Intercept Pharmaceuticals Inc (ICPT) 2020 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Intercept Pharmaceuticals Third Quarter 2020 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, Lisa DeFrancesco, Head of Investor Relations. 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 third quarter 2020 results and financial position, and also posted accompanying slides, which are 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 program; certain regulatory matters, including the potential approval of OCA for liver fibrosis due to NASH; and our strategy prospects, financial guidance and future commercial and financial performance. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this call. And we undertake no obligation to update such statements, except as required by law.

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

Today's call will begin with prepared remarks from our CEO, Dr. Mark Pruzanski; followed by those from our Chief Operating Officer, Jerry Durso; and our Chief Financial Officer, Sandip Kapadia. We'll then open the call to take your questions. (Operator Instructions)

Let me now turn the call over to our CEO, Dr. Mark Pruzanski.

Thanks, Lisa, and good morning, everyone. Thank you for joining us on our third quarter 2020 earnings conference call. I'm pleased to report our core PBC business performed well during the quarter, which I'll summarize shortly. But I want to focus first on providing a comprehensive regulatory update, starting with NASH. Last month, we had our Type A end-of-review meeting with FDA to discuss the agency's benefit-risk assessment in the CRL based on its review of the available data as well as our proposed basis for resubmitting our NDA seeking accelerated approval of OCA for NASH fibrosis.

As you know, we prepared extensively for this meeting with the objective of reframing our efficacy and safety data supporting benefit-risk of OCA in NASH patients with advanced fibrosis based on the Phase III REGENERATE 18-month interim analysis and a refined risk management approach for appropriate patient selection and monitoring. The end-of-review meeting was constructive. And based on the final meeting minutes we recently received, FDA has provided us with helpful guidance regarding supplemental data we can provide to further characterize OCA's efficacy and safety profile, which could, in fact, support resubmission based on our 18-month biopsy data together with a safety update from our ongoing studies. We are advancing accordingly and plan to hold additional meetings with the agency with the goal of achieving sufficient alignment to proceed on this basis and potentially resubmit our NDA next year.

Our work generating additional efficacy and safety data is ongoing, and we remain focused on reinforcing means to identify the segment of NASH patients with advanced fibrosis who are at most risk of progression to cirrhosis and could, therefore, most benefit from OCA's antifibrotic effects, while achieving appropriate management of hepatic safety and other potential safety issues in treated patients. As we have stated, we believe this can be achieved based on appropriate labeling and standard noninvasive assessments used by specialist physicians to assess and monitor the functional status of their patients.

As we've often pointed out, NASH patients with advanced fibrosis typically have comorbidities, take various medications and experience intercurrent illnesses that taken together, render them particularly vulnerable to acute and progressive chronic injury to their liver. So we and FDA have been particularly focused on working to gain a thorough understanding of OCA's hepatic safety profile in this population and the identification of patients who may potentially be at greater risk.

As we previously have shared, we conducted a comprehensive assessment of hepatic safety relatively late in the NDA review, and FDA did not have a chance to fully review it. We did have a chance to review some of the data at our end-of-review meeting. And as a first order of business, we look forward to engaging in a more focused review of the data with the agency.

A word on some of the work we're doing on the efficacy side. There is growing interest in digital pathology tools that are able to quantitatively score fibrosis and other histopathologic features of interests in biopsy specimens and provide more accurate resolution that is supportive of pathologists' assessments. While these innovative tools remain exploratory, we believe there is interest on the part of FDA and that such data might bring OCA's antifibrotic benefit into even clearer focus. In addition, of course, as part of any safety update from our ongoing studies, we will have the benefit of assessing the longer-term durability of OCA's treatment effect on a variety of noninvasive markers.

With that, we very much look forward to continuing to engage with FDA with the hope for objective to position us for resubmission of our NDA next year, and we will, of course, update you on any important developments as appropriate.

A quick update now on our MAA seeking conditional approval of OCA for NASH fibrosis in Europe. As you may recall, we submitted the MAA at the end of 2019, and our application is under review. In the third quarter, we were granted an extension to respond to the Day 120 questions we received from the EMA with our responses now due this coming January. We requested the extension to help ensure consistency in our approach in both the U.S. and Europe.

It's useful to pull back and remind you that based on recent literature, NASH is now the most rapidly increasing indication for liver transplant in the U.S., and there is an urgent unmet medical need for the treatment of advanced fibrosis due to NASH, where there are no approved therapies. Unfortunately for patients, the NASH field has seen more than its fair share of failures in recent years, and OCA is the only drug to have succeeded in the Phase III trial to date, having reproducibly demonstrated its ability to improve fibrosis.

We remain committed to the NASH patient community with REGENERATE currently ongoing through clinical outcomes with the goal of confirming clinical benefit on a post-marketing basis. As a reminder, we are also conducting the Phase III REVERSE study in NASH patients with compensated cirrhosis, with readout of the double-blind phase expected by the end of next year. Both REGENERATE and REVERSE are fully enrolled with patient retention continuing to track well despite the ongoing pandemic.

As a final note on our NASH program, our conviction in the potential for OCA to become the first drug approved and an important treatment for patients with advanced fibrosis is shared by many stakeholders in the liver community, including patient groups, opinion-leading physicians, and others passionate about advancing medical innovation. So I'm excited to note that Mani Subramanian, the former therapeutic area head of liver disease at Gilead, who successfully led efforts over a decade-long tenure to secure a number of drug approvals, has agreed to join our effort to help steer OCA to approval.

Pivoting now to PBC. Our performance during the third quarter was strong once again. We reported worldwide Ocaliva net sales of $79.5 million, reflecting impressive growth versus the prior year quarter. We believe the growth opportunity for our PBC business remains attractive over the long term.

As a reminder, for those of you not familiar with the regulatory history, Ocaliva was approved in May 2016 in the U.S. as a second-line treatment for patients with PBC under the accelerated approval pathway based on a reduction in alkaline phosphatase as a surrogate endpoint reasonably likely to predict clinical benefit. It also received conditional approval for PBC from EMA in December 2016.

Full approval of Ocaliva for PBC is contingent upon, among other post-marketing requirements, the confirmation of clinical benefit in our ongoing Phase IV outcome study, COBALT. COBALT is a placebo-controlled multicenter study designed to evaluate clinical outcomes in more than 400 PBC patients. Given the challenge in successfully completing the multiyear post-marketing, placebo-controlled studies in a rare disease setting, due, for example, to patient dropouts and placebo crossover to commercial drug over time, prior to initiating COBALT, we discussed with regulators potential conditions under which it might be converted to an open-label study of OCA compared to a historic case-matched control from available natural history data sets.

While we've been enrolling COBALT globally in more than 30 countries, we've continued discussions with both FDA and EMA concerning the merits of potentially converting to an open-label study design. And both agencies advised that we revisit this possibility, if warranted, after a prespecified interim efficacy analysis by our data monitoring committee, or DMC, which was recently completed.

The analysis included DMC review of unblinded safety data and no safety concerns were reported, resulting in no changes recommended to study conduct. However, the DMC did conclude that it doesn't seem feasible to continue COBALT as designed. Of course, we remain blinded to data in the ongoing study. And as is typical with such DMC interactions focused on maintaining data integrity, there was minimal additional detail provided as to the relative impact of confounding factors observed by the DMC, including patient discontinuations and placebo crossover to commercial Ocaliva. We've notified both the FDA and EMA of the DMC's conclusion, and per their respective recommendations, plan on holding a meeting with FDA early in the New Year, while seeking formal EU scientific advice.

There are examples of other confirmatory outcomes, open-label studies, relying on historic controls for rare disease drugs approved on an accelerated basis. And we, of course, remain committed to working with FDA and EMA to come to resolution on a potential modification of COBALT as soon as possible.

I also wanted to address the "newly identified safety signal," or NISS, for Ocaliva in the PBC post-marketing setting that was posted on FDA's website last month. For background, FDA has long conducted safety evaluations in the post-marketing setting, and in recent years, has taken steps to increase the transparency with respect to such reviews. In our case, as we previously disclosed, the agency notified us that it had initiated a NISS regarding liver disorder that it classifies as a "potential risk," the lowest level of risk. Per its guidance, FDA estimates up to a 12-month time line for the evaluation of this kind of NISS as compared to a more rapid time line for evaluating a NISS FDA determines as either an important potential risk or an emergency.

We understand that this potential Ocaliva risk in PBC was identified in the course of FDA's routine safety monitoring activities based on a search of the FAERS database and other available external sources. And FDA has further informed us that the NISS is focused on a subset of cirrhotic or more advanced PBC patients taking Ocaliva and not the broader PBC population.

As you would expect as part of our standard pharmacovigilance activities, we've worked with FDA to reconcile our internal safety database with the FAERS database and are now conducting a comprehensive assessment of all the available data, including data from our completed clinical trials, blinded reviews from ongoing studies such as COBALT, unblinded reviews of ongoing clinical trial data by the DMC, post-marketing data and natural history data.

FDA has acknowledged the limitations of post-marketing data and stated that safety data from controlled clinical studies will be of most value to inform any final assessment of a potential risk. So it is reassuring that, as mentioned, our DMC recently reviewed unblinded safety data from patients enrolled in COBALT, including cirrhotic patients who comprise the majority of the study population and stated that no acute safety concerns were observed. We are working to complete our comprehensive safety assessment with respect to the NISS within the coming months and intend to continue to work with FDA to complete the review.

It's important to note that we have over 14,000 patient years of post-marketing exposure in PBC patients treated with Ocaliva, and our view of its benefit-risk remains positive. We continue to engage the physician community and are pleased to see the continued strong interest in PBC at AASLD this year, where multiple abstracts evaluating OCA for the treatment of PBC will be presented. In particular, we look forward to the presentation of OCA's durable efficacy and safety data in PBC patients treated for up to 6 years. Meanwhile, we continue to be committed to fostering innovation for patients with this disease, and I'm pleased to report that we've resumed enrollment in our Phase II study evaluating OCA in combination with bezafibrate.

In addition to the strong net sales we reported in our PBC business in the third quarter, we also took swift steps to rightsize our organization in light of our receipt of the CRL in NASH fibrosis. This morning, we announced that we are narrowing our 2020 financial guidance within the high end of our previously announced Ocaliva net sales range and within the lower end of our previously announced non-GAAP adjusted operating expense guidance range. This will put us in a strong position as we enter 2021 to support the continued growth and advancement of our foundational rare liver disease business and the potential resubmission of our NDA in NASH fibrosis next year.

Now I'd like to turn the call over to Jerry, who will provide an update on our global PBC business and commercial activities. Jerry?

Thanks, Mark, and good morning, everyone. I'll start by discussing our Ocaliva results for the quarter, and then provide you with an update on our commercial organization, along with a summary of our current efforts in PBC.

In the third quarter, we reported $79.5 million in worldwide Ocaliva net sales, which represented a growth of 29% versus the prior year quarter and is our highest quarterly sales to date. In the U.S., we achieved net sales of $58.6 million in the third quarter. We saw continued in-market demand growth for Ocaliva as U.S. total prescriptions based on IQVIA data increased by approximately 14% versus the prior year quarter.

In the international region, we achieved ex U.S. Ocaliva net sales of $20.9 million in the third quarter. These results reflect the continued strong performance in our key international markets. Our global Ocaliva business continues to be resilient despite the challenges resulting from the COVID-19 pandemic, and we've been pleased with our ability to maintain patients on therapy.

The overall slowdown in patient visits persists in the GI segment globally. And while we saw some recovery in the third quarter, trends are still below the pre-pandemic levels. We continue to experience a lower level of new patient starts during the third quarter. And although the new patient segment represents a small portion of our business, the COVID impact we've seen in 2020 is expected to have an impact on our future quarterly growth rate versus the prior year period.

As we discussed last quarter, after receiving the complete response letter from NASH, we were able to take advantage of the flexibility we had built into our commercial plan to quickly prioritize our commercial activities and turn our focus back towards PBC while postponing our NASH launch efforts, and importantly, lowering our operating expenses moving forward. Subsequently, in the third quarter, we restructured our commercial and medical affairs organizations. The resulting targeted footprint in the field has been resized and is focused on maximizing the growth of our core PBC business.

Through this transition, we have retained a strong team with deep experience in the hepatology and GI segments. Our teams are fully trained, and now dedicated back to PBC. As our field teams navigate their outreach given the current pandemic, we are actively leveraging technology to increase the impact of our customer interactions. Complementing the efforts of our field teams, we've seen a positive response to our digital educational programs. For example, we recently trained our speakers to deliver education that included the results from our POISE 5-year open-label extension study.

Overall, we have continued to experience progressive growth, both in the U.S. and internationally as we've established Ocaliva as the first new therapy for PBC in over 20 years. As our commercial efforts pivot back fully to PBC, we remain confident that there is an opportunity for continued expansion in this market over the long term.

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 ended September 30, 2020. We reported strong Q3 results and made solid progress in our efforts to reduce operating expenses going forward. These efforts resulted in the narrowing of our 2020 guidance towards the higher end of our Ocaliva net sales guidance range and the lower end of our non-GAAP adjusted operating expense range.

Beginning with our commercial performance. In the third quarter, we recognized $79.5 million in Ocaliva net sales, our highest quarter to date, up from $61.5 million (sic) [$61.9 million] in the third quarter of 2019. Our third quarter Ocaliva net sales were comprised of U.S. net sales of $58.6 million and ex U.S. net sales of $20.9 million. This represents a growth of approximately 30% and 28%, respectively, versus the prior year quarter. As a reminder, in Q3 2019, we did experience a drawdown in trade inventories in the U.S.

Our GAAP operating expenses for the third quarter were $134.7 million. And our non-GAAP adjusted operating expenses were $118.1 million. As a reminder, our non-GAAP adjusted operating expenses exclude stock-based compensation and depreciation. Non-GAAP adjusted operating expense is a non-GAAP financial measure under SEC regulations. Please refer to our press release issued earlier this morning for a full explanation and reconciliation of this measure.

Our cost of sales for the third quarter were $1.8 million compared to $0.5 million in the prior year quarter. Our selling, general and administrative expenses for the third quarter were $70.6 million. This represents a decrease of $6.2 million versus the prior year quarter and was driven by our initiatives to reduce costs, including the postponement of the NASH launch.

Our research and development expenses decreased to $48.9 million in the third quarter of 2020 from $60.2 million in the prior year quarter. The decrease was primarily driven by lower NASH development costs, including the conclusion of enrollment activities for the REGENERATE and REVERSE studies prior to the third quarter of 2020 and reduced costs related to our preparation for NASH regulatory interactions.

Restructuring expenses were $13.4 million for the 3 months ended September 30, 2020. These expenses include the costs related to the previously announced restructuring. As of September 30, 2020, we were well positioned with cash, cash equivalents, restricted cash and investment debt securities available for sale of approximately $496.8 million.

And now turning to our updated financial guidance for the year. As I mentioned earlier, we took the necessary steps to lower our costs. The Ocaliva franchise is profitable, continues to grow and is expected to provide a strong financial foundation for our future. We are able to narrow our full year 2020 guidance range for both net sales and non-GAAP adjusted operating expenses. We now expect Ocaliva net sales in the range of $310 million to $320 million, up from the previous range of $300 million to $320 million. We now expect 2020 non-GAAP adjusted operating expenses in the range of $460 million to $480 million, down from the previous range of $460 million to $500 million.

As we close the year and look forward to 2021, we remain focused on top line growth and prioritization of our investments going forward. Overall, I'm pleased with our strong commercial performance, which together with the initiatives we've taken to reduce costs, put us in a strong cash position. We are well positioned to support our NASH regulatory process with the FDA to fund our ongoing clinical trials and continue to invest in the growth of our Ocaliva business.

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

(Operator Instructions) Our first question comes from the line of Michael Yee with Jefferies.

Mark, two questions relate to just clarifying the discussions with the agency as much as you can in terms of what specifically is required for the safety component of things and on the efficacy. To me, it sounded like a detailed discussion of hepatic safety and said that you weren't able to fully review all that. So maybe is that kind of what is really the gating part on the safety side and on the efficacy side? It sounded like a lot less stuff. So maybe just talk to those 2 sides again through? And then on Europe, can you just clarify was there any discussions there at all? It's really focused first on FDA?

Sure. Thanks, Mike. Yes. So as I mentioned in my prepared remarks, we are happy to have the end-of-review meeting with the agency. We've received the final meeting minutes. And as we've anticipated, this was the start of reengagement with the agency with respect to a potential resubmission of the NDA. And we got a lot of helpful guidance from FDA with respect to elements that we can address in support of ongoing discussion and that potential resubmission.

As you mentioned, on the safety side, as we've long held, I mean, liver-related safety in patients with advanced fibrosis is really important to get a handle on. We've mentioned before that both we and the agency have really tried to understand, across this population, liver health status. There are a lot of confounding features in a population like this, as mentioned, that lead to progressive disease, acute exacerbations of disease, et cetera. So it's a challenge. And we did conduct on this independent expert blinded assessment of liver safety relatively late in the review cycle. So the agency didn't have a chance to really complete review of that.

So after Type A, we did have a chance to discuss this. And I do think that it is sort of the first order of business to follow up with the agency and really trying to get a handle on, and again, part of any resubmission would be a comprehensive safety update from primarily REGENERATE and other ongoing studies. And assuming we're in a position to resubmit next year, we'll essentially have the chance to virtually double the safety database with respect to duration on study just for reference, when we think about the patients who comprise the month 18 interim cohort. On average, those patients are now nearing 3 years on study, and those who were first enrolled in the study are approaching 5 years. So that's going to be a very rich safety update, which is invaluable in a large disease population like this.

On the efficacy side, I mentioned in my remarks, a growing interest in digital pathology tools. And I personally, in the context of ongoing need for liver biopsy, think that these tools are going to also prove to have a lot of merit in addressing the well-known variability that we see with pathologists' assessment of these semi-quantitative categorical features, histopathologic features. So while they continue to be exploratory, I think that there's clearly growing interest in the community and that they can bring into clear focus, the histologic benefit of a drug like OCA. So that's just one example. And then obviously, the flip side of any safety update is taking a look at the durability of response with respect to noninvasive markers of efficacy. And then -- so that's on the FDA side.

On the European side, obviously, we're earlier in review. We did get this extension to January for our Day 120 responses, that allows us to align our approach across both U.S. and Europe. And we're pleased to be underway there, but premature to comment on what the issues will be.

Our next question comes from Yasmeen Rahimi with Piper Sandler.

Two quick questions. Maybe the first one is, is there really an additional meeting necessary with the FDA? I know you just had quite a lot of content from them on to prepare forward. And if you could just maybe give a little bit more granular details on -- in terms of whether we expect NDA filing first half of '21 or second half? And then is there a potential that you could maybe roll in the cirrhosis, the REVERSE data into the filing?

Thanks, Yas. So yes, we do need to have additional interactions with the agency, and frankly, we welcome that. It's in our mutual interest to try to gain as much clarity and comfort with respect to this large and complex data set prior to any resubmission. So I think that -- and we've anticipated that, that would be the case coming off the Type A meeting. And the good news is that we're constructively engaged with the review division and have a lot of guidance with respect to things that they wish to look at.

I think with respect to your -- the second part of your question on timing, it is premature right now to speculate on first half, second half, we think, because largely in part that we need to get our ducks in a row in terms of timing of generation of data, the interactions with FDA, which I think we can have on a timely basis, but also is a little bit at the discretion of the agency, but they absolutely do want to continue the discussion and meet with us. And again, as I mentioned, assuming we get to adequate alignment, I think that could position us to resubmit next year based on the month 18 biopsy data with the safety update.

With respect to REVERSE, again, we anticipate it reading out by the end of next year. It is open under a separate IND. But right now, it's not contemplated that we would wait for the result of REVERSE to resubmit.

Our next question comes from Joel Beatty with Citi.

The first one is, has the next meeting with FDA already been requested?

Has the next meeting been requested? Well, look, again, we don't comment on any specific meetings or timing of meetings typically. But we're right now lining up our next steps. We just came off the meeting and just received the minutes, so we're still digesting.

Okay. Got it. That's helpful. And then one other question is on -- is there a potential the unblended outcomes data from REGENERATE as well as COBALT would be submitted to the FDA as part of the NASH refiling?

Yes. Look, I mean, it's a good question, and that was what we were wondering after receiving the complete response letter. But -- which -- what we're really pleased about coming off the Type A meeting now is that there appears to be openness on the part of the agency to a potential resubmission based on the month 18 biopsy data with the safety update, of course. And so that would not necessarily include any kind of interim outcomes data from the ongoing REGENERATE study. Remember, we remain blinded to outcomes studies ongoing, as I mentioned. But as of right now, we anticipate it'll take another 3 years or so until we get to a target number of outcomes to get to the end of the study.

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

You mentioned some of the -- I guess, on the efficacy side, you talked about the potential for filing with greater clarification on the existing 18-month biopsy data set from REGENERATE. Just I'm wondering if you could talk a little bit more about that. You mentioned this -- some digital assessments of histology. Is that -- are those analyses that you guys have already done? And if not, how long might those take to do?

And then secondarily, I'm wondering how much the discussion with the agency is centered around a potential narrowing of the population, maybe closer to this -- the at-risk advanced population that you guys have always talked about as framing from a commercial standpoint versus the broader REGENERATE population?

Brian, we may have lost Mark. Just stand by while we get him back.

We have Mark back on the line now.

Apologies. My line dropped.

Brian, can you repeat your question?

Yes, sure. My first question was just on the digital assessment of histology that you guys have talked about and whether you've done some of those analyses yet? And if not, how long those might take to conduct?

And then secondly, just wondering the degree to which your discussions with the agency are centering around a potential narrowing of the label, maybe closer to this at-risk population of advanced fibrosis patients at that -- patients that you guys have always talked about when framing a potential commercial effort versus the broader REGENERATE population?

Yes. Thanks, Brian. And sorry to drop there. So with respect to digital pathology, that work is ongoing. But I don't think it will be -- represent critical path with respect to getting to a potential resubmission next year. And by the way, I'd point out that there are a number of abstracts at this year's AASLD starting towards the end of next week to look out for just to -- if you're interested to look at the power of the technology.

With respect to the second part of your question on narrowing label, I mean, it's premature to speculate on labeling. But yes, I mean, we've been very consistent with respect to our intended focus, and that is on patients with advanced fibrosis who are at most risk. And that clearly represents a narrower segment than the population we studied overall.

Our next question comes from Alethia Young with Cantor Fitzgerald.

The first one, can you just talk a little bit about like how you think about the, like, macro environment at the FDA around NASH? I mean is it like a question of sort of education that you're having to provide because it's your first? Or are people getting more jittery just because there's like there have been some failures in the space?

And the second question is just, when you think about like PBC, and that's a crazy question to ask. How do you think about potentially being more aggressive there and taking share in light of what's going on with the cash and the benefit like perhaps like hopefully NASH gets approved, but I think also now PBC is obviously a clear marketing focus since the team is probably mostly deployed?

Yes. Look, Alethia, with respect to the first question. I mean, obviously, there's a tremendous unmet need in NASH. It's a large population. As I mentioned in my remarks, it's now become the fastest-growing reason for liver transplant with no approved therapies. That said, I think it's appropriate for FDA to really scrutinize every drug that comes through. I mean, at the end of the day, we all acknowledge that these endpoints, as high as the bar is, are surrogate endpoints reasonably likely to predict clinical benefit. And so you need to really rigorously assess both sides of benefit-risk.

I do think that FDA and EMA continue to be committed to NASH to the potential for surrogate endpoints to support accelerating conditional approvals, respectively. But clearly, the bar is high. And OCA is the only drug, as you know, to have succeeded in Phase III, certainly the only drug to have reproducibly shown an antifibrotic benefit that the leading KOLs compare to the kind of antifibrotic effect that you see with bariatric surgery in NASH, which is the only reference standard. So we're confident in the drug, but clearly, more work needs to be done in updating our safety and efficacy data and reviewing it with FDA to put us hopefully back in position for resubmission.

On the second part of your question, on the PBC side, look, we clearly are very pleased with the growth that we've seen in the PBC business globally. I mentioned that we're now past 14,000 years of exposure. We've got long-term safety, durability -- safety and efficacy data in the population. We continue to innovate and be committed to the population. Maybe Jerry could ask -- or answer more specific question about our penetration.

Yes. Alethia, it's Jerry. I think, clearly, we believe that there's considerable potential left for us to access in PBC. I would not at all consider that we're at the late-stage of the life cycle at this point. We should be able to continue to access more of the patients that are eligible for Ocaliva and haven't been started yet. I think when we look at the market research that we continue to do on a regular basis, significant opportunities for growth remain. I think if you look at every quarter, even in the period like we're in now where COVID has some disruption in the market, we're seeing new prescribers come on board for the first time, which is not always the case when you're several years into the launch. I think it just speaks to the need for us to continue to educate the market.

And as you said, importantly, now, our commercial and medical field teams are now refocused and dedicated. And frankly, I think -- and I've been really pleased with the level of engagement on our teams as we've made the pivot over the last several months from a lot of the preparatory education for NASH back, fully focused commercially to Ocaliva and PBC. So we'll continue to ensure the right focus to drive the growth. But again, the key message for me is considerable opportunity remains in PBC.

Our next question comes from Steve Seedhouse with Raymond James.

This is Timur Ivannikov on for Steve Seedhouse. And -- so we have a couple of questions. So in terms of NISS, when do you expect to provide data analysis results to the FDA? And then could you remind us what portion of your PBC patients are cirrhotic?

Sure. So second part of your question, what proportion are cirrhotic? The vast majority of patients are not cirrhotic. We estimate up to 85%. So we're talking about a pretty narrow segment of the population.

With respect to the work that's ongoing, I mean, there's a comprehensive safety assessment across post-marketing and clinical data, as I mentioned in my prepared remarks. We're working as expeditiously as we can to complete that work, which we expect to happen over the next few months. And that will then facilitate discussion with FDA with respect to any resulting recommendations.

Okay. And then on COBALT, could you clarify what was the main reason COBALT cannot continue as a blinded study?

Yes. So you're referring to the DMC's conclusion coming off the interim efficacy analysis. And as I mentioned, I mean, we've long been aware as have the FDA and EMA of the challenge of conducting these multiyear placebo-controlled outcome studies in a rare disease setting and in the post-marketing basis. We've clearly done our utmost to enroll COBALT over the last few years, as I mentioned, in over 30 countries. And also, it's important in context to know that it's not only that we're studying a rare disease population, but this is primarily a more advanced segment of the population, right? So majority of the patients in COBALT are already cirrhotic when they enter the study. So it's an exceedingly tough study to enroll and takes many, many years.

And the concern, of course, going in is that over the years, of course, you're going to get discontinued -- patient discontinuations, and you're going to get patients crossing over to commercially available drug. So -- and this is a concern not unique to COBALT, of course. I think it's a more generalizable challenge for anyone who follows us in PBC, and frankly, in other chronic rare diseases. So it is something we've had an ongoing dialogue with FDA and EMA on. And as I mentioned, we will, in the New Year, be following up with FDA, getting scientific advice in Europe to see what we can do. We remain committed, of course, to confirming benefit. But again, need to see where the regulators would like to go with respect to modifications to the study.

Our next question comes from Ritu Baral with Cowen.

I wanted to ask you about what you were thinking as far as your -- the strategy for your 2023 converts. Is that going to be wholly dependent on your conversations with FDA? Or do you sort of have a stand-alone strategy regardless on how to deal with those?

And then my follow-up is on your bezafibrate study that you mentioned. One, can you talk about the data timing and potentially regulatory path beyond the current study? And if you could as well, could you just walk us exactly through the rationale for the different comparator arms? Because it's just a little confusing on clin trials. There's a bunch of them, and they read kind of the same, but not really.

Sure, Ritu. So Sandip, could you take the first part on converts?

Sure. Ritu, thanks for the questions. I think we took a lot of the initial steps, obviously, to reduce our operating expenses. I'm very pleased with what that progress has made so far. The first maturity on the convert is not until 2023. And so we're always evaluating options. We're always thinking proactively and strategically ways to manage our future capital needs. I think we'll certainly, as we understand better the time lines for resubmission. And in the coming months, we continue to sort of evaluate and provide you an update there.

And then bezafibrate?

Yes, Ritu, with respect to the combo bezafibrate. So just a reminder to everybody that bezafibrate is a pan-PPAR agonist that's been on the market in a number of countries ex U.S. for many, many years, and there's been a lot of interest in beza -- in PBC, specifically, around the world. In fact, among many data sets at the recent European Liver Meeting, EASL, the first abstract in the general session was 10-year outcomes data from Japan in PBC showing an outcomes benefit with bezafibrate treatment as compared to URSO alone, the first-line treatment.

There have also been several combination data sets, clinical data sets out of Europe that have been presented at various meetings, looking at the combination of OCA with bezafibrate, which again look quite promising and support the potential for the combination as a follow-on treatment for PBC. So the Phase II study is currently enrolling. I think, Ritu, it's premature. I mean it was on hold during the -- a lot of the pandemic. Happy that we're now -- we've reinitiated enrollment, but it's a bit premature to project on timing of readout.

In terms of where -- what the regulatory path would look like, there is guidance, of course, for combination product development. Typically, you have to characterize component A versus component B versus component -- versus A plus B. Hopefully, we'll be able to do a lot of that characterization in Phase II. But ultimately, Phase III design would be a function of our discussions with FDA and EMA at the time.

The development of the fixed-dose combination is going well from a product development standpoint, and we currently don't see any major instrumentable challenges there. So I'll stop there.

So the current study doesn't answer the factorial question that FDA will want. That will come afterwards?

Well, typically, in Phase III, you do -- part of the guidance, you do the factorial, you do the A versus B versus A plus B. But again, there are exceptions to that. I think we'll just have to see. And again, I think we will want to leverage as much as possible the available data. That's why I mentioned all of the data sets that currently out are there published, et cetera.

Our next question comes from Jay Olson with Oppenheimer.

I had two of them. Starting with the NASH CRL, I think, at the time you received the CRL, you suggested a time line of about 6 months to resubmit your NDA with a 6-month review and a potential NASH approval mid-2021. And I was wondering, it just seems like today's language sounds like a potentially longer time line. So now that you've met with the FDA, what changed? Why does the time line seem longer now? And was there something incrementally more time-consuming that you got from your FDA meeting?

And then I had a PBC question. I'm kind of surprised that Intercept would want to convert COBALT to an unblinded design. Since Ocaliva has repeatedly been a victim of unwarranted safety concerns, which were all based on uncontrolled safety records. So why would you want to deliberately give up an ideal source of controlled safety data, which you could use to potentially ensure the clean safety profile of Ocaliva?

Sure. So with respect to the first question on time line, right on the heels of the CR letter, I put out speculatively what a best case could look like in responding to the CR letter. Obviously, that was gated in the first instance by timing of the first interaction, the Type A end-of-review meeting, which we just had last month. So I think that we've adjusted our thinking about potential time line accordingly.

In addition, as we contemplated at the time, we knew that this was -- the Type A meeting was an opportunity to reengage with the agency. And what's helpful here is that there's a mutual desire on our part and FDA's part to get together again and have substantive interactions to try to gain further clarity and comfort with respect to, first and foremost, safety data, including ultimately a safety update that I've mentioned in my remarks and, of course, additional efficacy data.

But what we're pleased about is that, number one, we're constructively engaged with the review division. Number two, that they've expressed an openness to potential resubmission based on the month 18 biopsy data with the safety update. And that, in fact, was our -- was and remains our hope for objective here.

On the PBC side, look, as I mentioned, we've been 100% committed to conducting COBALT globally on an ongoing basis as a placebo-controlled study. And as I mentioned also, with respect to addressing the NISS that's currently being looked at, we believe that the safety data from that controlled study, and again, just to punctuate the point, right, majority of the patients in that study are cirrhotic patients. That will be, by far, the most valuable source of safety data that we will tap, and we have pretty extensive safety data at this point, given how long the study has been ongoing.

So with respect to -- on a forward-looking basis, then the idea of converting it to open-label, it's not necessarily that, that was our intent. It's that we have long been aware as have FDA and EMA of the challenge of successfully completing a placebo-controlled confirmatory outcome study in this kind of rare disease setting, taking many years in a post-marketing setting. So we now have a DMC conclusion based on a prespecified interim efficacy analysis that the study doesn't seem to be feasible as currently designed. And so that is now going to catalyze discussion with both FDA and EMA with respect to any appropriate modifications. The open-label design with external control, historic control, is an option that could make sense under such circumstances.

Our next question comes from Thomas Smith with SVB Leerink.

In NASH, I know you have a large number of patients who are enrolled beyond the interim analysis cohort in REGENERATE, who should be coming up to their 18-month biopsy. Can you just clarify if you're planning to analyze and submit the 18-month biopsy data from this cohort to the agency as part of the resubmission?

And then secondly, on the NASH marketing application in Europe, I understand you've asked for an extension here to try to align your responses and your approach between the 2 agencies. But can you comment on how closely the Day 120 questions near some of the questions raised in the FDA review? Are there any notable differences in the feedback between FDA and EMA?

Sure. Thanks for the questions. Yes, the answer is, so with respect to the month 18 biopsy data, we do have additional biopsy data. We're blinded to it right now from the cohort of the outcomes, cohort of patients. And we are considering whether it could incrementally add to the efficacy data set that we currently have in hand. But that's going to take a little bit of time to think about.

With respect to EMA, again, we're relatively speaking early in the review of the Day 120, I think that the review issues will come into better focus with Day 180. But the opportunity that we have with the extension that we requested is, in fact, to align our approach. One thing I will say is that EMA, and this is very helpful and aligned to our approach in the -- with FDA, EMA is quite focused on fibrosis and fibrosis improvement as a recognized, more clinically relevant histologic feature of NASH. And so that's very much aligned with our approach as an antifibrotic drug across both U.S. and Europe.

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

It's Aspen on for Geoff. Just a quick one on PBC. Understanding that it is early in the FDA investigation and that the focus population for the NISS is also bit small, have you guys seen any impact to Ocaliva sales either in that focused population or outside of it? And any anecdotal feedback from patients or physicians would be really appreciated.

Jerry, could you take that?

Yes. I would say to date in the time since the NISS has appeared on the website, we don't see anything in the ongoing trends, which would be representative of any sort of immediate effect from that.

That concludes today's question-and-answer session. I'd like to turn the call back to Mark Pruzanski for closing remarks.

Thanks, operator. Thank you, everyone, for listening in today. It's obviously been an eventful quarter. We're very pleased with where we are in our foundational PBC business. And we're also very pleased to have begun our reengagement with FDA with respect to next steps getting to potentially resubmission next year, assuming we, of course, get to sufficient alignment with the agency on the basis of resubmission. But it is constructive that the agency appears to be open to our resubmitting based on our month 18 biopsy data with safety update. We'll continue to review -- the review process in Europe, and we look forward to providing you with updates across our NASH program as appropriate going forward. Thanks very much.

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