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Intercept Pharmaceuticals Inc (ICPT)
Q2Â 2019 Earnings Call
Aug 7, 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 Second Quarter 2019 Financial Results Conference Call. [Operator Instructions] 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 2 weeks.
I'd would now like to introduce Justine O'Malley, Vice President, Corporate Affairs. Please go ahead.
Justine O'Malley -- Vice President of 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 second 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 we will be making certain forward-looking statements, including statements regarding our approved product and clinical development program, the timing and potential acceptance of our regulatory filing, the target, product profile, potential approval of launch and commercial success of our product candidates including OCA for NASH and our strategy prospects, financial guidance and future commercial and financial performance. Listeners are cautioned not 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, are 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 public periodic filings with the SEC. Today's call 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 up to take your questions.
Let me now turn the call over to our CEO, Dr. Mark Pruzanski.
Mark Pruzanski -- Chief Executive Officer, President and Director
Thanks, Christine. And good morning, everyone. Thank you for joining us on our second quarter 2019 conference call. As we announced in our press release this morning, we had a strong second quarter with our team delivering substantial demand and revenue growth in the PBC business. We've also continued to make great progress preparing for our planned NASH launch next year while further bolstering our industry-leading Phase III development program. Based on the great momentum we've seen, we announced that we exceeded target enrollment in the outcomes portion of the REGENERATE study while remaining on track to complete enrollment of the expanded REVERSE study later this year, with, to date, approximately 3,000 patients enrolled between the 2 studies. In support of these activities, we executed a successful financing that netted the company a little more than $450 million in proceeds, greatly strengthening our balance sheet.
With respect to our second quarter results in the PBC business, I'm really pleased to note our commercial team's continued outstanding execution, resulting in $65.9 million in Ocaliva net sales worldwide, representing 53% growth versus the prior year's second quarter. Coinciding with this performance is the positive feedback we've been receiving from hepatologists and a growing group of community gastroenterologist, who've been prescribing Ocaliva to their PBC patients and seeing its benefits. We've developed an excellent understanding of these liver disease specialists, while continually honing our commercial expertise, marketing Ocaliva in the U.S. and our other target markets where we are approved internationally. This positions us very well for a successful first-to-market specialty launch in NASH, where we will again target our core customer base of hepatologists and gastroenterologists. Turning to our NASH prelaunch efforts. These are now well under way with great progress made over the quarter on a number of fronts.
Our team has been working to prepare for regulatory filings in the coming months. And we remain on track to submit our NDA to the FDA later this quarter, followed by our MAA filing in the EU in the fourth quarter. In connection with our launch preparations in NASH, we continue to have very productive interactions with physicians, payers and patient groups. These key stakeholders recognize the critical importance of the therapy with an antifibrotic benefit, underscoring what we believe to be a key competitive advantage of OCA. If approved, we expect OCA will become the first and, over time, an essential therapy in NASH patients with advanced fibrosis. We firmly believe that NASH is a blockbuster opportunity for us, and that we will be able to realize this by driving a successful specialty launch, that leverages our strong commercial foundation. We look forward to presenting our launch and commercialization plans at an investor event prior to approval. In addition to our ongoing NASH launch preparations, we continue to advance our industry-leading NASH development program.
Today, I'm pleased to announce that we've completed target enrollment of the outcomes cohort of the REGENERATE Phase III study. With more than 2,400 patients randomized, it's by far the largest and most advanced study of its kind. To date, OCA remains the only investigational NASH drug to have shown an unequivocal antifibrotic benefit in a large adequate and well-controlled Phase III study. Given what we've observed in the REGENERATE 18-month interim analysis with respect to fibrosis reversal and stabilization, we believe that OCA is well positioned to go on to confirm its therapeutic benefit on a postmarketing basis in the clinical outcomes portion of the study. We also expect to publish the primary results from REGENERATE and present additional important study data at upcoming scientific meetings, such as the AASLD Liver Meeting in November. Important new contributions include anticipated abstracts, examining OCA's effects on noninvasive measures of liver fibrosis and patient reported outcomes that will provide important new clinical insights to healthcare providers.
Today, we also announced recent changes we've made to drive even stronger confidence in the success of our ongoing Phase III REVERSE study of OCA in NASH patients with compensated cirrhosis. As a reminder, the primary endpoint in REVERSE is fibrosis improvement with no worsening of NASH, identical to the endpoint OCA achieved in REGENERATE. With REVERSE now the only ongoing Phase III study in cirrhotic patients and with the confirmation of OCA's antifibrotic effect in REGENERATE earlier this year, we've seen tremendous investigator and patient enthusiasm at our close-to-300 active sites worldwide and continued strong momentum in the enrollment of the study. Capitalizing on this momentum, we've decided to expand REVERSE to approximately 900 patients. Importantly, we're maintaining our guidance of completion of enrollment by year-end. We're also extending the double-blind phase of the study from 12 to 18 months in order to align with the REGENERATE. As recently reaffirmed by the FDA, we expect the successful readout of REVERSE to support our pursuit of an extension of the approved indication for OCA to the treatment of NASH patients with compensated cirrhosis.
Such patients represent a very high unmet need being at particularly high risk of liver failure, and we are uniquely position as the leader in this more advanced segment of the NASH patient population. To summarize, in the first half of 2019, we continued our strong momentum in our PBC business and initiated what's been an incredible key metric preparing for our planned first-to-market NASH launch next year. We are confident in the team we are building, our market preparation activities and the resources we have on hand to deliver a successful NASH launch. In the near term, as we continue to prepare our upcoming regulatory filings, it's inspiring for all of us here at Intercept to contemplate the opportunity ahead of us to help patients with advanced fibrosis due to this devastating disease.
With that, I'll turn it over now to Jerry for a more detailed update on our global commercial PBC business and our prelaunch activities. Jerry?
Jerome Durso -- Chief Operating Officer
Thanks, Mark. And good morning, everyone. Quarter 2 was our strongest quarter-to-date with regard to our commercial performance. We reported $65.9 million in worldwide Ocaliva net sales, representing 53% growth over the second quarter last year. In the U.S., we achieved net sales of $50.7 million and are pleased with our team's execution of our commercial strategy, which drove significant expansion of our PBC business. The work we've been doing to expand our physician reach and prescriber base in PBC has been successful. In fact, since January, about 1/3 of our new patient enrollments are coming from new prescribers. We continue to receive positive feedback from prescribers of Ocaliva. In our most recent quantitative market research, approximately 95% of the hepatologists and gastroenterologists, who had the most experience prescribing Ocaliva, reported a positive clinical experience with our product. Turning to the international region, we achieved ex-U.S. net sales of $15.2 million in the second quarter, representing an increase of approximately 75% as compared to the second quarter of 2018.
We believe the ex-U.S. growth we're seeing is a clear indicator that the team is executing well and our physicians are becoming more confident using Ocaliva in their PBC patients. As we look ahead to the remainder of 2019, I'm confident in the capabilities of our team to drive momentum in our commercial PBC business. Now turning to NASH. As Mark mentioned, we've been rapidly progressing our launch preparations ahead of expected filings in the U.S. later this quarter and the EU in the fourth quarter. While we are making great progress domestically and abroad, today I'm going to focus on our U.S. preparations, as the U.S. is expected to be our first market to launch in NASH. As you might imagine, we've undertaken a significant amount of work to understand the evolving NASH landscape and have been conducting extensive qualitative and quantitative market research work with physicians, payers and patients to inform our strategies and our launch planning.
One of the points that is evident is that while there's education required to develop this market, there are also a substantial number of patients with advanced fibrosis due to NASH already identified in the specialty setting today, even ahead of a therapeutic being available. The work we have done with physicians indicates that the greatest need for treatment is for those patients with advanced fibrosis due to NASH, as these are the patients who're at the highest risk of progressing to cirrhosis. It's clear based on our market research that physicians remain focused on preventing progression to cirrhosis as a top treatment goal. In fact, in a recent quantitative survey of over 100 hepatologists and gastroenterologists these specialist rated halting fibrosis as the most important efficacy attribute in the treatment of patients with advanced fibrosis due to NASH, with over 80% deeming it very important. With OCA positioned to potentially be the first therapy approved that deliver the benefit in stabilizing and reversing the progression of fibrosis, this physician insight reinforces our confidence in our ability to successfully commercialize OCA and NASH.
In fact, in the same research, after viewing OCA's blinded-target product profile, approximately 3/4 of the specialists indicated, they were definitely or very likely to prescribe such a product in their practice. We believe that early adoption will be higher among patients with more advanced fibrosis, given the greater risk of progression to cirrhosis. For example, close to 2/3 of the specialists polled indicated that their need to treat F3 patients was very urgent. Although certain of our market research data is based on the traditional fibrosis or F-Score framework, we believe the market is in transition away from this paradigm and moving instead toward the framework defined by early and advanced fibrosis. It is our view that this change is being driven by the growing acceptance of noninvasive tests. As we've stated previously, the majority of advanced fibrosis patients with NASH under treat or care have not had a biopsy as community physicians are generally identifying patients using noninvasive tests, including imaging modalities and blood-based measurements.
And we do expect the use of these tests to continue to grow and gain widespread acceptance. In summary, our market insights confirm that there is significant number of patients with advanced fibrosis under the care of specialists today and a clear willingness to treat those patients with an antifibrotic therapy, like OCA, once approved and available in the market. Moving on to our payer interactions. We've made good progress to date as we continue to educate payers on the NASH disease state, the importance of treating advanced fibrosis and the best way to identify and monitor these patients. It's important to note that our precise target population at launch will also depend on the results of our conversation with payers. Based on our market research, and similar to what we've heard with physicians, payers have indicated that they view the prevention of cirrhosis and related complications as a key value driver, and they generally agree that patients with advanced fibrosis have the greatest unmet need.
When considering appropriate patient identification, our experience is that payers tend to align with current medical practice. With physicians' sentiment moving away from the use of biopsy, we believe that payers recognize and will also support the evolution toward the greater use of noninvasive methods to diagnose patients with advanced fibrosis. We believe that we have a strong value proposition with OCA's demonstrated fibrosis benefit. And as we progress toward launch, we'll be working together with payers regarding our target patient population, ensuring access and finalizing pricing. While we're planning for a specialty launch in NASH, understanding the perspectives of the patients we'll target at launch will also be critical. Accordingly, we've conducted additional market research, including a recent survey of over 100 patients already under the care of a specialist. Results show that close to 2/3 of these patients stated that they are very concerned about NASH, and about 80% stated that they would be very likely to fill a prescription for a drug with OCA's target profile if they received one.
Overall, we feel confident in the fibrosis benefit that OCA offers, and our market research across physicians, payers and patients reinforces our belief that we are well positioned to successfully launch OCA, if approved, it being the first therapy to patients with advanced fibrosis due to NASH. As Mark mentioned earlier, we look forward to sharing more in-depth market insights as we get closer to launch. From an operational perspective, we have great momentum as we're accelerating our launch readiness plans in anticipation of the approval of OCA for NASH. As we previously mentioned, we're preparing for a specialty launch focused on patients with advanced fibrosis due to NASH and plan to target approximately 15,000 hepatologists and gastroenterologists in the United States. Today for PBC, we cover about 5,000 of these physicians and have initiated our plans to increase our field base teams to ensure coverage at launch, while bolstering our home office support functions to effectively serve the business. For example, we've already completed the expansion of our medical affairs team.
We have strengthened our access teams and are actively engaging with payers. We are hiring additional leadership in our sales organization, and we'll build out the sales force in a stage-gated manner in accordance with our launch plans as we move closer to the potential approval of OCA for NASH. Our expanded medical affairs team is already hard at work, educating specialists in connection with the rollout of our NASH disease education campaign. I feel confident in our launch plans and our ability to continue to execute as we move closer to the expected approval of OCA and NASH. We're poised to build on our strong PBC business and are excited about the prospect of driving the successful first-to-market launch in NASH, where we believe we have the people, the skills and the capabilities to accomplish our goals.
And now I'll turn the call over to our Chief Financial Officer, Sandip Kapadia, for a financial update. Sandip?
Sandip Kapadia -- Chief Financial Officer and Treasurer
Thank you, Jerry. And good morning, everyone. Please refer to our press release issued earlier today for a full summary of our financial results for the quarter ended June 30, 2019. Q2 was an important quarter for us. We successfully raised approximately $450.6 million in net proceeds in our financing transactions. We also saw a very strong volume growth versus the prior year quarter in our PBC business as well as made important investments to strengthen our clinical development program, prepare for our NASH filing and fund our launch activities. In the second quarter, we recognized $66.3 million in total revenues, up from $43.6 million in the second quarter of 2018, a growth of 52% versus the prior year quarter. Our second quarter Ocaliva net sales were comprised of U.S. net sales of $50.7 million and ex-U.S. net sales of $15.2 million. We continue to have strong demand growth in the U.S. though we did observe specialty pharmacy orders outpacing prescription trends during the quarter. This was generally in line with our expectations, but we would expect it to normalize as we go forward.
Total gross-to-net for the quarter were toward lower end of our previously communicated 10% to 15% range. Our GAAP operating expenses for the quarter were $130 million and non-GAAP adjusted operating expenses were $113 million. As a reminder, our non-GAAP adjusted operating expenses exclude stock-based compensation, depreciation and amortization. Our cost of sales for the second quarter was $0.7 million, and was consistent with prior year quarter. Our selling, general and administrative expenses for the quarter were $69.7 million. This was an increase of $4.5 million over the prior year quarter and was driven primarily by increases related to our NASH launch preparation activity. Our research and development expenses for the second quarter were $59.6 million. This was an increase of $12.2 million over the prior year quarter. The increase was primarily driven by costs associated with our NASH development program and the preparation of our NASH NDA submission.
As of June 30, 2019, we had cash, cash equivalents and investment debt securities available for sale of approximately $758.5 million. As mentioned previously, this includes $450.6 million in net proceeds from our public offering and current private placement of our common stock and issuance of convertible notes in May of 2019. Moving to our financial guidance. 2019 continues to be a critical year as we build momentum in our PBC business while deploying resources to support our NASH regulatory filing efforts and launch activities. We continue to be confident in the demand for Ocaliva and the financial outlook for the remainder of 2019. As mentioned earlier, we do expect to see the normalization of specialty pharmacy orders and seasonal effects in Q3, followed by a stronger Q4. As a result, we are reiterating our previously announced 2019 Ocaliva net sales guidance of between $235 million to $245 million. Given the strong performance, we now expect to be in the upper end of this range.
We continue to expect gross-to-net for the year to be in the 10% to 15% range. In addition, we are reiterating our 2019 non-GAAP adjusted operating expense range between $470 million and $500 million. In summary, we're in a very strong cash position, have good momentum in our PBC business, are making solid progress in advancing our regulatory filings and making important investment decisions to strengthen the clinical development program and fund the successful NASH launch. Finally, as a reminder, non-GAAP adjusted operating expenses 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 measure.
I'd like to now turn the call over to the operator for questions. Operator?
Questions and Answers:
Operator
[Operator Instructions] Our first question comes from Michael Yee from Jefferies. Please go ahead.
Michael Yee -- Jefferies -- Analyst
Hey guys Congrats on a strong quarter, and the progress on your REGENERATE and REVERSE studies. That sounds great. I think that -- I'd 2 questions. Both are related to the investment communities thinking about the NASH launch next year, and while appreciating you guys allowed more color on that as we get closer. I guess my 2 questions are: One, how to think about the push/pull dynamics of the NASH launch versus the PBC launch? Obviously, one has significantly more patients. But would there be any differences in dynamics, for example, biopsy confirmations, things of that nature, that are different from PBC. So maybe just comment about the difference of the NASH launch versus PBC? And then related to that, my other question is, you've already said that you have filed 2 different NDAs and expect to have 2 different NDC codes. Maybe just comment on your confidence about being able to do that and whether you feel good about that? And whether payers are OK with indication pricing?
Mark Pruzanski -- Chief Executive Officer, President and Director
Mike, thanks for your questions. I'll ask Jerry to take them.
Jerome Durso -- Chief Operating Officer
Yes. Mike, thanks for the question. I guess to start on the first one, we clearly believe that we have a blockbuster opportunity here with NASH that we're going to unlock through the specialist launch. As we said, there are a significant number of patients that are already identified today that are sitting with the specialist that we're going to target. And of course, most of these have been identified and recognized without a biopsy. I think that the -- one of the key differences between the PBC and NASH will be that we would expect the treatment rhythm with NASH to follow what you would typically see with a chronic condition, a chronic medication, and this would probably resonate in the launch where we would anticipate that physicians would see their NASH patients on the regular rhythm that we would. So that's one of the main differences, where clearly in PBC the patients are very diffused across a pretty large treatment group of physicians. They tend to have a very low number of individual patients for physicians, which wouldn't necessarily be the case in NASH, where the general hepatologists and gastroenterologists will frankly have a larger group of NASH patients in their normal population.
Michael Yee -- Jefferies -- Analyst
And then the comment about biopsy, would that be required? Is that your base case? And would that have to have been within a certain time frame? Or you feel that it could be a lot more like PBC? And then I have a question about NDC codes.
Jerome Durso -- Chief Operating Officer
Well, I think -- yes, OK. So I'll try to take them in order. As we've indicated and as we continue to see from all the learnings that we're doing in the market, we do see a physician willingness to identify these patients without a biopsy. We also see a lot of momentum in the marketplace with some of the data emerging, moving much more toward utilization of noninvasives in the clinical setting. We also know from the early discussions we've had from -- with the payers that we know that payers prefer to align with medical practice. So we do see them continuing to support the movement toward noninvasives in an appropriate way. We also know that the exact patient population, etc., will be the result of the deep conversations that we're going to have with payers as we progress through -- toward launch, and we'll give you some more color on that as we get closer. And then I think your third question, Mike, was on the pricing between potentially 2 different indications. We are, as we said before, pursuing a dual-branding strategy and we filed a separate NDA. This would give us an option to explore differential pricing, if, in fact, we're successful of securing the second brand. But of course, as you would imagine, our final perspective on that is going to be based on some future work and discussions and dialogue with payers as we progress, both through the regulatory process and ultimately with our discussions with those customers.
Michael Yee -- Jefferies -- Analyst
Okay. Thanks so much appreciate it. Thank you.
Operator
Our next question comes from Alethia Young from Cantor Fitzgerald. Please go ahead.
Alethia Young -- Cantor Fitzgerald -- Analyst
Hey guys thanks for taking my question and congratulations on very good quarter as well on the progress that you've made finding patients, etc., etc. Two -- maybe 2, 2.5 questions for you here. One, I want to just talk a little bit about REVERSE. What was the impetus behind the potential change and doubling the population and elongating the trial, was it something from the FDA? Or was it something internal? Or was it kind of anything else that drove that? And then my next question is, you've mentioned that with your patient identification work you found a significant number of patients and well, I'll just ask point-blank, are you willing to identify -- quantify this for us today? If not, will you just kind of clarify whether it's kind of higher, lower or the same, as how you estimated maybe, let's say, a year ago before you began this exercise?
Mark Pruzanski -- Chief Executive Officer, President and Director
Alethia, I'll take the first question. So with respect to REVERSE. We completely drove this. I've been saying for some time now that we've been looking since the -- particularly, the failure of STELLAR 4, that we're completely alone out there and in a lead. And this is a really a huge unmet need and opportunity for us. So we're looking for ways to gold-plate the study and that's precisely what we've done, capitalizing on the great enrollment momentum and enthusiasm we've seen worldwide for this study. And the fact that we can maintain our guidance of completion of enrollment by year-end, made this decision really a no-brainer for us. This will, in the end, be the largest ever NASH cirrhosis study. As I mentioned in my prepared remarks, I mean, just to signal how far in the lead we are in our development program between the 2 Phase IIIs, we've got approximately 3,000 patients enrolled, and we're now well into the outcomes portion of REGENERATE with that cohort fully -- target enrollment reached. So we feel very good about our prospects with both studies.
Jerome Durso -- Chief Operating Officer
Yes. Alethia, I'll take the second part of your question. Yes, we're not going to go specifically into the patient populations today. That would be something, I think, we would definitely look forward to covering at a future time. I would say that as we progressed over past 12, 18, frankly, 24 months, it has been a deep exercise. It's one of the opportunities we have as really the first company to go deep in this area is that there's not exactly a clear map that existed. So it was really up to us to go in and do the deep work quantitatively primarily work defining. And I would say that over the past, again, 12 or 18 months, we've become more confident in the range of opportunity that we have. And again, we would look forward to sharing that at a later point.
Operator
Thank you. Our next question comes from Brian Abrahams from RBC. Please go ahead.
Brian Abrahams -- RBC -- Analyst
Hi thanks for taking my questions and congrats as well on the quarter and all the progress. Two questions from me. Where are you guys with respect to analysis of translation of diagnostic data from patients screened in REGENERATE? Is this something we should we looking for at AASLD and that could be part of the initial label? Or should we be thinking about this more as part of broader initiatives for elucidating noninvasive diagnostic potential? And then separately, on PBC. Could you maybe quantify the extent to which that difference between specialty pharmacy orders and demand-based sales drove this quarter's U.S. sales uptick? And what was the actual underlying quarter-over-quarter demand change?
Mark Pruzanski -- Chief Executive Officer, President and Director
Yes. Thanks, Brian. So with respect to your first question, yes, we are doing a deep dive now in the REGENERATE and other data on noninvasives. And as I mentioned in my prepared remarks, we're looking forward to presenting data from REGENERATE on the effects of OCA on various noninvasives, both serologic and imaging, that we believe, while we know, are already being used out there, to the point Jerry made earlier, to identify patients with advanced fibrosis. So we'll look forward to having the opportunity to present the additional data from REGENERATE at upcoming scientific meetings, including AASLD, there's -- I've often said there's a treasure trove of data here. With respect to the second question, I'll hand to Sandip.
Sandip Kapadia -- Chief Financial Officer and Treasurer
Yes. Brian, thanks for the question. I mean, obviously, we had a very strong quarter. We're very pleased with the momentum, both in the U.S. and ex-U.S. I mean we had very strong underlying demand. I think the way to sort of think about the impact, especially ours, I mean, we have IMS data out there. So you certainly can -- it still continues to be a good indicator of underlying demand in the U.S. And this was in line with our expectations. We expect this to sort of normalize typically -- we'll also, obviously, have some seasonal effects in the Q3. But we certainly expect a very strong Q4. We continue to reiterate our guidance. And as a matter of fact, at this point, we expect to be at the upper end of our range. Hopefully, that gives you some sort of background.
Brian Abrahams -- RBC -- Analyst
Thanks Mark.
Operator
Our next question comes from Yasmeen Rahimi from Roth Capital Partners. Please go ahead.
Yasmeen Rahimi -- Roth Capital Partners -- Analyst
Thank you for the continued progress and the updates. Two questions for you, both are directed to Jerry. So Jerry, can you kind of give us a little bit color on sort of NASH pricing, specifically what do you believe is a range of a NASH price, that's going to probably minimize the request by payers to have biopsy as a prior authorization? And then maybe you can also educate us about what the current cost burden is on the healthcare system of F3 NASH patient versus an F2 NASH patient?
Jerome Durso -- Chief Operating Officer
Okay. So maybe a little color on how we're thinking about the NASH price. Obviously, it's premature to talk about specific pricing points. But it's clear, NASH and PBC are very different diseases, different populations. All of the inside and the discussions that we're having with payers indicates that they're top goal, the way that they think about the value and the concern from them is around progression to cirrhosis and the fibrosis benefit that we saw. And REGENERATE will be at the core of our value proposition. With NASH, the importance of the fibrosis endpoints and the kind of data that we've been able to generate in REGENERATE will be important to them in that conversation. And we also believe, clearly, that the benefit, the fibrosis benefit will give us some strong differentiation and value from other drugs and other drugs classes that are providing a more metabolic effect. And of course, we're going to be focusing the launch as a specialty launch. We are fully engaged, as you can imagine, on this topic. And we'll look to communicate more. The F3, not to go into specifics, per se, but it's clear the F3 patients are where the concern is. The payers recognize that the cost burden comes with the comp of patients as patients get closer and ultimately progress to cirrhosis. So although, again, we see the market moving over time away from the classes -- classic fibrosis stage framework and more toward kind of a early and advanced fibrosis. As patients advance, the concern and the cost around progression to cirrhosis is a factor. And it's why we continue to learn from the payers that their prioritization, their urgency is around those advanced patients, and it's where we believe we'll have a real good productive discussion on all of the appropriate topics, price identification of the right patients. And again, our shared intention to get access to a drug that impacts fibrosis to these high-risk patients who are the ones that are at top of mind with payers.
Yasmeen Rahimi -- Roth Capital Partners -- Analyst
Okay. And when do you plan on sharing the data that you have done internally in terms of the PRO work, is that something we should be expecting to see at the upcoming Liver Meeting in Boston? Or is that more an EASL event?
Mark Pruzanski -- Chief Executive Officer, President and Director
Yes. I think it's -- we will have important data to present at AASLD and subsequent scientific meetings. So stay tuned for that. I think it's premature to specify what's going be presented. But we've -- I've talked before about the PRO data, the Patient Reported Outcome data based on validated quality-of-life instruments. It's been really important to highlight the patient experience of taking our drug. So stay tuned for that.
Yasmeen Rahimi -- Roth Capital Partners -- Analyst
Thank you for taking my question. Thanks guys.
Operator
Thank you. Our next question comes from Brian Skorney from Baird. Please go ahead.
Brian Skorney -- Baird -- Analyst
Hey good morning guys. Thanks for taking the question a little more.Little more on sort of the data that we're going to be seeing on noninvasive methods used in REGENERATE. Can you just review what major noninvasive measures were utilized in the study? What you think are the most interesting potential surrogates for changes in liver histology? Were all patients in REGENERATE analyzed for FibroScan and MRI-PDFF? And at what intervals were those measurements utilized?
Mark Pruzanski -- Chief Executive Officer, President and Director
Yes. Sure, Brian. Thanks for the question. So the primary focus in terms of relevant data are noninvasives, what we call NITs that are currently available, point-of-care, relatively inexpensive, easy to use that the physicians are already using. So starting, there's a fair amount of literature now on this. But starting with very easy to calculate scores like, for an APRI, that are based on standard liver enzymes like LTA, AST, platelets and age. That's before APRIs, AST and platelets. These are very good first screens. And with improving sensitivity specificity to identify patients with advanced fibrosis. FibroScan, transient elastography is the other obvious one, it's approved, reimbursed point-of-care with a growing installed base in the U.S. and an extensive installed base in Europe. And there's a fair amount of literature on appropriate cutoffs there to identify patients with advanced fibrosis.
There are other tests that can be currently ordered in the U.S., like FibroSURE. So these are all things that we're primarily focused on. I want to note though -- and it should be obvious that, all of these are focused on fibrosis, right? And that's why we keep saying that commercially it's so critically important for us to be in position to launch a drug with a fibrosis benefit. This is not only associated with outcomes, but it's where we've got a grab bag of already available noninvasives at the point-of-care that can be employed. To much higher list -- lift as I've been saying constantly, with the drug that ends up getting approved just on so-called NASH resolution.
Brian Skorney -- Baird -- Analyst
Thanks Mark.
Mark Pruzanski -- Chief Executive Officer, President and Director
Thanks Brian.
Operator
Thank you. Our next question comes from Ritu Baral from Cowen. Please go ahead.
Ritu Baral -- Cowen -- Analyst
Hi guys. Thanks for thanks for taking the question. Maybe we'll start with your comment on how the, I guess, clinical definition of staging of NASH is moving from early and advanced and away from the F stages. Can you quantify that a little bit, like, what -- as the definition changes, what constitutes early NASH? What constitutes advanced NASH? And how does concept of high-risk cofactors like diabetes, et cetera, sort of weigh into that?
Mark Pruzanski -- Chief Executive Officer, President and Director
Yes. Thanks, Ritu. I mean, obviously, the field is evolving, as Jerry mentioned. And we are moving toward a noninvasive world. I mean, frankly, really the only reason NASH patients being -- or primary reason NASH patients being biopsied today is because in clinical development programs in Phase II and III, it's still required. But in the real world, as Jerry mentioned, based on our market research, we know that a majority of patients under treat or care are not receiving biopsies. And that's why, continuing to drive education and analysis around the noninvasives that I just mentioned, is so critically important. We do think that the world is evolving away from that stage, to your question, to one where we'll be categorizing patients with early or no fibrosis versus advanced fibrosis versus cirrhosis.
And the exact definition -- what I can tell you is that, these are rooted in underlying fibrosis or scarring in the liver. I think over time, certainly, we'll be able to identify risk factors, like comorbidities, that you mentioned like diabetes. But what we know is that fibrosis alone is clearly associated with the risk of outcomes. And that's where the focus really is for all stakeholders, for physicians, for payers and, of course, ultimately for patients.
Ritu Baral -- Cowen -- Analyst
Got it. And then we -- actually Cowen had organized a meeting with the FDA recently where the Cedar had mentioned exactly what you did that the world is moving to noninvasive. And the implication was, they'd love to see within a pivotal design, some sort of prospectively defined sub-analysis that would, at least in their minds, validate noninvasive such that they could omit biopsy diagnose/NASH in a label. Can you talk about whether -- you don't have to go into the specifics, but are there prospectively defined analysis set within the REGENERATE that you'll be discussing with FDA?
Mark Pruzanski -- Chief Executive Officer, President and Director
Well, we certainly prespecified the use of the various noninvasives that I mentioned a few minutes ago. And as I've been saying, I mean FDA is deeply interested in looking at the totality of data that we've got. We know -- I mean FDA is another key stakeholder here. They -- to your point, they've said that they ideally would like to move beyond biopsy themselves and what they require in the clinical development programs. I still think that, that's going to be a lagging indicator, so to speak. It's going to take a little while for them to get comfortable enough with noninvasive data being sufficiently validated to remove the need for biopsy and development programs. But they certainly are very interested in working with us on this problem.
Ritu Baral -- Cowen -- Analyst
Got it. And a quick follow-up. Just on -- can you give us some high-level color on the European market feedback on the NASH market? And how doctors view it? We've had some particularly challenging conversations and what's usually the biggest market in Europe, Germany, from German doctors on NASH. How do they think about it? Can you talk about maybe the top 3 markets? And how you plan to approach that sort of almost cultural perspective on the disease?
Jerome Durso -- Chief Operating Officer
Yes. This is Jerry. So we're making good progress in doing the similar kind of deep-market analysis in the major European markets as we have in the U.S. Although, the filing will be a little bit behind the U.S. And with all of the normal process in Europe around approval and then market access, we do expect the European markets to come later. I think the concept of there being a high -- higher urgency to treat with the advanced population is, frankly, a consistent theme that we see coming back from the markets. Obviously, there's some differences in the structure of the markets when you look across in terms of some of the major countries in Europe where the treatment tends to be more focused in some of the key centers where you have a situation. For example, in Germany, where it is more of a broader treatment spread throughout a broader group of treaters. And again, we're deep in the similar process that we have in the U.S., in terms of defining what each of those markets look like. And again, I would look forward to going into more details on that in the future as we progress. Good progress there. But obviously, the initial focus for us has been on ensuring, while things are lined up with our first market to launch, which will be the U.S.
Mark Pruzanski -- Chief Executive Officer, President and Director
And the only thing I would add, Ritu is, I'm well aware of the sort of almost cultural conservatism that you're alluding to with some of the docs there. And that really, I think you diplomatically pointed to stigma that these patients sometimes face. The same was true, I'd point out, with hepatitis C long time ago, and clearly changed over time. But what is abundantly clear is that the unmet need represented by NASH with advanced fibrosis in Europe is just as urgent and pressing, no matter where you are, there are -- Germany, U.K., France, clearly this is -- there's a pressing need there. And we're very confident in the opportunity in those countries and the fact that docs will be willing to prescribe. There is probably even more, this is a qualitative comment, probably even more of an emphasis on an antifibrotic benefit as necessary to support value proposition for a NASH drug. As you know, right now the EMA reflection paper requires either a drug to hit on both the currently defined from primary endpoints or if it's fibrosis, then to be further supported by 2-stage improvement, which is why we believe -- again, we've got a unique opportunity there based on our data in REGENERATE to gain approval in Europe.
Ritu Baral -- Cowen -- Analyst
Thanks for taking all the questions that was helpful. Thanks you.
Operator
Thank you. Our next question comes from Salveen Richter from Goldman Sachs. Please go ahead.
Ross Howard Weinreb -- Goldman Sachs -- Analyst
Hi good morning. This is Ross on for Salveen. Just a few quick questions here. So broadly speaking, if we just think about the conversations you gys are having with payers, what concerns have they highlighted regarding a potential commercial NASH drug?
Jerome Durso -- Chief Operating Officer
Yes. I mean, I think, that first area of focus for them, where we believe ultimately we'll have good alignment, is ensuring that the implications they're most concerned about, which is the -- this progression to cirrhosis is a -- impacted by ensuring that the patients that they're most concerned about, frankly, are the ones that are addressed. I think that's where we believe there's going to be good alignment in how we're thinking about the focus on the advanced population as opposed to the really broad potential NASH group, including those earlier patients. So again, I think that there is a good willingness on the payer to talk about a specific group of patients, again, that they believe need the treatment most urgently and where they see the value, and that does overlap, I think, with the approach that we're taking with a focus on the specialists, on the advanced population, and ultimately on a benefit, like we've seen in REGENERATE where we can impact fibrosis.
Ross Howard Weinreb -- Goldman Sachs -- Analyst
That's helpful. And then just lastly here. So you mentioned that a lot of patients are identified currently using noninvasives. So how does your view on the potential uptick for OCA change if a liver biopsy for a NASH diagnosis is required in the label?
Jerome Durso -- Chief Operating Officer
So I guess I'd just take a step back in the regulatory element of your question. I mean, of course, it's premature to speculate on exact label language, but we do know that it would be atypical for the FDA to mandate the method of diagnosis in the label-indication statement. Obviously, we're going to go through the full regulatory process, and ultimately the payer process to define the patient population and how those patients should be recognized in the real world, though we do continue to see that payers prefer to align with medical practice. So I think we remain confident that this evolution that we keep talking about toward noninvasives will ultimately be the way that the market develops. And clearly, we're going to have a role to play in that in educating both the physicians and ultimately the payers on the way that they can utilize the noninvasive methods that they have out there to identify this group of advanced patients, which I think there's reasonably good alignment from the payers that those types of patients should be the first ones that a drug like ours would be targeted toward.
Ross Howard Weinreb -- Goldman Sachs -- Analyst
Great. Thank you.
Operator
Thank you. Our last question comes from Steve Seedhouse from Raymond James. Please go ahead.
Steve Seedhouse -- Raymond James -- Analyst
Good morning thank you. I have a follow-up on PBC sales. But first, I wanted to ask about REVERSE. The change in endpoints seems more interesting than the increase and which just seems prudent. So I had a few small questions on the endpoint. Mark, given you indicated FDA reaffirmed their comfort with the old design, post the issuance of the cirrhosis draft guidance, it wasn't clear. Do you have a sense of what the FDA's view is of this new endpoint, given that you mentioned it was the Intercept that really decided on the change? But also, since you're extending follow-up anyway, did you consider making REVERSE an outcome study to align with the FDA cirrhosis guidance? And if so, how much longer would that have made REVERSE in your estimation compared to the 18-month endpoint?
Mark Pruzanski -- Chief Executive Officer, President and Director
Thanks for the question. Just to be clear, we did not change the endpoint. We -- it's important to say that we're reading out on fibrosis improvement with no worsening of NASH. And this is essentially the same -- or it is the same endpoint that we met in REGENERATE. So what we did do, in addition to expanding the size of the study, was we extended the duration of the double-blind phase of REVERSE to match up with the 18-month interim phase from REGENERATE. And we just thought that was a prudent thing to do. Again, to gold plate the study and have identical duration at readout. I -- and just the second part of your question?
Mohit Bansal -- Citigroup Inc -- Analyst
Just -- I -- is -- did you contemplate an outcome study since you are extending the duration of the endpoint.
Mark Pruzanski -- Chief Executive Officer, President and Director
Yes. So the outcome study is something -- we decided going into REVERSE, that given the wide range of what cirrhosis means, and the fact that we are going for reversal of cirrhosis histologically from F4 to F3 or below, we wanted to study patients with well-compensated early cirrhosis based on the surrogate endpoint and then do a separate outcome study and then overlapping but more advanced population closer to clinical outcomes, very -- while completely analogous to the approach that we took in PBC and kind of a more standard pursuit and Subpart H accelerated approval programs. So that's because in a population like this, it would require substantially more patients for a long duration to get to a sufficient number of clinical outcomes events. And the only thing I'd add, and you already alluded to this, is the fact that post-FDA's guidance in this population, they reaffirmed to us the fact that this program -- that REVERSE, assuming is successful, we'll support pursuit of an extended indication in this population and that's not just because we were grandfathered in but based on what we'd carefully designed with FDA in the totality of our data available.
Steve Seedhouse -- Raymond James -- Analyst
And you're comfortable with the changes that you just made, don't change the FDA's view that they reaffirmed you?
Mark Pruzanski -- Chief Executive Officer, President and Director
You mean -- no, no. It's quite the opposite. I mean we -- they welcomed -- and again, we drove this, they welcomed the changes. This just will generate that much more safety and efficacy data in this critically important population.
Steve Seedhouse -- Raymond James -- Analyst
Okay. Great. And on the PBC sales, the commercial dynamics there. So sales growth seems to substantially outpace script growth, and your guidance does seem to imply the client sequentially from the 2Q number at least, even at the top end of the guidance. So can you just expand on any change in channel inventory this quarter? Sandip, I think you commented briefly in your prepared remarks. Are there other onetime dynamics that contribute to this quarter's U.S. sales number? And your outlook for the second half of the year that maybe hold the line on sales guidance.
Sandip Kapadia -- Chief Financial Officer and Treasurer
Yes. No, thanks. Good question. I think, look, overall, we had a very strong quarter. Certainly, underlying demand, you can see from IMS trends. It's probably our best quarter in the U.S. And again, international's contributing very meaningfully in terms of our overall growth. As I did note in my remarks, that we did notice that especially pharmacy orders outpaced our underlying very strong TRx growth, but that was generally in line with our expectations. It's within what you would generally expect for a growing product like ours. We expect that to sort of normalize. I think we'll have to -- there's -- also at the same time as we think about Q3 -- and there are typical seasonal effects, as you know, summers tends to be a bit slower, in general, with refills and holidays and vacations and so forth.
So we see that sort of impacting quarter 3. But we'll see a good strong quarter 4. I think the way we thought about in terms of guidance is right now we're very -- given the strong growth that we've had -- we changed guidance earlier this year based on the Q1 performance, we're seeing great trends here in Q2 as well. And right now we expect to be at, certainly, at the -- we're very comfortable being at the high end of the range. I think we'll have to see how the third quarter evolves over the summer and then we can maybe provide an update at a later point.
Steve Seedhouse -- Raymond James -- Analyst
Okay that's helpful. Thank you.
Operator
Thank you. This concludes our Q&A session. At this time, I'd like to turn the call back over to CEO, Dr. Mark Pruzanski, for closing remarks.
Mark Pruzanski -- Chief Executive Officer, President and Director
Thanks, operator. Thanks, everyone, for joining us on today's call. I just want to leave you with a few key points. I'm thrilled that we just had our strongest-ever quarter in the PBC business. We continue to execute and exceed expectations worldwide. We've got a great and growing group of talented people in this company currently working day in, day out preparing for our anticipated NASH launch next year, supported by the great feedback that we've been getting from the key external stakeholders, physicians, payers, patients, who all, clearly, recognize the beneficial antifibrotic profile of OCA based on REGENERATE data. We've build a very strong commercial foundation in liver disease. We've got the expertise and the ability to execute to drive a successful blockbuster launch in NASH and look forward to coming back to you next quarter and beyond with our progress. Thanks very much.
Operator
[Operator Closing Remarks]
Duration: 56 minutes
Call participants:
Justine O'Malley -- Vice President of Corporate Affairs
Mark Pruzanski -- Chief Executive Officer, President and Director
Jerome Durso -- Chief Operating Officer
Sandip Kapadia -- Chief Financial Officer and Treasurer
Michael Yee -- Jefferies -- Analyst
Alethia Young -- Cantor Fitzgerald -- Analyst
Brian Abrahams -- RBC -- Analyst
Yasmeen Rahimi -- Roth Capital Partners -- Analyst
Brian Skorney -- Baird -- Analyst
Ritu Baral -- Cowen -- Analyst
Ross Howard Weinreb -- Goldman Sachs -- Analyst
Steve Seedhouse -- Raymond James -- Analyst
Mohit Bansal -- Citigroup Inc -- Analyst
