Intercept Pharmaceuticals Inc (ICPT) 2016 Q1 法說會逐字稿

Thank you for joining Intercept Pharmaceutical's 2016 First Quarter Financial Results Conference Call. (Operator Instructions) At this time, I would like to introduce Dr. Mark Vignola, Intercept's director of Investor Relations. Please go ahead.

Good evening, everyone, and thank you for joining us on today's call. We are reporting our financial results for the quarter ended March 31, 2016. Before we begin, please remember we will be making certain forward-looking statements on today's call, including statements and forecasts regarding our future financial and operating performance, anticipated timelines for the potential approval and commercial launch of obeticholic acid, and our regulatory, clinical and commercial plans, goals, and estimates, as well as other statements which relate to future events. These statements are based on the beliefs and expectations of management as of today. Our actual results may differ materially from our expectations. Investors should read carefully the risks and uncertainties described in our reports filed with the SEC, including the Risk Factors section of our most recent annual report on Form 10-K and Intercept's other filings with the SEC. We assume no obligation to revise or update forward-looking statements, whether as a result of new information, future events or otherwise.

The format for today's call will include opening remarks for Intercept's management team, and then we'll open the lines to take your questions. We would like to note that we have slides accompanying today's call and webcast, which are available on the Events section of our IR website, or can be streamed along with the webcast. At this time, it is my pleasure to turn the call over to our CEO, Dr. Mark Pruzanski.

Thank you, Mark, and thanks Thank you Mark and thanks for everyone to for joining us on our conference call and webcast. I am going to provide you with a 2016 corporate update. Lisa Bright, our chief commercial and corporate affairs officer, will make a few comments on our ongoing commercial preparations. Barbara Duncan, our chief financial officer, will then discuss our financial results and cash position. Also available to answer questions on this call are Rachel McMinn, our chief business and strategy officer, and Richard Kim, Senior Vice President and head of US Commercial.

Before I begin, I would like to remind you all again that we have slides accompanying today's call, as Mark just mentioned. These are being streamed along with our webcast or can be accessed through the IR section of our website. Given our ongoing negotiations with regulatory authorities, we will not be discussing our regulatory interactions or respond to questions on this topic.

2016 is a momentous year for Intercept as we transition to a commercial stage biopharmaceutical company. Key highlights year-to-date include announcement of our conditionally approved brand name Ocaliva for our lead drug candidate of obeticholic acid, or OCA; completion of a successful FDA advisory committee for Ocaliva for primary biliary cholangitis, previously known as primary biliary cirrhosis, or PBC, on April 7; presentation of multiple scientific abstracts at this year's European Liver Disease meeting, EASL; completion of various precommercial activities to support our anticipated June US launch of Ocaliva for PBC; continued enrollment in our various clinical trials; our Phase 4 PBC outcomes study COBALT, our NASH trials REGENERATE and CONTROL; and our Phase 2 primary sclerosing cholangitis and biliary atresia studies, AESOP and CARE.

Starting first with our advisory committee meeting. As many of you know, on April 7, the FDA's Gastrointestinal Drugs Advisory Committee met to review and discuss our new drug application for Ocaliva for the treatment of PBC patients inadequately responding to or intolerant to the standard of care therapy UDCA. The committee voted 17-to-0 in favor of accelerated approval of Ocaliva. We are exceptionally pleased with the advisory committee's strong support for Ocaliva, especially given the extent of unmet need that exists in the PBC patient community. As a reminder, there have been no new treatments in nearly 20 years for patients with this progressive liver disease. And while the FDA is not bound by the advisory committee's guidance, the agency does take their feedback into account when reviewing investigational medicines. We continue to work collaboratively with the FDA as the agency completes its review of Ocaliva and we move towards our May 29 PDUFA date.

I'd like to take this opportunity to address some questions that we have received following the advisory committee. If you refer to the slide that is up now, there are two broad ways to think about risk stratification in PBC -- first, histology and, second, biochemistry. Starting with histology, this classification has relevance to one of the questions FDA raised at the AdCom, where the agency asked panelists to discuss a proposed Ocaliva dosing scheme in patients with decompensated cirrhosis and the potential safety of Ocaliva in this setting. While it is no longer standard of care to biopsy PBC patients today, it was more commonplace prior to UDCA, biopsy is still used today in some cases to stage high risk patients.

Based on the large data cohort from the global PBC study group and backed up by our market research, the majority of PBC patients who have been biopsied have mild or moderate disease by histologic staging. An estimated 16% of patients have cirrhosis, and only about 3% are estimated to have advanced or decompensated cirrhosis, as you can see in the pie chart on the left.

Separately, the panel discussed the adequacy of evidence for use of Ocaliva in moderately advanced or advanced patients as defined by the so-called Rotterdam Biochemical Criteria. As you can see in the pie chart on the right, advanced patients as defined by the Rotterdam criteria constitute less than 10% of the PBC patient population. We are continuing to work with the FDA in relation to PBC staging and expect these criteria to continue to be primarily relevant for use in the conduct of clinical trials.

On this next slide, we've also received several questions on how data in PBC patients relates to our ongoing work in NASH, specifically with respect to hepatic events linked with higher doses of OCA in PBC observed in PBC patients receiving higher doses of drug. As laid out in detail on this slide, PBC and NASH are very distinctive diseases with distinct etiologies, sites of injury and disease pathology. While both PBC and NASH eventually lead to fibrosis, cirrhosis and increased risk of hepatocellular carcinoma, the patient experience between the two is very different. In the next three slides I'll walk you through the rationale for why we would caution against extrapolating dose findings for Ocaliva in PBC to other liver diseases, like NASH.

In a healthy person, bile is secreted from the gallbladder during mealtime into the intestine and then is reabsorbed and taken up by the liver and taken up at a cellular level in the liver. Bile is then actively secreted out by the bile ducts, channeled by the common bile duct for storage in the gallbladder. This is the intrahepatic recirculation of bile in which there is minimal bile accumulation in the liver. PBC is a cholestatic liver disease, where the autoimmune mediated destruction of bile ducts leads to progressive impairment of bile flow, or cholestasis. It is this backup of bile, a natural detergent and resulting abnormal hepatic exposure that leads to cell death, or apoptosis, fibrosis and eventually cirrhosis. On the other hand, in NASH and other noncholestatic liver diseases, most patients maintain normal bile flow until very late stages of the disease, i.e., during the development of advanced cirrhosis. Because OCA is a natural bile acid analog that circulates with the bile pool, it also has a higher predicted concentration in a cholestatic liver than in a noncholestatic liver, as illustrated in the cartoon.

On the next slide we present some data illustrating this point. In these two studies, hepatic bile acid concentrations were compared in different disease states to normal healthy livers. As you can see, bile acid concentrations in pretransplant patients with cholestatic cirrhosis were nearly four times higher than normal, and approximately two times higher than pretransplant noncholestatic patients with cirrhosis.

On the right side panel we see results from another study showing the precirrhotic NASH patients have hepatic bile acid concentrations only 1.4 times greater than normal. Tying this together, OCA concentrations would be predicted to be lower in precirrhotic NASH patients relative to patients with cholestatic liver disease.

Finally, on the next slide, slide 10, we show an illustrative example of a 25 milligram OCA dose. As you can see on the right, in the setting of advanced cholestatic cirrhosis, the dosing equivalent of 25 milligrams is approximately 90 milligrams. We believe it is this difference in effective concentration that led the FDA to express concern regarding appropriate dose selection in patients with advanced PBC and hepatic impairment. Meanwhile, a 25-milligram dose in a precirrhotic NASH patient would not be expected to be materially different. While these data are based on very detailed modeling by both the Intercept team and FDA, it is also important to note that we have not observed notable safety concerns with both the 25-milligram and 50-milligram doses in NASH patients from our Phase 2 study.

And then recalling in the FLINT trial, where approximately 140 patients were exposed to a 25 milligram dose for up to 18 months, there were no observed differences in hepatic events versus placebo. On the contrary, there were marked improvements in both liver histology and multiple biomarkers of liver function.

Moving to EASL, here on slide 11, while there were no groundbreaking new data presented at this year's meeting, the meeting was an important time for our medical and commercial teams to engage with key stakeholders ahead of our anticipated PBC launch. We presented four clinical abstracts on PBC and sponsored a continuing medical education, or CME symposium on the disease. In addition to PBC, we had three clinical abstracts in NASH, one abstract in biliary atresia, and a sponsored CME symposium on NASH.

We also announced awards in our Practice to Policy program. Practice to Policy offers financial support for local and national projects in PBC that create valuable insights, evidence in learning for the wider healthcare community across Europe, United States and Canada. In its inaugural year, the grants program received 36 applications from 11 countries. From this diverse group of submissions, a total of 20 winning organizations will receive Practice to Policy grants in 2016. The winning institutions include academic centers, healthcare organizations and patient advocates, reflecting the key stakeholder groups that can play a role in improving PBC care.

I'd like to shift now to our NASH efforts. Enrollment is continuing at pace in our Phase 3 REGENERATE trial, our registrational study of OCA in NASH patients with fibrosis. We are providing guidance today that we expect to have this trial fully enrolled in the first half of 2017. As a reminder, assuming positive results, we plan to file for accelerated approval following interim data at 72 weeks of treatment, and the trial will continue on to confirm clinical benefit driven by a predefined number of liver-related events. Enrollment is also continuing in our Phase 2 CONTROL trial, which is prospectively evaluating the impact of statin therapy added to OCA on LDL levels and the effect of OCA on lipid metabolism. We are providing guidance today that we expect this trial will be fully enrolled by year-end. We are continuing to plan for additional clinical trials to broaden our NASH development program including a cirrhosis study and a study dedicated to evaluate promising noninvasive technologies.

Finally, I wanted to provide an update on the status of certain publications. First, our POISE Phase 3 manuscript is under active review, and while trying to predict timing is challenging, we currently expect publication in the second half of this year. A manuscript is important for providing physicians with more detail beyond the package insert for our planned commercial launch. In addition, we wanted to highlight a recent publication of healthy volunteer data for OCA, which was published last month in the Journal of Diabetes, Obesity and Metabolism. This paper provides some additional insights into OCA's effect on lipids, although any conclusions need to be caveated by the small nonprospective nature of the results.

Key highlights include the magnitude and direction of lipid changes in healthy volunteers appeared similar to what we observed in the FLINT study of NASH patients. Lipid changes were independent of dose, and lipid subfraction analysis showed that the OCA-induced LDL increase is driven by an increase in large LDL particles, while small dense LDL particles were left unchanged. While it is tempting to extrapolate these findings in healthy subjects to NASH patients, it will be important to wait for results from the CONTROL study to have a clearer understanding of OCA's lipid effects in the NASH study. I would now like to turn the call over to Lisa Bright, our chief commercial officer, for a few comments on our commercial efforts.

Thanks, Mark, and good afternoon, everyone. As we move toward our May 29 PDUFA date, there is a powerful level of excitement in our US commercial team to launch Ocaliva, which if approved would be the first new medicine for patients with PBC in 20 years. I would really like to thank our 45 territory business managers, our managed markets team, and the broader commercial team, who have been working together to develop an aligned cross-functional plan, as highlighted on slide 13. Our focus is really in four key areas. So, firstly, we have to communicate the unmet need in PBC. A key cornerstone of our strategy for the foreseeable future will be to continue disease education programs to help physicians understand findings from large PBC datasets both (inaudible) PBC and the UK PBC, and the importance of tracking alk-phos in this disease. These large datasets have shown that obtaining lower alk-phos levels is correlated with lower risk of liver-related complications, including transplanational death. For example, we have executed actually now 100 programs focused on raising general awareness of the PBC disease state and current treatment approaches. This initiative has reached approximately 1,000 physicians, and we are proud to have been part of increasing the awareness in the healthcare community of this important orphan disease.

We must prioritize our sales efforts for high volume prescribers, and cumulatively we have profiled over 4,000 of our core potential customers which has helped us to continue to refine our knowledge of how PBC patients are treated, how many PBC patients there are, and where they are located in the US. It is essential we achieve broad payer coverage, and our managed markets team has performed extensive payer research with national and regional payers to enhance our understanding of how they will cover and reasonable for PBC patients. We completed three national advisory boards, two national mock P&T simulations, and have had over 50 interactions with key regional and national payers as broad recognition and intent to cover patients within the POISE population.

Finally, we have to enable patients and physicians to have a great experience with Ocaliva. Good examples of some of our initiatives include websites and a mobile app to help patients monitor their own alk-phos, as well as what we expect to be a best-in-class patient services program to help guide the transition on to treatment. With less than a month to anticipated approval, we are ready to launch in the US. We are ready post-approval to communicate the tremendous scientific innovation that Ocaliva represents. In Europe, we continue to plan for a late 2016 approval, and continue to anticipate our first sales in 2017 on a country-by-country basis. We are making great progress across multiple fronts outside the US. We have worked to make sure we have robust plans ready for launch in multiple markets, and we are devoting extra focus and resolve on showing successful market entry in key early launch markets, particularly France, Germany, the UK and Canada. And, of course, we continue to work closely with the relevant health technology assessment bodies. I would now like to hand over to Barb Duncan, our chief financial officer, to talk through the financials.

Thank you, Lisa, and good afternoon, everyone. Please refer to our press release issued earlier today for the summary of our financial results for the quarter ended March 31, 2016. We ended the quarter with $556.9 million of cash, cash equivalents and investment securities available for sale on our balance sheet. Our detailed financial results are contained in our press release issued earlier today. Our first quarter 2016 non-GAAP adjusted operating expense was approximately $71.9 million. This amount excludes the one-time $45 million net settlement for the purported securities class action lawsuit, noncash stock compensation expense of $10.2 million, and depreciation expense of $684,000. In regards to the settlement for the purported securities class action, this is a one-time expense recognized in our GAAP G&A expense for the first quarter of 2016. We anticipate this payment will be made in the second quarter of 2016.

The increase in our expenses in the first quarter of 2016 versus the first quarter of 2015 was a result of infrastructure buildout supporting our general corporate activity, our precommercialization activities in the US and internationally, and extension of our research and development efforts. For the full year 2016, we reiterate our adjusted operating expense guidance in the range of $360 million to $400 million. Now, this excludes the $45 million net settlement for the purported securities class action lawsuit, stock-based compensation and other noncash items. These expenses will support the precommercialization activities of our US and international teams, and commercialization expenses anticipated in post-approval. They will, in addition, support a growing clinical program that include the broadening NASH program, including the REGENERATE and CONTROL trials, continuation of the PBC outcomes, and long-term safety extension trials, phase 2 trials in PSC and biliary atresia, as well as our Phase 1 program for our next clinical candidate, INT-767. As a reminder, we expect operating expenses for the year to be weighted in the second half driven by increased R&D activities, as well as our anticipated US Ocaliva launch expenses.

While we are not providing any sales guidance at this time, we would like to reiterate. Given our May 29 PDUFA date, we do not expect material sales in the second quarter. It will likely take several weeks from first prescriptions written to reimbursement and fill prescriptions. Ex-US, we do not expect sales until 2017, and these will be on a country-by-country basis as we obtain pricing and reimbursement.

Adjusted operating expenses and non-GAAP financial measures. We anticipate that other than the net $45 charge for the purported shared litigation, stock-based compensation expense will represent the most significant noncash item that is excluded in adjusted operating expenses as compared to operating expenses under GAAP. Please see our press release from today for reconciliation of our historical non-GAAP adjusted operating expense to GAAP operating expense. With that, I'll turn it back to the operator for questions.

(Operator Instructions) Our first question comes from Michael Yee of RBC Capital Markets. Your line is open.

Two questions. One is on the enrollment of REGENERATE. That was new information today, so I appreciate -- I think we all appreciate that guidance. Can you talk to what it assumes, what are the push-pulls in that guidance? How would the time of enrollment be impacted by what things, and does that assume competitive drugs out there that are enrolling? Maybe you could talk to that a little bit. And then the second part of the question is, in terms of the competitive environment out there, obviously fibrates, PPARs were just pulled from the cardiovascular market. Do you think that impacts the perception of the class and the profile of those drugs? Maybe you could talk a little bit about that and the competitive landscape that is playing out there. Thanks.

Sure, Michael. I'll take the first question and I'll ask Rachel to take the second one on fibrates. So, with respect to REGENERATE, yes, we felt that we were in a position now to provide guidance for proficient of enrollment in the first half of 2017. As you know, this is a huge trial, first Phase 3 NASH trial of its kind, and we're looking to enroll to support the interim analysis, 1,400 NASH patients with stage 2 fibrosis, and then another 600 for 2,000 in all to follow through to outcomes to confirm clinical benefit, so, really a pretty huge study. Earlier this year we weren't prepared to provide guidance just because we didn't have the visibility on trajectory given the relatively long lead-in period for screening and the ramp-up in operationalizing the study with a target of up to 300 centers worldwide.

So, I would say just in terms of the dynamics, we factored everything that feeds into the rate of enrollment including competitive dynamics out there. There is right now one other Phase 3 that is being mounted, and a number of Phase 2 studies from various companies, and obviously all these compete for patients. Now, that said, we believe that we really have a uniquely differentiated opportunity for investigators and the patients they care for to enroll in the REGENERATE trial. Based on the unprecedented data from the FLINT study showing uniquely the ability of OCA to not just stop it but in a significant proportion of patients actually reverse fibrosis, which, as you know, is the single most important histopathologic feature driving adverse clinical outcomes. So, we feel we've got good positioning and feel -- are happy to provide guidance today. And I'll let Rachel answer on fibrates.

Yes, so, Mike, thanks for the question. You're right to point that out. Just recently the FDA took the unusual step of withdrawing the indication for fenofibrate on top of statins and the cardiovascular certainly -- to treat high cholesterol. But the underlying claim obviously is about cardiovascular benefit and, as you probably are aware, there is -- data has been out for some time now that when you add a fibrate on top of a statin that there is no improvement in cardiovascular outcomes. There has been a whole bunch of other datasets that have added to this and have led to not just fenofibrate but other drugs being pulled as well, niacin specifically.

I think the main perception issue that we think this is going to impact is really those competitors going with a fibrate-based mechanism. As you know, fibrates act against PPAR alpha or alpha/delta, or alpha/delta/gamma, depending on which class -- you know, which specific molecule you're talking about. Some companies have made bold claims that they are cardio-protective, but certainly the FDA's action would suggest otherwise.

Okay, very helpful. So, it definitely adds to a lot of uncertain there. Appreciate it.

Sure. Next question, please.

Our next question comes from Alethia Young of Credit Suisse. Your line is open.

In the case of the enrollment, is there a limitation on how many patients can be enrolled at certain sites? And then I have another question.

No, there is no such limitation on patients at sites.

Okay. And then as far as like PBC, maybe can you talk a little bit, for Lisa probably, about the EU and US market and how to think about that, and in particular, is there any kind of information you can provide us on like compliance or persistence, how to think about that in our model?

We will turn the US question over to Richard Kim, who can talk to that, and then Lisa can come back and answer if there is any specific differences in that.

Hi, there, Alethia, it's Richard Kim. So, yeah, we've learned quite a bit about the marketplace here in the US, you know, from prevalence all the way to the number of patients we think are eligible for POISE. As far as your specific compliance question is concerned, when we actually look at what UDCA has done historically, it's in the range of about 75% compliance. So, we use that as a good barometer as we are learning through things. So, we've used a lot of historical data from UDCA and other chronic care medicines as well.

And in the case of thinking about persistence, like, potential discontinuation, do you guys have a way to think about that?

Very similar as to what UDCA's persistence, it's a little bit below that 75% mark, probably a little bit closer to --

Okay.

-- (inaudible)%. And once again, as you think about the patients that POISE actually studied were all exposed previously to UDCA, so we've used that to gain a lot of our insights.

Yes, and actually, some of these issues are going to be the same. I think it's interesting that these patients who have been on UDCA, you know, that consistency rates, we anticipate that we're going to see if patients are moving on to Ocaliva that we would assume that they would see similar levels of persistency and compliance.

Great, thanks.

Our next question comes from Ying Huang of Bank of America Merrill Lynch. Your line is open.

So, may first on the enrollment. Can you just confirm whether you are referring to the 1,400 patients or the 2,000 patients when you mentioned that it will be complete in first half of 2017?

Yes. No, I was referring to the 1,400 patients, because those are the -- that is the critical cohort to support accelerated approval.

Okay, great. Thanks for that. And secondly, I have a question on maybe your discussion with payers, because what we have seen so far with some of the recent launches is that the drug may work very well and very effective in the clinical trial setting, but we have seen unprecedented, I guess, pushback from payers. So, I'm just curious what you have heard from the payers, broadly speaking. I'm not asking to divulge any information on pricing or anything, but broadly speaking, what do payers view the benefit and then how do they think about reimbursement pending FDA approval? Thanks.

Hi, it's Richard Kim again. So, we've, as Lisa mentioned, we have had numerous payer interactions, and to be very candid, I think when you look at what the payers have said, PBC isn't a disease that they've had a huge amount of knowledge on. So, as you start to think about what we've learned there, as we've educated them on the disease, I think a couple things. One, they have -- once they understand the context, they definitely do see alkaline phosphatase as a good surrogate marker for the disease. And I think a lot of questions come down always with most payers is really to tie up the marketplace. And I think by really confirming the fact that the disease is really focused on diagnosis by both using alk-phos and AMA, I think a lot of concerns around sort of bigger patient number of groups have sort of somewhat alleviated. But I think in general I think they acknowledge that there is unmet need for patients who are not well controlled or intolerant to UDCA. And as we think about payers, we probably really focus on the likelihood that they will sort of replicate the POISE population for who they would focus in on in their thinking and when they evaluate the drug at P&T. So, that's sort of a high-level explanation of what we've learned so far.

Okay, thank you.

Our next question comes from Salveen Richter of Goldman Sachs. Your line is open. If your telephone is muted, please unmute. Okay, our next question comes from Alan Carr of Needham & Company. Your line is open.

You mentioned earlier, Mark, about the lipid study, or data from a Phase 1 study around lipids in healthy volunteers, and you said you were reluctant to extrapolate, but I wonder if you could comment about that and to the extent that it might be informative. And then, also, I guess, can you give us an update on a couple of those early stage programs, 767, 777. With 767, I think you've given the guidance that you'll have that one done by the end of the year. I'm wondering what you're looking for there, what sort of profile you're looking for and where you might take it after that? Thanks.

I'll ask Rachel to answer the question on the lipid study and I'll take 767.

Yes, I don't know if you've had a chance to read through the publication yet, but Mark summarized kind of the key conclusions. But I think the main thing here is that this is healthy volunteers. We can't say for sure that it's exactly like NASH, but like you mentioned, we will need to wait for control. I know that the investment community in particular has had a lot of interest in better understanding OCA's potential effects on lipid subfractions, and so you see within that publication kind of one of the key findings. As you know, there is an LDL increase associated with OCA administration. That level of increase looks very similar to what you would see in a NASH population. And then the subfractions, we don't have that data in NASH, but what we do have is in healthy volunteers, you can see that the increase is driven exclusively by an increase in large LDL particles as opposed to these small, dense LDL particles. We can't say, again, what's the significance of that. I think there is a lot of sensitivity around small, dense LDL, just given its association with higher risk of cardiovascular events. That doesn't mean that shifting it around one way or the other would have an impact on that, but I know that it's really more of interest in terms of mechanism and for people who have been following that particular field. So, in terms of the dose effects, there was no dose change in that study. Again, we'll have to see with more patients in a NASH population whether that still holds to be true. But stay tuned as we get more data from CONTROL in 2017.

So, Alan, with respect to 767, just to remind people listening in, this is a dual FXR and TGR5 agonist. It's about three-fold more potent on FXR than OCA, and also has activity on another bile acid receptor, TGR5. And the molecule has looked better than OCA in every animal model we've put it into in liver, intestinal and kidney disease. So, it's a very interesting molecule. It is, of course, another bile acid analog. And going through Phase 1, as you mentioned, with completion expected by year-end. We're not prepared at this point to give any guidance beyond that in terms of where we'd like to position the molecule. But, again, are very excited about it. And just to again highlight the fact that we're not aware that any other -- obviously other companies are interested in these targets, especially FXR, but we are not aware that anyone other than Intercept has the capability of selectively and potently targeting FXR and TGR5 with natural bile acid analogs, which we continue to believe have superior properties, so far at least, to synthetic, purely synthetic compounds targeting these receptors.

Okay, thank you very much.

Our next question comes from Ritu Baral of Cowen. Your line is open.

Hi. This is Kevin Patel for Ritu Baral. For REGENERATE, how was this study with respect to dropout and has the titration regimen had an impact, the expected impact on these factors? And then, secondly, for CONTROL, what do you think could be top line versus for a medical meeting?

I think you asked about dropouts is the first part of your question on REGENERATE, and we're not going to provide any details with respect to an ongoing study. But if you refer back to the FLINT study, which was of equal duration, there were very few dropouts. The one tolerability issue we saw in FLINT OCA was pruritus, which with an incidents of about 1 in 4 of patients, mostly mild moderate, but only led to one discontinuation, and there was very good compliance and completion of the study and repeat biopsy right. So, we're hoping for the same in REGENERATE. And titration is not happening in REGENERATE. We are testing two doses, the 25-milligram dose that we carried forward, and also a lower 10-milligram dose, but there is no titration regimen there. With respect to CONTROL, I'll let Rachel talk to that.

I'm sorry, can you just repeat the question? You were a little bit hard to hear on CONTROL.

Oh, just what do you think could be top line versus, say, for medical meeting data?

Oh, I think it's too early to provide guidance on that, but if you look at the study, it's relatively a short design timeline, so you should be thinking about -- based on our enrollment guidance, sometime in 2017. We would likely provide some kind of top line disclosure as well as present it at a medical meeting, but we're not prepared to give any specifics on today's call.

All right, thanks.

Our next question comes from Ian Somaiya of BMO. Your line is open.

Hi, good afternoon. It's Matthew on for Ian. First, just a housekeeping question as it relates to REGENERATE. You mentioned 300 sites as the target. Can you confirm that all those centers are now online? And then, secondly, I just was wondering if you could provide an update on where you are with your discussions with FDA regarding the Phase 2 trial in cirrhotics? I know the study was expected to start this year, but it doesn't seem like it's on Trials. I doubt you'll give any guidance right now, but maybe you could at least give some sense as to when you might be prepared to talk about it?

Yes, with respect to your question about site activations, we don't comment. We don't give blow-by-blow on our studies, but we are well underway with the study worldwide and enrolling patients in both US and Europe. With respect to the NASH cirrhosis study, we are in active discussion with FDA about finalizing the design for the study, so it's still in the planning stages.

Yes, and just a quick follow-up comment there. I don't think you should consider the cirrhosis study as really having any specific regulatory issues of note. It's really more priority for the Company to really execute on our PBC NDA as well as our REGENERATE study. So, it's really just been more of a focus for the Company to prioritize those initiatives. With the cirrhosis study, certainly a high priority, but coming after those two.

Okay, sure. Thank you.

Our next question comes from John Eckard of Barclays. Your line is open.

Hi, guys. This is Brian sitting in for John. Thanks for taking the question. Based on your projected commercial spending, would it be reasonable for us to assume that the OCA PBC commercial program could be cash flow-positive before the potential approval in NASH? By commercial program, I mean the PBC revenues minus commercial sales and expenses in COGS. And a second question, a mechanistic one on OCA for David. Could you remind us of the effect OCA has on FGF19 production, and based on your understanding, what are the biological or clinical observations for OCA in NASH that would be driven by FGF19? And what are most likely driven directly by FXR signaling?

Sure. I'll ask Barbara to take the first question and I'll take the question on mechanism.

Yes, on the first question, sadly I'm going to disappoint. We don't give out any, sort of, forward guidance in terms of our expenses. I mean, the only guidance we give out is sort of for the 2016 time period, which we have reiterated today in terms of the OpEx guidance.

And with respect to mechanism in FGF19, yes, this is a targeting of FXR. It's secreted in the gut, and we have demonstrated a very clear dose-dependent induction of FGF19 in our clinical trials with OCA. You were then asking about how this, how FGF19 would figure into NASH as opposed to FXR, and again I don't think that is very well known. There is some literature on the effect, the biologic effect of FGF19 with respect to metabolic regulation, but it's very difficult to separate it from FXR itself.

I have a little bit of a follow-up on that. There has been some data published last year by a company that was looking specifically at an FGF19 analog, and you could see there that the ALP reduction was actually quite modest, so efficacy was quite limited. I think that does provide some suggestion that there are mechanisms beyond just FGF19 alone. And we certainly have looked at our own data preclinically, for what that's worth, and compared it to others claiming to have an FGF19 specific driven mechanism. And our preclinical data shows substantially greater activity, at least in terms of some transcript data suggesting that hitting FXR is going to be very -- you know, broadly, it's going to be very important from an efficacy perspective.

Great. Thank you very much.

Our next question comes from Joseph Schwartz of Leerink Partners. Your line is open.

This is Brett Larson in for Joe. Following up on an earlier question. In your discussions with payers so far, how do they intend to define an adequate response to ERSO in terms of duration and/or reduction in ALP before approving a patient for OCA use?

Hi, it's Richard again. I think that's a great question. So, I think once again, our anticipation is that the payers will basically follow obviously what the label says and what the POISE criteria were as well. So, as you know, for POISE we had a 1.67 times upper limit of normal sort of entry criteria to be in it. I think obviously we'll wait upon the label depending on if anything other than ALT, such as bilirubin, is incorporated, but I think they'll likely follow the guidance of both the label and the study criteria as well.

Okay, great. That's really helpful to know. And then following up as well, do you have any plans in place to offer a commercially insured patient co-pay assistance program currently with launch of OCA if approved and, if so, what would that look like?

We obviously know that for all medications, patient affordability is a really big issue. That's really a big focus for us. So, as Lisa mentioned, we are developing what we hope to be a really strong patient services program, and we are actively looking at issues such as commercial co-pays that we can help to address as well. So, no final decisions there yet, but it's obviously something we're very cognizant around the patient affordability as well.

Okay, great. Thank you very much.

Our next question comes from Jeff Hung of UBS. Your line is open.

Thanks for taking the question. Can you provide any updates on what you're hearing from payers on access at launch, or what are you anticipating?

Hi. It's Richard again. I think as far as access at launch, I mean, what we would anticipate is, as for most orphan specialty product is there will be some coverage. It will obviously take us some time to go through the P&T process, and hopefully having a potential PDUFA date at the end of May gets us into some of the summer months as well. So, we would anticipate a reasonable amount of coverage. Obviously, that could be a lot more work to go through. And then we would anticipate sort of in and around that three-month time period post-approval is when we would start to see some more of the commercial coverage through P&T review. And, of course, the Medicare we are expecting up to 180-day timeline to go through that. So, we would anticipate some access early on, but obviously the coverage as far as getting out formally will take us months to develop as well.

Thanks, that's helpful. And then in your pre-launch activity, does your managed market seem to -- has there been any interaction with key regional and national payers? So, on average, how many interactions do you have for payer and typically how many interactions are needed [for each] payer ahead of their decision on coverage? Thanks.

I think for the payer landscape, as mentioned earlier, a lot of the payer interactions have really been a focus on explaining the disease, similar to what we're doing with the healthcare provider audience as well. And, by the way, that number is probably closer to, what, 60 or 65 right now, even in the last week and a half. So, we really focus on really educating the disease with both our medical team and our payer group as well. So, I think that's really been a good foundation. As I mentioned before, once people really understand ALP is a reliable surrogate marker, they understand how the patients are diagnosed, I think it's done a lot to sort of really bring PBC forward in people's minds as well. So, we'll continue with dialogues and obviously up through the approval and [Ocaliva will be pretty busy, touch] with once we're approved as well.

Thanks.

Our next question comes from Liisa Bayko of JMP Securities. Your line is open.

Hi. Actually, the majority of my questions have been answered, but perhaps just a quick one on what -- can you give us a rough screen failure rate for the trial, for REGENERATE? Thanks.

Yes, Lisa, we're not providing any metrics on an ongoing study like that, but suffice to say that this is a histologic screening study, so we've got to identify patients with definite NASH with stage 2 and 3 fibrosis, and enough of an activity score of at least 4. So, clearly there are going to be patients who don't meet all of those criteria are going to screen fail.

Thanks.

Our next question comes from Salveen Richter of Goldman Sachs. Your line is open.

Hi, guys. This is actually Tom on for Salveen. Thanks for taking the questions, and sorry about the technical issue earlier. Just another question on controls. I know this is a short trial and it's mainly designed to look at with the metabolism, but is there going to be any sort of read on efficacy on that, or you're not even collecting that data?

So, a couple of points. One is that probably the key focus is less on -- lipid metabolism is obviously a key endpoint, but I think the other really critical outcome of this study is the impact of statins on LDL. So, I would just highlight that as something that's probably got more relevance to just helping physicians understand how to use statins in combination with OCA. In terms of efficacy, the patients enrolled are biopsy-proven NASH patients. They will be -- the eligibility criteria are from earlier stage fibrosis up through compensated cirrhosis, so we'll get a broader view of that. We certainly are collecting data and we'll follow patients in a long-term extension study after the 16-week LDL point. But there won't be a placebo after that first 16 weeks. So, I think from an efficacy perspective what we would be able to garner would really be on a basis relative to their baseline as opposed to placebo. So, it will have to be taken in that context.

Okay. And you would plan to share that data or --

Well, so, again, the top line data and the data that would be available in 2017 would really be around the primary endpoints, which would be statin impact as well as lipid metabolism. Any efficacy reads, there is not going to be much to say unless you're looking at surrogate markers of efficacy, like ALT, which [I've been told have] limited relevance for clinicians. But in terms of future biopsy data, that would be much further down the road. So, it could be collected. Certainly, patients will be followed and it may be of interest, but certainly wouldn't be sort of the primary focus of that dataset.

Okay, got it. Thanks again.

Our next question comes from Joel Beatty of Citi. Your line is open.

Hi, thanks. This question is actually on PSC. A couple months ago there was a workshop for the FDA ASLD on trial endpoints. Were there any takeaways from that meeting to help with the outlook for OCA?

Yes, I'm glad you asked the question. So, PSC, primary sclerosing cholangitis, I call it a brother disease to PBC, autoimmune cholestatic liver disease, about a third as prevalent with no approved treatments and a very nasty disease course. The workshop that FDA hosted was very informative and highlighted the fact that the agency is really engaged in working with industry and sponsors and the academic hepatology community to try to come up with a viable regulatory path. I think that where we came out, because of the very, sort of stop-and-go nature with flares in this disease that result in alkaline phosphatase spiking during flares, it was determined that although clinical data so far with alk-phos is definitely intriguing and this biochemical marker should be used as an endpoint probably is not sufficient. So, it will be coupled with a clinical endpoint, which could be another surrogate endpoint. It just isn't clear yet, so we're thinking that what will emerge is probably a dual endpoint in this disease.

One thing that we put out today was guidance on AESOP, our ongoing Phase 2 study enrolling 75 PSC patients, and we're guiding completion of enrollment by year-end this year. So, we expect to have a data readout next year, and at that point we'll determine the course forward in this indication.

Thank you.

And, Operator, we have time for just one more question.

Okay. Our next question comes from Brian Skorney of Robert W. Baird. Your line is open.

Hi. This is Nina on for Brian. I just have a question again about the OCA lipoprotein metabolism study you published in healthy volunteers. So, I know you said that there was an increase in large LDL particles but no change seen in the smaller, dense particles. Can you tell us a little bit about what sort of preclinical data you might have that might indicate kind of why that's occurring? And that's all, thanks.

Honestly, no, we don't have that kind of data. I mean, I would just back up and say there is not really a good translational model for human lipid data. If you look at rodent data, you'll see that OCA has very different effects on lipid particles, so I'm not sure that that would even be really feasible to study based on the models that are currently available.

Yes, and I would just add that even in primate models that have been published, OCA lowers cholesterol, so really there is no good interest PCs comparison there and anyone evaluating at least an FXR agonist I think really needs to see what happens in the clinic and ultimately in actual patients. Because as we've shown just comparing PBC with NASH, OCA effects on LDL and other cholesterol fractions is very different. And that's why we're cautioning against read-through from the healthy subjects in the Phase 1 study, while at the same time acknowledging that the pattern there with respect to direction of LDL increase did match up well with what we observed in NASH. So, with that, I guess we're out of time, and I just want to thank everyone who has listened in today on the call.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.