Intercept Pharmaceuticals Inc (ICPT) 2020 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2020 Intercept Pharmaceuticals Earnings Conference Call. (Operator Instructions)

I would now like to [introduce your host for] this conference call, Ms. Lisa DeFrancesco, Head of Investor Relations. You may begin.

Thank you. Good morning, and thank you for joining us on today's call. This morning, we issued a press release announcing our first 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 our 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 in our periodic 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. Mark?

Thanks, Lisa, and good morning, everyone. Thank you for joining us on our first quarter 2020 earnings conference call. We hope that everyone joining us on this call and your families have remained in good health during this challenging and unprecedented time.

Before diving into our business update and financial results, I'd like to discuss the current global situation that we are all facing and how we, as a company, have been navigating. Here at Intercept, we remain strong and resolute in continuing to serve the needs of our colleagues, customers and the patient community globally. We are monitoring the COVID-19 situation closely, and mobilized early in the course of the pandemic to secure the safety of our employees and take steps intended to ensure business continuity while remaining focused on our important objectives for the year. It goes without saying that adjusting to the new reality of remote working has been challenging, and I'd like to thank our employees for their solidarity, determination and successful efforts in continuing to drive our enterprise forward.

Turning to our ongoing clinical trials. We are focused on ensuring patient safety and maintaining trial integrity, consistent with recent regulatory guidelines. With more than 4,000 patients enrolled across our NASH and PBC programs at approximately 400 sites around the world, we've been finding new ways to compliantly support patients and investigators participating in our trials via telemedicine, home care visits, direct delivery of investigational product and other measures. As you know, our Phase III NASH trials REGENERATE and REVERSE are fully enrolled and ongoing. We made the decision to temporarily pause screening and randomization of patients in our Phase IV COBALT outcomes trial in PBC as well as in our Phase II study evaluating OCA in combination with bezafibrate in PBC.

We are carefully evaluating evolving circumstances in light of the pandemic and look forward to restarting enrollment in these trials as soon as possible, likely on a regional basis.

With respect to our supply chain, we've been working continuously with our third-party manufacturers, distributors and other trusted partners to avoid any potential disruptions to our product supplies as a result of the pandemic. At this time, we have not experienced any meaningful interruptions in the supply of commercial product for our Ocaliva PBC business or investigational product for our ongoing clinical trials.

Looking now at our performance, I'm pleased to report that our Ocaliva PBC business continued to perform well in the first quarter of 2020, with net sales of $72.7 million, representing 40% growth over the prior year quarter. In the first quarter, we saw higher-than-anticipated net sales supported by continued strong total prescription trends, and modestly higher-than-expected inventory demand towards the end of the quarter as certain customers responded to the uncertainty of the early COVID-19 period. These strong results continue to provide a solid foundation as we advance during this pivotal year for the company.

On the regulatory front, we continue to work closely with the FDA on our priority review application for OCA and liver fibrosis due to NASH as we look toward our PDUFA target action date of June 26. Of course, the next important review milestone is our advisory committee meeting tentatively scheduled for June 9. As you may be aware, given the current environment, the FDA has publicly indicated that it is moving ahead with its plans to host virtual AdComs, and our team is preparing accordingly. We are pleased that the FDA has been working to ensure that their technology platforms are robust and that their virtual meeting format will facilitate productive discussions amongst all the participants. In the meantime, we've been conducting virtual mock AdComs, and I've been encouraged by our ability to execute these remotely.

With the first ever NDA on file for a NASH fibrosis indication, we are preparing for a wide range of topics to potentially be discussed at the AdCom. NASH is a complex disease, and many of these patients have comorbidities, which involve treatment by various specialties that may therefore be represented on the panel. Following the AdCom, our next review milestone will be the anticipated approval of OCA based on our PDUFA target action date. Our launch preparation has been extensive and we will be prepared to launch as soon as possible following the expected approval. Based on the uncertain duration and potential variability in government-imposed restrictions due to the pandemic, our commercial team has been hard at work on a thoughtful and flexible plan to launch OCA for NASH with appropriate customer engagement and patient safety and access foremost on our minds.

Intercept is a company that has accomplished many firsts. As the leader in progressive nonviral liver disease, it seems only appropriate that we anticipate, yet again, having the opportunity to lead the way navigating the first NASH launch in this evolving commercial environment. Our team is prepared and up for the challenge. The hepatologists and gastroenterologists who care for NASH patients with advanced fibrosis continue to be highly engaged, and the unmet medical need remains significant in this vulnerable population. For all of these reasons, I remain confident in our ability to successfully execute on this potential blockbuster opportunity in NASH.

A final word as a member company of bio, I take great pride in the way the entire biopharmaceutical industry has mobilized in response to the COVID-19 crisis. I believe we will get through this and that ultimately, our industry will once again demonstrate the value to society of our collective efforts to drive scientific innovation to improve health outcomes and save lives. I expect we will emerge a stronger, more united industry and be well positioned to pursue our common objectives to treat patients in need and conquer disease.

Now I'd like to turn the call over to Jerry to provide an update on both our global commercial PBC business and our NASH prelaunch activities and commercial readiness. Jerry?

Thanks, Mark, and good morning, everyone. In the first quarter, we reported $72.7 million in worldwide Ocaliva net sales, which was our highest quarterly sales to date. In the U.S., we achieved net sales of $50.8 million in the first quarter as our end market demand performance was strong, and we continue to see good total prescription growth versus the prior year quarter.

In the international region, we achieved ex-U.S. Ocaliva net sales of $21.9 million in the first quarter. These results reflect the continued strong performance in our key international markets. Now we did not see the anticipated seasonality in worldwide Ocaliva net sales in quarter 1 as there was modestly higher-than-expected inventory towards the end of the quarter as select trade customers in the U.S. and in Europe proactively manage inventory in response to the uncertainty of the early COVID-19 period. As you would expect, we have begun to see a slowdown in new patient starts as the impact of social distancing directives has caused the reduction in physician office visits. To give some context on that dynamic, as you know, Ocaliva is a chronic medication, and new patient starts are a small percentage of overall prescriptions.

Turning to NASH prelaunch activities. Our teams continue to make significant progress in preparation for our launch, which we'll be fully prepared to execute upon FDA approval. I'll talk a little bit about that progress and then the adjustments that we're making related to COVID-19 and its impact on our launch planning. The good news is our strategy and our overall opportunity in NASH remains the same. The global pandemic has not impacted the fact that a significant unmet need exists in noncirrhotic NASH patients with advanced fibrosis, and we remain committed to moving forward with our launch as soon as possible following the anticipated approval of OCA.

As we began 2020, we are encouraged by the strong momentum we saw as we progressed in our efforts to educate stakeholders on the implications of advanced fibrosis due to NASH and the appropriate identification of these patients. We were able to continue to expand the reach and the depth of our educational efforts based on our expanded field teams and our increased utilization of digital programming. For example, by the end of the first quarter, our field forces have delivered disease-state education to well over 11,000 physicians treating NASH patients. Of course, at the end of the first quarter, the COVID-19 situation began to emerge and has caused disruption in the health care system. Therefore, we've been working to update our launch plans to account for the changes in the market environment.

As a result of the crisis, overall patient visits across the industry in the U.S. are down between 50% and 60% from this time last year. However, we are observing an increase in the utilization of telemedicine and monitoring of patients that is growing practically on a weekly basis. Our NASH target physicians in both the hospital and the community setting have been rapidly adopting virtual platforms, and we're looking to harness this emerging trend. At our NASH Commercial Day last December, we talked extensively about our initial target patient population for launch and that has not changed. Our initial target population remains noncirrhotic patients with advanced fibrosis due to NASH, who are already under the care of a hepatologist or a GI specialist, and we estimate that there are approximately 500,000 such patients existing in the U.S. We know that success with the payers is a critical priority for our launch, and we remain encouraged by what we see on that front. Our payer discussions have continued to progress with little, if any, interruption, even as the payer dialogue moved to a virtual setting.

As part of our progressive dialogue with payers, we have now advanced to corporate-level discussions. We are pleased to see a high level of payer engagement on NASH despite the demands on payers resulting from the COVID-19 situation. Our overall objective is the same. We're working to ensure that there are no surprises and that our payer customers have a clear understanding of our target population and the unmet need that exists today in noncirrhotic NASH patients with advanced fibrosis. Our objective is to ensure that we're well positioned for the final negotiation phase with payers, which will happen once we have approval, a final label and a price. Since mid-March, as a result of the COVID-19 pandemic and the implementation of government-imposed social distancing directives, we, like the rest of the industry, have experienced a disruption of our efforts to educate the community. Face-to-face meetings with the physician community are just not possible right now. So our educational efforts have transitioned completely to virtual platforms. We've been pulsing appropriate disease education content to the physician community regularly, and our field teams have begun to reengage with physicians through personalized remote communications.

Over the past several weeks, we've also been focused on further increasing the reach and the frequency of our virtual programs to provide additional opportunities to bring relevant education content to health care providers. It is our goal to ensure that our launch plans enable us to keep our customers and our employees safe. Until we can safely move back to in-person interactions in the field, we expect that the early stages of our NASH launch will be conducted virtually. We expect the recovery from COVID-19 will be regionally phased so our local teams will be assessing each geography and monitoring customer trends in each of our markets in real-time so that we have the flexibility in our launch plan to adjust our customer interaction model as local situations evolve.

Consistent with our objective to be fully ready for launch as early as the PDUFA target action date, we've hired and trained the majority of our targeted field-based teams across sales, market access and medical affairs, and I'm very encouraged by the talent that we've assembled. With regards to the final group of open positions in our targeted field structure, we plan to continue to evaluate the evolving COVID-19 situation on a local level and will take a measured approach to the addition of incremental personnel as we look to optimize our available resources.

In summary, upon approval, we'll be ready to execute the first launch in this category during what we know will be a dynamic market situation. We look forward to providing access to OCA for noncirrhotic patients suffering from advanced fibrosis due to NASH, and we continue to believe OCA is well positioned to become the foundational therapy for these patients.

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 this morning for a full summary of our financial results for the quarter ended March 31, 2020.

Our regulatory and commercial launch readiness activities continued during the first quarter. We responded rapidly to support business continuity and took important steps intended to minimize disruption to our supply chain and clinical studies in response to the COVID-19 pandemic, all while maintaining strong execution in the PBC business and advancing our NASH prelaunch activity.

In the first quarter, we recognized $72.7 million in Ocaliva net sales, our highest quarter to date, up from $51.8 million in the first quarter of 2019. Our first quarter Ocaliva net sales comprised of U.S. net sales of $50.8 million and ex-U.S. net sales of $21.9 million. This represents a growth of approximately 34% and 58%, respectively, versus the prior year quarter.

As Jerry mentioned earlier, we did not see the anticipated overall Q1 sales seasonality for Ocaliva we typically experience, with certain customers proactively managing inventories at the end of Q1 in response to the uncertainties in the early COVID-19 period. We also saw lower new patient starts towards the end of the first quarter as we began to experience the impact of COVID-19 on our business.

Our GAAP operating expenses for the first quarter were $156.1 million and our non-GAAP adjusted operating expenses were $142.9 million. As a reminder, our non-GAAP adjusted operating expenses exclude 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 first quarter were $0.9 million compared to $0.6 million in the prior year quarter. Our selling, general and administrative expenses for the first quarter were $98.6 million. This was an increase of $21.4 million over the prior year quarter and was driven primarily by organizational growth and our NASH launch preparation activities. During Q1, we completed the majority of the U.S. field force expansion to support the launch in NASH.

Our research and development expenses for the first quarter were $56.7 million and generally in line with the prior year quarter. As of March 31, 2020, we were well positioned with cash, cash equivalents, restricted cash and investment debt securities available for sale of approximately $554 million.

Turning to our financial guidance for the year. We expect Ocaliva total prescription demand to continue to grow on a year-over-year basis. We also expect second quarter Ocaliva net sales to be relatively in line with first quarter Ocaliva net sales based on the anticipated reversal in the second quarter with the COVID-19-related inventory build seen in Q1.

With respect to operating expenses, our guidance remains unchanged. And we continue to expect non-GAAP adjusted operating expenses for 2020 to be in the range of $560 million to $600 million, reflecting our investments to support launch of OCA in liver fibrosis due to NASH, our commercialization efforts in PBC, our clinical development program and pipeline programs and other operating expenses. This expense guidance assumes OCA is approved in NASH on or about the PDUFA action date of June 26, 2020.

In summary, we have a strong financial foundation, and our teams have proven we can adapt to a rapidly changing environment. We remain well positioned to achieve our strategic objectives for 2020.

So I'd like to now turn the call over to the operator. Operator?

(Operator Instructions) Our first question comes from Alethia Young with Cantor.

Congrats on the progress. Just a couple for me. One, can you just talk a little bit about kind of your -- kind of recent communication with the FDA around upcoming panel and kind of what you or guys are kind of really focused on in prepping? Are there things that are new that we should think about? Or is it just kind of the same set of topics that we've all kind of been debating over time? And then the second one is just on commercial prep. I guess do you think with a fair amount of patients being under care that there is a still significant focus on kind of trying to find new patients as far as doing kind of early patient education? It seems like most people in the U.S. and clients in probably Europe don't really know what NASH is. That's obviously a unique factor this launch over the long term.

Thanks, Alethia. I'll take the first one. This is Mark and I'll hand to Jerry for the second one. So as I mentioned in my prepared remarks, we're preparing for a tentative June 9 date. We are confident that FDA is planning on proceeding with advisory committees at this time and they publicly stated that they are working on facilitating virtual formats, right? And that's what we've been preparing for.

With respect to topics, we don't have a clear line of sight. We won't until we get their briefing book. But what I can say and we've said this before and this is the first ever NASH approval, it's an accelerated approval. And so -- and it's a complex disease with significant comorbidities, right? So there are a range of topics that could come up. We're preparing for everything. We're very confident based on the progress we've made that we'll be well prepared. I think to be more specific, just looking across what you typically expect. Obviously, on the efficacy side, on the surrogate endpoints, the histology endpoints. So looking at (inaudible), of course, with fibrosis, that's with respect to the association with clinical outcomes. There's also (inaudible) with recent readouts, Phase II and III. There's no necessarily standardized way to assess these endpoints from a biopsy reading standpoint. So -- and of course, there, we learned a lot from FLINT, and we have great results in 2 large randomized studies. But biopsy could come up in that context.

And then moving over to the safety side, there's overall exposure that we have. And then the safety topics that are well-known with respect to our drug that are in the literature. Pruritus being one, tolerability and then hepatic or more broadly hepatobiliary, and of course, the on-target lipid changes that we know very well. So those would be the anticipated topics there.

And then finally, given all of the interest in noninvasives, there could come up discussion about noninvasive means of an accuracy of identifying patients appropriate for treatment versus biopsy. So those would be sort of a range of topics that we are preparing for in the AdCom.

Jerry, on the second part of the question?

Thanks for the question, Alethia. As we've indicated up to now, we're going to continue to stay focused on the advanced patient that's going to be true in terms of the education, with both physicians and with patients in the pre-approval period, and then once we enter the launch phase after approval, likewise. So there's still a good amount of work to do. So we think about, again, the effort as a targeted one on the education side, particularly with the patients where we do know that there's information. The advanced patients are more interested in understanding their care are more urgent, but do need information. So we would anticipate on an educational basis that we'll stay focused in that launch phase on that advanced population. Of course, we'll do some things overall to make sure that the overall understanding of the impact of fibrosis and the patient issues are more well understood with the patients that are out there. But again, the message is really a focus on this advanced population.

Our next question comes from Michael Yee with Jefferies.

Congrats on a good quarter during the crazy environment. Two questions that are related. My first question is assuming approval and assuming everything goes smooth, can you talk about how you guys will know about biopsy requirements for managed care and how the Street will know about which payers would or would not require it? How should we think about going about that journey and what information is out there? And then second, related to that, how do you think whether a patient requires a biopsy or not changes the patient journey to get a script? And how that would change our thinking about a launch in a COVID environment?

Jerry, could you tackle those?

Yes. Sure, Mike. Good morning. I think on the first question, we would expect we kind of move progressively as we've described up to now through this journey with the payers, which is about the importance and the unmet need, the focus on the patients with advanced fibrosis. They're a population that they're concerned about. And ultimately, with a label in hand and a price, which we would set at the point of time then enter into the next phase. And we would anticipate, Mike, that those access decisions where you know formally where you land with payers would happen on the commercial side in that first 6- to 9-month window. So we still do see that as being the period of time which we would be aligning with payers on how they're going to look at the overall considerations for access to OCA and NASH. And again, we're progressing, I think, well on that discussion. There are still some of those key elements, which we need in hand like the label and like the price to have that final phase of conversations, then those happen on a one-on-one basis with the payers. The payers make their decisions usually at different timetables, but that 6- to 9-month window is a good frame of mind. And of course, I would anticipate that as we progress through the launch window after approval, we'll be communicating back to you with update on the progress as those individual conversations continue. And again, ultimately, on the commercial side, end up occurring in that 6- to 9-month window.

And can you kind of make a comment about the second part of my question, which was just in a COVID environment, different drugs have different impacts in terms of what it means to see patients and see doctors. I don't think consensus has really changed at all. And I don't think anyone's -- I think we're all still just waiting to see how it plays out. But do you have some comments about how that would play out in this environment, whether it would be some headwinds or not and how to think about that?

Yes. I mean, I think we're all, Mike, looking intensely on a weekly basis about how things are progressing. And maybe a couple of key things that we have in mind, I think, as we move close to the point, hopefully, where we're able to finally bring the first therapy for patients with advanced fibrosis to the market. One thing that hasn't changed amidst all of this is that the unmet need is there, is recognized more and more and as part of really our long-term focus in terms of ensuring that the first opportunity for patients to get treatment that we're able to bring it to market effectively. Of course, you're seeing. And we do expect for some foreseeable future that there is impact and disruption at the customer level. I think this key dynamic that, of course, if due to social distancing, patients aren't entering the physician's offices as they normally would. That's one dynamic, and you see some of the impact happening in terms of just new patients. So that's one dynamic that we'll be watching closely as we look at the evolution locally now as directives are eased in some areas quicker than others. How does that change things on a local level. So we really look at the local situations as being critical. We do know that we have good knowledge about a core group of our customers, the 5,000 physicians that we've been seeing with PBC. So during a period like this, where there is some disruption in the communication, it is good that we have this base of knowledge about these customers and it allows us to hopefully work and plan effectively. I think on the other side, we have moved to our communications being -- we're now exclusively virtual. And while we feel good about the impact that we can have on virtual communications, both now in the education and after launch, we also have to acknowledge that this is a different model. And so we'll continue to go deep on that and react. So we're encouraged by some of these dynamics, but like everyone, we're adjusting, looking at what's happening on a week-to-week basis. And I think remaining focused on the high unmet need that exists and really the unique long-term opportunity that we have here.

Our next question comes from Yasmeen Rahimi with Roth Capital Partners.

Congrats on the continued progress you are making during this environment. Two questions for you. The first one is, can you share with us if you've had any dialogue with the FDA or EMA in regards of analysis of REVERSE given during the COVID time, especially if biopsies at 72 weeks are met? How can we think about that? And then the second question is for Jerry. Can you share -- shed some light on how payers actually understand the unmet need for NASH given in the COVID era, many of the patients that are in high mortality potentially are NASH patients. Do you think that this environment could actually be far more favorable as we're thinking about as the unmet need is more recognized and allows you in terms of payers and adoption? And then if you know, we'll be representing the data from the investigator side at the outcome, that would be also great if you could share it with us.

Sure. So Yasmeen, I'll take the first and the last part. I think you meant panelists at AdCom?

Yes.

And we don't know -- yes, we don't know who they're going to be yet. So that's an easy one.

The first one, you asked about REVERSE and end of treatment biopsies at month 18. And clearly, look, it's -- as you know, well, it's a global issue, not just in the context of NASH trials. But the vast majority of ongoing clinical trials, FDA, the hepatology division is well aware of the challenge in the context of REVERSE and other studies and is providing dispensation for sponsors to take action and extend biopsy windows, et cetera. So as I mentioned in my prepared remarks, we've gone to great lengths. And luckily, starting with the fact that our 2 pivotal Phase III trials are fully enrolled, that's a very fortunate position for us to be in. And so we can focus exclusively on taking measures to ensure maintained integrity of these studies, patient retention, and where needed, go directly to the patient essentially if they can't access clinics. So we are doing everything in a quiet manner to ensure continuity in these studies, including with respect to managing the biopsy window in REVERSE.

And Jerry, the...

Yes. And on the -- I guess, the middle part of your question, I think that we have seen good progress, and I think that's been prior to the COVID-19 window in terms of the understanding on the payer side as they've done a deeper dive, getting ready for the first approval in NASH, I think understanding the risk, particularly the productive conversation we've been able to have on the medical side about really this differential risk and this increased risk that patients reach when they become advanced in terms of their fibrosis. So I think there's a growing recognition of the risk. And again, I think that's good cohesion with our focus and our strategy against the advanced population. Now a lot of conversation and a lot of, I think, interest around the COVID concomitant conditions, and I think the payers are digging into this on the medical side and trying to understand the risk profile. I think it would be premature to speculate on exactly how that specific element impacts the payers' view on the NASH population. But I do think we start with a good progress in terms of understanding about the advanced risk and the implications of progression to cirrhosis that I think has been a result of a lot of movement, overall, a lot of momentum, overall from the medical community in addition to the educational efforts that we've been engaged with. So I think this will be a key area of further conversation across both the physicians and the payers about how the overlap of concomitant conditions impact the risk of COVID-19 patients. So we'll -- I think that will be something that, again, we'll play out in more detail over time.

(Operator Instructions) Our next question comes from Brian Abrahams with RBC Capital Markets.

So back in December, you provided some extended follow-up data from the subset of REGENERATE patients on FibroScan. I'm wondering as we approach the AdCom, can you talk about the types of additional updated data sets or analyses you've been submitting to the FDA that may emerge in the briefing documents or AdCom discussion? And how overall that's evolved your confidence in OCA's overall benefit risk profile?

Thanks, Brian, and I like the question. As you can imagine with a huge data set like this, we've continued to generate a lot of analyses, both in the context of our launch preparations and, of course, regulatory review. What you're referring to that we presented at our NASH commercial Day was in the subset of patients. Remember, we've been accruing patients in the study for a long period of time. By the time we cut off on the month 18, 931 patient ITT cohort. And so we had experience all the way up to and including 3 years. And we were able, therefore, to show what happened in the subset of patients from a noninvasive fibrosis testing standpoint past the month 18 interim. And very reassuringly saw with respect to FibroScan, you mentioned, continued improvement through -- we call that the month 30 analysis, those are patients plus/minus 6 months at that point in time. And that's strongly suggestive of continued ongoing benefit, which is not surprising, given how many years it takes to accumulate all the scar that results in advanced fibrosis. So the short answer to your question is yes, there are additional analyses. As you'd expect, you'll see more data in our briefing book certainly when that becomes available and discussed at the advisory committee. We, in totality, only have more confidence, therefore, in the robustness of our data in support of accelerated approval.

Our next question comes from Ritu Baral with Cowen.

This is Dushyanth on for Ritu. Just 2 from our end. First is, how is the FDA and payers' understanding evolving in identifying and treating those patients that are likely to be fast progressors? And my second question is, as you're reaching more physicians in your marketing efforts, what's the feedback that you're receiving from them regarding comfort with new patient initiations of PBC in a virtual format?

Jerry, could you take this?

Okay. So if you can just repeat the last part of the question, the new patient initiations. I'm sorry, go ahead.

Yes, the new patient initiations. I'm just wondering, as your commercial efforts in reaching new physicians and engaging with them, how is -- what's the feedback you're hearing from them about new patient initiations with PBC in a virtual format?

Yes. So I think we're seeing to date. And the group of targeted physicians that we've been focusing on with PBC has been relatively stable. So as we expand, we talk about the expanded effort of the team that's really an expansion for our disease state communications on NASH. While the target audience that we've been really promoting to for PBC has stayed stable, roughly 5,000 physicians that were targeted to. And we do see, as I indicated earlier, that as the number of patient visits to physicians has slowed as a result of COVID-19, we do see new patients start to drop-off in a similar proportion, although we do see new patients getting initiated during this window during COVID-19 on PBC, albeit, it has been in the first 8 weeks or so here at a lower rate, which is what we signaled earlier. I think you do see an evolution in how physicians are thinking about telemedicine and really, while there's good progress and you do see when you look at the type of audited data that's out there, an increase in the number of physicians that are seeing patients via telemedicine. There isn't one consistent view on that. It is evolving in different practices at different rates. So this is going to be something that we're going to watch quickly. I think when we think about the NASH world, there are a couple of things that are important. We do -- we will be targeting for NASH a group of patients that are already with specialists, as we've indicated, and who already have been in a specialist practice and already have information that the physician has gathered on them through a variety of different noninvasive means that gives you high probability that these patients have advanced fibrosis.

So there are some elements there that I think we think about the patients are more well known, let's say, than maybe patients that were needing to be referred. So we'll take a look at that as things progress. But the PBC picture, again, we do see new patient starts happening. It is at a rate that is lower, consistent with the fact that less patients over the past 8 weeks have been going into physicians' offices.

Got it. And then, Jerry, just to follow-up another question. How is the FDA and payers' understanding evolving regarding identifying and treating those patients that are likely to be fast progressors with NASH?

Yes. I mean, I'll speak to the payers' side. I mean, I think that the payers do recognize, again, their focus, their priority because it's where they see the implications is the progression to cirrhosis. That's their concern. So they do look at this group of advanced patients that they see at times. And again, there is, as always, some variability of how the payers might be looking at their own population and concomitant conditions. But I think the notion that fibrosis is an indicator and as the fibrosis gets more advanced, that those are the patients that are at risk for progression to cirrhosis and the progression of cirrhosis being the priority for the payer. I think the connection to how advanced the fibrosis is one of really the key elements that the payers understand well and I think has been the focus of a lot of our discussion with them, and will continue to be as we move forward.

Our next question comes from Navin Jacob with UBS.

Two, if I may. Number one, sorry if I missed this, but wondering what your latest thoughts on the feasibility of having dual pricing, differential pricing for PBC and NASH. Number two, wondering, Mark, if -- what the latest are with bezafibrate. And sort of a corollary to that, how are you thinking about potential combinations in NASH beyond beza as other drugs start progressing? Do you see feasibility beyond beza to combine with OCA?

Thanks, Navin. So I'll take the second question first and then hand it to Jerry for the pricing question. So with respect to beza, as I mentioned in my prepared remarks, we've paused temporarily screening randomization in our combo study in PBC. We don't think that this is ultimately going to have a material impact. And as I mentioned, we're looking carefully at the evolving situation. And to the opportunity to restart recruitment, likely on a regional basis. So we continue to be fully committed to the combo there. And also, of course, in the meantime, from a product development standpoint, things are continue a pace without interruption on the fixed-dose combination formulation side.

I think looking beyond beza, while there have been some intriguing results reported in Phase II in the last, say, 6 months or so, most recently, the semaglutide high dose daily injectable clearly had benefit on the NASH endpoint as we've long anticipated it would. I think that we're seeing things evolve as we kind of anticipated in terms of the core mechanisms we think are going to have a role to play in a complementary manner alongside our drug, whether used directly in combination in the form of a single pill as we intend with the beza or just simply administer in combination in different ways. But it remains -- the field continues to progress relatively slowly. The bar continues to be extraordinarily high particularly to meet the fibrosis endpoint. I continue to point out that OCA is the only investigational NASH drug to demonstrate a robust fibrosis improvement in 2 mid- and late-stage randomized trials. So the bar remains very high, and that's, of course, fibrosis is our focus. And I think what we saw with the most recent data set is what we've been saying all along, which is that, what's currently defined, at least as NASH resolution, does not translate necessarily to fibrosis improvement, which is much more elusive and harder to achieve. So we keep watching the field, of course, and very closely, but I don't have a specific update in terms of additional mechanisms.

Yes. And on the question on the...

And then Jerry on the differential pricing. Yes.

Yes. So we have clearly done, I think, the right measures to make sure that we had options to implement the right pricing strategy based on all the information that we'll have by the time we make this decision. And I think continue to progress the work. It's an important question, I know, for you and for us as well. So we continue to progress with a separate NDA, which we hope that upon approval, that would mean a separate label and brand name and give us the option. Now of course, we're continuing to do all the deep work so that at the time we have to make the decision, it's the best informed decision. We're still, I think, needing information from the continuation of the payer dialogue as well as, of course, the final label on NASH at that point of approval where we'd set a list price on our NASH product and also come back to you with an indication of what we plan to do with PBC. So again, I think optionality, we feel good about where we are in terms of potentially having the option to execute whatever we determine as the best pricing approach, but we'll continue to do the work and come back to you at the right time with finality on that. And obviously, looking at the feedback from our customers and the environment, we'll be part of that. So look for that in the future. And again, I think we all understand the importance of that being the right decision.

Our next question comes from Salveen Richter with Goldman Sachs.

This is Ross on for Salveen. Just one here. Can you just talk about some of the feedback that you guys are receiving and any updates on this point in terms of the potential to price OCA differently in NASH and in PBC?

Jerry, I think you just took that one, but...

Yes, I'm sorry. That's kind of where I just went. And again, I think the key takeaway for us is we believe we'll have the option to price the products individually if we determine that, that's the best approach. However, we'll be taking that decision once we have a final label, set a price on NASH, and then make a decision about what our intentions are in the future in terms of the strategic approach we'll take with PBC. So we'll come back to you that after approval.

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

Mark, you briefly touched on that, but I wanted to ask you a little bit more in the competitive landscape. What do you think about the effect size from the Novo data? And I guess more broadly, how are you thinking about that class down the road as an efficacy benchmark? And then the second question is on NASH. Pre-commercial, how much insight do you guys have into the queue of already identified NASH patients just based on your physician feedback? I'm just thinking about the initial rollout.

Thanks, Geoff. So with respect to the first question, the Novo data and the effect size, I think what you may be alluding to is the outsized placebo response, which took a lot of people by surprise. It would be interesting to see how they actually evaluated the endpoint that wasn't clear to me. But clearly, as expected with semaglutide as a GLP-1, we saw the effect on NASH resolution, particularly at the high dose. I think it's important to keep in mind, this is a daily injectable under GLP-1. It will be interesting to see how they choose to design the Phase III and if they're going to continue to go with a daily as opposed to weekly, which is their commercially approved schedule. So no real surprise there. And again, as I pointed out a couple of minutes ago, despite the clear efficacy on NASH, on the NASH side of things and what I assume -- what I presume will be the expected weight loss. We did not see in their data any significant fibrosis improvement, highlighting or underscoring just how unique that feature is with OCA. So we've long been saying that we expected GLP-1, and particularly semaglutide, will have a role to play in the treatment of these patients that's complementary to OCA. But of course, a long road to go for them now having, just read out a Phase II study.

Jerry, I'll hand over for the other questions to you.

Yes. When we think about that early window of launch, again, we've been focused on this group of 500,000 patients who we talked about in the past and who we know are already with specialists being treated for liver condition and who already have a variety of different noninvasive measurements taken that would determine that, that patient has a high likelihood of being in advanced fibrotic. So they're already in with the specialists. I think the good thing that's happened as we've gone over the past couple of quarters and had more detailed discussion and done a significant amount of profiling with the expanded target group that we're talking about in this disease state window prelaunch the type of patients that we describe when we sized the 500,000, or patients that the physicians recognize in their practice, and I think we've been able to confirm through that work that this group of 15,000 physicians that we're talking about targeting, in fact, have the patients, and that these patients are ones that physicians can recognize when described. So I think we got a good sense over the more detailed work we've done that the target audience, both on the physician side and on the patient side, are the ones that not only are right for us to focus on, but also that are recognized clinically, which I think is an important dimension. I think that's been one of the points of progress in the prelaunch education efforts.

Our next question comes from Brian Skorney from Baird.

I was just wondering if you could kind of outline your current thinking around how you're going to utilize the 10-milligram data from REGENERATE as far as the AdCom and approval goes? Is this -- are you guys really leveraging this as a signal of a dose response to support the 25-milligram dose? Are you positioning it as a titration step? Or is it being positioned as potentially approved dosage in and of itself?

Yes. Thanks, Brian. I'll take that one. So as you know, the 25-milligram dose is the dose that met the prespecified statistical bar hurdle for success in this study. And so we've long said that that's the dose that's the efficacious dose that we are proposing in patients with advanced fibrosis due to NASH. The 10 did not meet the hurdle, although clearly, there is activity there in a subset of patients. And I think that, that bolsters confidence, to your point. Seeing the very consistent dose response, it bolsters confidence in the biological activity of the drug. Obviously, for completeness, the data for the 10-milligram are presented. If FDA and the panel wish to discuss that dose, we'll be prepared for it. But from our standpoint, as the sponsor here, we are only proposing the 25 milligrams once-daily for these patients.

Our next question comes from Steve Seedhouse with Raymond James.

ICER recently published a draft evidence report, as you know, on OCA for NASH. Their threshold analysis concluded about $15,000 annual price would result in $50,000 per quality threshold mark. I just wanted to get your thoughts on that number, but also on the analysis in the report, particularly their projections and comments on cardiovascular events and risk?

Jerry, do you want to tackle that one?

Yes. I mean, I think we have to first keep in mind that the ICER information that's out there is preliminary. We do intend to provide feedback during the public comment period. I think we'll continue to encourage ICER to consider not only our comments, but also incorporate some of the necessary changes to the modeling. I think there's some opportunities for it to more accurately reflect how patients with advanced fibrosis should be considered and how to think about treatment with OCA. So a work in progress there from ICER as it is preliminary. And again, I think some opportunities for us to continue to ensure that we're communicating appropriate changes based on what we know in depth. And I think also would expect other external experts to have a point of view on some of these key topics.

Yes. So the only thing I'd add is, I think at the $100,000 to $150,000 cost per quality range, which is really where we're focused on, you see higher cost effectiveness price -- cost-effective price in the target population north of $20,000. And as Jerry said, I mean, we're going to work with ICER. We clearly take issue with some of the assumptions they've made in their modeling. So we'll proceed from here.

Our next question comes from Liisa Bayko with JMP Securities.

Just a quick question for me. Can you give us a sense of how much experience FDA will have with virtual AdComs prior to you -- to your scheduled AdCom? I'm just curious if there's anything we can look at as a benchmark?

Thanks, Liisa. I am not aware of another virtual AdCom scheduled prior to the June 9 date involving a sponsor and an NDA review. So I think to the extent that, that doesn't change, we will be the first test case of this. And obviously, we're coordinating closely with them on the tech side to try to ensure that this is done as seamlessly as possible.

Our next question comes from Michael Morabito with Chardan.

I just wanted a quick update. You mentioned that once approval comes, there are still 6 to 9 months of discussions to be had with payers. So what exactly are you envisioning should an approval come on or before June 26? What are you envisioning for how quickly the product can be launched and start being delivered to those 500,000 patients that you're targeting? And I know you haven't given sales guidance, but if everything goes according to plan, what are you anticipating over the first half -- the second half of 2020?

Jerry, could you take those?

Yes. So as I said, our objective is to be ready quickly to launch as soon as possible after potential approval. And so all the good background work in terms of launch planning on the supply chain side, on the other elements is progressing as we would expect right now. So I think when we think about the opportunity to bring the first product to patients with advanced fibrosis, there hasn't been a therapeutic option. So we feel a certain level of urgency is warranted. Obviously, we do know that, as we've talked about before, there is a window of time where the 6 to 9 months on the commercial side is typical for a new specialty product. We would expect that to be the rhythm upon which we'll see the key commercial payers make their decisions. We also know that we would anticipate physicians to be assessing patients for initiation at their next visit. So we'll be in that early period where, again, the variability of how the payers are going to be looking at the situation will vary some in that early window until the formal decisions on access are taken. We have not communicated yet on sales guidance over that initial window. I don't know if Sandip wants to add anything onto that. But we haven't yet given guidance out on the sales side in the launch window.

Yes. I mean, nothing to add. I mean, it's definitely immature to talk about sales guidance, so -- but we'll certainly update you as we get closer to launch.

The last question comes from Mayank Mamtani with B. Riley FBR.

Congrats on a strong quarter. Just one quick follow-up to Jerry, maybe. Could you just remind us if there's any tactics on new patient starts that you're learning about in PBC that could be applicable to NASH, given the end customer being relatively more similar? And then maybe, Mark, if you could just remind us on the progress on the EMEA front? And if there's any requirement on the endpoint where patients need to attain both NASH resolution and fibrosis improvement.

Yes. I mean, I think we have taken the opportunity, the fact that we are in the market with OCA and PBC, to learn a lot and to test a lot of things, and this is not just in this recent window, but we have taken the opportunity, both on the education side, means of promotion, how we've mixed historically digital and in-person promotion. So there has been accumulation of, frankly, a lot of learnings. It is a big advantage being in market with these customers, and we have consistently, even before the period that we're in now had the opportunity to test things in PBC and then to apply them into the launch plan. So that's been a rich window. Now obviously, in the period that we're in right now with a focus on virtual communication, we are actively doing some things on the PBC side or considering some things on the PBC side, which will give us some quick feedback to market. So that's a kind of a real-time opportunity for us, again, importantly, with a group of physicians of many of which will be important for us with NASH. So that's part of the DNA and the company an advantage of us being a focused liver company. And we think an incremental learning because of the fact we're in market that we're applying even before this period and obviously pulling through a lot of things into the launch.

Yes. Thanks, Jerry. And just we're already over time. So very quickly on the EMEA side, we -- as you know, we filed late last year. We expect a typical 1-year-or-so review period. So please don't expect an approval or launch in Europe until next year. The -- and with respect to the endpoints, yes, we have confidence. And you, I think, alluded to the reflection paper that's out draft essentially equivalent of draft guidance that requires either meeting the co-primary endpoint of fibrosis improvement and NASH resolution or if you've got fibrosis improvement, supplementing and supporting it with at least 2 stage improvement. And as you know, we demonstrated that with OCA. So we think we've got a great position in going forward in European review.

With that, I know we didn't get to some questioners. We will follow up with you, happy to do so over the course of the day. And thank you all for listening in, and stay safe. Thank you.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.