Intercept Pharmaceuticals, Inc.

Hello, and thank you for standing by. Welcome to Intercept Pharmaceutical's second quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to turn the conference over to your speaker, Narek Segarian. Sir, you may begin.

Good morning, and thank you for joining us on today's call to review Intercept's second quarter 2023 financial results and key business updates. Our second quarter 2023 press release and accompanying slides are now on our website at 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 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 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, Chief Financial Officer, Andrew Saik, Chief Commercial Officer, Linda Richardson, and our President of Research and Development and Chief Medical Officer, Dr. Michelle Berry. We will then open the call for questions. Let me now turn the call over to our CEO, Jerry Durso.

Thanks, Narek, and good morning, everyone. Thank you for joining us on our second quarter 2023 earnings conference call. In the second quarter, our Ocala business and PBC again performed well, delivering double-digit growth for the fourth consecutive quarter. The $83.7 million in Ocala net sales was 17% growth over the prior year quarter. This outstanding, sustained performance is a result of the execution of our commercial team and the trust and value that hepatologists and gastroenterologists place in Ocala. With more than seven years on the market, positive patient and physician experience and strong outcomes data in multiple real-world analyses, Ocalava's role as a preferred improvement second-line agent for PBC continues to expand. Linda will share more about the dynamics driving our sales growth, as well as our positive outlook on the Ocalava business. Turning to our pipeline, we continue to prioritize investment in our OCA and Vesafibrate combination program in PBC. We were pleased to share positive data from the first of our two Phase II studies at the Easel Congress this past June. These data illustrate the combination's best-in-class potential to deliver biochemical responses across a range of biomarkers that predict improved clinical outcomes in PVC. We look forward to sharing more details from this program and expect to have all the necessary data to submit a request in 2023 for an end of Phase II meeting with the FDA. Finally, we are aggressively implementing the plan that we communicated on June 23rd to restructure our business, strengthen our focus on rare and serious liver diseases, and deliver profitability quickly. We have discontinued all NASH-related investments and fully expect to meet our targeted reductions in operating expenses. We are making rapid progress in evolving our organization and reducing our cost basis. Andrew will discuss our progress in more detail shortly. The shift we have made puts Intercept in the best position to create value for shareholders while supporting our patient-driven mission. We believe that the actions, which are now well underway, will improve our ability to drive long-term growth and leadership for our PBC business, develop innovative new medicines, and achieve meaningful profitability in 2024. With that, I'll now turn the call over to Andrew.

Thank you, Jerry, and good morning, everyone. I will begin with an update on our cost reduction efforts and organizational restructuring that we announced in June. As previously discussed, this work is aimed at significantly reducing our cost structure by discontinuing all NASH-related investment and reducing the size of our company to support our focus on rare and serious liver diseases. These actions will allow us to pivot to profitability by year end which will help ensure our long-term growth and provide us with strategic flexibility as we take the company forward. The closeout process for the Regenerate study is well underway and is expected to be substantially complete by the end of this year. We expect to have all clinical sites shut down by year end with some final activities and spend extending into the first quarter of 2024. Since our restructuring announcement, we have stopped all other NASH-related spending throughout the company. The removal of these costs from our operating expenses is an important contributor to our ability to move toward profitability as quickly as possible. With regard to reducing our workforce, we have completed the first wave of notifications which impacted commercial and general administrative functions. The second wave of notifications, which will impact the R&D and medical affairs functions, will be completed in the next few weeks and the reorganization will be materially finished by the end of this year. As previously stated, we plan to maintain the scale of our current field sales organization to support the growth of Ocala. With respect to OPEX this year, in June we lowered guidance for 2023 non-GAAP adjusted operating expenses to $350 million to $370 million. This guidance includes expenses to wind down the Regenerate study and all other NASH-related activity, as well as estimated one-time charges related to our workforce reduction. As a result of these changes, and after the restructuring activities are complete, we expect to achieve meaningful profitability in 2024 and to be in a position to grow our PBC franchise with a significantly lower cost structure than our current run rate. Specifically, we are targeting a net reduction in annual non-GAAP adjusted operating expenses of approximately $140 million relative to our updated 2023 non-GAAP adjusted operating expense guidance. Our new cost structure will be effective upon completion of the restructuring and closeout of the REGENERATE study, which is expected to be materially complete by the end of 2023. Turning to revenue, we are raising the lower end of our guidance and have updated our full year 2023 Ocala net sales guidance to $320 to $340 million. As Jerry mentioned, we are pleased with our strong sales performance this quarter for Ocala, recording $83.7 million in net sales compared to $71.8 million in the prior year quarter. This represents 17% growth as our fourth consecutive quarter with double digit growth. Selling general and administrative expenses were $53.3 million in the second quarter of 2023, compared with $40 million in the prior year quarter. The increase in Q2 was primarily driven by NASH-related spending, which has now been removed from our expense base. As a direct result of the actions taken last year to strengthen our balance sheet and reduce our outstanding debt, Interest expense in the quarter ended June 30, 2023 was $2.8 million, down from $6.7 million during the same period last year. We reported a net loss from continuing operations of $5.8 million in the second quarter of 2023, a decrease compared to a net loss from continuing operations of $20.3 million in the second quarter of 2022. As of June 30, 2023, Intercept had cash equivalents, restricted cash, and investment securities available for sale of $415 million, and the company was net cash positive by approximately $80 million. As previously disclosed, the 2023 convertible notes matured on July 1, and we made a cash repayment for the total principal amount due of $109.8 million. For a more detailed summary of our financial results, I encourage you to look at our press release for the second quarter and the June 30th, 2023. In closing, I am proud of our performance this quarter and the strong underlying financial foundation of the company. Both of those factors are important enablers of our ability to reshape Intercept and achieve meaningful profitability in 2024. I will now turn the call over to Linda.

Good morning, everyone. As Jerry and Andrew have noted, our commercial performance this quarter was very strong. We reported Ocaliba net sales of $83.7 million in the second quarter, representing a 17% increase compared to the same period last year. Several factors are driving our repeated double-digit sales growth. First, we continue to attract new first-time Ocaliba writers. Specifically, five out of 10 prescribers of new patients in the second quarter of 2023 were first-time O'Callaghan writers. Second, we continue to see volume growth. New-to-brand prescriptions grew nearly 25% during the same time period, as reported by IQBIA's National Prescription Audit. And during this quarter, we reached an all-time high in monthly unit demand. Clearly, our field sales force is delivering messages that resonate with PVC prescribers. These important factors show that we continue to expand our Ocaliba prescriber community and add new patients to our base business. Among patients, we maintain a strong on-time refill rate of approximately 90%. This dynamic is driven by support from our InterConnect Hub program and Specialty Pharmacy Network, as well as on the ground with our field reimbursement manager team. These established capabilities will continue to be valuable drivers. even with the potential for new therapeutic options in the future. I'd like to now share new insights from recent prescriber and patient market research that provide support for our confidence in the future of Ocalva in PPC. Recent patient feedback shows that satisfaction on Ocalva remains high, with approximately 86% being satisfied to extremely satisfied with their therapy. We also found that 92% of patients enrolled in InterConnect our patient support program, indicated that they expected to continue on Ocaliba, and 70% were still on Ocaliba at 12 months. As important background, approximately three in four Ocaliba patients are enrolled in InterConnect. These customer insights demonstrate high levels of satisfaction with Ocaliba, and we know that patients who are satisfied with their therapy are typically inclined to remain on it, despite the potential for new options. This belief is supported by persistency data for patients taking Ocaliba. Persistency for Ocaliba is in line with, and in some cases better than, multiple analogs for chronic disease therapies. This includes products in diabetes, dyslipidemia, notably statins, and stroke prevention at intervals from three months through two years. Moving forward, one of our key promotional platforms will be to highlight recent scientific presentations which emphasize that the amount of time a PBC patient remains above target levels for select liver biomarkers leads to an incremental risk of hepatic decompensation and liver transplant or death. In the second half of 2023, we will emphasize the totality of Ocala's impact on these additional biomarkers, such as AST, ALT, GGT, and total bilirubin. As cited in our corporate presentation, Ocaliba has a beneficial impact on these same biomarkers, all of which contribute to assessing total liver health. ALP is an important factor in PBC management, but just one of several elements of total liver health that should be monitored. Of course, what matters most in PBC are outcomes. In another current market research study, approximately 85% of HCPs surveyed stated that preventing disease progression and avoiding the longer term complications from liver disease are the most important attributes of a PBC therapy. Real-world evidence has shown Ocaliba's ability to slow disease progression and help patients avoid long-term complications. In fact, there are now five independent real-world data sets that show this improved survival. Utilizing appropriate avenues to create greater awareness of this real-world evidence supporting the use of Ocaliba and PBC is an important differentiator versus future competitors. and part of our long-term strategy to demonstrate the unique benefits of Ocaliba. The data that I've reviewed today illustrates the stability and durability of our base business and the commercial team's ability to drive further adoption of Ocaliba. Building on our momentum in the first half of 2023, I am confident in the strength of Ocaliba's market position and our plans to continue growing our PVC franchise. I'll now turn the call over to Dr. Michelle Berry for regulatory and clinical updates. including how our long-term opportunity in PBC is amplified by our OCA-Bezofibrate Combination Program.

Thank you, Linda, and good morning, everyone. I'll start with an update on our OCA and Bezofibrate Combination Program, which we believe offers the potential to establish best-in-class clinical benefits. We know that the most important goals in PBC treatment remain improved transplant-free and decompensation-free survival, Outcomes that have been demonstrated in multiple analyses from real-world patients taking Ocaliva. Early data from the Phase II combination program of OCA and Bezofibrate have shown that achieving biochemical remission in more than half of patients with PBC is possible, with the potential to prevent progression to these clinical outcomes in the future. We have two Phase II studies exploring a range of therapeutic doses for this combination. We have now completed enrollment of both studies and have shared data from a planned interim analysis of our first study, study two and three, at Easel in Vienna. We're very encouraged by these initial data, which show that the combination of OCA and 400 milligrams of bezofibrate was effective in normalizing key biochemical markers associated with PVC-induced liver damage. Most significant was that nearly 60% of patients in the higher dose combination arm achieved biochemical remission. That is, patients in this group saw normalization of all key biomarkers, ALP, total bilirubin, ALT, AST, and GGT. These compelling data demonstrate the potential synergy between FXR agonists and PPAR agonists. which we believe could reframe the parameters for efficacy in PBC. Analysis from both of our phase two studies, in addition to our large phase one study and preclinical data, will serve as the basis for an end of phase two meeting with the FDA. We expect to have data in hand to submit a request in 2023 for this important meeting. We look forward to sharing more information about this program including the planned interim analysis from our second Phase II study, Study 214, later this year. Turning now to Ocala, as previously communicated and in alignment with the FDA, we remain on track for submission of our SNDA this year in support of fulfilling post-marketing requirements. This submission will include data from our post-marketing study, COBALT. which will likely be the FDA's primary basis for evaluation, as well as supplementary real-world evidence from large datasets in the US and Europe. As we've discussed previously, we believe that cobalt was a flawed study due to feasibility challenges and did not provide a placebo-controlled group that reflects the well-known natural history of PBC. Our analyses of real-world datasets were completed in accordance with all requirements specified by the FDA's issue draft guidance. Importantly, these analyses demonstrate a consistent improvement in transplant-free and decompensation-free survival, the ultimate goals in PBC treatment. We believe that the population and guidance in our current label reflects a positive benefit-risk for patients with PBC. We are committed to working with the FDA regarding our post-marketing commitments and have been engaged with the agency. Finally, within our earlier stage pipeline, we continue to progress our proof-of-concept fresh study evaluating 787 in patients with severe alcohol-associated hepatitis, also known as SAH. We are encouraged by the efficacy of INT787 as demonstrated in preclinical assessments and the safety and tolerability in our single and multiple ascending dose first in human study. We look forward to sharing additional updates as this program advances. In closing, I'm proud of the progress being made by our R&D group. With that, I'll turn back to Jerry.

Thank you, Michelle. For the fourth consecutive quarter, Intercept delivered strong double-digit sales growth for Ocaliba. We also made considerable progress with the OCA-Bezofibrate combination program. including presenting new data that suggests best-in-class potential in PBC. This exceptional performance, along with our restructuring plan to significantly reduce costs, has intercepted well on the way toward quickly achieving profitability while advancing our leadership in rare and serious liver disease. I'll now turn it over to the operator for questions. Operator?

Thank you. Ladies and gentlemen, as a reminder, to ask the question, please press star 11 on your telephone. and then wait to hear your name announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of .

Good morning, team. Thank you so much for the updates. just wanted to understand a little bit more about what are the possible outcomes as you guys are having your end of phase two meeting with the FDA in regards to the fixed dose combo? Is there an opportunity to maybe expedite, you know, the phase three development? Just maybe walk us through, you know, sort of the scenarios. And I know that we don't, we will get more call over the upcoming months, but would love to hear how we should be thinking about what the next communication will be around that discussion and what could be sort of a best-case scenario. And I'll jump back into the queue for a follow-up. And thank you again. Good morning.

Yeah, good morning, Yasmeen. Thanks for the question. Obviously, from our prepared remarks, we're encouraged by what we've seen thus far from the initial data set on the quick-dose combination, as Michelle outlined. More to come. Michelle, maybe you can give a little more color around how we're looking at the accumulation of the data and the opportunity to get with the agency on an end-to-end basis.

Sure. Yep. Thanks, and good morning, Yaz. So, we do plan to have all of the data pulled in from the PK and drug-drug interaction data from our large phase one study, as well as the planned interim analyses from 213 and 214. As you know, we're looking at biochemistries, we're looking at tolerability and some key safety parameters, including lipids for those patients. The plan for the end of phase two meeting, we do have a proposed phase three design, and we hope that we can come to alignment with the agency during that end of phase two meeting. We have already begun, though, making preparations to identify sites so that as soon as we get that study design finalized, we're off and running for enrollment in 2024. So very excited about the opportunity to explore this combination. We have had initial conversations with the agency about expected endpoints and what, based on what we're seeing in the phase two, what they anticipate that we may be thinking about for a potential endpoint. Clearly, the expectations are high for this combination, given what we've seen so far in phase two. We're all looking forward to those discussions.

Thank you so much, team. I'll jump back into the queue.

Thank you. Please stand by for our next question. Our next question comes from the line of Ma Yank. Mantani with B. Reilly Securities. Your line is open.

Good morning, team. Thanks for taking our questions, and congrats on strong quarters. So we were studying the OCA BEZA Phase II PBC protocols, and we're hoping if you'd comment how you might be measuring baritis. You know, there are endpoints like NRS, VAS, core, things like that incorporated, and then I have a quick follow-up on the financials.

Michelle, will you take the first one, and then I'm sure we'll take the follow-up on the financials with Andrew and I. Yes, good morning, and thanks for the question.

So, yes, we are incorporating a couple of different assessments in our 213 and 214 so that we do have comparability across the monotherapy trials as well as some of the prior trials conducted in the combination. So we look forward to sharing those data from both of the studies at 12 weeks from the 2 and 4 study, the planned interim analysis, as well as the longer-term data from 2 and 3, the study that we shared at EASL.

Okay. Great. And then maybe I missed this. How do you characterize this growth you have in the PBC business between contribution of penetration versus persistence to revenue growth? And as you think about full approval, how do you think of the drivers to growth here? And sort of related, should there be an outcome here? expected around your full approval for PBC SMA submission next year? Are you guys expecting there to be an adcom on PBC next year?

So maybe I'll start with that and then we can describe a little bit more about the growth. So we could expect an adcom in the process. It could be a reasonable option. We haven't had any specific commentary on that directly from the agency, but it wouldn't be unforeseen that there could be an adcom that the agency could ask for, but obviously we'll get more insight on that once the submission goes in and we have more of that dialogue. On the growth this quarter, Mayank, if I understood your question, one, I think overall are encouraged that we continue to see the level of growth that we reported out and that we clearly expect to continue with our sales guidance and the revision that we made on that. Underlying that, as I believe Linda mentioned in her prepared remarks, good demand growth, so good prescription and unit growth underneath. It was our largest quarter in terms of the generation of demand, which is utilization of of Ocala by more physicians with more patients than at any given time. And we're really continuing to focus on both sides, on expanding new patients and on ensuring that the ones that are on therapy, we're doing everything we can to keep them on. And we are encouraged that satisfaction is high. And while we do see some dropout, as you would expect with chronic medications, again, it's in the range with We did include in the prepared remarks some of the analog work that we're doing. And really, while there's a lot of discussion around what happens to patients on the Ocala journey, we do see patients stay on at least as well as some of the chronic drugs that are typically considered good adherence, like statins, like anti-diabetic medications. We thought that that comparison was useful. for you to think about how we're kind of looking at that picture of adherence over time.

Great. Thanks for the question.

Thanks, man.

Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Ed Arcee with HC Wainwright. Your line is open.

Great, thank you. Good morning, and congrats on the strong quarter. A couple questions from me. First, I just wanted to clarify on the OCA-bezofibrate combination. Firstly, the pruritus measurements that you mentioned before, a couple different measurements, could you expand on what those are, if it's NRS or something else, just in terms of comparability with your own prior data and other studies. And then secondly, on the 58% complete remission, just wondering how you came to that number. Is that eight out of 15 or nine out of 15? And then I have a follow-up, thanks.

Michelle?

Hi, Kep, so good morning, Ed. We are using the VAS in the assessment of pruritus. We are also excluding patients with severe pruritus consistent with other large trials in the PBC space. The 58, I believe, was 9 out of 15. I'll have to pull that up and double-check on that across all those measures. I will mention we had an additional three patients who were very close to normalization, so well over half of the patients, I think, Again, these are small data sets, and we look forward to bringing a larger data set, both from the remaining patients from two and three, as well as both the plain and interim analysis and then full analyses from two and four. We should have all those data in hand in time to request an end of phase two meeting at the end of the year.

Great. Thank you for that. With these studies, 213 and 214, and I recognize 213 would have longer-term data, these interim analyses later this year, is it possible to get any further granularity on the timing, perhaps at a medical meeting such as AASLD? Thank you so much.

Certainly, that would be a great opportunity as we're all together later in this year. It's hard to say definitively where we'll be able to present those data. I can say with some assurity we will be sharing at a minimum the top-line data from that study as well as from the longer-term data. As you point out, we now have data from more than 12 months for many of the patients in the 213 study, given that it was initiated about 18, 24 months ago for the majority of patients.

Great. Thank you.

Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Brian Abrahams with RBC Capital Markets. Your line is open.

Hey guys, good morning. Thanks for taking my questions. Maybe for Linda, curious if you could walk us through how you expect the PBC market dynamics to play out with potential new entrants. Wondering if there's going to be, if you're thinking about any changes to your commercial strategy or if your market research is really suggesting that the patients who kind of naturally drop off of OCA will really be the ones who would be trying a new therapy. And then maybe for Michelle, What's the most important things that you think you'll need to do to combat any potential FDA skepticism around the use of real-world data to support Ocala's maintenance on the market in PBC? Thanks.

Okay, so we'll start with Linda on the commercial work that, as you say, Brian, that we're deep in.

Yeah, so thanks for the question and good morning. I think that what we're seeing are several really important things in the marketplace. We are confident that we have certain competitive advantages overall that I can touch on. But first, we would expect the overall PBC market to grow. We've done some analog work and looked at that. And we are anticipating probably about a 10% to 15% increase in the number of PBC patients receiving treatment. And that's great across the board. In that, we'll also see what we believe to be an emergence of third-line markets. This will be evident because there's no one product that even with the rates and efficacy rates we're seeing, no one product is necessarily gonna be right for everyone. So as folks move through that paradigm, there'll be a third line market that begins. We believe strongly from the market research and patient satisfaction scores and asking patients directly, we expect that the majority of our existing patients to express high satisfaction and a willingness to stay on therapy will be on therapy. And this is, you know, also supported by the persistency data and an additional patient satisfaction rate, you know, we've showed before. So third, we expect to continue driving new prescribers and new patients by increasing the awareness of the data that we uniquely have. We talk about the efficacy on five different biomarkers, the efficacy that we see emerging in the real-world evidence, And we'll continue to talk about those things as an organization. And lastly, we believe that we have leverageable incumbency moments and expertise that we'll be able to continue to drive. Our sales force has done a phenomenal job across the board, but particularly this quarter. And then we look at our established hub, specialty network that's expanding, and our existing relationships with the HEP and GI community. Those are things that we have well established I think the totality of those four things will help secure our business.

Michelle?

So moving over to the real-world evidence, I think there's three things that are going to be helpful in addition to the draft guidance that's been issued by the FDA, which we are following and interacting with the agency on those specifics. The three things that I think will make a big difference are replication of the data, advocacy, and the evolution of the standard of care. So first, the replication of data sets, which we have seen across multiple analyses now, as Linda pointed out, initially with the POIS open label extension, which was compared with both the UK PBC and the global PBC patient registries. The fully real-world Komodo claims database analyses, which we call HEROES, which showed a superimposable benefit, 70% benefit in a decreased risk of progression to liver transplant or death. And finally, we've seen this replicated across a completely independent analysis that was presented in early June before EASL by the Italian patient registry. group called Recapitulate, which again has shown this consistency. Scientifically, being able to replicate the exact same benefit across these multiple databases, patient types, healthcare systems is even more confirmation of the benefit, the survival benefit that we know is critical to patients. Second is patient advocacy and physician advocacy, both on the individual basis as well as the societies. We've heard over and over again from clinicians that they're unwilling to put their patients on placebo for long-term follow-up, for progression to outcomes. And third, the standard of care evolution. And since 2017 and 2018, Ocalva has been indicated as the only second-long therapy We know that that is the basis for second-line therapy and now has that additional benefit of showing these outcomes. The only compound that has been able to demonstrate that, because we have that long-term follow-up, not modeled, real data, now across multiple different data sets. So as the standard of care has evolved, We have to be looking realistically about what we are asking patients to do for these longer-term studies to get to outcomes.

Thanks so much, Coral, the detail. That's really helpful. Thank you, Brian.

Thank you. Will you stand by for our next question? Our next question comes from the line of Jay Olson with Oppenheimer. Your line is open.

Oh, hey, congrats on the quarter, and thank you for taking the questions. Based on the early efficacy data that you've seen for the OCA plus benzo combination, would you consider running a pivotal trial in first-line treatment of PBC? And maybe from a more philosophical perspective, do you think it's possible to replace UDCA in the first-line setting?

Shell, maybe you start there?

Yeah, so it's a great question, certainly one that we have discussed, not just for the fixed-dose combination, but really with the continued emergence of survival data. Clearly, it is important to look at getting patients quickly on therapies that we know improve those outcomes. The decisions on first or second line really will be driven by data. So we have to hold off until we get the full data sets. We did a planned interim analysis, which of course we're all really encouraged by and look forward to those discussions with the agency. I think what informs us at this point though is the survival data that we have seen is in the setting of that combination. So moving patients quickly to whether that's in addition to or so or in patients who were intolerant, I think has been a key message. And I think that'll carry forward for the fixed dose combination with even more urgency, getting folks on to Ocalva so they can reap the full benefit as early in their disease as possible.

Thank you.

Thank you.

Thank you. Please stand by for our next question. Our next question comes from the line of Michael Yee with Jefferies. Your line is open.

Hi, good morning. Thanks for taking our questions. This is Jenna for Mike. With regard to the potential new product coming to PPC, how should we think about the profile of your combo versus the others, and specifically, Could the OCA as a combo potentially show superiority on pruritus? Thank you.

Jill?

Want to say that?

Yes, sir. We are watching this space. I do think that we'll have those data, again, coming out in the fall. It is something that we are looking into and are certainly encouraged by the early data that we have seen. As we've discussed, there are multiple ways to achieve approvals in fixed-dose combination, improvements on efficacy, which we've certainly seen initial implications for with improvements across the biochemistries, but also improvements in tolerability and safety. So, we are looking at pruritus. We saw very encouraging rates for the initial 2 and 3 study, which we reported out in June, are continuing to collect those data in a way that will allow us to do those comparisons as much as appropriate. I think the short-term answer is patients are staying on therapy, and we're very encouraged by those data. So we'll look forward to sharing more in the fall.

Thank you. Please stand by for our next question. Our next question comes from the line of John Wollobin with JMP. Your line is open.

Hey, congrats on the progress and thanks for taking the questions. Just hoping you could characterize what you consider meaningful profitability in 2024. Thanks.

Yeah, John, thanks for the question. As we indicated, all things are progressing. We had referenced the $140 million savings target in the last call, and as we framed, we're well on track in terms of the savings plan. Andrew, maybe you can sketch out a little bit how we're thinking as we progress through this period of execution of the savings plan towards next year where we'll be at a more steady state once things finish.

Yeah, sure. Thanks, Jerry, and thanks for the question, John. So, yeah, as we look to next year, John, and obviously we haven't given guidance yet. We don't intend to give guidance until the end of the year in our normal course. But having said that, you know, with four quarters of consecutive growth, we anticipate Ocala growing into next year. We have current guidance range of 320 to 340. Obviously, we're not giving guidance on next year, but we expect it to continue to grow. With regard to expenses, we indicated $140 million savings off our current estimate of 350 to 370 next year. That should give you some pretty good visibility into what we expect our spend to be next year. That number includes things like a Phase III study and fixed dose. So we feel like we're headed for a very good year. We want to generate meaningful EBITDA next year, and we think it's achievable given where we are.

Helpful color. Thanks, guys.

Thanks, John.

Thank you. Please stand by for our next question. Our next question comes from the line of Thomas Smith with LeRink Partners. Your line is open.

Hey, guys. Good morning. Thanks for taking our questions. Just one on Ocala pricing. It looks like you took a 5.9% list price increase here on August 1st, which is the second price increase, I think, this year. I don't think there's been a year since Ocala launched where you've taken two price increases in the same calendar year. So can you just talk about what prompted that and how we should think about your pricing strategy going forward?

Yeah, Thomas, thanks for the question. Obviously, we don't comment in detail on our pricing strategy. Obviously, we're looking on an ongoing basis at the value that Ocala offers and prices accordingly. You did capture the action that we took and probably not more comment from me on that at this point.

Okay. And I guess if I could sneak in one on DOCA, Visa Combo, it seems like the Europe study took, I think, about two and a half years to enroll 72 patients. Can you just comment on some of the things that may have impacted enrollment there and then talk about how you're thinking about driving enrollment into a potential phase three program in a world that obviously has commercially available Calva, but then also potentially multiple competitor products?

Yeah, happy to address that one. Yes, we did have a slowdown in the European enrollment on two and three in the pandemic specifically, but saw that pickup over the last year. And then what I will say is after the presentation of the planned interim analysis at EASL, we had a dramatic pickup, completed enrollment in our second phase two, and have already had folks signing up for the phase three. We've had lots of discussions, as you might imagine, about how to optimize enrollment, looking at site performance, looking at various countries for their enrollment, how we can maximize our efficiency, recognizing that this is a rare disease and that we need to go where the patients are. I think we've seen across therapeutic areas, though, One thing that is very consistent in driving phase three enrollment is excitement about a real shift. Probably best characterized by Fred Nevin's quote that he's always excited when you get in a therapeutic area where you can finally cross that 50% mark and really start to see more than half of patients who are realizing substantial benefits and a shift in their disease progression. I think that has really driven a lot of the interest, and we're excited about getting the program up and running.

Got it. That makes sense. Thanks, guys.

Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Elena Merrill with UBS. Your line is open.

Hey, guys. Thanks so much for taking my question. Just in terms of some of the commercial trends you're seeing, what's the average duration of patients being on OCA? And I see that you, in your slides, have 72 persistency rate at six months. Just curious if you can provide any color over a longer period of time. And then just a second question. Can you comment on what proportion of patients on OCA are still experiencing pruritus, even just as part of the underlying PBC disease, and any info on the severity? Thanks.

So I'll just start with persistency, if that's OK. I think that what we see across the board with our persistency is greater than 50. We have 50% of patients on the drug at two years, which is very comparable, in fact, superior to the average of a lot of classes looking at MS, stroke prevention, type 2 diabetes, and statin. So we do have that dynamic going on for us. And we're quite close to what you would see as just a normal kind of patient dynamic across many chronic conditions. We are impacted by that as I think a country compared to some of the other factors that you see in ex-US countries. So there's just that dynamic in general. Now, when you talk about pruritus, remember that pruritus is about 70% of patients who have PBC. also report pruritus. So we see that dynamic as part of the condition. When we have the vast majority of pruritus that was seen in trials with Ocaliva is mild to moderate and can be managed. And when you see it in the real world, it's half of that. It's about 29%. And then you get to the management techniques that you can implement at any time if someone's having a period of pruritus. You can cut down on the dosing. You can go off for two weeks. There are various management strategies articulated in the label itself. It depends on how bothersome it is. The people who have really intolerable pruritus for any reason, I would imagine, aren't on the product. So I can't really speak to how many people who are continuing to be on the drug have that issue. I would imagine if it was something that was rate limiting, they wouldn't stay on for two years.

Got it. Thanks so much for the call.

You're welcome. Thank you.

Please stand by for our next question. Our next question comes from the line of Brian Scorney with Bayer. Your line is open.

Hey, guys. Good morning. This is Charlie on for Brian. We had a question about the potential pivotal study for the besafibrate combination. Specifically, when you're looking at the comparator arms, would you have arms of OCA-naive patients, each starting OCA, and then one arm also getting benzofibrate, and then one getting placebo? Or would you do patients already on OCA with inadequate responses as your patient population? Just kind of, how are you thinking about those enrollment criteria things? Thanks, Charlie. Michelle?

Hi, good morning. Yeah, we do anticipate that in order to fulfill all the requirements for a fixed-dose combination that you have sufficient data showing the contributions of each independent agent. Now, whether or not that has to come from your Phase 3 or from the Phase 2 studies or from other sources is something we'll be discussing with the agency. I think our going-in assumption is that at least one arm of monotherapy, probably the bezafibrate monotherapy, but we may have two arms of monotherapy as we go in. The placebo study, again, that's a big topic in PBC where patients, you know, whether that's placebo or placebo plus ortho, Again, with the changing standard of care over the last seven years, it's difficult to ask patients to stay on placebo, certainly for more than the 12-month double-blind portion. So stay tuned on that. But, yes, I would expect at least one monotherapy arm.

Great. Thank you. Thank you, Charlie.

Thank you. Please stand by for questions. Our next question comes from the line of Steve Seedhouse with Raymond James. Your line is open.

Good morning. This is Ryan Desner on for Steve Seedhouse. I wanted to get your current thoughts on how you're seeing the potential impact of mechanisms that specifically target pruritus in the PVC space, such as IVAT inhibitors, and then also wanted to ask if you had any updated guidance on what sort of a timeline you could expect to see data from the outcomes portion of Regenerate. Thanks.

So maybe I'll take the first one and then Linda can take the second one on the IVATs where I think it's a little early yet, but obviously we're working on that in the background. So as we said in our announcement to discontinue the work with Regenerate, we'll capture the available data data and communicate appropriately at the right time on that. So again, the focus of the work of the team is on all of the important closeout activities. As we said, we do anticipate that the sites will be closed and the material costs will end this year. There might be a little bit of some final things that flow into the beginning part of next year, but part of the closeout is to appropriately capture the data. Of course, you know, we're working with the sites to make sure that the all is clear as the closeout, and as we capture that data, we would communicate back appropriately based on good practices. Linda?

Sure. I think the IBAT story is an interesting one in that if you're addressing a symptom, and I'm not an expert on IBATs by any means, or they're all the details of their programs that they may have in the future. But I do think that with the incidence of pruritus as part of the disease state in PBC, having something that can help patients moderate or address that is an important quality of life element. And if that were to come to bear in the marketplace, I'm not aware that at this point they've shown disease-modifying opportunities. So it would be something to address the disease, but you may still need something to really look at lowering ALP, AST, ALT, bilirubin, other markers. So while it could pave the way to improve that kind of symptom of PBC, I imagine right now there's still a need for therapy to look at stopping the progression of the disease itself. So at this point, I think, you know, that could be potentially beneficial to Ocaliba. That became part of a, you know, an ongoing strategy to address that part of, you know, patient's experience of PBC.

Got it. Thank you very much.

Thank you. Please stand by for our next question. Our next question comes from the line of Ritu Varel with COID. Your line is open. Good morning, guys. Thanks for taking the question.

Michelle, I just wanted to round back on something you mentioned and some of the prior questions about what will serve as the control arm for the Phase III combination, at least as you will propose it going in. You mentioned there would be a monotherapy arm. I think you left open the possibility that there could be at least a shorter-term placebo arm Which one at this point do you think would serve as the control for statistical analysis of the primary endpoint? And I guess if it was placebo, would that have to change with full approval? With full, make sure I understand. Full approval of, I'm sorry, full approval of Ocalibus.

I see. Okay.

Accelerated. Yep.

Right, right, right. So, yeah, so you do bring up a good point that while you're still under accelerated approval, it cannot serve as the only comparator. You have to continue to compare back to placebo. Should we get to a full approval with fulfillment of our post-marketing requirement, then that does shift your standard of care. One of the interesting questions in PBC, though, is the utility of external controls as we have continued to build out these patient registries and claims databases, but really the multiple patient registries where we have now established the natural history of the disease. We have those data, and to be able to pool some of those data We've seen some great presentations on how to incorporate external controls, either as a basis for powering the study or even within the study. So I think this is an evolving space and one that hopefully can decrease the proportion of patients who would have to go on to placebo for that phase three. Again, hopefully that could just be for the short double-blind portion. and not require patients to be on placebo through to liver transplant or decompensation or death. I think that's a shifting expectation in the field and one that we're happy to be supporting, being creative on those designs.

Got it. And a very quick follow-up. Linda, you mentioned something about having bilirubin data in the real world to support Ocalibur use. So can you elaborate a little bit on what sort of bilirubin benefit or data you'll have in hand for commercialization? I'm sorry, for continued competitive commercialization.

Well, we have data from both 12 weeks and 52 weeks where you can look at that. And knowing bilirubin is a very important element of progression of disease. So if you start to see that move, that's not good for a patient. And even in our open label extension, we showed that we were able to not only maintain fibrosis, but also bilirubin without progression. So these are things that are very important to physicians. Michelle, anything else that you can think of on bili?

Yeah, I think it's part of this overall appreciation that the story is not just about ALP, that it is important to look at the other the other biochemistries, and in particular in patients who are in a, who have progressed more, so who were perhaps not started on Opaliva early enough, who are already starting to see some burnout in their ALP and elevation in their total bilirubin. So it's really part of a bigger story of looking at the contributions of all biochemistry. ALP doesn't tell the whole story. We know that looking at GGT and bilirubin are also really critical elements. We now have those data across five, six, seven years, both from the POI's open label extension, but these large patient registries. So we look forward to sharing additional data on that front and how that correlates with the improved outcomes that we've demonstrated for Ocala. Great, thanks.

Thank you. Please stand by for our next question. Our final question comes from the line of Salvin Richter with Goldman Sachs. Your line is open.

Hi, thanks. This is Matt for Salvin. On the $140 million expense guidance, could you give any more details on the breakdown between SG&A and R&D? And then could you just remind us how far the OCA plus the Beza combo would extend IP? Thank you.

Yeah, so maybe I'll take the first one on IP, and then Andrew can handle. So look, the OCA Benzofibrate has always been a twofold opportunity for us. One is the therapeutic opportunity, and it's great to see that the data that we're starting to read out points to the real potential for our best in class here. Second was yes on lifecycle management. So as a reminder, Benzofibrate is a new chemical entity in the U.S. market, as it's never been filed or approved here. We have the first patents issued through 2036 on the combination, which covers a broad range of doses in PVC. We would anticipate both additional IP and probability for patent term extension beyond. So again, we think about that as a real long-term incremental opportunity for us. Andrew, maybe you take the last question on

Yeah, sure. So with regard to the OPEX reductions for next year, the way I would think about it, our NASH R&D spend has always been about a third of our expense. If you extrapolate that out, about $60 million in NASH spend on the R&D line this year. The rest of it would be a combination of reductions throughout the SGMA line.

Got it. Thank you.

Thank you.

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. That concludes today's conference call. Thank you for your participation. You may now disconnect.