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Intercept Pharmaceuticals (NASDAQ:ICPT)

2013 Year-End Update on Clinical Programs

January 09, 2014, 04:30 PM ET

Executives

Senthil Sundaram - Senior Director, Corporate Development

Mark Pruzanski - Chief Executive Officer

Barbara Duncan - Chief Financial Officer

David Shapiro - Chief Medical Officer

Analysts

Rachel McMinn - Bank of America Merrill Lynch

Jonathan Eckard - Citibank

Jim Birchenough - BMO Capital Markets

Akiva Felt - Oppenheimer

Liana Moussatos - Wedbush

Alan Carr - Needham & Company

Operator

Thank you for joining the Intercept Pharmaceuticals' Clinical Development Update Conference Call. At this time, all participants are in a listen-only mode. Following the formal report, Intercept management will open the lines for a question-and-answer period. Please be advised that this call is being taped at the company's request and a webcast of this call will be archived on the company website for two weeks from today's date.

At this time I would like to introduce Mr. Senthil Sundaram, Intercept's Senior Director of Corporate Development. Please go ahead.

Senthil Sundaram

Good afternoon and thank you for joining us on an exciting day for Intercept. Today, we are providing an update on the progress of Intercept's clinical development program including today's announcement regarding the FLINT trial.

Before we begin, please remember we will be making certain forward-looking statements on today's call, including statements and forecast regarding our future, financial and operating performance, anticipated timelines for the potential approval and commercial launch of obeticholic acid, and our regulatory, clinical and commercial plans and goals and estimates, as well as other statements which relate to future events. These statements are based on the beliefs and expectations of management as of today.

Our actual results may differ materially from our expectations. Investors should read carefully the risks and uncertainties described in our reports filed with the SEC, including the Risk Factor Section of our most recent quarterly report on Form 10-Q and in our annual report on Form 10-K for fiscal 2012.

We assume no obligation to revise or update forward-looking statements whether as a result of new information, future events or otherwise. The format for today's call will include opening remarks from Intercept's management team and then we'll open up the call to take your questions.

At this time, it's my pleasure to turn the call over to Intercept's CEO, Dr. Mark Pruzanski.

Mark Pruzanski

Thanks very much, Senthil. And thanks to everyone on the phone and listening in on the web. Certainly an interesting day for us here and for Intercept's shareholders with the unexpected news this morning. I am going to provide you with an update on the development of obeticholic acid; OCA and then hand over to Barbara Duncan, our CFO who'll discuss our cash position and runway. We also have David Shapiro, the company's Chief Medical Officer here with us today.

When we announced the call last week, we certainly planned to share exciting news on the progress of OCA for three different indications. Our lead indication primary biliary cirrhosis or PBC, portal hypertension and bile acid diarrhea where as you know, we've had a couple of Phase 2 proof-of-concept studies ongoing. In addition of course, today, we have the great privilege to announce unexpected great progress in the advancement of OCA for the treatment of nonalcoholic steatohepatitis or NASH.

And let me start then with the news and specifically the FLINT trial and as many of you know on the call NIDDK which is a part of the NIH and has been running and sponsors the FLINT trial informed us that Data Safety Monitoring Board for the FLINT trial recommended stop of the trial early for efficacy and this was based on an interim analysis showing that OCA had met the primarily histological endpoint.

The decision to stop early was based on a predefined requirement that OCA show a much greater efficacy benefit with better than a P value of 0.0031 in an intention to treat -- on an intention to treat basis and this is certainly a much higher bar to reach than would have been required for final analysis at the end of study.

In addition, the interim efficacy analysis was pre-specified to occur when approximately half the patients of the 283 enrolled had completed both the baseline and end of treatment 72-week biopsies. As a result, the patients who did not complete the study and therefore didn't have a second biopsy were included in the ITT analysis as non-responders.

Nonetheless, the analysis still yielded a p-value of 0.0024; therefore coming in under the pre-specified stopping guidance. Since I know it's on some of your minds, the p-value, we were also informed per protocol was 0.0015 based on an analysis of only those patients who had completed the study and had a second biopsy.

At this point, the NIDDKs only shared the statistical result of the interim efficacy analysis with us. So we don't have additional data to share with you today. NIDDK is running the study as I mentioned and we'll be conducting all of the final analysis that you can get further details on at clinicaltrails.gov. Of course, when we get the data in hand from NIDDK, we will share the results with you.

As you appreciate as this information has come a lot earlier than anticipated, you might remember we are projecting Q4 for topline results. We haven't had a chance to discuss the trial and the results with FDA or EMA, nor therefore the regulatory path forward for us in NASH.

That said we of course look forward to having robust discussions with the FDA and as you may recall FDA sponsored together with AASLD, a NASH workshop in early September of last year bringing industry academia and of course the relevant regulators from FDA together for a very comprehensive discussion of NASH as a disease and likely end points for approval in different subpopulations of NASH patients.

In terms of background, some of you may know that NIDDK has been focused on finding an effective treatment or treatments for NASH for really a number of years. They recognized very early on that this is a looming epidemic well before it was on the radar of a lot of companies, let alone and even hepatologists.

Over the past number of years, NIDDK has conducted several large scale trials and really perfecting the design and enrolment of these patients investigating other therapeutic options typically of products that were already marketed for example the PIVENS trial which compared Vitamin E Pioglitazone actors to placebo.

However the utility or effectiveness of these treatments is long-term treatments in NASH patients was not really borne out due to combination of issues of efficacy tolerability and/or safety which became apparent after completion of these trials.

In 2009 we announced encouraging results from actually what was our first Phase II study of OCA. It was six week double blind placebo controlled trial of OCA in type 2 diabetics with NAFLD with non-alcoholic fatty liver disease that met primary and secondary endpoints. The primary endpoint was insulin sensitization as demonstrated by an improvement in glucose disposal rate and patients also demonstrated dose dependent weight loss with improved liver function markers in what at that point we considered to be a pretty difficult-to-treat patient population.

In addition to these clinical data, we had accumulated and frankly others looking at FXR agonists had published on a number of mechanisms pre-clinically in animal models of this disease, showing that FXR agonists like OCA could significantly reduce steatosis or fat in the liver fibrosis or scarring and inflammation all key components of NASH as a disease. So based on the pre-clinical and clinical data, NIDDK selected OCA out of several other compounds that at the time were in the clinic and in March of 2011 initiated a FLINT trial to evaluate OCN or rigorous placebo controlled study.

We are as I stated in the press release we issued deeply greatful to the NIDDK for being so tenacious in their quest for a novel effective therapy for NASH patients and sponsoring such a robust well designed trial that now lays a real foundation for the way forward in treating this disease.

I can tell you that at that time, as a small private company, we absolutely didn't have the resources to undertake a trial close to as ambitious as FLINT. So this is only possibly by them and their excellent academic hepatology collaborators who are the investigators here in the U.S.

A little bit more about NASH, really this disease has come out of nowhere seemingly in the last decade or so to become frankly an epidemic. There is no other way to describe it. It has become a leading cause of cirrhosis and liver failure not just in the U.S. where of course we have an obesity epidemic but worldwide. On its current trajectory NASH is projected to become the leading indication for liver transplant exceeding chronic Hep-C infection and alcoholic liver disease.

As you probably know there are no drugs approved to treat NASH. And just to give you a flavor, studies have shown that over ten years or so at least one in ten NASH patients in the general NASH population will go on to develop cirrhosis significantly more if you just look at patients with more advanced NASH. And liver related mortality due to NASH is tenfold that of the general population. So there is a really significant unmet need in NASH.

According to recent epidemiological studies here in the U.S. and elsewhere thought that north of 10% of the U.S. adult population has NASH. I am not talking about NAFLD; I am talking about the subset of patients with actual steatohepatitis. And if you just limit yourself to patients with stage three, stage four disease meaning bridging irreversible bridging fibrosis and cirrhosis, we are talking in the neighborhood of north of 2.5% substantially in the U.S, more than six million patients which really exceeds chronic Hep C and alcoholic liver disease in prevalence. Proportion of liver transplants of course that are attributable to NASH has been exploding and as I mentioned are projected to become leading indication for liver transplant over the next decade.

We also slipped into the press release earlier today, the very good news that our partner in Japan and China, Dainippon Sumitomo Pharma has exceeded expectations in coming very close to full enrollment now projected by the end of this month for another large placebo controlled NASH trial in Japan, enrolling a target of 200 patients and they've been able to update and accelerate their projection for topline results at least by the end of 2015. So we eagerly await that and of course they communicated their excitement about the results we reported today.

So with that, let me turn to other indications. Of course, FLINT, the news of the day, but we have other exciting news to report and let me start with PBC and the POISE trial. We recently finished the double-blind phase of the POISE trial 12 months as you know. And we are very happy to see that more than 95% of the patients completing the double-blind phase opted to crossover to the open label five-year long-term safety extension phase.

We had as reported in the press release we just put out 20 minutes ago or so a quite low discontinuation rate from the double-blind phase in fact given the focus on pruritus very low discontinuation rate for us approximately 3% and this coupled with the patients voluntarily going into the OTFC tells us a lot about we think about the general tolerability of OCA at the doses administered in these PVC patients.

In the way of regulatory update and PVC, of course as we've been saying, we continue to have a very good constructive dialogue with FDA and as you know, we've been working hard to get final dataset from the global PBC study group what we shorthand as the Supergroup as well as collecting, corroborating data from another independent large database from the U.K. PBC Group, and provide the best possible most robust evidence to FDA and other regulatory authorities, of course to provide the most -- the strongest evidence possible that alkaline phosphatase and bilirubin are the two parameters -- the surrogate parameters that are the basis of our poise Phase 3 endpoint are appropriate to use as a surrogate in this disease.

We utilized the findings from both datasets to inform our proposed design of the second confirmatory clinical outcomes trial, which has been submitted to the FDA for review and if FDA generally comes to agreement with us on this design, we anticipate initiating the trial in the second quarter of 2014 and will of course be sufficiently assuming that we can do so underway at the time of accelerated approval, first approval that we hope for in the U.S.

In Europe as we stated before based on written scientific advice that we obtained some time ago from EMA, we believe that poised and as a result should they be positive, will be acceptable for approval OCA in Europe.

As you know the Supergroup presented data -- interim data and some final data at both liver meetings, in 2013 at EASL in April of last year and AASLD in November that provided further strong support for the use of surrogate biochemical endpoints based on our cost and bilirubin and specifically our end point in PBC as predictive of clinical outcomes in these patients.

The originally stated target of 4,000 patients was exceeded by the Supergroup with clinical data collected and pulled from 15 different academic medical centers across eight countries to end up with over 6,100 patients worth of clinical outcomes. The final analysis on the poised end point upholds our claim that the surrogate endpoint is strongly predictive of liver transplant pre-survival in PVC patients with hazard ratio of approximately two times.

Moving on from PVC to PESTO to our study in portal hypertension, preliminary data from our trail in portal hypertension show that approximately half of the alcoholic cirrhotic patients demonstrated a clinically significant reduction in hepatic venous pressure gradient or HVPG. Based on the results of this trial, we do intend to advance the program with a multi-centered placebo controlled randomized Phase 2b clinical trial of OCA in [all covered] cirrhotic patients so that means including for example NASH cirrhotic patients with portal hypertension in the second half of 2014, using HVPG as the end point.

In bile acid diarrhea, we've been conducting a trial called OBADIAH. This has also been completed and final data from that study in bile acid diarrhea patients demonstrate that OCA significantly increased levels of fibroblast growth factor 19 FGF19, which you may know as a gut protein directly under the control of FXR that is induced and secreted secondary to activating FXR and we also had evidence of clinical improvement over a two-week treatment period in patients with primary bile acid diarrhea.

These data were presented last year at [TBW] and now also in Crohn's patients with secondary bile acid diarrhea and these results excitingly actually and as hypothesised correlated inversely to prior surgical reception lent and we can talk about it if you are interested in the Q&A.

Furthermore we had a controlled group of idiopathic IBS-D irritable bowel syndrome diarrhea predominant patients who had normal FGF19 levels and there is no response in these patients as we frankly expected. Based on this, we do plan on advancing this program with multi-centered placebo controlled randomized Phase 2B clinical trial of OCA in Crohn's patients with secondary bile acid diarrhea in the second half of 2014.

Finally Primary Sclerosing Cholangitis, this is as I've described it before quote unquote "brother autoimmune cholestatic liver disease" to PBC inasmuch as it's predominantly a disease of men as opposed to PBC which is a disease of women. This disease occurs with about one third to prevalence of PBC, but there is nothing approved and it tends to have a more aggressive course. There is a 75% or so comorbidity with ulcerative colitis.

We had previously announced our intention to initiate a Phase 2 trial in PSC and we will indeed be doing do this year a multicenter placebo controlled trial, which will look not just at endpoint or endpoints related to the liver disease, but also to ulcerative colitis in these patients. And I just want to say that tied this in with the bile acid diarrhea that in doing these two trials, we hope to expand our understanding and positioning of OCA as protective not just in the liver, but also in the intestine, consistent with the rational or an FXR agonist like this.

And finally we are not a one trick pony with OCA. We do have a pipeline and we have another compound named INT-767. This is a potent dual FXR and TGR5 agonist, TGR5 is another dedicated bile acid receptor. We have had extensive preclinical data and evidence of anti-fibrotic anti-inflammatory fats across liver, intestinal and renal chronic disease models with INT-767 that make us very excited about this compound.

We are on track right now in our IND-enabling studies to file an IND in the fourth quarter and to start Phase 1 with this compound prior to year end.

So with that, I'll turn it over to Barbara our CFO for a discussion of our financial position.

Barbara Duncan

Good afternoon, everyone. My comments are going to be very limited and will focus primarily on our projected cash runway. As a reminder, we ended the third quarter of 2013 with approximately $157 million of cash and cash equivalents and investments on the balance sheet and based upon the current operating plan and with the addition of the new development initiatives that Mark has just described this afternoon, we believe that we will be able to fund our operations into the second half of 2015, which gets us really comfortable path in the NDA and MAA filings of OCA in PBC, which is currently anticipated in December of 2014.

And with that, I am going to turn the call back over to Mark.

Mark Pruzanski

Thanks Barbara. And I think we can open it up for Q&A with the remaining time we have.

Barbara Duncan

Operator, can we please proceed with the Q&A portion of the call?

Question-and-Answer Session

Operator

(Operator Instructions) And our first question comes from Rachel McMinn of BoA Merrill Lynch. Please go ahead.

Rachel McMinn - Bank of America Merrill Lynch

Thanks for taking the question and congratulations on pretty big day for you guys. I have so many questions, but I guess may be just to start, getting a lot of questions on just the primary endpoint here, if you could just help put into context, I am assuming if the NIH setup study that a two point improvement in the fibrosis score is important, but can you help benchmark that for us in any way or are there other studies that have looked at this endpoint?

How comfortable do you think the FDA is and then I guess I also wanted to just get your -- take your temperature on, I know you don't know what the regulatory pathway is, you have to submit this package to the FDA, but it seems like a base case would be a second pivotal would be required and may be even extensive safety, I guess I just want to get a sense from you, do you think that Japan study is really it? Do you -- are you currently re-evaluating your operating plan, should you be running your own study in the U.S. population that's really, really big as a second pivotal? Thanks.

Mark Pruzanski

Thanks Rachel. Yeah, let me start with a comment you made which is absolutely true. The regulatory path in NASH in the U.S. is as yet undefined and of course as you know FDA has been quite proactive in setting up the workshop last September and bringing together industry and academia to have -- to start a very robust discussion and as demonstrated their understanding clearly that there is a huge unmet need here and the need to define the path forward.

So it's difficult for us right now to comment with any degree of real confidence about what that path is going to look like and how many -- whether the Japanese trial will be sufficient or whether it will have to do an additional Phase 3 here in the U.S.

What we can return to it a little bit, but you asked about the end point. So just to define it, the NIDDK, this is again NIDDK study and they proposed this and designed the study and they did so in accordance with a design that they had successfully used before namely PIVENS.

I mentioned before there are adult NASH study with Pioglitazone and Vitamin E and it took a lot of their learning from that study and applied it here across the Board. Their feeling in designing this study was that a two-plus point improvement in the activity score with no worsening of fibrosis is clinically meaningful and a relevant way to assess disease progression and therapeutic efficacy of a novel agent like OCA, but as you highlighted -- as I highlighted, we haven't had a chance yet to sit down formally with FDA and present the results to them and discuss that.

I think that given the way that FDA framed the discussion at the workshop, there is a clear understanding that in a disease -- a chronic relatively slow moving disease like this and frankly any chronic disease, it is extremely challenging to demonstrate hard clinical outcomes for a first approval and FDA opened the session by really framing discussion in the context of subpart H and the potential for the use of surrogate endpoint for accelerated approval followed by conformation of clinical benefit exactly what we've been talking about for several years now in the context of PVC and here of course depending on the patient population you are talking about they are potentially different end points available and we anticipate having a very good discussion with them.

Certainly histology and an end point like this has a great deal in our opinion utility in predicting treatment response or demonstrated therapeutic response in these patients and we just have to see what -- how the discussion evolves with FDA in terms of requirements. I apologize it can't be more directive, but it is where we are.

Rachel McMinn - Bank of America Merrill Lynch

And then just briefly and I am sure everyone else also have questions, but you highlighted the six million patients, there are people in the U.S. estimated to have NASH, do you have a sense at all of how many patients are actually under the care of physician where they are diagnosed to have cirrhosis and they actually know that and would be available for some kind of treatment?

Mark Pruzanski

We are doing that work now to better quantify and of course the six million number cited is -- it comes from epidemiological studies and speaks to the estimated prevalence of the disease. I think what you are getting at is how many NASH patients are actually identified out there and under the care of herpetologists and other physicians.

What I can tell you is that in keeping with the projection that this disease will relatively soon become the leading indication for liver transplant, there will be a lot of these patients with more advanced disease who come into the care of herpetologists and other specialists and of course internists.

I don't want to overplay where we are. As you know right now the only way to definitively diagnose this disease is with biopsy that's clearly not ideal and there is a lot of work being done on different surrogate modalities that will lead we believe to non-invasive diagnostics and monitoring methods that ultimately we hope can get us away entirely from the liver biopsy both for diagnosis and assessing treatment efficacy.

But all this is definitely coming and as we've heard before from key opinion leaders who have been very active in this space for many, many years and focus so much on Hep C for the last decade or so this is the coming tsunami of liver disease.

And David just wants to add something.

David Shapiro

Just to add a quick comment here, I think relative -- a relevant statistic is actually comparing NASH to HCV that I think everyone is very familiar with, not leads for all of the large number of drugs being developed till HCV and HCV is still to affect about 1.5% of the U.S. population of that order of magnitude as opposed to you can 3% to 5%. It's at least double the number of people have NASH and there is no therapy as compared to HCV that I think a lot of people are more familiar with.

Rachel McMinn - Bank of America Merrill Lynch

Thanks so much and congrats again.

Barbara Duncan

Thanks, Rachel.

Mark Pruzanski

Thanks, Rachel.

Operator

Our next question comes from Jonathan Eckard of Citibank. Please go ahead.

Jonathan Eckard - Citibank.

Thanks for taking my question guys and again, congratulations. So I guess, I was going to continue on couple things. You said -- you talked about diagnosis. I believe that there were some discussion at the AASLD on some advancements in potential diagnosis using imaging for example. Did the FDA -- was there any comments or suggestions of the FDA about the generics of some of these during those or just kind of framing it so we can understand how the diagnosis could improve or how they maybe feeling -- how they maybe feeling about using some of these other methods?

Mark Pruzanski

Yes. Thanks Jonathan. I’m not going to put words in FDA's mouth or attributions as to where they’re at on these other surrogate modalities. I will say that there is very extensive discussion at NASH workshop of these different modalities. Imaging was one of them.

As you probably know as has been in the case in Europe for several years now, FDA earlier in 2013 approved an ultrasound-based method called Fibro Scan for assessment of liver fibrosis obviously non-invasive and relatively cheap and ubiquitous and something that’s really taken hold in Europe and we predict will also in the U.S.

And then MRI has also improved dramatically and fallen in cost and MR elastography is very, very sensitive -- has high -- very high sensitivity specificity when it comes to assessing fibrosis and steatosis in these patients. And we’re definitely watching those closely and working with these modalities, both in FLINT to some extent and certainly going forward.

There are also of course, the fibrosis markers, the serum fibrosis markers that have been around for some time. We looked previously at the ELF markers and are doing so as well in FLINT. And then there are some intriguing new developments for example, liver, a true liver function, quantitative liver function test that may come into the main stream. Think analogously pulmonary function test for the liver that also hold a lot of promise. And I think that some combination of these surrogate modalities will be used and can be used in combination both for diagnosis and more importantly for monitoring the progression and therapeutic efficacy in these patients.

Jonathan Eckard - Citibank

That’s very useful. One more question and I’ll be back in the queue. With regards to the NAS Score, could you just help us from the context? I know that fibrosis is one of the main component of that score, but obviously there are other factors because you could have no progression of fibrosis but not regression.

Mark Pruzanski

Yes.

Jonathan Eckard - Citibank

Still having improvement. So, when I’m looking at these results, they seem simply robust.

Mark Pruzanski

Yes.

Jonathan Eckard - Citibank

I’m trying to understand how fibrosis could have contributed to that change in the Score. I’m just trying to figure out how confident we’ll be that there is going to get some benefit in fibrosis in these results?

Mark Pruzanski

Yeah. No, no. Good question. So, just to clarify what we mean by NAFLD Activity Score. It’s an eight-point Score, histologic score that consists of three main components. The steatosis or fat in the liver, which is scored zero to three, there is lobular inflammations or an inflammation component scored zero to three and there is ballooning, which is zero to two. So it actually, frankly, the fibrosis component what typically staged as zero through four is separate and is looked at separately, and you can almost think of the endpoint in FLINT as a composite histologic endpoint of the NAS and fibrosis.

Now I think what you’re alluding is that -- so, so the improvement that we have to demonstrate in NAFLD Activity Score meant by definition that we were improving some or all of the components of steatosis inflammation and ballooning as central aspects of this disease and in order to get into the study you had to have a score of at least four of eight with at least one in each of the three categories. On the fibrosis side, the requirement was no worsening, so no progression of fibrosis at least relative to placebo.

And again, we don’t have the results, so I can’t comment any further. I think it’s an obvious point in these patients. Clearly the win would be to very least to prevent progression, further progression and keep in mind that not just NASH but any chronicle liver disease, the liver has a remarkable ability to regenerate to compensate and function and if you can’t eradicate or cure the underlying disease, the next best thing with it and easy to take oral therapeutic would be to halt it and extract and allow the liver to continue compensating even with the continued underlying existence of the disease.

And now, I’m not saying that’s what OCA is doing. Obviously we hope that when we finally see the results, we’ll have not just stopped fibrosis, but also improved it and help to reverse these patients as we’ve shown time and time again in animal models, but we just doing have those results in hand yet.

Jonathan Eckard - Citibank

Well, thanks and hope I expect to thank you for starting year off well.

Mark Pruzanski

Thanks, Jonathan.

Barbara Duncan

Thanks, Jonathan.

Operator

Our next question comes from Jim Birchenough of BMO Capital Markets. Please go ahead.

Jim Birchenough - BMO Capital Markets

Yeah. Hi, guys, and let me add my congratulations, a few follow-up questions. I guess the first thing I’m trying to understand Mark is the process by which you obtained a data from NIDDK. Is that going to be something where you have to wait a long time to get the data from them, because clearly that seems to be gating to having a discussion with FDA. So, how quickly can you get the data from NIDDK and talk to FDA is the first part of it and then I’ve got a follow-up?

Mark Pruzanski

Yeah. Thanks, Jim. So, you’re right. And I can’t, David and I cannot answer right now definitively what the timing will be. They are right now determining and its NIDDK running and sponsoring the study and of course eight investigators, leading investigators including guys like Arun Sanyal, President of [medicine] of AASLD and Co-chair of the Clinical Research Network, [Art McCall] and other thought leaders in this disease.

They are together discussing their publication strategy and timing for getting all of the final analysis done. This will we anticipate take some time. It’s a little bit out of our hands. That said they are extremely motivated. They are I think it’s safe to say they're excited about these unexpected results as we are.

You'll remember that PIVENS they got published in New England Journal. I think they’ll want to aim for top journal and publishing these results and of course a top meeting like one of the liver meetings with AASLD being an obvious target later this year.

When in that we actually get the data in hand and then are able to turn around not only share it to some extend at least publicly, but almost more importantly than proceed to have an informed robust discussion with FDA is still a little up in the air. I would hazard -- I would absolutely be able to with confidence to say it will this year, but I unfortunately can’t tell you it's two weeks from now or two months from now.

Jim Birchenough - BMO Capital Markets

And then, maybe just thinking about the opportunity here, do have it and since I've looked at this recently but what the number of patients on the liver transplant wait list is and what percentage of those have NASH. I’m just trying to get a sense of the identified patient population by looking at it that way?

Mark Pruzanski

It’s a good question. We would have to go back and get some updated information. I think if nothing else this year, almost a year earlier than anticipated results will spur us to expedite our market research here. I can tell you that currently based on the most recent stats I’ve seen NASH at least in the last couple of year has accounted for close to about 15% of liver transplant, so ranking third on the list behind Hep-C and alcoholic liver disease.

But that’s an increase -- that’s a tenfold increase over the last decade or so. So, I can’t give you the exact number, Jim right now, but I will be able to the next time we have a call like this and David just wants to add something.

David Shapiro

And just to emphasize Mark's point I think the point being is the fastest growing indication for liver transplant is where it's going to end up. I mean we are in the middle of this. We are arriving on the front end of this the tsunami at the moment and it's getting more and more every year. So...

Jim Birchenough - BMO Capital Markets

And then I have other questions on NASH for people in the queue, but I want to ask a question on bile acid diarrhea which may seem odd, but when you look at the benefit in Crohn's patients when you talk about patients who had bowel resection, is there any overlap with the market that's being targeted by [Gatex] in terms of patients getting TPN and have malabsorption, could there be some overlap in that opportunity?

Mark Pruzanski

It's an interesting question and it's something that has occurred to me and the answer is yes, there is overlap. Although patients with such severe short bowel syndrome who require almost 24X7 TPN for nourishment are very advanced. Those are the patients being treated with [Gatex] and there might be some -- there might be some overlap here.

What's interesting is that this was hypothesized going in right that there should be an inverse correlation between the treatment effect we would expect with OCA and the extent of prior surgical recession. Simply put the less remaining functioning surface area of ilium you got left, the less FGF19 you can generate irrespective of how much obeticholic acid you've got on Board. And that's exactly what investigators saw.

So I think if nothing else makes us more confident in the mechanism here, there is a very clear rational based on FXR's regulation of FGF19 here, but anyway I am sorry, I can't give you any more color on the overlap of the patient population, but certainly something to think about and going forward.

Jim Birchenough - BMO Capital Markets

Thanks Mark.

David Shapiro

And just another quick comment is it could be a spectrum as well in the patients who have TPN long term Total Parenteral Nutrition, actually end up with a cholestatic liver pattern in their livers and there is a sole spectrum probably between bowel failure and malfunction and sort of cholestatic liver disease and I think that some of these clinical trials where we are getting at, we hope to sniff around if that's not the wrong term, at some of these other sort of comorbidity and other conditions as well. So it's actually -- it's a good question.

Jim Birchenough - BMO Capital Markets

Thanks guys.

Operator

Our next question comes from Akiva Felt of Oppenheimer. Please go ahead.

Akiva Felt – Oppenheimer

Hi. Good afternoon, guys and my congratulations as well. Just a -- maybe I'll start off with another question on NASH. Imagine you are going to get quite a data package from FLINT with biopsies and blood work, is that something that you think will help accelerate the discussions evolvement for surrogate markers in NASH for trials going forward?

Mark Pruzanski

Yeah I hope so Akiva. An endpoint like this -- exactly like this and variations on this theme was very much a focus of discussion a the NASH workshop in pre-cirrhotic patients. You may know that for example Gilead has a study in stage four, cirrhotic NASH patients and they are using HVPG as an endpoint, the same endpoint we've used in PESTO within alcoholic cirrhotic patients and one that we will use going forward as well in NASH patients.

So I alluded to this before that depending on the population of patients we are talking about, there could be different end points, but this one in FLINT is definitely front row center as a focus for now and I alluded of course to the great progress that's been made in surrogate modalities, but I personally don't think that at least for now we have any one surrogate that's ready for prime -- sufficiently ready for primetime to take the place entirely of histology and their biopsy. So I anticipate that biopsy is here with us to stay.

At the same time one concern we had going into FLINT was these are patients who typically have significant comorbidities on the metabolic side. The last thing they want to hear is that they also have a liver disease and you know none of us want to get a big needle stuck in our liver once let alone twice and yet what really was encouraging here was just how amazingly accurate the investigators were in recruiting patients.

There is less than a 15% screen failure rate. We've talked about that before and they easily met the north of 90% target for repeat biopsy. So there is very, very little attrition here in the study and very willing patient population.

Akiva Felt – Oppenheimer

Okay. Thanks. And maybe I'll jump to PVC for a moment. The confirmatory study that you are hoping to go ahead with next quarter, can you tell us if you are planning to do -- that's planning to be a randomized study or getting used to historical control?

Mark Pruzanski

Yeah. Akiva good question and we wrestled a lot with this and what I'll tell you, I can update you that -- and again I am going to caveat my remarks by saying that of course we haven't had a chance to formally discuss our proposed design with FDA yet. So really their feedback will be fundamentally important here.

I can tell you that the possibility of doing a randomized placebo control trial has presented itself based on again the excellent data generated by both the PBC Supergroup and the U.K. PBC Group, which has provided us just a treasure trove of natural history data that we can look to in sort of pinpointing the kind of enrich patient subpopulation to study outcomes.

Akiva Felt – Oppenheimer

Okay. I'll jump back in the queue and just congratulations again. So it was a great day and a lot of even good updates after the close. So thanks.

Mark Pruzanski

Thanks Akiva.

Operator

Our next question comes from Liana Moussatos from Wedbush. Please go ahead.

Liana Moussatos - Wedbush

Thank you for taking my question. Can you give us a prevalence estimate for NASH in Europe and rest of world and are you thinking about -- given that OCA seems to be working in every single indication you tested in and there are some orphan and then NASH is a large market opportunity, are you thinking about bringing 767 into NASH or some of the orphan diseases just because pricing is going to be so different?

Mark Pruzanski

Thanks Liana. I can tell you I just pulled it up my notes frankly from the NASH workshop and the first set of talks were on the epidemiology of the disease and frankly while it's true that in general, prevalence of NASH in the U.S. seems to be a bit higher and at least in reporting, the reality is I think the experts feel that it's pretty close in Europe and elsewhere and of course as you know DSP Dainippon Sumitomo Pharma is laser focused on NASH in Japan.

As again we keep using the term coming tsunami, but I think may be in the Japanese context that's even more appropriate analogy. So I can't give you the exact prevalence and frankly it's a little bit over the map, suffice to say, it's very significant worldwide.

As far as your other question, the mix of orphan and larger indications the answer -- the jury is out right now in terms of how we are going to position in the clinic 767. We are going to be doing additional work on it. We still need to do IND-enabling studies to position that exactly right.

I think with respect to OCA, we continue to feel that we are going about this in the right way. PBC remains our lead indication, we hope again to be in position to file in both the U.S. and Europe end of the year, which positions us for launch within the end of 2015 and I keep, I don't want to [give] but we've said before that we are going in the right order here in establishing a premium price in the rare disease followed hopefully with an expansion label with a NASH registration which still even on the best most aggressive estimate, will post date by some time launch for PBC.

At the same time and while we are not giving any guidance on pricing, I think you know that you obviously and other -- the other analysts covering us have established a range, modelling a range in the five figures generally speaking on OCA and the orphan indications, I think in NASH, our idea is that we initially want to focus on the patients with greatest unmet need with, but frankly irreversible or otherwise irreversible advanced NASH i.e. the stage threes and fours for example. There are still million of those patients. Those are the patients who Jim asked before showing up on the transplant list eventually and in the care of hepatologists along the way.

And with that kind of a focus, you’re not really talking -- talking about a specialty care indication and you’re not necessarily discounting way down to a broad primary care market type price. So, I think we can manage this. Dan Regan joined us earlier last year. He’s our CCO and he has given this a lot of thought and we’ll continue to think about this.

Liana Moussatos - Wedbush

Out of the six million prevalent in the U.S. what percent are stage three and four?

Mark Pruzanski

Those are believe it or not, that refers just to the stage threes and fours.

Liana Moussatos - Wedbush

Okay.

Mark Pruzanski

We’re talking -- what we cited in the release is around -- from this one good EPI study was about a 12% prevalence in the adult population, in the general population. So, 12% of the U.S. population would suggest over 30 million patients with this disease. And the six million referred actually to the stage threes and fours, so those thought to have advanced disease.

Liana Moussatos - Wedbush

And then just switching over to bile acid diarrhea again, did you see any clinical benefit in over diarrhea on the Crohn's too any disease modifying activity?

Mark Pruzanski

We don’t have the results, but we weren’t really looking at Crohn's. Now of course you could argue that the diarrhea that these patients experienced and other associated symptoms are part and parcel of what they suffer from on a daily basis with Crohn’s as Crohn's patients. But no, this was not -- there weren’t scope. We didn't scope these patients, for example or biopsy them.

Liana Moussatos - Wedbush

Okay. All right. Thank you very much and congratulations.

Mark Pruzanski

Thanks, Liana.

Operator

Our next question comes from Alan Carr of Needham & Company. Please go ahead.

Alan Carr - Needham & Company

Hi. Thanks for taking my questions and congratulations, well done. Couple of them. One, can you comment on a bit more in commercial strategy, obviously there is a lot more patients here in NASH. You know there is a possibility of partnership in the U.S. or Europe. Then also is there an interim analysis for the Dainippon trial in NASH. And then lastly, you’ve disclosed the discontinuation rate for pruritus for POISE, can you comment any on how that was managed any differently? Thanks.

Mark Pruzanski

Thanks, Alan. And sorry, I -- the first…

Barbara Duncan

The first was partnering.

Mark Pruzanski

Partner, right. We have stated very clearly that with the exception of our Asia partnership with Dainippon, our intension right now is to hold on to ex-Asia worldwide rights and continue building value into OCA and in our pipeline, and that continues, that hasn’t changed.

We demonstrated that we can very capably take this compound forward in a number of indications. I think we mentioned in the press release that we’ve successfully completely six Phase 2s and five different indications. We’re going to continue building value in the compound and I wouldn’t say, never say never. NASH is a larger indication. We obviously are open to options down the road. But for now our plans have not changed. The second part of your question was on the interim analysis.

Alan Carr - Needham & Company

In there an interim analysis in the DSP trial?

Mark Pruzanski

In DSP no, there's not.

Alan Carr - Needham & Company

Okay.

Mark Pruzanski

And again, its DSP’s study. And finally the pruritus, I would say that our hypothesis going first of all, as you remember in Phase 2 we have very dosed dependent effect, both in terms of incidence and severity. 10 milligram dose had very good efficacy in Phase 2 and as our -- was our going forward dose and the difference between Phase 2 and POISE Phase 3 was we knew to expected.

So yeah, we had management strategies that are tried and true in managing this annoying symptom in these patients and these were deployed during the POISE trial and obviously we’re glad to see pretty successfully. We do think we are blinded, but I have been saying and now we have the final, the final numbers, I have been saying that even if we assume that those patients who discontinued from the double-blind phase due to pruritus were in one of the two dose groups and not on placebo.

We did better than we did in the 10 milligram dose group in Phase 2 and with over three times the duration of treatment. So we’re very happy about that. The other proxy of course for tolerability is one thing to keep a patient and hold a patient through a double-blind study, the patient visit, the patient visit, it's another thing when they have the option or not to continue on drug in a five-year open-label LTSE and as we mentioned over 95% of patients opted to do so.

So, we’re -- again this is an annoying symptom that's clearly an issue in some patients with taking OCA. But we do believe it’s quite manageable in the vast majority of PBC patients.

Alan Carr - Needham & Company

Thanks very much and congratulations again.

Mark Pruzanski

Thanks, Alan.

Barbara Duncan

Thank you. We’re going to take one more call.

Mark Pruzanski

Question.

Barbara Duncan

Question sorry.

Operator

And our final question comes from Jim Molloy of Janney. Please go ahead.

Unidentified Analyst

Yeah. Hi, guys. This is [Kiara] on for Jim. He is actually out travelling. Great result this morning. Thank you for making it very exciting for me. Just two really quick questions. First of all, for the NASH with the success that you guys have had with the FLINT trial, is there any possibility that you guys could comment on perhaps the confirmatory trial in terms of size and length of that particular -- that particular trial might be and then the second question is, does this data at all change as in accelerate the FDA’s filing timeline if at all?

Mark Pruzanski

I think just to be clear I think when you ask about the confirmatory trial, you’re asking about the PBC confirmatory trial that we’ve submitted a design for to FDA. We’re not talking about that in the context of NASH and the answer is that it will take several years to demonstrate, improve clinical outcomes in PBC patients even in patients with more advanced disease and that's typical of a relatively slow moving chronic disease like this.

In terms of acceleration of filing the answer is no, and in the context of NASH, again as I mentioned before, we have to go and sit down with FDA and have a formal discussion with them in order to be able to clarify the path to registration and what will be required. With respect to PBC of course, we’re having an ongoing discussion about that and are projecting that we can file for approval the end of this year in both the U.S. and Europe.

Unidentified Analyst

All right. Great guys. Thank you and congratulations again.

Mark Pruzanski

Thank you very much. So thank you everyone who dialled in and/or is on the webcast. This can be rebroadcast. And thank you of course for your interest in the company and in sharing the great news that we put out today. We’re obviously quite excited and look forward to talking to you on an ongoing basis going forward. Thank you all.

Operator

Ladies and gentlemen, this does conclude today’s conference. Thank you for your attendant. You may all disconnect. Have a great day.

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