Intercept Pharmaceuticals, Inc.

Welcome to the Q1 2021 Intercept Pharmaceuticals Earnings Call. My name's Annette and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star then one on your touchtone phone. I will now turn the call over to Lisa DeFrancesco. Lisa, 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 2021 results and financial position, which is available on our website at www.interceptpharma.com. Before we begin our discussion, I'd like to note that during our call we will be making forward-looking statements, including statements regarding our approved product and clinical development program, certain regulatory matters, and our strategy, prospects, financial guidance, and future commercial and financial performance. Listeners are cautioned not to place under 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 necessarily 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 public filings with the SEC. Today's call will begin with prepared remarks from our President and CEO, Jerry Durso, our Chief Accounting Officer, Acting Chief Financial Officer and Treasurer, Rocco Bonavia, and our Acting Chief Medical Officer, Dr. Gail Cockwell. We'll then open the call up to take your questions, and Linda Richardson, Chief Commercial Officer, will join us for Q&A. Please limit yourself to one initial question in order to allow time for all questions to be addressed. Let me now turn the call over to our CEO, Jerry Durso. Jerry?

Thanks, Lisa, and good morning, everyone. Thank you for joining us on our first quarter 2021 earnings conference call. We've been focused on our priorities in the first quarter of this year and have made progress across all key fronts, including, first, Finalizing our Ocaliba label update in the U.S., which is now nearly complete. We anticipate announcing our updated label in the coming days. Second, advancing our NASH development program, where we've had multiple interactions with FDA and we're in the process of generating a significant amount of additional data in support of our dialogue with the agency. And third, continuing to make progress on our pipeline. I'm going to begin today by discussing our PBC business, including our solid performance in the first quarter. I'll then turn it over to Gail to provide an update on our labeling discussion with FDA, our NASH development program, and our other pipeline activities. Rocco will conclude with an overview of our financial performance and update to our guidance before we take your questions. Let's start with our PBC business, where we had another quarter of double-digit growth. Worldwide Ocala net sales in the first quarter of 2021 were $81.7 million, representing about 12% growth over the prior year quarter. We had solid performance in the U.S. with sales of $57.3 million, representing 13% growth over the prior year quarter. Nearly half of our new prescriptions were generated by new prescribers, demonstrating the success of our efforts to reach community-based gastroenterologists. Importantly, we continue to educate healthcare provider audiences through our RethinkPBC disease education campaign, which highlights important data from the GlobalPBC study group. supporting more ambitious treatment goals for lowering ALP. We believe broader awareness of these data will impact the way healthcare professionals manage PBC and encourage earlier consideration of second-line therapy within the large group of eligible patients who are not achieving ALP goals with ERSO alone. In our international markets, we recorded $24.4 million, which was 11% growth over the same quarter last year. We saw a continued strengthening of new patient starts versus the previous quarter, driven by our digital education activities. I would now like to turn the call over to Dr. Gail Caulkwell to provide an update on our regulatory progress and our pipeline. Gail?

Thank you, Jerry, and good morning, everybody. I'll begin by discussing our OCAL level label update. The process is nearly complete, and we plan to communicate a final label shortly. We expect the final label will restrict use in patients with decompensated cirrhosis, as well as in those patients with compensated cirrhosis who have evidence of portal hypertension. As you know from our previous discussions, the OCALiva label update process began as a result of a NIS or newly identified safety signal of liver disorder. This was identified during routine post-marketing safety monitoring from FDA in 2020. We shared findings from a comprehensive safety assessment with FDA earlier this year and have been working with the agency to translate the implications of the NIS into updates to the OCAL of a label. These label updates focus on patients who reach the most advanced stages of PBC and not on the broader PBC population. Patients with PBC and cirrhosis demonstrate a wide spectrum of disease severity, from clinically stable compensated cirrhosis to end-stage decompensated disease. The development of portal hypertension in these patients is a key pathophysiologic event along this natural disease progression and is often associated with serious consequences of advanced liver disease. From a patient identification perspective, we believe this approach is clear and will enable prescribers to delineate those who are eligible for Ocaliba, the only approved second-line medicine for patients with PBC. Regarding our post-approval studies, COBALT and 401, we continue to discuss potential modifications to these studies with FDA and EMA. The final OCALIFLA label update will play a role in the discussions about our post-marketing study requirements, but we expect that the process of defining a path forward for the studies will continue beyond the label update, given the need to align with both FDA and EMA. Now, let's turn to our NASH development program. As we've previously stated, alignment with FDA on the right data and the subsequent interpretation of that data are key dependencies prior to a potential resubmission. We are working towards that alignment in a step-by-step process, including multiple recent and upcoming formal interactions with the agency, each of which requires significant preparation. As a reminder, we believe there are three key items that we need to align with FDA on prior to a potential resubmission of our NDA through the accelerated approval pathway. First, a shared understanding of OCA's safety profile in the NASH fibrosis population, which will be supported by a comprehensive safety update to refresh and increase the amount of safety data to discuss with FDA. Biopsy reading methodology, an important topic for the field, as regulators, thought leaders, and industry work to establish new approaches to reduce variability and improve accuracy. And lastly, and importantly, what, if any, additional efficacy data will be beneficial to better support the benefit-risk profile of OCA in NASH fibrosis? Let me provide an update on where we are with each of these three items. We've had recent FDA interactions primarily focused on safety. While these have provided deeper insight on key focus areas for the agency, including liver safety and other elements of the OCA safety profile, there is additional work underway. We're also advancing our preparations for a safety update that will double the safety exposure from our first submission. Regarding biopsy methodology, FDA's public statements on biopsy methodology and our own learnings from Regenerate have led us to a proposed approach that we believe is both scientifically rigorous and grounded in the latest thinking in the field. We're looking forward to furthering the discussions with FDA on biopsy methodology in the coming months and subsequently applying that approach to new data. We have also made progress regarding the potential generation of additional data sets to assess efficacy of OCA for the treatment of patients with NASH fibrosis. Again, FDA meetings on this topic are planned. For example, as a result of the REGENERATE study design, following the 18-month interim analysis, which included 931 patients in the intent to treat population, approximately 500 additional biopsies were gathered from a group of later enrolling patients once they reach the 18-month time point. We now expect to include these additional 18-month biopsies as a part of any potential resubmissions. Given that Regenerate is an ongoing study, we continue to accrue data and assess other relevant data sets for inclusion and analysis. To put this in context, by the middle of this year, the patients who were part of the 18-month interim analysis will have all reached their 48-month time point. Importantly, the Regenerate Outcomes trial is an event-driven study, meaning that the study completes when a pre-specified number of events occur. As such, the exact timing of completion is difficult to predict. As we've previously stated, our completion date is likely some years away, and our latest estimates point to a potential completion date in 2025. We also have our second large pivotal NASH Phase III study, REVERSE, underway in patients with compensated cirrhosis due to NASH. We believe the data from REVERSE will provide important learnings in the NASH compensated cirrhosis population, a group of patients with very high unmet need. We plan to take advantage of our work with FDA to align on biopsy methodology as we prepare for a top line readout at the end of this year. We also continue to make progress on our pipeline. Our phase two OCA plus Bezafibrate trial is still currently enrolling outside the US, and we now have an open IND for the combination in the US. Enrollment in a rare disease clinical trial does not require a high number of patients, but may take more time due to COVID-19. We will provide an estimated timeline when trial enrollment is complete. Recently published data supporting the benefit of Bezafibrate and PBC are encouraging and reinforce the potential for synergistic profile in a combination approach with OCA. Finally, turning to our next generation FXR agonist, INP787, we plan to initiate a first in human study later this year. We will provide additional updates once this process is underway. I'll now turn the call back over to Jerry for further remarks. Jerry?

Thanks, Gail. As we look to the remainder of the year, our most immediate focus is on finalizing the Ocaliba label update in the U.S. It's important to note that the significant majority of patients eligible for Ocaliba will not be impacted by the label change. In terms of the population that will potentially be impacted, we're in the process of finalizing a label that would restrict Ocaliba's use in patients with decompensated cirrhosis those with a prior decompensation event, and those with compensated cirrhosis with evidence of portal hypertension. We estimate that roughly 20% to 25% of the current Ocala patients could have cirrhosis. The portion of Ocala patients that we expect to be impacted by the final label changes would be a subset of this overall cirrhotic group. As you would imagine, the rate of cirrhosis in PBC can vary by treatment setting. For example, the rate tends to be higher at hepatology centers and lower in the community settings. We're fully prepared to support and educate patients and providers through this upcoming label update, and that process will be implemented as soon as the label is final. Following the label update, a significant majority of PBC patients who can benefit from second-line treatment will remain eligible for Ocaliba. Our long-term focus and commitment to supporting those patients will continue to be a high priority. Turning now to NASH. Our continued objective is to align with FDA on a resubmission package for NDA that increases the probability of success. This is a multifaceted process that will require additional work and additional interactions with the agency, and therefore we can no longer reiterate a potential submission by the end of this year. We look forward to narrowing and refining our plans for potential resubmission in the third quarter of this year. Now turning to the EU, since our last update, We've been formally granted a six-month clock stop in the review of OCA for the treatment of NASH fibrosis. This additional time allows us to focus on executing on the feedback we've received from both FDA and EMA and provides us with the ability to potentially include some of the new data we're generating as part of the review process in Europe. Before we turn to our financial results, I wanted to announce that Chris Weier, Our Executive Vice President of Research and Development has decided to leave Intercept to pursue a new opportunity. I want to thank Chris for his contributions to the company and wish him well in his future endeavors. As we've previously discussed, our work towards potential resubmission in NASH fibrosis is led by a strong, dedicated team of both internal experts and external advisors. Mark Prusansky, as part of his ongoing advisory role with Intercept, will continue to support our R&D team from a science and strategy perspective. This will ensure business continuity and a smooth transition until the new permanent head of R&D is named. I want to say a few final words about Intercept's progress navigating our regulatory dialogue in both PBC and NASH. I'm pleased that we're nearing the conclusion of our work with FDA on updates to the Ocala label, which will provide important new guidance for healthcare providers and patients with PBC. This clarity on the label will allow us to focus on the future and continue to support the significant majority of patients who will remain eligible for treatment. As we continue our work with the FDA and DMA on our NASH program, we remain committed to taking the necessary actions to arrive at the right informed decisions regarding our path forward. In parallel with our near-term focus on the regulatory dialogue in PBC and NASH, we've continued to advance key pipeline activities that position Intercept for future success and build on our leadership position in the liver space. We expect to communicate more on our pipeline later this year, and now that we have clarity on our label update to our foundational PPC franchise, we can increase our focus on identifying additional opportunities to leverage our strengths and our expertise. And now I'll turn the call over to Rocco Venezia for financial updates. Rocco?

Thank you, Jerry, and good morning, everyone. Please refer to our press release issued earlier today for a summary of our financial results for the first quarter ended March 31, 2021. In the first quarter, we recognized $81.7 million in worldwide Ocaliba net sales. This was an increase of $9 million versus prior year quarter. Our worldwide Ocaliba net sales were comprised of U.S. net sales of $57.3 million and ex-U.S. net sales of $24.4 million. This represents growth of approximately 13% and 11% respectively versus the prior year quarter. As Sherry mentioned earlier, our established first quarter results in the U.S. were driven primarily by continued demand growth, although as anticipated, we have seen slower growth in new patient starts as a result of COVID-19. During the first quarter, half of all scripts were generated by new prescribers. We also experienced the typical seasonality in Q1, as patients were impacted by the resetting of insurance plans and Medicare coverage caps. This led to a higher gross than that percentage for the quarter. Our GAAP operating expenses and non-GAAP adjusted operating expenses for the quarter were $111.0 and $101.7 million, respectively. This was a decrease of $45.1 million and $41.2 million versus the prior year quarter. 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 SBC regulations. Please refer to our press release issued earlier this morning for a full explanation and reconciliation of this measure. Our cost of sales was $0.8 million in the first quarter as compared to $0.9 million in the prior year quarter. Selling, general, and administrative expenses for the quarter were $59.3 million. This was a decrease of $39.3 million over the prior year quarter and was driven by our efforts to lower operating expenses in order to provide a strong financial foundation for the company going forward. Research and development expenses for the quarter were $50.8 million. This was a decrease to $5.9 million over prior year quarter and was primarily driven by lower NASH and Ocala API development costs. As of March 31st, 2021, we were well positioned with cash, cash equivalents, restricted cash, and investment debt securities available for sale of approximately $418.6 million. And now, turning to our financial guidance for the year. As a reminder, last quarter we issued full year 2021 worldwide Ocalibin net sales guidance between $325 million and $355 million. As a result of the latest dialogue with the FDA, which we expect to result in a label update restricting the use of Ocalibin patients with decompensated cirrhosis and then a subset of patients with compensated cirrhosis, we are narrowing our Ocalibin net sales guidance range. We now expect full year 2021 worldwide O'Callaghan S sales to be between $325 million and $340 million. Once the label is finalized, as we monitor post-label update market dynamics, we will plan to refine this range throughout the year as necessary. We are reiterating our full year 2021 non-GAAP adjusted operating expenses to be between $380 million and $410 million. In summary, I am pleased with the strong commercial performance and our ability to manage expenses in the first quarter. We remain well-positioned to continue investing in the growth of our Ocala franchise, supporting our national regulatory processes with FDA and EMA, and furthering our pipeline by building on our strong foundation. With that, I'd now like to turn it over to the operator for any questions. Operator?

Thank you. We will now begin the Q&A session. If you have a question, please press star then 1 on your touch-tone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. There will be a delay before the first question is announced. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star, then 1 on your touchtone phone. Okay, and our first call is from, and please excuse if I mispronounce your name, I'm sorry, Ritu Baram from Cowan. Go ahead, please.

Hi, guys. Thanks for taking the question this morning. So, Jerry, I wanted to just drill down further on the percentage of patients, PBC patients with compensated portal hypertension that we could be expecting. I know we have the revised guidance, but can you let us know if, like, the definition of portal hypertension, whether it's, like, the ranges of millimeters of mercury or the, you know, any point within the workup for portal hypertension is different for PBC patients than, I guess, the standard portal hypertension definition? Yeah, a standard portal hypertension workup, like should we be thinking about that 15 millimeters of mercury or more?

Okay, thanks for the question. I think what would be good, I'll have Gail give you, you know, an overview on what we're expecting from the label. Again, we're at the end of the process. We would anticipate, based on the interactions that we have, I've had to date that the process will end shortly, but perhaps Gail can give you an overview of what we're expecting to see, what we anticipate, and then I can comment a little bit on the front end of your question in terms of some of the ranges. Gail?

Thanks, Jerry. So to give a little clarity, let me take one step back for just a second and just again define what we said is where the label change will apply to different patients. Patients with decompensated cirrhosis, the most severe group of patients will be excluded from the label. This is a population that can be quite sick, and studying a medicine in that setting can be very, very challenging, particularly one for chronic use. Your question focused on this population with portal hypertension. So just to clarify again for a second before we step right to your question, cirrhosis on the compensated side can be divided into two subsets. there's those who are early on in the spectrum of cirrhosis and who are really somewhat indistinguishable from patients with out cirrhosis until they develop portal hypertension. Now the way portal hypertension is described here is clinical evidence of portal hypertension or evidence of portal hypertension. So we're not looking for an invasive procedure or something else to assess portal hypertension, but rather the clinical evidence that doctors use in their practice really every day since they recognize that once patients with cirrhosis progress to having portal hypertension, their risk for adverse liver outcomes really increases. Again, once you have cirrhosis and progress to portal hypertension, we then will have a contraindication at that point.

So if we think then in the context of the overall cirrhotic group, so we do estimate, based on a variety of sources, both from the US and ex-US, the proportion of Ocaliba patients overall that have evidence of cirrhosis is in that range of 20 to 25%. Again, the decompensated group, as Gail mentioned, we anticipate will be restricted by the new label that's in the mid-single digits, and then you have the compensated group where somewhere in the range of about half of the compensated group might fall into this evidence of portal hypertension. So that's how we think about the picture at this point. Of course, as the label is finalized, we'll monitor the dynamics in the market and continue to update.

Got it. And then a very quick follow-up on the NASH side. You noted, like, the three topics of discussion with FDA, safety, biopsy, methodology, and risk-benefit analysis. On the safety side, you guys highlighted liver toxicity. Is it fair to assume that the conversations on that safety topic focus more on liver safety at this point than any lipid changes, or are lipid changes still a topic of discussion?

Gail?

Sure. So it's important to recognize that FDA has really been interested in the full spectrum of the OCA safety profile. And I note that there's really a lot of published material in the public domain about the safety profile. And we're continuing to generate more as the REGENERATE study continues.

Great. Thanks for taking the question.

Thank you.

Okay, and our next question comes from Brian Abrams from RBC. Brian, go ahead.

Hi, thanks so much for taking my question. This is actually David Situ on for Brian. I guess just thinking about the NASH study and building off of Rishi's question maybe, could you just, Help us understand maybe what exactly changed in sort of your understanding of the cadence of interactions maybe or what needed to be aligned when we think about these three buckets that led to maybe less clarity on a potential timeline to refiling here.

Thank you for the question, David. You know, as we mentioned the prepared remarks, we have had multiple interactions. We have more planned. I think we continue to work overall on the question of risk-benefits, as you could imagine. And then in that context, the three areas that we've outlined, the comprehensive safety update, the biopsy approach, and ultimately the potential for additional efficacy. So I think we've gotten, as we've indicated, some better clarity on some of the specifics around the data we need to generate as we prepare for the comprehensive safety update, which we anticipate that that data will be a significant increase in the level of exposure, which we think could be important. We've been encouraged by the level of engagement from the agency. We have had interactions. We have more planned coming. I think our focus continues to be on getting clarity. Sometimes that clarity creates some better insight on the work we have to do, as well as you know, a better idea of the sequencing of the interactions to come. And so as we work on this thing holistically on the overall picture, it's all of those elements that, you know, in the context of this step-by-step approach and us wanting to avoid unknowns later on that, you know, we continue to work on the plan moving forward and do anticipate we'll come back in quarter three with refinement on that.

Got it. Helpful. And a quick follow-up on the PPC side of IMEI. I'm just thinking more about the, I guess, the ex-US side. You know, it was a strong quarter, and I think you noted driven by both new patient starts and also digital education activities. I guess, could you just help us better understand the dynamics on the EU side? I know quarter is a little bit more maybe volatile on that side, but So how are you thinking about the rest of the year as you maybe continue these digital education activities? And I guess what I'm trying to understand is how much of a run rate here we might see and how much this contributes maybe to guidance.

So I can start on that, and perhaps Rocco would want to add on. We do continue to execute our Ocala plan in the markets, you know, in different situations, depending on where COVID is. So in the ex-US context, obviously we have, you know, different progress occurring in terms of the activities in the market. So, you know, when we think about quarter one and the previous quarters, there has been a specific, I think, opportunity to enhance the digital approach, which is, you know, we signaled that in the prepared remarks and the impact that that has had Ex-US, obviously, again, the different countries are in different situations. Now, in context of the guidance, Rocco, perhaps you want to give a little more color around how we're seeing the guidance with the label change and looking at the regions.

Yes, sure. Thank you for the question. As we had mentioned earlier in our prepared remarks, we've narrowed our sales guidance. With respect to our XUS, despite all of the challenges, as many of us know, and the repeated closures in many of those markets, we continue to do well. So that is all factored in in our latest guidance. And with respect to the approach that we're taking, I could turn it over to Linda to perhaps add an additional color on that.

Sure, I'm happy to take that. I think there's been a real focus on non-personal promotion, right? We need to get into those centers, and many in the, unlike the US, in Europe, many of the practitioners are in institutions, healthcare settings that were closed to sales representatives and pharma in general because of the need to take care of COVID patients. There's been a serious restriction on that. Our team quickly pivoted to many innovative programs using telecalls, reaching out, using Internet programs, et cetera, to keep awareness up, and that went very well for us. And we've borrowed those same tactics in the U.S.

Got it. Thanks. Thanks, David.

Okay. And our next question comes from Michael with Jefferies. Go ahead, Michael.

Hi. Thanks. This is Ari Goldon for Michael Yee. Yeah, just a couple of quick questions. Can you talk a little bit more about the recent dialogue with the FDA, and then when you give that update in the third quarter, are you just going to come out and sort of say that you have alignment now, or are you going to give more color around that? And then secondly, can you just sort of set expectations for the Phase III data that we should be getting around the end of the year? Thank you.

Thanks, Ari. I'll start. I think as we've outlined on NASH, the interactions, we have had multiple formal interactions and I think importantly a good view forward for some steps to come. I think that in the context of the quarter three update, we anticipate to have feedback from some of these key discussions on some of the key topics. you know, coming back to progress on clarity on what the safety updates should look like, you know, some of the details that we'll have to work through yet with the agency, for example, on the analysis plan on safety biopsy. We will anticipate making some progress. So the update that I referred to in quarter three, we should think about that, both update on our work and our planning as well as, you know, an update on some of the key elements coming from coming from the regulatory dialogue. I think your second question was about reverse. So we are continuing to view reverse as an important data set in an important population. As a reminder, this is a group of NASH patients with compensated cirrhosis. It's our second major phase three that we're working towards the top line readout by the end of the year where we're going to learn more about the role of OCA in a different incremental patient population. So we're working towards that. Thank you. Thanks, Ari.

Okay, and the next question is from Althea from Cantor Fitzgerald. Althea, go ahead.

Hi, this is Emily. I'm for Althea. Just a quick question. Do you still expect the Regenerate trial results to be enough to refile on efficacy for NASH? It kind of sounded like you may need additional data besides the study, so I'm just wondering what the base case is still and if there's been any updates on that. Thank you.

Thanks, Emily. You know, our approach has been focused on defining a path forward in alignment on a potential resubmission package that would support accelerated review. We did reference in the prepared remarks that there is this additional group of patients that were not part of the interim cohort that we do have an opportunity on the 18-month biopsies to include that efficacy element in any potential resubmission. And as I indicated, we're also interested in what, if any, additional efficacy items might be relevant to the agency's thinking. And that topic will be one of the topics discussed in the future interactions that I described.

Thank you.

Thanks, Edward.

Okay. And next question is from Steve with Raymond James.

Good morning, this is Ryan Deschner on for Steve Seathouse. Can you elaborate a little more on the difference between the additional data sets to assess efficacy and the actual 48-month efficacy on the interim patient population coming in mid-2021?

So I'll start and then I'll ask Gail to comment. So, you know, what I did indicate is that, you know, we're open to the discussion on potential additional efficacy beyond the interim data that we've already generated. And we did reference the additional 500 biopsies as another data item that we would anticipate could be part. Gail, maybe you want to give some additional color on the efficacy side.

Sure, I'm happy to do so. So by the middle of the year, the study's ongoing. That means that we're just progressing through the protocol, and by the middle of the year, The original patients who were part of the interim analysis will have all reached the 48-month time point. It's a point also where there's an additional seminal biopsy, but it also means our exposure is really greatly increased. So both on the safety and the efficacy side, we really have a large and robust database that just continues to get bigger. And we're looking to those FDA interactions to define exactly how we can provide the most compelling data.

Okay, thank you. And then also, the additional data sets to assess the efficacy, will that entail a reread of biopsies in a pooled manner, as in a read of all post-treatment biopsies scrambled together?

Yes, so I think that we're looking at the way of rereading the biopsies and discussing this with FDA really right now and in the short term. It's important to recognize that FDA has publicly said that they believe a consensus approach to reading biopsies is an important next step, and that's something that we will be discussing with FDA to assure that we have an approach that will have the objective of really decreasing variability and improving accuracy so we get the best reading. FDA has not asked us at present to go back and reread earlier biopsies, But we're looking forward to having those discussions and aligning on an approach in the near future.

Okay. Thank you very much.

All right. Our next question comes from Jasmine with Piper Sandler.

Hi, guys. This is Jessie on for Yaz. I was wondering, was there a reason why that an IND was not filed for the OCA and benzofibrate in the U.S. when the study began?

I'm sorry, Jessie, can you repeat the question? It was a little low on this end.

Yeah, no problem. I was wondering why an IND was not filed for OCA and benzofibrate in the U.S. when the study began, as opposed to why the IND is being filed right now.

Great. Hey, it's Gail. So we do have an open IND right now. It's not just filed, but it's open and ready to start a study later this year. We took advantage of the approval of Bezofibrate in Europe to get things going earlier ex-U.S., and our Phase II OCA plus Bezofibrate trial is currently enrolling and progressing outside of the U.S. We believe this provided a way to move our development program along expeditiously.

Great, thank you. And then one more. Maybe I missed it, but is the NISS for OCA, is that cleared, or when should we expect a decision on it?

I'm sorry, Jessie, it was difficult. Can you just repeat?

Oh, yeah, sorry. Is that NISS for OCA, is that cleared? I might have missed it earlier in the discussion. And if it's not cleared, when can we expect a decision?

Yeah, I can take that one. So the NIST process, as we've said, it's a relatively new process, so there's very few drugs that have gone through the totality of the process. But based on the communications we've had with FDA, the new label change is really the output and the actions that FDA has taken based on their assessment in the NISS process. So I think you can look at that as the totality of the process.

And again, from our end, based on the most recent interactions, we do anticipate that we're nearing the very end of the process, and we would anticipate that the new label happens shortly.

Great. Thank you, Tim.

Thank you.

All right. And our next question is from Brian from RW Baird.

Hi there. This is Luke. I'm for Brian. For PDC, could you provide some color with where your dialogue is on subpart H, post-approval studies and requirements to maintain labeling? So in the midst of labeling updates taking place, do you see a path to converting to a full approval at this point?

So important topic, Gail. Can you give the update on the post-marketing conversations with both agencies?

Sure. As we mentioned in the prepared remarks, we are continuing to discuss potential modifications to our post-approval requirements, the COBALT study and the 401 study, with both FDA and EMA, since they are commitments in both parts of the world. The final Ocala label update that we anticipate, as Jerry said, just in the next short period of time, will play an important role in the discussions about our post-marketing study commitments. But we do expect that the process in defining a path forward for the studies will continue beyond the label update, given the need for that alignment.

Great. Thank you.

Okay. Next question, excuse me, is Ed RC. Please go ahead.

Hi. Good morning, everyone. This is Thomas Yip asking a couple of questions for Ed. So first question perhaps on the financial side, you guys mentioned about 20 to 25 percent of PPC patients have cirrhosis. Can you tell us the financial impact of this proposed updated PPC label has that been fully fit into the 15 million revised sales guidance for year 2021?

Yeah, maybe I'll start and then Rocco can comment just to clarify. So the estimate of the 20% to 25% is where we're estimating the overall rate of cirrhosis. The impact of the label is with a subset of that population. We've tried to factor that dynamic into the sales guidance as we look at the rest of this year, Rocco. some additional color might be helpful for Thomas's question.

Yes, sure, absolutely. As we had indicated, we have narrowed our sales guidance for the year to 325 to 340 million. Obviously, this contemplates the various scenarios that we've discussed, and we will continue to refine the sales forecast as we work through that process and implement the new label.

Thanks for the clarification. Perhaps one more question regarding NASH. With the six-month quick stop with the EMA, is it safe to assume that any dialogue in that market will come after your concurrence with the FDA, perhaps some time later this year, third quarter, fourth quarter this year?

Yes, so as we did announce, we received the six-month clock stoppage. It allows us to execute and work in parallel on the work with the FDA and EMA and potentially include some of the additional data on the responses in the process in Europe later this year.

Okay, got it. Thank you so much for taking our questions, and we look forward to the updates this year. Thank you, Thomas.

Okay, next question comes from Naden Jacob with UBS.

Hi, everyone. It's Sean Lim on for Naveen Jacob this morning. I'll keep it to one question, and I'll keep it broad. But if possible, could you give us an overview of the status of your conversations with EMA for Ocala across PBC and NASH? I understand at the last call we were talking about day 120 responses. Any updates from there?

Yeah, so maybe Gail can start on the PBC view with Europe, and then we can come back to NASH.

Sure. So on the PBC side, our focus of our discussions has been on the post-marketing commitment studies, COBALT and 401, and assuring we find a path forward to meet commitments, particularly those around our conditional approval. We also, given that a label update in the U.S., will plan to file a Type 2 variation And I would say that EMA has had a somewhat different approach to thinking about things as they are want to do. For example, after our periodic benefit risk annual update this past year, PRAC, the EMA regulatory authority that looks at safety, did note that the benefit risk was unchanged given the current label. Nonetheless, we will be doing a type 2 variation on the PPC side.

And to reiterate on the NASH side, so we did talk last quarter about submitting our responses to the day 120 questions. And then after the response from the agency, we did receive the six-month clock stoppage. And so that's where the process is currently. Again, it gives us an opportunity to work in parallel to potentially use some of the additional data as we work on the approach with Europe, importantly working towards a definition of responses that highlight the risk-benefit and the right population in that context. So more to come later this year.

That's very helpful. Thank you very much.

Thanks. Okay, next question is from Matthew with BMO.

Hey, this is Jin on for Matthew. Yeah, thanks for taking our questions, and two for me. So you guys withdrew guidance for the resubmission timing. Where is the gating step for the refiling? Are you guys just waiting for the 48-month data to mature, or is there anything else that you guys are waiting on? And I have a follow-up after that.

Thanks for the question. You know, as we work on the overall risk-benefit dialogue with the agency. I think we're looking at this combination of the feedback that we will continue to get as we get clarity on some of these items, the operational impact of some of those requirements, and it's really that full picture that we have in mind as we come back and clarify that at this point we're unable to reiterate the guidance of a potential resubmission by the end of this year. So it's a holistic view on the dialogue. I think importantly we have upcoming planned interactions with them where we'll continue to advance the conversation on some of these key topics, get further clarity and be in a position at each step to define what's the right path ahead. And as I said before, I look forward to coming back in quarter three as we've continued our work, as we've continued the dialogue and provide refinements to the plan.

Got it. And then it looks like the new guidance doesn't reflect the label of the Is it fair to assume the addressable patients for PBC may come down to, say, like 80% of the initial market? And what are your potential, like, what are your expectations for the potential outcomes of the FDA discussion on Cobalt's post-marketing trial?

So maybe we'll start with Cobalt, which, as Gail indicated, is an ongoing trial. discussion which will be impacted by the finalization of the label. Gail, maybe you want to start on that and then we can come back to the first question.

Sure. So on the cobalt side, it's important to recognize this is a commitment. We have a subpart H approval. We will find a path ahead. It's a question of working through the process with both FDA and EMA and the time it takes to align on that path forward.

And then Rocco, maybe on the second one. Yeah, sure.

Just to clarify, the narrowing of our guidance does include all of the scenarios, which we've contemplated with the label update. So I just wanted to make sure that that was clear, because I think your question was, did it or did it not?

Okay. Yeah, that's helpful.

Okay. Next question is from Jerry of Oppenheimer.

Oh, hey, it's Jay Olson from Oppenheimer. Thanks for taking the question. Hey, I was curious, can you talk about what percent of your operating expenses are dedicated to NASH versus PBC? And what would the financial profile of the company look like if Intercept chose to become a PBC-only company? And have you contemplated that scenario internally and If so, when might the company be willing to make a decision like that? Thank you.

Sure. So thank you for the question. With respect to our R&D costs, as a reminder, we have two large phase three trials that are ongoing. So specifically two-thirds of, I would say, our R&D costs are NASH specific. And I guess I'll turn it over to Jerry perhaps to answer your question on some of the strategies.

Yeah, so as Rocco indicated, the cost structure around NASH. At the same time, we're intensely engaged on the process that we've outlined on NASH in ensuring that we're working towards alignment and making sure at each step along the way we're advancing and making the right decision on the path ahead. I think the That work will continue to get more insight from some of the important interactions which are to come and which are planned. We have talked about in the past, if you viewed the standalone CBC franchise, it would be a profitable franchise which plays on some of our core capabilities and our strengths. I think as we move forward now and implement the label change that's an important short-term focus that also gives us a better ability to be able to work on some of the future opportunity that still exists in the PBC market.

Great. Thanks for taking the question.

Thanks, Jay.

Okay. Our next question is from Jeff with Bank of America. Jeff, go ahead.

Hey, guys. It's . Thanks for taking our questions. Just two kind of quick ones. First off, maybe you can walk us through how you're thinking about the NIST update and your expectations for the label as it specifically pertains to your development pathway for OCF as a five-rate combo. I guess, are there any specific learnings to apply there in terms of the development or the design of some of those studies? And then, secondly, Maybe we'll talk through what the contingency plans are, if any, for reverse, trying to incorporate the feedback from the FDA workshop a few weeks or, I guess, a month or so ago. Thank you.

So with regard to the OCA Bezafibrate program, you always learn over the course of a development program. One of the objectives of a Phase II study is, of course, to find the right dose. And in a combination product, it's that extra step of finding the right synergistic dose, ideally between two different medicines. Our hope is that that can be a relatively low dose for both so that we can really look for opportunities to have the sort of an optimized benefit-risk profile. That said, There's always a component of looking at a new medicine, learning as you go, but we have been very encouraged by the data that exists, the really wide array of data that exists. There's a fibrate in PBC, OCA in PBC, or a caliphate in PBC, and even some data that independently exists and has been published where both medicines are on the market on the two together.

And I guess just on the question on reverse medicine, So, you know, the importance of the reverse data is something that we continue to stress. Again, it's an incremental data set and an incremental population. We have had historical conversations with the FDA on the potential path forward based on a successful reverse readout, however, in the context of our overall approach and really stressing alignment at each stage, I think we would look forward to regrouping with the agency with a positive data set in hand if we're in that scenario and discussing the path ahead. Got it. Thanks, guys. Thank you.

Okay, and that concludes our Q&A session. Now let me turn the call over to Jerry Durso for closing remarks.

So thanks, everyone, for joining us today. We were able to bring forth another quarter of double-digit revenue growth while working to finalize our updated Ocaliba prescribing information with FDA in advance, our NASH regulatory process, and our pipeline. We remain as committed as ever to serving patients with progressive non-viral liver disease, as well as the health care providers who care for them. And we definitely look forward to updating you on our progress on the future calls. Thanks for the time today.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.