pipeline, if that helps.

Jon Wolleben: Very helpful.

Operator: Thank you. Our next question comes from the line of Joseph Stringer with Needham & Company. Your line is now open.

Joseph Stringer: Just wanted to get your updated thoughts on the pre-cirrhotic NASH market segmentation, and looking ahead, if OCA approved in NASH with your desired label, what types of NASH patients would you just getting on the drug for?

Jerry Durso: Yes. Thanks, Joe. Maybe I can start and Linda can chip in if she wants. I think, look, when we think about how we would best position OCA. We continue to be focused on the antifibrotic effect and the more advanced patients. And so I think that theme, what you’ve heard from me for a while continues to be what we’re getting back as we do these updated discussions with all of the stakeholders, the deep updated market research you would anticipate, we’re doing as we’re in this phase of preparation. So really, the advanced patient who is most likely identified through noninvasive means continues to be where we would zero in on both — it really is the patients that the physicians the payers and the patients themselves have the most amount of urgency towards seeking treatment.

And we know from the profile of OCA, including, importantly, the greater level of efficacy that we showed in some of the analysis that we reported out in the latter part of last year showing higher efficacy. For example, in that F3 subset goes in that same direction. We would also be focused in the initial phase on those patients that are already under care of the specialists of and GIs. And as Linda said earlier in response to the one of the questions, we’re seeing most of those physicians already today. So, I think we have a good understanding of those practices and of those individual and group prescribers. So Linda, anything you want to add on.

Linda Richardson: Yes. I think the combination of calling on these folks with the urgency that’s been noted over and over again by physicians with the fibrotic patients, advanced patients we estimate that there are probably 20 million adult patients with NASH, but only a small percentage, roughly about 3.8 million have been actually diagnosed, right? There’s nothing to use to treat them. So you see an increase in diagnosis that comes following the ability to have on-label treatment and therapies and lots of discussions. We continue to estimate that approximately 500,000 diagnosed NASH patients. These are diagnosed are currently under the care of a HEP or GI and have advanced fibrosis without cirrhosis. So from a launch mode, we feel that those patients reside in the offices that we’ll be calling on and have the most need and we have the best data in that set.

Operator: Thank you. Our next question comes from the line of Brian Skorney with Baird. Your line is now open.

Brian Skorney: I guess on the Ocaliva guidance for 2022, maybe you can just frame how to think about getting that higher end of the guidance, it’s almost 20% increase year-over-year, which is quite a bit of acceleration compared to where it’s been trending for the last two years. So can you just characterize what you’re seeing in the more that might get you there? And does that high end include anything for NASH?

Jerry Durso: Andrew, maybe you just start on that.

Andrew Saik: Yes, sure. Thanks, Brian. Look, the guidance that we gave is kind of in the 9% to 19% range growth. We tend to try to target the center of that growth as to where our focus is internally, Again, we’re continuing to put effort and energy into growing our top line and we’re really comfortable with our guidance overall. What I would say is that the guidance that we gave on Ocaliva is unimpacted by NASH. In my prepared remarks, you probably noted that I mentioned that we would reserve the right to come back and reissue guidance when and if we get approval from the FDA. And at that point, would we give more of a blended and that secondary guidance would include any impact from NASH on Ocaliva.

Jerry Durso: Yes, Brian. The only other thing that I would add just in terms of dynamics, we talked in the second half of last year about the emerging data that we were beginning to publish from the real-world data sets on outcomes. We know that some of those publications came late in the year, and look, all indications, that data, we’re getting it out there appropriately in the context of the medical affairs and/or a commercial plan. But that data is just starting to get into the hands of the prescribers. And we know from the market research that we’re doing, it can be quite important to those prescribers as they think about potentially increasing their utilization of Ocaliva for the right second line patients.

Dr. Michelle Berrey: Yes. And I think the last thing to note is coming out of the second half of the year as we predicted we’ve seen accelerated growth. We saw this bolus of new writers, demand, et cetera. And we are layering that now, as Jerry noted, with the distribution of our real-world evidence data. And when we test that in market research and have people that are exposed to that data and say, all right. Now project or prescribing, we see a significant increase in allocation of share to Ocaliva, and as we have, and we anticipate additional presentations of new real-world evidence data. AND frankly, the publications that we will be able to disseminate, we see that awareness picking up and really reframing the way that physicians evaluate what does complete PBC management look like.

And they’ve always said that preventing progression, maintaining the patients, those are the important things, and we’ve got not only five years of data from our POISE data on looking at stabilization of fibrosis and bilirubin, but now we have outcomes, and we’re talking about lives, not labs. These are actual patients that are benefiting from treatment with Ocaliva.

Operator: Our next question comes from the line of Thomas Smith with SVB Securities. Your line is open.

Unidentified Analyst: This Mike on for Tom. Can you provide some additional color on where you are with the PBC regulatory discussion, and what, if any, are the remaining gating factors for submission? And then just as a quick follow-up, when in 2023 specifically are you targeting for submission?

Jerry Durso: Michelle, can you take that, please?

Dr. Michelle Berrey: Yes. Thanks for the question. So we have been in discussion with the agency about the content of our planned supplemental NDA which, as we’ve discussed, would include the COBALT results, which we top lined last year as well as an external control. So comparing those patients from — within the COBALT study, who were on OCA to a group of patients from external data bases. We’ve looked at the Komodo database as we’ve released as well as two different patient registries, the U.K. and global PBC databases. So, we’ve been in discussions with the agency about inclusion there. We will also be planning to publish these data as we did with the gastro cover last December in releasing the real-world evidence. The most striking thing about these data sets is the consistency completely independent data sets.

We’re seeing a 50% to 70% reduction in depth and decompensation leading to liver transplant or death. So, we are really excited about those data sets. This would be the first non ultra-rare condition that would include real-world evidence in a significant submission. We know there’s a lot of interest here. That is our plan for the submission. We haven’t yet given guidance on the exact timing of that. As you might understand, with a small group, we are working in two parallel pads, so on the NASH preparations and for the PBC sNDA. So, we’ll give more guidance as that date grows closer. Thanks for the question.

Operator: Thank you. Our next question comes from the line of Brian Abrams with RBC Capital Markets. Your line is now open.

Brian Abrahams: A question on IP. Can you talk about your level of confidence in OCA’s exclusivity extending to 2031, just given all the recent settlements that you’ve been able to do, but still maybe one filer remaining out there. And then how should we be thinking about that expiration potentially applying to OCA in the NASH setting versus just in the PBC setting.

Jerry Durso: Thanks for the question, Brian. Andrew?

Andrew Saik: Yes, sure. Thanks, Brian. Yes, so look, we’re extremely happy that we were able to get such a positive settlement. Not going to litigation on the IP was a great outcome for the Company and getting 70% of the value of those 2033 patents is a real win for the Company. Look, we can’t speak to the current additional filer out there, which is Zanera Pharma. That’s a separate trial. It’s the same jurisdiction, the same judge, same fact set it would — but it’s out there in 2024. The good news for the Company is that we’re completely ready for trial, right, because we did all the work, we did all the prep. Zenara would have to start over from scratch. We’re never going to predict an outcome, but it’s the same fact set, and we’re ready to enforce our IP vigorously.

In terms of carry on to NASH, again, assuming that we get approval, that’s the same fact set. It will — presumably, if people file against it, it would be a completely different trial. But again, we’re very comfortable with the IP. We’ve been through it. It’s the same patents. So we would have the same level of comfort that we have with Ocaliva as we have with NASH. I don’t know, Jerry, if you want to add to that?

Jerry Durso: Nope.

Operator: Thank you. Our next question comes from the line of Michael Yee with Jefferies.

Unidentified Analyst: This is P.J. on for Mike. One question from us today. So some competitors have Phase 3 data coming up over the span of the next year. Could you comment to us a little bit of your view on how the competitive landscape is involved is evolving and how Ocaliva is positioned in this and.

Jerry Durso: So I assume you’re talking about competitive landscape on PBC just so that I’m clear.

Unidentified Analyst: Yes, PBC.

Jerry Durso: Yes. Maybe a couple of comments from me, and then Linda can get in a little deeper. I think importantly, we continue to position ourselves for a long-term effort in PBC. We have leadership there. Our goal is to maintain that leadership. And I think, as Andrew just indicated, the patent settlements give us more runway and certainty on Ocaliva. And then importantly, we have the opportunity with the next generation and the FTC coming to not only potentially provide a better therapeutic solution but also more runway because there’s incremental exclusivity and IP potential on the combination. So this is a long-term play for us now. And as we get ready for potentially some Phase 3 data to come and new entrants in the second-line therapy, I think we feel good about our position and the work to do ahead. Maybe Linda, you can comment on how we see that evolving.

Linda Richardson: Yes. I mean, obviously, we’re the incumbent, we are still growing. We have new data that’s changing the way prescribers think about the goals. We have probably two more publications to come this year, reinforcing our real-world evidence. And what we’re really trying to do is say it goes beyond ALP and just normalizing or lowering scores, it really is about what is the long-term impact on the patient. And we are the only people right now in the new second line, not discounting or so. But in the second-line market, we are the only ones with that data, and it is important, and we are repeating the data in multiple studies, and that gives credibility and credence to what we are able to communicate and generate.

And in that commitment to this space, we will continue to move the goalpost. Again, impacts lives, not labs. We have the ability to still call on these folks if we have a future NASH launch. We’re in there day in and day out. And we’re also strongly engaged with patient organizations with the groups that are making guidelines, et cetera, so we feel we have a lot of game and growth as is evidenced by our accelerating growth in the second half. Our plan is to carry that forward into the year.

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

Jay Olson: Congrats on the progress. I’m curious about the fresh trial for INT-787. It says on clinicaltrials.gov that patients must participate in alcohol use disorder program. So will patients be allowed to consume alcohol during the study? And if so, how do you plan to manage alcohol consumption and the potential impact that could have on the trial outcomes?

Jerry Durso: Michelle?

Dr. Michelle Berrey: Yes. It’s a great question. As we were designing this study, we worked with many of the centers across the U.S., U.K. and France really experts in this area. And what we have found is that it’s really critical for outcomes for these patients to commit to being an outpatient program immediately after their release from the hospital. So the trial is focused on hospitalized patients, of course, but then they would continue for their follow-up in this outpatient program. We do find that patients in general don’t consume alcohol within the first couple of months after release from the hospital, it’s I think special period in that recovery, certainly after that, we do see recidivism, but we are working, again, closely with these centers who have expertise in treating these patients and in maximizing the — their retention in the trial and making sure that these have lost to follow up patients because of recidivism early.

Operator: Thank you. Our next question comes from the line of Salveen Richter with Goldman Sachs. Your line is now open.

Unidentified Analyst: This is for Salveen. You referred to this briefly in the past. So how are you thinking about the product market fit for OCA given the data demonstrating greater efficacy in three patients compared to F2 patients in NASH as well as given the data from emerging treatments like the ones from .

Jerry Durso: Yes. So, I can start on this and just make sure I got the question correctly. I understand the question kind of positioning given our stronger efficacy in F3s in the context of other data being out there. I mean, I think, look, we continue to do all the deep work in market and continue to confirm the understanding that this incremental efficacy that we see in the advanced population is an important part of the overall value proposition. We also know that look there are different mechanisms of action at play here between OCA where you have clearly consistent antifibrotic effect and other drugs that might be working differently. So again, I think everything we learn in an updated context, including consideration of other potential profiles that are out there confirm that the unmet need is high overall.

The unmet need is most pronounced in these more advanced populations and that the well-known profile of OCA plays to that more advanced population. Of course, there is an asymmetry of information available. So we know a lot about OCA in the context of all the safety and efficacy we’ve put out. The profile of other emerging therapies, as you would expect, are there’s less information, particularly when we consider the longer-term experience that we now have with OCA. And importantly, when we think about the improved the benefit-risk profile of OCA that we believe we have from the first submission. One of the important dimensions is that longer-term safety experience where we believe we have the opportunity both in the regulatory dialogue and ultimately, hopefully, in market to talk about appropriate chronic therapy, the right guidance around what to measure and monitor over time.

And again, I think it speaks well to that more advanced population. So look, the unmet need in NASH is high. I guess just the last point I would stress is in any chronic class, and clearly, NASH will be over time, an important chronic class of therapy, it always takes multiple drugs to address the different segments of patients that are out there, and we’re working towards defining the right introductory approach and the right segments for success for OCA and for the patients who have this high level of unmet needs.

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

Eliana Merle: Just in terms of the NASH commercial landscape, you mentioned there’s a large number of undiagnosed patients. I guess what trends have you been seen recently on the horizon as potential initial therapies approved. And on the topic of reimbursement and diagnosis, I guess, as you do your pre-commercial conversations with payers, what feedback are you getting in terms of what they will view as a NASH diagnosis and any types of potential restrictions or step-throughs from the payer conversations, just given the potential for us to be able to this class and say, potential biopsies or any other types of sectors that might be needed or adjusted by payers?

Jerry Durso: Yes. Maybe a couple of dynamics to have in mind, Eliana thank you for the question. As I indicated earlier, obviously, we’re doing all of the in-depth work. And look, our plan would be to come back with more details on the commercial plan in a formal way when we get closer to PDUFA. Nonetheless, I think there are a couple of key themes which continue to play out. One is that we continue to see the utilization of noninvasives overall move in the right direction, right? There’s good momentum there. There is a larger utilization of the variety of different noninvasives for identifying patients. And the payers do understand this dynamic and are monitoring the progress and are looking for the right ways to identify patients consistent with what the KOLs are saying and what clinical practices, which is clearly utilizations of noninvasives.

I think with the payers, one of the themes which has been really important and productive for us is that we’re talking in the early discussions with the payers about a subset of our potential indication, right? We’re talking about the more advanced population. We’re talking about working together to find a way to find the right patients. And one of the big payer concerns is always utilization beyond your indication. So it’s a great starting point that we’re talking about the more advanced population and actually identification of a subset of our indication. And I think that gives us a good productive discussion. Of course, as I said, this will be an ongoing dialogue with the payers, and we’ll come back with more details as we get closer to finalization of the strategy.

And just the last point, of course, our final decision on price, et cetera, will be taken with approval, and we would communicate that as one of the last pieces in the equation.

Dr. Michelle Berrey: The only thing I might add to that, Eli, is at this point, unlike four or five years ago when we were talking about initial payer discussions, the idea and the acceptance of IT is also broader. So that plays into people trying to get to an easier path on the expense and the time and frankly, the pain per patient of biopsy. So I really feel like that is an advancement from where we were before and should help with different — the expansion of NITs being available and access to different ways to find appropriate advanced patients really has moved significantly from our earlier work.

Operator: Thank you. Our next question comes from the line of Jeff Meacham with Bank of America. Your line is now open.

Unidentified Analyst: This is Susan on for Jeff. Given the Company’s stronger cash position, are there any interesting external business development opportunities? And if external business development isn’t on the books this year, which internal programs do you expect to accelerate in.

Jerry Durso: Yes. So as you can imagine, we’re always looking for externally for good opportunities, but we’re also making sure that we’re managing the cash we have on hand appropriately given the work that we’re trying to do and funding the important internal programs that we discussed some this morning, INT-787, with a lead indication ongoing. And importantly, the long-term next-generation in PBC for the fixed-dose combination will be our primary focus. We’re also looking for additional indications for both of those internal assets should it should it make sense. So, we’ll continue to evolve the pipeline in the right way while we also make sure that we’re focusing our cash and our investment on the growth drivers.

Operator: Thank you. Our next question is the follow-up from Mayank Mamtani with B. Riley Securities. Your line is now open.

Mayank Mamtani: So maybe just one more NASH NDA review question. Has there been any indication for biopsy endpoint definition changing or being mechanism specific, et cetera. Anything that to suggest that agency might be looking to go beyond the scope of their 2018 draft guidance document, Michelle?

Dr. Michelle Berrey: Well, as Linda was to, we have seen a lot of interest and some great publications now coming out on the noninvasive tests. I think it’s recognized certainly by the community and by the GI division that those patients and providers would really look for an alternative to biopsy. Really the only reason first to getting a liver biopsy is to participate in clinical trials. Having said that, we have relied on histology for decades in viral hepatitis and now in NASH, and that is our agreement with the agency that this planned interim analysis would focus on histology. We’re confident that the histology results that we’ve seen now with two independent analyses confirm our antifibrotic benefit, and we’re excited about that opportunity to discuss it with the agency at upcoming opportunities.

I think it does remain draft guidance as you point out though. So, as more data are being reviewed, we may see some modifications to that, but we are confident in our submission and our analyses that have been submitted with the NDA. Thanks for the question.

Operator: Thank you. And now, I will turn the call back over to Jerry for closing remarks. Jerry?

Jerry Durso: So thanks, everybody, for joining us today. Just to reiterate, I’m really extremely proud of the performance that the Intercept team delivered both in the fourth quarter and for the year of 2022. We clearly have a lot of work ahead of us, but I think the achievements that we’ve discussed this morning, set us up to drive continued long-term growth for Intercept, and I definitely look forward to sharing updates as we progress through what is an important and exciting year ahead. So thanks, and everybody, have a great day.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.