Intercept Pharmaceuticals [ICPT] Conference call transcript for 2023 q1
2023-04-27 14:24:02
Fiscal: 2023 q1
Operator: Good day and thank you for standing by. Welcome to the First Quarter 2023 Intercept Pharmaceuticals Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and answer-session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today Nareg Sagherian, Executive Director of Investor Relations. Please go ahead.
Nareg Sagherian: Good morning and thank you for joining us on today's call to review Intercept's first quarter 2023 financial results and key business updates. We are also pleased to share an overview of our commercial launch strategy for OCA in NASH. Our first Quarter 2023 press release and accompanying slides are now on our website at intercept pharma.com. Before we begin our discussion, I'd like to note that 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; our President of Research and Development and Chief Medical Officer, Dr. Michelle Berrey; our Chief Financial Officer, Andrew Saik; and our Chief Commercial Officer, Linda Richardson. We will then open the call for questions. Please note that our prepared remarks on today's call are more in depth than typical, but we have allotted additional time for Q&A during the call. Let me now turn the call over to our CEO, Jerry Durso.
Jerry Durso: Thanks, Nareg, and good morning, everyone. Thank you for joining us on our first quarter 2023 earnings conference call. Today, we will review key business updates for the first three months of the year and preview our commercial launch strategy for OCA in NASH. The strategic actions we took in 2022 established a strong base for us to build on in '23. As we proceed through this critical year for Intercept, I'm pleased with the disciplined execution our team has taken to grow our leadership in PBC to work through the regulatory review process for OCA in NASH and prepare its potential commercial launch and to advance our pipeline. First, I want to highlight our important upcoming milestones in NASH and then I'll discuss the sales performance of OCALIVA and our outlook in PBC. We're actively preparing for our advisory committee meeting on May 19th to review our new drug application for OCA as a treatment for pre-cirrhotic fibrosis due to NASH. Given the robust body of evidence we've gathered through our OCA NASH clinical development program, we're confident in the improved benefit risk profile of OCA and believe it has the potential to become an impactful therapy for patients in urgent need of pharmacologic intervention. We look forward to discussing the strong and confirmed anti-fibrotic effect of OCA as well as its monitorable and manageable safety profile with the advisory committee. At the same time, we look forward to our upcoming PDUFA target action date on June 22nd. In parallel, we're progressing our launch readiness activities, which Linda will elaborate on later in this call. Now turning to PBC, our PBC business continued to perform well in the first quarter. We recorded $68 million in net sales for OCALIVA in PBC, representing 15% growth over the prior year quarter. This strong performance is evidence of the sustained growth of our foundational PBC business. Importantly, we're seeing a consistent trend in attracting new first time OCALIVA writers, which is a key factor in our growth trajectory. Specifically, four out of ten total prescribers in the first quarter of 2023 were in fact first time OCALIVA writers. Looking ahead, we have strong conviction in the strength and long-term opportunity of our foundational PBC business for several reasons. First, we know that patients on OCALIVA persist on therapy at a rate better than what is typically seen with many other chronic disease therapies. In fact, over 95% of our business is driven by existing patients and our refill rate continues to be strong at approximately 90%. Additionally, our market research shows that patient satisfaction on OCALIVA therapy remains high. 85% of patients report a strong intent to remain on therapy and would highly recommend OCALIVA to others living with PBC. This satisfaction rating jumps to 95% when you survey patients from Interconnect, which is our patient assistance platform. Because of these high satisfaction ratings, 65% of currently active patients on OCALIVA have been on therapy for more than two years. Our market research also shows that published data of the impact of OCALIVA on clinical outcomes is a strong motivator among health care providers when considering their intent to prescribe PBC therapies in the future. We know the primary treatment goals for managing PBC are to prevent liver transplant or death. We assess the ability of OCALIVA to meet these goals with multiple real world analysis that were published in gastroenterology and presented last year at medical meetings. This includes six years of data through our POISE open-label extension study demonstrating that OCA has a sustained impact on key biomarkers of liver health. OCALIVA is the only second line therapy in PBC to demonstrate a positive impact on outcomes, driving greater awareness of the real world applications and benefits of OCALIVA in PBC is an important differentiator and part of our long-term strategy. Supporting our well established leadership position in the PBC market is strong IP protecting OCALIVA market exclusivity into the 2030s. And finally, our OCA and Bezafibrate fixed dose combination program, which Michelle will discuss in a moment, further adds to our long-term leadership in this space. In summary, I'm confident in the strength of OCALIVA's market position and the long-term opportunity with our foundational PBC business, as evidenced by double-digit sales growth for the third consecutive quarter and clinical development progress for the OCA-Bezafibrate fixed dose combination. Importantly, our strong financial position gives us the optionality to drive continued growth in PBC, execute on our upcoming milestones in NASH and develop innovative new medicines through our pipeline programs. I'll now turn the call over to Michelle.
Dr. Michelle Berrey: Thank you, Jerry, and good morning, everyone. As you can imagine, our organization is actively preparing for an advisory committee meeting on May 19th. Our NDA for OCA is supported by a robust body of evidence, including two independent positive 18 month interim analyses from the pivotal Phase 3 REGENERATE study and a pooled safety database of almost 2800 patients with nearly 1000 patients on study drug for four years. In these analyses, OCA has demonstrated a strong and consistent anti-fibrotic effect, as was seen in the Phase 2 FLINT study, the first clinical study to show anti-fibrotic benefit. Additionally, our safety database, which is the largest in the NASH field with the longest duration of patient exposure, provides a well characterized safety and tolerability profile that supports the potential chronic administration of OCA. It's also important to remember that while there are various pathways being studied in NASH drug development, patients with NASH exhibit signs of impaired signaling in the FXR pathway specifically which triggers progressive fibrosis. Therefore addressing underlying mechanisms related to FXR dysfunction is one important aspect of NASH treatment. OCA is an anti-fibrotic meaning it drives fibrosis improvement through direct restoration of FXR mediated signaling. It does this in three ways decreasing fibrogenesis and collagen deposition regulating inflammation and reducing bile acid induced cytotoxicity. As we move toward our advisory committee meeting, we continue to believe that OCA has the potential to become an impactful therapy and the first approved therapy for this devastating disease. Based on the additional data we have generated, we believe that the benefit risk of OCA has improved since our initial regulatory submission. We look forward to discussing this with the advisory committee next month and progressing toward our June 22nd PDUFA target action date. I'll now share more about our commitment to innovating in PBC with our fixed dose combination of OCA and Bezafibrate. The first potential fixed dose combination of an FXR agonist and a PPAR agonist. We're excited about the progress we're making. Our Phase 1 study is now complete and we expect to complete the planned interim analysis from our two ongoing Phase 2 studies this year. Pharmacokinetics data dynamic biochemical changes and safety tolerability will serve as the basis for an end of Phase 2 meeting with FDA. We plan to provide an update on the timing of that meeting as well as a Phase 3 study once we have those data in hand. At the upcoming EASL meeting in Vienna, interim analysis results from one of the two Phase 2 studies evaluating the effects of the combination on serum biomarkers in PBC will be presented. This podium presentation is one of seven abstracts in PBC and Nash accepted for the Congress. We look forward to providing more information in the EASL embargoed list. We believe that a fixed dose combination of OCA and Bezafibrate presents an opportunity to optimize the doses of each medicine and further improve the treatment of PBC with the potential to establish best-in-class clinical benefits. We know from many years of data in Europe that OCA and Bezafibrate has synergistic mechanisms of action and have the potential to drive relevant biochemical markers to well within normal ranges. Changes that have been associated with improved clinical outcomes in PBC. In late 2022, we published data on the improved transplant free survival, demonstrating the long-term clinical benefits of OCA and PBC. In other words, its impact on lives, not just labs. We believe that a fixed dose combination of OCA and Bezafibrate may meaningfully improve treatment options for individuals living with PBC. While our fixed dose combination program advances, we also remain on track for regulatory submission to FDA this year in support of fulfilling our post-marketing requirements for OCALIVA and PBC. This submission will include data from our post-marketing study COBALT with external controls, real world evidence from the Global PBC Patient Registry and supportive evidence from the POISE open-label extension. At this point, I'll turn the call over to Andrew for a brief financial update.
Andrew Saik: Thank you, Michelle, and good morning, everyone. I encourage you to refer to our press release for a detailed summary of our financial results for the first quarter ended March 31st, 2023. I will begin by sharing some highlights for the first quarter. First, we are pleased with our strong sales performance this quarter, recording $68 million in net sales as compared to $59.2 million in net sales in the prior year quarter. This represents 15% growth, which is in line with the midpoint of our annual revenue guidance provided during our last earnings call. Selling, general and administrative expenses were $57.7 million in the first quarter of 2023, compared to $37.8 million in 2022. The period over period increase was primarily driven by NASH commercial launch preparation, as we approach our PDUFA date in June and to a lesser extent costs related to our ANDA litigation, which was settled prior to trial. Research and development expenses decreased to $41.7 million in the first quarter of 2023 from $47.6 million in the prior year quarter. This decrease was primarily driven by the closeout of our Phase 3 REVERSE study and R&D cost sharing reimbursements. Interest expense in the quarters ended March 31st, 2023, and 2022 was $2.8 million and $6.7 million respectively and is related to our convertible notes outstanding. We reported a net loss from continuing operations of $31.9 million for the first quarter of 2023, a decrease compared to a net loss from continuing operations of $33.4 million in the first quarter of 2022. As we mentioned, last quarter, we anticipated a heavier than normal cash burn to occur in the first quarter relative to the rest of the year. We experienced the typical revenue seasonality in Q1 as patients were impacted by the resetting of insurance plans and medicare coverage gaps. Additionally, cash outflows related to accrued expenses were higher in Q1 than in a typical quarter, as can be seen by the drop of approximately $20 million in accrued liabilities in AP from year end to the end of this quarter. As of March 31st, 2023, Intercept had cash, cash equivalents, restricted cash and investment debt securities of $435.2 million. As previously mentioned, we plan to use $110 million to pay off the convertible notes due on July 1st, 2023. In summary, we believe that our balance sheet cash position and foundational PBC business provide us with the financial strength to grow our existing business and meet our strategic objectives, including preparation for a commercial launch in NASH should we gain approval by the FDA or a pivot to profitability if we are unable to achieve an approval in NASH. Finally, we may choose to revise our 2023 guidance later in the year, pending potential regulatory approval for our NDA for OCA and pre-cirrhotic fibrosis due to NASH. With that, I will now turn the call over to Linda to provide more detail on our commercial launch strategy for OCA in NASH. Linda?
Linda Richardson: Thank you, Andrew. Good morning, everyone. I'm excited to provide greater insight into the opportunity we see ahead for OCA as the first potential treatment for patients who have advanced fibrosis without cirrhosis due to NASH. This is a specific subset of the overall NASH patient population and our regenerate population, one where patients and their healthcare providers are in urgent need of a pharmacologic intervention. The work we've been doing to prepare our strategies and plans for launch is grounded in robust market insight and analytics using third-party databases, primary and secondary market research data from publications and feedback from multiple advisory boards. We've included HCP's patients and payers in the pre-launch work that I will discuss in my upcoming remarks. In addition to our robust market research program, we also have considerable marketplace knowledge from our years of directly engaging the hepatology and gastroenterology communities through our work delivering OCALIVA and PBC. Now let's start by digging into this advanced fibrosis population in a little more detail in terms of both the size and the significance of this group of patients. We are focusing on this population for several reasons. Notably, these patients are fundamentally at greater risk for mortality as their fibrosis progresses to cirrhosis. One in five patients with advanced fibrosis progresses to cirrhosis within approximately two and a half years. The fact that we cannot currently predict which patients are most likely to progress makes treating these at risk patients an urgent priority. Also, we've updated our understanding of the size of this advanced fibrosis segment. As you can see here on slide 14, starting near the top of the funnel on the left. The subset of adult NAFLD patients who are believed to have NASH is approximately 26 million US adults. Of this group, slightly more than 5 million are estimated to have a NASH diagnosis. As NASH ICD 10 codes are not consistently used, we would expect that the number of formally diagnosed cases should grow over time as new treatments become available. We then look to evaluate how many of these NASH patients are under the care of a specialist, meaning a hepatologist or gastroenterologist. Currently, this seems to be in the range of 2.7 million patients. We believe that these specialists will primarily oversee the management of NASH in the advanced fibrosis without cirrhosis population and will therefore be the primary focus of our commercial efforts. Our in-depth work with these specialists has strengthened our belief that these patients can be readily identified using non-invasive tests. This is the group that we refer to as patients with advanced fibrosis without cirrhosis due to NASH. We now estimate this OCA target population to be approximately 700,000 patients. This is an updated number from the roughly 500,000 figure we've previously referenced based on work done several years ago. Over the past few years, we've seen significant increases in recognition of the importance of fibrosis as the strongest predictor of disease progression and awareness of negative outcomes in NASH. In a retrospective study comparing NASH patients with and without fibrosis survival among those with fibrosis was significantly reduced as their fibrosis progressed. Our recent market research shows that Heps and Gastros clearly understand this risk of progression in their patients with advanced fibrosis. Six out of ten respondents agreed that fibrosis reversal of one or more stages is more important than improvement of steatohepatitis and seven in 10 believe that preventing progression to cirrhosis and fibrosis reversal of greater than one stage are the most important treatment goals for this patient segment. We've been tracking position sentiment on the importance of fibrosis and the need to treat advanced fibrosis patients differently in one of our large market research studies. The most recent research confirms the following. An increasing number of Heps and Gastros believe that advanced fibrosis patients need to be treated urgently. They require a different management approach and reversing their fibrosis is more important than improving steatohepatitis. We see similar beliefs from patients under the care of a gastroenterologist or hepatologist. These patients cite that they are aware of the risks of advanced fibrosis, know it must be urgently treated and intend to speak with their physician about treatment options. Later on in the presentation, I will show complementary data from payers who also see the importance of addressing advanced fibrosis. We note the importance of treating these advanced fibrotic patients in NASH, but how can physicians readily identify and stage them? This is where the use of non-invasive tests or NITs becomes a very important element of the care pathway. We believe the availability and acceptance of these diagnostic and staging tools in NASH is a potential game changer. Numerous practice guidelines from a variety of associations, including AASLD and the joint ACG/CLDF publication, now endorse the use of NITs as an appropriate option to liver biopsies. Liver biopsies are invasive not without their own risks and are often very painful for patients. Thought leaders in the NASH space have indicated publicly that biopsies are infrequently used in office settings and are instead primarily used for screening patients in NASH clinical trials. The level set everyone NITs include simple scoring tests like FIB-4 or APRI, a proprietary serum tests like ELF and FibroSure and imaging done with a FibroScan or by MRA. To increase sensitivity and specificity, many of the guidelines suggest that a two-step system be used, starting with the simple scoring test like FIB-4, followed by imaging or a serum test such as FibroScan or ELF respectively. In fact, FIB-4 has now been added into many electronic health records like Epic making it even more accessible to many medical professionals and simplifying the identification of NASH patients. The availability of NITs is certainly important, but it's critical that health care professionals use them and have confidence in these test results. Our market research shows that target prescribers, meaning heps and gastros are familiar with NITs and are increasingly using these options. Approximately four in five surveyed hepatologists, gastros and ATTs indicate that they are already using at least two NITs to diagnose NASH and confirm fibrosis stage. A growing number of these HCPs are using FibroScan for their imaging and the majority feel that is the most ideal approach to non-invasive imaging for their NASH patients. Conversely, our analysis the Komodo Health Database, shows that only 14% of confirmed or suspected NASH patients were ever biopsied, meaning nearly nine in 10 were not. We believe that the growing adoption of NITs among KOLs and specialists will help drive and facilitate the identification of NASH patients with advanced fibrosis without cirrhosis, exactly those patients who need to be treated. The inherent impracticality of using biopsies to identify and stage potential NASH patients contrasted with the growing endorsement of NITs will be considerations for all aspects of the health care ecosystem as it relates to NASH. Payers willingness to use NITs will also be an important factor in the reimbursement and access space. Earlier in our call, Michelle spoke about the importance of the FXR pathway in NASH. To reiterate, weakened FXR signaling in NASH is associated with the disruption of multiple biologic processes which lead to the progression of liver fibrosis. OCA directly targets these fibrotic inflammatory and bile acid cytotoxic mechanisms. The majority of other late stage compounds in NASH development targets steatosis or fat in the liver, which occurs in earlier phases of the NAFLD spectrum. For example, GLP-1 appeared to regulate food consumption and weight. Other drugs in development address steatosis by thyroid hormones that regulate hepatic lipid metabolism. Understanding where and how OCA fits into the treatment of the disease is an important foundational understanding of the demonstrated anti-fibrotic effect OCA produces. We've previously highlighted the efficacy of OCA in NASH from our Phase 3 REGENERATE trial evidence supported not only by liver biopsy data, but also by NITs. Using histology, we see that OCA 25 milligrams demonstrated double the response rate of placebo in reducing liver fibrosis without worsening NASH. Our NIT data reinforced the findings of histology data showing similar efficacy and measurements of key biochemistries and liver stiffness associated with fibrosis. Furthermore, our anti-fibrotic effect is even more pronounced in patients who were considered more advanced at baseline, the F3 like patient, so to speak. Importantly, we also see improvement in fibrosis in nearly 40% of patients who had baseline and month 18 liver biopsies in REGENERATE. This compelling efficacy data on fibrosis reversal, the most important parameter of concern for specialists and the driver for urgency comprised the message platform that we plan to carry forward to prescribers. So far I've focused on the size of the target population for OCA therapy, the strong desire among specialty prescribers to urgently stop or reverse advanced fibrosis, the increasing availability of NITs to facilitate staging NASH patients, ensuring the most appropriate patients receive treatment. The role of FXR dysregulation in NASH and how OCA as an FXR agonist addresses that to help stop and reverse fibrosis and our compelling efficacy data. I'll now focus on how we are planning to leverage our current knowledge and resources in this space to launch effectively in the landscape. As an organization, we have been working to understand the NASH market for years and are leveraging our deep knowledge to ensure launch readiness. We've done extensive modeling using claims databases to confirm our target prescribers, hepatologists, gastroenterologists and advanced practice providers. We've learned that three and four of the highest potential NASH prescribers are HEPs and GIs already in our existing PBC target list, allowing us to easily pivot to a NASH launch focus while maintaining critical support for our PBC business. We have existing relationships with these offices and prescribers. Importantly, reaching this substantial percentage of identified NASH targets can be achieved at launch using our current field footprint, which we view as a strength and differentiator. Of course, we will assess the decision regarding whether to add to our field forces as we progress through regulatory and market access milestones. We've also started to prioritize these HCP targets based on our insights regarding accessibility, influence within the NASH space, familiarity with obeticholic acid through PBC prescribing, projected patient loads and proximity to FibroScan machines to facilitate inclusion of a second NIT when staging NASH patients. We understand the gastro group affiliations and networks and the roles that internal staff play in handling reimbursement paperwork. We believe this gives us a significant advantage when it comes to being the potential first to market mover in NASH. Additionally, we are sharing research results that show our reps are highly regarded in gastro and hep offices, and our corporate reputation is equally strong in the NASH field. We believe that it is not just the educational messages that we will deliver regarding OCA in NASH, but who is delivering that information. We are already underway with pre-launch activities to prepare the market as slide 22 highlights. We are engaging with key audiences at major Congresses using peer-to-peer dinner programs to educate HCPs on NASH and our disease awareness website is up and running as well. We are already training our reps to deliver NASH education in the field, which we plan to start in May. Our medical affairs teams are also engaging in appropriate educational efforts. Now I'd like to discuss what we are hearing from our payer communities as access and reimbursement are critical drivers of launch success. First, I can share that we plan to expand our field reimbursement manager team to help facilitate reimbursement processes at launch. We are committed to providing assistance on this front, including the use of a hub for additional patient support. As this slide highlights, payers share many of the same sentiments that HEPs and GIs stated regarding the significance of treating patients with advanced fibrosis and a willingness to use NITs, especially if they are supported by KOLs and guidelines. There is an overarching recognition of the unmet need in NASH and an acknowledgement that different pathways and corresponding therapeutics may be needed. We see all of these as positive indicators for productive reimbursement conversations following a potential approval and access to a final label. In our discussions, we are focused on the advanced fibrosis without cirrhosis segment of NASH patients. We believe this focus helps payers understand exactly the segment where an FXR agonist like OCA has the potential to yield the greatest benefit for appropriate patients. Regarding pricing for OCA in NASH, the value proposition for OCA will be tied to the final label that we would receive upon a potential approval. We'll make a final decision about our pricing with full insight from our label, along with the most up to date insights from our key payers. At that time, we'll be able to provide our pricing decision. Slide 24 depicts the range of prices within the continuum of categories. We believe that OCA falls into the chronic specialty drug segment and are assessing our pricing options within that context. As this is a separate NDA with the 25 milligram tablet and a unique trade name and NDC code, we will have the opportunity to consider differential pricing from OCALIVA and PBC, which is an orphan disease with a distinct value proposition for PBC patients. Especially as OCALIVA is the only approved second line treatment and has demonstrated real world evidence that shows improved transplant free survival. Our strategy remains to have optionality and make the best decision with full insight in hand. In closing, we are excited about the opportunity to potentially bring OCA to market as the first treatment for NASH and the patient segment that most urgently needs it. The approximately 700,000 patients with advanced fibrosis without cirrhosis due to NASH, who are under the care of a hepatologist or gastroenterologist. The NASH landscape in 2023 shows a greater understanding of the real risks caused by advanced fibrosis and the endorsement and growing acceptance of NITs to diagnose and stage NASH patients. Much has changed over the past three years, including a better understanding of the safety and efficacy profile of OCA in Nash from a REGENERATE trial. Paired with our commercial expertise in liver space and deep knowledge of our Hep, GI and ATT customers, we stand poised to successfully launch OCA in Nash later this year. I'll now turn the call back over to Jerry.
Jerry Durso: Thank you, Linda. In summary, I'm proud of the progress we've made in the first quarter of the year and believe we're in a strong financial position as we manage our upcoming milestones, including our advisory committee meeting for OCA in NASH and planning for a potential launch. I'll now open the call for questions for the team.
Operator: Thank you. [Operator Instructions] Our first question comes from Yasmeen Rahimi with Piper Sandler. Your line is open. Yasmeen, please check your mute button.
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Operator: Thank you. And there are no other questions in the queue. This does conclude today's conference call. Thank you for participating and you may disconnect.
