Intercept Pharmaceuticals Inc (ICPT) Q4 2020 Earnings Call Transcript

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Intercept Pharmaceuticals Inc (ICPT)
Q4 2020 Earnings Call
Feb 25, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter 2020 Intercept Pharmaceuticals Earnings Call. [Operator Instructions]

I'd now like to hand the conference over to your host today, Ms. Lisa DeFrancesco, Senior Vice President, Investor Relations and Corporate Affairs. Please go ahead.

Lisa DeFrancesco -- Senior Vice President, Corporate Affairs & Investor Relations

Thank you. Good morning, and thank you for joining us on today's call. This morning we issued a press release announcing our fourth quarter and full year 2020 results and financial position, which is available on our website at www.interceptpharma.com.

Before we begin our discussion, I'd like to note that during the call we will be making forward-looking statements, including statements regarding our approved products and clinical development program, certain regulatory matters and our strategy, prospects, financial guidance and future, commercial and financial performance. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this call, and we undertake no obligation to update such statements except as required by law.

These forward-looking statements are based on estimates and assumptions that although believed to be reasonable are inherently uncertain and subject to a number of risks and uncertainties. Some but not all of the risk factors that could cause our actual results to differ materially from our historical results or those anticipated or predicted by our forward-looking statements are discussed in our -- in this morning's press release and in our periodic public filings with the SEC.

Today's call will begin by prepared remarks from our President and CEO, Jerry Durso; and our Chief Financial Officer, Sandip Kapadia. We'll then open the call to take your questions. Also available for questions from our leadership team will be Gail Cawkwell, Senior Vice President, Medical Affairs, Safety and Pharmacovigilance and Acting Chief Medical Officer. Please limit yourself to one question in order to allow time for all questions to be addressed.

Let me now turn the call over to our CEO, Jerry Durso.

Jerome Durso -- President, Chief Executive Officer and Director

Thanks, Lisa, and good morning, everyone. Thank you for joining us on our fourth quarter 2020 earnings call. This is my first earnings call as CEO of Intercept and so I want to begin by saying how excited I am to lead the company as we focused on our next chapter. As with any new opportunity, I fully expect there to be challenges, but more importantly from where I now sit, I also see many potential pathways for future growth and opportunities for success as we execute on our objectives and leverage our commercial and R&D capabilities in liver disease.

In addition to the many talented and dedicated people at Intercept, we recently announced a number of new important leadership appointments. With these additions to our team, I believe we've assembled a strong group of leaders with diverse backgrounds, including experience with many of the very same challenges and opportunities that are ahead of us. And I believe this is the right team to embark on the next phase of our journey as we execute on our key objectives in 2021, which includes strengthening our foundational PBC business, furthering our NASH regulatory process in the U.S. and Europe, executing on clinical and regulatory goals and expanding our portfolio and pipeline.

Before I provide an update on NASH, let me begin today by giving an update on our core rare disease business and PBC. I'll then provide an update on our pipeline before turning the call over to Sandip to discuss our financials and our 2021 guidance. We continue to gain new ground in our PBC business. Since the introduction of Ocaliva, we've achieve new milestones each year, including in 2020, where we experienced strong sales growth in the face of the global pandemic. We've continued to evolve our customer facing patient-centric organization, including specialty product distribution, strong payer coverage, community education and deep relationships in the liver community, and most recently, expanding use of virtual channels to reach and educate our stakeholders. And I'm proud to say as an organization, we've built core competencies in each of these areas. 2020 was a year of growth for Ocaliva despite the challenges that COVID-19 brought to the healthcare system.

For full year 2020, we achieved net sales of $313 million, which was 25% growth over the previous year. Our strong performance was supported by important new long-term five-year data that has been resonating with the specialist community. The global pandemic we're facing is not over and we do anticipate a continued impact to our business, particularly as a result of lower new patient starts due to fewer patient visits overall. As we previously mentioned, we've been expanding the number of community-based gastroenterologists that we're educating on Ocaliva. This education is important considering our strategy of supporting earlier identification of appropriate Ocaliva patients in the community setting. To date since the launch, about 20% of the gastroenterologists in the U.S. have prescribed Ocaliva and we have an opportunity to continue that educational process.

When considering our efforts in PBC, the current trends and future updates we anticipate to our label in patients with the most advanced stages of PBC, which I'll talk more about in a moment, I believe our PBC business continues to represent an important long-term opportunity given the considerable number of appropriate PBC patients that are not yet on Ocaliva. As we continued to discuss our PBC business, I wanted to provide you with an update today on two key post-marketing activities. The evaluation of the newly identified safety signal or NISS and discussion regarding the future of our post-marketing studies in PBC, both of which we discussed on our last earnings call and also at our most recent investor conference.

First, regarding the ongoing process with the NISS. As you know from previous discussions, NISS was identified during routine post marketing safety monitoring from the FDA in 202. It was classified as the potential risk for liver disorder in a subset of PBC patients with cirrhosis. We completed a comprehensive safety assessment consisting of post-marketing and pharmacovigilance data, epidemiological data and information from our clinical trials, including an assessment from our data monitoring committee or DMC, which looked at our key post-marketing studies on an unblinded basis. These analysis were provided to FDA to review and we had a meeting earlier in quarter one. This process remains ongoing. However, based on our interactions with the agency to date, it will ultimately result in a labeling change regarding patients with the most advanced stages of PBC. We're now working with the FDA to align on these changes. We will provide further updates when the process is concluded.

As we previously communicated, the majority of patients with PBC are not cirrhotic. This is one of the main reasons the name of the disease was changed from primary biliary cirrhosis to primary biliary cholangitis several years ago. Patients with advanced PBC include those patients with cirrhosis. The most severe of which progress to decompensated cirrhosis. We project that patients with evidence of cirrhosis make up about 15% of the overall PBC population. Since Ocaliva is the second-line treatment, the proportion of patients with cirrhosis on Ocaliva is a bit higher and we estimate it in the 20% range. The most severe patients those with decompensated cirrhosis are a smaller subset of that total population, in the mid single-digits percentage wise.

So to summarize where we are on the NISS, the process with the FDA remains ongoing and right now we're focused on working with the FDA on updates to the Ocaliva label for patients with the most advanced stages of PBC. Now let me turn to our PBC post-marketing trials. As a reminder, we have to post-marketing placebo-controlled studies ongoing in PBC, which we have also recently discussed with regulators. First COBALT, which is our confirmatory study of several hundred advanced patients with PBC, and second, the 401 study, which is a smaller study for the most advanced PBC patients who are hepatic empiric.

As we previously communicated in the second half of 2020, our DMC reviewed unblinded data from both ongoing clinical trials. The DMC indicated through a blinded report that there were feasibility concerns. These concerns were focused on study design and patient retention, particularly given the advanced population and the commercial availability of Ocaliva while running a placebo-controlled trials. The concerns they raised were not related to safety, but again on the feasibility of conducting the trial as designed. We submitted these DMC findings to support our meeting with the FDA this quarter.

We proposed modifications to COBALT, including potential conversion to an open label study design with an external control and we have a dialog under way to further discuss revisions to the study. We're also seeking scientific advice on the proposed modifications to COBALT in the EU. And of course, future changes to our Ocaliva label related to the most advanced PBC patients will influence the modifications to our study design. In the label considerations, we think it's important to look across the spectrum of information, including recent feedback from the DMC from our ongoing studies and consider the patients who we believe are benefiting from Ocaliva, as Ocaliva is the only approved second line treatment for this patient population.

Now let me turn to our NASH regulatory process for OCA and advanced fibrosis. Our efforts remain ongoing as we work toward potential resubmission of our NDA in the U.S. by the end of 2021. As a reminder, our ongoing Phase 3 REGENERATE study remains the only positive Phase 3 study to demonstrate anti-fibrotic efficacy in patients with NASH fibrosis. We have a strong team comprised of internal and external expertise and we've initiated the process and we expect will be a series of interactions with the FDA over the coming months with the goal of gaining alignment on a number of key items prior to a potential resubmission.

The key focus areas for these interactions include a comprehensive view of OCA safety, biopsy methodology and potential for any additional efficacy data that we maybe able to utilize to support the overall benefit risk profile. We have specific actions under way to support these key areas where we're seeking alignment with FDA including preparation of a comprehensive safety update to refresh and increase the amount of safety data that we will have to discuss with FDA. This effort will provide us an opportunity to potentially double the safety exposure from our initial filing as we focus on providing FDA with a greater understanding of the overall safety profile of OCA and NASH fibrosis.

As we focused on this process of gaining alignment with FDA, it's important to note that we have an ongoing study with REGENERATE where we can continue to produce important data to support the potential resubmission. As a reminder, we also have a second large Phase 3 study REVERSE which is under way in patients with compensated cirrhosis due to NASH. We anticipate top-line data readout by the end of this year. The readout of REVERSE will represent important learnings in the later stage NASH population and we're very much looking forward to the data. In parallel to our work in the U.S., OCA is on file in Europe where we submitted the responses to the day 1 20 questions and the review process remains ongoing.

Furthering our pipeline and evaluating opportunities for expansion of our portfolio are key areas of focus for 2021. We continue to enroll our Phase 2 trial evaluating OCA in combination with bezafibrate outside of the U.S. We're pleased with the rate of enrollment so far, and once the trial is fully enrolled, we'll be able to share an estimated timeline for data. We also filed a new IND in January as we prepared to expand the development of the OCA as a fibrate combination into the U.S.

We believe there is a significant opportunity for the combination of bezafibrate and OCA to enhance the product profile and if approved, it will be an important new therapy for patients with PBC. Intercept remains committed to innovating for patients. We've also made the decision to move forward with at least one of our internal candidates INT-787, a next-generation FXR agonist, which we believe has great potential for differentiation and we look forward to doing the first in-human work in 2021. So overall, 2021 will be a pivotal year for Intercept. There is a number of priorities under way this year which will help shape our company's future success.

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 and full year ended, December 31, 2020. We reported strong financial results in 2020 with overall worldwide Ocaliva net sales growth of 25% as well as continued progress in our efforts to reduce operating expenses going forward.

Beginning with our commercial performance. In the fourth quarter, we recognized $83.3 million in worldwide Ocaliva net sales, our highest quarter to-date. Upfront $70.3 million in the fourth quarter of 2019. For the full year 2020, worldwide Ocaliva net sales were $312.7 million compared to $249.6 million in the prior year. Our full year 2020 Ocaliva net sales comprised of U.S. net sales of $234 million and ex-U.S. net sales of $78.7 million, representing a growth of 25% and 27%, respectively.

Our GAAP operating expenses for the fourth quarter were $123.9 million and our non-GAAP adjusted operating expenses were $106.6 million. For the full year 2020, GAAP operating expenses were $543.9 million and our non-GAAP adjusted operating expenses were $480 million. As a reminder, our non-GAAP adjusted operating expenses excludes stock-based compensation and depreciation. 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 a full explanation and reconciliation of this measure.

Our cost of sales for the fourth quarter were $0.8 million compared to $2.5 million in the prior year quarter. For the full year 2020, cost of sales were $5.3 million as compared to $4.2 million in the prior year. Our cost of sales consists primarily of packaging, labeling, materials and related expenses. Our selling, general and administrative expenses for the fourth quarter were $70 million. This represents a decrease of $23.7 million versus the prior year quarter and was driven by our initiatives to reduce costs as a result of the postponement of the NASH launch.

For the full year 2020, selling, general and administrative expenses increased to $332.5 million, an increase of $15.1 million from the prior year. The full period-over-period increase was primarily driven by expenses in the first half of the year related to our launch preparation activity associated with the potential approval and commercialization of OCA for liver fibrosis due to NASH.

Our research and development expenses decreased to $51.9 million in the fourth quarter of 2020 from $64.6 million in the prior year quarter. For the full year 2020, research and development costs decreased to $191.5 million from $242.8 million as compared to the prior year. The decrease in research and development expenses for the year was primarily driven by U.K. R&D tax credit of $22 million recognized as a reduction in expenses and lower NASH development costs, including the conclusion of enrollment activity for the REVERSE and REGENERATE studies.

Restructuring expenses were $1.2 million and $14.6 million for the 3 and 12 months ended December 31, 2020, respectively. These expenses were comprised of severance cost and other termination benefits included in conjunction with the 2020 workforce plan. As of December 31, 2020, we were well positioned with cash, cash equivalents, restricted cash and investment debt securities available for sale of approximately $477.2 million.

And now turning to our financial guidance for the year. We expect full year 2021 Ocaliva net sales to be between $325 million and $355 million. Key drivers and assumptions include the following. First, we believe we have contemplated the scenarios of anticipated prescriber label changes that will occur for to the most advanced PBC population and potential timing of those changes in our range of guidance for the year. We will plan to refine and update throughout the year as we have more information. Second, we have also factored in the continued impact of lower new enrollments as a result of the COVID-19 pandemic. And lastly, as a reminder, we would expect typical seasonality in Q1 as patients are impacted with insurance plans reset and Medicare coverage gap. Therefore, expect higher gross to net deductions in the first quarter.

We expect full year 2021 non-GAAP adjusted operating expenses to be between $380 million to $410 million. The guidance reflects the impact of our streamlining efforts during the back half of 2020 as we have refocused our commercial efforts on PBC, while continuing to resource our NASH program and advancing our pipeline. So, overall, I'm pleased with the strong commercial performance in 2020 and our ability to pivot and reduce operating expenses quickly, which has resulted in a strong cash position entering this year. We will continue to invest in the growth of our Ocaliva business, support our NASH regulatory process with the FDA, fund our key clinical trials, including REVERSE and REGENERATE, and focus on finding ways to leverage our strength.

So with that, I'd like to turn it over to the operator for any questions. I'd ask that you limit yourself to one question and reenter the queue for any follow-up, and we'll get to as many people as possible. Thank you. Operator?

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Yasmeen Rahimi with Piper Sandler.

Yasmeen Rahimi -- Piper Sandler -- Analyst

Hi, team. Thank you so much for taking my questions. So I wanted to have a better understanding on how many patients on the REGENERATE study has -- have already completed being on drug for four years, three years, two years? Time wise by, it's been almost now two years since the REGENERATE data read out, which is about 931 patients. So if you could provide that in this comment as in regards to the FDA recently stating that they really want to see data post year two, so if you could shed that. And then, second quick question is can you provide a little bit color on 787 and how it differentiates from OCA? And thank you for taking my questions.

Jerome Durso -- President, Chief Executive Officer and Director

Yasmeen, it's Jerry. Thank you for the question. As you mentioned, REGENERATE has been ongoing. We read out at 18 months for that group of patients, a while ago now. So there are a considerable portions of the population who have obviously moved through the subsequent periods, including that 48-month window at this time. Enrollment was completed a while ago and the time to completion of the overall study, which as a reminder, is an event-driven study is based on the events that are accumulating so that pieces is some years away.

The ability for us, for example, to take advantage of the larger numbers of patients that have now reached a later time period is one of the elements in the safety update that we are preparing for discussion. I think, again, it's one of the elements of an ongoing study that allows us to look at some of that data appropriately. And again, I think the safety update and the roughly doubling of the exposure that we expect will be part of the updated safety cut is a key element as we look to align with the agency over time in terms of the comprehensive safety view of OCA.

So on 787, as I did mention in the prepared remarks, we do plan to initiate a first in-human study this year. It is a bile acid selective FXR. I think there is potential from some of the preclinical models for differentiation, for greater efficacy, potentially based on some of the models. We will be doing more work and communicating more on 787 as we move forward.

Yasmeen Rahimi -- Piper Sandler -- Analyst

Thank you.

Jerome Durso -- President, Chief Executive Officer and Director

Thank you.

Operator

Our next question comes from Steve Seedhouse with Raymond James.

Steve Seedhouse -- Raymond James -- Analyst

Great, thank you. It's not entirely clear to me whether or not the NISS would have implications or change anything with respect to NASH, specifically the NASH cirrhosis study, obviously you're titrating the higher dose even. So, can you just comment on that. And also just quickly, what is the IP on 787? Thank you.

Jerome Durso -- President, Chief Executive Officer and Director

Thanks, Steve. So first of all, the NISS as we've talked about is based on post-marketing in the PBC environment. PBC is a cholestatic disease. REVERSE is our second large Phase 3 trial group of compensated cirrhosis that trial is fully enrolled over 900 patients. The study is ongoing. It continues to be monitored in all the ways that are necessary for a study like this, including the DMC, the data monitoring committee taking a look at the study on a regular basis and recently the DMC has reviewed REVERSE comeback and not recommended any changes. So again, we look forward to continuing forward on the REVERSE trial. It is a different condition PBC and NASH and our plan is to read out top-line by the end of this year.

Steve Seedhouse -- Raymond James -- Analyst

Thanks. Would you mind just commenting on the patent protection on 787?

Jerome Durso -- President, Chief Executive Officer and Director

Yeah. I don't believe we've commented on the IP on 787 yet.

Steve Seedhouse -- Raymond James -- Analyst

Okay. Thank you.

Operator

Our next question comes from Alethia Young with Cantor.

Alethia Young -- Cantor Fitzgerald & Co. -- Analyst

Hey, thanks for taking my question. I am just curious if you can talk on any kind of precision about maybe what the FDA, what are the new and recent considerations around NASH and what's going on there and you're kind of confident as you work through that with them?

Jerome Durso -- President, Chief Executive Officer and Director

I'm sorry, Alethia. Can you repeat the first part of your question. You're a little low.

Alethia Young -- Cantor Fitzgerald & Co. -- Analyst

Okay. I'm just curious about like you kind of your conversations with the FDA and considerations they're having around NASH, if you can give any more granularity, visibility on what's going on there and your general confidence around kind of being able to refile for the year-end. Thanks.

Jerome Durso -- President, Chief Executive Officer and Director

Okay. Thanks for the question. We're heavily focused on this engagement with the FDA with a real priority around alignment on some of the key areas of a potential resubmission. It is a process that we have initiated and it is ongoing. We've tried to highlight the key areas, Alethia, that are -- we think are most important in terms of that alignment process, including the comprehensive safety of OCA. And again I think that having the right ability to have an updated and refreshed discussion with the safety update that we're preparing is going to be important. The biopsy approach is one of the others. And then of course we're asking as we work through this what if any potential additional efficacy data might inform the right risk benefit discussion prior to a resubmission.

So we're doing the work. We're generating the data. And we're not going to be providing granular update at each discussion, but we would definitely look forward to as the process continues, and we have an ability to refine to comeback and provide an update at that point. I think the other thing that's important is we continue to believe that OCA due to the fact that it's still the only Phase 3 that has shown the anti-fibrotic effect in advanced fibrotic patients that we have to continue to keep that in mind these are group of patients with a high unmet need and that's part of the large motivation for our focus.

Alethia Young -- Cantor Fitzgerald & Co. -- Analyst

Thank you.

Jerome Durso -- President, Chief Executive Officer and Director

Thanks, Alethia.

Operator

Our next question comes from Michael Yee with Jefferies.

Aryeh Gold -- Jefferies -- Analyst

Hi, thanks for taking my question. This is Aryeh gold on for Michael Yee. I just wanted to try and get your thoughts on the recent resignation of the CMO and any potential impact that will have through filing? And second question relating to potentially safety and tolerability benefits with the new -- with the second-gen FXR. Thanks.

Jerome Durso -- President, Chief Executive Officer and Director

Thanks for the question, Aryeh. We remain focused on our NASH efforts. I think I mentioned, J.P. Morgan, for example, the fact that we put a new dedicated team onto the NASH efforts with the real focus on ensuring that we were bringing a combination of new perspectives in also with considerable folks that have history on the program. So the team remains ongoing in all of the efforts. You did mention the fact that there have been some changes to the leadership team, I think, ensuring we have the right team to take the next steps has been a clear focus for me.

In the first period, I think during the leadership transition changes are always anticipated, but I've been really pleased, additionally, with our ability to bring in some new top talent, bringing some different experiences and perspectives and also having a chance to reinforce some of our existing folks and having some folks step into new leadership positions, which I think creates a good mix on the team with some new talent in, some folks that through succession planning are having an opportunity to play to their strengths and also leverage folks like Sandip and Gail, who have been with us on the Intercept journey for a while. So, I feel good where we are on the leadership side at this point.

Aryeh Gold -- Jefferies -- Analyst

Sounds good. And on the second-gen FXR?

Jerome Durso -- President, Chief Executive Officer and Director

I'm sorry, what was your question on that?

Aryeh Gold -- Jefferies -- Analyst

For the new FXR, any potential safety and tolerability benefits that you're seeing preclinically?

Jerome Durso -- President, Chief Executive Officer and Director

Yeah. Again, I think there is reason to believe that there is differentiation potentially both on the efficacy, but also for a better overall profile. So, so far, again, early data looks promising based on the preclinical work, but we'll come back with with more insight over time as we move 787 now into the next steps.

Aryeh Gold -- Jefferies -- Analyst

Got it. Thank you.

Operator

Our next question comes from Navin Jacob with UBS.

Navin Jacob -- UBS -- Analyst

Yes. Thanks for taking my question. Just wanted to, Jerry, wondering if you could help us with some of the potential label change scenarios here. Would it just be an exclusion of individuals that have cirrhosis or just a warning? What are the type of scenarios that could play out here understanding that it's tough to comment while discussions are ongoing, but if you could at least walk us through maybe the book in the type of scenario that could come out of this.

Jerome Durso -- President, Chief Executive Officer and Director

Yeah. So maybe I'll start and then maybe ask Sandip to talk a little bit in the context of guidance. Navin, as you said, importantly, the processes is ongoing. So we wanted to provide an update today based on the information that we have, but it's difficult to get into certain level of specificity given the conversations will continue. I think we are working to finalize again updates for patients with the most advanced stages of PBC. We've tried to in the guidance give you a range of potential scenarios. And then of course on the prepared remarks, what I tried to do was to outline the group of patients that fall into these different stages and how we see them. So, the process is ongoing. We'll definitely come back as that is complete. Sandip, do you want to give any additional context in?

Sandip Kapadia -- Chief Financial Officer and Treasurer

Sure, Jerry. Just, I mean, we announced the sales guidance today of $325 million to $355 million for worldwide health sales in 2021. What I'd say is, we believe, I think, we've contemplated the scenarios of anticipated prescriber label changes that could occur in the more advanced PBC patients population, I would say, along with the timing. But we're in the midst of the process. So what I would say is we're continuing to refine and update as we learn more information. But I think the current guidance provides at least some context around that.

Jerome Durso -- President, Chief Executive Officer and Director

Yeah. So we...

Navin Jacob -- UBS -- Analyst

Yeah, Sandip, if I could just -- on that. So your guidance is basically I think effectively saying flat or annual -- if you annualize Q4, it's effectively flat from here on. A couple of things on Q4 and maybe I just missed this, apologies, Sandip, but was there any inventory build or burn during the quarter? And then, should we think about sort of the trajectory here during the course of the year as demand continuing to do what it's doing until the potential label change comes in and then a potential drop in demand or like how did you sort of come to the guidance? I'm just trying to understand that, did you think about the phasing there or was it just you took a conservative approach to kind of annualize in Q4?

Sandip Kapadia -- Chief Financial Officer and Treasurer

Well, I think look, in respect to the first question in terms of inventory changes in Q4, there wasn't anything significant, usually I see a little bit of a tick up at year-end but that's every year. We do see that. And then, of course, as I also mentioned, typically you'll see in the first quarter just as insurance plans reset and patients have the Medicare coverage gap. We have higher gross to net deductions in the first quarter. So first quarter tends to be a bit softer and then growth post there. So right now, I think what I can say is, we've factored in some of our thinking in terms of the potential for a label update as sort of like the range and we'll update you along the way, Navin.

Navin Jacob -- UBS -- Analyst

Thank you very much.

Operator

Our next question comes from Brian Skorney with Baird.

Brian Skorney -- Robert W. Baird & Co. -- Analyst

Hey, good morning, everyone. Thanks for taking my question. Just trying to parse the language here on NASH. It seems like along with the goal of increasing the probability of the successful outcome for patients with advanced fibrosis due to NASH would indicate maybe targeting a potential narrowing of the addressable patient population for an approved product and I know the rep ones in the broader REGENERATE enrollment and there had been some idea that you could get a maybe a broader label on F2, F3. So I'm just wondering, is the thought to try to focus on limit the patient population to F2, F3 in an NDA or is it something narrower than that like are you just targeting F3s or maybe some other criteria to kind of enrich the data?

Jerome Durso -- President, Chief Executive Officer and Director

So as a reminder, the interim analysis that readout in Phase 3, the successful impact on fibrosis was in a population of F2 and F3. The F1s that were in the REGENERATE study were an exploratory, so that wasn't a group that was part of that interim analysis result. So the assumption on the 18-month results is an F2, F3 population. I think in parallel, we talked over time, particularly in advance of the complete response letter when we had some more in-depth discussions about our commercial plan, the focus around the advanced fibrotic population in this F3-like advanced has always been our commercial focus because of the high level of unmet need. I think the opportunity for us, the dialog with the FDA in this process that we're in now around risk benefit overall, bringing new safety data into the picture, I think will allow us to have the right discussion around risk benefit in the context of thinking about a potential resubmission. But again, the population of the initial IA higher read out was that F2, F3 group from REGENERATE.

Brian Skorney -- Robert W. Baird & Co. -- Analyst

Okay. Thanks.

Jerome Durso -- President, Chief Executive Officer and Director

Thank you, Brian.

Operator

Our next question comes from Ritu Baral with Cowen.

Ritu Baral -- Cowen and Company -- Analyst

Hi, guys. Thanks for taking the question. So, Jerry, it sounds like you're not reiterating prior indication that a 2020 submission is likely. And you talked about this comprehensive safety update. What do you think the odds are that you'd have to develop some sort of new efficacy submission or interim efficacy book for submission as part of any potential resub view at this point?

Jerome Durso -- President, Chief Executive Officer and Director

So, Ritu, as I said, we remain focused on the interactions with the FDA and our plan is that we'll progress through those and align -- work toward alignment for a potential resubmission by the end of 2021. And so, that's why we're intensively focused on some of these key areas. I mentioned the safety update as a key one. Our focus in this work and our thinking includes the in-depth conversation around safety, along with any potential for additional efficacy based on the -- what the FDA would be looking to consider in that context. So I guess I can't probably go much more definitively than that except that the efficacy component is an additional and core part of the topics that we intend to work through this alignment process on of course based on the conversations we had, for example, with the FDA at the end of -- toward the end of last year with the Type A meeting and the real focus on ensuring the right discussion around risk benefit in both sides of that equation.

Ritu Baral -- Cowen and Company -- Analyst

Got it. And I'll squeeze one follow up in. just as far as converting COBALT and 401 into an open label extension, do you have to generate the natural history analysis before you can sort of flip the switch and turn those patients over or is it more complicated than that?

Jerome Durso -- President, Chief Executive Officer and Director

So on COBALT, as I mentioned, the dialog is ongoing. We had proposed an open label and a plan around that, including the control we would recommend. Of course, since the dialog is ongoing, I can't get more definitive on that. Now I think one of the other points that is important is that there is a near dependency between a potential for revision of design and what might be the right revised design and the final label and that's the other component that's important to this whole discussion.

Ritu Baral -- Cowen and Company -- Analyst

Great. Thanks for taking the questions.

Jerome Durso -- President, Chief Executive Officer and Director

Thanks.

Operator

Our next question comes from Michael Morabito with Chardan Capital Markets.

Michael Morabito -- Chardan Capital Markets -- Analyst

Hi, team. Thanks for taking the questions. I just wanted to try to get a little bit more information, any details you can provide on the safety data cuts on potentially the timing of when that may occur? Is there any delay on when you expect that to happen based on your interactions with the FDA? Have you finalized which trials will be involved in that safety data cut and do you have any plans to share the results for that analysis?

Jerome Durso -- President, Chief Executive Officer and Director

So maybe I'll start. So as I said, the work on that safety update from REGENERATE is ongoing also part of what we would anticipate in any potential resubmission would be an update from our other trials as well. We do look at the safety update that we are in the process of working through as an important component again since it gives significantly more safety exposure for patients with fibrosis due to NASH from REGENERATE. And again, that's a heavy emphasis on the team. Of course, the alignment with the agency on the analysis of that data and the -- what that dataset means, we expect will be the focus of some of these ongoing discussions. Again, the opportunity to approximately double the safety exposure from what was included in the initial file we think is an important component in this overall discussion on the overall safety profile of OCA.

Michael Morabito -- Chardan Capital Markets -- Analyst

I guess, just a quick follow-up on that. Is a positive outcome of this additional safety data cut a continuation of seeing the same safety profile that you have seen with no worsening in any safety signals or are you looking to see improvement over time?

Jerome Durso -- President, Chief Executive Officer and Director

So, of course, our ability to get a refreshed view of the overall safety is going to be important and it's going to be important to look at that in the overall context in the discussion with the agency.

Michael Morabito -- Chardan Capital Markets -- Analyst

Okay. Thank you.

Jerome Durso -- President, Chief Executive Officer and Director

Thanks.

Operator

Our next question comes from Brian Abrahams with RBC Capital Markets.

Brian Abrahams -- RBC Capital Markets -- Analyst

Hey, good morning, guys. Thanks so much for taking my question. I have a question on the OCA-bezafibrate lifecycle extension potential. I'm just wondering what else needs to be done to move into U.S. trials? Has the IND there cleared? And how might U.S. studies differ from your approach with that combination outside of the U.S.? Thanks.

Jerome Durso -- President, Chief Executive Officer and Director

Thanks for the question, Brian. Maybe on this one I'll start and then Gail can comment. I think, first, the opportunity for us to progress on our next medicine in PBC, for us I think reinforces the long-term interest we have in rare cholestatic diseases like PBC. I think that the opportunity that we have bezafibrate in-house and access to it for the U.S. we think it's a competitive PPAR. There is a significant amount of data on bezafibrate in PBC albeit most of it from investigator-initiated trials, but importantly also some interesting combination data with OCA gives us an indication that there is good a potential here. And as we look at the Phase 2 that's on going as you say outside of the U.S., maybe Gail you can comment a little bit on that and some of the key elements as we think about the work to start in the U.S. now.

Gail Cawkwell -- Senior Vice President, Medical Affairs, Safety & Pharmacovigilance

Yes. Thanks very much. So, as Jerry said, we have started our Phase 2 study with the OCA-bezafibrate combination outside of the U.S.. We've been very pleased with the enrollment despite the ongoing pandemic. That study includes two arms of the bezafibrate, two different doses since dose titration is clearly an important part of any Phase 2 study as well as OCA at 5 milligrams titrating to 10 milligrams. At the same time in the U.S., we have filed an IND and are preparing to start additional clinical pharmacology work later this year in the U.S. that will help us to understand more about dosing in our Phase 3 program and get us ready to start Phase 3 at the right time. We should have more information as the year goes on and as enrollment progresses in our Phase 2 study to provide an update later.

Brian Abrahams -- RBC Capital Markets -- Analyst

Got it. Thanks, Gail, and thanks, Jerry.

Jerome Durso -- President, Chief Executive Officer and Director

Thanks, Brian.

Operator

Our next question comes from Joseph Stringer with Needham & Company.

Joseph Stringer -- Needham & Co. -- Analyst

Hi, everyone. Good morning. Thanks for taking our questions. You mentioned some earlier metrics on PBC and percent of gastroenterologists prescribing Ocaliva. Just wondering if you could maybe speak to what you think the current market penetration for your addressable or target patient population is? And what is key in sort of unlocking the next tier of PBC patients? Thank you.

Jerome Durso -- President, Chief Executive Officer and Director

Thanks, Joseph. I think when you consider the PBC opportunity that we have, it's important that there are a considerable number of patients that are appropriate for Ocaliva that aren't getting therapy. It's been a big part of the educational efforts that we've had over time. And I think the dimension of in a focused way expanding our education to more community-based gastroenterologists is at the center of our strategy and we'll continue to move. Now those gastroenterologists tend to have a relatively few number of potential PBC patients in their practice. So it is important that we educate and also identify where those patients will be and particularly important in the community setting is identification of the right patients early that are ready for second line therapy and might benefit. So this, I think that the fact that there is more room for penetration in our core patient population and the steady expansion of our reach with the gastroenterologists continues to be a core part of our efforts, both on the commercial and medical affairs side in the U.S.

Operator

Our next question comes from Geoff Meacham with Bank of America.

Aspen Mori -- Bank of America Merrill Lynch -- Analyst

Hey, guys. It's Aspen on for Geoff. Thanks for taking our questions. Both on the pipeline. First, on 787, if you could quickly walk us through what you view as a development path there and how you're thinking about the prioritization of development in terms of the different indications PBC and NASH or maybe something beyond that? And then quickly on bezafibrate as well, any plans to move further into -- look forward as a monotherapy either in NASH or PBC or you kind of view that as purely a combo play? Thank you.

Jerome Durso -- President, Chief Executive Officer and Director

Okay, thanks. First on 787, I think we're -- as I said earlier, I'm sorry, we look forward to the first in-human work this year. We are doing some I think good work also in looking at potential indications. It's too early to get definitive on that today, except to say that we are looking at the potential and then across the group of indications based on where there might be the right scientific rationale considering potential path forward in terms of development and regulatory and looking at that with a rather open mind to point this asset toward the right indication.

And I'm sorry, you had a -- your second question on...

Aspen Mori -- Bank of America Merrill Lynch -- Analyst

On bezafibrate, yeah, I just wanted to understand if there was -- just kind of how you view the asset? Is it more of a combo play regardless of indication or do you see any path forward where you develop as a monotherapy?

Jerome Durso -- President, Chief Executive Officer and Director

At this point, our primary focus has been on the combination of bezafibrate and OCA as a fixed dose combination.

Aspen Mori -- Bank of America Merrill Lynch -- Analyst

Okay. Thank you.

Jerome Durso -- President, Chief Executive Officer and Director

Thank you.

Operator

Our next question comes from Jay Olson with Oppenheimer.

Jay Olson -- Oppenheimer -- Analyst

Hi, thank you for taking the question. I had a financial question and I'm curious about the path to profitability by geography. How much visibility do you have into achieving profitability in the U.S. alone? And if NASH start looking like a U.S.-only opportunity for OCA given the lower PBC revenues and lower operating margins ex-U.S., can Intercept become profitable ex-U.S. on PBC alone or would you consider becoming a U.S. focused business and out-license ex-U.S. rights to OCA? Thank you.

Jerome Durso -- President, Chief Executive Officer and Director

Sandip?

Sandip Kapadia -- Chief Financial Officer and Treasurer

Yeah. Hi, Jay. Thanks for the question. I think what we have commented on is -- in the past is that our PBC Ocaliva franchise is a profitable franchise as a stand-alone business. We are pleased with the how the revenues have grown over the past several years. We've managed our expenses accordingly. And the business is profitable, both in the U.S. and outside the U.S. when you consider the direct marketing and selling expenses. With respect to long-term profitability, I think it's something that at least we provided a guidance today kind of gives you a sense of where we expect our sales and operating expenses. As you can see, it's meaningfully lowered our cash burn as compared to last year based on the guidance that we provided. That as far as at least we can go at this stage, but hopefully that gives you some context.

Jay Olson -- Oppenheimer -- Analyst

Great. Thank you, Sandip.

Jerome Durso -- President, Chief Executive Officer and Director

Thanks, Jay.

Operator

Our next question comes from Matthew Luchini with BMO Capital.

Matthew Luchini -- BMO Capital Markets -- Analyst

Hi, great. Thank you so much for fitting me in. So actually on the European question. So as it relates to NASH, so you -- Intercept delayed 120 response to this year to try to get better alignment with FDA. Guys have now responded, but it seems like alignment with FDA is of course saw a bit of a work in progress. So just wondering how we should think about the EU opportunity from here? And then secondarily, just quickly on PBC as it relates to the NISS, just given everything that you've done with FDA so far, do you feel like the discussion is in the home stretch and we should be expecting things to be resolved in the relatively near-term or are the push and pulls related to label and any other open issues still relatively large and you're very much so in sort of the hammering it outpace? Thank you so much.

Jerome Durso -- President, Chief Executive Officer and Director

Thanks. Maybe, I'll take the second one first, Matthew. So as I've continued to say the process is ongoing, I think we're working to finalize the updates to label. I can't really be definitive on the timing since the process is ongoing. What I would say though is based on the regulations for these kind of interactions that the process could be completed within the coming months. But again, it is ongoing and obviously, we're not in control of all facets of the process.

The first question was on Europe. The OCA is on file. We did submit responses to the day 120. We are working in parallel on that process and the ongoing important work for alignment in the U.S. prior to a potential resubmission by the end of this year. And as we go through those processes in parallel, as you can imagine, will be considering the best options to take. We are progressing through the process in Europe and we would anticipate the constructive dialog moving forward. Of course, as a reminder, OCA is the first. NASH drug also being reviewed on the European side, but we're working through that process and we'll assess things as it progresses.

Matthew Luchini -- BMO Capital Markets -- Analyst

Okay. Thank you.

Jerome Durso -- President, Chief Executive Officer and Director

Thanks.

Operator

Our final question comes from Mayank Mamtani with B. Riley.

Sahil Kazmi -- B. Riley FBR, Inc. -- Analyst

Hi, good morning. This is Sahil on for Mayank. Thanks for taking our questions and congrats on the progress. Maybe a quick question on the PBC label change. Could you discuss how that's reflected in some of the sales guidance provided today? And perhaps in the context of the enrollment going on and competitive programs maybe from genta and how you think about that in the overall guidance? And then finally, is there a similar label update process under way in the EU as well? Thank you.

Jerome Durso -- President, Chief Executive Officer and Director

So, Sandip, maybe you want to start on is the framing around the guidance.

Sandip Kapadia -- Chief Financial Officer and Treasurer

Sure. I think the guidance that we gave the $325 million to $355 million, I think reflects a couple of different factors overall. One is, we've contemplated what we would anticipate as the subscriber label changes. Obviously, is still in place. So it's hard to say specifically. We will continue to refine that throughout the year as we get more information. And the other piece we've also factored in is, Jerry talked about lower new patient starts during -- based on the COVID pandemic, so you start to see some of that impact as we go into this year. And I think the best way to sort of also think about the guidance, at the bottom-end of the range reflects the greater restriction on the advanced PBC population, while I would say the top-end reflects a lesser impact overall. So hopefully that gives you a little context on that, and maybe Jerry?

Jerome Durso -- President, Chief Executive Officer and Director

Yeah. And I'm sorry, the second question was.

Sahil Kazmi -- B. Riley FBR, Inc. -- Analyst

Yeah. Just in terms of -- is there a similar label update process on the way in the EU as well?

Jerome Durso -- President, Chief Executive Officer and Director

So not a similar process per se as the process that is ongoing right now was initiated out of the NISS in the post-marketing context from the FDA. Of course, there -- we will look to consider the right discussions with the regulators as we work through things with the U.S., but the process that I speak about specific to the NISS is FDA-specific process.

Sahil Kazmi -- B. Riley FBR, Inc. -- Analyst

Great. Thanks for taking our questions. Appreciate it.

Jerome Durso -- President, Chief Executive Officer and Director

Thank you.

Operator

That concludes our question-and-answer session. I'd like to turn the call back to Jerry Durso for closing remarks.

Jerome Durso -- President, Chief Executive Officer and Director

So thanks for the questions and look forward to continuing the dialog. I think as I near the end of my first 60 days as Intercept's new CEO. Definitely excited for the opportunity we have to grow our business, support our patients with PBC, NASH, other serious liver diseases, our capabilities, importantly, our people and the strong evidence we generated with OCA gives us multiple pathways to achieve success and advance our mission and I'm looking forward to our execution on the major objectives that we outlined this year and spoke about today which have the ability to transform our company. So I look forward to continuing the conversation, and thank you very much for joining us this morning.

Operator

[Operator Closing Remarks]

Duration: 60 minutes

Call participants:

Lisa DeFrancesco -- Senior Vice President, Corporate Affairs & Investor Relations

Jerome Durso -- President, Chief Executive Officer and Director

Sandip Kapadia -- Chief Financial Officer and Treasurer

Gail Cawkwell -- Senior Vice President, Medical Affairs, Safety & Pharmacovigilance

Yasmeen Rahimi -- Piper Sandler -- Analyst

Steve Seedhouse -- Raymond James -- Analyst

Alethia Young -- Cantor Fitzgerald & Co. -- Analyst

Aryeh Gold -- Jefferies -- Analyst

Navin Jacob -- UBS -- Analyst

Brian Skorney -- Robert W. Baird & Co. -- Analyst

Ritu Baral -- Cowen and Company -- Analyst

Michael Morabito -- Chardan Capital Markets -- Analyst

Brian Abrahams -- RBC Capital Markets -- Analyst

Joseph Stringer -- Needham & Co. -- Analyst

Aspen Mori -- Bank of America Merrill Lynch -- Analyst

Jay Olson -- Oppenheimer -- Analyst

Matthew Luchini -- BMO Capital Markets -- Analyst

Sahil Kazmi -- B. Riley FBR, Inc. -- Analyst

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