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Executives

Senthil Sundaram - Senior Director of Corporate Development

Dr. Mark Pruzanski - Chief Executive Officer

Barbara Duncan - Chief Financial Officer

Analysts

Jonathan Eckard - Citi

Michael Yee - RBC Capital Markets

Alethia Young - Deutsche Bank

Akiva Felt - Oppenheimer

Jim Molloy - Summer Street

Alan Carr - Needham

Joseph Schwartz - Leerink Partners

Navdeep Singh - Goldman Sachs

Intercept Pharmaceuticals, Inc. (TCPT) Q2 2014 Results Earnings Conference Call August 11, 2014 4:30 PM ET

Operator

Thank you for joining the Intercept Pharmaceuticals’ Second Quarter 2014 Financial Results and Business 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’s website for two weeks from today’s date.

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

Senthil Sundaram

Good afternoon. Thank you for joining us on today’s call. We are reporting on financial results for the quarter ended June 30, 2014, and will also providing an update on our development programs including an update on additional positive FLINT data included in today's 10-Q filing.

Before we begin, please remember we will be making certain forward-looking statements on today’s call including statements and forecasts regarding our future, financial, and operating performance, the POISE, FLINT and other trials of obeticholic acid or OCA, anticipated time lines for the potential approval and commercial launching of OCA in our regulatory, clinical and commercial plans, 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 important risks and uncertainties described in our reports filed with the SEC, including the Risk Factors section of Intercept's most recent Annual Report on Form 10-K and Intercept’s quarterly reports on Form 10-Q and Intercept other filings with the SEC. We assume no obligation to revise or updated 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 our CEO, Dr. Mark Pruzanski.

Dr. Mark Pruzanski

Thank you, Senthil. And thanks to everyone for joining us on our conference call and webcast today. I'm going to provide you with an update on the development of our lead product candidate, obeticholic acid or OCA. Barbara Duncan, our Chief Financial Officer, will then discuss our financial results, and cash run rate.

First item, I'd like to cover today is our program in primary biliary cirrhosis or PBC. Our supporting studies are proceeding on track and we continue to anticipate completing our NDA and MAA filings in the first half of 2015. We will continue to work closely with FDA and MAA and are preparing for pre-NDA and pre-MAA meetings that we anticipate will take place in the fourth quarter 2014. We believe that the successful outcome of these meetings will give us an increased confidence in our regulatory strategy for OCA and PBC and facilitates for filing our NDA and MAA.

We also recently announced that FDA granted us a Fast Track designation for our PBC program, which will allow us to request submission of the NDA on a rolling basis as each section is completed.

Since our last quarterly update, we’ve also made significant progress towards finalizing a protocol with FDA for our confirmatory Phase 3 clinical outcomes trial in PBC. We continue to expect trial initiation around year-end 2014 with completion of the trial to occur on the post marketing basis in support of eventual full approval in accordance with FDA’s subpart H guidelines. We’ve not get officially finalized the trial protocol and submitted yet to FDA but I can provide some general specifications regarding the trial.

We currently expect to enroll about 300 to 400 patients with severe PBC as characterized by very significantly elevated alkaline phosphatase or ALP of greater than five times the upper limit of normal and/or abnormally elevated bilirubin of upto three times the upper limit of normal. We intend to use a composite endpoint that will include depth, liver transplant and then so called MELD score greater than 15, the point at which patients with advance liver disease are typically placed on the liver transplant list.

Moving on to other indications, we’re also excited to announce that we remain on track to launch our first clinical trial of OCA in primary sclerosing cholangitis or PSC at the end of this year. We recently submitted an IND to FDA for this indication and posted information on the trial for a placebo-controlled dose ranging Phase 2 trial on the clinicaltrials.gov website.

Like PBC, PSC is a rare autoimmune cholestatic liver disease though with distinct characteristics. PSC is an orphan indication with a prevalence of about one third that of PBC with no approved therapies available, therefore representing a very significant unmet medical need. We intend to study the effects on levels of alphos ALP, the same liver enzyme market we’ve assessed in our PBC trial. PSC patients enrolling our Phase 2 trial will receive 24 weeks of treatment with either placebo or OCA, the single daily doses ranging from 1.5 mgs to 10 mgs.

We’re really excited today to sharing news with you regarding the results from the FLINT trial and I know a lot of you have been waiting for quite some time as had we.

The NIDDK recently sent us a draft manuscript describing the FLINT results which intended to submit for publication. Since the manuscript is in draft format is expected to undergo peer review, it’s subject to further modification prior to publication. The NIDDK has expressed to us a preference to avoid any publicity concerning the FLINT results ahead of publication and public presentation to the medical community that’s anticipated to occur in the Late-Breaker Session at the upcoming AASLD, the American Association for the Study of Liver Disease conference on November 10, 2014.

In the spirit of our collaboration, we do not intend to issue a separate press release, provide any further information about the trial results other than those disclosed in our quarterly report or provide any statements or interviews in response to media requests. Furthermore, the NIDDK has indicated to us that neither it nor the FLINT investigators will provide any comment in response to third party enquiries for information on the FLINT trial until after the results have been published and presented.

We will share with you today top-line results of the trial including key efficacy endpoints and a summary of safety and tolerability. We do not want to jeopardize the potential for a scientific publication or presentation. Therefore, we request that investors, analysts and the media respect the NIDDK’s and our wishes to defer inquiries for additional information and statements until after the data has been presented at the appropriate scientific forum.

FLINT was a double blind placebo controlled 72 week trial in 283 NASH patients with biopsy proven NASH comparing once daily 25 milligram OCA and placebo.

Following the 70 week treatment phase, there was a 24-week follow-up phase and final 96-week visit, to be enrolled in FLINT patients have to have biopsy-proven NASH with NAFLD Activity Score or what's called NAS of at least 4 out of a total possible score of 8.

Fibrosis was scored separately and scale of 0 to 4 and FLINT patients could have no fibrosis or upto stage three fibrosis or bridging fibrosis. Patients with the stage four consistent with cirrhosis were excluded from the trial. All of the FLINT results that I will now report come from the draft FLINT’s manuscript provided to us by NIDDK.

So to begin, the proportion of the patient meeting the FLINT primary endpoint, defined as a decrease in the NAS of at least 2 points with no worsening of fibrosis, at the end of the 72 week treatment phase was 46% in the OCA group and 21% in the placebo group with the P-value of less than 0.001. Notably subgroup analysis of the primary endpoint revealed numerically higher response rate in OCA treated patients with more advanced NASH as characterized either by NAS, fibrosis stage or comorbid type 2 diabetics. The response rates in FLINT appear to be similar to the response rate in the PIVENS trial and NASH trial conducted by NIDDK that evaluated Pioglitazone and Vitamin E.

That said, I'd like to highlight a couple of important differences between the two trials. First, the treatment duration in FLINT was shorter at 72 weeks as opposed to 96 weeks for PIVENS. Second, the patient population in FLINT had more advance disease, nearly half of the patients had comorbid type 2 diabetics and our overall population presented with higher baseline NAFLD Activity Score and fibrosis scores. Finally, some patients influent were taking Vitamin E and Pioglitazones medications that have been studied for the treatment of NASH.

Now, moving on to secondary endpoint. OCA also produced generally equivalent statistically significant improvements in each of the components of the NAFLD Activity Score. As a reminder the NAFLD Activity Score is comprised of three such components that are individually scored, steatosis, lobular inflammation and hepatocellular ballooning. On the secondary endpoint of NASH resolution although there was a positive trend, this endpoint did not reached statistical significance.

As a reminder NASH resolution is different from the NAFLD Activity Score and provides a global assessment of whether a patient will be diagnosed with NASH. The rates of NASH resolution were substantially lower in both the OCA and placebo groups than those observed in the PIVENS trial. However, a partly consideration given to the differences between the two trials that I just noted before without more detailed histological data and other relevant information, we're not in a position to speculate further as why the bar appears to have been higher to acute NASH resolution in the FLINT trial as compared to PIVENS.

Let me now turn to fibrosis, which to remind you is the scoring that can occur in NASH and other chronic liver disease patients with the potential to progress eventually to cirrhosis and in some cases lever failure or cancer. We're very pleased to see that 72-weeks of OCA treatment resulted in a statistically significant improvement in fibrosis with a P-value of 0.01. The improvement in fibrosis was observed in just over one in every three patients, nearly double the response observed in patients receiving placebo. The mean fibrosis change in FLINT was relatively small with a placebo adjusted improvement of just under one-third of a stage. Although this is not unexpected given the narrow fibrosis scale of zero to three in the population studied in a relatively short period of therapy.

The fibrosis benefit with OCA treatment is the first time we are aware of that a therapeutic has been shown significantly improved liver fibrosis in a meaningful proportion of NASH patients and unexpected and positive finding.

I'd like to make a few observations as to why we believe the recorded fibrosis benefit is particularly striking. First, the FLINT trial was not powered to demonstrate a fibrosis benefit and there are only 200 patients with paired liver biopsies in the trial. Second patients will not require to have fibrosis to enter the trial which means that a proportion of patients could by definition not experience any fibrosis improvement. Third, having two weeks is a relatively short time to assess changes in liver fibrosis. And fourth we maintain the view that helping progression of fibrosis which was observed in an even large proportion of FLINT patients receiving the OCA treatment is in and of itself a clinically meaningful outcome.

It will clearly be very important for us to be able review the fibrosis results for the various subgroups of patients, including those with more or less advanced fibrosis. Once we have them in hand, if the ability of OCA to improve fibrosis along with the other histopathological features of NASH is replicated in Phase 3 and long-term safety is also demonstrated. We believe this therapeutic benefit would represent an important turning point in the treatment of NASH patients.

The histological improvements observed in OCA treated patients were accompanied by significant reductions in certain liver enzymes, ALT, AST and GTT all of which have been abnormally elevated at baseline. There was also a modest decrease in bilirubin and increase in out fast, although both fade within normal limit. These five biochemical parameters tended to return to pre-treatment values at the end of 24 week follow up days after stopping OCA treatment.

The changes in liver enzymes seen on OCA treatment in FLINT were generally consistent with the effect observed in our prior six week trial in diabetic NAFL patients.

Moving on to other secondary endpoint. OCA was also associated with changes in metabolic perimeters. In particular OCA patients experienced the modest statistically significant weight loss and stable to what glucose controlled as measured by glycosylated hemoglobin A1c, again as observed in our previous six week trials. However, there was an enormous result observed in a market of fasting hepatic insulin resistance called HOMA-IR which increased in the OCA treated patients at the end of 72 weeks. This finding is difficult to interpret particularly because there was an even larger HOMA-IR increase in the placebo group during the 24 week follow-up period and seen over 72 weeks in the OCA treated patients.

In addition this is finding has laid out results in our previous six week study showing improved hepatic insulin resistance based on the gold standard glucose method. Given the extensive public interest in lipid affect observed insulin and the potential cardiovascular safety concern that is resulted we have provided a lot of details in our quarterly report from lipid levels of baseline 72 weeks of treatment and 24 weeks after treatment this continuation. At 72 weeks modest had statistically significant increases in total an LDL cholesterol and decreases in HDL cholesterol were observed in the OCA treated patients. A decrease in triglyceride was also observed but this is not statistically significant at the end of treatment.

The time course of the lipid changes I mean particularly interesting, the cholesterol change is peak at the first 12 week time point assessed on study then decrease in magnitude through the remainder of the 72 week treatment phase and then effectively return to baseline during the 24 week post treatment follow-up phase. The following total cholesterol and LDL over the study period could be related to more rigorous cholesterol management implemented during the trial although we cannot draw any firm conclusions until we see an analysis of the impact of statin therapy.

The incidence of adverse events or AEs influent with similar between groups for all symptoms except colitis. OCA treated patients experienced a higher incident and grade of mostly moderate colitis resulting in the discontinuation of one patient. The draft menu script did not describe the time course of colitis over the course of the trial. We note that in our PBC Phase 3 trial colitis incidence and severity declined over the course of 12 months. The incidence of severe or life threatening events does not different between the two treatment groups and most events were deemed unrelated to treatment including all severe or life threatening cardiovascular events. The only two patients that influent were those that we previously disclosed in our 10-K and in contrast to what we previously reported neither of that would considered to be related to treatment.

I would like to take this opportunity to express again our gratitude to NIDDK the FLINT investigators and others working with the NASH clinical research network as well as the members of the data coordinating center for their long standing commitment to identifying effective therapeutics for the benefit of NASH patients.

We believe their efforts to conduct and complete the FLINT trial marks an important milestone moving the entire field forward and of course in the advancement of OCA for this critically important indication. We realize that many investors are eager to understand more about plans for a potential Phase 3 design and pediatric NASH Phase 2 trial including the specifics of regulatory endpoints in patient population.

However we feel that it would be prematured to provide more guidance until we have the full set of FLINT data in hand and receive feedback from regulatory authorities. We remain committed to advancing OCA for the treatment of NASH as expeditiously as possible and based on timely availability of the full data set we continue to plan for a Phase 3 program start in the first half of 2015.

As a reminder our Japanese collaborators Sumitomo Dainippon Pharma please note the recent name change of the company, is also conducting a placebo controlled Phase 2 trial of OCA in 200 NASH patients with data expected by the end of 2015.

In conclusion, I’d like to summarize the results from the FLINT trial with three key takeaways. One, results from the FLINT Trial give us increased confidence in our plans to advance in OCA for the treatment of NASH and we look forward to working with FDA and EMA to expedite development; two, the unprecedented and unexpected fibrosis benefit observed with OCA despite the challenging and heterogeneous patient population treated for a relatively short period of time gives us increased confidence that OCA has the potential to be an important medicine for patients with NASH and advanced NASH; three, we are fully committed to continuing our close collaboration with NIDDK and the FLINT investigators. And I’d like to reemphasize that we do not plan on making additional information disclosures beyond the 10-K and today's call in order to preserve discussions at the appropriate scientific forum.

I’ll now turn over the call to Barbara Duncan, our Chief Financial Officer for a discussion of our financial position.

Dr. Mark Pruzanski

Thanks Mark and good afternoon everyone. Please refer to our press release issued earlier today, for a summary of our financial results for the three and six months period ended June 30, 2014. You will note that we had net income this quarter, mainly due to the recognition of non-cash gain of approximately 56 million that was associated with the exercise of all outstanding warrants in April.

Going forward, there are no warrants outstanding, so we no longer have the associated non-cash warrant income or expense. We ended the second quarter with $299 million of cash, cash equivalents and investment securities available for sale on our balance sheet. During the past few months, we've been evaluating our infrastructure and requirements for the build out of a world class organization. The analysis not yet compete but we have identified the development of the infrastructure needed to best position us for maximizing [alphos] potential in PBC, NASH and other liver diseases. The potential launch of PBC in North America, Europe and other countries, the investment in adequate commercial supplies and a continuation of our investment in research and development, the company will need additional resources. Thus we’re changing our guidance in our cash runway to mid 2016 to incorporate these identified areas of growth.

Let me now turn the call back over to the operator to proceed with the Q&A portion of the call.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). Our first question comes from the line of Jonathan Eckard of Citi. Your line is open.

Jonathan Eckard - Citi

Good afternoon and congratulations on the data. What a sigh of relief. So, just a quick question, and I’ll try to maybe take a step back, so not put you too much in the quarter. I guess versus what a lot of people maybe anticipating as an improvement in resolution of NASH versus an improvement in fibrosis, I guess broadly speaking, just one from the other; I mean I think that there's been other companies saying that resolution of NASH recently in FDA meetings [isn’t] improvable endpoint. Without you trying to say putting in the corner what the pathway forward, I mean if you, two days ago had to say, if you had a choice I’d rather go over after fibrosis versus resolution of NASH, is there a fair kind of hierarchy of what will be a preferable endpoint you go after?

Dr. Mark Pruzanski

Jonathan, it's a very good and important question. And frankly, we’re here digesting the results wheels on. We certainly, as I mentioned during my scripted remarks, we’re not expecting the fibrosis benefit. And I think you know why. So, this does provide us an additional ace in the hand, so to speak and certainly it's something that we need think about and discuss with the regulatory authorities.

You are right that recent speculation and including from us just based on what we’ve been hearing, but not directly from the regulators is that NASH resolution maybe utilizable as a primary end point of future NASH trial. And as I mentioned, we were somewhat surprised.

I think at this point, we’ve got a series of hypothesis, including -- starting with the differences in the FLINT population from for example (inaudible) population. But hypothesis is what might be going; we clearly need to get a lot more of the data in the hand to really understand the phenomenon.

I think it's also important to understand that NASH is a really heterogeneous disease and FLINT certainly enrolled a pretty heterogeneous NASH population. Based on the data that we end up getting from FLINT, I think we’ll be able to make a really informed decision in conjunction with our discussion with FDA and EMA in how to do a perfect patient selection, what end points to go for and finally, what population to go for? This is such a massive epidemic and therefore frankly market opportunity that I’ve got no doubt that we can find the appropriate populations to target first.

And beyond that, I think it’s just impossible to speculate further on how this will shape our Phase 3 program.

Jonathan Eckard - Citi

And then just one last question is on the severe life threatening events, I mean it seems like the prior announcement that there was an imbalance seems now, is it based on reassessment by a different group, is that made of that’s diversion versus that last kind of flag that NIDDK raised, that DSMC raised, trying to understand what could have led to -- what was imbalance now being not imbalanced?

Dr. Mark Pruzanski

Again a very good question and we’re not [ready] to the deliberations that went on internally amongst the NIDDK the investigators and DSMC but clearly there is a change perhaps on some adjudications that took place since our last disclosure that resulted in a reclassification at least of the patient that is unrelated and in any case I can certainly tell you that we’re very pleased to see the results with respect to not just the serious cardiovascular events but safety in general, which appear to be which just from the data we have the drug seem to be safe in this population over the treatment period. And that’s all I can speculate on now.

Jonathan Eckard - Citi

Well I’ll get back in the queue. Congratulations again.

Dr. Mark Pruzanski

Thanks John.

Operator

Our next question comes from the line of Michael Yee of RBC Capital Markets. Your line is open.

Michael Yee - RBC Capital Markets

Hi thanks, congratulations as well. Question on lipid effects maybe you could comment on lipid more information around that as it relates to what percent of patients were on benchline statins that throughout the study you commented that LDL went up, but at the end of 72 week, have ended at have plus 9 so presumably it was higher than it was managed with statins, so is that what was going on there maybe you could comment on the clinical meaningfulness of that data? And then the second question is on the fibrosis effects clearly a great initial saving the result but perhaps a question about meaningfulness so is the thought from your view that obviously overtime that gap is going to widen as one group gets worse and one group is getting better that also gets better overtime, is that the thinking? Thanks.

Dr. Mark Pruzanski

Thanks Michael, yes so let me take your questions in turn, with respect to lipid I think we disclosed what we know and I agree with you it’s very important to see what’s that management looks like over the course of this trial and as we speculated certainly some of the apparent benefit and the sort of seeming reversal in trend for changes in LDL for example could very well have resulted from improved and more vigorous cholesterol management over the course of the study. I think in any case we were, if given the concern that’s been out there for last seven months or so about lipid effect we were very, very pleased to see pretty similar pattern to what we have observed before there was in the 6-week study that we previously published there is certainly an increase in LDL which appeared by the end of that period to be plateauing and the same thing seems to have happened here. We thought a peak that first time only 12 weeks but then an all-time points after that LDL was coming back in and lipids in general about 72-weeks came back in and off drug off treatment essentially return to base line values. All I have said, we clearly within FXR agonists with OCA those here we clearly have interactions with lipids and lipid metabolic effects and we’ve been saying for some time, we are absolutely committed to very detailed study of this phenomenon as we've done in first indication PBC for all conducting and detailed lipid metabolic study we will be doing the same in NASH.

Now your second question was about fibrosis and what we make of this now and in terms of results so few weeks and over longer period of therapy. But I certainly agree with the premise of the question that from our standpoint, this is highly clinically meaningful. Remember that just knowing that we hope that progression of fibrosis in a very substantial proportion of patients and meeting the primary endpoint is considered clinically meaningful, I mean we're stopping the disease and it's tracks and as you know patients with the chronic liver disease with even with stage two, even stage three, liver fibrosis can live relatively happily with compensated disease for a long period of time and really the name of the game is to prevent progression to cirrhosis and eventual decompensation and potential hepatocellular carcinoma.

So that said, we are thrilled to see a static benefit and even sort of a seen reversal. The other thing just to your question about timeframe, is also very important because 72 weeks is in the context of a chronic fibrogenic process that we see in NASH and other chronic liver diseases is almost a blink of an eye, and it takes a long time, this is the result of the years and years, sometimes even decades of scarring, progressive scarring in the liver, the liver is trying to generate turned over scar.

And so it’s surprising to see the kind of effect that we have just over one, three patients with an improvement and I can't wait to see what this drug can potentially do with longer term therapy.

Michael Yee - RBC Capital Markets

Okay. Thank you.

Operator

Thank you. Our next question comes from the line of Alethia Young of Deutsche Bank. Your line is open.

Alethia Young - Deutsche Bank

Hey. Thanks for taking my question and congrats on the data guys. I just want to go back to the kind of NASH clearance ask a couple of questions. One, are power for NASH clearing? And then just how many biopsies that we have in that NASH clearance endpoint? And then the last question is, just what kind of is things kind of effect NASH clearance and talk a little bit more about how it’s measured and what it means numerically please?

Dr. Mark Pruzanski

Good questions Alethia. You were powered on the primary endpoint which as you know is NAFLD Activity Score improvement of two points and NASH clearance as I mentioned in my remarks, it's something different. It's determined by global histopathological assessment which obviously incorporates settlement of NAFLD Activity Score which goes beyond that. And one thing that we have to learn frankly and get smarter on is how exactly did the hits of the pathological global assessment done in FLINT. And what the meaning of this is. So I think in answer to the first part of your question, no, we weren’t necessarily powered for that for any secondary endpoint here.

In terms of the number of paired biopsies, we put that in the queue. We believe there is 200 patients across both groups so little bit bigger sample size than what was reported on the payments if you are sort of looking to that is compared. And third part of your question was…?

Alethia Young - Deutsche Bank

Just kind of talking about what NASH clearance by definition means on the scoring from the NAFL scoring (inaudible) zero and then also just some of the variability and the effects that are seen in measuring biopsies?

Dr. Mark Pruzanski

Yes. Well, so when you did the gross, so I can't speak knowledgeably on all the aspects of what going to assessment of about NASH resolution. And there are, there is a readout there, it doesn't necessarily mean black and white, no improvement, yes improvement right.

So, you can have stages of improvement as determined for example by NAFLD Activity Score, but not quite rich resolution. So, just as in my answers to the previous question about time course of treatment and what we could hopefully over longer period with time with fibrosis. Again this is -- a lot of these patients with advance to this are relatively interactable problem. A lot of the patients in FLINT had diabetes, underlying diabetes which drives a lot of elements of more aggressive steatohepatitis.

So, I can't speculate what would happen with longer term therapies, but perhaps we could expect to get more patients fully resolving. But again I wouldn't mistake NASH resolution sort of a black, white, yes, no patients responding to therapy or not.

Alethia Young - Deutsche Bank

Great. Thanks.

Operator

Thank you. Our next question comes from the line of Jim Birchenough of BMO Capital Market. Your line is open.

Unidentified Analyst

Hi, it's Nick in for Jim. Good afternoon. Couple of questions, first on -- I know you don't want to talk about Phase 3 design. But do you have from all of the clinical data that you have collected with OCA, a pharmacokinetic markers that tell you, do you think 25 milligrams is ultimate dose, I mean you could argue that given the safety profile looks good that a higher dose you might see more fibrosis, you could argue, oh gosh, we could back off a little bit and give ourselves a bit more of area in case a larger broader population, we do see some safety signals. And then my second question is on fibrosis. It sort of comes out at a zero 4 point, so really it is it sort of a linear scale there is no continued scale. So how do you defined fibrosis improvement and is there something that needs to be adjudicated by a blended third party? Thanks.

Dr. Mark Pruzanski

Yes, both great questions. Thank you. With respect to dose selection let me a take a big step back and remind everyone that frankly going into Phase 2 in PBC and other indications we clearly underestimated the potency of OCA in humans based on animal data and as you know in PVC we made what in retrospect with a very wise decision to include a second dose group calculation dose group lower dose groups attached to a lower dose of 5 mgs to 10 mgs which looks like it could be what we go with commercially based on the improved safety profile.

So, in NASH again as I said before it’s too early to speculate on the specifics of our phase 3 design, but I wouldn’t rule out going with something -- if it’s also a 25 and perhaps even a lower dose than 25. So, far in patients like these NAFL NASH patients at the lowest that below dose we studied. We also studied 50 marketing. But again it’s a good question and the answer to some qualified maybe.

With respect to fibrosis and what this improvement mean, I just want to correct, just because it’s a zero, 1, 2, 3, 4, definitely really meaning it’s linear there are sub categories in between Phase I but not to get into the technicalities of it. Improvement we believe a way that it’s judged is patients who have first of all have to have preexisting fibrosis by definition, so at least stage one. And to improve, you have to improve by stage. So, we believe that that’s what’s met by fibrosis improvement. As far as blinded adjudication, you are right. I mean this is just in my answer to the question before on NASH resolution, this is a histopathological assessment. So pathologist looks to the slide and based on his or her expert opinion determines what stage that patient is and whether that patient has probable or definitive NASH or not. That said, the protocol for FLINT was as gold plated as you can get their double blinded histopathological leads of different histopathologist, they had to agree. But anyway, good question; I hope I have answered it.

Alethia Young - Deutsche Bank

Thank you.

Operator

Thank you. Our next question comes from the line of Akiva Felt of Oppenheimer. Your line is open.

Akiva Felt - Oppenheimer

Thanks. And congratulations on the data. So Mark, a couple of questions. First, it’s somewhat hard to reconcile what looks to be very benign lipid data reported today; what the NIDDK is focused on safety back in January. Was this just something that was misread by the street or was NIDDK looking at a different beta set? And second related question which you may have already answered to Michael, but did you say that there is no longer a CV imbalance overall, not drug related or not drug related but just an overall CV imbalance? Thanks.

Dr. Mark Pruzanski

Yes, Akiva, thanks for the question and obviously to the extent that you are worried about the lipid changes, we certainly were that much more. So, I can't speak for NIDDK. And as you know, this is a large trial, the long trial, there is always a lag in sort of getting up-to-date beta sets and it could be that the alarm went off based on earlier trends in lipids, perhaps before that plateau that [reported said] they started coming back in. So, I don't want to second guess that. I think this is just focused on the results seven months later. I think the results speak for themselves. And so the put to rest to concern at least about outsize magnitude changes or increasing changes over time in worrying lipid parameters.

And then yes, same thing on CV events. So I think again with the benefit of further analysis and adjudication, potentially that in the end in the final analysis, we came out without an imbalance in cardiovascular events.

Akiva Felt - Oppenheimer

Alright, that’s very encouraging. Thanks.

Dr. Mark Pruzanski

Thanks.

Operator

Our next question comes from the line of Jim Molloy from Summer Street. Your line is open.

Jim Molloy - Summer Street

Hey guys, thanks for taking my question. And I was just wondering does this -- much benign lipid data than it seemed before, does that necessitate lipid study that you guys had planned and you still plan to start it first half next year but is it really needed?0

Dr. Mark Pruzanski

Yes, Jim, thanks. Look, we clearly have an effect on lipids. And as I mentioned before, we are absolutely committed to detailed study and understanding of the lipid metabolic effects of our drug. Just because the results came out better than we expected doesn’t negate the fact that there was clearly an effect. And we need to do a study to ascertain number one, the mechanism display here in a very detailed way; number two, clinically whether we can intact with standard of cares statin therapy manage the issue effectively over a time. And I think that that’s something that clinicians are -- want to see from us.

So anyway, the bottom line is yes, we are going to go ahead with the Phase 2 lipid study, statin study in NASH patients.

Jim Molloy - Summer Street

Okay. A quick follow up on that. I mean knowing that severity of disease and the treatment options right now, any -- premature to talk about any chance or earlier than running a full Phase 3 to get the full beta set to file and recognize and obviously want to run all the data you need to get, but [just how] the way you to get a drug that treats the disease and trial and give any data.

Dr. Mark Pruzanski

Yes. Look first, your question I think is correct. This is an epidemic of indication liver disease. As I said before, NASH just one key stat. NASH is poised to become the leading indication for liver transplant just in the next few years. And I am talking about overtaking both chronic FC and alcoholic liver disease with no available treatment. Now, that said, we continue to guide I think appropriately that we shouldn't expect get our drug approved without doing a Phase 3 trial. Our intention is to design a clinical outcomes trial, placebo controlled clinical outcomes trial in NASH patients.

And again, as was discussed back in September of last year at the FDA hosted NASH end points workshop, we do expect as do other companies developing NASH drugs to be able to come to agreement with FDA on the surrogate end point that we could nest into the Phase 3 trial and potentially file for accelerated approval on.

And I think just again referring to the workshop and now some of you might be aware of the liver forum that has sprouted from that two day workshop involving all the stakeholders together, I think it's important to recognize that FDA and same I hope EMA joining in the liver forum taking a real leadership position here. They absolutely recognize the unmet medical need here and are getting out ahead of this.

Jim Molloy - Summer Street

Thanks for taking the question.

Operator

Thank you. Our next question comes from the line of Alan Carr of Needham. Your line is open.

Alan Carr - Needham

Hi, thanks for taking my questions. Couple of them, one of them is it sounds like just given the manuscript and not the raw data, and I wonder how that effects the timing of when you can dowel over it, kind of some ideas as to what a Phase 3 would look like and discuss tat with the FDA, might that be pushed out a little ways?

And then also can you talk a bit more about the impact on metabolic parameters and that sort of thing and some of the diabetic things, the glucose as well. Thanks.

Dr. Mark Pruzanski

Sure thanks Alan. Yes, you’re right. At this point we have a manuscript it’s a very detailed manuscript as you can see we just summarized top-line data from it. And I think that ahead of regulatory and David Shapiro, our Chief Medical Officer feel good that based on what’s in the manuscript, go ahead, we believe to our preliminary planning after Phase 3 and initiate formal discussions with the regulatory authorities with FDA.

And now that said we don’t necessarily we won’t be able to finalize our plans I think without the complete data set and I think and I fully appreciate the fact that we need to get the complete set of data and we have a plan in place to work with them on getting it to us.

Alan Carr - Needham

Yes. It’s something that you think you’re going to have a pre-phase pre-meeting in the fourth quarter?

Dr. Mark Pruzanski

I don’t Alan it’s just too early to speculate on timing of the regulatory meeting.

Alan Carr - Needham

Okay, that’s fine.

Dr. Mark Pruzanski

Yes, the other your question about metabolic parameters, I think you’re asking primarily about glucose control and insulin resistance is that right?

Alan Carr - Needham

Yes, and also your thoughts on weight loss if you can -- to the extent if you can characterize it?

Dr. Mark Pruzanski

Yes. I mean the weight loss is interesting. We saw that we don’t expect it over the six weeks that we previously studied OCA in patients like these. So, we’re certainly pleased to see it again it’s a modest weight loss but statistically significant compared to placebo and that’s certainly better than the opposite, right, which is a concern a historic concern with the (inaudible) class of drugs that’s undergoing a lot of study for this indication.

I think that that coupled with the flat HbA1c especially given the patient population is good news, given the obesity and insulin resistance in type 2 diabetes overlap. The homa IR that I mentioned is the anomalous finding it’s considered to be a generally good marker of insulin resistant but there is really a ton of daily this is testing on static measure and there is a ton of daily variability in fact we just recently read a pretty good paper that showed that any increase of less than 90% from time point to time point cannot really be interpreted as meaningful. And we certainly did not see that and as I mentioned the placebo is first of all whatever reasons from the end of the treatment phase 72 weeks, just 24 weeks later had gone through a swing for the worse that was significant it was greater in magnitude certainly than what we saw with those OCA. So we’ll find that one a little difficult to interpret.

Alan Carr - Needham

Okay. Thanks very much.

Operator

Thank you. Our next question comes from the line of Joseph Schwartz of Leerink Partners. Your line is open.

Joseph Schwartz - Leerink Partners

Thanks very much. I was wondering if you could give us a sense of your expectations for the timing of the publication, would you expect this to be done concurrent with AASLD or before then perhaps?

Dr. Mark Pruzanski

It’s a good question Joe, but that’s not in our hand, it’s their manuscript their publication, we know they intend to submit it, it will undergo a peer review and as you know process like that can’t be quick, it can take time, depends on what additional data are requested of them what internal et cetera. So difficult for me to speculate on that.

Joseph Schwartz - Leerink Partners

Okay. And I don't want the label any points that will already covered and I don't know you're limited with what you can say and maybe even what you know. But I'm little bit confused on the seeming removal of imbalance of adverse cardiovascular events. And I recall that this was seen it an interim analysis at which point the monitoring committee decided to stop dosing patients. Can you step back for us and give us you read on why that they do that, was it not due to their overall risks benefit, was this just a bad decision, a mistake, those things happened I don't know, I'm just, I'm trying to understand what might have happened with regard to the read of the overall risk benefit at the time?

Dr. Mark Pruzanski

Yes. So just to be clear, we just closed serious cardiovascular event imbalance in our 10-K in March and that was based on what we saw there is a statement in their annual IND update that typical annual IND update and there was a comment that had come from the Drug Safety Monitoring Committee. We're not entirely sure, what data they had in hand at that time, how much adjudication had occurred of different serious adverse events. But clearly the DSMC, which as you know is independent of the investigators and in NIDDK in this case raised on the concern and the regulatory personnel at NIDDK self-compelled to include that in their update and we in turn self-compelled to point it out as a materially important disclosure for investors to know. I can't speculate on how, what happens, but obviously they had a fair amount of time to look at the complete data set, safety data set and they determined in the end the number of cardiovascular events and it turned out there wasn't an imbalance.

Joseph Schwartz - Leerink Partners

Okay, great. Thanks very much.

Operator

(Operator Instructions). The next question comes from the line of Navdeep Singh of Goldman Sachs. Your line is open.

Navdeep Singh - Goldman Sachs

Hi guys. Thanks for taking my questions and congrats for the benefit on fibrosis. So I was just looking at the 10-Q and it says that the mean decrease in fibrosis was 0.2 from a base line of 1.9 in the OCA patients and FLINT. And just trying to get -- can you put us insight maybe a little better clinical perspective to us? I think if you look at the PIVENS trial, Vitamin E showed an improvement of 0.3 from a base line of 1.5 but that wasn't statistically significant. So, I am just trying to see if the fact that saw and FLINT is materially better than what we seen in PIVENS And also on the, if you look at the PIVENS trial just looking at the NASH score improvement 43% of patients on Vitamin E improved versus 19% on placebo and that data just looks very similar to the data influence so I am just trying to get a better sense of on how differentiated OCA is from Vitamin E? Thank you.

Dr. Mark Pruzanski

Yeah. And it's a good question and obviously we understand that PIVENS is really the standard out there, the standard trials prior to FLINT and comparisons will be drawn. But as I said in my scripted remarks, the trials are really not apples to apples in terms of the trial design, the patients enrolled, right?

So, I think it's important to keep in mind that treatment duration in our trial was 25% shorter, 72 weeks versus 96 weeks that we had about half of our patients were Type 2 diabetics and if you read the literature, it’s very, very clear that the present TYPE 2 diabetes means more aggressive and risk of more advance disease, which frankly is collaborative by the fact that speaking specifically of fibrosis, that the mean baseline value in the OCA treated group in FLINT was 1.9 as opposed to 1.5 in PIVENS. And why that might not sound like a lot, if you consider that we are talking about a three point scale but from the only start in terms of presence of fibrosis with a one and be founded on the upper balance by three, that's actually a very meaningful difference, right, a significantly more advanced on average to these population with respect to fibrosis.

And so, who knows how Vitamin E or Pioglitazone would have done in FLINT. I can speculate that two trials are directly comparable.

But setting that aside, I think it’s also important to know that while I truly believe that OCA is an FXR agonist, based on its mechanism of action and its numerous effects in ameliorating liver damage, we believe that our drug that there is very good thesis and ameliorate is really is an optimal approach, I would never say that there is just going to be one magic for it, in this large heterogeneous population and as you know there are other companies using other approaches, advancing other therapeutics and just as the case in other large populations of patients, I could foresee the future of combination of therapy and targeted therapies for different sub-populations from NASH patients and I mentioned this before that we are going to be taking, looking very carefully at the data and discussing very carefully with FDA and other regulators what the appropriate cost for it is, but there is lots of room for different agents, setting aside Vitamin E and Pioglitazone.

Navdeep Singh - Goldman Sachs

Okay. Mark just a quick follow-up to that in prepared remarks you said that LDL peak to 12 weeks do you know what it peak that?

Dr. Mark Pruzanski

It was consistent with what we observed in our prior 6-weeks study.

Navdeep Singh - Goldman Sachs

Okay. All right that’s very helpful. Congrats again.

Dr. Mark Pruzanski

Thank you.

Operator

And ladies and gentlemen, that concludes our question-and-answer session for today. I’d like to turn the conference back to Mark Pruzanski, for closing remarks.

Dr. Mark Pruzanski

Thank you all for taking the time to listen in and those of you on the webcast, obviously a very exciting day for us. And now we’re going to get back to work. Thanks everybody.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude program and you may all disconnect. Everyone have a wonderful day.

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Source: Intercept Pharmaceuticals' (ICPT) CEO Dr. Mark Pruzanski on Q2 2014 Results - Earnings Call Transcript
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