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Intercept Pharmaceuticals Inc (NASDAQ:ICPT)
Q1 2019 Earnings Call
May. 8, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and thank you for joining the Intercept Pharmaceuticals First Quarter 2019 Financial Results Conference Call. All participants are now in a listen-only mode.Following the opening remarks Intercept's Management will open the lines for a question-and-answer period. Please be advised that this call is being recorded at the company's request and a webcast of this call will be archived on the company's website for approximately two weeks. I would now like to introduce Justine O'Malley, Vice President, Corporate Affairs. Please go ahead.

Justine O'Malley -- Vice President, Corporate Affairs.

Thank you, operator. Good morning and thank you for joining us on today's call. This morning we issued a press release announcing our first quarter 2019 financial results, which is available on our website at www.interceptpharma.com. Before we begin our discussion I'd like to note that during our call and question-and-answer session today we will be making certain forward-looking statements, including statements regarding the progress, timing and results of our clinical trials including our clinical trials for the treatment of non-alcoholic steatohepatitis or NASH, the safety and efficacy of our approved product Ocaliva for primary biliary cholangitis or PBC and our product development candidates including obeticholic acid or OCA for NASH.

Timing and acceptance of our potential regulatory filings and potential approval of OCA for NASH or any other indications in addition to PBC. The timing and potential commercial success of OCA and any other product candidates, we may develop our strategy, future operations, future financial position, future revenue, projected cost, financial guidance, prospects, plans, objectives and expected market growth. 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 any forward-looking statements except as required by law.

These forward-looking statements are based on estimates and assumptions by our Management 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 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 filings with the US Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2018.

In addition, please note that OCA is an investigational product that has not been approved for use by any regulatory authority for any indication, other than PBC. No conclusions can be drawn considering the safety or efficacy of OCA for any other indication at this time. Today's call, we will begin with prepared remarks from our CEO, Dr. Mark Pruzanski followed by those from our Chief Operating Officer Jerry Durso and our Chief Financial Officer, Sandip Kapadia. We'll then open the call to take your questions.

Let me now turn the call over to our CEO, Dr. Mark Pruzanski.

Mark Pruzanski -- Chief Executive Officer

Thanks Justin and good morning everyone. Thank you for joining us on our first quarter 2019 conference call. We had an exciting start to the year, achieving a number of critical milestones that heralded the beginning of a transformative year for Intercept. Of course we marked a watershed moment in liver disease with the announcement of positive results in the month 18 readout of our pivotal Phase III REGENERATE study in patients with liver fibrosis due to NASH. We generated the largest and most comprehensive study ever conducted in NASH and is the only successful Phase III study to-date, paving the way for OCA to become the first drug for this indication, if approved. We're particularly thrilled with OCA's robust and anti-fibrotic effect in REGENERATE having reported that the daily OCA 25-milligram dose met the primary endpoint of at least one stage improvement in liver fibrosis with no worsening of NASH. As many of you know, we recently presented additional supportive analysis from REGENERATE, at the Annual Meeting of the European Association for the Study of the Liver or EASL. We are particularly encouraged by the clear OCA dose response observed across multiple pre-specified, histological and biochemical analysis, demonstrating that the drug is highly active in ameliorating the key identified pathogenic parameters in NASH.

The most important of these was the fibrosis shift table analysis in patients with a repeat biopsy. In this analysis, nearly 4 in 10 patients on OCA 25 milligrams improved fibrosis by at least one stage compared to just over 2 in 10 on placebo. Importantly, in the same analysis just over 1 in 10 patients on OCA 25 milligrams worsened by at least one stage. As compared to approximately 2 in 10 on placebo.

Of course clinically, both reversal of fibrosis and prevention of worsening are of great importance. In addition, although the primary NASH resolution endpoint was not met, OCA ameliorated underlying disease activity based on the liver pathologist's overall assessment of steatohepatitis and improvement in key parameters, such as inflammation and ballooning.

Consistent with previously reported OCA treatment effects, the drug's biological activity was reflected in rapid and sustained dose-dependent improvements in liver enzymes, such as ALT, AST and GGT. Importantly, the majority of patients enrolled in REGENERATE had abnormally elevated ALT and AST at baseline, which is typically how NASH patients are discovered in routine clinical practice. And with OCA 25 milligram treatment, close to two thirds normalized ALT and more than half normalized AST, approaching double the rate of those on placebo for both.

We left EASL invigorated by the enthusiastic feedback, we received from key opinion leaders and the broader liver community, who openly expressed their excitement about the REGENERATE results, and after years of wait, the possibility of an approved treatment in the relative near term to address the pressing need in their patients for an effective anti-fibrotic therapy.

It's clear based on our market research with physicians and payers, that a primary anti-fibrotic benefit in NASH patients with advanced fibrosis is the most clinically desirable and relevant feature of any treatment. It's well known that fibrosis alone has been shown to predict liver related adverse outcomes and all-cause mortality. And it's the case that currently available non-invasive blood tests and bed-side imaging modalities are focused on fibrosis assessment. And these are becoming increasingly routine as a means to diagnose and stage patients with fibrosis due to NASH.

It's sobering to reflect on just how challenging it is to demonstrate the kind of anti-fibrotic benefit that we've shown with OCA. The recent spate of phase II and phase III failures in the field has reminded us that not a single other investigational NASH drugs in development has demonstrated fibrosis improvement in a well controlled trial. With this said, we have a unique competitive advantage with OCA, now well positioned to become the first drug approved in NASH based on a demonstrated anti-fibrotic benefit. This reinforces our long-standing belief that OCA has the potential to become the essential therapy for patients with advanced fibrosis due to NASH.

Based on the totality of REGENERATE data generated to-date, we are very pleased to be in a position to announce today the acceleration of our projected NDA filing to the third quarter followed by our MAA filing in the fourth quarter of this year. Accordingly, we are also accelerating our launch planning activities and Jerry will provide additional detail on this shortly.

Of course, our comprehensive phase III NASH program continues to expand globally. REGENERATE has continued to enroll well and is by far the largest study of its kind with well over 2000 patients enrolled to-date. REVERSE our phase III study and NASH patients with compensated cirrhosis is also enrolling well and remains on track to reach its current target by the end of 2019.

With the understandable focus on our NASH program, it's important that everyone recognize the strength of our PBC business. Our first quarter results show a very solid growth trend with sales of Ocaliva coming in at just under $52 million. We attribute this growth to the successful implementation of our expanded customer reach strategy in the marketplace as well as the results that healthcare providers are seeing in their patients.

Our confidence in Ocaliva's benefit has been further bolstered by, among other things, the presentation at EASL of clinical data, supporting the anti-fibrotic and anti-inflammatory benefits of long-term therapy in PBC patients. In addition, we continue to publish new data from our phase III POISE five year open label extension study, with consistent demonstration of Ocaliva's durable treatment effect and no changes in its safety profile. This mirrors our accumulating extensive experience in the post-marketing setting in thousands of PBC patients and is critically important to demonstrate given multi-year ongoing treatment in this patient population.

Based on our performance this quarter, we are increasing our 2019 net sales guidance, a clear reflection of the success of our market penetration efforts globally. Longer term, we are working to deepen and differentiate the therapeutic profile of Ocaliva by further evaluating its clinical benefit in PBC and by pursuing combination therapy. We previously announced the acquisition of the US rights bezafibrate with a plan to develop a fixed-dose combination with Ocaliva, first for PBC followed by other liver indications, including NASH. Based on the data we've seen, we are confident in the potential for this combination in liver disease and we'll soon be initiating a phase II clinical study in PBC.

In summary, the first quarter of 2019 has been a truly transformational time for us at the company. The presentation of our data at EASL and the discussions we've had with physicians and payers underscore our confidence in successfully bringing the first ever NASH therapy to patients with advanced fibrosis. NASH clearly is a blockbuster specialty market opportunity. And with the liver focused medical and commercial infrastructure we've built, we will be well positioned to successfully launched the first ever anti-fibrotic treatment for this disease following approval.

With that, I'll turn it over to Jerry for an update on our global commercial business and NASH pre-launch activities. Jerry?

Jerome Durso -- Chief Operating Officer

Thanks, Mark, and good morning everyone. As Mark mentioned, we had a strong quarter one reporting $51.8 million in worldwide Ocaliva net sales. This represents 47% growth over the first quarter of 2018. In the US, we achieved quarter one net sales of $38 million with majority of our growth coming from community based gastroenterologist as a direct result of the sales force strategy we've deployed over the last several quarters.

Internationally, we achieved net sales of $13.8 million in the first quarter. As we now have national pricing and reimbursement in most of our major international markets, the growth we're seeing is a clear indicator that the launch is progressing well, with our targeted physicians. We continue to see our international business contribute meaningfully to our overall sales picture. Our strong start to the year, as evidenced by our announced increase to our 2019 Ocaliva net sales guidance, shows our confidence in our ability to continue to execute and drive momentum in our PBC business.

Now turning to NASH. It's clearly an exciting and busy time as we move closer to the potential approval of OCA and bringing our product to market for the many patients with advanced fibrosis due to NASH. As Mark mentioned, we're accelerating our launch preparations consistent, with our updated Q3 filing timeline in the US. In Europe, we continue to expect to file our MAA, in the fourth quarter. As we look at the market, we know that reversing fibrosis and avoiding the complications associated with cirrhosis remain top priority of both physicians and payers, when evaluating potential new treatments for patients with NASH.

While the underlying fibrotic diseases is usually a result of long-term damage to the liver in NASH patients in the REGENERATE study, OCA demonstrated the ability to impact fibrosis at only 18 months. Based on the feedback, our medical colleagues have received, since we announced our positive phase III REGENERATE data, OCA presents a very strong value proposition to our key stakeholders and this was recently reinforced at the EASL meeting. As Mark mentioned, the presentation of our REGENERATE data with particularly well received among the hepatologist and gastroenterologists who attended this meeting.

In addition to the anecdotal feedback we received that EASL, we also conducted a pulse survey of 100 US-based hepatologist and gastroenterologists who were exposed to a blinded OCA product profile. The pulse survey showed first that fibrosis improvement is seen as the top benefit for most physicians surveyed and it had a strong impact on their willingness to prescribe. Secondly, when shown the blinded OCA profile, the clear majority of physicians surveyed expect to adopt the product within the first year post approval and prescribe it most frequently in their NASH patients with advanced fibrosis. Of course, the survey was an initial pulse and more detailed research will follow. We're excited about the positive response, which supports the high unmet need, the importance of the fibrosis benefit shown in REGENERATE and the willingness of physicians to prescribe a drug based on the OCA profile to their NASH patients.

Moving on to discuss our ongoing launch readiness plans, we remain convinced that NASH presents a blockbuster opportunity and that we'll be well positioned to unlock that opportunity following OCA's approval through a targeted launch focused on specialists treating patients with advanced fibrosis. We believe we have a unique position given the clear fibrosis benefit seen in REGENERATE and OCA's potential will be clearly differentiated from other compounds in later-stage development. We believe that the majority of patients currently diagnosed with advanced fibrosis due to NASH are under the care of hepatologists and gastroenterologists and we're confident in our ability to effectively reach the specialist group following OCA's approval for NASH.

Currently in the US, our medical affairs teams are focused on disease state education to help physicians understand the needs of patients with advanced fibrosis due to NASH. As well as the urgency required to prevent the severe complications of cirrhosis in these patients. The team has executed numerous programs reaching top thought leaders in the field. In addition, the medical affairs team has been focused on educating physicians on the increasing importance of non-invasive tests or NITs to diagnose and manage NASH patients. We're also rolling out a disease education campaign to a broader hepatology and GI physician audience, reminding physicians that patients with advanced fibrosis due to NASH maybe on the tipping point of developing cirrhosis. Additionally, our commercial and medical hiring is ongoing and has accelerated post the positive REGENERATE data readout.

We're also making good progress in our market access activities. Our access teams have already conducted dozens of key payer interactions focused on the NASH disease state. These meetings and our other interactions with payers have reinforced the fact that a key value driver for payers will be the prevention of cirrhosis and related complications and they therefore tend to agree that advanced patients with fibrosis have the greatest unmet need. Payers also recognize that the NASH market is evolving and that NITs will be an important part of patient identification and diagnosis.

OCA is the only medication to have shown an anti-fibrotic effect in a late-stage clinical trial and subject to OCA's approval, we expect to be the first to market with this unique value proposition, which puts us in a very strong competitive position. We're confident in the commercial opportunity for OCA and NASH. We feel good about our commercial strategy and the state of our launch preparations and look forward to continuing our efforts and sharing more details with the investor community, as we move forward toward approval and to launch.

And now I'll turn the call over to Sandip Kapadia, our Chief Financial Officer for a financial update. Sandip?

Sandip Kapadia -- Chief Financial Officer

Thank you, Jerry and good morning everyone. Please refer to our press release issued earlier today for a summary of our financial results for the quarter ended March 31, 2019.

Q1 was an important quarter for us as it built the foundation for the important journey ahead. We had a very strong sales growth versus prior-year quarter in our PBC business. We read out positive results in our pivotal phase III REGENERATE study in NASH and made solid progress in our NASH filing and pre-launch preparation efforts. This gives us strong confidence for the balance of the year and we're announcing important updates to our previously announced 2019 financial guidance.

We were very pleased with our results in the first quarter. We recognized $52.2 million in total revenues in the first quarter of 2019, up from $36 million in the first quarter of 2018, a growth of 45% versus the prior year quarter. Our first quarter Ocaliva net sales were comprised of US net sales of $38 million and ex-US net sales of $13.8 million. This represents a growth versus prior-year quarter of approximately 33% in the US and approximately 108% ex-US. As we expect the total gross-to-net deductions for the quarter were toward the higher end of our previously communicated 10% to 15% gross-to-net range. This increase was primarily related to the annual resetting of deductibles and the Medicare Part D coverage gap.

Our GAAP operating expenses for the first quarter were $136.2 million and our non-GAAP adjusted operating expenses were $118.9 million. As a reminder, our non-GAAP adjusted operating expenses excludes stock-based compensation and depreciation and amortization. Our cost of sales for the first quarter was $0.6 million. This was an increase of $0.3 million over the prior year quarter. Cost of sales primarily consist of packaging, labeling, material and related expenses.

Our selling, general and administrative expenses for the first quarter were $77.2 million. This was an increase of $14.8 million over the prior year period, driven primarily by an increase related to our NASH pre-launch activities. Our research and development expenses for the first quarter were $58.4 million. This was an increase of $9.7 million over the prior year quarter. The increase was driven primarily by increases in our OCA and NASH development program expenses, including costs associated with the REGENERATE readout in the first quarter.

Now, as it relates to our cash position. As of March 31, 2019 we had cash, cash equivalents and investable debt securities available for sale of approximately $353.5 million.

Moving onto our financial guidance for 2019. 2019 continues to be a critical year as we build momentum in our PBC business while deploying resources to support our NASH NDA filing efforts and pre-launch activities. Given our strong first quarter Ocaliva net sales and our confidence in the outlook for the remainder of 2019, we are increasing our 2019 Ocaliva net sales guidance range to $235 million to $245 million and expect gross-to-net for the year to be in the 10% to 15% range.

We continue to take a disciplined and focused approach with our resourcing in order to leverage our unique competitive position by increasing investments in our NASH pre-launch efforts. We will also continue to invest to optimize execution in our NASH clinical development program. In light of the significant market opportunity in NASH and the acceleration of our NASH NDA filing and launch preparation activities, we're updating our 2019 non-GAAP adjusted operating expense guidance between $470 million and $500 million.

Finally as a reminder, non-GAAP adjusted operating expense is a non-GAAP financial measure under SEC regulations. Please refer to our press release issued earlier this morning for an explanation and reconciliation of this metric.

So with that, I'd like to turn it over to the operator for any questions. Operator?

Questions and Answers:

Operator

Certainly. (Operator Instruction) Our first question comes from the line of Michael Yee from Jefferies. Your question please.

Michael Yee -- Jefferies -- Analyst

Hey, good morning. Thanks, guys, and congrats on the progress. Two questions that are sort of related, I guess coming away from EASL, maybe there was various feedback or various discussion about the way the data was presented, but in some ways also those who were seeking to know about prevention to cirrhosis, for example, as a key endpoint. Can you talk to what is -- what other potential analysis you're looking at? What we could maybe hint at getting at AASLD? What you'd like to do there and maybe talk to the prevention to cirrhosis endpoint or anything or anything around that as it relates to shift table? Thanks so much.

Mark Pruzanski -- Chief Executive Officer

Yes, sure Mike. And it's a good question, because obviously progression to cirrhosis is a clinical outcome defined in the outcomes portion of the study. As we've mentioned before, as expected in a relatively short period of time 18 months in a population of this size. We don't have a large enough sample to make a definitive statement except that the trend definitely favors OCA 25 over placebo. So we see that trend continues and that will be really reassuring.

I do think you bring up the fibrosis shift analysis. I do think apart from the primary endpoint success on fibrosis improvement, that was by far and away the most important analysis that was presented at EASL because it's essentially a bridge of sorts to the clinical outcomes endpoint on progression to cirrhosis. And of course this is a pre-specified standard shift analysis in patients who received a repeat biopsy. And as I mentioned in my prepared remarks, it was really great to see in close to 4 in 10 patients taking OCA 25 improved by at least one stage against approximately 2 and 10 placebo. And then on the worsening side and of course in clinical practice, this is critically important to prevent progression ultimately to cirrhosis. We saw basically just over 1 in 10 at OCA 25 versus two in ten on placebo. By-the-by that this analysis, whether per protocol which was presented at EASL were in the ITT population of patients with a repeat biopsy where the sample size is greater, is virtually identical. And that was also very gratifying to see.

Michael Yee -- Jefferies -- Analyst

So, just as a follow-up to put it also very clearly you would be confident that not only is prevention to cirrhosis trending very positively for you, certainly, favorable in the 25 mg arms, but also that the event rate therefore overall you feel very good about as well and I don't know what you can say that.

Mark Pruzanski -- Chief Executive Officer

Yeah, I mean you know that will, in terms of the incidents of progression to cirrhosis across the population is that your question ?

Michael Yee -- Jefferies -- Analyst

Yeah. I mean, I think if you look at the rate of progression, which was part of your shift analysis table, there was certainly a greater rate in the placebo arm versus the drug arm. Some people could argue that half of those patients that are progressing probably were progressing to cirrhosis based on the fact that half of them are F3s show that therefore that would've been favorable. So, I mean, I guess you are saying that is favorable in your way and that is one of the events, in the overall event analysis?

Mark Pruzanski -- Chief Executive Officer

Yeah and again I don't want to over characterize it because of the small numbers we're talking about in terms of progression to cirrhosis but yeah, I mean I think that, that would be correct. And in a future date, we'll break this down further by one, two, three stage shifts in the population. And as you remember, one of the analysis we presented at EASL was with two-stage improvement which clearly favored OCA 25 three to one in the per protocol analysis over placebo. So, yes, I mean what we're seeing there in the shift analysis is definitely very encouraging.

Michael Yee -- Jefferies -- Analyst

Okay, thank you.

Operator

Thank you. Our next question comes from the line of Brian Abrahams from RBC Capital Markets. Your question please.

Brian Abrahams -- RBC Capital Markets -- Analyst

Hi, there. Thanks so much for taking my questions and congrats on all the progress toward the filing. Two questions from me. You mentioned the pulse study showing physicians are particularly enthusiastic to potentially give OCA to their more advanced patients. Your access teams are hearing feedback that reimbursement may be driven by preventing more advanced patients from progressing to cirrhosis. So I'm just wondering how should we think about how this all plays into your pricing strategy and initial commercial targeting.

And then separately, just a second question, Mark, you alluded to the beza, OCA, PBC combo data that you presented at EASL. Can you speak a little bit more about how you foresee that combo being used in PBC both in the US and abroad, whether you think those synergies will translate to the NASH setting? And how important that combo would be for your lifecycle strategy plan for OCA? Thanks.

Mark Pruzanski -- Chief Executive Officer

Great, Brian. I'll ask Jerry to take the first question. I'll take the second.

Jerome Durso -- Chief Operating Officer

Okay. Thanks, Brian. Yeah, I mean, we did get some good positive feedback from the pulse survey as a result of the initial profile. It's good to see physicians recognize the unmet need and the connection with what OCA might be able to bring to these patients and their willingness to prescribe a therapeutic agent in NASH for the first time.

On the pricing side, it's too early to really go into a lot of depth yet on pricing points per se, but it is clear, we are going to focus the launch on the advanced population. There is the highest unmet need there. There is a recognition across both the physicians and the payers that there is a group of patients that will need treatment first and where the value proposition based primarily around the fibrosis benefit as one of the key elements will be particularly important. And I think will allow us to find a good common ground with the payer about the benefit that OCA will be able to bring and also allow us to differentiate the benefit for a drug like OCA that brings a fibrosis benefit to others that may be working more on the metabolic front. So, quite a bit of work to do. As you could imagine the payer conversations, I would characterize are on the front end. We're having the appropriate discussions on the disease state at this point, doing the market research and no doubt that our decision strategy ultimately on our price and access will be one of the key elements to the commercial launching strategy.

Mark Pruzanski -- Chief Executive Officer

Yeah. And with respect to bezafibrate, appreciate the question, because I think that this is a longer-term opportunity for us that is being overlooked in the market right now. We were very excited to announce earlier this year the US license. Of course bezafibrate is an NCE in the US. It's been approved in many markets outside of the US for a long time. And the reason we're excited about it of course, is that it's a pan-PPAR agonist and based on all of the published data, its got by far and away the biggest safety data set of any fibrate published any PPAR and it also appears to be just as good as any other competing PPAR in the class, in the investigational pipeline right now for PBC or NASH.

We are pursuing the fixed dose of course with an initial focus on PBC. The data presented by Fred Nevins at EASL were very exciting and actually corroborated our thesis here because the addition of beza to second line Ocaliva in PBC patients who'd been on therapy with our drug for four to five years, coming out the POISE study and continue to experience benefit. The add-on for another six months of beza did as expected, further improvement -- significant improvements in alkaline phosphatase. also gratifying to see in combination with OCA, further improvement in bilirubin and improvement in pruritus. So we believe that this combination will entrench us in second-line and third-line in the PBC market over the longer term and of course from a lifecycle standpoint you asked, will give us significantly further LOE runway.

On the NASH side, I mentioned in my prepared remarks that we are -- we do intend to study this combination in NASH again for the same reasons, that beza in our view is a good PPAR and as you know, PPAR next to FXR is the next most popular target in NASH. So more to come from us on this combination but we're very excited about it.

Brian Abrahams -- RBC Capital Markets -- Analyst

Great. Thanks so much.

Operator

Thank you. Our next question comes from the line a Alethia Young from Cantor Fitzgerald. Your question please.

Alethia Young -- Cantor Fitzgerald -- Analyst

Hi, guys, thanks for taking my questions. Congrats on the quarter. Sorry I'm losing my voice. One question -- two questions actually. One, on the ITT versus per protocol, just maybe reflect back on making that decision. And these data, are they more different or similar? You kind of made a allusion to it in a prior Q&A, but just can you talk a little bit more about that too, as I think it's still an investor controversy? And on the second point, I've just been wondering around like non-invasives, like how important do you think they are at launch, like in what are the puts and takes of the payer-FDA, buy and the use, something along with a potential approval next year as well? Thanks.

Mark Pruzanski -- Chief Executive Officer

Yeah, sure thanks. So as I mentioned at the Investor Meeting and again at EASL, the success or failure of REGENERATE was a pre-defined based on an analysis from the primary endpoints, both primary endpoints in the ITT population. And this represented the absolute gold standard, because of course every single patient randomized to receive at least one dose of drug was included in that analysis. And obviously with a categorical histology endpoint like this, where you can only evaluate it in a patient who had a repeat biopsy, if you drop out, you don't have a repeat biopsy then you're a non-responder. So this is -- we read out in the absolute gold standard pre-specified analysis.

Per protocol of course is pre-specified and agreed and a standard in any such clinical study and of course, is the best way to assess the drug effect when used as intended i.e, was sufficient compliance in patients evaluable on the endpoint, in this case with repeat evaluable biopsy. There are lots of examples but even in hepatology there are prior drugs approved in viral hepatitis based on histologic improvement which only read out in the evaluable patient population. So the analysis, which were for the benefit of the scientific community were supportive in this case. And as I mentioned, as you mentioned Alethia, very similar between ITT and per protocol.

I mentioned in my answer to Mike, just one example, the shift analysis which is literally first identical on any of the improvement or worsening whether for OCA 25 or OCA 10 or OCA or placebo, the delta is less than 1% for each one of those readouts between the per protocol and the ITT again evaluable patients. And there is no imbalance between the arms in terms of dropouts,. So very representative of what the drug is doing in the population.

With respect to NITs , I'll ask Jerry to take that.

Jerome Durso -- Chief Operating Officer

Yeah, Alethia, area of big progress and I think coming off of the last quarter, we feel good about the momentum and how things are evolving out there in the market. Obviously biopsy is invasive, expensive. It carries some risk and there's pretty good alignment across the stakeholders. If you look at what the specialists and the payers are sharing on this view that biopsy carries challenges in the everyday setting, particularly looking about how they're going to think about NASH moving forward. We do have increasing confidence that the evolution of the utilization of tests will be more important part of identifying patients, diagnosing patients, monitoring patients, in the future and clearly we're going to play and are playing an active role in that education to ensure that the market continues to move forward.

I think we also feel good with a lot of the discussion from EASL. More data continues to emerge in terms of the diagnostic value. Both of the blood based tests, which tend to be a pretty simple and might be the easiest access but also obviously some of the other imaging tools, again. So not only identify the patients, but also to predict who is going to be at outcomes and move forward.

On the payer side, again, they do recognize that this is evolving, that there is an important role that they expect these modalities to play as we move forward in NASH. But that's going to be an important part of the discussion, and a focus of our interactions as we move ahead.

Alethia Young -- Cantor Fitzgerald -- Analyst

Great, thanks.

Mark Pruzanski -- Chief Executive Officer

And one thing's for sure, nobody likes biopsy, right, including hepatologists.

Operator

Thank you. Our next question comes from the line of Irina Margine from Cowen. Your question please.

Irina Margine -- Cowen and Company -- Analyst

Hi guys, good morning and thanks for taking the question. I was wondering on the regulatory front in Europe, have you guys already gone through the formal scientific advice process. And if so, have you already received the formal feedback? And then perhaps you could talk a little bit more about how you think about the European opportunity in general and whether physician perception after the REGENERATE data has been similarly strong to the one in the US? Thank you.

Mark Pruzanski -- Chief Executive Officer

Sure. So you know we don't comment on specific regulatory interactions but suffice to say that we are confident in our guidance to a fourth quarter filing of an MAA based on the totality of data that we have in hand, which we believe is fileable in Europe. I think that you're probably aware that EMA put out a draft reflection paper they call it. It's not quite at the level of a guidance, which looks more stringent than the current regulatory requirements for approval in NASH in the US. And again, I think that's probably what you're alluding to, and again based on the strength of the data that we have in hand, we believe that we certainly have a fileable package. I do think that for sponsors of other phase 3 -- ongoing phase 3 trials reading out on just a single endpoint, particularly on the NASH resolution endpoint, could have challenges given the rigor that is currently anticipated in Europe.

With respect to the opportunity and perception, yes, I mean we've talked obviously too and we were in Vienna, so there were a lot of O-US and European hepatologists and gastroenterologists there. And there is no difference in my view in the kind of enthusiastic feedback that we got there. And since, with respect to the strength of the data and particularly the awareness, which is very gratifying to see the near-universal awareness that fibrosis improvement is really the absolute key for NASH therapy. And Jerry if you...

Jerome Durso -- Chief Operating Officer

Yeah. Maybe just a couple of additional point as Mark said, we would anticipate the fibrosis benefit to be important. Just to clarify, the data that I referenced before on the pulse survey was specific to the US physician. We are moving forward on preparation in Europe, but we'll come back in the future, I'm sure with some similar data, some similar feedback from physicians but I just want to make sure that we're clear that the data, I referenced before was from the US. As always the market access timing will be a country by country thing and that will evolve over time and so look forward to more insight on Europe in the future.

Irina Margine -- Cowen and Company -- Analyst

Thank you so much.

Mark Pruzanski -- Chief Executive Officer

Thanks.

Operator

Thank you. Our next question comes from the line of Steve Seedhouse from Raymond James. Your question please.

Steve Seedhouse -- Raymond James -- Analyst

Good morning. Thank you. First is regarding the REVERSE study, a couple of quick questions. Have you increased the enrollment target at all, similar to REGENERATE, where the in terms cohort was initially I think targeting 750 and ultimately you enrolled over 900 in the ITT. And have you updated or adjusted your powering assumptions at all based on the effect you saw on REGENERATE or even based on the placebo arm in Gilead STELLAR-4 study?

Mark Pruzanski -- Chief Executive Officer

Yes, it's a good question. As I mentioned in my prepared remarks, we're very pleased with our rate of enrollment in REVERSE. As far as we know, we're the only game in town there. We're the only -- well, certainly we're the only phase 3 study enrolling in this population. And with the unfortunate failure of STELLAR-4 and it's termination, there are lot of patients essentially been stranded. And investigators are looking for a new home for them and I think that that bodes well for the continued strong enrollment in REVERSE.

We certainly -- you're asking about looking to our REGENERATE data and STELLAR-4 to revisit our assumptions about REVERSE. That's certainly something that we're doing right now, but we continue to be confident in our guidance of hitting current target prior to year-end.

Steve Seedhouse -- Raymond James -- Analyst

Okay. One quick follow-up to that and then I have another question on PBC. Are you saying that you could potentially enroll patients that had been treated with either selonsertib or placebo in that study. And then my follow-up question on PBC, obviously you had a pretty nice and growing business there that if the price of OCA gets cut would take a substantial step back. So given that, is there any mechanism for price discrimination between PBC and NASH whether it's via a beza, OCA fixed dose combo is that a way to maintain pricing or could you even price a 25 milligram presentation cheaper than the current 5 and 10 mg tablets or is that just an absurd idea? Thank you.

Mark Pruzanski -- Chief Executive Officer

Just to follow-up on REVERSE enrollment, yeah, I mean I with an adequate wash-out period from STELLAR-4, it's certainly possible to screen in patients from that study into REVERSE. And in fact, there are a number of -- I can tell you there are number of such patients right now in screening. With respect to preserving price, the base case out there, consensus is one brand, one price. We did announce today that we are -- we do intend to proceed with the filing of an NDA as opposed to as an SNDA. And our hope therefore is for a different brand, different trademark for the NASH drug. Whether that supports differential pricing it's too early to speculate, but certainly would represent upside to the current base case. And as we've said before, we've invested quite a bit in building up our PBC and overall (inaudible) franchise.

The beza combo represents a strong lifecycle strategy step forward with great data presented at EASL, as I mentioned. And by the way, there's more clinical data to come from Europe with this combo and yeah, I mean over time we intend to preserve the value and build up the franchise in PBC.

Steve Seedhouse -- Raymond James -- Analyst

Great. Thank you.

Operator

Thank you. Our next question comes from the line of Salveen Richter from Goldman Sachs. Your question please.

Ross Weinreb -- Goldman Sachs & Co. LLC. -- Analyst

Hi, this is Ross on for Salveen. Thanks for taking the question. Just in terms of your strategy around dose titration around the high events of pruritus that we're seeing at the 25-milligram dose. Can you talk about what progress you made there and how you plan to approach the FDA with that strategy?

Mark Pruzanski -- Chief Executive Officer

Sure. So, I have speculated before that just as is the case on the PBC side, where we have successful titration strategy from 5 to 10. It is possible that we'll end up with the same kind of titration strategy in NASH. But prematurely at this point we haven't filed yet. So this will be obviously the place of the 10 out there commercially will ultimately be a decision of the FDA in the context of the US review. While the 10 did not meet the pre-specified statistical hurdle for success, it's clear based on all the data we presented that the 10 milligram dose is active, that there are patients in the population that do respond to this end and may do just fine with the 10. So, we're doing the work right now to try to identify who those patients are and how to predict effectively -- non-invasively predict the response. That's going to be a big part of this story going forward. But then as I mentioned too early to speculate with confidence about the availability of the 10 whether for titration or as an effective dose.

Jerry, I don't know if you?

Jerome Durso -- Chief Operating Officer

Yes, I mean I guess in the context of the pruritus, I know one of the questions that ultimately leads to is how do we feel about patients staying on therapy potentially in the real world and I think we've obviously done a good amount of work on this. The rate of pruritus that we saw, we are expecting to see pruritus in the study. It's a well-known effects. So there's been a lot of thinking ongoing for a long time on this. I think we also have to remember, of course, as we saw on the data at EASL, most of the -- the vast majority of the pruritus over 90% was mild to moderate. That's important for patients as they manage particularly that early part of therapy. It's also true and we look at the learnings we've had in market in PBC where pruritus is an effect on PBC patients on OCA and how we've helped to support patients staying on therapy, the education we've done, a lot of learnings there that will pull through into the NASH launch.

I think the other thing that's important, when we think about, and this is true across a lot of chronic diseases, patients and their willingness to stay on therapy is also impacted by whether or not they feel the drug is having a positive impact. So it's not only the tolerability, it's also the confidence they have and the efficacy. And I think that some of the exciting data around the impact -- consistent impact of OCA on liver enzymes might be one of the elements in market as a patient manages through therapy that gives them reminders and reasons in fact to make sure that they're staying persistent on the therapy. So lot of work in place to make sure that we're helping manage this situation. And again, our goal will be to make sure that the patients stay on therapy so that they can get the benefit that we've shown in REGENERATE.

Mark Pruzanski -- Chief Executive Officer

Yeah, the only thing I'd add -- one telling observation from REGENERATE itself is that despite the protocol mandated on discontinuation in patients assessed by the investigator with grade 3 pruritus in the OCA 25 milligram group, that was about half of the patients. There is no difference in overall discontinuation from treatment from the study and that is very telling. Patients vote with their feet out there and stay tuned for more on this story in terms of patient reported outcomes.

Ross Weinreb -- Goldman Sachs & Co. LLC. -- Analyst

Great. And just a follow-up so to be clear, is your filing strategy or you filing application going to include both the 10-milligram and the 25-milligram dose?

Mark Pruzanski -- Chief Executive Officer

Well, we certainly will be including data for both. All of the analysis that will go into the NDA will include all three arms. So yes, and as I've said in the past FDA is certainly interested in assessing on its own merits the 10 milligram dose.

Ross Weinreb -- Goldman Sachs & Co. LLC. -- Analyst

Great, thank you.

Operator

Thank you. Your next question comes from the line of Navin Jacob from UBS. Your question please.

Navin C. Jacob -- UBS -- Analyst

Thanks for saying my name correctly Navin Jacob, UBS. So would be helpful to get an updated view on how many diagnosed patients there are in the US in F2 and F3 categories. And to what extent do you think those patients can be treated in the first few years, so basically asking for some kind of sense of treatment rate that you think is feasible? And then secondly, Mark, you highlighted that per protocol and ITT analysis were identical for the fibrosis shift curve. I'm wondering if you could clarify, as you've had more of a chance to look at these datasets if that is also true for the subset analysis, between fibrosis stage 2 and stage 3. Thank you very much.

Jerome Durso -- Chief Operating Officer

So I'll jump in on the first part of the question. Look, obviously we know that this is an extremely important question, the sizing of the segments. It's and area that we're working hard on and one that will definitely provide more clarity in the future. I think it's important to recognize that we're the first to progress in the market, which puts us in a unique and strong position, but it also I think ensures that we initially define the market -- we''ll be the ones to initially define the market in the segments.

And so we're really trying to make sure we're doing that thoughtfully, so that as we finalize and communicate that to you, we've built the right context. As I've said, we're going to be targeting the subset of the overall NASH population. That's the ones with advanced fibrosis and of course the market research data that we continue to get confirms that those are with the specialists, those tend to be diagnosed without a biopsy. And it's really in that context of the fact that for the patients that we're considering here, most of them, according to our data are getting "diagnosed" without a biopsy that we could expect that fibrosis stage alone is going to become less clinically relevant over time. And this is one of the elements that we're really looking at closely when we're finalizing the size of these segments, because it's not always a clean line of sight in the real world.

It's also true that when sizing the segments that we're obviously heavily focused on the payer perspective and we know that those future discussions are going to be an important element in this. So, as the leaders here, we're continuing to define things in a market that's evolving, that we're helping to evolve with all the education. And again, we're definitely going to come back to you with more detail on our view of the segments on future calls.

Mark Pruzanski -- Chief Executive Officer

Yeah. With respect to the second part of your question, yes, as you mentioned that the shift analysis, which was by far and away the most important analysis that we've shown so far on fibrosis improvement or worsening was virtually identical in the two different analysis per protocol versus ITT in evaluable patients. You asked about F2, F3, yes, I mean generally similar and very gratifying to see consistent dose-dependent treatment effects favoring OCA 25 over placebo in virtually every sub group we've presented, right. You saw the forest plot, we presented in Vienna, again, generally similar between per protocol and ITT.

I do want to dovetail back to something Jerry just said though, that in the real world our strong conviction is that over time, as we transition from biopsy to non-invasives, the segmentation and definition of patients by virtue of a histologically defined fibrosis stage, which in this case we happen to be using NASH CRN, but there are other scales where you can only make that assessment based on sticking a needle in the liver that is going to go away we believe. And there will be other categories which are defined non-invasively to identify patients with advanced fibrosis eligible for treatment versus patients with earlier stage disease or no fibrosis, where you can watch and wait and not necessarily have to intervene with an anti-fibrotic like OCA.

Navin C. Jacob -- UBS -- Analyst

And Mark, how is that currently done? I mean are there specific guidelines on the non-invasive algorithms that have been that are out there or is it an amalgamation of various different things ?

Mark Pruzanski -- Chief Executive Officer

Yeah, look, our market research has shown us that even today a majority of patients diagnosed undertreated care had been diagnosed non invasively i.e without a biopsy. And, yeah, there are various very standard bio-marker tests starting with, by the way, just liver enzyme ALT, AST , which as I mentioned in my prepared remarks is what clinically bring these patients to clinicians attention and is the way the clinicians assess the liver health in their patients. But also a composite easy scores like FIB-4 and APRI and there are the ELF markers, which are still investigational, the fibrosis markers. There is of course FibroScan, the ultrasound based point of care modality that's approved and reimbursed. And with each meeting you see more and more data generated on useful combinations of one or more of these non-invasive tests that are more and more accurately identifying patients with advanced fibrosis versus earlier stage fibrosis.

But I'm not suggesting that these are sufficiently validated yet. I'm just saying that there already is a practical matter used in routine clinical practice more and more to identify these patients as Jerry mentioned a couple of minutes ago, that's where we think the world is going.

Navin C. Jacob -- UBS -- Analyst

That's helpful. Thank you very much.

Operator

Thank you. Our final question for today comes from the line of Brian Skorney from Baird. Your question please. It appears that he has disconnected. Our final question then comes from the line of Jay Olson from Oppenheimer. Your question please.

Jay Olson -- Oppenheimer -- Analyst

Hey, guys. Thanks for squeezing me in. With regards to the market research, can you tell us if that was conducted only in the US or if you have insights from Europe that you could share with us, particularly with regard to any differences in clinical practice and the treatment of NASH and potential use of OCA in patients with NASH. And then I had a follow-on question for your payer research.

Mark Pruzanski -- Chief Executive Officer

Okay. The pulse survey that we've referenced several times was US based physicians hepatologist and gastroenterologist. As I mentioned, we will be conducting similar work in Europe, but the data was specific to the US. There are some elements. I think one of the interesting elements we just discussed, the evolution of non-invasives, there's actually more progress frankly on the non-invasive side in Europe and even in the US. So we will find as always some nuances, but I think, again, we'll come back with some additional market research outside the US, I'm sure in the future.

Jay Olson -- Oppenheimer -- Analyst

Okay, thanks for that. And then with regards to the research you've done with payers. Is there any feedback on how it may stratify patients with regards to diabetics versus non-diabetics or other stratification factors to determine which patients should be treated? And also any feedback on how they plan to monitor improvement in these patients to determine an appropriate duration of treatment?

Mark Pruzanski -- Chief Executive Officer

Yes, the payer feedback that I've been referencing is coming up, both through some of the market research and as I mentioned, some of the initial NASH disease state discussions that the teams are having under way, the concept and this will be, I think one of the key elements with the payer is making sure that the identification of patients that are in fact advanced and at risk and exactly how that happens is going to be an important dimension, I can't give you an algorithm yet. That will be coming but it is one of the key elements of the future discussion, I'm sure is the right patient. They do recognize that they're looking for the patients that are likely to be at risk and likely to progress, but it's premature to discuss in a lot of certainty at exactly how they would look to monitor impact on patients over time. But of course, the notion that non-invasives would be a part of that process is something that they acknowledge.

Jerome Durso -- Chief Operating Officer

And the only thing I would add is that while there's no hint of stratification here and certainly non-diabetics do develop advanced fibrosis as you saw in the REGENERATE cohort, it's also clear that type two diabetes puts you at much greater risk of progressive NASH right and fibrosis. And the only other thing is that what's clear in the research is that payers are focused on fibrosis. This is going to be about fibrosis.

Jay Olson -- Oppenheimer -- Analyst

Is there any indication from payers that patients would need to demonstrate a response in order to remain on therapy and continue to be reimbursed?

Jerome Durso -- Chief Operating Officer

I think it's premature to talk about that, but certainly monitoring for treatment response is going to be part of standard of care. And one thing with respect to the non-invasives, which I mentioned in my prepared remarks is that whether you're talking about these routine blood tests or something like FibroScan, these are all focused on fibrosis assessment. There are currently to my knowledge, no real non-invasives that can reliably tell you whether you've got what we currently are defining as NASH resolution. So there's a much higher hill to climb non-invasively with respect to NASH itself and much more straightforward with respect to an anti-fibrotic therapy.

Jay Olson -- Oppenheimer -- Analyst

Great. Thanks for taking the questions.

Operator

Thank you. This does conclude the question-and-answer session as well as today's program. Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Duration: 80 minutes

Call participants:

Justine O'Malley -- Vice President, Corporate Affairs.

Mark Pruzanski -- Chief Executive Officer

Jerome Durso -- Chief Operating Officer

Sandip Kapadia -- Chief Financial Officer

Michael Yee -- Jefferies -- Analyst

Brian Abrahams -- RBC Capital Markets -- Analyst

Alethia Young -- Cantor Fitzgerald -- Analyst

Irina Margine -- Cowen and Company -- Analyst

Steve Seedhouse -- Raymond James -- Analyst

Ross Weinreb -- Goldman Sachs & Co. LLC. -- Analyst

Navin C. Jacob -- UBS -- Analyst

Jay Olson -- Oppenheimer -- Analyst

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