Intercept Pharmaceuticals Inc (ICPT) 2016 Q2 法說會逐字稿

Thank you for joining the Intercept Pharmaceuticals second quarter results conference call. At this time, all participants are in a 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 two weeks from today's date.

At this time, I would like to induce Mr. Mark Vignola, Intercept's Director of Investor Relations. Please go ahead.

Good morning and thank you for joining us on today's call. 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 displayed at timelines for the commercial launch of Ocaliva in primary biliary cholangitis of PBC. Market estimates relating the PBC and the commercial potential of Ocaliva in the treatments of PBC, 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 expectation of management as of today.

Our actual results may differ materially from our expectation. Investors should carefully read the risks and uncertainties described in our reports filed with the SEC, including the Risk Factors section of the most recent annual report on Form 10-K and Intercept's other filings with the SEC. We assume no obligations to revise or update forward-looking statements, whether as a result of new information or future events or otherwise.

The format for today's call will include opening remarks from our CEO, Mark Pruzanski; our President of International, Lisa Bright; our Senior Vice President and Head of US Commercial, Richard Kim; and our Chief Financial Officer, Sandip Kapadia. We'll then open the line up the call to take your questions. Rachel McMinn, our Chief Business and Strategy Officer is also available to answer questions during the Q&A portion of the call.

At this time, I'd like to turn the call over to our CEO, Dr. Mark Pruzanski.

Thanks, Mark, and good morning. Thank you for joining us on our second quarter financial results call. The second quarter was a transformative one for Intercept, marked by the accelerated approval and initial commercial launch of Ocaliva in the US for the treatment of primary biliary cholangitis or PBC in patients inadequately responsive or intolerant to UDCA. Other key recent highlights include the completion of a $460 million convertible notes financing in July and the hiring of Sandip Kapadia as our Chief Financial Officer.

As we look to the future, our key strategic objectives are clear. We're focused on establishing and maintaining a leadership position in PBC, establishing and maintaining a leadership position in NASH and building a liver disease focused product pipeline.

Starting first with PBC. The approval of Ocaliva in the US for the treatment of patients with PBC was a momentous event, not just for the Company, but also for patients with PBC who have been without a new therapeutic option for nearly 20 years. As a reminder, Ocaliva was approved for the treatment of PBC in combination with UDCA in adults with an inadequate response to UDCA or as monotherapy in adults unable to tolerate UDCA.

The approval was under the accelerated approval pathway based on the reduction in the liver enzyme outline alkaline phosphatase or alk-phos. Alk-phos is elevated in PBC and is used by physicians to both diagnose and monitor progression of disease. While it's still very early days, we are pleased with the progress of the launch to date.

Our organization was well prepared. Within a few days of approval, we had Ocaliva shipped to specialty pharmacies, and our territory business managers have been reaching out to key hepatologists and gastroenterologists. Richard Kim, our Head of US Commercial will share more details with you shortly on how the launch is progressing.

With regard to Europe, we remain on track for EMA approval near year-end and continue to prepare for an initial launch in key European countries in 2017. Commensurate with regulatory requirements for accelerated approval, we are currently conducting a Phase 4 confirmatory outcomes trial called COBALT. As you may recall, based on the post marketing commitments requested by FDA, we are currently considering several study modifications to COBALT to broaden the spectrum of disease represented by the study population. We plan to submit an updated protocol to both FDA and EMA prior to year-end, but this one will not impact ongoing enrollment in study conduct. Finally, on the topic of PBCs. We look forward to the publication of our Phase 3 POISE results in a near term in a high-profile medical journal, which is important for many of our stakeholders.

Moving now to our NASH program. Enrolling our Phase 3 REGENERATE trial for NASH patients with advanced fibrosis remain the top priority for the Company. We are reiterating our objective to complete enrollment for the interim analysis patient cohort within the first half of 2017. And therefore, we'd expect results from the interim analysis to be available in 2019.

As we've mentioned before, REGENERATE is a very large and complex global NASH trial involving serial liver biopsies, including one at baseline and the second biopsy at 18 months to support the interim analysis. In addition, as it has been seen in other NASH fibrosis studies, many patients screen turned out not to be eligible for the study given that we are only enrolling patients showing on biopsy to have both definite NASH and advanced fibrosis but not cirrhosis. As we stated previously, we believe that the interim analysis based on full primary histologic end points, will support marketing approvals in the US and Europe. And assuming positive results from the interim analysis, we will plan to file for label expansion with the FDA and EMA.

With regard to our additional NASH programs, we continue to target the completion of enrollment of the ongoing Phase 2 CONTROL trial by year-end. As a reminder, this study prospectively evaluating the impact of statin therapy added to OCA on LCL and the effects of OCA on lipid metabolism. Finally, we continue to work towards expanding our NASH clinical development program. These plans include a cirrhosis study and a study to evaluate promising non-invasive technologies.

To update you on our other ongoing studies, enrollment in our Phase 2 is at trial in primary sclerosing cholangitis or PCS. It's on track to complete before year-end. Our Phase 2 CARE trial in pediatric biliary atresia is also enrolling, although we would note that this is an extremely rare disease, and enrollment in the study is challenging. So it's difficult at this time to project when we will complete enrollment. Our Phase 1 study of INT-767 - our dual FXR and TGR5 agonist remains on track to complete by year-end 2016.

Before I conclude my remarks win, I wanted to review some recent changes in senior management and the Company's organizational structure. First, I'm very pleased to officially introduce you to our new CF, Sandip Kapadia. Sandip brings over 19 years of experience in building and leading finance and administration teams at life sciences companies both in the US and internationally. I look forward to continuing to work closely with him as we expand our commercial presence globally. You'll hear from Sandip a bit later on the call.

Second, Lisa Bright has recently taken on the position of President of International. With the US launch now underway, Lisa will pivot from overseeing the commercial teams to focusing on the ex-US business, preparing the Company for multiple anticipated Ocaliva launches outside the US across a number of European countries and other markets. I'm confident Lisa's prior extensive international experience will enable her to execute on our international objectives. Meanwhile here in the US, our most important single market, Richard Kim will continue to lead our Ocaliva launch and manage our US Commercial organization. With that, I'd now like to turn the call over to Richard to provide you with an update on the launch.

Thanks, Mark. The US Commercial team has been hard at work since the approval of Ocaliva in late May. While it is still early days, we would like to highlight a few key emerging themes. Overall, we've not had any big surprises, and so far, things have generally lined up to most of our major preapproval assumptions. Initial qualitative feedback from our customers about the Ocaliva label has been positive and supportive of product use and patients similar to those who are in our Phase 3 POISE study. We are pleased with our initial commercial execution and have had good reach or coverage of our key customers and a lot of quality interactions.

As anticipated, there's not been a warehousing effect of PBC patients. We expect to see a gradual update as patients come in for their regularly scheduled visits. Because there's not been any therapeutic option for patients with PBC for nearly 20 years, we continue to believe that changing ingrained position prescribing behavior will require a concerted and consistent effort.

While it's too early to share specifics on the launch given our May 27th approval, I'd like to now provide a few updates on our activities and some initial observations through the first 60 days of launch. First, let me update you on our sales force execution. Our 45 Territory Business Managers or TBMs were in the field within a week of approval having branded conversations with our customers. Consistent with our goal, within the first 30 days of launch, our TBMs visited over 80% of our initial lead target prescriber group, consistent of approximately 700 hepatologists and gastros. In the first 60 days of launch, we increased our coverage of this group to over 90%.

As a reminder, we believe this group treats approximately 30% of the patients with PBC in the US and tend to be early adopters of new medicines. We are seeing early signs that as expected, this group of physicians are writing the majority of the first Ocaliva prescriptions. Additionally, in the first 60 days since launch, we have visited approximately 85% of our larger target group of approximately 3,300 physicians. We believe this prescriber group along with our lead targets account for 70% to 80% of all PBC patients under treat and care in the US. We're also maintaining our commitment to educate healthcare providers. In the first 60 days since launch, we have conducted one national Ocaliva webcast and about 120 peer-to-peer nationwide educational programs with PBC and other experts reaching more than 1,200 healthcare providers.

Now, let me shift to managed markets. Overall pair engagement has thus far been very favorable. An initial access is aligned to the Ocaliva label. In the first 60 days since launch, we have had well over 100 interactions with key payers and PBMs. To date, we have confirmed published coverage from one of the two largest commercial insurers in the country and numerous large regional plans, all aligned to the FDA label. We expect additional coverage decisions into the fall.

It is too early in the launch to provide significant qualitative and quantitative metrics, however, we have the following updates we can share with you on patients enrolled into our patient services hub Interconnect. Thus far, data coming through enter connect shows all the patients have a diagnosis of PBC. Moreover, the vast majority of patients generally near the population we studied in the POISE Phase 3 study in line of our expectations. Approximately 15% of patients enrolled in Interconnect are not on UDCA. This is slightly higher than observed in the global PBC study group reflecting the high unmet need in this population of patients intolerant to UDCA. A vast majority of the patients are female consistent with the epidemiology of the disease. Requests are almost exclusively for the 5 milligram starting dose consistent with the titration recommendation in our label. Lastly, a prescriber base is approximately 90% GI/Hepatology in line with our expectations.

As we think about drivers to accelerate Ocaliva adoption, we highlight the following. Awareness. We are a new organization with a new product. Successful education programs for Ocaliva and PBC and share our voice within our key prescribers are paramount. We will continue to execute our plans to reach and educate target prescribers and key payers, and have supportive materials, patient materials available. Marketing materials. We expect to have new materials that have gone through the necessary approval process this fall. When we will launch our Ocaliva campaign and also equip our field teams with enhanced claims and materials to support the Ocaliva value proposition in PBC. Access to patients. As with many summer product launches, we expect patients to be in their doctor's offices more after the summer months to begin having discussions with their physicians about whether Ocaliva is right for them. One more point. Based on the IMS data we have seen today, we continue to believe that IMS will become directionally accurate, but it's too soon to make any further statements about IMS accuracy at this time.

To summarize, although it's too early to judge our launch, we are pleased with our early execution and the interactions that we've had with our customers. Most important, our patients continue to be our source of inspiration for what we do as reflected in testimonials at our advisory committee meeting in April and recently at the PBCers' national conference in Dallas. We are privileged told finally be able to offer a new treatment option for payments with an inadequate response or intolerant to PBC. Thanks, and now, I'd like to turn the call over to Lisa.

Thanks, Richard. So with the US team now established and launched underway, I'm excited to lead the globalization of our company with a focus initially on Europe and Canada where the PBC patient population is actually higher than the US. Of course, uptake will be slower reflecting the timing of pricing reimbursement, and pricing itself is generally lower and very market specific.

Starting first with the regulatory update. We remain on track for European approval at the end of the year, and we expect Ocaliva to be approved through the conditional approval pathway with an anticipated oral hearing this fall. Discussions with European regulators on our Phase 4 COBALT study will fill a key requirement for conditional approval. Pre-regulatory approval where regulatory framework allows, we will be making Ocaliva available through a medical early access program for those patients with a high unmet medical need who are unable to enroll in COBALT and who do not have any other treatment option. However, we expect these early access programs to be relatively limited in scope given the timing of likely approval.

As you know, though, outside the US, gaining regulatory approval is only the first step. Each country has its own pricing and reimbursement processes, both at international and at regional level. We continue to engage key health technology assessment bodies and are finalizing our European pricing strategy based on extensive market research outputs. People in key international leadership roles are already in place. We will only hire our sales team when we receive a CHMP positive opinion and have an ability to promote based on local regulations. We are reiterating our previous guidance that we do not expect international revenues until 2017.

Further, we expect the ex-US sales ramp to reflect the staggered timing of pricing and reimbursement in various countries. We expect 2017 international revenues will mostly come from Germany, France and to a lesser extent, Canada and the UK. Our largest international market is Germany where we will have immediate access. We will also launch in France assuming the regulatory authorities approve an ATU this year.

Having spent time with all of our team over the last month reviewing our launch readiness plans, I'm confident that we are in great shape and can rapidly learn from our colleagues' experiences in the US. And with that, I'd like to turn the call over to Sandip.

Thank you, Lisa. And good morning everyone. It's a pleasure to be here with you for my first earnings call at Intercept. I'm thrilled to have joined Intercept during a very exciting junction as we begin to commercialize Ocaliva in the US and internationally. I look forward to meeting many of you in the coming months. So with that, please refer to our press release issued earlier today for a summary of our financial results for the quarter ended June 30th, 2016.

I would like to take this opportunity to give a brief overview of three key areas. Our cash positions are operating results for the second quarter, as well as financial guidance for the rest of the year. So let me start off with our cash positions. We ended the quarter with $439.5 million with cash, cash equivalent investment securities on our balance sheets. On a pro forma, we have approximately $849 million in cash and cash equivalents which include approximately $409 million net proceeds from the July 2016 convertible notes transaction. The $409 million proceeds are net of underwriting fees and funding of the cap call transaction.

So now moving to the second quarter of 2016 results. During this quarter, we started to recognize revenues as a result of the June launch of Ocaliva. We recognized revenues for the quarter at 75,000 which reflects our estimates of filled prescriptions. Please note that until we establish a record of sell through, we will be booking sales based on this method. We also recorded $2.7 million in deferred revenue on our balance sheet, which represents products shipped through distributors, but not billed through as of the end of the June.

And finally for guidance for the balance of the year. For the full year 2016, we are guiding towards the lower end of our previously adjusted operating expense guidance of $260 million to $400 million. The guidance excludes the $45 million net settlement and noncash items such as stock-based compensation. We continue to guide for an uptick in operating expense in the second half of 2016 driven by our increased spend from our US Ocaliva launch., our buildup of international capabilities in preparation for EMA approval, as well as continued R&D activity. While we are not providing any sales guidance at this time, we would like to reiterate that we do not expect ex-US Ocaliva sales until 2017, and this will be on a country-by-country basis as we retain pricing and reimbursement.

And finally, just as reminder, adjusted operating expense is a non-GAAP financial measure. We anticipate that other than the $45 million charged for shareholder litigation stock-based compensation, will represent the most significant noncash items that excluded in adjusted operating expense as compared to under GAAP. Please refer to our press release from earlier today for a reconciliation of our historical non-GAAP adjusted operating expense to GAAP operating expense. So with that, I would like to pass it back to Mark for some final comments.

Thanks, Sandip. It's truly been a transformative quarter for us at Intercept, and we look forward to coming back to you in the fall with additional details about our programs including ongoing launch progress with Ocaliva. With that, I'd like to now turn the call over to the operator to take some questions.

And ladies and gentlemen if you do have a question at this time, you may press the star, then number one key on your touchtone telephone. (Operator Instructions) Our first question comes from Alethia Young from Credit Suisse. Your line is open.

Guys, this is [Elian] for Alethia. Thanks for taking the question. Just regarding the launch, can you talk about what qualitative feedback you've heard from doctors and patients using Ocaliva specifically regarding pruritus? And also, how is the dose citation working in the real world? And can you update us on your thoughts on persistence rates and whether there's been any discontinuation so far? Thanks.

Yes. Hi, thanks. It's great question. So as far as a lot of your questions are concerned, it's a little too early right now to talk to this. With the May 27th approval, we really haven't had patients yet who have been through the three-month titration period. So as far as titrations are concerned, we don't have any new insights. For pruritus as well, it's very early on as well.

The good news that we will see is the vast, vast majority of patients are starting on the five milligram dose. And as far as consistency is concerned, once again, there's really not enough new data to help change that. What we can say is we previously understood U DCA compliance to be around 75%, and we've used that as a guide -- maybe not as high as that, but as a guide to consider usage for Ocaliva in the future. I hope that answers your question.

Great. Thanks, I appreciate it.

Thank you. And our next question comes from Michael Yee from RBC Capital Markets. Your line is open.

Hi, thanks. Good morning. Congrats on the progress so far. A couple more on the launch. Just thinking about as you walk through demand and as you get to you the payers, can you talk a little bit about how fast it takes to get a script filled once it's written and talk a little bit about how many scripts actually get through? 75%, is it higher or lower? Maybe just talk about sort of where any bottlenecks may be as you get through the payers?

And then as I think about Q3, you mentioned some things such as summer months and some things like that. How should we think about modeling Q3? And is that $2.7 million deferred? Is that something you know about demand or is that just some estimated inventory build? How did you get to that number just trying to think about Q3? Thanks so much.

I think Richard will take the first part of your question on the demand and payers, and then I'm going to ask Sandip to answer the question on the $2.7 million in deferred revenue and what that represents.

Sure. Hey, thanks for the questions, Michael. So yes, as far as sort of how scripts are being managed with the payers, what we've seen in general, most of the scripts coming through right now are being adjudicated as medical exceptions. So as I mentioned, we recently had one of the major payers actually cover us, but in general, it's taking several weeks. You know, we probably estimate four to six weeks minimum to get these medical exceptions through early on. So a lot of the work that's been done to get the claims through have been managed through our Interconnect patient services. So thus far, we can say we're pleased with how that service has been executed.

And as far as the bottlenecks are concerned, I think they're the regular growing pains -- people sending in completed forms, having the right signatures. But in general, I think we've been learning as an organization as have our physicians, and we seem to be getting better as time goes by as well. And as far as the summer months are concerned, I think the way I would think about it is, as we sort of said before, PBC is a disease where there's about nothing new for 20 years. So we believe it's really going to be a slow steady uptake. In summer, when you have think about the etiology of the disease, really it's a time where not a lot of patients are always in the offices of their physicians. So we sort of just anticipate a slow steady impact of patients come in for their regular scheduled visits. And maybe I'll turn it over to Sandip to talk about the $2.7 million.

Okay. Thank you. Yes, Michael. Just to give you a little back ground, as you know, we have a specialty distribution model where we fill our products through. And the $2.7 million essentially represents product that we have shipped to the specialty pharmacies. But at this rate given the early stage in our launch, we elected to essentially book only revenues of products that have been shipped out of the specialty pharmacy and out to patients. So at this stage, we deferred the revenue even though we actually sold it to the specialty pharmacy. Did that help?

Is that just an estimated demand that has been ordered in scripts or is that just some random estimate of, say, a few weeks or few months of demand?

So Michael, we can follow up with you offline. But no, just think about this as kind of an initial filling of the channel. So obviously, all companies make their own judgments of how much they plan to ship, but it will take -- demands will help pull that through over time. So depending on demand, we could go through that quicker or slower.

Thank you guys.

Thank you. Our next question comes from Ying Huang from Bank of America. Your line is open.

Hi, it's [Aspen] on for Ying. Thanks for taking the questions. Just two quick ones. You mentioned that coverage was roughly in line with the FDA label, but can you provide any clarity on how payers are thinking about alk-phos cutoff? And have you seen any off-label use in NASH by any chance? Thanks.

Yes, great questions. So as far as the alk-phos cut-off, we see it generally aligned to the POISE study at that 1.67 times upper limit abnormal or approximately 200 international units. And then as far as off-label usage concern, it's really too early to sort of see. The one thing I can confirm is all the patients who have come through the Interconnect patient services hub, we've confirmed their diagnosis of PBC.

Okay, thanks.

Thank you. Our next question comes from Jonathan Eckard from Barclays. Your line is open.

Good morning. Thanks for taking the question. I wanted to ask about the enrollment rate of REGENERATE. It appears that generally this is really quite rapidly despite the requirement of required biopsy and the fact that patients weren't guaranteed to meet the enrollment criteria for the trial. So is there anything that we can take away from this regarding the overall demand I guess for a therapy in NASH because of the concerns in the street are out there that biopsy could be a potential headwind for early adoption for, say, NASH? So, yes, that's my question.

Thanks for your question, Jon. As I mentioned in my prepared remarks, this is - REGENERATE is a large and complex trial. As you know, it involves serial biopsies, and we also have very well-defined stringent histologic criteria for entry in the study, which include a diagnosis of definite NASH-based on liver biopsy and advanced fibrosis stage 2 and 3.

So I think that the trial dynamic is what's specifically driving enrollment. You know, I alluded in my remarks to the not unanticipated relatively high screen fail rate due to the fact that you can only do so much to predict on a prescreening basis whether a patient meets the criteria histologically before you biopsy that patient. I don't think that there can be any read-through from a clinical trial like this or frankly any other NASH trial with respect to overall demand and number of patients out there in need of treatment.

I guess -- I mean, the question is more, it doesn't seem like the serial biopsy and everything has been a deterrent for enrollment. And the thought process is for NASH, when it gets out into the real world, OCA gets out in the real world, are patients going to want to get a biopsy in order to get OCA? So I guess, is there -- you haven't had any problems basically enrolling patients, and is that something that you anticipated? Has it been stronger kind of enthusiasm for the trial than you expected?

Well, and I said this before that there is a lot of enthusiasm out there for the first ever Phase 3 trial. In NASH, as you know there are no approved therapies, and certainly hepatologists and a lot of gastroenterologists see these patients coming into their clinics in greater and greater numbers, understand that this is a serious medical problem and unmet need. I just want to say for the record that biopsies as you know is not necessarily standard of care - I mean, not at least because there's really nothing today outside from lifestyle counseling that physicians can offer their patients, and so there's not much incentive to biopsy.

And I would also say that the trial REGENERATE involves serial biopsies over a relatively short period of time -- a period of five, six years, and that is also not reflective of standard practice. So again, I don't want to draw a parallel between the dynamic within this trial and the real world out there and demand and would caution against a read-through.

Jonathan, it's Rachel. I would just add one more comment. I don't think that you should walk away with the impression that people don't care about liver biopsy. And I think this is -- I'm sure if you talk to physicians that it's something that physicians and patients are really loath to do. So I think ultimately the goal for the overall industry is clearly to replace liver biopsy with some form of non-invasive diagnosis. Obviously, the field is not there today. But I wouldn't want you to walk away with the impression that liver biopsy doesn't matter, everyone's happy to do it. I think it's something -- it's a necessary part of the trial in all these early NASH trials that longer term, presumably, the field will work very hard to move away from liver biopsy.

Great. Thank you very much.

Thank you. And our next question comes from Ian Somaiya from BMO Capital Markets. Your line is open.

Thanks. I apologize for the background noise. Again, on the launch, I would love to just get your -- if you're willing to share your thoughts from conversations with provincial formularies -- just what type of interactions you've had -- what type of steps do you expect? If you could just comment on that first and then a follow-up question.

Sure. Thanks. No problem. So far as interactions we've had so far, there's been quite a bit of education to do still both on PBC and now on Ocaliva itself. So it's really been -- it's really focused on explaining the product insert. And as far as our expectations are is, we do expect most of the interactions and the Pas to be associated with the label and the study. So what we're seeing generally is requirement to confirm PBC diagnosis, and also, to make sure that patients were previously exposed to UDCA or intolerant to UDCA. So it's very consistent with what we're seeing within our label today.

Was there a follow-up question as well?

Ian, are you there? I think, operator, we'll move on to the next question, and Ian can get back in the queue if he has a follow-up.

Thank you. And our next question comes from Salveen Richter from Goldman Sachs. Your line is open.

Hi, this is actually [Kerry] on the line for Salveen Richter. Thanks for taking my questions, and congrats on the progress. First on the launch, what has early qualitative feedback been from patients and physicians? And what has the distribution of early adopters been in terms of patients taking Ocaliva as monotherapy versus combination therapy? And also, I have a follow-up question.

Sure. Great question, [Kerry]. So as far as initial feedback, I think most of the impressions are generally based off of our label right now because the amount of durations patients have been on has been quite short for those who have started. So I think the reaction qualitatively with the label has been quite favorable. They really believe that the label supports the clear value proposition of Ocaliva in PBC.

And as far as the initial experience, I think we're going to just have to wait a little bit more to get some of that feedback especially considering we don't have anyone who would have actually hit the three-month titration period yet. And as far as early adoption as far as monotherapy versus combination therapy, we see the vast majority of users thus far in combination consistent with how POISE was done. As mentioned in my prepared remarks, there's a slightly higher utilization of monotherapy at this stage. And our belief is just that there are some of these patients who were intolerant to UDCA who have been waiting for another option. But once again, these are very early days for us to get too much deeper into that so far.

Got it. Thank you. And then just going on, how long do you expect to take to work through the $2.7million in deferred revenues? And will you work through that with upcoming patient orders or do you expect -- do you need to fill the channel more going forward?

Hey, [Kerry], it's Rachel. We're not providing sales guidance, and the question is kind of a clever way of getting at specific sales guidance. So good job with that.

But I think just the way to think of that -- the way to think about it is, again, that $2.7 million represents drug that's been shipped to specialty pharmacies. And you will be able to watch the IMS data and make your own assumptions and calculations of when that $2.7 million will get used up.

Sure. Okay. Can I just finish up with one quick question on the CONTROL trial? So you'll complete enrollment by year-end. When should we expect to see data from that?

So keep in mind, there is a statin washout period. It's a 16-week trial, but there's an additional four weeks at the front for those patients who are on statins that get washed out. So that's a five-month, and then obviously, typically, it takes a couple of months to clean up data and report out. So it wouldn't be an early 2017. You know, based on timelines, if you kind of play that through, the back half of the year.

Got it. Thank you.

Thank you. And our next question comes from Ritu Baral from Cowen. Your line is open.

Hi, guys. Thanks for taking the question. My first question is on the calling effort. Right now, what's your planned frequency of calls to that tier one of physicians that you mentioned, and will this change in fall? And how does that differ from your planned frequency for the tier two doctors?

Great question. So as I said before, the majority of our initial focus has been on our lead targets. These approimate 700s gastros and hepatologists. So we definitely have more frequency with them earlier. Our plans as we get it through the fall is to distribute some of our effort to more of the non-lead targets -- the other 3,300 physicians.

So we've had good coverage of them. We've reached about 85% of those physicians. But as we get into the latter parts of the year, we'd like to increase the frequency on those physicians as well.

Is it fair to assume that based on the previous launches that I've seen that the frequency is probably once every 45 days or once every 60 days for your tier one or is that not possible given the geographic spread?

No, it's a great question. I mean, it sort of varies to your point, so it'll be a little easier to do in Manhattan than it is in Omaha. But I think what we're seeing right now is because PBC is new -- because we're offering new services and Ocaliva is new, there is a little more frequency in these offices. Also, getting educated on our Interconnect patient services, we're in the office as little more frequently now. We believe once maybe the offices get a little bit more into the routine especially heavier usage ones, we can shift some of our effort, once again, more of the community-based offices as well.

Understood. And again, based on previous launches, some of the metrics given have to me by other management teams have been four to five -- anywhere between four and seven visits details per office until that first prescription is written. Is that the sort of dynamic that you would expect from this launch, or am I thinking about that number wrong?

You know, [Salveen], I think we're just not going to get into that level -- I'm sorry, Ritu. I had my eye on a wrong name -- early morning. We're just not going to get into that level of detail. I think Richard's kind of provided you with at least a qualitative view of how he's planning on this. We're just not going to provide numbers beyond what we've provided in our prepared remarks.

Understood, Rachel. Last question. Can you give us any sort of directionality or your current thoughts on pan-European pricing? And also, can you let us know what the sort of topics or areas of focus on your expected oral arguments with CHMP will be later?

Okay, yes, thanks for the question. It's Lisa here. So just let me quickly talk about pricing. Obviously, we are currently finalizing our pricing strategy across Europe and it's obviously not appropriate for us to specifically comment on that strategy at this time. But I think what I can say is that prices of course in Europe are largely based on two factors. The first is demonstrating cost effectiveness, and that particularly affects the UK, Canada, obviously, not in Europe, but also France. And secondly, budget impact, which of course is important across most of the European countries. Generally, of course, pricing in Europe is around 40% to 50% of the US price. It's generally lower than the US price. So hopefully, that will give you some kind of direction about the way to think about that.

So from a perspective of a regulatory, obviously, our discussions are ongoing. We are -- they're progressing well. We don't have any kind of confirmation yet of whether or not we'll have an oral hearing, but we plan to have one for the fall.

Great. Thanks for taking the questions.

And then I think Mark can provide a little bit more color on the oral hearing question.

Yes, only to say in addition to what Lisa just mentioned that we don't anticipate any untoward issues on the -- what we've always guided is that evidence supporting the surrogate end point from the Phase 3 trial was the primary issue. And obviously, we had a lot of success in the context of the FDA approval making those arguments. So that's why we feel good about maintaining our guidance for approval in Europe by yearend.

Thank you. And our next question comes from Joseph Schwartz from Leerink Partners. Your line is open.

Good morning. Thanks for taking my question. I was just wondering following on to the earlier biopsy questions, if you could talk about your progress towards developing a dedicated non-invasive technology to help diagnose patients for NASH?

Yes, Joe, so I'll take the question and Rachel can follow up. So as Rachel mentioned earlier on the call, we and other companies and frankly all stakeholders including FDA and the key opinion leaders really desperately want to get away from liver biopsy for obvious reasons. We have taken a lead in incorporating the most what we consider to be the most promising non-invasive technologies into our clinical trials, so that includes REGENERATE. And as I mentioned, also we're planning a dedicated non-invasive technology Phase 2 study in patients with NASH. So it's too early right now to call out any one technology, but the goal here is ultimately to sufficiently correlate one or more non-invasives with histology with liver biopsy, such that it can predict outcomes, and we can get away from biopsy both for the purpose of diagnosing and staging patients.

Yes, the only other comment, and we could have a very lengthy discussion on this, but I would just add that REGENERATE is a very, very large study and should provide us with a wealth of information to really help us understand what kinds of technology. And I would think at this point, we are a casting a wide net. We're looking at established technologies such as Fibroscan, but we're also looking at other types of imaging technologies that at earlier stage but appear to be very promising and will have a lot of work on algorithms and trying to improve existing algorithms to kind of combine all those technologies or whatever makes the most sense to hopefully get at least narrow the needle in the haystack, so to speak, to figure out who to biopsy and eventually replace biopsy altogether.

Okay, great. Just as a follow-up, you mentioned the need to educate the PBC marketplace and you have some plans for enhanced marketing materials to become available over the balance of the year. Can you talk a little bit more about what these initiatives are going to emphasize and how you will be measuring the impact of that?

Joseph, great question. So as part of our (inaudible) approval, we actually do have to have all of our promotional materials approved through the OPDP branch of the FDA. So we feel very good about the fact that we have a new campaign that we believe will really position Ocaliva really as far as its ability to impact the liver. So we'll be on our campaign. This will also entail new speaker programs and provide materials, and for us, the potential ability to make stronger claims consistent with our label as well. So the way we'll measure it is typically like with most product launches through awareness and usage studies to really see the impact of the message resonation with our customers as well. So we hope to be able to provide details on that in future calls.

Just one comment to add that. As Mark mentioned in his opening remarks that we are looking forward near term to the publication of the Phase 3 POISE results and that we expect that to have positive impact on the field as well.

Thank you.

Thank you. And our next question comes from Alan Carr from Needham & Company. Your line is open.

Hi, thanks for taking the questions. Just a follow-up on the previous one. Can you talk a bit more where you think patient awareness stands with respect to Ocaliva and also with respect to monitoring AOP and that sort of thing to patients? Do you track how well patients understand parts of AOP versus symptoms? And then also, where things stand in terms awareness in Europe. Thanks.

Yes, and I'll take the first couple of questions and obviously pass it over to Lisa for the last. As far as patient awareness is concerned, right now, it's hard to really measure that, but what we can say is we've actually had a long-standing relationship with both the PBCers which is probably the most organized PBC patient advocacy group in the country as well as the American Liver Foundation. So what I would say through those groups, I think awareness is quite good for Ocaliva. In fact, we were at the PBCers' national meeting about a month ago as well. So I think awareness is starting to increase with the patient groups.

And as far as alk-phos is concerned, it sort of depends on the physician and how frequently their PBC patients are followed up. But our general guidance is it's somewhere between 3 to 12 months from when the patients are followed up with depending on disease severity. And typically, alk-phos is measured at every one of these visits as well. So maybe with that, I'll turn over the question to Lisa about Europe.

Yes, thank you. So of course we are pre-approval in Europe, so we are not proactive engaging in discussions around Ocaliva at this stage -- where we have been requesting for information with the key patient group particularly ELPA. Obviously, we've been able through medical to provide them with information, but alk-phos focus at this stage given where pre-approval is just preparing ourselves for launch.

Great. Thanks very much.

Thank you. And our next question comes from Joel Beatty from Citi. Your line is open.

Hi, thanks for taking the questions. Are you able to provide information on the number of individual patients treated with Ocaliva or the number of lives covered at this time?

Hi, it's Rachel. No, we're not going to get into that level of detail. I'm not sure if we will be providing patient numbers at all. I think the best way for you to monitor the launch intra quarters, obviously, the IMS data, which we said is directionally -- we expect to be directionally accurate. And in our next quarter, you'll have more information. Obviously this is just the first few weeks of the launch. And as Richard has mentioned, it takes four to six weeks on average to get from a script into - the drug into patient's hand. So it's just too early to get to that level of detail.

Sure. And then one follow-up question. For the 15% of patients or so that are starting Ocaliva as monotherapy, how are payers defining the inability to tolerate URSO? Are there specific criteria or a specific amount of time for them to be intolerant?

No, it's a great question, Joel. I think in general the payers are relying on a physician definition of what intolerant is. And generally, actually, what we hear are people tried UDCA for some period of time and they just are off it. So once again, the 15% is probably a little bit higher than what some of our databases would have told us. But I think if we think about it, they haven't had any option, so that's possibly why we're seeing slightly higher use initially than maybe what the epidemiology would tell you. So I hope that answers your question.

Yes, thank you.

Thank you. And our next question comes from Lisa Bayko from JMP securities. Your line is open.

Sorry, my questions have been answered. Thank you.

Thank you. And our next question comes from Brian Skorney from Robert Baird. Your line is open.

Hey, guys. Thanks for taking my question. Two, I guess - first, at the start, when we look at the prescription numbers coming in for Ocaliva, how can we measure kind of the relative market penetration? I know there's somewhere around 80,000 prescriptions per month for URSO. Do you guys have any good data on what percentage of URSO users actually in PBC versus for gallstones?

And then when we think about OCA commercialization in Europe and making the value-based pricing argument whether it'd be NHS or GBA, it just seems like those payers love surrogate endpoint approvals where they don't really take into context the implications for the surrogate endpoint, but use that as kind of like pure measure of value and try to really keep the price down. I guess what's the counter argument you have when you go on there to kind of explain the value proposition here? Thanks.

Brian, it's Richard. I'll take the first question, then we can hand it off to Lisa for the second. So as far as prescripts are concerned, our estimate of URSO utilization in PBC is around 25% to 30%. The scripts are specifically for PBC. So that's our best guess. And as far as penetration within there, I think we'll rely on your best guess over there. But I think we'll sort of be able to measure that over time, but it's very difficult for us to get an accurate market share within PBC thus far. So like I said, it's 25% to 30% of utilization of URSO within PBC.

Yes, and this is Mark. I would just add, we've shown this to you before, a waterfall plot showing the estimated prevalence of PBC in the US. A number of patients diagnosed and under treat and care around 50,000. And then of those an estimated target population of approximately 19,000 which includes 15,000 currently on UDCA, but persistently above 1.67 times upper limit of normal for alk-phos and then another 4,000 patients thought to be intolerant to UDCA. So that should give you an idea of the kind of penetration that we're getting over time.

Okay. That's all I can think of.

And, Lisa?

Yes.

Yes, yes. So thanks for the second question. So yes, you're quite right to say that a big focus at the moment is on ensuring that we work with payers to demonstrate the value of Ocaliva. Clearly, it's important that the payers understand the importance of the surrogate in this context of PBC. And I think Richard's talked about some of the work that the team have been doing in the US, and it's no different in Europe where the market access teams which have been in place for a while now have been really focused on making sure that payers understand the context of the surrogate and the link to outcomes. So a big focus has been on that.

In terms of developing the value proposition, I think what's really important, and sometimes payers don't get this straight off, and when you explain it to them, it's more obvious. But by the time, a PBC patient is likely to come to Ocaliva, there is a second line treatment option. They've already failed on their first line treatment -- or not had an adequate response -- or they've just not been able to take it. So the patient's disease has pretty progressed by the time they get actually onto treatment. And so, the transition probability for them into either a transplant or one of the intermediate events leading up to that in relation to serious liver disease is much more common than they might first have anticipated. And so, that's the basis upon which we're pulling together the value opposition and of course country-by-country making sure that we are able to generate real life costs as they relate to PBC. And this is a disease where there have been no real new treatment options for 20 years, so we were having to work together with each kind of country to generate those costs to fulfill that model.

Great. Thanks, guys.

Thank you. And our next question comes from the Jim Molloy from Laidlaw. Your line is open.

Hey, guys. Thanks for taking my question. I had a question on spending for the year, you guided to the lower end of 360 to 400. Is it appropriate to be thinking about what next year's OpEx spend will be? I presume, that range or higher. And would the 800 some odd million pro forma in the banks -- is that enough to get you guys to break even or profitability?

Hi, it's Sandip here. I think, obviously you can see from our spend rate's about what our second half would look like, right. So at this point, we're not really providing guidance for 2017, so I can't really comment on what it would be. But I think just to help you out in terms of just looking at our spend rates at the second half, that would roughly - and the of course, we have incremental initiatives going into next year in terms of the launches in Europe, as well as the full year impact of the launch in the US.

And then just on profitability again, we're not providing guidance on when the Company would turn profitable. But just keep in mind that in terms of our overall strategy to establish an important leadership position in NASH, there's going to be a lot of investments. We've talked about the REGENERATE trial having a full year with more patients, and we've got other NASH clinical development programs, as well depending on what the pipeline looks like in 767, you could envision some additional clinical studies there. So profitability near term is not really the focus of the Company.

I certainly understood. You guys have been very clear that for Ocaliva in PBC, to expect a moderate rollout, certainly, we understand. Is there is there an expectation at which point, Ocaliva will start paying for itself at breakeven if they could be -- obviously, it won't be next year. I think it will be two years, 10 years, 20 years?

Again, I think it's an excellent question. We're just not prepared to give that level of guidance. So obviously, the answer is yes, we would expect it to be more than breakeven. We would expect it to be very profitable.

But again, our business model is focusing on PBC1, having a fantastic launch. And hopefully, you've seen some of the early metrics from Richard. We're very pleased with that. But beyond that making investments in NASH and also building an overall sustainable portfolio in progressive non-viral liver disease. So I don't think that -- it's just not the right framework in which to judge our overall company. You're not going to get a model. We're not looking to kind of turn profitable within a few quarters of launch.

Excellent. Thank you. Final question. On the REGENERATE, the interim look now for filing 2019, you guys are on track to complete enrollment here and then at the 72-week trial. What pushed it to 2019? Is that just a couple three months to grind through data?

Yes, Jim, thanks. I mean you're exactly right. It's an 18-month endpoint at the interim analysis. And really what -- and the reason we provided that guidance is just a number of investors have been asking us when we would anticipate to get the results. So you've got to figure from the last patient in, you've got 18-month time to schedule that last visit -- that last biopsy to support the interim analysis and then large complex trial, you need time to clean the data to get the database locked and readout on your topline results. So that gets you to a 2019 kind of guidance.

Great. Thanks so much for taking the questions.

Thank you. And our final question comes from Ian Somaiya from BMO Capital Markets. Your line is open.

Thanks for letting me get back in. Just a question on the interim analysis, Mark, and I think you might have mentioned this in your last answer. But how much time do you have to reconduct a repeat biopsy from the time or point patient reached that week 78 time? Is there -- how much leeway do you have -- I'm just curious, from a scheduling standpoint, if a patient is not available or for health reasons, they're not able to have a biopsy immediately. I'm just curious how much leeway the trial allows you?

Yes, Ian, the answer is as soon as practicable. So given that the 18-month time point is certain, the clinics will be scheduling patients to come back in well in advance for their normal visit. And keep in mind that there are regularly scheduled visits, follow-up visits over the course of the trial including between baseline and 18 months. So -- but the implication of your question is that, it's not bang on right at 18 months necessarily. And it's true that Richard was mentioning earlier that we're in the summer months and patients take vacations, as do physicians. So it's not -- there might be a little bit of time lag from last patient reaching 18 months and the final scheduled biopsy.

Okay. And just one final question. I know you guys are not giving out patient numbers -- it makes sense for you not to give out patient numbers. But as you speak to physicians that it seems like it's spoken with quite a few, is the overall size of the pool, just in terms of the number of patients the physicians are treating, the type of patients that they're treating, is that in line with your expectations?

Yes, hey, it's Richard. Yes, so as Mark said before -- we said it earlier that we believe there's about an estimated 19,000 physicians in -- our patients in the US that potentially make up our eligible pool -- 15,000 who have an alk-phos greater than 1.67 and about 4,000 who are either intolerant or are no longer on UDCA. So we think that's our best estimate still to really think about the potentials for the marketplace for us.

Okay. Thank you again.

Okay. Thanks everyone for listening in to the call and your interest in Intercept and Ocaliva. We will be available after this call for additional questions. Thanks very much.

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