Q2 2021 Intercept Pharmaceuticals Inc Earnings Call
[music].
Good day and thank you for attending.
Welcome to the second quarter 2021, intercept pharmaceuticals earnings call. At this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during that portion of the call you will need to press star 1 on your telephone.
If you require any further assistance. Please press star zero I would now like to hand, the conference over to US because lease had day Francesco Senior Vice President Investor Relations and corporate Affairs.
Thank you good morning, and thank you for joining us on today's call. This morning, we issued a press release announcing our second quarter 2021 results and financial position.
Available on our website at Www dot intercept pharma dot com before.
Before we begin our discussion I'd like to note that during this call we will be making forward looking statements, including statements regarding <unk>.
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.
Mornings 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 and today, you will hear from a number of new members of the intercept leadership team, including Chief Commercial Officer, Linda Richardson.
President of research and development and Chief Medical Officer, Dr. Michelle.
Chief Financial Officer, Andrew stake and Dr. Dr. Gail Cockwell senior Vice President of safety and Pharmacovigilance will also be available for Q&A.
Please limit yourself to 1 question in order to allow time for all questions to be addressed let.
Let me now turn the call over to our CEO Jerry Durso Jerry.
Albury, Lisa and good morning, everyone. Thank you for joining us on our second quarter of 2021 earnings Conference call.
We embarked on 2021 was focused set of objectives and as we cross the halfway point of this pivotal year for intercept.
Pleased with the progress that we've made first.
First we told you that we would continue to drive our PBC business.
Thanks second quarter, we delivered sales of over $96 million.
And another quarter of double digit sales growth.
We also work with FDA to finalize important changes to our caliber label in the US the began educating the market on the new prescribing information.
This clarity on the label will now allow us to return our focus to supporting the long term growth.
Growth of this important foundational franchise.
Second we told you we would execute on our clinical and regulatory goals. This includes most importantly, progressing our clinical development program in advanced fibrosis due to Nash.
We promised you an update on our Nash program in the third quarter and I'm pleased to report that today, we are actively moving from.
Seeking alignment and gathering regulatory feedback to data generation.
Now, let me tell you exactly what that means.
If you recall in the beginning of the year, we established a new team of internal and external experts and tasked them with instituting a process to gain alignment and feedback from FDA on a number of key items relating.
Safety biopsy methodology and efficacy data.
As a leader in the Nash space a disease with no approved medicines are work and thinking around Nash continues to evolve and our objective has been to gain as much support as possible from FDA along the way in order to decide on the data necessary to best address the FDA.
<unk> discussions around the overall benefit risk profile of OCA.
Since the beginning of the year, we've had frequent exchanges with FDA. The overall engagement has been significant.
Today, we believe we have gained enough insight from SBA in these critical areas to move forward on our plans.
And with the addition of Dr. Michelle Berrey now leading the process.
<unk>, we have a very strong team to execute our next steps.
Based on the progress made in our interactions with FDA throughout the first half of 2021, we're now generating what will be the largest data package ever produced in the Nash field.
These data will build on the foundation established with the interim analysis of regenerate the only.
It's quite a day phase III data readout in patients with Nash.
As they become available we'll be evaluating safety and efficacy findings internally to inform decision, making about a potential resubmission.
On this morning's call Michelle will share more details on the specific data sets, we expect to generate.
We anticipate.
8 the profit could continue into the early part of next year and if we believe the data support accelerated approval. Our goal is to have a pre submission meeting with FDA during the first half of 2022.
We also told you that we would expand our portfolio by furthering our pipeline and looking for opportunities to leverage our strength.
The parties to report that we have initiated the first in human study for our next generation <unk> agonist.
787, and continued to advance our phase 2 work for the OCA is a fibroid combination program.
We've made substantial progress this year, while simultaneously strengthening our leadership team we expanded.
Handed the responsibilities for our existing team members and added strong new talent to our team.
You'll be hearing from several of our new leaders today, and we look forward to meeting with all of you in the coming weeks and months.
Importantly, we reported our first cash positive quarter in the history of the company in the second quarter.
As it is still early in Ocala.
Under the label update process, we've reiterated our financial guidance and ended the quarter in a solid cash position.
We're well positioned to focus on the next phase of the journey for intercept as we continue to execute against this year's objectives and leverage the company's strong R&D capabilities and our commercial structure to drive long term growth and shareholder.
Caller value.
With that I'm going to turn it over to Linda who will talk about our commercial performance in the quarter and our progress on the implementation of our updated label for Ocala in the us.
Michelle will then provide an update on our regulatory and R&D activities and Andrew will conclude with a review of our financial performance Linda.
Linda.
Thanks, Jerry and thank you to everyone, who is making time to join us today as.
As you saw in our press release. This morning, our foundational PBC business remained strong posting another quarter of double digit growth and a solid performance from the first half of 2021.
The performance was driven by increasing sales in the us and our signature.
Shareholder contribution from our <unk>.
International growth.
First let me talk about the U S. You may recall, we received our updated label in late May and quickly began communicating this information to our key audiences using a multichannel approach.
Our top priority is to reach our existing prescribers.
And we are making excellent progress towards that volume.
And today, we have educated almost 2 thirds of our existing prescribers and a market research survey sample prescribers indicated 85% already have awareness of our new label importantly, as we feel confident that we have been effectively educated the majority.
Of our existing Ocala riders in a given territory, we will return to branded messaging and our prior strategy and driving growth in the community Gastroenterology setting. This will be on a case by case basis of course, and we anticipate that all territories will be switched over by the end of August.
In terms of prescribing trends.
We are now just beginning to see the impact of our label update in the US I would note that new writers or largely community gastroenterologists generate a significant amount of our new business. Therefore, we would expect to see an impact from new patient starts from the third quarter of 2021.
Patients who are no longer appropriate from calendar discontinued.
As a therapy.
Also would expect to see some declines in rebuilds and dispute us fairly quickly, especially in patients with deep compensated cirrhosis.
We look forward to fully pivoting our team back to branded messaging from a caliber and educating our HCP community on developments regarding the management of patients with PBC.
We have several key plans in place to support our promotional efforts.
Late next month, we plan to deploy a refreshed educational materials, highlighting the new data from our cohort of Ocala per patients who remained in the open label extension phase of the poise trial.
These data include information on fibrosis.
To visit as measured by fiber scan and enhanced liver fibrosis testing the patients participating in the open label extension has been used in Ocala book for up to 6 years, and we look forward to sharing these data with health care providers.
Second we will continue to discuss the benefits of adding ocala therapy to the treatment regimen.
Change per patients, who have elevated levels of LP in bilirubin stable, but elevated bile chemical mark are still place a patient at risk for negative outcomes. According to data from the global PVC consortium.
<unk> remains the only second line agent approved for use in PBC.
In the US we have a new label that clearly defines our patient population and simplified dosing.
And we have new information to share with health care providers, who treat patients with PBC.
There are many PBC patients who remain eligible for treatment with a panel of us, especially since the majority of patients do not have.
<unk>.
We believe the growth opportunity is significant and sustainable over the long term as approximately 3 quarters of the patients are non cirrhotic and we've been positioning <unk> for use in these less advanced patients for some time now.
Moving to our international business, we had the strongest sales quarter in company.
History. This was driven by several factors, including increased access to institutions and prescribers for our sales force does this COVID-19 restrictions ease.
We saw increased demand and adoption of ocado when compared to last year, particularly in new patient starts.
<unk> channel execution has been a strong focus for us.
<unk> excellent engagement with our customers across regions again exceeding our expectations.
Our discussions with regulators regarding our post marketing commitments remain ongoing.
We have agreed with FDA and DMA to stop enrollment in the 401 study, which included the most advanced patients with PBC as these.
And we are now contra indicated by the new label.
We are committed to working with the regulatory authorities to define next steps for the ongoing cohort trial and look forward to generating additional long term data.
Importantly, as the field begins to evolve beyond ALC alone when evaluating therapies for PBC, we are well.
Positioned to deliver important ocala data demonstrating the medications are set on bilirubin fibrosis and ultimately outcomes I'd.
I'd like to turn the call over now to Dr. Michelle Berrey to provide an update on our regulatory progress in our pipeline Michelle.
Thank you Linda and good morning, everyone.
I'm truly honored to be joining the team here today.
I'll begin with the Nash regulatory update that was promised for this quarter.
We are pursuing an accelerated approval pathway for <unk> is the first compound to treat advanced fibrosis due to Nash disease, with increasing prevalence and no approved therapeutic options.
The accomplishments by the intercept team to date have been groundbreaking.
I believe the iterative process with the FDA. This year has affected progress on 3 key items, 1 the large safety database for a see a true.
2 liver biopsy interpretation methodology.
Free inclusion of 500 additional months 18 liver biopsies from regenerate.
First we have more than doubled the safety data, we have for OCA and Nash since the time of the initial interim analysis.
Let me put that in perspective for the interim analysis in 2019 a.
Approximately 1900 patients had a median of 15 months of drug exposure.
We now have just under 2500 patients with a median of more than 30 months of exposure data.
Approximately 650 of these patients have reached month 48 and are each contributing 4 years of.
And free data on N C a.
With this significant increase in the amount of time patients who've been on therapy. We are now analyzing over 6000 patient years of safety data.
We've gained alignment with the FDA on the safety day to cut off and other details related to the analysis plan.
As well as for adjudication of specific events, including potential liver events.
As we analyzed data over the coming months, we will pursue active dialogue with the FDA as needed.
In summary, we've made significant progress on our evaluation of safety and Tolerability profile in Nash.
And we're excited to see data beginning in the fall and through the early part of 2022.
Second liver biopsy methodology.
With the increasing number of investigational compounds moving forward in Nash.
Need for standardized slide preparation and reading methodologies has become a front and center issue.
Cash is the regenerate trial of OCA is the first and largest successful phase III trial in Nash. It was critical for us to take a look at different potential methodologies for slight interpretation.
We have completed our review of the methodologies and the draft guidance and have elected to move forward with a piano.
You can review.
The details of our data driven approach and the rationale for our panel of 3 independent pathologists. That's been submitted in an abstract for the liver meeting this fall.
We have standardized the preparation and reading methodology for all of our liver biopsies and selected pathologist.
<unk> fibrosis or Nash interpretations were consistent.
3 pathologists on each panel will receive the slides simultaneously and their analyses will be integrated using a consensus approach in line with the Fda's latest draft guidance.
For each biopsy if the first 2 pathologists agree on there.
Your assessment that is the result.
The 2 primary pathologists to have just accordant reads the results from the third pathologists breaks at the time.
Although we are continuing to discuss the details of the analyses. We believe we have enough insight from our discussions with the agency to begin reading liver biopsies.
Because this is a new methodology, we will be reading, all regenerate baseline and months 18 liver biopsies.
And because regenerate is an ongoing multi year study trial participants have continued to progress to month 18 and to undergo scheduled liver biopsies.
At the bottom line is that we will have an additional 500 months 18 liver biopsies in the regenerate database that were not included in the interim analysis and the total of over 1700 month 18, biopsies and the intent to treat analysis population.
Yeah.
As these liver biopsy.
And safety data become available in the coming months and into early 2022, we will be evaluating internally and making data driven decisions on our potential Nash resubmission.
We also have a second large phase III Nash study underway reverse studying OCA.
C items with compensated cirrhosis.
We will be utilizing the same reading methodology for the primary endpoint for reverse utilizing a panel or consensus approach.
Today I'm happy to report that the reading of all of these biopsies has now begun.
As Gerry said earlier.
In page <unk>, we have now evolved from planning and gathering feedback to active data generation.
The amount of data we are generating in Nash is unprecedented.
We remain the front runner in this space and we will ultimately accumulate the largest data set of the field by far.
As a reminder.
Minder, when we announced positive results from the first interim analysis of regenerate.
He became the first investigational compound to demonstrate fibrosis improvement with no worsening of Nash in the phase III trial.
As we enter the second half of 2021 regenerate remains the only phase III study.
And Nash to produce positive results.
And every day, we collect additional efficacy and safety data that will provide a deeper perspective on oca's benefit risk profile.
In the us.
Our Nash program is focused on an accelerated approval submission.
In my short time here at intercept I've been pleased with the interactions with FDA and the response to the agency's feedback following the type a meeting last fall.
I look forward to continued progress as we generate exciting new data in the second half of this year and into 2022.
As you.
We also submitted an MAA in Europe for Nash fibrosis, as we indicated last quarter, we continue to work toward aligning the timing of European regulatory data reviews with our new analyses.
We have requested and have now received a 2 months extension to our clock stop.
You know application currently remains paused as we progressed with the data generation activities that I've reviewed for you today.
Turning to our internal pipeline, our phase 2 <unk> plus <unk> trial is currently enrolling outside the us.
Recently published data supporting the.
The benefit of densify rate in primary biliary cholangitis are encouraging and reinforced the potential for this novel combination to reduce elevated alkaline phosphatase and bilirubin improvements associated with improved survival.
And Linda reviewed for us earlier from caliber remains the only second.
Our agent approved for use in PBC.
Autoimmune liver diseases are increasingly recognized as substantial drivers of loss quality adjusted life years as they tend to manifest in young to middle aged women in the prime of their productive years.
We remain committed to progressing therapies for individuals living.
Net line PBC.
I'm also pleased to share today that we have initiated a first in human study for our next generation ethics are agonist 787.
Early data on this compound are exciting we expect additional animal model data over the coming months that will deepen our understanding.
Living with this compounds per vial.
Finally, as 1 of several new faces that intercept I'm excited about the opportunity we have to leverage our diverse skills experiences and capabilities to shape. The future of intercept together, we are committed to embracing the challenges in finding new solutions.
To address previously untreated liver diseases, where there remains a significant unmet need.
I will now turn the call over to Andrew for a financial update Andrew.
Okay.
Thanks, Michelle and good morning, everyone. I am also very pleased to join the team on the call. This morning from.
Preference I would ask that you please.
Please refer to our press release that was issued earlier today for a summary of our financial results for the second quarter ended June 30 of 2021.
Beginning with sales performance this quarter, we recognized worldwide <unk> net sales of $96.6 million.
This compares to $77.2 million in the prior.
<unk> period, and $81.7 million in the first quarter of this year.
Our worldwide <unk> sales are comprised of U S. Net sales of $68.2 million and ex U S. Net sales of $28.4 million. This.
This represents growth of approximately 14 and 61% respectively.
Total year versus the prior year quarter.
Our U S business performed well as Linda discussed earlier.
In our international business growth over the last year was driven by increased demand and also have included benefit from country mix foreign exchange rates and timing of inventory changes last year related to COVID-19.
Overall results reflect the solid global business performance.
GAAP operating expenses for the quarter totaled $95.8 million, which was a decrease of $33.5 million versus the second quarter last year.
Non-GAAP adjusted operating expenses were $86.5.
<unk> brand from the second quarter, a decrease of $25.9 million versus the prior year period.
Please note that we recognize on the R&D tax credit of $10.7 million during the quarter, meaning that on a normalized basis adjusted operating expenses were $97.2 million.
As a reminder.
Our non-GAAP adjusted operating expenses exclude stock based compensation and depreciation cost.
Cost of sales for the second quarter was <unk> 6 million compared to $1.9 million from the prior year period.
SG&A expenses were $57.7 million for the second quarter, a decrease of $35.7.
$7 million versus the second quarter of 2020.
The change was driven primarily by actions taken to reduce operating expenses relative to the prior period.
Our R&D expenses in the second quarter were $37.8 million versus $34 million from the same period last year the.
The increase was primarily.
Driven by the recognition of lower U K R&D tax credits in the 3 months ended June 32021.
Normalizing for R&D tax credit in both periods R&D expenses decreased by approximately $7.5 million.
Reflecting lower costs related to our Nash development program.
For the.
Once ended June 32021, total R&D expenses were $88.6 million with Nash related R&D expenses, representing approximately 2 thirds of this cost.
As a result of our strong business performance, we ended the second quarter and a higher cash position in Q1 and reported the comps.
Companys first ever cash positive quarter our.
Our cash cash equivalents restricted cash and investment debt securities as of June 32021 totaled approximately $422.5 million.
Lastly, we are reiterating our guidance for full year 2021.
Including worldwide <unk> net sales in the range of $325 million to $340 million.
While our year to date sales results were strong and are trending above expectations. We are just now beginning to see the impact of our label change in the us.
Because the label update us still in its early stages.
We're not prepared to change our guidance at this time.
We are also reiterating the non-GAAP operating expenses in the range of $380 million to $410 million.
This operating expense guidance factors in the incremental work in Nash that Michele discussed earlier in the call.
It is 1 of my top.
We have to ensure that intercept remains financially strong we will utilize our cash prudently and ensure we have a strong balance sheet to support the growth of our foundational PBC business execute on our regulatory milestones and have the flexibility to look for opportunities to grow and expand our business.
With that I'd now like.
And over to the operator for any questions operator.
Thank you and as a reminder to ask a question simply press star 1 on your telephone to withdraw your question press the pound or hash key.
Okay.
Please standby, while we compile the Q&A roster.
To tell us we have our first question from Michael Yee with Jefferies. Your line is open.
Hi, Good morning, Thanks for the question and nice to hear Michelle I think everybody knows Michel So it's great to have you at intercept.
2 questions 1 was.
On the.
Re read an analysis of the.
Sure.
Pivotal study can you just clarify youre going to reread everything baseline and scans, there's more patients now at 18 months.
And you're just going to report out that data because technically that data could change right. So can you just clarify how that will play out and what happens you're just.
Kind of put out the data and tell us if it gets better stayed the same or worse and then the second question us on the F..4 study same type of thing I think he made some changes to that study previously, but maybe just talk a little bit about how you're handicapping that result, and how you expect that to read out. Thank you.
Okay, Mike Thanks for the question.
And I'd like you are happy to have Michelle on the call today, So we'll turn.
Your questions right to her I think yes.
Yes, I think that nice to hear your voice.
Really great to be here today, so to your first question on the re rate, yes, we now have.
Closed what we are going forward.
Or our consensus reads like the path Allergists as you know historically.
And really over many decades, we've relied on us single path allergist, sometimes 2 paths allergist and we have heard from the regulators that that raises some questions about this importance they have been.
Questioning in their draft guidance consensus, but really didnt.
FX on what that meant.
We have gone forward and we'll be disclosing details around that hopefully at the liver meeting this fall on our plan, which is to us 3 independent pathologists. So.
We'll all.
Recommend eating those biopsies simultaneously.
And then we will as we get there read then the first 2 primary pathologists that they are aligned on there read on this slide then that's again, Sir yes. They have 2 different rates net third pathologist breaks the tie and simply.
Simply stated that that's R. R.
Our plan to get to that consensus it will create a new data set so because this is a new methodology and 1 that we believe increases the sensitivity will go into the details again at the liver meeting.
We are.
We are excited to be implementing this new methodologies that we did want to read all of the baseline slides all the month 18 day.
Over 1700 biopsies by.
The baseline and months 18.
I think on your question about <unk>.
<unk>.
1 was about the patient population. So that's an F F for.
Patient population and again that methodology would be used for those slides as well.
Did have some changes on the timing at that biopsies that went from 9 months.
<unk> 12, 2 months <unk>.
And will again be using that same methodology. Those lives are going to be red in parallel to the regenerate. So we expect the timing of those should come pretty close.
And until we get a little line of sight on how long it takes for the pathologist to get through.
All of these biopsies really cant give any specific guidance, we'll certainly be updating once we see with their with their cadences on reading the slides or cause.
That would it be.
The timing of this would all come out kind of around the same time as your base case, which is by year end for both studies.
We can't really give.
<unk> just on that until we see what the timing is again with pathologists, where reliance on humans sorrow.
Again until we get some idea of what their pace, Mike just just to clarify.
As Michelle indicated will be reading the the 2 studies in parallel the regenerate data.
You kind of us obviously a lot larger.
We do continue to expect to see the reverse top line by the end of the year, However, as Michelle indicated.
We will get a little more insight on the time for the totality of those.
Generate reads as we progress through the process here.
Perfect.
Thank you guys.
Thanks, Mike.
Our next question comes from Alethia Young with Cantor Fitzgerald. Your line is open.
Hey, guys. Thanks for taking my questions and welcome to all the new cases, we look forward to working with you guys.
1 I guess just from a philosophical question, but just kind of as you work through this process.
Data sale like how much do you feel the issue of being first in class margins with potential kind of low.
Long term kind of risk benefit concerns of OCA and then just following on the question that was asked previously like so when we see the kind of new biopsy review is it is it possible the efficacy will change that youll see.
But it would probably be.
The exact same and so is that the efficacy of now that the FDA will be considering.
So along with the risk thanks.
Yes, Alicia thanks for the questions maybe I'll start on the first 1 and then maybe Michelle on on the second 1 I mean, obviously, we're continuing to.
Progress with the dual objective there.
There is an unmet need out there so our intention to do our best to meet that unmet unmet need on us as expeditious path as possible is 1 of the objectives at the same time.
Ensuring that we're moving forward and ultimately have a data set here.
That will allow us to have.
<unk>.
Being the best positioned to have the strongest understanding of risk benefit as we regroup on that discussion with the agency in terms of the question first in class I mean, I think we want to make sure that.
We're also not losing sight of the fact that we continue to believe the anti fibrotic benefit that we've seen in the.
Previous analysis us.
A key element of the benefit and is a potential differentiator from some other compounds that might be progressing that may not bring that benefit so more to come here, but we stay focused again on that dual objective of yes moving.
Forward as quickly.
As we can while at the same time trying to.
Increase the ultimate probability of success in the important.
Quality of that dialogue with the agency once we have some additional data in hand, the second part of the question was.
About whether or not the new method could could alter or provide new results.
Maybe you can give some color there please.
We expect these data to be exactly the same but remember we did see highly statistically significant and we believe clinically significant differentiation from the placebo cohort even in the interim analysis as you pointed out this is a lot more data.
And we believe.
Michel made using this panel we are getting a more consistent read.
Across that.
Sort of taking out some of the noise that we know you've got discordant.
So we believe this will give us a stronger data set.
On the basis of a potential resubmission.
On.
<unk> 1 other point on the safety.
As we now have over 650 patients who've reached 4 years since that additional large dataset also will strengthen.
The ability for us to assess risk benefit going forward with this submission. So we're excited to get these.
And look forward to sharing that with you guys.
Next from Tim.
Great. Thank you.
Our next question comes from Josh <unk> with Piper Sandler Your line is open.
Hi team so nice to hear your voice and thank you so much for.
A great color.
I would like to drill down on understanding a little bit more that is this coordinates between sort of a single reader and 3 readers. When we think about the 2 endpoints 1 point improvement of fibrosis and Nash resolution can you give us a glimpse into is that this court.
Ordinance Mark.
More problem, when we assess fibrosis versus Nash resolution how does this did this coordinates could contribute to differences in the placebo and thank you for taking my question.
Yes. Thanks for the question, it's nice to talk to you today show the difference between.
A single reader and again, we will go into the specifics on our analyses at the liver meeting we're hopeful.
Again, thats been submitted as an abstract that can't go too much into the data.
Behind that but what we did see why is that by using a panel we do increase the sensitivity.
And we believe that gives us a more consistent read on these on these data whether thats a binary outcome like whether there's ballooning or night or INR fibrosis grade. So we do believe that this will give us a more consistent dataset and when that that we believe again.
Since then the risk benefit assessment for us.
As we go forward with us accelerated approval datasets.
Thank you and if I may just ask a clarifying question how does the 500 additional biopsies Brad can you comment on how many of those are on drug and how many are in.
Placebo.
So the addition, all of the patients are randomized across the 3.
Farms.
So that's that's consistent whether that was with the initial analysis or are these additional 500. So it was a 1 to 1 to 1 randomization placebo 10 in.
25%, so that would appear inc. Forward for these 500 as well.
Great. Thank you.
Thanks, guys.
Our next question comes from Salvino, Victor with Goldman Sachs. Your line is open.
Hi, Thank you so much for taking our question.
Sonya on first.
<unk>.
Could you just help us understand.
The reverse data coming by year end will that would you fold that also into your Resubmission package potentially I guess next year.
And then also could you help us understand what your expectations are into that top line rate. Thank you.
Thanks, Sonya maybe I'll start on the first question and Michelle can maybe get to the second 1.
<unk>.
As we've said.
Previously continues to be the case the dialogue that we've had with the agency. This year has primarily been around the regenerate data set.
And so.
Clearly.
Really as we get closer to.
Readout on reverse will be having additional.
Discussions on that data set I think we continue to be excited about the potential to bring data and this important.
High risk.
Population if the study is positive I think we have some some good options for what we may do with.
But we would like to have a more contemporary discussion with the agency, which will have as we get closer to the dataset.
I guess the second part of the question was.
Any additional color on our expectations I mean, I just think as I said, we're we're excited it's an important on a high unmet need and we will definitely look forward.
With that data set there.
To answer your questions.
Yes. Thank you so much.
Thank you.
And as a reminder, as a courtesy to others.
We're just seeing the please limit your questions to 1.
Our next question is from Brian <unk> with Baird. Your line is open.
Hey, Thank you for taking my question.
Just.
Thinking about us consensus methodologies that youre utilizing for the biopsy reading I guess first of all does that.
So is that a protocol change in reverse so as the primary analysis going to utilize vessels as opposed to what it was protocol defined and is there any alpha hit to the statistics as a result of that and then in terms of the baseline analysis that youre going to do for regenerate.
Can ah patients wind up that was.
And the primary analysis be enough to F..3 now 1 wind up being F..1 or at 4 and how will those baseline patients be considered and the data that's fine. Thanks.
Thanks, Brian maybe we will start on the reverse question first.
Yes, so we are re reading.
Biopsies and that was.
I thought that was from regenerate just make sure I want to make sure I'm answering your question. Brian I think the question was has been rereading These baselines and could those change.
We and again, we're not going to go into all of the details on how we selected.
Those ethologists sites.
We did find that there are pathologists, who are very consistent with their range of fibrosis and other personnel, which has been very consistent with their rights.
The net readings on Steatosis inflammation.
So we are.
Confident that us well.
D C. A minimum number if there are any differences there on the baseline rates with this new methodology. It is important for us to have the same methodology across all of these analyses. So reading all of the baselines and with now 1700 biopsies at the month 18, it's important to have.
That same methodology that did not require a per our protocol change we are specifying that in our statistical analysis plan and again have been in very frequent conversations with the agency about this.
And I have an agreement with them that we can begin reading our slides with this new.
New methodology. It is a new data set so it is not an alpha hit.
So again, it will be a new dataset that will be the basis for our potential resubmission.
Great. Thanks for the answers.
Okay. Thanks, Thanks, Brian.
Our next question comes from Brian Abrahams with RBC.
T capital markets. Your line is open.
Sure.
Hey, good morning, Thanks for taking my questions. Congrats on the progress and welcome to Michel and Andrew and others.
I am curious if you could talk a little bit more about how you anticipate the biopsy re analysis to impact the fda's overall assessment of benefit risk.
In other words, I guess I'm curious on the interdependencies with respect to some of the other gating issues like safety and outcomes are there has there been any specific bar for a delta on the histological end points. That's been discussed and then secondarily any reason to expect that the additional 500 patients who enrolled later in the study.
Might differ in their characteristics or on the biopsy collection versus the original patients. Thanks.
Thanks, Brian adequate Michelle on us.
Goodbye.
Nice to talk to each day, so again.
Important thing with us.
This panel as we believe a much more consistent.
Reed.
Across the us so we are using 2 different panels glencore fibrosis Gwen for Steatosis.
And we believe that that new this new path at.
New methodology with these pathogens will get us closer to true then you can't see my air quotes on that site again is there.
Surrogate endpoint and we've long known some of the limitations of liver biopsies. We believe this methodology gets us closer to that truth of what we're seeing in net and the.
Changes in the liver between the baseline and the months 18.
The second question.
Give us a second question.
I guess I was curious if theres been a bar discussed a specific bar for the Delta that you would need to show on the histological end points and then any reason the new crop of patients might be different.
So the new the new patients that additional 500 are all after you have 3 that is our primary analysis.
Population and has then you may recall there were some F..1 patient exploratory analyses, but theyre not part of the basis of our statistical power.
That was part of the original assumptions I don't believe that the statistics have been disclosed previously I'm happy to get back with you if that's.
But I wouldn't say that.
As.
Very highly powered to detect what we believe will be both statistically and clinically significant delta.
And I think you can see that even from the original interim analysis with these additional 500 patients again, we believe this is a much stronger data.
Datasets that will be.
Potentially supporting net.
Accelerated approval.
Thanks Neil.
True.
Our next question comes from Ritu <unk> with Cowen <unk> Company. Your line is open.
Hi, this is on us if the answer too congrats on the quarter.
It's not the 2 questions from us firstly just to confirm.
Have you obtain a definite alignment with the FDA for the submission and secondly, what is the cutoff from the safety data that will be needed for the resubmission. Thanks for taking our questions.
Okay, maybe I'll start on the question.
Just the first 1 and then we can come back.
It's been a considerable amount of dialogue.
With the FDA in the year to date I think as you can.
As you heard in the call today, I think we have enough insight now to move forward and generate these large datasets.
We're talking about I think we feel.
Feel good that we align on the details of the safety update and as Michelle indicated that we have good agreement to start to read the biopsies with the approach that we proposed of course once we generate.
The data depending on what we see in the data it's going to be an important next step then to get together with the agency and the potential pre.
The submission and discuss the data in advance of a potential submission. So that's the way we think about where we are in the process. We do believe based on.
The work to do that that pre submission meeting if it happens would be in the first half of 2022.
And we will continue.
To provide updates as we progress through the work that we've outlined this morning.
Thanks Annabel.
Next question.
Our next question is from Matthew Luchini with BMO. Your line is open.
Hello on hold.
To answer that.
Question on coupons.
Could you provide more color on what drove the second quarter.
Do you expect to reverse going forward.
Given that you guys may include in the guidance is that all gone before us here like the third quarter or is that going to be spread over the second half and I have.
A follow up after that.
Okay. Thanks for the question I mean, we do we do feel good about what happened in the second quarter with the 96.
Roughly that we reported on Ocala by Andrew perhaps you can give some insight to how we're looking at the.
The year to go in the context of the sales guidance at this point sure.
Yes look again really happy with the $96 million and the business performance in both the US and international was terrific I think the reason for the reiteration of the guidance is simply that the.
Impacts of the label change have not been seen yet in the numbers right. So the second quarter was an impact.
Impacted by the label change, we expect that to come in yes, I don't think we want to give specific guidance on which quarter, it's going to hit and when we expect the impact to last.
Call it 3 to 6 months until we see it and hopefully start growing again at that point.
So really the reason for the reiteration was simply that we don't know.
And it just seems.
Not the appropriate time to change guidance when we have such a big question Mark out there, yes, I guess the only additional color that I might add is we did talk.
Last quarter for example about the.
Potential size of the patient population that might be impacted by the label change.
<unk> group that now falls into the Contra indication.
With the label update in net range of roughly 10 ish to 15% range. We still believe that's a good estimate of the patients who will be now outside of the label. So thats 1 of the dimension when we look at the.
The potential impact that we will be looking at monitoring and again, providing update in the future as Andrew said.
Okay. Okay helpful and then.
When you leave us.
The IFC channel.
What data are you guys implementing a store like pro.
Perspective.
Particularly the Blue bar here or are you guys.
From data Postop patients following that lead.
Hum.
A little bit more details on what we can.
What we can be expecting from a S. L D.
I believe you guys are not going to little scores from the new theater right.
Right.
Right.
We'll be going into you at.
Then later meeting again, hopefully we have submitted an abstract and we don't yet know.
At that 6 update.
We're hopeful we'll be able to share the analysis that we conducted so work that we did to share why a.
Panel and the.
Carrier.
Superior.
Methodology.
Compared to a single rate, which has been our historical GAAP.
<unk> standard for decades is as you know and again, we won't we'll go into some of the analysis that we did looking at these different consensus methodologies that are.
All acceptable from the FDA again US Canada front runner, we felt it was really some.
Net.
Incumbent on us to do these analyses to have a rationale for why we chose the panel approach and will go into the data behind that rationale at the liver meeting.
And but we're excited about the looking at those results as those come in over the coming months again going back to you.
Net earlier point that we are using this new methodology for that.
Baselines and the month 18, and we do believe this will strengthen our data set.
We have not talked about again the power.
<unk> of the study except to say that it is.
Greg strongly Howard study to be able to detect the difference.
And that we again, we saw statistical significance, even in the smaller dataset that was conducted back in 2019.
So excited about seeing that we'll certainly disclose that.
We have the final data.
Right and then with the new REIT is gonna be a prospective or post hoc basis.
Or are you guys not disclosing that yet.
Not sure I understand the question we are looking both at those baselines and the month 18.
<unk> and as those data come in and we are adding the additional 500 patients as they have reached month 18.
But again those data will be coming in over the coming months may not be understanding your question.
Okay, Alright, alright, thanks for taking my questions.
Sure.
Our next question comes from Jay Olson with Oppenheimer. Your line is open.
Alright, Thank you for the update and thank you for taking my question.
Can you comment on whether or not the discordance between a single biopsy reader and a 3 person consensus panel is systematically biased and wondering.
Or is that this coordinates randomly distributed.
And then on the cash flow positivity is that a goal that we should expect to see in future quarters and can you talk about the timeline to reaching profitability and whether or not that's a priority. Thank you.
Thanks, Ken maybe we will take the second question first with.
Wondering with Andrew.
Yes, no. Thanks.
Thanks for the question.
Of course, we're delighted that we have the first ever cash positive quarter in the company.
We're not guiding to that in the next couple of quarters with the label change and the potential impact on revenue and continued.
Spending on.
Nash, we would expect to go negative in the next 2 quarters.
Obviously long term, we're going to be a profitable company and we're looking for that but we haven't given guidance past this year and we will do that in the normal course, when we get to year end.
And then the second question I guess it was your first question on discordant.
The past us.
Again, we will share the data that we generated but I think 1 thing that hasn't been interesting to watch.
Spaced over again, many decades and even the importance within a single pass Allergist show on reread of biopsies, we do see changes in the in those regions and that's.
So 1 of the many datasets that pushed us for this panel approach, where we believe we can address some of the issues.
<unk> seen with a single path allergist or <unk>.
Leave that this.
<unk> sensitivity improves the accuracy.
Avoid some of the.
Why is that we see with a single reader overtime, where we do see drift and how they are reading.
We don't see that with this methodology I can't really give you any more details on that until the presentation.
Break our embargo and wont get to share all the data with you at the liver meeting.
Okay, great. Thanks for taking the questions.
Thanks Jay.
Our next question comes from Steve <unk> House with Raymond James Your line is open.
Great. Thanks, Good morning, just wanted to clarify on the biopsy reads.
There are 2 primary endpoints Nash resolution and fiber.
This improvement or if there will just be 1 fibrosis improvement and then on the Resubmission data package.
You mentioned youre going to have 650 patients per month 48 I.
Didn't hear really any mention of a role for outcomes data in our resubmission. So I just wanted to be crystal clear.
Clear on.
Whether blinded to intercept or not outcomes data, including those 48 month biopsies will be part of a resubmission or data that FDA reviews. Thank you.
Yes. So on your first question on the primary endpoint. So it is improvement than Cypress.
Process with no worsening of theaters. This our resolution of Steatosis without worsening of fibrosis. So that's that combined primary endpoint for the U S.
And then.
There are multiple secondary endpoints that are already in a hierarchical manner.
So again, if you hit statistical significance on the primary that you then move to all of those additional secondary it is a large large datasets that will be generated and of course, the largest number of patients that will be because the amount of data that we will be generating over the coming months.
We'll be the largest package created to date in Nash. So we're very excited.
To get that package and we are looking through that and again, that's the basis of our.
Our accelerated approval submission, we hoped and in 2022 on the month 48 outcomes.
And the clinical outcomes again that would be the basis of a full approval. So that month 48 and looking at that presence.
Preservation and the longer term fibrosis benefit that's not something that we are analyzing at this point, we're focused on an accelerated approval, which is again the baseline months 18 biopsies.
Clinical outcomes.
48 would be.
Analyzed as part of us full approval down the line.
But can I just follow up from the first answer because I think it might.
More confusion.
I think based on your answers.
There was an orphan can in there and.
You mentioned the resolution of stay at doses and this is an endpoint that's.
Months share over the course of regenerate. So can you just clarify other 2 separate primary endpoints, 1 being improvement in fibrosis without worsening of Nash.
Being Nash resolution without worsening of fibrosis, or if you hit 1 or the other or are you.
Hitting the primary endpoint.
Correct, so the latter at us.
Or on the primary and.
Change with that you can then move to the secondary endpoints. So yes. It is a very confusing.
Analyses.
Again, working with the regulators on this to make sure that we're.
Demonstrating all of the things that they wanted to see I think we do have alignment that fibrosis is the most important.
And then aspect of that and Thats consistent.
Cross the us and Europe.
It is.
It is also going to be important for us to look at these additional components of steatosis of inflammation.
And they are addressed mostly in those secondary endpoints.
But if you have resolution or improvement of fibrosis.
Without impacting <unk>.
So price so that's why we have those or in that primary endpoint.
Thanks, so much.
Yes.
And our next question comes from Thomas Smith with <unk>.
<unk> Leerink your line is open.
Hey, guys. Good morning, Thanks for taking the questions.
Just finally expanded thank you Daniel.
So I think you mentioned you have reached alignment with FDA on the adjudication of safety events, including liver, but can you just give us.
Color on how these are being evaluated.
Similar consensus methodologies, you're using for the histology endpoints and I guess what was the.
The Genesis for coming from alignment on.
On the adjudication.
Thanks.
Yeah.
So good question the adjudication was really.
A little more having an independent group of blinded clinicians.
Clinicians who are reviewing these cases for us there.
3 different panels for this.
I don't think it's anything out of the ordinary or certainly used adjudication groups and other.
Large studies.
And in particular, where you have the.
The organ of interest.
It is 1 that is of high interest to the FDA right sorry.
The liver the progression of liver disease.
Is of increased interest in all of our therapeutic areas not.
About to deliver so that's why it was particularly important to have an independent group of clinicians to reviewing these narratives for.
Were delivered for renal disease et cetera.
It's a pretty standard adjudication group and it was just about.
Just any alignment with them on.
Which cases would be to this independent group.
Okay.
Got it okay, and just a follow up on that Michelle you mentioned, I guess liver renal and what's the what's the third.
And cardiac cardiovascular and cardiovascular okay, great. Thanks for taking the questions.
Getting absolutely thanks, Tom.
Thank you. Our next question is from John <unk> with JMP Securities. Your line is open.
Hey, good morning, and thanks for taking the question.
Just wondering part of the conversation previously was about identifying the right patients and making sure youre able to.
Got it.
Caliber.
Right.
Segment I'm wondering if that conversation has changed with the recent interactions or if thats something thats going to be revisited when we have the right analysis of these biopsies.
Yes, John I think that with the data in hand, we'll be in the best position to regroup on that important to discuss.
Discussion about the right population thinking about some of the.
Considerations potentially end market. So I think again the next step is the data generation then all those important questions you outlined will be in a better position to have.
Got it thanks.
Thank you and this ends our.
The Q&A session I would like to turn it back to management for their final remarks.
Thanks, and thanks for everybody for joining us today from my perspective, our perspective.
Great progress so far this year I think importantly, new leadership team in place.
Which definitely is going to help us we do.
The important work moving ahead.
Secondly on.
Our global PVC business delivered another strong quarter, we completed the label update in the us and definitely now focusing on our back to our long term strategy as you heard we've had.
Reductive interactions with the FDA on the Nash.
Syed.
We have the insight that we needed now to move forward to execution and to generate.
What will be the largest data package in.
In the field of Nash and this data will be key to drive that.
The decision, making as we move ahead and certainly can't forget the fact that we stay focused on the pipeline.
<unk> will readout reverse by the end of the year and we're making progress on the other products in our internal pipeline. So definitely look forward to continuing to work providing you. The updates we're going to go through what will be another important busy period on the clinical side on the regulatory side and on the commercial side during the second.
And last and certainly not least I want to thank the team.
At intercept for all that they have done and continue to do with the complete dedication to the patients that we serve in this area. So thanks, and we'll talk along the way.
And this concludes today's conference call.
For your participation and you may now.
Now disconnect.
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