Albireo Pharma, Inc.

Good afternoon and welcome to the Alvareo Pharma second quarter 2022 earnings call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the call over to your host, Hans Wittstum, Managing Director of LifeSci Advisors. Thank you. You may begin.

Thank you, Operator, and good afternoon, everyone. Thank you for joining today's call. This afternoon, Alvareo issued a press release highlighting its recent business accomplishments and financial results for the first quarter ended June 30th, 2022. This press release is accessible via the company's website at www.alvareofarma.com. Before proceeding, we'd like to note that management's comments today may include forward-looking statements regarding the company's plans and expectations. These statements are being made under the Private Securities Litigation Reform Act of 1995, and they are subject to various risks and uncertainties. Actual results may differ materially due to various important factors, including those described in the risk factor section of our most recent Form 10-K and our subsequent SEC filings. These filings can be accessed from the investor section of our website at www.albareofarma.com or on the SEC website. Any forward-looking statements represent our views as of today, August 15, 2022, and should not be relied upon as representing our views as of any subsequent dates. We undertake no obligation to update these statements publicly. Now, it is my pleasure to turn the call over to Ron Cooper, Al Barreo's President and Chief Executive Officer.

Ron? Thanks, Hans, and thank you everyone for joining us this afternoon. With me today are Simon Hartford, our Chief Financial Officer, Pamela Stevenson, our Chief Commercial Officer, and Dr. Jan Motsen, Chief Scientific Officer and Head of R&D. We estimate that there are about 100,000 cholestatic liver disease patients around the world that could benefit from bilbao therapy. And in Q2, we had another strong quarter. accessing these patients through excellent execution of both our commercial and clinical development plans. Old standard Phase III studies like ours provide the highest quality of compelling data for payers, regulators, and prescribers. Our approach resulted in Build-A-US and EU approvals in PFIC, and we expect the same for allogel syndrome and biliary atresia. Ethic country commercialization rollout continues as planned. We're looking forward to a major phase three readout in algal syndrome around the corner, and expect the bold Villarreal-Theresa study to be fully enrolled this year. We're building short-term and long-term corporate value at a steady pace to drive our aspiration of making Bill's a billion-dollar drug in the second half of the decade. On top of Belvay, our promising earlier stage assets, A3907 and A2342, are progressing exactly according to plan and will become valuable growth drivers. Strong financial footing and a team of years of expertise in bile acid modulators, we're poised to deliver our plan and create additional value. As we shared with you in the first half of 2021, we have a global launch strategy for Billvape, achieving global net product revenues of $5.9 million in the quarter. While sales are important, the more important metric is patient capture, which relates to the long-term value of our drug. I'm pleased that we now have 245 total bill pay patients, either on drug or in process. On a quarter-to-quarter basis, we've had consistent new patient capture. We continue to make excellent progress with global bill pay launch and gain important market insights along the way. This quarter, we had a larger change in the mix of babies versus adults on therapy. We're also finding that in the U.S., patients are a bit more dispersed than expected. longer than originally anticipates to get to them. Pamela will provide more detailed update on these topics and the global launch metrics. You will see that we've adjusted the metrics in a new format based on investor feedback. The metrics are simplified and now add up to total bill bait patients. As we all know, PFIC is our smallest syndication, but we're making excellent progress in our objective of expanding beyond PFIC as Bilvay is a pipeline in the product. We're on track in allogeal syndrome and expect to report top-line data for the Phase III ACERT study in the fall, which is really exciting. ACERT is a gold standard prospective intervention trial with 35 sites across North America, Europe, Middle East, and Asia Pacific. With that in mind, we're also very excited about the progress to date with our Phase 3 BOLD study in biliary atresia with enrollment on track to be completed by the end of this year and a top-line data readout in 2024. Phase 3 BOLD trial is the first and only Phase 3 evaluating IVAT inhibitor in biliary atresia with clinical trial sites spanning the U.S., Europe, Latin America, and China. Our exchange with the FDA has been very productive, and we're excited about Bilbao's potential in this indication. Bilbao atresia is the most common pediatric cholestatic liver disease and the number one reason for pediatric liver transplants across all diseases. And finally, We're pleased with the two recent appointments to our Board of Directors, strengthening our company with the addition of Susan Alesina, Vice President, National Business Development and Alliances at Boston Children's Hospital, and Hibby Dable, former President and CEO of Acceleron Pharma. Susan is a strong leader who, in her role at Boston Children's Hospital, provides us excellent insights into the healthcare system challenges and opportunities. In addition to her experience with a major children's hospital, Susan brings a rare blend of both big pharma and biotech strategic planning, business development, and communications experience. Habib is another successful leader who grew Acceleron, which is eventually sold to Merck for over $11 billion. Habib brings excellent biotech CEO experience as well as big pharma scale experience for his many years at Bayer. We're fortunate to have both these great leaders join our board. Now let me turn it over to Pamela, who will take you through the progress for our global launch of BuildA and Pfefic. Pamela?

Thanks, Ron. We are very pleased with the progress the team has made with BuildA. To take you through our Q2 performance, I encourage you to reference slide 15 in the corporate deck posted on the investor section of our website. So let me start with our updated metrics methodology. We have revised the Q1 figures to match the new methodology. Having listened to feedback from you as investors and analysts, we have adjusted three of our key metrics and added a new metric we're calling total bill day patients so that our metrics are more intuitive and easier to understand. The net sales and unique prescribers metrics remain the same. The three updated metrics are number of reimbursed patients, patients pending reimbursement, and rollover patients. Reimburse patients, meaning patients initiated on reimbursed drug and generating revenue, net of patients who have discontinued. Pending reimbursement, meaning patients with a prescription who are currently in our managed access programs or are in the process of getting on reimbursed drug. Rollover patients, meaning patients in the PFIC expanded access program or in the PEDFIC2 open label extension trial. It's important to note that this metric no longer includes patients in our managed access programs, as they are now included in our new pending reimbursement metric. Together, these three metrics add up to our total bill of a patient's metric, which account for all patients currently on, or in the process of getting on, bill of a worldwide. Let me give some detail on each of these, starting with total bill day patients, which is showing strong quarter over quarter growth from 170 patients at year end 2021 to 207 at the end of Q1 to 245 at the end of Q2. Total bill day patients increased 18% in the second quarter. That is 38 new patients added that we did not have at the end of March, consistent with the double-digit quarter-over-quarter increase we saw in Q1. We are very pleased with this increase because it means more physicians are gaining experience with Bilvay and seeing firsthand the clinical benefit. We are seeing that once a physician has a positive experience, they are more likely to prescribe Bilvay again. Most importantly, this means that more and more patients are getting relief from their debilitating pruritus, seeing improvements in growth and sleep, and enjoying better health outcomes. This is the reason to believe in the long-term value of our drug. Doctors are telling us this drug works, which is exactly what you want to hear in a launch, and why we have 245 patients, and that number continues to grow. Now let's turn to reimbursed patients. We are pleased that reimbursed patients have essentially doubled in the first six months of 2022, from 50 at the end of 2021 to 99 as of the end of June. This is a good indicator of coverage in the U.S., Germany, and the U.K., and we will continue to see this number grow as pricing and reimbursement is granted in additional countries. In the U.S., nearly all patients across public and private insurers have a path to coverage for bill day. Now let's look at pending reimbursement. The number of patients pending reimbursement in the quarter increased to 68. This group of patients will eventually, and hopefully as soon as possible, transition to becoming revenue generating going forward. We are progressing well with completion of pricing and reimbursement in Italy, Belgium, and Scotland. This is a direct result of the experience of our market access team and the recognition among payers of the innovation that BILVE represents with our pivotal Phase III clinical trial data. In Italy, BILVE has been granted full therapeutic innovation status by IFA, the Italian Medicines Agency, which will ensure dedicated national funding and inclusion into regional formularies within 60 days from the publication of the decree in the National Gazette Journal, anticipated next month. Together with Scotland and Belgium, these results confirm our thesis that payers see the high unmet need, added clinical benefit, robustness of the phase three scientific evidence, and overall value of bilvey. With 14 dossiers submitted to date, we anticipate coverage in additional European markets this year, which will trigger conversions of patients who are pending reimbursement to becoming revenue generating. Let's now look at rollover patients. As a reminder, these 78 patients are either in the PFIC Expanded Access Program or the PEDFIC II Open Label Extension Trial, and they will rollover onto reimbursed drug over time. This metric is anticipated to decrease as patients roll off the extension trial at the end of 72 weeks and onto revenue-generating product in reimbursed markets. Moving on to net sales. Bilvey achieved $5.9 million of net revenue in the quarter, resulting in $10.5 million year-to-date with revenue from the U.S., Germany, and recently the addition of the U.K. U.S. revenue was $3.5 million in Q2. In the U.S., we are pleased with a significant increase in the number of unique prescribers as our field team connects with patients as is common in rare diseases. We are seeing, however, that it is taking longer than originally anticipated due to the broader prescribing base. International performance is going well with $2.4 million in revenue due to strong performance in Germany. This is proof of our ability to quickly connect patients and get them reimbursed on a global scale. As Ron mentioned earlier, the reality is that we are seeing greater variability than anticipated in terms of weight and patients starting on bill day. A larger proportion of our discontinuations have come from older, heavier, and thus higher revenue patients as they transition to liver transplant due to the progressive nature of their disease. I want to stress that we are in the early stages where small variations can make a big difference. The range of patients is wide in terms of age and weight, with teenagers and adults bringing 10 times the initial revenue of small babies. Yet in the long term, our smaller patients will create a larger revenue annuity as their health improves and they get back onto the growth curve. Given that both the compliance rate and refill rates are tracking well above 80%, we are confident in this revenue opportunity. Finally, our last metric is unique prescribers. We have increased the number of Build A prescribers in the U.S. to 73 by the end of June, up from 57 at the end of March as a result of the expertise we are building and the new targeting approaches we are using to connect prescribers and patients. This is an additional 16 prescribers who had not previously written a prescription for Bilvay. The acceleration in the U.S. prescriber base confirms our belief that the available patients are there. but we are finding that they are taking longer to access due to 30% of prescribers being outside our key centers. These prescribers include community and office-based physicians, as well as adult prescribers. Now that these HCPs have a therapeutic option to prescribe to their patients, they do not need to refer them to large centers as they had to do in the past for transplants. In summary, we are making excellent progress in terms of total bill day patients. We continue to expand the prescriber base to encourage more experience with Bill Bay, and we are gaining reimbursement in important markets, such as Italy and Belgium, due to the strong, pivotal Phase III data and our ability to execute our market access strategies. Now I'll turn it back to Ron.

Thanks, Pamela. I wanted to quickly touch on our one-of-a-kind early development assets, 83907 and 82342. A3907 is the world's first and only oral high systemically bioavailable ASPD inhibitor in clinical development. And in our preclinical models, A3907 clearly demonstrates that it's different from the commercially available IVAD inhibitors. In addition, in a phase one study, A3907 demonstrated excellent systemic exposure and good tolerability. We anticipate starting a Phase II study in adult liver disease by the end of 2022. We will share more details about our development approach for A397 later this year. Our second asset for adult liver disease, A2342, deserves a few words. A2342 is the world's first and only oral NTCP inhibitor. We're working on advancing A2342 into a Phase I study by the end of this year. the intent of proving it to be a unique component of a combination treatment for hepatitis B or D. We have the ability and resources to develop both of these assets on our own for a single rare disease, but both product candidates have garnered interest from strategic partners considering wider development plans. Let me turn it over to Simon.

Thank you, Ron. Let me summarize our financial results for the second quarter of 2022. Bilvey global net product revenue was $5.9 million. U.S. revenue was $3.5 million, and international revenue was $2.4 million. Royalty revenue was $2.3 million compared to $2.4 million last year, a decrease of 100,000. All royalty revenue is passed on to healthcare royalty partners. Cost of product revenue was $800,000. Following approval of BILVE, certain manufacturing and quality headcount costs are now included in cost of product revenue. There were no material costs, as materials related to current products sold were expensed prior to approval. BILVE was approved during the third quarter of 2021, Therefore, there was no cost of product revenue last year. R&D expenses were $22.9 million compared to $20.9 million for the same period of 2021, an increase of $2 million. The increase in R&D expenses were principally due to expenses related to clinical program activities, personnel expenses, including stock-based compensation, and other costs, as we continue to increase our headcount and program activities. The increase in program activities related to ongoing Phase III clinical trials for biliary atresia and allogel syndrome, as well as BILVAPFIC expenses, and were partially offset by a decrease in preclinical expenses and A3907 due to completion of the Phase I study. Selling, general, and administrative expenses with $21.6 million compared to $16.9 million last year, an increase of $4.7 million. The increase is attributable to personnel and related expenses as we continue to increase our headcount and commercialization activities related to BuildA, including our sales force and support for global expansion efforts. Net loss for the second quarter of 2022 was $39.9 million or a loss of $2.04 per share compared to a loss of $36.4 million or a loss of $1.90 per share for the second quarter of 2021. The company had cash and cash equivalents of $181 million as of the end of the second quarter versus $216.7 million as of March the 31st, 2022. The company expects to have sufficient cash into 2024 based on current revenue and expense projections. While total bill day patients continue to progress well, the variability on weight of starting patients and time to find patients in the U.S., means we are adjusting our 2022 revenue guidance to $24 million. With that, let me turn it back to Ron for closing remarks.

Thank you, Simon. Every week, we're capturing more and more patients, creating a stronger and stronger annuity for growth. Clinical trials are on track or ahead of expectations. As we advance our plans to make Buildway a billion-dollar product, the key for us to take Buildway seriously from a PFIC drug to a leading pediatric cholestatic liver disease drug. We'll accomplish this by building our patient base quarter by quarter and plan to expand to allogel syndrome and biliary atresia patients on the back of our Phase III studies. And finally, continue to focus on progressing our early assets in adult liver disease with A3907 and A2342. With this strong portfolio and financial position, we have a tremendous opportunity and will continue to stay focused on our growth drivers. It's all very exciting for Alvareo as a company with a first-in-class and first-to-market product for near- and mid-term growth. We thank everybody for joining us and are pleased to open the call now for Q&A. Operator?

Thank you. We will now hear the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any key. To redraw your question, please press star, then 2. We will pause for a moment as the caller is joined the queue.

Thank you.

The first question is from Ritu Baral with Cohen. Please go ahead.

Hi, guys. Can you hear me? A little bit fuzzy, but you start again.

I think we're hearing you now. OK. Sorry about that.

I apologize. I apologize. We're really having a hard time hearing you now. No problem. All right. Thank you so much.

The next question is from Yun Yang with Jeffries. Please go ahead.

Thank you. Can you hear me okay?

We hear you perfectly well. Thank you.

Oh, great. Great. Thank you. Okay. So I have a question on Allergy Syndrome data expected this fall. So in Allergy Syndrome study, the dose is 120, whereas in PIFIC, it started... at 40, so given that it's a three times higher dose with a similar study design and same endpoint, how do you see the efficacy and safety compared to what we saw in PIFIC?

Thank you for the question, Yoon.

I think we're pretty excited about the ACERT study and those results being announced, you know, just around the corner, you know, this fall. As you know, ACERT is the very first and only gold standard randomized placebo control study. And with that, we hope to show really strong efficacy and great tolerability in the ASSERT study, similar to what we saw in the PedFix studies, right? As it relates to your question in regards, you know, to dose, you know, I think that's another, you know, it's one step at a time, right? Let's get the results from the ASSERT study, and then following the results in the ASSERT study, you will be submitting that to the regulatory authorities, and we'll get into dialogue, you know, with them.

Yeah, so one follow-up question to that is at 120 micrograms per kilogram dose, do you expect side effects could be potentially greater than a 40 microgram that you used in PIFIC as a starting dose?

Well, I think we'll have to wait until we see the data, but if you go back to the PedFix study, where we used both the 40 and the 120 doses, we saw very similar levels of tolerability. So, I think our expectation would be that we'd have excellent tolerability in the Assert study, just like we saw in the PedFix study.

Okay, that's helpful. And the second question is... Oh, sorry. Sorry for interruption.

No, go ahead. Go ahead.

Thank you. Yeah, so you, in the prepared remarks, you mentioned that in PIVX, patients are more dispersed than expected in the U.S. and prescribing, prescribers base is like 30% outside the key centers. So do you think there would be similar with the Allergy Syndrome patients, and with that, do you think you would need to expand your sales rep base?

Hi, Eunice. Pamela, thank you for the question. So, I'll just start by saying, you know, we're really pleased with how we're doing in terms of getting out to more unique prescribers with that 28% increase to 73 prescribers. You know, for AllerGeal, you know, we anticipate a similar type of prescriber base with those key centers that will continue to call on. And there may be patients out in the community, like we're finding with PFIC. And the good news is we're out there finding those unique prescribers and expanding our prescriber base. We're really, really confident that we will not need to expand our field team, maybe one or two more reps, but nothing beyond that.

That's the great thing about our model. It's the exact same pediatric hepatologist that prescribed for PFIC, for allogeal, and biliary atresia. So we think that we're sized appropriately to be able to take advantage of those opportunities.

Okay, my last question. So Pam mentioned that compliance and refill rate is greater than 80%. Does that kind of imply the discontinuation rate? You mentioned that it's, you know, local order and, you know, higher body weight patients. Do you think the discontinuation rate is, you know, somewhere around less than 20%?

So let me just take a step back to clarify. So, no, these are two different rates, right? So, the compliance and persistency rate that I was speaking to really has to do in a given month, the patients who are on therapy at the end of the month, did they take all of their pills? Did they get all their refills on, you know, on time? And so, that's, you know, we're really pleased with that being quite high. The second question, a different question that you were asking was around, you know, around the discontinuations. That's a different metric. That is a metric that we, you know, are seeing as right in line with expectations, what we would think for rare disease. But I do just wanted to clarify that those are two different metrics.

Oh, great. Thank you. So, you're not disclosing the discontinuation rate?

Well, that's one of the reasons we changed our metrics slightly, you see, from previous quarters. You see that in, we have a new metric called the reimbursed patients, right? And that's patients who are on drug at this time and they connect directly to revenue. And that would be inclusive of individuals that have withdrawn from therapy. That's probably the more relevant metric for you.

Okay, thank you very much.

Thank you.

The next question is from Jim Lugo. With William Blair, please go ahead.

Hey, guys. It's Lachlan on for 10 minutes. Thanks for taking the call. A couple here. So you mentioned a broader prescriber base. Can you maybe talk about how much bigger that is than originally planned? I know you were just saying you don't think you expect to expand the sales force much, if at all. But how many more physicians are you now targeting? And then second, on the international reimbursement wins, do you have any color of how the patient might be in each of those markets and maybe pricing looks like?

So, Lachlan, you're a little choppy on us. I just want to make sure that we have the questions correct, right? I think that your first question was around the prescriber base in the U.S., how much broader that is. And your second question, I think, was around the international markets. And I believe what you were asking about what we, you know, in terms of number of patients that are there and what we anticipate for price. I just want to make sure that that's what they were.

Correct.

So, Pamela, why don't you grab a hold of that?

Yep. So, first on the question on the broader prescriber base, I mean, what we're seeing is that we're still quite focused on the 100 physicians that we've always talked about in the 60 key centers. There's depth there in terms of the, you know, physicians and centers and patients that are there. And then beyond that, you know, as we look, you know, to the potentially around 1,000 other potential prescribers, what we're doing with that is we're able through advanced analytics to really have a better understanding of which of those physicians are most likely to prescribe. So we've been really going sort of deep on the centers and then broad on the broader prescriber base. On your second question in terms of reimbursement outside of the U.S., as I mentioned, you know, that is going well. The negotiations have gone well. We're really pleased with Italy and Belgium and Scotland. bringing those countries in, you know, faster than we've seen for industry benchmarks. And the number of patients in each of the countries, you know, I would just say, you know, look to your country population estimates, you know, as a guide there because there's, you know, that's something that we're, you know, not able to disclose at this time, but it's something that I think, you know, you can see from your population models. And then the pricing, I think, you know, again, as expected, the pricing is, you know, right in line with what we had expected in terms of rare disease pricing in European markets.

Thanks. A quick follow-up there. You mentioned the depth in the key centers. The broader prescribers, are you seeing as much depth in them, or are they just treating one or two?

No, you're absolutely right. One or two, you know, patients in the broader prescriber base.

But, you know, again, remember, we're still early in the launch process, right? So, that's what we would expect. But that gets us pretty excited, right? Because once they start, we anticipate that as new patients, as they identify new patients, that there will be depth of prescribing.

Yeah. Yeah. Makes sense. Thanks.

The next question is from Brian Scorny with Baird. Please go ahead.

Hey, thanks, team, for taking the question. I was hoping you'd talk briefly about the uptake in the EU, now reimbursement in UK, Italy, and Belgium, but it sounds like Belgium doesn't start to contribute until October. Just wanted to get an idea of how much of a contributing factor UK and Italy were this quarter versus Germany and how much growth you may have seen in Germany. And then on the U.S., Since last quarter, there was an inventory drawdown. Were U.S. sales effectively flat over these last three quarters? I mean, it just seems like if I kind of back out some reasonable inventory expectations for that fourth quarter, stocking followed by destocking last quarter and today's front, it all seems to be sort of in that $3 billion. Can you talk a little bit about the U.S.-specific dynamics in terms of reimburse patients and pending reimbursements? Thanks.

Hi, Brian. This is Simon. In terms of the EU, really the way you need to sort of think about revenue going forward for the remainder of this year is that in sort of Q3, we would expect it to continue to be primarily patients from the countries that have already launched. So the US, Germany, and the UK. As you know, the UK launched sort of in late May. As we fast forward then into Q4, that is where you should expect to see the Italian and Belgian patients start flowing through. As Pamela, I think, was saying, in Italy, for example, we've completed the negotiations, but we still have to wait for publication and then regional rollout, region by region. So that will start happening soon. strongly in the fourth quarter of this year. As you think about the topic of your question on inventory in the U.S., that really was a two-quarter phenomenon. And as we said, we were back to sort of steady state inventory at the end of Q1. So specifically to your question on growth, between Q1 and Q2 in the U.S. Yes, it is fair to say the revenue numbers were flat due to that weight variability between patients, but the more meaningful metric here in our minds is really these reimbursed patients, and hence why we've given it to you, who are actually on drug and generating revenue at the end of the quarter, and that continues to grow.

Okay, great. That's helpful. Thank you. Thank you.

The next question is from Ed Arspay with HC Wainwright. Please go ahead. Go ahead.

Hi, guys. Thanks for taking my questions. Firstly, for me, I appreciate the extra detail on the different patients. wanted to first confirm that, I think as you've mentioned, revenue-generating patients right now stand at 99. And if that is in fact the case, could you help us understand the average time to conversion for both the pending and the rollover patients? And then in the US, do you have a range that you could provide for us in terms of the gross and net pricing discount? And I have a follow-up.

Thank you. So first off, you're asking about the revenue patients. So it is 99 patients that drive the revenue. Pamela will take the question about the average time, and then Simon can talk about... pricing in the U.S. So, Pamela.

So, hi, Ed. So, your question on the average time to conversion on the two categories, pending reimbursement and rollover patients, that was your question, correct?

Correct.

Yes, so the, you know, that is, that's going to differ based on the different countries. So, you know, depending, those two categories are the number of patients, for example, in Italy in those countries, and any of the markets that we have, you know, don't have reimbursement yet of the 14 dossiers in which we've submitted. So, we'll have a, you know, we'll have a, you know, a good number of those patients from Italy, as Simon has just mentioned, rolling over at Q4. And then, you know, the other countries as they come online, we'll have some patients from Belgium and then the other countries into 2023. So, you know, we're really excited that, you know, we're going to have patients rolling over Q4 as well into early next year. And then, as you know, there is U.S. patients in that number, too, that are going through reimbursement. And very pleased with our time to fill in the U.S. We're able to quickly get patients through that process of prior authorization and on to drugs.

And, yeah, I think in terms of the question about gross to net, currently... Close to 50% of patients in the US are Medicaid patients. So they're at the standard Medicaid discount. The remainder of patients are obviously commercial payer, and those discounts are very, very different, obviously, from Medicaid. So those two things sort of drive the mix as it relates to gross to net.

OK. All right. Thank you.

And then just one additional question. If I look at the total patients growing from 170 in the fourth quarter, 207 in the first, and 245 this past quarter, those are growth rates of 21.8% and then 88.4%. Is that a... Is that a reasonable way to think about the growth trajectory through the remainder of this year and into next year?

Well, I think, Ed, I think, first of all, what we're really excited about is the new capture of patients, right, is roughly the same quarter on quarter, right, since 37 and 38. So that's very consistent. That means patients are out there. I think that, you know, Projecting ahead, difficult for us to do so because, in fact, we have reimbursements that are coming in. There's a lot of dynamics. All I can say is the fact that we've been consistent quarter to quarter is very pleasing to us, and these are new patients that will become revenue-generating over time.

Thanks so much. That's helpful. Thanks so much.

The next question is from Andreas Argyrais with Wedbush Securities. Please go ahead.

Hi. Yeah, good afternoon. Thanks for taking our questions. Just a couple here. Can you just provide clarity on the number of rollover patients of 78 versus the 110 provided at the end of Q1? And then I don't know if I caught all the details here. It calls them a bit choppy. But you're seeing growth across two metrics. So what's driving the reduced sales guidance? And then I have one follow-up on a certain thing.

Why don't we do this in reverse order? Why don't you talk about the sales guidance, Simon, and then maybe you can just help, Andreas, a little bit with the metrics, Pamela.

Yeah, Andreas, in terms of the sales guidance of $24 million for 2022, Really, what's driving that is the two items that have been referenced several times here. One is just the time to connect to patients in the US, given the broader prescriber base than we had originally anticipated. And then secondly, obviously, we've had quite some variability in terms of patient starts. between sort of patient groups. And that's the other factor here in the equation. Particularly as early on, we had probably more advanced sort of disease-heavier patients who were quickly then sort of transitioning to liver transplant, whereas what we're seeing now is more the patient you would expect to get, which is the babies or infants The good news about those is though they generate less revenue to begin with, we catch them and benefit them as patients as they continue to grow with this progressive disease PFIC. So that's the biggest driver. If you think about first half, second half, first half of the year, we had 10.5 million of revenue. This would imply force out to 24 million of 13.5 in the second half, and again, I would expect to see continued growth in both quarters from the markets where we're already launched, and then a little bit of a step up in Q4 for the Italy and Belgium patients.

And so, Andreas, on your first question, the difference between what we reported in the Q1 category of potential rollover patients and the Q2 category of rollover patients The first thing to keep in mind is that we changed and updated the definition of that category. So that's partially what's driving the difference. We removed the patients that are on our managed access program and put those into the pending reimbursement category. So that's partially why you're seeing the difference in the number there. And then in addition to that, we've been rolling over patients because within that category now, right, is the open label, PEDFIC2. extension patients as well as the EAP patients. And so as we came online with the UK, we rolled over patients. And as patients in Germany hit the 72-week mark, we rolled them over as well. Just a couple different dynamics that would explain the difference in numbers there.

Okay. And have you provided the target number of U.S. prescribers? And then if so, whatever that is, what's the average number of patients per prescriber that you estimate?

Well, what I can tell you is what we've provided is that 100 key top prescribers remains the same. They're the ones in the 60 centers that we're very much focused on, have been focused on. And then beyond that, what we are looking at is because of the broader prescriber base and we're seeing patients, some patients who are out more into the community within the community gastro as well as with the adult hepatologist. We've shared there's a number of about 1,000 more potential prescribers out there that we are currently actively targeting.

And in terms of depth, Andrea, it's too early for us to be able to say. We're still early in the launch, right? So, obviously, we'd like to see as much depth of prescribing with all of these, right? But to us, we're pretty excited that, you know, the number has gone up to – you know, to 72, sorry, to 73, right? So there's more people prescribing. We'd anticipate that over time there's going to be greater depth as well.

Okay. And the last one, if I caught this correctly, the ACERT timeline, the timeline for the readout on ACERT has moved from year end to the fall. I don't know if you caught this, if you discussed this, but what's the, you know, the contributing factors to that timeline? Thank you.

Yeah, thank you, Andreas. We just wanted to refine our guidance to be a little bit more accurate, right? And so we're pretty excited that, you know, the CERT study is fully enrolled, the first gold standard phase three study in algeol syndrome, you know, and we hope to see some good data around the corner.

Great, thank you.

The next question is from Ritu Baral with Cohen. Please go ahead.

Hi, this is Yanil on for Ritu.

My question would be, hi, sorry, the line is still a little bit choppy, but I'm going to persevere. The question is around the discontinuations that you were seeing. Do you characterize it more as the patients sort of progressing through needing surgery, or is it more of a tolerability issue? And then, Sort of comparing that to what you saw in the Phase 3 study.

Sure, let me take that question. First, I'll just start with saying that the discontinuations are right in line with what we would expect and what we've seen in other rare disease. And we're really pleased that we are not seeing discontinuations due to efficacy. So to your question, one of the reasons that we see, in this quarter at least, we've seen some patients discontinue is the fact that they had advanced liver disease. They were already on path to liver transplant. The physician was prescribing sort of as a last resort to help with the patient as they were getting ready for transplant. So those patients sort of just went on to transplant and had to stop bilvey. And the other reasons that we would see is sort of more family social dynamics that you often see in any disease category with some of the discontinuations. But again, what I would just say is that this is not concerning, and the discontinuations have been right in line with expectations.

Okay, so I'm going to follow up with a couple of questions. So that sort of ties into what you were describing last quarter about targeting the wave two patients. And my understanding of that category of patients would include perhaps more of those same patients that you characterized as probably having higher discontinuation rates. How do you expect that to sort of feed into your numbers? How do you expect your numbers to shake out? And then also, can you help quantify or give some idea of how the average size or age of the patients have changed? Have you expected that to sort of start steadying now?

Sure. Let me talk a little bit about what we're seeing because what we are seeing is a lot of new younger babies starting therapy. you know, that is something that we're really excited about because they are, you know, they're going to be with us for the long term. And so that is a trend that we're seeing in terms of patient starts. I think overall, the age, what I would say, it's early in the launch. It's still early. We're seeing a lot of variability. We are seeing younger patients, older patients, heavier patients, lighter patients. And with our pricing dynamics, that does cause a lot of variability. And, you know, I think that's in the short term. Over the long term, we're really excited. As the patient numbers grow, we think things will smooth out.

Yeah, and I would just add to that, you know, as you think about sort of revenue, you know, when you start at the beginning with a relatively small number of patients, If you get a teenager, they're worth significantly more, obviously, with weight-based dosing than if you're starting with a sort of a baby or infant. Ironically, though, over the long term, those patients that you want to capture early in the progression of the disease, the younger and lighter ones will be the ones that create the continuous annuity over the long term. So that's something to think about as you model.

Thanks, Simon.

We have reached the end of the Q&A session. I will now turn the call to Ron for closing remarks. Great.

Well, thank you, operator. And thank you all for attending today's conference call. I am very proud of our organization's ability to deliver and execute this plan and thank each and every one of our employees for their commitment, drive, and innovation. We'll keep you updated as we continue to advance Alvareo's mission to provide hope to families with patients with liver disease and the entire liver community.

Thanks very much.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a blessed day.