Earnings Transcript for ICPT - Q4 Fiscal Year 2021

Operator: Hello. Thank you for standing by and welcome to the Fourth Quarter and Full Year 2021 Intercept Pharmaceuticals Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. ? Operator Instructions] Please be advised that today's conference may be recorded. I would now like to hand the conference over to your speaker today, Nareg Sagherian, Executive Director, Investor Relations. Please go ahead.

Nareg Sagherian: Thank you. Good morning and thank you for joining us on today's call. This morning, we issued a press release announcing our fourth quarter and full year 2021 results and business updates, which is available 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; our Chief Commercial Officer, Linda Richardson; President of Research and Development and Chief Medical Officer, Dr. Michelle Berry; and Chief Financial Officer, Andrew Saik. We will then open the call to take questions. 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 Durso: Thanks Nareg and good morning everyone. Our performance in 2021 has put us on a solid foundation as we enter this year and embark on the next pivotal chapter for Intercept. In my first year as CEO, we made great strides to achieve our corporate objectives and capitalize on the opportunities to support our future growth. Looking first at our performance in PBC, our team delivered strong double-digit sales growth for Ocaliva and ended the year with worldwide revenue of $363.5 million, despite the challenges associated with the pandemic and the US label update. We now look to 2022 as a year to continue capitalizing on this momentum as there are still a significant number of people living with PBC globally who could benefit from adding Ocaliva as a second-line therapy to treat their disease. We look forward to expanding our efforts to reach physicians with important data that will support the continued adoption of Ocaliva in the appropriate PBC population. We've also made significant progress towards generating a robust data set that will deepen our understanding of the potential role of OCA and NASH and determine the path forward. After an extensive dialogue last year with FDA, which focused on the REGENERATE study, including the consensus biopsy reading methodology and the scope of an updated safety data set, we have been at work generating what will be the largest data package in the NASH field. The magnitude of this work is unprecedented and we're looking forward to sharing the new data package from REGENERATE when our work is complete. If the data support it, we continue to target a potential pre-submission meeting with FDA in the first half of this year. Our second Phase 3 trial, REVERSE, is evaluating OCA in patients with compensated cirrhosis due to NASH. Given the magnitude of the data we are generating from REVERSE as well as complexities associated with reading biopsies in the compensated cirrhotic population with this new method. We now expect that the delivery of these data will move into the third quarter. Michelle will provide more information about the status of our data generation later in the call. As a reminder, REGENERATE remains the only pivotal Phase 3 study in NASH in which an investigational compound has demonstrated fibrosis improvement with no worsening of NASH, and REVERSE remains the only active Phase 3 trial in people living with compensated cirrhosis due to NASH. Taken together, REGENERATE and REVERSE represent the largest and most robust data sets in the field and include more than 3,300 patients across both studies. We look forward to sharing these important data. We also made meaningful advances in our pipeline in the past year as we continue to explore areas of significant medical need in liver disease. We progressed our development program for the OCA and bezafibrate fixed-dose combination and initiated a first-in-human study for INT-787, our next-generation FXR agonist. Advancing these important programs will continue to be a focus in 2022, and Michelle will talk more about that later in the call. I'm pleased to note that we achieved this progress in 2021 while significantly strengthening our leadership team. We've assembled an executive leadership team with the right experience to drive INTERCEPT's next phase of growth and development. Additionally, we successfully exchanged the majority of our near-term debt to address the maturity of 2023 convertible notes. We also remain prudent with our SG&A expenses, which decreased by more than $100 million versus the prior year, resulting in a 30% savings. This, along with our top line growth, allowed us to maintain a steady cash position for a third consecutive quarter in 2021. With our continued focus on cost management, which Andrew will elaborate on later, we're well positioned to drive another year of strong performance. 2022 is poised to be a transformational year in Intercept's history. I look forward to working alongside the dedicated Intercept team, as we expand and grow our commercial PBC business, where significant opportunity remains, as we deliver important data from our NASH development program that will drive decision-making for our path forward. And as we progress our pipeline opportunities to continue to innovate on behalf of people living with liver diseases with significant unmet need. In summary, I remain confident in the strong foundation we've built and in making data-driven decisions that will define the strategic path for our company's future. I'd now like to turn the call over to Linda, who will talk about our commercial performance for the fourth quarter and the full year of 2021. Michelle will then provide an update on our regulatory and R&D activities, and Andrew will conclude with a review of our financial performance. Linda?

Linda Richardson: Thanks, Jerry, and good morning, everyone. I'm happy to share some of the performance highlights of 2021, as it was another strong year for our PBC commercial business. Despite the ongoing global pandemic, we drove another year of double-digit sales growth, underscoring the strength of Ocaliva's market position as the only second line agent approved for use in PBC. For the full year, we reported $363.5 million in Ocaliva net sales globally, which represents 16% growth over the prior year. And for the fourth quarter, we had global sales of $92.4 million, an increase of 11% versus the same period in 2020. Let's review how we were able to drive this growth 5 years post launch. First, the U.S. commercial team managed the label update in an exemplary way, using multiple porches to communicate the changes to our HCPs patients and other audiences in a focused, efficient manner, we were able to fully pivot back to promotional messaging in September. Second, as an organization, we've made excellent and appropriate use of the wealth of data coming from the open-label, long-term safety extension of our POISE Phase III study. We were able to successfully leverage insights from this work throughout 2021. First, we began with highlighting the positive impact Ocaliva has on maintaining ALP and bilirubin levels, important factors in monitoring PBC progression. In the third quarter, we shared data from the same cohort of LTSE patients that showed a stabilization of fibrosis. Something physicians have told us is an important consideration in managing PBC. This layering of key messages is creating a more complete picture of how Ocaliva may benefit patients who need second-line therapy and that these benefits go beyond lowering ALP. The third thing I'll highlight regarding our strong performance in 2021 is the outstanding growth we see in our international markets, where we achieved annual sales 30% higher than the prior year. Implementation of multichannel marketing and strong execution of commercial messaging led to an increase in underlying demand. In fact, new patient acquisitions in 2021 surpassed projected targets, and early data in 2022 sees this trend continuing. While Italy and Spain consistently bring strong performance, we are now seeing additional contributions coming from our other markets as well. We know that there remain a considerable number of patients who could benefit from the addition of a second line therapy to manage their PBC. Some estimates have shown that only about 1/3 of eligible US patients have ever received a second-line agent. Our focus is to continue to bring education to HCPs on the benefits of actively managing their PBC patients and to reevaluate those that could appropriate for treatment with Ocaliva. In 2022, we will be creating new promotional campaigns, attending major conferences in person again and continuing to show the value Ocaliva can bring to appropriate patients, leveraging the data and insights we have from years of being on the market. In closing, I'm proud of the global commercial team's performance, commitment and passion this past year, and I look forward to sharing updates on our progress in 2022. I'll now turn the call over to Dr. Michelle Berrey. Michelle?

Michelle Berrey: Thank you, Linda, and good morning, everyone. I'll be providing a few updates today on our continued work to generate evidence supporting Ocaliva in PBC on our NASH development program and on our pipeline. In 2021, we continue to add to the large evidence base supporting Ocaliva in PBC. We now have more than 20,000 patient years, since Ocaliva was first approved for marketing in 2016. We are looking into multiple real-world evidence databases to better understand how to leverage these data to show the clinical benefits of continued therapy with Ocaliva beyond biochemical improvements. We are now expecting to publish our data from the POISE long-term extension study, first presented as a late-breaker abstract to deliver meeting last November. These data showed that individuals with PBC treated with Ocaliva had a statistically significant greater transplant-free survival than propensity score matched controls, who are eligible but not treated with Ocaliva. We are submitting the manuscript to a global scientific journal and will disclose details as soon as we have confirmations of the publication. In addition to the publication, we expect these data to be included with other outcomes data and support for our post-marketing study, COBALT, and a regulatory submission planned for later this year. As we noted in the third quarter of 2021, we've been closing out our COBALT study, because of the challenges with maintaining patients on a multiyear placebo-controlled study which was designed to confirm benefits in clinical outcomes, but when a therapy is commercially available. We have been discussing options with regulators, and we'll be including the available placebo-controlled data in a broader evidence package that we anticipate submitting to both FDA and EMA in the second half of 2022. We also anticipate presenting these additional data at scientific meetings later this year and are excited about the opportunity to get back to some in-person meetings with our thought leaders and physician advocates. Turning to NASH. Last year, we made substantial progress on our OCA for NASH program. After dialogue with FDA, we implemented a new consensus reading methodology that is in line with the agency's draft guidance. Together, REGENERATE and REVERSE represent the largest Phase 3 program ever conducted in advanced liver fibrosis and compensated cirrhosis due to NASH and we initiated a significant amount of data generation using this new methodology in the second half of 2021. We are continuing to generate a new data package from REGENERATE. And as we've previously guided, if the data support it, we're targeting a potential pre-submission meeting with FDA in the first half of this year. We're also continuing to work towards top line data readout from our REVERSE study, the only active late-stage study in compensated cirrhosis due to NASH. Given the magnitude of the data from REVERSE, as well as complexities associated with reading biopsies in the cirrhotic population with multiple external parties using a new methodology, more time is required to have a top line data readout. We now anticipate delivering these data in the third quarter of this year. As a reminder, from a regulatory perspective, our efforts continue to be focused on the REGENERATE data set. Therefore, these shifts in the REVERSE time line will not impact our ability to hold a potential pre-submission meeting with the FDA in the first half of the year, should the data from REGENERATE support it. Overall, the amount of data we're generating in NASH is unprecedented. And upon completion of these analyses from REGENERATE and REVERSE, we will have accumulated the largest data set in the field. As evidence of that, the REGENERATE safety database will now include an additional 12 months of patient data and the comprehensive assessment of the safety database will include more than 3.5 times the drug exposure of the prior analyses and submission. In addition, this analysis will now include almost 1,000 subjects who've reached month 48, four years of data. Once we have these new data in hand, they will provide a significantly more robust perspective on OCA's benefit-risk profile. Despite the substantial amount of work being done across the industry, there are unfortunately still no approved therapies to treat NASH, and we are working to deliver these important data as soon as possible. Moving on to our pipeline, we have several clinical trials ongoing for our OCA plus bezafibrate fixed-dose combination in PBC. In the US, our large Phase 1 study to better characterize the exposure data of the fixed-dose combination is ongoing, and we also are beginning to screen patients for our second Phase 2 trial. We are continuing to enroll patients in our international Phase 2 study. These three early phase studies will inform the doses to be included in the fixed dose combination that we will study in Phase 3. We believe OCA and bezafibrate have synergistic mechanisms of action that carry the potential to benefit individuals with PBC and other cholestatic diseases when used in combination. Both medications have been shown to help lower the key biochemical markers that predict long-term outcomes in PBC. Bezafibrate has also been associated with improvements in pruritus, a potential benefit we're exploring in our Phase 2 program. In addition, our Phase 1 study of our next-generation FXR agonist, INT-787, is ongoing and we expect to submit an IND in the first half of this year. We're in the process of determining a target indication for 787 and look forward to sharing that information. We are very excited about this compound and its potential applications. I'll now turn the call over to Andrew for a financial update. Andrew?

Andrew Saik: Thanks Michelle and good morning everyone. I would ask that you please refer to our press release that was issued earlier today for a summary of our financial results for the fourth quarter and full year ended December 31st, 2021. Beginning with our commercial performance, in the fourth quarter, we recognized $92.4 million in worldwide Ocaliva net sales, up from $83.3 million in the fourth quarter of 2020. For the full year 2021, worldwide Ocaliva net sales were $363.5 million compared to $312.7 million in the prior year. Our full year 2021 Ocaliva net sales comprised of US net sales of $260.8 million and ex-US net sales of $102.7 million, representing growth of 11% and 30%, respectively. Our GAAP operating expenses for the fourth quarter totaled $113.3 million, which was a decrease of $10.6 million versus the fourth quarter last year. Non-GAAP adjusted operating expenses were $104.4 million in the fourth quarter, a decrease of $2.2 million versus the prior year period. For the full year 2021, GAAP operating expenses were $419.1 million and our non-GAAP adjusted operating expenses were $382.3 million. As a reminder, our non-GAAP adjusted operating expenses exclude stock-based compensation and depreciation. Cost of sales for the fourth quarter were $1 million compared to $0.8 million in the prior year period. SG&A expenses were $60.6 million in the fourth quarter, a decrease of $9.4 million versus the fourth quarter of 2020. SG&A expenses were $230.9 million for the full year 2021, a decrease of $101.6 million from 2020. Our R&D expenses in the fourth quarter were $51.7 million as compared to $51.9 million for the same period last year. And we're $185.3 million for the full year 2021, a decrease of $6.2 million from the full year 2020. Approximately two-thirds of our full year R&D spend was related to our NASH programs. Cash, cash equivalents, restricted cash and investment debt securities available for sale at year-end totaled $429.4 million. Turning to our financial guidance for the year, we expect full year 2022 Ocaliva net sales to be between $375 million and $405 million. This guidance contemplates a significant number of untreated PBC patients globally that could benefit from Ocaliva, the strength of Ocaliva's market position and the EU label change, which we anticipate implementing in the first half of this year. As a reminder, Ocaliva is subject to seasonality in Q1 due to the fact that patients are faced with insurance plan resets and Medicare coverage gaps at the beginning of the year. Therefore, similar to what we've seen in prior years, we expect lower revenue in the first quarter relative to the rest of the year. We expect full year 2022 non-GAAP adjusted operating expenses to be between $360 million and $390 million. This guidance range reflects our continued investment in our commercial and post marketing efforts in PBC, our ongoing REGENERATE clinical trial and regulatory efforts in fibrosis due to NASH, our additional pipeline programs, such as the OCA and Bezafibrate combination trial in our Phase 1 study of INT-787. Our spend to support NASH data readouts and the subsequent potential regulatory and commercial next steps in NASH as well as our normal general operating expenses. Cash interest expense for the year is expected to be $23.5 million based on our current capital structure. Even though we managed to reduce SG&A expenses by over $100 million this year relative to the prior year, we continue to find opportunities to manage expenses while ensuring that we invest in the business to meet our company objectives. One example of our continued focus on cost containment is our recent decision to relocate our headquarters to Morristown, New Jersey. Our cost management efforts will continue into 2022 and beyond. Overall, I am very pleased with the progress we made in 2021 and believe that we significantly strengthened our financial foundation. We successfully derisked the balance sheet by executing an exchange for our convertible notes and we have materially reduced our spend such that we have had stable cash for three consecutive quarters. We believe that we are well-positioned financially to support the company moving forward and help us achieve our strategic objectives. Now I'll turn it back over to the operator to start the Q&A. Operator?

Operator: Thank you. Our first question comes from Alethia Young with Cantor Fitzgerald. You may proceed with your question.

Alethia Young: Hey, guys. Thanks for taking my question. Congrats and I’m going to keep moving forward here. I guess, I was just wondering to see if you could give us more color on the time line shift on REVERSE. Is it kind of event driven, or is there something else going on, or COVID can you just give us any kind of color that you might have on what's going on there? Thanks.

Jerry Durso: Hi, good morning Alethia. Good to hear from you. Yeah, maybe Michelle, you can start, obviously, an important question for us to go into. Michelle?

Michelle Berrey: Yeah. Good morning, Alethia. First, I wanted to be clear that there's no delay in our overall program or in our regulatory interactions. So we are still intending to have our pre-NDA meeting in the first half of the year. Remember last year, we had discussions with the FDA on the reading methodology and then deployed multiple panels reading the two large studies in parallel. So although our major focus on the regulatory interactions continues to be the REGENERATE study, the delay in REVERSE to the third quarter is not going to impact the pre-NDA meeting. What I can say specifically about the REVERSE study is it's a large study. It's more complex given the advanced patient population with early cirrhosis, so we now expect those data into the third quarter.

Alethia Young: Great. Thanks.

Jerry Durso: Thanks, Alethia.

Michelle Berrey: Thank you.

Operator: Thank you. Our next question comes from Yasmeen Rahimi with Piper Sandler. You may proceed with your question.

Yasmeen Rahimi: Good morning, team and thank you for the updates. Just going along the same thing that Alethia raised. So will you be able to share with us when you report out the REGENERATE reanalysis, Some safety look into REVERSE. I know that we may still be waiting for the histology analysis. But is there some commentary that's going to be provided with the safety of Ocaliva looks like in the REVERSE population when you -- at the top line? That's maybe question one. And then question two is we're almost done with this quarter. Why not just say the fact that you're not seeing it second quarter, is there any glimpse of hope that this data could come in still onto this first quarter? And thank you for taking my questions.

Michelle Berrey: Yes. Thanks, Yasmeen. So again, on the REGENERATE safety database, I think that's a huge question. And one of the things that we really wanted to try to pull in was the additional data from REGENERATE. So -- we've now added another year. So we've added all of 2021 to our safety database. So compared to what we had submitted with the initial interim analysis back in 2019, we had about 2,400 patients total patient years. We're now out to over 8,000 to 3.5 times the number of -- excuse me, yes, patient years. And importantly, we now have almost 1,000 patients out to four years. So that was a really critical point we wanted to pull in. We will pull the safety from REVERSE at the same time that we do the top line for the efficacy. So it's important to lock your database on the same data cut-off. So we'll have that safety data coming out around the same time. Well, at the same time, the top line with the efficacy from REVERSE. So there won't be too much of a lag between those. But again, our main focus with the FDA, pre-NDA would be on the REGENERATE safety database. With regard to the timing, we have an earnings call in May and may have a little more specificity at that point. But speaking from today, I think we expect it to go into the third quarter. Thanks for the question.

Yasmeen Rahimi: Thank you.

Operator: Thank you. Our next question comes from Michael Yee with Jefferies. You may proceed with your question.

Kelechi Chikere: Hi, this is Kelechi on for Michael. Thanks for taking my question. I just want to ask about the REGENERATE study a little more and kind of get an understanding for what are the different scenarios you're thinking of. So, is the base case that the Phase 3 data shows at least the same magnitude of effect in hazard ratio and you view that positive and the study -- sorry, and the safety database is now even larger and that will drive better risk management approval. So, yes, what is your scenario here and how are you thinking about that?

Michelle Berrey: Yes, it's a great question and I think you nailed it. So, they're really important question from the CRL in 2020 was about the benefit risk. And I now am much -- we will now have a much more robust safety database. When we expect patients to be on Ocaliva, on OCA for the rest of their lives for NASH, it's important that we have long-term safety data so that we understand the tolerability that we make sure there are not new safety events at year three, year four. So, now we have almost 1,000 patients, 995 patients through December 31st, 2021. So, that's a really important new set of data. We -- back into the 2019 interim analysis, we have -- out of months 48, year four. So, it's a much more robust safety database, which we feel gives us a much better assessment of the overall benefit risk for the drug.

Kelechi Chikere: Okay, great. Thank you.

Michelle Berrey: Thank you.

Operator: Thank you. Your next question comes from Brian Abrahams with RBC Capital Markets. You may proceed with your question.

Brian Abrahams: Hi, good morning. Thanks for taking my question. With respect to REVERSE, I was wondering if you could elaborate a little bit more on some of the key hurdles for the biopsy reads in the cirrhotic population. Is it just a matter of matter of finding readers or variability, given the severity of this delivery disease that might require any sort of special protocols or extra time? I'm just -- I guess wondering how to think about the overall reliability of the data sets that will be generated in this population on histology when we see the data. Thanks.

Jerry Durso: Thanks for the question, Brian. We're keeping Michelle busy this morning.

Michelle Berrey: Hi Brian, good morning. So, I think one of the important things to understand about reading the early cirrhotic patient population is that in clinical practice, it's not really critical to differentiate advanced fibrosis from an early compensated cirrhotic patient population. There's nothing you're going to do differently clinically to treat that patient. Unfortunately, we still don't have any drug available approved for NASH. So, it's never really been that critical to differentiate a high F3 from a low F4. In a clinical trial, however, it is obviously quite critical that these pathologists are differentiating. So, yes, there are some additional elements of training that were involved. We had deployed parallel panels. So, we had some panels moving forward for REGENERATE and separate panels on the REVERSE study. There was different training for those pathologists to make sure that they were paying special attention to that high F3, low F4 differential. Clearly, that's going to be important when they progress to reading the month 18s as well. The second element, this is the only advanced trial in advanced fibrosis early cirrhosis. And third, it's -- we're deploying this new methodology. So we've learned a lot through the deploying this new methodology and our applying those learnings to the REVERSE trial.

Brian Abrahams: Thanks. That’s really helpful. Appreciate it.

Michelle Berrey: Thank you.

Jerry Durso: Thank you, Brian

Operator: Thank you. Our next question comes from Joseph Stringer with Needham & Company. Your may proceed with your question.

Joseph Stringer: Hi. Good morning, everyone. Thanks for taking my questions. A couple on PBC. Your 2022 sales guide, what percent of that is sort of volume growth as opposed to a price increase? And secondly, five years post launch in PBC, what's your feeling on the market penetration into the addressable PBC patient population at this point?

Jerry Durso: Thanks for the questions on PBC. Obviously, I think as we said in the prepared remarks, we feel good about the progress we made and the growth in 2021 and look now to push forward. Maybe, Andrew, you start with the question specific to the 2022 view and how we're looking at the sales guidance that we provided?

Andrew Saik: Yes, sure. And thanks for the question. So with regard to PBC growth, we are expecting continued volume growth in both the U.S. and international. I think on the low end of our guidance, it obviously wouldn't take a great deal of volume growth to hit the low end. But we're expecting to be -- obviously, we gave a range to be on the higher end, we would need to see continued growth in international and the US, which we're enjoying right now.

Michelle Berrey: Yes. I'll tag on to that, if you don't mind. I think there is really a lot to be said for what we're learning about with the number of years that we've been on the market, our ability and Michelle noted, to generate new data and particularly when you're looking at it, the ultimate goal of therapy in PBC is to prevent end-stage liver disease, transplantation and depth. And as we're reading out, as we did at AASLD, some of this information, combined with what we're learning with our five-year LTSE data on not only lowering ALP and bili, but keeping it low and then showing important stability in fibrosis, we are creating a fuller package of the data that physicians need to take into consideration when choosing to add on a second line agent. And this education is, I think, going to very much accelerate with the work that we are doing because of the data we have access to. We know that in Europe, there is a stronger market for second line. It's been more established. And because it's based at institutions, more institutionally treated than perhaps community gastros as we have to go out and hit them across the land. This is a little bit easier way to penetrate than in the US. But we did some market research that shows we have really increased the confidence of physicians using Ocaliva to treat second line, and that is really where the game’s being played. Those patients that are appropriate are being intercepted early, and we're trying to manage that before you get to the point where you're in hepatology office and very severe. So we intend to use new data, new materials, really comprehensive approach to getting out. We won't have the limitations we've seen, hopefully, with COVID. We've overcome that. And move forward with our business, about only one-third of patients at all in the US have had second line treatment. So we see the next two years as being fundamental to shift in the conversation, and really increasing patients getting treated with second-line therapy.

Joseph Stringer: Great. Thanks so much for taking our questions.

Jerry Durso: Thanks Joseph.

Operator: Thank you. Our next question comes from Thomas Smith with SVB Leerink. You may proceed with your question.

Thomas Smith: Hey guys, good morning. Thanks for taking the question. Just on REVERSE, it sounds like the gating factors you're pointing to around the complexity of the biopsy slide interpretation. I guess if we turn to the safety analysis. Can you just remind us how much visibility you have into the ongoing safety analysis and the independent adjudication of safety events there? And are there any types of events that need to be adjudicated as being explicitly defined, or have there been any changes to the types of events that are being evaluated. And I guess if you could just confirm if any of the delays in interpreting the data are related to, I guess, adjudication of those events? Thanks.

Jerry Durso: Thanks, Thomas. Michelle?

Michelle Berrey: Hi, Thomas good morning. So good question. We do have a DMC that is overseeing the NASH trials and is looking specifically at these large patient populations, just to make sure that the ongoing safety, there's no issues there that would require additional monitoring changes in the study design. So we continue to have -- continue as designed back from our DMC. With regard to adjudications, we have had discussions with the FDA and have specific independent committees look at hepatic events, cardiovascular events and kidney specifically, a large number of these patients are diabetic. So that's something that they wanted to specifically look into the hepatic safety events is separate. So that's more of a daily specific review of those cases, that's separate than the hepatic outcomes, which will be part of the full approval analysis. Is that helpful?

Thomas Smith: Yeah. No, that's helpful. Thanks Michelle. And then I think you alluded to this, but can you just confirm, I guess, do you expect to have any visibility into the reverse safety data set as you engage with the FDA potentially in first half 2022 on the advanced fibrosis population?

Michelle Berrey: They should be coming in, as I said, in the third quarter, so shortly thereafter, and would certainly be part of our full safety package that would be submitted. So, again, we're looking through the DMC and the adjudications. And the DMC has full visibility into the adjudicated cases. So if there's any concerns, they could certainly make recommendations to us about altering the study or looking more specifically at any specific kinds of events. So both the patient, the large patient population regenerate almost 2,500 patients and just over 900 in REVERSE, are both being reviewed by the DMC. We remain blinded until the database lock for both of those studies.

Thomas Smith: Okay. Got it. Thanks for taking the questions.

Michelle Berrey:

Operator: Thank you. Our next question comes from Mayank Mamtani with B. Riley Securities. You may proceed with your question.

Mayank Mamtani: Good morning Congrats on the progress, notably on the financial trajectory. And thanks for taking the question. So on the OpEx guidance, maybe, Andrew, it seems like the NASH-specific investments this relatively seem to be coming down. Is there anything to rig into your level of conviction and the opportunity? Can you just comment on that? And then I just have a quick follow-up for Michelle.

Andrew Saik: Yes, sure. Thanks for the question. Yes. No. So NASH is one of our key programs, and we are fully committed to funding it through the end of the studies. You will see NASH spend as a percentage of our overall R&D spend continue to decline, but that's mainly a function of REVERSE finishing up, so obviously, our spend on NASH overall is going to reduce. Some of our other programs are going to increase to kind of pick that up and that would be notably the combination study in OCA beza and 787, which hopefully will get going this year. So no, absolutely no lack of conviction on NASH. It's just a natural life cycle of our R&D spend.

Mayank Mamtani: Okay. Great. And then for Michelle, just quickly on the REVERSE study and thinking about what you will learn from the region at biopsy analysis and putting in context the FDS poster wanting to go away from biopsy. And we've seen other studies also change their primary efficacy endpoint, a non-biopsy. So is there a remote chance that you may elevate a secondary endpoint into the primary endpoint analysis. And FS, what might be the NIT is that look particularly attractive to you right now?

Michelle Berrey: yes, it's a great question. And certainly, we heard at a fireside chat at NASDAQ earlier this year, a lot of interest in the noninvasive tests. But FDA at this point is still considering the only validated circuit endpoint is the biopsy-driven histopathology. We certainly have multiple noninvasive tests, but both the wet biomarkers and fiber scan and other noninvasive mechanisms to evaluate the progression regression of fibrosis in these patients. So we'll be pulling in all of those data as well and hope to have as much of that available at the time of our briefing book for the agency on REGENERATE, we have the same noninvasive assessments progressing for the REVERSE study.

Mayank Mamtani: Thanks for taking our question.

Jerry Durso: Thank you, Mayank.

Operator: Thank you. Our next question comes from Steve Seedhouse with Raymond James. You may proceed with your question.

Timur Ivannikov: Yes, hi. This is Timur Ivannikov on for Steve. So just for REGENERATE, I wanted to clarify, I'm not sure I heard correctly, but it sounds like you have an internal benchmark in order to proceed with submission and meeting with the FDA. Could you just talk about that benchmark in terms of the safety event rate -- and just to clarify for the 48-months safety analysis, is that safety only, or will you be adding any type of efficacy in terms of NASH resolution and fibrosis reduction. Thank you.

Michelle Berrey: Yes. For safety, I just want to make sure we're clear on that. So in the initial interim analysis, we actually were still enrolling the study at that time back at the data cut-off, which was October 2018. And -- so we didn't have any patients who had reached month 48. For this data cut-off we -- we'll have almost 1,000 patients, 995 patients out to 48 months or year four. So a much, much larger safety database. We went from 2,400 patient years to over 8,000, 3.5-fold almost increase in patient exposure. So a much more robust safety database. We're not looking for this analysis on events. So that's not -- this is not an event-driven analysis. This is an interim analysis focused on an accelerated approval only. So again, an interim analysis of those month 18 biopsies, not looking at clinical events of progression, et cetera. That would be for the full approval. This is solely focused on an accelerated approval.

Jerry Durso: Yes. The only thing I would add is, of course, as Michelle indicated before, the challenge of the CRL was about overall risk benefit. So the opportunity to assess this total -- the totality of this larger data set inclusive of all the safety data that she outlined, the efficacy, I think, is going to put us in a good position to assess and reengage if the data supports us. So again, we look forward to getting to the end of that data generation for REGENERATE and defining the next steps.

Timur Ivannikov: Okay. Thank you very much.

Operator: Thank you. Our next question comes from Brian Skorney with Baird. You may proceed with your question.

Unidentified Analyst: HI. This is Luke on for Brian. Thanks for taking the question. Just a quick one, and apologies if you've covered this. But on REGENERATE, have you had any progression in discussions with the FDA regarding the scheduling of a pre-submission meeting, or is that something that you'll like to do once you have data in hand?.

Michelle Berrey: That's a good question. And our only disclosure today is that we continue to plan for that meeting in the first half of 2022.

Unidentified Analyst: Great. Thanks.

Michelle Berrey: Thank you.

Operator: Thank you. Our next question comes from Jon Wolleben with JMP Securities. You may proceed with your question.

Jon Wolleben: Hey, thanks for taking the question. A follow-up on safety for me. Following your withdrawal of the MAA, as far as the EMA is bridge response, you mentioned also a potential concern about effect on kidney function, which I don't think I've heard discussed before. So I was hoping you could provide a little more color on that potential safety signal?

Michelle Berrey: Yes. So you'll recall the MAA and the NDA, we were not able to align on the timing of those analyses. And as I just mentioned, we're just now pulling in the data for the end of 2021, December 31, 2021, which will be the new data cut-off. So obviously, we weren't able to pull those data in to respond to any of the questions from the EMA. Those data are being adjudicated as one of the requested focus areas again, those data have been being reviewed by the DMC, but the final adjudications will be coming in together with the rest of that safety data package. So, unfortunately, as we've said before, we just weren't able to align on the timing to pull all those data in to respond to their questions.

Jon Wolleben: Okay. And maybe a follow-up, if I may on OpEx. With the jumps in the fourth quarter in R&D and SG&A, how should we expect that split to move forward in 2022 given the guidance you guys gave us today?

Jerry Durso: Andrew?

Andrew Saik: Yes, sure. No, thanks for the question. Look, when we give guidance, we typically don't break it out between R&D and SG&A, and we're not expecting to at this point in time. But as I said, I mean, we're going to continue funding the pipeline as we've described. REGENERATE is going to continue on into the year. REVERSE spend will back down a bit. And then some of our other program spend as those programs get off the ground, will pick up. So, other than that, we've given the guidance on OpEx, and we expect to continue to look at our expenses every day and manage them as low as we can while still meeting our objectives.

Jon Wolleben: Got it. Thanks for the color.

Andrew Saik: Sure.

Operator: Thank you. Our next question comes from Ed Arce with H.C. Wainwright. You may proceed with your question.

Thomas Yip: Hi. Good morning everyone. This is Thomas Yip asking a couple of questions for Ed. First, you touched on it briefly earlier, regarding your discussions with the EMA, for Ocaliva and for REGENERATE. So, are we waiting for REGENERATE data to go ahead or is it a separate process from the FDA?

Michelle Berrey: Not sure I understood the question. We were through the MAA. And so if the data supported it, we could go forward with a resubmission as we are doing in the US. So, the procedures in Europe recorded a whole withdrawal in resubmission. You can answer questions for a while. But unfortunately, we had used up all of the time and their procedures didn't allow us to have any other -- So, in the US similarly, we are resubmitting with this now much more robust, larger safety database, plus the additional biopsy data that we'll have in hand this spring.

Thomas Yip: I see. So, I guess, what I meant to ask was is the EMA also looking for the data package that you plan to submit to the FDA sometime first half this year?

Michelle Berrey: Once we have those data in hand, we could consider a resubmission to the EMA as well. It would be a similar data package, yes.

Jerry Durso: We'll assess any potential next steps with data in hand.

Thomas Yip: Okay, sounds good. And then perhaps one more question from me. Can you tell us what the next milestones for the OCA plus bezafibrate combination study in this year, when should we expect the first data set?

Michelle Berrey: Yes. So, we have to present some data later this year. We are conducting, as I mentioned, in large Phase 1 study, so in healthy subjects, looking at the exposure data for multiple different doses in combination as well as different doses in combination in a PBC patient population with one Phase 2 study, continuing to enroll in Europe and kicking off the Phase 2 study in the US. So our next big milestone for us is determining the optimal combination. As we've alluded to, we believe that there's potential synergistic interaction between these two drugs, potentially decreasing pruritus and synergistic mechanisms of action that could make for a really great combination for patients with cholestatic liver disease for PBC and beyond.

Thomas Yip: I see, got it. Thank you again for taking the questions. And looking forward to our progress this year.

Michelle Berrey: Thank you very much.

Operator: Thank you. Our next question comes from Ellie Merle with UBS. You may proceed with your question.

Ellie Merle: Hey guys. Thanks for taking the question. Just on the REGENERATE biopsy read again. Can you give us any color, I guess, maybe on the proportion of biopsies you've read so far and maybe the proportion remaining both as the reread from the initial biopsies as well as the new patient samples? Just any update in terms of where you are in that process or additional color you can give? And then maybe just like discuss a little bit more on your confidence that you’ll have the state of read in time to support the potential pre-submission meeting with the FDA in the first half just in light of the reverse update in terms of the timing? And then just any chance that this meeting could potentially get moved to the second half and say the FDA wants to have some more of the full biopsy data from the full reverse biopsy reads for this meeting? And if this could perhaps get this time frame shifted at all? Thanks.

Michelle Berrey: Yeah. So on the REGENERATE study, again, back the initial interim analysis with a little over 900 patient biopsies that we had both at baseline and at month 18, that was the F2, F3s and we have an additional 500 or so that we are bringing in those have been being read using this same panel methodology. The reverse patient population, we have just baseline and end of study, which is either a majority of those are 18 months. And those are all being read again using the same methodology as we've talked about previously, there were more challenges in this patient population given the importance of differentiating the higher threes, low F4s, and we presented some of those data at the liver meeting last year, I talked about the large number of patients who were screened in order to identify those patients with compensated cirrhosis both clinically and on their biopsies. So again, all of those safety and efficacy data will be pulled in with the same data cutoff and will provide us with a good assessment of the benefit risk, again, which we look forward to sharing a little later on this year. It's a big year for us.

Ellie Merle: Thanks for the color.

Michelle Berrey: Good. Thank you.

Operator: Thank you. Our next question comes from Salveen Richter with Goldman Sachs. You may proceed with your question.

Unidentified Analyst: Thanks for taking the question. This is Andrea on for Salveen. Just wondering if you could discuss further when you do see this expanded safety database, what you're looking for, what you'll be focused on? Is it primarily the cardio metabolic? And then remind us what would be acceptable in terms of triglyceride level increases as well as the rate of pruritus? Thanks so much.

Michelle Berrey: Yes. So the overall safety, if you think about it from a regulatory perspective or a therapy that we anticipate would be these patients will be requiring for the rest of their lives. It's really important to make sure that we understand the tolerability to things like pruritus, in general, looking at their lipid profiles given that these patients are in general have higher rates of obesity and type 2 diabetes than the general population. So just look at those general tolerability issues. I also want to look out now that we have 1,000 patients out at year 4, it's important to make sure that there aren't any new adverse events that are popping up at year 3 or year 4. So those will be the specific things that we're looking at. Again, the DMC has been looking at unblinded data threw out and continuing to watch that. We remain boring good now, but we'll be pulling those data in shortly.

Unidentified Analyst: Thanks a lot.

Michelle Berrey: Thank you.

Operator: Our next question comes from Geoff Meacham with Bank of America. You may proceed with your question.

Aspen Mori: It's Aspen on for Geoff. Thanks for the question. I guess first off, it's clear that most of the REGENERATE re-analysis focus is on the robust safety database. But maybe you can help us understand, if you expect to or if you think you need to show any additional delta versus placebo in the fibrosis end point? And then for REVERSE, maybe just remind us on after you get that data in 3Q, what does the regulatory pathway look like for that subset? Do you need to generate any additional data to file that with FDA or even talk to the FDA? And then lastly, really quickly, just help us understand the gating factors for dosing the first patient in the US in the OCA beza study? Thank you.

Michelle Berrey: Okay. So first on the NASH program, if we look at REGENERATE, again, it's a large study, and that's interim analysis, we do have alignment with the FDA that, that would be based on a fibrosis endpoint for an accelerated approval, and that is the focus of our discussions with the agency again, that the first initial interim analysis that was also the focus, and we did show statistically significant reduction in fibrosis. So we're in a number of patients who have regression at, at least 1 stage without any worsening of the NASH activity score, so no worsening of inflammation or steatosis. We now have a much more robust safety database against which to compare that. So overall, a much better opportunity to; assess benefit risk. The reverse patient population because it is an advanced, more advanced fibrosis, early cirrhosis and initially, the agreement was for looking at fibrosis, all the subsequent trials in this patient population, the FDA has stated that they want to look at the clinical outcomes -- but because we had already begun the study, we are on that one. So this will be the final endpoint for the REVERSE study is looking at fibrosis. Obviously, we are pulling in, as I mentioned earlier, all those noninvasive tests for both REGENERATE and REVERSE. And I think those are going to be playing, obviously a much larger role as we go forward. Hopefully, the FDA are continuing to look at those data. But at this point, those are considered supportive of the primary endpoint of reduction in fibrosis, reversal of cirrhosis in that advanced patient population and comparison there against the large safety database. And with regard to the fixed dose combination, we do have sites open in the US and are actively screening. So we look forward to announcing our first patient in that fixed-dose combination in the US in our Phase 2 study and presenting some data from that later on this year. Thanks for the question.

Aspen Mori: Thank you.

Operator: Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Jerry Durso for any further remarks.

Jerry Durso: So thanks, everybody, for joining us today. I really believe that the work that we did and that really the team did across the business in 2021 puts us in a strong foundation. It's clear, we're embarking on what's going to be a transformative year for Intercept, and we definitely look forward to sharing more updates as things progress. Thanks, and have a great day.

Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.