Q1 2022 Intercept Pharmaceuticals Inc Earnings Call
Ladies and gentlemen, thank you for standing by your conference calls set again momentarily again, thank you for standing by the conference call should be enormous.
Yeah.
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Okay.
Thank you for standing by and welcome to anesthesia Pharmacy Pharmaceuticals, Q1, 2022 earnings conference call. At this time, all participants are in a listen only mode.
So to speak its presentation there'll be a question and answer session to ask a question at that time. Please press Star then one on your Touchtone telephone.
As a reminder, today's call is being recorded I would now entering the commentary house that's in Iraq <unk>, Sir you may begin.
Thank you good morning.
And thank you for joining us on today's call. This morning, we issued a press release announcing our first quarter 2022, adult and business update which is available on our website he knows that pharma dotcom.
Before we begin our discussion I'd like to note that during our call we will be making forward looking statements.
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.
<unk> undertakes no obligation to update such statements, except as required by law.
These forward looking statements are based on estimates and assumptions that although believed to be reasonable are inherently uncertain and subject to a number of risks and uncertainties.
Some but not necessarily all of the risk factors that could cause our actual results to differ materially from our historical results or those anticipated or predicted by our forward looking statements are discussed in this morning's press release 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 Berrey, and Chief Financial Officer, Andrew sake.
We will then open the call to take questions. Please.
Please limit yourself to one initial question in order to allow time for all questions to be addressed.
Let me now turn the call over to our CEO Jerry Durso.
Thanks, <unk> and good morning, everyone. Thank you for joining us on our first quarter 2022 earnings conference call.
As we proceed through this transformational year for intercept I'm pleased with the progress that our team made in the first quarter, we reported $88 $6 million in worldwide O'callaghan net sales, representing 8% growth compared to the first quarter of 2021.
Caliber continues to deliver revenue growth on a worldwide basis in the U S. As we expected we saw a slower growth rate versus previous quarters, given the cumulative impact of COVID-19, and last year's label update.
Overall, our quarterly performance was in line with our expectations.
With more than 20000 patient years of experience for O'callaghan PVC were strategically focused on generating and sharing compelling long term data to support adoption of Ocala.
Given the substantial number of patients with PBC, who could benefit from second line treatment I remain confident in our ability to continue to grow this business over the long term.
Turning to Nash were new.
Nearing completion of the new top line data analysis from our phase III regenerate study, which will include a significantly larger data set than our interim analysis in 2019.
<unk> is the most rapidly growing cause of liver transplantation in the U S and people living with advanced fibrosis due to Nash urgently need an approved therapy as.
As the first company with positive phase III data in Nash, we look forward to delivering these new data analyses in furthering our understanding of oca's potential role in treating this disease, we continue to target a potential pre submission meeting with the FDA in June .
Our second phase III trial in Nash reverse.
Value, adding OCI in patients with compensated cirrhosis due to Nash is on track for a top line readout in the third quarter.
Our team has also made progress on our earlier stage pipeline programs, which Michele will elaborate on later in this call.
Turning now to the announcement, we made yesterday.
As you saw from our press release advanced Pharma has acquired the rights to our international operations, including the rights to commercialize Ocala in PVC in markets outside the U S.
So under the terms of the agreement we will receive royalties on any future X U S. Net sales of Obeida collagen NASS should advance pharma pursue marketing authorization for the syndication.
Upon the closing of this transaction intercept will continue to be responsible for the manufacturing and supply of a beta cola asset globally and advanced pharma will be responsible for the packaging distribution and commercialization of the therapy in all markets outside the U S.
Intercept will maintain an office in the U K to manage our global supply chain support our global clinical trials and our quality organization. So the majority of current intercept employees outside the U S will transfer to advance farmer.
Importantly, this transaction is consistent with the focus that we've been employing over the last year and a half.
Since I've assumed the role of CEO , we've been laser focused on strengthening our financial foundation to support multiple pathways for future growth.
Ultimately this transaction was a financially strategic move for our organization and the proceeds of the deal will significantly strengthen the company's balance sheet increase our ability to invest in our core business priorities, including the support for a potential launch of Nash should we be successful in the U S. And also allow us to continue to advance and <unk>.
Spanned our pipeline.
I want to thank our international colleagues for their contributions to intercept I'm inspired by their commitment to bettering the lives and building a healthier tomorrow for people throughout the world with progressive non viral liver diseases.
We know that advance pharma will be positioned to drive growth of Ocala Ava outside the U S and this will ultimately benefit the international PVC community.
We look forward to working closely with the <unk> pharma team.
To ensure a seamless transition.
Now before we continue with the rest of our quarterly earnings recap Andrew will now provide additional financial details around the agreement Andrew.
Thanks Jerry.
Good morning, everyone to provide a bit more color on this under the terms of the agreement with advanced pharma intercept who received consideration in the amount of $405 million upfront subject to customary working capital and other adjustments, we will receive an additional $45 million from advance firm are contingent upon receipt.
Of an extension of pediatric orphan exclusivity in Europe .
Subject to customary legal and regulatory approvals and other closing conditions, we expect to close in two to three months.
As a result, we are suspending our financial guidance as we assess the impact and timing of this transaction.
Innovation.
We anticipate providing revised 2022 financial guidance after the close of the transaction.
Likely during our second quarter earnings call.
Ultimately and as Gerry mentioned this agreement reflects our commitment to a strong balance sheet and gives us the ability to invest in our strategic priorities.
<unk> support for a potential launch of Nash in the U S should we be successful.
It also gives us flexibility to manage our debt obligations.
I'll turn the call over to Linda Linda Thanks, Andrew and good morning, everyone.
Please be sure that we continue to drive our PVC business in the first quarter of this year, we delivered worldwide Ocala. The net sales of $88 6 million, which is comprised of U S sales of $59 2 million and ex U S sales of $29 4 million aligned with our expectations in the U S. We have.
We see evidence of seasonality in Q1 performance caused by benefit verification requirements and patient migration to new plans, which occur at the start of the year. In 2022. This pattern was further exacerbated by a large number of national employers and health plans.
Granted two new networks specialty pharmacy, and this links in the time to process new prescriptions.
In Q1 'twenty two we're also seeing the effect of last year's U S label update on reducing the number of patients eligible for account of that I would remind everyone that Q1 2021.
A D compensated PBC patients and those with evidence of portal hypertension, both in total prescriptions and entering into new Ocala to patients. We believe that this will be just the transient pace and growth will return as we replenish the patient pipeline over the next few quarters.
Current U S market dynamics showed that nearly 90% of our physician interactions are now in person patient visits are trending up in recent weeks and we've seen a much quicker turnaround and patients moving through the enrollment process in March.
Moving onto our international region.
In the first quarter. We saw continued continued growth driven by strong new patient starts.
Our net sales were 21% higher than the same period last year with all countries performing above budget.
I would like to take a moment to acknowledge the many contributions and outstanding performance at the interconnect International team has made to the overall business, especially over the last 15 months.
When I had the opportunity to work closely with them.
In closing, we remain confident in our ability to drive growth.
Increased market penetration and maintain a positive long term outlook for PVC business.
While we recognize that lowering a L. P has been a long standing market of improvement in PVC optimizing care includes additional considerations. We believe outcomes data in PVC will become an important consideration for prescribers and patients as it addresses the higher goals of avoiding liver transplantation and improves.
Morbidity and mortality.
Committed to generating in evaluating this type of data for all caliber, which we believe will be highly differentiated as we move through 2022, new data from cobalt additional real world evidence information from PVC registries and the publication of the data we presented at <unk> last year, we will provide to continue.
News flow messages on the important role <unk> plays is the only approved second line therapy for patients with PBC.
Now I'll turn the call over to Dr. Michelle Berrey Michelle.
Thank you Linda and good morning, everyone.
Today I'll be providing a few updates on our continued work to generate evidence supporting <unk> and PVC as well as updates on our Nash development program and on our pipeline.
Looking first at PVC as we mentioned last quarter. We are focused on completing the analysis for the phase four cobalt study and leveraging real world data sets to help show the clinical benefit of long term therapy with Excalibur beyond biochemical measures.
The ultimate goal of therapy in PBC.
That makes a difference to someone living with PBC is to prevent progression to end stage liver disease liver transplantation and that and we are generating substantial evidence from multiple different sources on the positive benefit to the calendar on these clinical outcomes.
To that end I'm pleased to present pilot data last year at the liver meeting from the phase III Poise trial open label extension, which showed that individuals receiving of calibre for PVC and a clinical trial setting.
Statistically longer transplant free survival, when compared to individuals' from external databases that were eligible who did not receive a taliban.
These data, which we expect to publish later this year continue to generate very positive feedback from physicians regarding their impact on clinical decision, making and on the PVC community.
Importantly, these data will be included as support for our post marketing study cobalt and regulatory submissions to FDA and EMA in the second half of this year.
As we previously communicated we've closed our cobalt study because of challenges associated with retaining patients and a multi year placebo controlled study.
Especially when there's a commercially available therapy.
We are compiling the final available placebo controlled data from cobalt, including a new expanded primary endpoint.
<unk> earlier clinical events that indicate progression toward decompensation.
The new primary endpoint has a higher sensitivity for demonstrating ocala with clinical benefit and the original primary endpoints of hospitalization for liver events liver transplant and death.
We are working on completing topline data analyses in the coming weeks and look forward to sharing them when available.
Additionally, our data compilation from cobalt will include a pre specified comparison of randomized patients who've received a call of that with patients from external datasets for.
For the same reasons behind the closure of our cobalt study we've initiated two retrospective real World studies collectively called heroes, which leverage real world evidence to assess a TV impact on important clinical outcomes.
With data from the Phase III Poise trial open label extension and outcomes from cobalt. We intend to include these data as supportive evidence and our regulatory submissions later this year.
Now on Nash.
Cited to be nearing completion of the new data analyses from our phase III regenerate study and look forward to sharing these results.
As a reminder, these new analyses will now include more than 8000 patient years of safety data compared to around 2400 in the prior submission.
And nearly 1000 patients have reached four years in regenerate.
The comprehensive assessment of the safety database.
Therefore provide a much more robust insight on okay benefit risk profile and Nash.
A pre submission meeting with the FDA is currently scheduled for June .
And we intend to continue the discussion on the structure and content that potential submission.
Although FDA has expressed interest in the totality of our data in Nash, which will include over 2000 subjects with noninvasive tests or niche.
Recently received additional feedback on our final data analysis plan, including details on the different populations of interest for a potential resubmission.
Mary population or histology will mirror the original interim analysis population at 931 subjects.
Additional analyses will consider the entire histology population, which includes the new 500 subjects.
As with any FDA review the agency can evaluate any patient population within our submission.
We are also continuing to work toward a topline data readout from our phase III reverse study the only active late stage study in compensated cirrhosis due to Nash.
We anticipate delivering top line data for <unk> in the third quarter.
We'll assess the role of these data and our ongoing dialogue with the agency once we have the results in hand.
Overall, the amount of data we are generating in Nash with regenerate and reverse is unprecedented and ultimately upon completion of these analyses we will have accumulated the largest phase III clinical trial dataset in the field.
Moving on to our pipeline, we continue to screen patients and clinical sites in our U S. Based phase II study of our OCA as a five rate fixed dose combination for PVC and.
In addition, we continue to enroll our international Phase two study that is evaluating different dosing regimens of that I've got that's a combination.
Our large phase one study in the U S to better characterize the exposure data and any potential drug drug interactions of the fixed dose combination remains ongoing together. These three studies will inform the dose selection and study design for a phase III trial.
Finally, our comprehensive phase one study for our next generation ethics are agonist Int 787 is ongoing and we are on track to have an open IND in the coming weeks.
We look forward to sharing additional information about our intended indication and development plans for Int 787 later this year.
I'll now turn the call over to Andrew for a financial update Andrew.
Thank you Michelle please refer to our press release issued earlier today for a summary of our financial results for the first quarter ended March 31, 2022 and.
In the first quarter, we recognized $88 $6 million in worldwide <unk> net sales, representing 8% growth over the prior year quarter.
Our worldwide TV net sales were comprised of U S. Net sales of $59 2 million and ex U S. Net sales of $29 4 million.
In the U S. As anticipated we experienced typical seasonality in Q1 patients is Q1 patients were impacted by the resetting of insurance plans and Medicare coverage guests at the beginning of the year.
Our GAAP operating expenses non-GAAP adjusted operating expenses for the quarter were $98 9 million and $91 $8 million respectively. This was a decrease of 12.
$1 million and $9 9 million versus the prior year quarter as we continue to focus on cost management.
As a reminder, our non-GAAP adjusted operating expenses excludes stock based compensation and depreciation non-GAAP adjusted operating expense is a non-GAAP financial measure under SEC regulations. Please refer to our press release issued earlier this morning for a full explanation and reconciliation.
This measure.
Our cost of sales was eight point.
$8 million in the quarters ended March 31, 2022, and 2021, our cost of sales for the quarters ended March 31, 2022, and 2021 consisted primarily of packaging labeling materials and related expenses.
Our selling general and administrative expenses were $50 million in the first quarter of 2022 down from $59 $3 million in the prior year quarter.
The decrease was primarily driven by our ongoing efforts to manage our operational costs and to run the business as efficiently as possible.
Our research and development expenses were $48 $1 million in the first quarter of 2022 down from $50 8 million in the prior year quarter as we continued to drive efficiencies, while progressing our Nash program.
Interest expense for the quarter ended March 31, 2022 was $6 $7 million, we expect cash interest expense to be approximately $23 $5 million for the full year based on our current capital structure.
In the first quarter of 2022, we reported a net loss of $17 3 million.
Decrease compared to a net loss of $44 million in the first quarter 2021.
As of March 31, 2022.
We're well positioned with cash cash equivalents restricted cash and investment debt securities available for sale of $406 9 million.
In summary, I am pleased with our commercial performance, which is on track in the first quarter and our continued cost management. During this important time in their subs history.
We are well positioned to continue investing in the growth of our kelsen PVC supporting our Nash development program and regulatory process with the FDA and furthering our pipeline.
With that I'd now like to turn it over to the operator for any questions.
Great.
Thank you again, ladies and gentlemen, if you like to ask a question. Please press Star then one on your touch tone telephone.
Our first question comes from Jasmine Rahimi Piper Sandler Your line is open.
Good morning team and thank you for taking my questions and congrats on.
The new partnership.
With advanced pardon My two quick questions for you one is direct head to Michelle maybe I'll start off with.
Are we going to be seeing the interim data after you've had your meeting with the FDA in June or are you planning to meet with DFT first and then come back and released the data and kind of provide a comprehensive overview of data as well as the next steps.
And then the second question is in regards to advanced pharma.
Deal.
What what do they want to see in order to motivate them to partner.
Partner for <unk>, and Nash and ex U S geographies and thank you so much for taking my questions.
Okay. Thanks, guys.
Flip it right to Michele on the first question and then I'll come back with the question on the deal.
Great. Good morning, yes, so on the data as you are aware as soon as we have the data.
Certainly it is material for the companies that we would be releasing top line data as soon as we have those and they were ready to share and we do have the pre submission meeting calendar with the FDA.
You don't have to have those data in hand to have the meeting and actually there are some companies that have their pre submission meetings planned well before they have data in hand, because a majority of those conversations frankly are around the structure of the submission and making sure that.
The company and the agency are aligned on the different populations of interest or that you can get all of your tables listings figures lined up and ready ready to submit.
So we again, we will have those data released as soon as we have those in hand.
Can't you can't say much more specifically about that at the moment, but you'll hear about it.
Yeah and on the considerations around Nash.
As advanced pharma has the rights to commercialization in the territory they would be determining.
Whether or how to pursue on a regulatory basis to Nash obviously as the global developer we would have the data we would provide them with the data that we're in.
Preparation for now and then they would they would make a decision. We did think it was important in the in the structure of this deal that we were able to benefit from a potential upside in Nash outside of the U S. So we felt good about the inclusion of a strong double digit royalties should advance pursue envy.
Successful with securing available.
Availability of OCA and Nash outside of the U S.
Thank you team and I'll jump back in the queue.
Thanks.
Thank you. Our next question comes from Richard morale of Cowen Your line is open.
Yeah.
Good morning, everyone. Thanks for thanks for taking the question.
Just go through exactly what will be part of the Resubmission to the FDA just as far as patient numbers, Michelle my sort of reading this right.
Gonna have 1400 patients at the primary endpoint.
And can you tell us I guess, how many total discrete patients have been treated with drug and then I've got a question about reverse.
Okay. Thanks Richard.
Sure Hi, good morning.
So index of MS. Shang again, then and a lot of dialogue with the FDA about specifically, which populations. They wanted to see as we've talked a lot about over the last year or so their main area of interest is looking at the the primary population.
<unk> of that.
That mirrors, what was part of the original submission in 2019. So the 931 patients that were part of that ITT analysis read by central readers. So.
As long as we mirror that population, we don't use any alpha that that's really critical they of course are interested and looking at all of the histology data that we have for core subjects that have both a baseline in a month 18.
That includes the new 500.
That would be part of another analysis, but the group that has both the central read from the original analysis.
And but that and then new consensus pathology reads on would be the primary submission will be the top line.
We also have subjects, who are out at 4800, that's the total safety population that we've talked about we.
We have a thousand subjects, who are now out to 48 months. So that's what comprises our safety population without with over 8000 patient years of data. So again, a substantially more robust package than what was submitted in 2019.
I know it gets a little complicated this is certainly not a straightforward.
Submission. It is an accelerated approval with the surrogate endpoint with several surrogate endpoints, including the noninvasive test as well.
Continuing to move towards that full primary indicate primary analysis for clinical endpoints.
Submission as a resubmission on an interim analysis, using our new methodology, but importantly, it's focused on that same population that mirrors. The original submission from 2019.
Got it okay.
And then you mentioned the FDA.
I was interested in if keep different populations was there any mention of a subpopulation that encompasses potential fast progressing we've heard a lot of that over the years from from Kols.
We'll certainly be looking at that I don't anticipate that we will have that with our top line data, but we have multiple populations that will be assessed.
Following the availability of those top line data.
Got it and then just going back to reverse and the.
The primary endpoint on that any or just the analysis other companies have moved to move.
Moving there.
Cause something more biomarker based maybe elk.
And other companies are incorporating AI into some of their fibrosis assessments.
Any any plans to either.
And then the various endpoints to include AI quantification or.
I guess promote the importance of else within the analysis.
We do have secondary endpoints that include all of these other second the noninvasive tests.
Including the wet biomarkers as.
As well as the noninvasive.
And fiber scan it etcetera that will be included as secondary analyses and apologies, we're gonna aspects to stick to one question and then we'll let everybody get through to the queue.
What I'd say, though scalable rectal cancer in the third quarter phase III.
Yeah.
Thank you. Our next question comes from Thomas Smith of the SBB. Your line is open.
Hey, guys. Good morning, Thanks for.
Taking the questions.
Just on the advanced deal can you comment on how much visibility advance has into the ongoing regenerate re analyses and the reverse trials. They were conducting their diligence and then can you also provide I guess.
Additional details on just thinking financially the split.
Your.
Operational spend Thats currently relative to the global total thanks.
Thanks, Thomas I appreciate the question.
Obviously advanced did.
Deep diligence process as as you can imagine can't really comment much further than that.
Except that.
They have done a deep dive on the company.
Andrew maybe you want to comment on the Thomas as I understand your question it was kind of color around.
Our commercial investment.
By territory was that kind of what you were trying to get out there.
Correct, Yes, yes operational spend X U S.
Yeah, Thomas Thanks for the question.
We don't break out our profitability by segment.
But what I can tell you is that both segments. The international business unit commercial units in the U S business unit.
Very profitable right. So you can see the gross margin that we have on the top of our P&L just by virtue of the U S being side. The majority of our profits come through the U S business, having said that the international business is also a terrific business, it's showing terrific growth and we think <unk> is getting a great asset this made sense.
For us and on the strategic level. So we think it's a very good transaction for both sides and yes, we do keep the majority of the profits generated by Ocala will just by nature of the U S business being larger.
Okay, great. Thanks, I appreciate you taking the question, yes, that's helpful. Thanks.
Thank you again, ladies and gentlemen, we please ask that you. Please limit yourself to one question and then I'll return to the queue to follow up. Thank you. Our next question comes EMEA mentality of B Riley Your line is open.
Thank you.
Thanks for taking our questions and congrats on the advanced students. So just maybe a quick clarification question on PVC them, then I do have a last question answer so on the U S component of the previously issued guidance have you.
Any underlying assumptions changed.
Your guidance is suspended but relative to the last time you issued.
I'm going to change.
And then the Helios study that.
Yes.
Initiative can you just clarify the timeline.
Was that data and whether that could be part of the PVC submission.
And then lastly, just on Nash.
Now that you're out four years with some patients.
<unk> gone through the analysis that has been done.
Even in a blinded nominal.
That at least inform you how youre tracking relative to your initial predictions.
Thanks for taking my question.
Right. So so maybe we start with the question around the guidance and sales, which we have suspended the guidance pending.
Clothing, and an ability to come back later.
An update yeah sure with regard to guidance nothing has fundamentally changed in the business.
Had the headwinds transaction not taken place, we're very comfortable with the guidance that we issued earlier in the year and we likely would have reiterated we're on track, we're very happy with where sales were in the first quarter both in the U S and internationally.
Fences are very under control.
We are suspending largely due to the fact that we just can't impact the timing of the transaction. We just think it makes sense to reissue in Q2, but nothing fundamentally has changed.
So maybe on Harris yesterday, Youll recall at the liver meeting last year, we presented the pilot study from the poise open label extension compared with a large external database and shows the impact of Ocala on improved and highly.
Mystically significant improved.
<unk> plant free survival.
D a.
Now turning to two larger.
Bernal databases to pull data from the over 20000 patient years of data that we know of in.
Okay all of it in PVC to support the data from our cobalt study, we will be submitting the primary analyses from cobalt to both the FDA and EMA, but we will be supporting those data with these two large databases, one patient registry and.
One that's a claims database that.
That we hope will also continue to show this transplant free survival as we showed in the data last year.
Yeah.
Thanks for the question.
Thank you. Our next question comes from John <unk> of JMP Securities. Your line is open.
Hey, Thanks for taking the question and the updates today.
Michel just hoping for clarification.
So they're confusing feedback.
Feedback from FDA when you use the word mirrors I just wanted to clarify are they primarily just wanting you to re read the biopsies from about 131 patients from the interim analysis with your new methodology using three readers is that their primary focus for the new data package.
Yes, Sir just to start off yes, we are rewriting all of those subjects, but importantly, their primary focus for this resubmission of interim analysis enzyme that is 931 patients that mirrored the original <unk>.
Interim analysis and that were read by central to Central reader.
This is using the new methodology as we've been talking about for almost a year now and it's really important for the FDA to learn from this very large database.
So we're excited to be providing them with those data, but certainly every patient who has.
Ben been willing to provide us with a liver biopsy will be included in the database both for the interim analysis and the eventual.
Analysis of the full dataset.
But again the second interim analysis of the.
Same thing effect, that's what I was referring to with the mirrored primary analysis.
Thank you. Our next question comes from Brian Abrahams RBC capital markets. Your line is open.
Hey, guys. Good morning, Thanks for taking my question and congratulations on the out licensing deal.
So I guess, just kind of along the lines on regenerate.
Maybe a question another question for you Michelle so.
Just given that you won't be able to or you won't be including those additional 500 biopsies.
In the the primary histology endpoint that may have helped broaden the overall database do you believe that youll need to show a wider delta on the primary endpoint.
<unk> is a comparable effect to what you showed in the interim with the more reliable methodology now coupled with the larger long term safety database that you'll have.
Do you think that'll be sufficient.
That's a great question and again remember that our guidance. The draft guidance has recently been issued in which the FDA stated that they wanted to look at a consensus methodologies. So they wanted to make sure that they are looking at the same patient population that was previously.
<unk> analyzed using central reader. So they have an apples to apples comparison of that same dataset to see if that addresses their prior concerns with discordance between two readers. However, they will be looking at the full dataset, certainly ethically any patient who undergoes deliver.
Transplant will be included in these analyses and they're going to want to see every single patient included in one of the analyses, but for that first analysis. They wanted to make sure. It works mirroring the original patient population.
Thank you. Our next question comes from Michael Michael Yee of Jefferies. Your line is open.
Yes.
Alright, Thanks, good morning, I appreciate the questions.
Our question really makes good morning, our question relates to maybe the timing of the transaction literally right ahead of the.
Regenerate re read and then front under reverse cirrhosis study just from the concept of someone's getting all the rights to this drug outside the United States Wouldnt, they want to have some insight into that.
And how you thought about the timing of that personally given if it was all positive this quarter and next quarter, then all valuable assets, including <unk> would go up so maybe you could just talk a little bit about that.
And.
The second part of that which is literally the same thing how do they decide whether they want to file in.
U S or not and is not their NDA or MAA not yours, they fully control that thank you.
Thanks, Mike appreciate the questions.
We've talked and we've been focused.
As we.
Looked at the transformational.
The period that we're in and we'll be in as we look at this about insuring.
The financial Foundation is as strong as possible and as we consider the potential next steps for intercept as on a strategic basis getting as much optionality as we can and so the level of value.
Here, we felt comfortable with at this time and I think when we think ahead to <unk>.
Creating the right kind of Optionality I think the strengthening of our balance sheet will allow us in all scenarios frankly too.
Move the company forward.
And ensure that whichever path. We're on we have a strong ability to to invest and make the right financial choices. So.
Again based on.
The strength of the deal we felt it was in the best interest to do.
Do the deal and again I think the good optionality whichever we pursue it's difficult for me to speculate on advances thinking they will have the decision, making ability to decide whether or not to file and according to the rights. They gain they will be the regulatory inner.
Interactor into territories that they own so again that would be their decision we would add to the global developer give them access to the data that we generate in the history of our discussion and how it continues in the U S.
On the regulatory side, but it would be their call.
Thank you. Our next question comes from Jay Olson of Oppenheimer. Your line is open.
Oh, Hey, congrats on the deal with advance and thank you for taking my question.
Talk about the.
Okay.
Can you talk about the process for selling the ex U S. A caliber business to advance.
Was that a competitive process with multiple bidders in that process also contemplate selling the U S. What kind of a business and does that deal include the rights to the OCI business hybrid combo, where do you retain those rights ex U S. Thank you.
So as a reminder, our rights to beds of five rate on our development plan for <unk> five rate is a U S specific.
Plan.
The agreement with advance is specific to Ocala, but in PVC.
And obviously, if they pursue OCI mono therapy in Nash they they they have the rights to pursue that as well with the royalty I mentioned earlier from from dollar one sales if they if.
If they succeed there.
Was there was another part to your question.
Are the process yes.
There were multiple parties involved in the process.
Thank you. Our next question comes from Brian Cornea of Baird. Your line is open.
Hey, good morning, everyone.
My question is really on what your level of commitment to completing regenerate is designed the steel gives you a substantial cash position.
Just seems like if the FDA doesn't allow you to get to review based on this re analysis of the cost of running this fully out to 2020 fiber later might kind of too much to bear so I guess.
Why not just stop the study now and see what you have.
How many events have accrued at this point and then between any trends on events 1004 year biopsies 2572 week biopsies on 8000 patient years of safety.
Alex this is insufficient.
The most likely option of what you would do to move forward.
Yes, maybe I'll start on that and Michelle can add some color on the work that will continue.
So we've said.
That we are focused and the interactions with the agency and obviously with the data sets that we're in the process of generating exclusively on the potential of OCA in Nash on an accelerated approval pathway.
Where our focus is obviously the data and the subsequent.
When our interactions will will define the the right.
Our next steps, but we are exclusively focused on it on the accelerated pathway, which is one of the reasons why it's been so important for us as I mentioned.
A bit earlier to make sure that the foundation financially was as strong as possible. So that we do have a good optionality regardless of the strategic path that we choose here.
So any color on the on the outcomes piece.
And that we continue to to accumulate.
The data set if we are able to succeed on the accelerated approval pathway will need that to date eventually.
The only thing I'd add on that Jerry is that says the histology end point and the noninvasive tests are considered potential surrogate markers and boats and Davis would need to be validated against the clinical outcomes.
So so without clinical outcomes, neither have been validated to date. So I do believe that the agency continues to have much interest and looking at that.
That potential correlation with with those clinical outcomes, but as Jerry said this.
Interim analysis is focused on the month 18 surrogate analysis of histology and certainly all of the secondary noninvasive tests will be part of the package to be submitted.
Thank you. Our next question comes from Steve feed off of Raymond James Your line is open.
Good morning. Thank you in your prepared comments you sort of confidence that you have not in fact peaked in PVC in terms of penetration I guess, it's unclear from slide four how much U S growth.
Should be expected going forward. So I wanted to ask about volume growth specifically in the U S and PVC year over year, what was that this quarter and what do you expect you can achieve in terms of volume growth post cobalt data assuming thats positive.
So I think we're very confident in our ability remember we need to come through a period, where we lost 5% to 7% of our business based on our label change. So we'll look at moving forward replenishing that harder in new patient starts.
We're very fundamental to that and as I said in the opening comments, we believe that we have a pipeline of data coming that will help them with publications and our resubmission for full approval in the U S that will allow us to be highly differentiated and offering value unmatched with the amount of time that we have.
But on the market vis vis the others, we're going to be in great stead. So that's our kind of plan and our long term plan focus though is get back to growing the underlying business and if we look at even units frankly units are up because we are going from smaller scripps that could be for those patients who were.
Only taking 234 mm twice twice a week for four weeks.
The volume now that we're on the 30 day regimens and we're moving forward in that capacity, we actually have higher volume.
The only other additional point I'd make is just a reminder of that.
We estimate only about one third of the.
Potential candidates for Oliver According to the label.
<unk> had been on treatment. So there is still a significant pool of patients who qualify for treatment who are within the label.
And who caliber would be the only indicated option for as a second line patients. So.
We will continue the good work ahead on an ocala, but in the U S and we're seeing we're continuing with our strategy of expansion to community Gastro is we're continuing to see new prescribers coming to the market and as we said before new new new visits are up again patients are backend and seeing their physicians. So I think.
It's kind of combination of of new prescribers patient visits and new data really does give us a positive path forward.
Thank you. Our next question comes from Joseph Stringer Needham <unk> Company. Your line is open.
Hi, good morning, Thanks for taking our questions just a quick one on <unk> just given the mechanism of action <unk> agonist follow on would you consider Nash is an indication or would you look to explore other types of indications for that thank you.
Alright, great Great question happy to talk about 787, and we look forward to sharing more about this molecule very excited about it and look forward to rolling out all of the.
Preclinical data that we now have on this molecule how it differentiates from OCA.
And the potential indications that we are pursuing.
Later this year.
So we look forward to sharing all of that again is a really exciting molecule I think you know we are.
<unk> to push forward on on Nash I think that's our.
Our commitment there with OCA.
Certainly can't be can't be questioned.
But I think we are looking at a molecule that does differentiate and gives us a lot of exciting optionality and we look forward to talking about that later on this year.
Thank you. Our next question comes from Ellie Merle of UBS. Your line is open.
Oh.
Thanks for taking the question just in terms of the updated data could you provide maybe some more color from the safety perspective.
I guess, what would be getting particularly let's.
Okay potential longer term safety updates and any sort of liver about such a thing progressed progression to cirrhosis will be included I'll say a safety event.
A potential longer term outcome data thanks.
Thanks for the question Elliott Michele Yeah.
So on safety, we will be giving that with the top line. We are happy that we will be able to include all the adjudication there as well. So you may recall with this much larger more robust safety database, we did specifically have in <unk>.
Independent.
Committee looking at adjudicated cases for hepatic safety events, but not clinical outcomes for this analysis at cardiovascular safety and renal safety given that this patient.
Patient population.
But it's a higher incidence of type two diabetes et cetera that puts them at increased risk there. So I need to make sure that we've got the hepatic car.
Cardiovascular and kidney safety are all fully adjudicated. So we will be planning to share that with the top line data.
Certainly all the details along those will be shared later at a scientific conference. The hepatic outcomes will be part of the final analysis for the those events are also being adjudicated and that will include the months 48, histopathology, which should reference.
Over half maybe even ever at two thirds have been cases of.
Progression to cirrhosis.
Yeah.
Thank you.
Our next question comes from <unk> Richter of Goldman Sachs. Your line is open.
Hey, Thanks for taking the question this is Matt on for <unk>.
I just wanted to see if there's anything special we should consider as we model this transaction.
The 405 million roughly will be recorded in the next month or two you said.
And then the royalties you said these are double digits.
Flat or tiered.
And then.
In terms of I'm, assuming there is no milestone payments attached to that either.
But just wondering if anything else we should consider thank you very much.
Yes, sure happy to take that.
Yes, the $405 million is as described it's a cash payment upfront that's going to be net of working capital and other fees.
The transaction.
That will come through immediately upon close which as we've said we expect to be in the next two to three months, depending upon regulatory we're hoping to get that in by the end of June but you know.
You can't control the regulatory process.
In terms of the royalty.
The upfront for <unk>.
And subsequent 45 is really related to just the caliber PVC business. The royalty is for any new indications in territories outside the U S. So that would only kick in in the event that they get essentially a nash indication.
The ex U S territories.
That royalty as Jerry mentioned sort of a strong double digit royalty it goes down to $0. It's not tiered. So it starts with sales one and stays flat.
Throughout the sales process for Nash.
Thats helpful.
Thank you. Our next question comes from Geoff Meacham of Bank of America. Your line is open.
Good morning. This is Jason on for Jeff. Thank you so much for taking our question and let me also extend my congratulations on the out licensing deal as well I wanted to return to Nash appreciating that safety is obviously a primary focus.
The Resubmission do you have a sense of how critical or at least how much of a focus the additional efficacy data will be especially given kind of the biopsy outcomes I guess, along these lines could you see reverse being potentially part of the Resubmission package. Thanks.
Sure.
Hi, Jason Thanks for the question. So I'm certainly the TRL previously was focused on the benefit risk and it's now much more robust safety database will play a key role there and as I've mentioned in prior calls I think with the compound that.
Is likely to be used for life after initiation of therapy when patients have progressed to advanced fibrosis for sure on that it's important to have long term safety data, we'll be presenting those data with our top line showing.
Especially there is cardiovascular hepatic and renal safety parameters.
On the efficacy side, we do have an increased patient population that they need 500, but as I've mentioned before with this new methodology. The FDA has been clear that they want a comparison of the prior analyses with the central reader versus.
The new <unk>.
Consensus panel methodology, so that that will be the first analysis, but clearly we want to include all of those subjects and the FDA as well has expressed their interest and the total weight of the evidence for the molecule.
With regard to reverse yes, I do expect that that would be and additional data set that will be critical, especially because this will be the first readout that we have in any large study.
And advanced phase three setting in patients with compensated cirrhosis.
I think that that will be of great interest certainly to all of us to see where these patients are who are really beginning to get more advanced in their disease process.
We'll be looking to do you have those conversations with the agency about as.
As I mentioned earlier, the content and the structure of the potential resubmission. Thank you for the question.
Thank you. Our next question comes from Ritu Borough of Cowen Your line is open.
Hi, guys. Thanks for taking the follow up.
I did want to just ask about any inclusion of AI on reverse or how youre thinking about that endpoint Michel I think he did Matt you didn't.
No sorry that was on point when you were saying that were going to increase.
Include earlier events for the states for Resubmission I guess that was my second follow up question.
Great. Thanks.
Yep Yep. Thanks for your for your patients on those receipts and.
Yeah, and the Nash setting we are looking at some exploratory and secondary endpoints.
Looking at AI and those are certainly growing in interest either as a way to assist with our human pathology tests and sort of funny, we have to specify that there's there are human reads now but.
There is increasing interest there and sort of addressing some of the concerns that the FDA had had about variability and human interpretation of histopathology and how AI can be helpful. We've certainly seen that another therapeutic area as well.
Our AI can be particularly helpful and those outcomes assessments.
So we are both in regenerate and reverse.
And including AI and a couple of different companies that we've been we've been working with on that front I think your other question was about cobalt and the new expanded primary endpoint that includes some of the earlier events.
Because I think the all of the regulators have recognized how difficult. It is to ask patients to remain on a blinded placebo controlled study when they have <unk>.
Progressive disease, and they can frankly look at their own biochemistry, and and see whether or not there are on placebo or active drug it's difficult to ask him to say Arnie what is probably a placebo arm as a long term study. So we are grateful that we have.
<unk>.
<unk> been able to work with the regulators to expand that primary end point to have a broader composite.
We believe increases the sensitivity for detecting the clinical benefit of Ocala that in these patients at an earlier phase before they progress to liver transplant hospitalization for liver events or deaths.
Thank you.
Ladies and gentlemen, showing no further questions I'd like to turn the call back over to Jerry Durso for any closing remarks.
So thanks, everyone for joining us today in closing.
Definitely believe that the work that.
The intercept team has accomplished in the first quarter. In addition to all the work since then.
Specifically the recent agreement with advanced pharma puts us in a strong position to manage what we know is an extremely important time for intercept as we build for the future definitely look forward to the work ahead and to sharing more updates as things progress.
Last and certainly not least as we head into this weekend my best to all the mothers out there. Thanks, and we'll talk soon take care.
Thank you ladies and gentlemen, this does conclude today's conference. Thank you all for participating and have a great day you may now disconnect.
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