Q2 2019 Earnings Call
All participants are now in listen only mode.
Following opening remarks intercept management will open the lines for a question and answer period.
Please be advised that this call is being recorded at the company's request and a webcast of this call will be archived on the company's website for approximately two weeks.
I'd now like to introduce Justine O'malley, Vice President Corporate Affairs. Please go ahead.
Thank you operator, good morning, and thank you for joining us on today's call. This morning, we issued a press release announcing our second quarter 2019 financial results, which is available on our website at www dot intercept pharma dotcom.
Before we begin our discussion I would like to note that during our call we will be making certain forward looking statements, including statements regarding our approved product and clinical development program, the timing and potential acceptance of our regulatory filings the target product profile potential approval launch and commercial success of our product candidates, including associate for Nash 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 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 public periodic filings with the SEC.
Today's call will begin with prepared remarks from our CEO Dr. Mark Pruzanski, followed by the former Chief operating officer, Jerry to Arsenal, and our Chief Financial Officer Cindy capacity.
We'll then open the call up to take your questions. Let me now turn the call over to our CEO Dr. Mark Pruzanski.
Thanks, Christine and good morning, everyone. Thank you for joining us on our second quarter 2019 conference call.
As we announced in our press release. This morning, we had a strong second quarter with our team delivering substantial demand and revenue growth in the PPC business.
We've also continued to make great progress preparing for our planned Nash launch next year, while further bolstering our industry, leading phase three development program.
Based on the great momentum, we have seen we announced that we exceeded target enrollment in the outcomes portion of the regenerate study while remaining on track to complete enrollment of the expanded to reverse study later this year.
With to date, approximately 3000 patients enrolled between the two studies.
In support of these activities, we executed a successful financing that netted the company a little more than $450 million in proceeds greatly strengthening our balance sheet.
With respect to our second quarter results in the PVC business I'm really pleased to note. Our commercial teams continued outstanding execution, resulting in $65.9 million in Ocala, net sales worldwide, representing 53% growth versus the prior year second quarter.
Coinciding with this performance is the positive feedback we have been receiving from Hepatologist and a growing group of community Gastroenterologist, who have been prescribing ocala to their PBC patients and seeing its benefits.
We have developed an excellent understanding of these liver disease specialists, while continually honing our commercial expertise marketing of caliber in the us and our other target markets, where we are approved internationally.
This positions us very well for a successful first to market specialty launch in Nash, where we will again target our core customer base of Hepatologists and Gastroenterologists.
Turning to our Nash pre launch efforts.
These are now well underway with great progress made over the quarter on a number of fronts.
Our team has been working to prepare for regulatory filings in the coming months and we remain on track to submit our end da to the FDA later this quarter followed by our EMEA filing in the EU in the fourth quarter.
In connection with our launch preparations in Nash, we continue to have very productive interactions with physicians payers and patient groups.
These key stakeholders recognize the critical importance of the therapy with an antibiotic benefit underscoring what we believe to be a key competitive advantage of those yet.
If approved we expect dossier will become the first and overtime and essential therapy in Nash patients with advanced fibrosis.
We firmly believe that Nash is a blockbuster opportunity for us and that we will be able to realize this by driving a successful specialty launch that leverages, our strong commercial foundation.
We look forward to presenting our launch and commercialization plans at an investor event prior to approval.
In addition to our ongoing Nash launch preparations we continued to advance our industry, leading Nash development program today I'm pleased to announce that we have completed target enrollment of the outcomes cohort of the regenerate phase III study with more than 2400 patients randomized it's by far the largest and most advanced study of its kind.
To date Osha remains the only investigational Nash drug to have shown an unequivocal anti fibrotic benefit in a large adequate and well controlled phase three study.
Given what we have observed in the regenerate 18 month interim analysis with respect to fibrosis reversal and stabilization. We believe that OTA is well positioned to go on to confirm its therapeutic benefit on a post marketing basis in the clinical outcomes portion of the study.
We also expect to publish the primary results from regenerate and present additional important study data at upcoming scientific meetings, such as the liver meeting in November .
Important new contributions include anticipated abstracts examining associated effects on noninvasive measures of liver fibrosis and patient reported outcomes that will provide important new clinical insights to health care providers.
Today, We also announced the recent changes we've made to drive even stronger confidence in the success of our ongoing phase III reverse study of OCA in Nash patients with compensated cirrhosis.
As a reminder, the primary endpoint in reverse is fibrosis improvement with no worsening of Nash identical to the endpoint associate achieved in regenerate.
With reverse now the only ongoing phase three study in cirrhotic patients and with the confirmation of those years anti fibrotic effect in regenerate earlier this year.
We've seen tremendous investigator and patient enthusiasm at or close to 300 active sites worldwide and continued strong momentum in the enrollment of the study.
Capitalizing on this momentum we've decided to expand reverse to approximately 900 patients.
Importantly, we're maintaining our guidance of completion of enrollment by year end.
We're also extending the double blind phase of the study from 12 to 18 months in order to align with regenerate.
As recently reaffirmed by the FDA, we expect the successful readout of reverse to support our pursuit of an extension of the approved indication for CA to the treatment of Nash patients with compensated cirrhosis.
Such patients represent a very high unmet need being at particularly high risk of liver failure, and we are uniquely positioned as the leader in this more advanced segment of the Nash patient population.
To summarize in the first half of 2019, we continued our strong momentum in our PPC business and initiated whats been an incredible team effort preparing for our planned first to market Nash launch next year.
We are confident in the team we are building our market preparation activities and the resources, we have on hand to deliver a successful Nash launch.
In the near term as we continue to prepare our upcoming regulatory filings, it's inspiring for all of US here at intercept to contemplate the opportunity ahead of us to help patients with advanced fibrosis due to this devastating disease.
With that I will turn it over now to Jerry for a more detailed update on our global commercial PPC business and our prelaunch activities Jerry.
Thanks, Mark and good morning, everyone.
Quarter, two was our strongest quarter to date with regard to our commercial performance, we reported $65.9 million in worldwide O'callaghan net sales, representing 53% growth over the second quarter last year.
In the U.S., we achieved net sales of $50.7 million and are pleased with our teams execution of our commercial strategy, which drove significant expansion of our PVC business.
The work, we've been doing to expand our physician reach and prescriber base in PBC has been successful.
In fact since January about one third of our new patient enrollments are coming from new prescribers.
We continue to receive positive feedback from prescribers of caliber.
And our most recent quantitative market research approximately 95% of the Hepatologists and Gastroenterologists, who had the most experienced prescribing Ocala reported a positive clinical experience with our products.
Turning to the international region, we achieved ex us net sales of $15.2 million in the second quarter, representing an increase of approximately 75% as compared to the second quarter of 2018.
We believe the ex US growth, we're seeing is a clear indicator that the team is executing well and that physicians are becoming more confident using ocala in their PBC patients.
As we look ahead to the remainder of 2019 I'm confident in the capabilities of our team to drive momentum in our commercial PVC business.
Now turning to Nash as Mark mentioned, we've been rapidly progressing our launch preparations ahead of expected filings in the US later this quarter and the EU in the fourth quarter.
While we are making great progress domestically and abroad today I'm going to focus on our us preparations as the US is expected to be our first market to launch in Nash.
As you might imagine we have undertaken a significant amount of work to understand the evolving Nash landscape and advocate inducting extensive qualitative and quantitative market research work with physicians payers and patients to inform our strategies and our launch plan.
One of the points that is evident is that while there is education required to develop this market. There are also a substantial number of patients with advanced fibrosis due to Nash already identified in the specialty setting today, even ahead of a therapeutic being available.
The work we have done with physicians indicates that the greatest need for treatment is for those patients with advanced fibrosis due to Nash as these are the patients who are at the highest risk of progressing to cirrhosis.
It's clear based on our market research that physicians remain focused on preventing progression to cirrhosis as a top treatment goal in fact in a recent quantitative surveil over 100, Hepatologists and Gastroenterologists. These specialists rated halting fibrosis as the most important efficacy attribute in the treatment of patients with advanced fibrosis due to Nash with over 80% deeming it very important.
With associate position to potentially be the first therapy approved that delivers a benefit in stabilizing and reversing the progression of fibrosis. This physician insight reinforces our confidence in our ability to successfully commercialize OTA in Nash.
In fact in the same research after viewing CA is blinded target product profile approximately three quarters of the specialists indicated they were definitely or very likely to prescribe such a product in their practice.
We believe that early adoption will be higher among patients with more advanced fibrosis, given the greater risk of progression to cirrhosis for example.
Close to two thirds of the specialist polled.
Indicated that their need to treat three patients was very urgent.
Although certain of our market research data is based on the traditional fibrosis or F. score framework. We believe the market is in transition away from this paradigm and moving instead towards the framework defined by early and advanced fibrosis. It is our view that this change is being driven by the growing acceptance of noninvasive tests.
As Weve stated previously the majority of advanced fibrosis patients with Nash under Treater care have not had a biopsy as community physicians are generally identifying patients using noninvasive tests, including imaging modalities and blood based measurements and we do expect the use of these tests to continue to grow.
And gain widespread acceptance.
In summary, our market insights confirmed that they are a significant number of patients with advanced fibrosis under the care specialists today and a clear willingness to treat those patients with an anti fibrotic therapy like CA once approved and available in the market.
Moving onto our payer interactions we've made good progress to date as we continue to educate payers on the Nash disease state the importance of treating advanced fibrosis, and the best way to identify and monitor these patients.
It's important to note that our precise target population at launch will also depend on the results of our conversation with pairs.
Based on our market research and similar to what we've heard with physicians pairs have indicated that they view the prevention of cirrhosis and related complications as a key value driver and they generally agree that patients with advanced fibrosis have the greatest unmet need.
When considering appropriate patient identification, our experiences that payers tend to align with the current medical practice.
With physician sentiment moving away from the use of biopsy, we believe that payers recognize and will also support the evolution towards the greater use of non invasive methods to diagnose patients with advanced fibrosis.
We believe that we have a strong value proposition with those ta has demonstrated fibrosis benefit and as we progress towards launch we'll be working together with payers regarding our target patient population, ensuring access and finalizing pricing.
While we're planning for a specialty launch in Nash understanding the perspectives of the patients we will target at launch will also be critical.
Accordingly, we have conducted additional market research, including a recent survey of over 100 patients already under the care of specialists.
Results showed that close to two thirds of these patients stated that they are very concerned about Nash and about 80% stated that they would be very likely to fill a prescription for a drug with associate target profile. They received one.
Overall, we feel confident in the fibrosis benefit that OCI offers and our market research across physicians payers and patients reinforces our belief that we are well positioned to successfully launch associate if approved and bring the first therapy to patients with advanced fibrosis due to Nash.
As Mark mentioned earlier, we look forward to sharing more in depth market insights as we get closer to launch.
From an operational perspective, we have great momentum as we are accelerating our launch readiness plans in anticipation of the approval of OCI for Nash.
As we previously mentioned we are preparing for a specialty launch focused on patients with advanced fibrosis due to Nash and plan to target approximately 15000, Hepatologists and gastroenterologists in the United States.
Today for PBC, we cover about 5000 of these positions and have initiated our plans to increase our field based teams to ensure coverage at launch while bolstering our home office support functions to effectively serve the business.
For example, we've already completed the expansion of our medical Affairs team.
We have strengthened our access teams and are actively engaging with payers.
We are hiring additional leadership in our sales organization and we'll build out the sales force into stage gated manner in accordance with our launch plans as we move closer to the potential approval of associate for Nash.
Our expanded medical affairs team is already hard at work educating specialists in connection with the rollout of our Nash disease Education campaign.
I feel confident in our launch plans and our ability to continue to execute as we move closer to the expected approval of those CA in Nash.
We are poised to build on our strong PVC business and are excited by the prospect of driving a successful first to market launch in Nash, where we believe we have the people the skills and the capabilities to accomplish our goals.
And now I will turn the call over to our Chief Financial Officer, Sundeep Chapada for our financial update.
Sandeep.
Thank you Jerry and good morning, everyone. Please refer to our press release issued earlier today for a full summary of our financial results for the quarter ended June Thirtyth 2019.
Q2 was an important quarter for us.
We successfully raised approximately $450.6 billion in net proceeds and our financing transaction.
We also saw very strong volume growth versus the prior year quarter in our PBC business as well as made important investments to strengthen our clinical development program prepare for our Nash filing and fund our launch activities.
In the second quarter, we recognized $66.3 million in total revenue.
Up from $43.6 million in the second quarter of 2013, a growth of 52% versus the prior year quarter.
Our second quarter Calvin net sales were comprised of US net sales of $50.7 million and ex us net sales of 15.2 million.
We continue to have strong demand growth in the U.S. So we did observe specialty pharmacy orders outpacing prescription trends during the quarter.
This was generally in line with our expectations, but we would expect that to normalize as we go forward.
Total gross to net for the quarter were towards the lower end of our previously communicated at 10% to 15% range.
Our GAAP operating expenses for the quarter were $130 million and non-GAAP adjusted operating expenses were $113 million.
As a reminder, our non-GAAP adjusted operating expenses exclude stock based compensation depreciation and amortization.
Our cost of sales for the second quarter or 0.7 million and was consistent with prior year quarter.
Our selling general and administrative expenses for the quarter were 69.7 million. This was an increase of $4.5 million over the prior year quarter and was driven primarily by increases related to our Nash launch preparation activities.
Our research and development expenses for the second quarter were 59.6 million.
This was an increase of 12.2 million over the prior year quarter.
The increase was primarily driven by costs associated with our Nash development program and the preparation of our Nash and FDA submission.
As of June Thirtyth, 2019, we had cash cash equivalents and investment securities available for sale of approximately 758.5 million.
As mentioned previously this includes $450.6 million in net proceeds from our public offering concurrent private placement of our common stock and issuance of convertible notes in may of 2019.
Moving to our financial guidance 29 team continues to be a critical year as we build momentum in our PVC business, while deploying resources to support our Nash regulatory filing efforts and launch activities.
We continue to be confident in the demand for our caliber and the financial outlook for the remainder of 2019.
As mentioned earlier, we do expect to see the normalization of specialty pharmacy orders and seasonal effects in Q3, followed by stronger Q4.
As a result, we are reiterating our previously announced 2019 Ocala net sales guidance of between 235 million to 245 million.
Given the strong performance, we now expect to be in the upper end of this range. We continue to expect gross to net for the year to be in the 10% to 15% range.
In addition, we are reiterating our 2019 non-GAAP adjusted operating expense growth.
Between 470 500 million.
In summary, we're in a very strong cash position have good momentum in our PVC business are making solid progress advancing our regulatory filing and making important investment decisions to strengthen the clinical development program and fund the successful Nash launch.
Finally, as a reminder, non-GAAP adjusted operating expenses as a non-GAAP financial measure under SEC regulations.
Please refer to our press release issued earlier this morning for an explanation and reconciliation of this measure.
I'd like to now turn the call over to the operator for questions operator.
Thank you, Sir ladies and gentlemen, this only do you have a question at this time, Please press star and one.
If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
Our first question comes from Michael Yee from Jefferies. Please go ahead.
Hey, guys congrats on a on a strong quarter and the progress Sean Euro.
For January and reverse studies that sounds great.
I think that I had two questions both are related to that.
On the investment communities thinking about the Nash launch next year and appreciating.
You guys will have more color on that as we get closer I guess my two questions are one.
How to think about the push pull dynamics of a national launch versus of PBC launch, obviously, one has significantly.
More patience, but would there be any differences in dynamics for example, biopsy confirmations things of that nature that are different from PBC should may be just comment about the differences of Nash launch versus PBC and then related to that my other question is you've already said that you have out to your front end DHS and expect to have two different NDC codes, maybe just comment on your confidence about being able to do that and whether you feel good about that and whether payers around okay with indication pricing. Thanks, so much.
Mark Thanks for your questions unless Jerry to take them.
Yes, Mike Thanks for the questions I guess to start on the first one.
We clearly believe that we have a blockbuster opportunity here.
With Nash that we're going to unlock through the specialists launch as we said there are.
Significant number of patients that are already identified today that are sitting with the specialists that we're going to target and of course most of these.
Have been identified and recognized without a biopsy.
I think that the one of the key differences between the PBC and Nash will be that we would expect.
The treatment rhythm with Nash to follow what you would typically see with chronic.
Condition, a chronic medication and this would probably resonate in the launch where we would anticipate that physicians would see their nash patients on the regular rhythm.
That we went so thats one of the main differences were clearly in PBC.
The patients are very diffused.
Across a pretty larger treatment.
Group of physicians they tend to have a very low number of individual patients for physicians, which wouldn't necessarily be the case in Nash where the general.
Hepatologists and Gastroenterologists, we'll we'll frankly have a larger group of of Nash patients in their normal population.
And then the comment about biopsy would that would that be required is that your base case and would that have to have been within a certain timeframe or you feel that it could be a lot more like PBC.
Well I think on the question about India.
Yes, okay, so I'll try to take them in order.
As we've indicated and as we continue to see from all the learnings that we're doing in the market.
We do see a physician willingness to identify these patients without a biopsy. We also see a lot of momentum in the marketplace with some of the data emerging not moving much more.
Towards.
Utilization of Noninvasive zone in the clinical setting.
We also know from the early discussions we've had.
From with the payers that.
We know that payers preferred to align with medical practice. So we do see them continuing to support the movement towards known in basis.
In an appropriate way.
We also know that the exact patient population.
Et cetera will be the result of the deep conversations that we're going to have with payers as we progress through.
Towards launch and we will give you some more color on that.
As as we get closer.
And then I think your third question Mike was.
On the pricing between potentially to two different indications.
We are as we said before pursuing a dual branding strategy that we filed a separate and da.
This would give us an option to explore differential pricing.
If in fact, we're successful securing.
The second brand.
But of course as you would imagine our final perspective on that is going to be based on some future work and.
And.
Discussions and dialogue with payers as we progress.
Both through the regulatory process and ultimately with our.
Our discussions with those customers.
Okay. Thanks, so much I appreciate it guys.
Thanks, Mike.
Thank you. Our next question comes from Leap year Jones from Cantor Fitzgerald. Please go ahead.
Hey, guys. Thanks for taking my question congratulations on very good quarter, as well and the progress that you've made.
Finding patients et cetera, et cetera to maybe two two and a half question for you here one.
I wanted you to talk a little bit that would reverse what was the impetus behind the potential change and when the population and Elongating from was it something from the FDA or was it something then turn off our with it.
Kind of anything else that drove that and then my next question as you've mentioned that your patient identification work you've done the significant number of patients then well I'll just ask point blank are you willing to identify quantify that for us today, if not well you just kind of clarify whether it's kind of higher lower or the same as how you estimate maybe let's say a year ago before you begin this exercise thanks.
Hey, Lisa I'll take the first question so with respect to reverse that we completely drove this.
I've been saying for some some time now that we've been looking since the particularly the failure stellar for that were completely alone out there and in their lead and this is a really a huge unmet need and opportunity for us. So we're looking for ways to gold plate on the study and that's precisely what we've done capitalizing on the great.
Enrollment momentum and enthusiasm we've seen worldwide for the study.
And.
The fact that we can maintain our guidance of completion of enrollment by year end.
Made this decision really a no brainer.
For us. So this will again be the largest ever Nash cirrhosis study as I mentioned in my prepared remarks, I mean, you know just just to signal how far in the lead we are in our development program between the two phase threes.
We've got approximately 3000 patients enrolled and we're now well into the outcomes portion of of regenerate with that cohort.
Fully.
Target enrollment reached so.
We feel really good about our prospects with with both studies.
Yes ill take the second part of your question.
Yes, we're not going to go specifically into the the patient populations today that would be something I think we would definitely look forward to to covering at a future time I would say that you know as we've progressed.
Over the past 12, 18, frankly 24 months.
It has been a deep exercise its one of the.
Opportunities. We have is really the the first company to go deep in this area is that there is not exactly a clear map that existed. So we use is really up to us to go in and do the deep work quantitatively primary work defining and I would say that over the past 12 or 18 months we've become.
No more confident in the range of of opportunity that we have and again, we will look forward to sharing that at a later point.
Great. Thanks.
Thank you. Our next question comes from Brian Abrahams from RBC. Please go ahead.
Hi, Thanks for taking my questions and congrats as well on the quarter and all the progress two questions from me.
Where are you guys with respect to analysis of translational diagnostic data from patients screened in regenerate is this something we should be looking for asset will be and that could be part of the initial label.
Or should we be thinking about this more as part of broader initiatives for elucidating noninvasive diagnostic potential.
And then separately on PBC.
Could you maybe quantify the extent to which that difference between specialty pharmacy orders and demand base sales drove this quarters us sales uptick and what was the actual underlying quarter over quarter demand change. Thanks.
Yes, thanks, Brian So with respect to your first question, Yes, we are doing a deep dive now in our the regenerate and other data.
On non invasive zebra as I mentioned in my prepared remarks.
We're looking forward to presenting.
Data from regenerate on the effects of O'shea on various non invasive both Sarah logic and and imaging.
That we believe will we know are already being used out there.
To the point, Jerry made earlier to identify patients with advanced fibrosis.
So we will look forward to having the opportunity to present the additional data from regenerate.
At upcoming scientific meetings, including a sold either.
And so theres, a treasure trove of data here.
With respect to the second question.
And to the next Sunday, Yeah, Hi, Brian . Thanks. Thanks for the question I mean, obviously, we had a very strong quarter. We're very pleased with the momentum both in the us and ex US I mean, we had very strong underlying demand I think the way to sort of think about.
The impact of specialty ours, I mean, we have IMS data out there. So you certainly can.
It still continues to be a good indicator of underlying demand in the us and.
And this was in line with our expectations, we expect this to sort of normalize.
Typically we also obviously have some seasonal effects in Q3, but we certainly expect a very strong Q4, we continue to reiterate our guidance and as a matter of fact at this point, we expect to be at the upper end of our range.
Hopefully that gives you some.
Background.
Thanks, Andy Thanks, Mark.
Yes.
Thank you.
Our next question comes from Yasmine Rahimi from Roth Capital Partners. Please go ahead.
Okay. Thank team. Thank you for the continued progress an update.
Two questions for you both have directed to Jerry Jerry can you kind of give us a little bit color on sort of Nash pricing specifically, what do you believe the range on the Nash price that can probably minimized.
Everquest sites here is to have biopsies that prior authorization.
And then maybe you can also educate at about what their current cost burden on the health care system.
He asked three Nash patients ask to match pace.
Thank you.
Okay. So maybe a little a little color on how we're thinking about the Nash price, obviously, it's premature to talk about specific pricing points, but.
It's clear our Nash and PBC are very different.
Diseases different populations.
All of the insight and the discussions that we're having with payers.
Indicates that.
They're they're top goal the way that they think about the value.
And the concern from them is around progression.
To cirrhosis and the fibrosis benefit that we saw on regenerate will be at the core of our value proposition.
With with Nash the.
Importance of the fibrosis endpoints and the kind of data that we've been able to generate data in regenerate.
Will be important to them in that in that conversation and we also believe.
Clearly that the benefit the fibrosis benefit will give us some strong differentiation in value from other drugs and other drug classes that are providing a more metabolic effect and of course, we're going to be focusing the launch.
As this as a specialty launch.
We are fully engaged as you can imagine on this topic in and we'll look.
Two.
Communicate more dfcthree.
Not to go in to specifics per se, but it's clear the three patients.
Our where the concern is that the payers recognize that the cost burden comes with the complications as Kate as patients get closer and ultimately progress.
Two cirrhosis so.
Although again, we see the market moving over time away from the the classes classic fibrosis.
Stage framework, a more towards kind of early and advanced.
Fibrosis.
As patients advance the concern and the cost around progression to cirrhosis is a factor and it's why we continue to learn from the payers that their prioritization. There urgency is around those advanced patients and it's where we believe will have a real good productive discussion on all of the appropriate topics price identification of the right the right patients and again, our shared intention to get access to a drug that impacts fibrosis to these high risk patients who are the ones that are on top of mind with payers.
And then came when do you plan on sharing that data that you have done internally in terms of debt Pirow work is that something we should be expecting to see at that upcoming liver meeting in Boston or is that more either love that.
Yes, I think it's.
You State we will have we will have important data to present at SLB and and at subsequent scientific meetings. So stay tuned for that I think it's premature to specify what what's going to be presented but we've I've talked before about the PRB. So.
Did the patient reported outcome data based on.
On validated quality of life instruments, as being really important to highlight the patient experience.
Of taking our drug.
So stay tuned for that.
Thank you Tim could take my question.
Thanks, guys.
Thank you.
Our next question comes from Brian Skorney from Baird. Please go ahead.
Hey, good morning, guys. Thanks for taking my question.
A little more on sort of the data that we're going to be seen on non invasive methods used in regenerate.
Can you just review what major non invasive measures were utilized in the study. What you think are the most interesting potential surrogates for changes on liver histology, we're all patients and regenerate analyze with fiber scan MRI PDF and what intervals were those measurements utilized.
Yeah sure Brian .
Thanks for the question. So you know the primary focus in terms of relevant data are.
Noninvasive, what we call an itcs that are currently available point of care.
Relatively inexpensive easy to use that physicians are already using so starting there is theres a fair amount of literature now on this but starting with very easy to calculate scores like for an app free.
That that are based on standard liver enzymes like LTAC platelets in age, but thats for Aptar uses tea.
And platelets these are very good for screens.
With with improving.
Sensitivity specificity to to identify patients with advanced fibrosis fiber scan.
Trends in Ela stronger fee is the other obvious one proved reimbursed.
Point of care with a growing installed base in the us and an extensive installed base in Europe .
And there is a fair amount of literature on on appropriate cut offs, there to identify patients with advance.
Fibrosis.
There are other tests that can be currently ordered in the in the us like fiber sure. So so these are all things that we're primarily focused on I want to note, though and it should be obvious that.
All of these are focused on fibrosis, right and Thats, why we keep saying that commercially it's so critically important.
For us to be able to be in position to launch a drug with the fibrosis benefit.
This is this is.
Not only associated with outcomes, but it's where we have good.
A grab bag of already available non invasive at point of care that can be employed.
Too much higher list lift as I've been saying.
Constantly with the drug that ends up getting approved just on on a so called Nash resolution.
Great. Thanks, Mark.
Thanks Brent.
Thank you. Our next question comes from re Tubarao from Cowen. Please go ahead.
Hi, guys. Thanks for thanks for taking the question.
Maybe I will start with your comments on how the I guess clinical definition staging of Nash is moving from.
Early in advance and away from the stages can you can you quantify that a little bit like what.
As the definition changes what constitute.
Early Nash constitutes advance Nash and how it is concept and high risk.
Factors like diabetes et cetera instrument weigh into that.
Yes, Thanks, Ritu I mean, obviously the field is evolving as Jerry mentioned and.
We are moving towards a non invasive world I mean frankly.
Really the only reason Nash patients being or primary reason Nash patients screened biopsy today is because in clinical development programs in phase two and three.
It's still required.
But in the real World as Jerry mentioned based on our market research.
We know that a majority of patients under under Treater care.
Or not receiving biopsies.
And Thats why you know continuing to drive on education and analysis around the non invasive that I just mentioned is so critically important.
We do think that the world is evolving away from F. stage to to your question to one where we'll be categorizing patients with earlier, no fibrosis versus advanced fibrosis versus cirrhosis.
And the exact definition, what I can tell you is that.
These are rooted in.
Underlying fibrosis, scoring in the liver.
I think over time, certainly we'll be able to identify.
Risk factors like co Morbidities that you mentioned like diabetes.
But what we know is that fibrosis alone.
Is clearly associated with the risk of outcomes and that's that's where the focus really is for all stakeholders for for physicians for payers.
And of course ultimately for patients.
Got it and then.
We actually Cowen had organised the meeting with the FDA recently, where.
The Cedar head.
Mentioned exactly what you did at the world's leading non invasive and.
The implication was they'd love to see we've seen.
Our pivotal design.
I have some sort of prospectively defined sub analysis that would at least in their minds.
Validated non invasive such that acreage on me.
Yes, yes.
Flash National label.
Can you talk about whether you have to go into the specifics that are there prospectively defined analyses.
Within regenerate that you'll be discussing with the FDA.
Well, we certainly pre specified the use of the various nominal basis that I mentioned, a few minutes ago.
And as I've been saying I mean, FDA say is deeply interested in.
In looking at the totality of data that we've got.
We know I mean ft is another key stakeholder here they.
To to your point, they've said that they ideally we'd like to move beyond biopsy themselves and what they require and clinical development programs I still think that thats.
That's that's going to be a lagging indicator so to speak.
It's going to take a little while.
For them to get comfortable enough with.
With noninvasive data being sufficiently validated.
Two.
To remove the need for for Bobs and development programs, but they certainly are.
Very interested in.
Working with us on this problem.
Got it and.
Follow up just on.
Can you give us some high level color on the European market feedback on.
The Nash market, how doctors view it we'd have can be particularly challenging conversations and with usually the biggest market in Europe , Germany.
From German doctors on Nash.
How do they think about it can you talk about maybe the top three markets.
And how you plan to approach that sort of.
Almost cultural perspective on the disease.
Yes. This is this is jerry.
So.
We're.
Making good progress in doing the.
Similar kind of deep market analysis in the major European markets as.
As we have in the us.
Although the filing will be a little bit behind us and with all of the normal process in Europe around approval and then and then market access we do expect the European markets.
To come later I think the concept of there being.
A high higher urgency to treat with the advanced population is frankly, a consistent theme that we see coming back.
From the markets obviously there are some.
Differences in the structure of the market.
When you look across in terms of some of the major countries in Europe , where.
The treatment tends to be more focused in some of the key centers, where you have a situation.
For example, in Germany, where it is.
More of a broader.
Treatment spread throughout a broader group of.
A broader group of treaters.
And again, we're we're deep in in the.
Similar process due to be added to us in terms of of defining what each of those markets looks like and again I would look forward to going into more details on that in the future as we progress.
Good progress there.
But obviously the initial focus for US has been on ensuring all things are lined up with our first market to launch which will be the us and the only thing I would add reviews I'm well aware of the sort of.
Almost cultural conservatism that you're alluding to.
With some of the docks, there and you really I think your diplomatically pointing to stigma.
That that these patients sometimes face the same was true I'd point out with hepatitis C.
Long time ago, and clearly changed overtime, but what what is abundantly clear is that the unmet need.
Represented by Nash with advanced fibrosis in Europe .
Is just as urgent and pressing.
No matter, where you are there, Germany UK, France.
Clearly this is.
There is a pressing need there and we're very confident in the opportunity.
In those countries.
And the fact that docs will will be willing to to prescribe. There is probably even more this is a qualitative comment probably even more of an emphasis on on an anti fibrotic benefit as necessary to support the value proposition for for Nash drug.
As you know right now the M- reflection paper requires either drug to hit on both.
The currently defined primary endpoints or if its fibrosis.
And to be further supported by two stage improvement, which is why we believe again, we've got a unique opportunity.
They are based on our data in regenerate to gain approval.
In Europe .
Great. Thanks for taking all the questions Thats helpful. Thanks, Richard.
Thank you.
Our next question comes from Salveen Richter from Goldman Sachs. Please go ahead.
Hi, Good morning. This is Ross on for Salveen, just two quick questions here. So broadly speaking if we just think about the conversations you guys are having with payers our concerns have they highlighted regarding.
Potential commercial Nash.
Drug.
Yes, I mean I think the first.
Area of focus for them.
Where we believe ultimately we will have good alignment is ensuring that.
The.
Implications there are most concerned about which is the this progression to cirrhosis.
Is a.
Impacted by.
Ensuring that the patients that are most concerned about frankly are the ones that are addressed.
I think thats, where we believe there is going to be good alignment.
In in how we're thinking about the focus on the advanced population as opposed.
To the really broad potential Nash group, including those those earlier patients. So again I think that there's a good willingness on the payer to talk about a specific group of patients again that that they believe.
Need the treatment, most urgently and where they see.
The value and that does overlap I think with the approach that we're taking with a focus on the specialists on the advanced population and ultimately on a benefit like we've seen in regenerate where we can impact fibrosis.
That's helpful. And then just lastly here. So you mentioned that in which a lot of patients are identified currently using non invasive so how does your view on the potential uptake for it we see a change a liver biopsy for Nash diagnosis is required in the in the label.
So I guess I would just take a step back on that and the regulatory.
Element of your question I mean of course, it's premature to speculate on exact label language, but we we do know that it would be a typical for the FDA to mandate the method of diagnosis.
In the label indication statement.
Obviously, we're going to go through the full regulatory process and ultimately to the payer process could define.
The.
Patient population and how this patient should be recognized in the real world, but we do continue to.
See that payers prefer to align with medical practice. So I think we remain confident that this evolution that we keep talking about towards noninvasive will ultimately be the way that the.
The market develops and clearly we're going to have a role to play in that in educating both the physicians and ultimately to payers on on the way that they can utilize the noninvasive.
Methods that they have out there to identify this group of.
The advanced patients, which I think theres reasonably good alignment from the payers that.
Those types of patients should be the first ones that a drug like ours would be targeted towards.
Great. Thank you.
Thank you.
Our last question comes from Steve seed House from Raymond James. Please go ahead.
Good morning. Thank you I have a follow up on PVC sales, but first I wanted to ask about reverse.
The change in endpoint seems more interesting than the increased and which just seems prudent so I had a few small questions on the endpoint.
Mark given you indicated at FDA reaffirmed their comfort with the old design post the issuance of the cirrhosis draft guidance it wasn't clear.
If you have a sense of what the FDA views of this new endpoint.
Given that you mentioned it was intercepted really decided on the changing also since you're extending follow up anyway.
Would you consider making reverse and outcome study to align with the FDA cirrhosis guidance and if so how much longer would would that have made reverse in your estimation compared to the 18 month endpoint.
Thanks for the question just just to be clear, we did not change the endpoint.
We it's important to say that.
We're reading out on fibrosis improvement with no worsening of Nash.
And this is essentially the same.
It is the same endpoint that we met.
In regenerate so what we did do in addition to expanding the size. The study was we extended the duration of the double blind phase.
Reverse to match up with the 18 month.
Interim phase from regenerate.
And we just thought that was prudent thing to do.
Again to gold plate on the study and have identical duration.
At read out.
And just the second part of your question.
Just.
Did you contemplate an outcome studies since you are.
Duration.
Well so so the outcome study is something we decided going into reverse.
That given the the wide range of what cirrhosis means.
And the fact that we were going for reversal of cirrhosis histologically from four to three or below.
We wanted to study patients with well compensated early cirrhosis.
Based on the surrogate endpoint.
And then do a separate outcome study in an overlapping but more advanced population closer to clinical outcomes very completely analogous to the approach that we took in PVC.
And kind of a more standard.
Pursuit and subpart H accelerated approval programs.
So thats really because in a population like this it would.
Requires substantially more patients for a long duration to get to a sufficient number of clinical outcomes events.
Okay.
And the only thing I'd add and you already alluded to this is the fact that post FDA is on draft guidance in this population.
They reaffirmed to us the fact that this program.
That reverse.
Assuming a successful will support pursuit of an expanded indication in this population and that's not just because we are grandfathered in but based on what we carefully designed with FDA and the totality of our data.
Available.
And you're comfortable at the changes that you just made.
Don't change Cfds view that they reaffirmed it Oh, you mean no no quite the opposite I mean with the they welcome when we can we drove this.
They welcome the changes this just will generate that much more safety and efficacy data.
In this critically important population.
Okay, Great and then on the PVC sales the commercial dynamics, there so sales growth seem to substantially outpace script growth.
And your guidance does seem to imply a decline sequentially from the Twoq number at least even at the top end of guidance. So can you just expand on that any change in channel inventory. This quarter Sandeep I think you commented briefly in your prepared remarks.
Are there other onetime dynamics that contributed to this quarter's us sales number and.
Your outlook for the second half of the year that made you hold the line on sales guidance. Thank you.
Yes, no. Thanks. Good question I think look overall, we had a very strong quarter.
Certainly underlying demand you can see from from IMS trends.
It's probably our best quarter.
In the us.
And again International's contributing very meaningfully in terms of our overall growth as I did note in my in my remarks that we did notice that specialty pharmacy orders outpace our underlying very strong trx growth.
But that was generally in line with our expectations.
Through then what you would generally expect for a growing product like ours.
We expect that to sort of normalize I think.
We'll have to.
Also at the same time as we think about Q3 and.
They are typical seasonal effects as you know the summer tends to be a bit slower.
In general with refills, and holidays, and vacations and so forth. So we see that sort of impacting quarter three but we'll see a good strong quarter for I think the way we thought about in terms of guidance is right now we're very given the strong growth that we've had we changed guidance earlier this year.
Based on the Q1 performance, we're seeing great trends.
During Q2 as well.
And.
And right now we expect to be at certainly I feel very comfortable being at the high end of the range I think we'll have to see how the third quarter evolves over the summer and then we can maybe provide an update at a later point.
Okay Thats helpful. Thank you.
Thank you.
This concludes our today's session at this time I would like to turn the call back over to CEO Dr., Mark Pruzanski for closing remarks.
Thanks, operator, thanks, everyone for joining us on today's call I just want to leave you with a few key points I'm thrilled that we just had our strongest ever quarter in the PVC business, we've continued to execute and exceed expectations on worldwide.
We've got a great and growing group of talented people in this company currently working.
Day in day out on preparing for our anticipated Nash launch next year.
Supported by the great feedback that weve been getting from the key external stakeholders physicians payers.
Patients.
Who all clearly recognize the beneficial anti fibrotic profile.
Associate base on regenerate data, we've built a very very strong commercial foundation.
In liver disease, we've got the expertise and the ability to execute.
To drive a successful blockbuster launch in Nash.
And look forward to coming back to you next quarter and beyond with our progress thanks very much.
Thank you ladies and gentlemen for attending today's conference. This concludes the program you may all disconnect good day.