Intercept Pharmaceuticals Inc (ICPT) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter 2020 Intercept Pharmaceuticals Earnings Call. (Operator Instructions) Please be advised that today's conference may be recorded.

I'd now like to hand the conference over to your host today, Ms. Lisa DeFrancesco, Senior Vice President, Investor Relations and Corporate Affairs. Please go ahead.

Thank you. Good morning, and thank you for joining us on today's call. This morning, we issued a press release announcing our fourth quarter and full year 2020 results and financial position, which is available on our website at www.interceptpharma.com.

Before we begin our discussion, I'd like to note that during the call, we will be making forward-looking statements, including statements regarding our approved product and clinical development programs; certain regulatory matters; and our strategy, prospects, financial guidance and future commercial and financial performance. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this call, and we undertake no obligation to update such statements, except as required by law.

These forward-looking statements are based on estimates and assumptions that, although believed to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. Some but not all of the risk factors that could cause our actual results to differ materially from our historical results or those anticipated or predicted by our forward-looking statements are discussed in our -- in this morning's press release and in our periodic public filings with the SEC.

Today's call will begin by prepared remarks from our President and CEO, Jerry Durso; and our Chief Financial Officer, Sandip Kapadia. We'll then open the call up to take your questions. Also available for questions from our leadership team will be Gail Cawkwell, Senior Vice President, Medical Affairs, Safety and Pharmacovigilance and acting Chief Medical Officer. Please limit yourself to one question in order to allow time for all questions to be addressed.

Let me now turn the call over to our CEO, Jerry Durso.

Thanks, Lisa, and good morning, everyone. Thank you for joining us on our fourth quarter 2020 earnings call. This is my first earnings call as CEO of Intercept, and so I want to begin by saying how excited I am to lead the company as we focus on our next chapter. As with any new opportunity, I fully expect there to be challenges. But more importantly, from where I now sit, I also see many potential pathways for future growth and opportunities for success as we execute on our objectives and leverage our commercial and R&D capabilities in liver disease.

In addition to the many talented and dedicated people at Intercept, we recently announced a number of new important leadership appointments. With these additions to our team, I believe we've assembled a strong group of leaders with diverse backgrounds, including experience with many of the very same challenges and opportunities that are ahead of us. And I believe this is the right team to embark on the next phase of our journey as we execute on our key objectives in 2021, which includes strengthening our foundational PBC business, furthering our NASH regulatory process in the U.S. and Europe, executing on clinical and regulatory goals and expanding our portfolio and pipeline.

Before I provide an update on NASH, let me begin today by giving an update on our core rare disease business in PBC. I'll then provide an update on our pipeline before turning the call over to Sandip to discuss our financials and our 2021 guidance.

We continue to gain new ground in our PVC business. Since the introduction of Ocaliva, we've achieved new milestones each year, including in 2020, where we experienced strong sales growth in the face of the global pandemic. We've continued to evolve our customer-facing, patient-centric organization, including specialty product distribution, strong payer coverage, community education and deep relationships in the liver community. And most recently, expanding use of virtual channels to reach and educate our stakeholders. And I'm proud to say, as an organization, we've built core competencies in each of these areas.

2020 was a year of growth for Ocaliva despite the challenges that COVID-19 brought to the health care system. For full year 2020, we achieved net sales of $313 million, which was 25% growth over the previous year. Our strong performance was supported by important new long-term 5-year data that has been resonating with the specialist community. The global pandemic we're facing is not over, and we do anticipate a continued impact to our business, particularly as a result of lower new patient starts due to fewer patient visits overall. As we previously mentioned, we've been expanding the number of community-based gastroenterologists that we're educating on Ocaliva. This education is important considering our strategy of supporting earlier identification of appropriate Ocaliva patients in the community setting.

To date, since the launch, about 20% of the gastroenterologists in the U.S. have prescribed Ocaliva and we have an opportunity to continue that educational process.

When considering our efforts in PBC, the current trends and future updates we anticipate to our label in patients with the most advanced stages of PBC, which I'll talk more about in a moment. I believe our PBC business continues to represent an important long-term opportunity, given the considerable number of appropriate PBC patients that are not yet on Ocaliva. As we continue to discuss our PBC business, I wanted to provide you with an update today on 2 key post-marketing activities: The evaluation of the newly identified safety signal, or NISS, and discussion regarding the future of our post-marketing studies in PBC. Both of which we discussed on our last earnings call and also at our most recent investor conference.

First, regarding the ongoing process with the NISS. As you know from previous discussions, NISS was identified during routine post-marketing safety monitoring from the FDA in 2020. It was classified as a potential risk for liver disorder in a subset of PBC patients with cirrhosis. We completed a comprehensive safety assessment consisting of post-marketing and pharmacovigilance data, epidemiological data and information from our clinical trials, including an assessment from our data monitoring committee, or DMC, which looked at our key post-marketing studies on an unblinded basis. These analyses were provided to FDA to review, and we had a meeting earlier in quarter 1.

This process remains ongoing; however, based on our interactions with the agency to date, it will ultimately result in a labeling change regarding patients with the most advanced stages of PBC. We're now working with the FDA to align on these changes. We'll provide further updates when the process is concluded.

As we previously communicated, the majority of patients with PBC are not cirrhotic. This is one of the main reasons the name of the disease was changed from primary biliary cirrhosis to primary biliary cholangitis several years ago. Patients with advanced PBC include those patients with cirrhosis, the most severe of which progress to decompensated cirrhosis. We project that patients with evidence of cirrhosis make up about 15% of the overall PBC population.

Since Ocaliva is a second-line treatment, the proportion of patients with cirrhosis on Ocaliva is a bit higher than we estimated in the 20% range. The most severe patients, those with decompensated cirrhosis, are smaller subset of that total population, in the mid-single digits, percentage-wise.

So to summarize where we are on the NISS. The process with the FDA remains ongoing. And right now, we're focused on working with the FDA on updates to the Ocaliva label for patients with the most advanced stages of PBC.

Now let me turn to our PBC post-marketing trials. As a reminder, we have 2 post-marketing placebo-controlled studies ongoing in PBC, which we have also recently discussed with regulators. First, COBALT, which is our confirmatory study of several hundred advanced patients with PBC. And second, the 401 study, which is a smaller study for the most advanced PBC patients who are hepatically impaired. As we previously communicated in the second half of 2020, our DMC reviewed unblinded data from both ongoing clinical trials. The DMC indicated through a blinded report that there were feasibility concerns. These concerns were focused on study design and patient retention, particularly given the advanced population and the commercial availability of Ocaliva while running a placebo-controlled trial.

The concerns they raised were not related to safety, but again, on the feasibility of conducting the trial as designed. We submitted these DMC findings to support our meeting with the FDA this quarter. We proposed modifications to cobalt including potential conversion to an open-label study design with an external control, and we have a dialogue underway to further discuss revisions to the study. We're also seeking scientific advice on the proposed modifications to COBALT in the EU. And of course, future changes to our Ocaliva label related to the most advanced PBC patients will influence the modifications to our study design. In the label considerations, we think it's important to look across the spectrum of information, including recent feedback from the DMC from our ongoing studies and consider the patients who we believe are benefiting from Ocaliva as Ocaliva is the only approved second-line treatment for this patient population.

Now let me turn to our NASH regulatory process for OCA in advanced fibrosis. Our efforts remain ongoing as we work towards potential resubmission of our NDA in the U.S. by the end of 2021. As a reminder, our ongoing Phase III REGENERATE study remains the only positive Phase III study to demonstrate antifibrotic efficacy in patients with NASH fibrosis. We have a strong team comprised of internal and external expertise, and we've initiated the process in what we expect will be a series of interactions with the FDA over the coming months with the goal of gaining alignment on a number of key items prior to a potential resubmission.

The key focus areas for these interactions include: A comprehensive view of OCA safety, biopsy methodology and potential for any additional efficacy data that we may be able to utilize to support the overall benefit-risk profile. We have specific actions underway to support these key areas, where we're seeking alignment with FDA, including preparation of a comprehensive safety update to refresh and increase the amount of safety data that we will have to discuss with FDA. This effort will provide us an opportunity to potentially double the safety exposure from our initial filing as we focus on providing FDA with a greater understanding of the overall safety profile of OCA and NASH fibrosis. As we focus on this process of gaining alignment with FDA, it's important to note that we have an ongoing study with REGENERATE, where we can continue to produce important data to support a potential resubmission.

As a reminder, we also have a second large Phase III study REVERSE, which is underway in patients with compensated cirrhosis due to NASH. We anticipate top line data read out by the end of this year. The read out of REVERSE will represent important learnings in the later-stage NASH population, and we're very much looking forward to the data.

In parallel to our work in the U.S., OCA is on file in Europe where we submitted the responses to the Day 120 questions and the review process remains ongoing. Furthering our pipeline and evaluating opportunities for expansion of our portfolio are key areas of focus for 2021. We continue to enroll our Phase II trial evaluating OCA in combination with bezafibrate outside of the U.S. We're pleased with the rate of enrollment so far. And once the trial is fully enrolled, we'll be able to share an estimated time line for data. We also filed a new IND in January as we prepare to expand the development of the OCA bezafibrate combination into the U.S. We believe there's a significant opportunity for the combination of bezafibrate and OCA to enhance the product profile. And if approved, it will be an important new therapy for patients with PBC. Intercept remains committed to innovating for patients.

We've also made the decision to move forward with at least one of our internal candidates, INT-787, a next-generation FXR agonist, which we believe has great potential for differentiation. And we look forward to doing the first-in-human work in 2021. So overall, 2021 will be a pivotal year for Intercept. There's a number of priorities underway this year, which will help shape our company's future success.

And now I'll turn the call over to our Chief Financial Officer, Sandip Kapadia, for a financial update. Sandip?

Thank you, Jerry, and good morning, everyone. Please refer to our press release issued earlier today for a full summary of our financial results for the quarter and full year ended December 31, 2020. We reported strong financial results in 2020 with overall worldwide Ocaliva net sales growth of 25% as well as continued progress in our efforts to reduce operating expenses going forward.

Beginning with our commercial performance. In the fourth quarter, we recognized $83.3 million in worldwide Ocaliva net sales, our highest quarter to date, up from $70.3 million in the fourth quarter of 2019. For the full year 2020, worldwide Ocaliva net sales were $312.7 million compared to $249.6 million in the prior year. Our full year 2020 Ocaliva net sales comprised of U.S. net sales of $234 million and ex U.S. net sales of $78.7 million, representing a growth of 25% and 27%, respectively.

Our GAAP operating expenses for the fourth quarter were $123.9 million, and our non-GAAP adjusted operating expenses were $106.6 million. For the full year 2020, GAAP operating expenses were $543.9 million, and our non-GAAP adjusted operating expenses were $480 million. As a reminder, our non-GAAP adjusted operating expenses excludes stock-based compensation and depreciation.

Non-GAAP adjusted operating expenses is a non-GAAP financial measure under SEC regulations. Please refer to our press release issued earlier this morning for a full explanation and reconciliation of this measure. Our cost of sales for the fourth quarter were $0.8 million compared to $2.5 million in the prior year quarter. For the full year 2020, cost of sales were $5.3 million, as compared to $4.2 million in the prior year. Our cost of sales consists primarily of packaging, labeling, materials and related expenses.

Our selling, general and administrative expenses for the fourth quarter were $70 million. This represents a decrease of $23.7 million versus the prior year quarter. And was driven by our initiatives to reduce costs as a result of the postponement of the NASH launch. For the full year 2020, selling, general and administrative expenses increased to $332.5 million. An increase of $15.1 million from the prior year. The full period-over-period increase was primarily driven by expenses in the first half of the year related to our launch preparation activity associated with the potential approval and commercialization of OCA for liver fibrosis due to NASH.

Our research and development expenses decreased to $51.9 million in the fourth quarter of 2020, and from $64.6 million in the prior year quarter. For the full year 2020, research and development costs decreased to $191.5 million from $242.8 million as compared to the prior year. The decrease in research and development expenses for the year was primarily driven by UK R&D tax credit of $22 million, recognized as a reduction in expenses; and lower NASH development costs, including the conclusion of enrollment activities for the REVERSE and REGENERATE studies.

Restructuring expenses were $1.2 million and $14.6 million for the 3 and 12 months ended December 31, 2020, respectively. These expenses were comprised of severance cost and other termination benefits included in conjunction with the 2020 workforce plan. As of December 31, 2020, we were well positioned with cash, cash equivalents, restricted cash and investment debt securities available for sale of approximately $477.2 million.

And now turning to our financial guidance for the year. We expect full year 2021 Ocaliva net sales to be between $325 million and $355 million. Key drivers and assumptions include the following: First, we believe we have contemplated the scenarios of anticipated prescriber label changes that will occur to the most advanced PBC population and potential timing of those changes in our range of guidance for the year. We will plan to refine and update throughout the year as we have more information.

Second, we have also factored in the continued impact of lower new enrollment as a result of the COVID-19 pandemic. And lastly, as a reminder, we would expect typical seasonality in Q1 as patients are impacted with insurance plans reset and Medicare coverage gap. Therefore, expect higher gross to net deductions in the first quarter. We expect full year 2021 non-GAAP adjusted operating expenses to be between $380 million to $410 million. The guidance reflects the impact of our streamlining efforts during the back half of 2020 as we have refocused our commercial efforts on PBC while continuing to resource our NASH program and advancing our pipeline.

So overall, I'm pleased with the strong commercial performance in 2020 and our ability to pivot and reduce operating expenses quickly, which has resulted in a strong cash position entering this year. We will continue to invest in the growth of our Ocaliva business, support our NASH regulatory process with the FDA; fund our key clinical trials, including REVERSE and REGENERATE; and focus on finding ways to leverage our strengths.

So with that, I'd like to turn it over to the operator for any questions. (Operator Instructions) Thank you. Operator?

(Operator Instructions) Our first question comes from Yasmeen Rahimi with Piper Sandler.

So I wanted to have a better understanding on how many patients on the REGENERATE study have already completed being on drug for 4 years, 3 years, 2 years? Time flies by, it's been almost now 2 years since the REGENERATE data read out, which was on 931 patients. If you could provide that in this comment as in regards to the FDA recently, stating that they really want to see data post year 2. So if you could check that. And then second quick question is, can you provide a little bit color on 787 and how it differentiates from OCA?

Yasmeen, it's Jerry. Thank you for the question. As you mentioned, REGENERATE has been ongoing. We read out at 18 months for that group of patients a while ago now. So there are considerable portions of the population who have obviously moved through the subsequent periods, including that 48-month window at this time. Enrollment was completed a while ago. And the time to completion of the overall study, which, as a reminder, is an event-driven study, is based on the events that are accumulating. So that piece is some years away.

The ability for us, for example, to take advantage of the larger numbers of patients that have now reached a later time period is one of the elements in the safety update that we are preparing for discussion. I think, again, it's one of the elements of an ongoing study that allows us to look at some of that data appropriately. And again, I think the safety update and the roughly doubling of the exposure that we expect will be part of the updated safety cut is a key element as we look to align with the agency over time in terms of the comprehensive safety view of OCI.

So on 787, as I did mention in the prepared remarks, we do plan to initiate a first-in-human study this year. It is a bile acid selective FXR. I think there's potential from some of the preclinical models for differentiation, for greater efficacy potentially based on some of the models. We will be doing more work and communicating more on 787 as we move forward.

Our next question comes from Steve Seedhouse with Raymond James.

It's not entirely clear to me whether or not the NISS would have implications or change anything with respect to NASH, specifically the NASH cirrhosis study, obviously, you're titrating to a higher dose even, so can you just comment on that? And also just quickly, what is the IP on 787?

Thanks, Steve. So first of all, the NISS, as we've talked about, is based on post-marketing in the PBC environment. PBC is a cholestatic disease, REVERSE is our second large Phase III trial, group of compensated cirrhotics, that trial is fully enrolled, over 900 patients. The study is ongoing. It continues to be monitored in all the ways that are necessary for a study like this, including the DMC, the Data Monitoring Committee, taking a look at the study on a regular basis.

And recently, the DMC has reviewed REVERSE and come back and not recommended any changes. So again, we look forward to continuing forward on the REVERSE trial. It is a different condition of PBC and NASH, and our plan is to read out top line by the end of this year.

Would you mind just commenting on the patent protection on 787?

Yes, I don't believe we've commented on the IP on 787 yet.

Our next question comes from Alethia Young with Cantor.

I'm just curious if you can talk with any kind of precision about maybe what the FDA or what are the new and recent considerations around NASH and what's going on there, and you're kind of confidence as you work through that with them.

I'm sorry, Alethia. Can you repeat the first part of your question? You were a little low.

I'm just curious about like you -- kind of your conversations with the FDA and considerations they're having around NASH. If you can give any more granularity, visibility on what's going on there and your general confidence around kind of being able to refile before the year ends?

Okay. Thanks for the question. We're heavily focused on this engagement with the FDA with a real priority around alignment on some of the key areas of a potential resubmission. It is a process that we have initiated, and it is ongoing. We've tried to highlight the key areas, Alethia, that are -- we think are most important in terms of that alignment process, including the comprehensive safety of OCA. And again, I think that having the right ability to have an updated and refresh discussion with the safety update that we're preparing is going to be important. The biopsy approach is one of the others. And then of course, we're asking as we work through this, what, if any, potential additional efficacy data might inform the right risk-benefit discussion prior to a resubmission.

So we're doing the work. We're generating the data. And we're not going to be providing granular updates at each discussion, but we would definitely look forward to, as the process continues and we have an ability to refine, to come back and provide an update at that point. I think the other thing that's important is we continue to believe that OCA, due to the fact that it's still the only Phase III that has shown antifibrotic effect in advanced fibrotic patients, that we have to continue to keep that in mind. These are a group of patients with a high unmet need, and that's part of the large motivation for our focus.

Our next question comes from Michael Yee with Jefferies.

This is Aryeh Gold on for Michael Yee. I just wanted to try to get your thoughts on the recent resignation of the CMO and any potential impact that will have to the refiling? And a second question relating to potentially safety and tolerability benefits with the new -- with the second-gen FXR.

Thanks for the question, Aryeh. We remain focused on our NASH efforts. I think I mentioned at JPMorgan, for example, the fact that we put a new dedicated team onto the NASH efforts with the real focus on ensuring that we were bringing a combination of new perspectives in, also with considerable folks that have history on the program. So the team remains ongoing in all the efforts. You did mention the fact that there have been some changes to the leadership team. I think, ensuring we have the right team to take the next steps has been a clear focus for me in the first period. I think during a leadership transition, changes are always anticipated.

But I've been really pleased, additionally, with our ability to bring in some new top talent, bringing some different experiences and perspectives and also having a chance to reinforce some of our existing folks and having some folks step into new leadership positions, which I think creates a good mix on the team with some new talent in, some folks that, through succession planning, are having an opportunity to play to their strengths and also leverage folks like Sandip and Gail, who have been with us on the Intercept journey for a while. So I feel good where we are on the leadership side at this point.

Sounds good. And on the second-gen FXR?

I'm sorry, what was your question on that?

For the new FXR, any potential safety and tolerability benefits that you're seeing preclinically?

Yes. Again, I think there's reason to believe that there's differentiation potentially both on the efficacy, but also for a better overall profile. So far, again, early data looks promising based on the preclinical work, but we'll come back with more insight over time as we move 787 now into the next steps.

Our next question comes from Navin Jacob with UBS.

Yes. Just wanted to -- Jerry, wondering if you could help us with some of the potential label change scenarios here. Would it just be an exclusion of individuals that have cirrhosis or just a warning? What are the type of scenarios that could play out here? Understanding that it's tough to comment while discussions are ongoing. But if you could at least walk us through maybe the -- book-in the type of scenarios that could come out of this.

Yes. So maybe I'll start and then maybe ask Sandip to talk a little bit in the context of guidance. Navin, as you said, importantly, the process is ongoing. So we wanted to provide an update today based on the information that we have, but it's difficult to get into certain level of specificity given the conversations will continue. I think we are working to finalize, again, updates for patients with the most advanced stages of PBC.

We've tried to, in the guidance, give you a range of potential scenarios. And then, of course, on the prepared remarks, what I tried to do was to outline the group of patients that fall into these different stages and how we see them. So the process is ongoing. We'll definitely come back as that is complete.

Sandip, do you want to give any additional context in?

Sure, Jerry. Just -- I mean, we announced the sales guidance today of $325 million to $355 million for worldwide Ocaliva sales in 2021. What I'd say is, we believe, I think, we've contemplated the scenarios of anticipated prescriber label changes that could occur in the more advanced PBC patients population, I would say, along with the timing. But we're in the midst of the process. So what I would say is we're continuing to refine and update as we learn more information. But I think the current guidance provides at least some context around that.

Yes, so we continue -- go ahead.

Yes, Sandip, if I could, just on that, so your guidance is basically I think, effectively saying flat -- or annually, if you annualize Q4, it's effectively flat from here on. A couple of things on Q4. Maybe I just missed this. Apologies, Sandip. But was there any inventory build or burn during the quarter? And then should we think about sort of the trajectory here during the course of the year as demand continuing to do what it's doing until potential label change comes in and then a potential drop in demand? Or like how did you sort of come to the guidance? I'm just trying to understand that. Did you think about the phasing there? Or was it just you took a conservative approach of kind of annualizing Q4?

Well, I think, look, with respect to the first question in terms of inventory changes in Q4, there wasn't anything significant. Usually, we see a little bit of a tick up at year-end, but that's every year, we do see that. And then, of course, as I also mentioned, typically, you'll see in the first quarter just as insurance plans reset and patients have faced the Medicare coverage gap. We have higher gross-to-net deductions in the first quarter. So first quarter tends to be a bit softer and then growth post there. So right now, I think what I can say is, at least we've factored in some of our thinking in terms of the potential for a label update and as sort of like the range, and we'll update you along the way.

Our next question comes from Brian Skorney with Baird.

Just trying to parse the language here on NASH. It seems like aligned with the goal of increasing the probability of a successful outcome for patients with advanced fibrosis due to NASH would indicate maybe targeting a potential narrowing of the addressable patient population for an approved product? And I know there were F1s in the broader REGENERATE enrollment. And there had been some idea that you can get maybe a broader label in F2, F3. So I'm just wondering, is the thought to try to focus and limit the patient population to F2, F3 in an NDA? Or is it something narrower than that? Like are you just targeting F3s or maybe some other criteria to kind of enrich the data?

So as a reminder, the interim analysis read out in Phase III, the successful impact on fibrosis was in a population of F2 and F3. The F1s that were in the REGENERATE study were an exploratory, so that wasn't a group that was part of that interim analysis result. So the assumption on the 18-month results is an F2 F3 population, I think, in parallel. We've talked over time, particularly, in advance of the complete response letter, when we had some more in-depth discussions about our commercial plan, the focus around the advanced fibrotic population and this F3-like advance has always been our commercial focus because of the high level of unmet need.

I think the opportunity for us to dialogue with the FDA in this process that we're in now around risk-benefit overall, bringing new safety data into the picture, I think, will allow us to have the right discussion around risk-benefit in the context of thinking about a potential resubmission. But again, the population of the initial IA read out was that F2, F3 group from REGENERATE.

Our next question comes from Ritu Baral with Cowen.

So Jerry, it sounds like you're not reiterating prior indication that a 2020 submission is likely. And you talked about this comprehensive safety update. What do you think the odds are that you'd have to develop some sort of new efficacy submission or interim efficacy hook for submission as part of any potential re-review at this point?

So Ritu, as I said, we remain focused on the interactions with the FDA, and our plan is that we'll progress through those and align -- work towards alignment for a potential resubmission by the end of 2021. And so that's why we're intensively focused on some of these key areas. I mentioned the safety update as a key one. Our focus in this work and our thinking includes the in-depth conversation around safety, along with any potential for additional efficacy based on the -- what the FDA would be looking to consider in that context.

So I guess I can't probably go much more definitively than that, except that the efficacy component is an additional and core part of the topics that we intend to work through this alignment process on. Of course, based on the conversations we had, for example, with the FDA at the end of -- towards the end of last year with the Type A meeting and the real focus on ensuring the right discussion around risk-benefit in both sides of that equation.

Got it. I am going to squeeze 1 follow-up in. Just as far as converting COBALT and 401 into an open-label extension, do you have to generate some natural history analysis before you can sort of flip the switch and turn those patients over? Or is it more complicated than that?

So on COBALT, as I mentioned, the dialogue is ongoing. We had proposed an open-label and a plan around that, including the control we would recommend. Of course, since the dialogue is ongoing, I can't get more definitive on that now. I think one of the other points that is important is that there is an interdependency between a potential for revision of design and what might be the right revised design and the final label. And that's the other component that's important to this whole discussion.

Our next question comes from Michael Morabito with Chardan Capital Markets.

I just wanted to try to get a little bit more information. Any details you can provide on the upcoming safety data cuts on potentially the timing of when that may occur. Is there any delay on when you expect that to happen, based on the interactions with the FDA? Have you finalized which trials will be involved in that safety data cut? And do you have any plans to share the results of that analysis?

So maybe I'll start. So as I said, the work on that safety update from REGENERATE is ongoing. Also part of what we would anticipate in any potential resubmission would be an update from our other trials as well. We do look at the safety update that we are in the process of working through as an important component, again, since it gives significantly more safety exposure for patients with fibrosis due to NASH from REGENERATE. And again, that's a heavy emphasis on the team. Of course, the alignment with the agency on the analysis of that data and the -- what that dataset means, we expect, will be the focus of some of these ongoing discussions.

Again, the opportunity to approximately double the safety exposure from what was included in the initial file, we think, is an important component in this overall discussion on the overall safety profile of OCA.

I guess just a quick follow-up on that. Is a positive outcome of this additional safety data cut a continuation of seeing the same safety profile that you have seen with no worsening in any safety signals? Or are you looking to see improvement over time?

So of course, our ability to get a refreshed view of the overall safety is going to be important, and it's going to be important to look at that in the overall context and the discussion with the agency.

Our next question comes from Brian Abrahams with RBC Capital Markets.

I have a question on the OCA bezafibrate life cycle extension potential. I'm just wondering, what else needs to be done to move into U.S. trials? Has the IND there cleared? And how might U.S. studies differ from your approach with that combination outside of the U.S.?

Thanks for the question, Brian. Maybe on this one, I'll start and then Gail can comment. I think, first, the opportunity for us to progress on our next medicine in PBC, for us, I think, reinforces the long-term interest we have and in rare cholestatic diseases like PBC. I think that the opportunity that we have bezafibrate in-house and access to it for the U.S., we think it's a competitive PPAR. There's a significant amount of data on bezafibrate in PBC, albeit most of it from investigator-initiated trials, but importantly, also some interesting combination data with OCA, gives us an indication that there's good potential here and as we look at the Phase II that's ongoing, as you say, outside of the U.S., maybe, Gail, you can comment a little bit on that and some of the key elements as we think about the work to start in the U.S. now.

Yes. So as Jerry said, we have started our Phase II study with the OCA bezafibrate combination outside of the U.S. We've been very pleased with the enrollment despite the ongoing pandemic. That study includes 2 arms of bezafibrate, 2 different doses since dose titration is clearly an important part of any Phase II study as well as OCA at 5 milligrams titrating to 10 milligrams. At the same time, in the U.S., we have filed an IND and are preparing to start additional clinical pharmacology work later this year in the U.S. that will help us to understand more about dosing in our Phase III program and get us ready to start Phase III at the right time. We should have more information as the year goes on and as enrollment progresses in our Phase II study to provide an update later.

Our next question comes from Joseph Stringer with Needham & Company.

You mentioned some earlier metrics on PBC and percent of gastroenterologists prescribing Ocaliva. Just wondering if you could maybe speak to what you think the current market penetration for your addressable or target patient population is? And what is key in sort of unlocking the next tier of PBC patients?

Thanks, Joseph. I think when you consider the PBC opportunity that we have, it's important that there are a considerable number of patients that are appropriate for Ocaliva that aren't getting therapy. It's been a big part of the educational efforts that we've had over time. And I think the dimension of, in a focused way, expanding our education to more community-based gastroenterologists is at the center of our strategy and will continue to move.

Now if those gastroenterologists tend to have a relatively few number of potential PBC patients in their practice, so it is important that we educate and also identify where those patients will be. And particularly important in the community setting is identification of the right patients early that are ready for second-line therapy and might benefit. So this -- I think that the fact that there's more room for penetration in our core patient population and the steady expansion of our reach with the gastroenterologist continues to be a core part of our efforts, both on the commercial and medical affairs side in the U.S.

Our next question comes from Geoff Meacham with Bank of America.

It's Aspen on for Geoff. Both on the pipeline, first on 787. If you could quickly walk us through what you view as the development path there. And how you're thinking about the prioritization of development in terms of the different indications, PBC and NASH or maybe something beyond that? And then quickly on bezafibrate as well, any plans to move beza into going forward as a monotherapy, either in NASH or PBC? Or do you kind of view that as purely a combo play?

Okay. Thanks. First, on 787. I think we're -- as I said earlier, we look forward to the first-in-human work this year. We are doing some, I think, good work also in looking at potential indications. It's too early to get definitive on that today except to say that we're looking at the potential and then across a group of indications based on where there might be the right scientific rationale, considering potential path forward in terms of development and regulatory and looking at that with a rather open mind to point this asset towards the right indication.

And I'm sorry, you had a -- your second question on...

On bezafibrate. Yes, I just wanted to understand if there was -- just kind of how you view the asset? Is it more of a combo play regardless of indication? Or do you see any path forward where you develop beza as a monotherapy?

At this point, our primary focus has been on the combination of bezafibrate and OCA as a fixed-dose combination.

Our next question comes from Jay Olson with Oppenheimer.

I had a financial question. And I'm curious about the path to profitability by geography. How much visibility do you have into achieving profitability in the U.S. alone? And if NASH starts looking like a U.S.-only opportunity for OCA, given the lower PBC revenues and lower operating margins ex U.S., can Intercept become profitable ex U.S. on PBC alone? Or would you consider becoming a U.S.-focused business and out-license your ex U.S. rights to OCA?

Sandip?

Jay, thanks for the question. I think what we have commented on in the past is that our PBC Ocaliva franchise is a profitable franchise as a stand-alone business. We're pleased with how the revenues have grown over the past several years. We've managed our expenses accordingly. And the business is profitable, both in the U.S. and outside the U.S. when you consider the direct marketing and selling expenses.

With respect to long-term profitability, I think it's something that at least we provided guidance today kind of gives you a sense of where we expect our sales and operating expenses. As you can see, it's meaningfully lowered our cash burn compared to last year based on the guidance that we provided. That's as far as at least we can go at this stage. But hopefully, that gives you some context.

Our next question comes from Matthew Luchini with BMO Capital.

Great. So actually, on the European question. So as it relates to NASH, so you Intercept delayed the 120 response to this year to try to get better alignment with FDA, guys have now responded, but it seems like alignment with FDA is, of course, still a bit of a work in progress. So just wondering how we should think about the EU opportunity from here?

And then secondarily, just quickly on PBC as it relates to the NISS. Just given everything that you've done with FDA so far, do you feel like the discussion is in the home stretch and we should be expecting things to be resolved in the relatively near term? Or are the push and pulls related to label and any other open issues still relatively large, and you're very much still in sort of the hammering it out phase?

Thanks. Maybe I'll take the second one first, Matthew. So as I've continued to say the process is ongoing. I think we're working to finalize the updates to the label. I can't really be definitive on the timing since the process is ongoing. What I would say, though is, based on the regulations for these kind of interactions, that the process could be completed within the coming months. But again, it is ongoing. And obviously, we're not in control of all facets of the process.

The first question was on Europe. The OCA is on file. We did submit responses to the Day 120. We are working in parallel on that process and the ongoing important work for alignment in the U.S. prior to a potential resubmission by the end of this year. And as we go through those processes in parallel, as you can imagine, we'll be considering the best options to take. We are progressing through the process in Europe, and we would anticipate the constructive dialogue moving forward. Of course, as a reminder, OCI is the first NASH drug also being reviewed on the European side, but we're working through that process, and we'll assess things as it progresses.

Our final question comes from Mayank Mamtani with B. Riley.

This is Sahil on for Mayank. Congrats on the progress. Maybe a quick question on the PBC label change. Could you discuss how that's reflected in some of the sales guidance provided today. And perhaps in the context of the enrollment going on in competitive programs, maybe, from (inaudible) and GENFIT, and how you think about that in the overall guidance? And then finally, is there a similar label update process underway in the EU as well?

So Sandip, maybe you want to start on the framing around the guidance.

Sure. I think the guidance that we gave, the $325 million to $355 million, I think, reflects a couple of different factors overall: One is we've contemplated what we would anticipate as the prescriber label changes. Obviously, it's still in play, so it's hard to say specifically. We'll continue to refine that throughout the year as we get more information.

And the other piece we've also factored in is, Jerry talked about lower new patient starts during -- based on the COVID pandemic, so you start to see some of that impact as we go into this year. And I think the best way to sort of also think about the guidance at the bottom end of the range reflects a greater restriction on the advanced PBC population, while I would say the top end reflects lesser impact overall. So hopefully, that gives you a little context on that. And maybe, Jerry?

Yes. And I'm sorry, the second question was?

Yes. Just in terms of -- is there a similar label update process underway in the EU as well?

So not a similar process per se. As you know, the process that is ongoing right now was initiated out of the NISS in the post-marketing context from the FDA. Of course, there -- we will look to consider the right discussions with the regulators as we work through things with the U.S., but the process that I speak about specific to the NISS is the FDA specific process.

That concludes our question-and-answer session. I'd like to turn the call back to Jerry Durso for closing remarks.

So thanks for the questions and look forward to continuing the dialogue. I think, as I near the end of my first 60 days as Intercept's new CEO, definitely excited for the opportunity we have to grow our business, support our patients with PBC, NASH, other serious liver diseases, our capabilities, importantly, our people and the strong evidence we've generated with OCA gives us multiple pathways to achieve success and advance our mission. And I'm looking forward to our execution on the major objectives that we outlined this year and spoke about today, which have the ability to transform our company. So I look forward to continuing the conversation. And thank you very much for joining us this morning.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.