Albireo Pharma, Inc.
Q4 2017 Earnings Call Transcript

Published: 15 Mar 2018

[Operator:]

Good morning, ladies and gentlemen, and thank you for joining us for Albireo’s Financial Results Conference Call to Review Results for the Fourth Quarter and Year-End of 2017. Following some prepared remarks from the Company, we’ll open the call for questions. I would now like to turn the call over to Paul Arndt from LifeSci Advisors, representing Investor Relations for the Company. Please go ahead, sir.

[Paul Arndt:]

Thank you, and good morning, everyone. Thank you for joining today’s call in which management will discuss Albireo’s financial results for the fourth quarter and year-end 2017 and provide a business update. Earlier today, Albireo issued a press release announcing its results. The press release is accessible via the Company’s website at www.albireopharma.com. Before proceeding, let me mention that comments today may include forward-looking statements made under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements other than statements of historical fact regarding the plans for or progress, scope, cost, duration or results of, development of A4250, elobixibat, A3384 or any other Albireo product candidate or program, including the target indications for development, size, design, population, location, conduct, objective, duration, endpoints, timing for initiation or completion of or for reporting the results from or regulatory feedback regarding any clinical trial, including Albireo’s planned Phase 3 trial of A4250 in patients with PFIC, the commercial outlook for any Albireo product candidate or program or opportunity in any target indication, any payment that HealthCare Royalty Partners or EA Pharma may make to Albireo, the period for which Albireo’s cash resources will be sufficient to fund its operating requirements, or Albireo’s plans, expectations or future operations, financial position, revenues, costs or expenses. Actual results may differ materially from those expressed or implied by any forward-looking statement as a result of many factors including those described under the heading Forward-Looking Statements in the Albireo’s press release from earlier today or under the heading Risk Factors in its most recent Form 10-K or a in later fillings with the SEC. Albireo cautions you not to place undue reliance on any forward-looking statement. Also, any forward-looking statement that is made speaks only as of today, Thursday, March 15, 2018 and should not be relied upon as representing Albireo’s views as of any future date. Albireo disclaims any obligation to update any forward-looking statement, except as required by law. With that, I’ll turn the call over to Ron Cooper, Albireo’s President and Chief Executive Officer.

[Ron Cooper:]

Thank you Paul, and thank you everyone for joining today’s conference call. With me today is Tom Shea, Albireo’s Chief Financial Officer and Paresh Soni, Chief Medical Officer. We have made tremendous progress at Albireo, over the last year, plus having generated important clinical data, engaged in a successful dialogue with regulatory authorities towards beginning a Phase 3 trial with our lead assets, and bolstered our financial position to where we speak you today with the current cash balance of approximately $200 million. So, allow me to provide some details on our accomplishments in 2017. Probably the most important achievement was the successful completion of a Phase 2 dose finding trial of our lead product candidate A4250, an IBAT or ileal bile acid transporter inhibitor, in children with cholestatic liver diseases and pruritus. This study was accepted by EASL as an oral late-breaking embargo presentation and later in the year was recognized as a Poster of Distinction, at both the AASLD and the NASPGHAN conferences. This study set the stage for our planned Phase 3 trial in patients with the rare and highly debilitating genetic disorder, known as PFIC or progressive familial intrahepatic cholestasis, which we expect to initiate this spring. 2017 also saw us agree with the European Medicines Agency’s Pediatric Committee on a pediatric investigation plan for A4250 in PFIC, an essential step for potential EU marking authorization application. We were also successful in expanding our stockholder base, with the completion of Albireo’s first under-written public offering in the United States. These achievements position us well for 2018 and the year is off to a great start. In January, our licensee EA Pharma received regulatory approval of elobixibat to treat chronic constipation in Japan, marking the first approval of an IBAT inhibitor anywhere in the world and triggering more than $55 million in non-dilutive royalty monetization and milestone payments. We subsequently generated approximately $94.1 million in net proceeds from first quarter equity transactions, further strengthening our financial position and providing a solid foundation on which to capitalize on our promising pipeline of innovative treatment for orphan pediatric liver diseases and other liver and gastrointestinal disorders and diseases. Let’s begin with a brief business update. I’ll start with our Phase 3 product candidate A4250, which we are developing initially to treat patients with PFIC and plan to expand development into other orphan pediatric cholestatic liver disease. PFIC is a rare, genetic disorder, associated with elevated bile acid levels in highly debilitating pruritus. As an IBAT inhibitor, A4250 was designed to divert bile acids that would otherwise recirculate from the intestine to the liver and to thereby reduce bile acid in the liver and serum. As I mentioned earlier, another Albireo’s IBAT inhibitor, elobixibat, recently became the first IBAT inhibitor approved anywhere in the world which we see as validating both the therapeutic potential of the mechanism and our scientific leadership. PFIC causes progressive, life-threatening liver disease with symptoms commonly developing in the first month of life and there is currently no approved drug option. Instead, first-line treatment is typically an off-label medication that is used in the hope of symptomatic relief and many patients require surgical intervention, either procedure known as bile diversion surgery in which bile acids are diverted to the stoma bag outside the body or a liver transplant. Bile diversion surgery, which accomplishes surgically what A4250 do pharmacologically, has been reported to lead the positive clinical outcomes in PFIC patients, thus providing proof of principle for the IBAT inhibition mechanism and supporting our choice as PFIC as the lead indication for A4250. After completing a successful Phase 2 pediatric study with A4250 in 2017, we set out to design and optimize our Phase 3 program, which includes a single randomized double-blind placebo controlled multicentre clinical trial designed to enroll approximately 60 patients with PFIC type 1 or 2 and an open label extension study to assess long-term safety and durability of response. The double blind trial which is fully funded, will evaluate two doses of A4250 for 24 weeks. The primary endpoint for FDA evaluation and a key secondary endpoint for EMA evaluation will be assessment of change in pruritus. The primary end point for EMA evaluation and a key secondary end point for FDA evaluation will be serum, bile acid responder rate. The trial will also have several additional secondary endpoints. We’re on track to start our Phase 3 trial this spring and assume -- with this timeline expect data will be available by the end of 2019. The Phase 3 trial together with available data from the then ongoing extension study are expected to form a primary support for drug approval applications for A4250 in both the U.S. and EU for the treatment of patients with PFIC. We anticipate additional support to come from an independent research study that we are supporting which pools and analyzes long-term historical PFIC patient data to provide insight into the natural history of the disease and potential correlations with biomarkers. We believe that A4250 has the potential to become a useful tool for physicians in the treatment of pediatric cholestatic liver disease. And we intend in the future to generate data beyond our planned Phase 3 program in PFIC to support its expanded usage. Let me now move to our pipeline program. Already in 2018, we have had great news with elobixibat in Japan. In January, we announced an agreement with a leading healthcare investment firm, HealthCare Royalty Partners to monetize our royalty rights for Japan under our license agreement with EA Pharma. A few weeks later, this agreement bore fruit when elobixibat was approved for the treatment of chronic constipation in Japan. The Japanese approval triggered more than $55 million in payments to us between HealthCare Royalty and EA Pharma. We are also eligible for an additional $15 million under the HealthCare Royalty agreement if a specified sales milestone is achieved. Moreover, we regain our royalty eligibility under the EA Pharma agreement, if HealthCare Royalty receives a maximum amount of 175% of its amount paid to us. Now, we have no current plan to conduct development of elobixibat in the rest of the world as the treatment for chronic constipation, based on commercial consideration. We do however believe elobixibat has potential benefits in the treatment of NASH. Studies have indicated that among other things, NASH patients have elevated bile acid level, elevated cholesterol, insulin resistance, liver inflammation and liver fibrosis. And we have clinical and pre-clinical findings with elobixibat or another IBAT inhibitor that show a beneficial impact on these parameters. We have a two-prong approach to NASH that includes the potential Phase 2 study with elobixibat and a preclinical program with novel bile acid modulators. We expect to initiate the trial of elobixibat in the first half of 2019, assuming issue [ph] it in the U.S. of a method of use patent that’s currently pending. With this two-pronged approach, we believe we have the makings [ph] of a compelling NASH program. Our third promising clinical stage product candidate A3384 is the proprietary formulation that is designed to overcome the limitation of an established bile acid sequestrant known as colestyramine by releasing it directly into the colon to treat bile acid malabsorption or BAM, a condition marked by high levels of bile acids in the colon and chronic watery diarrhea. We previously generated these two proof-of-principle data with a prior formulation of A3384 in BAM and subsequently completed the successful formulation optimization program. If our pending formulation related patents for A3384 issue in United States, we’re considering taking the optimized formulation into the clinic to evaluate it as treatment for BAM. If we decide to do so, we would expect to start an A3384 trial in the first half of 2019. With success in the clinic and regulatory approval, A3384 could be the first treatment approved for the treatment of bile acid malabsorption in the United States. So to summarize, with A4250 on the cusp of Phase 3 initiation in an orphan indication, which has no approved drug option, our current cash balance of approximately $200 million and our pipeline of promising bile acid modulators, Albireo is poised for a success in 2018 and beyond. With that, I’ll turn the call over to Tom for a financial update. And then, we’ll be happy to take your questions. Tom?

[Tom Shea:]

Thanks, Ron. Let me quickly highlight our financial results for 2017, which we released earlier today. We ended 2017 with a balance of $53.2 million in cash and cash equivalents. Subsequently, we received proximately a $149.1 million in royalty monetization and milestone payments triggered by the approval of elobixibat for the treatment of chronic constipation in Japan and net proceeds from the equity offerings, resulting, as Ron said, in the current cash balance that approximates $200 million. Our revenue for 2017 was nominal compared to $11.4 million for 2016. Our revenues in 2016 were generated entirely from a license agreement with EA Pharma. We do not have any milestone revenue in 2017. Our research and development expenses for 2017 were $13 million compared to $8.1 million in 2016. R&D expense increased primarily due to clinical and manufacturing costs related to A4250. Our G&A expense in 2017 was $15.2 million compared to $15.8 million in 2016. This decrease was primarily due to professional fees and service cost incurred in 2016 in connection with the Biodel transaction, approximately offset by the increased personnel and stock-based compensation costs in 2017. Other income for 2017 was $3.8 million compared to other expense of $3.9 million for 2016. The difference was primarily due to the 2017 sale of certain legacy intellectual property acquired in the Biodel transaction along with the conversion of convertible notes into common stock in connection again with the 2016 completion of the Biodel transaction. Our net loss of 2017 was $24.6 million or $3.15 per share compared to $16.4 million or $13.19 per share in 2016. Based on our current operating plans, we anticipate our operating expense for 2018 to be in the range of 45 to $50 million with the expected increase over 2017 driven primarily by the execution of a planned global Phase 3 clinical study of A4250. From a cash standpoint, we expect our current resources will be sufficient to meet our operating requirements at least into 2021. And with that, let me turn the call back over to Ron for some concluding remarks.

[Ron Cooper:]

Good job, Tom. Thank you. So, as we’ve outlined for you today, Albireo made great progress in 2017, and we’re off and running in 2018 with the elobixibat approval in Japan and the substantial capital inflow as we near the initiation of Phase 3 with A4250. And now, we’d be happy to take any questions you may have. Operator?

[Operator:]

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Liana Moussatos with Wedbush Securities. Please proceed with your question.

[Liana Moussatos:]

Congratulations on all your progress. You mentioned the Phase 3 PFIC program starting in spring but also A4250 also worked in other cholestatic liver disease like Alagille. Do you have any plans for clinical work in those diseases? And you mentioned using $24.2 million, I think in the press release, of the ATM. Is there anything left?

[Ron Cooper:]

Thanks for the kind comments, Liana. Let me address the first part of the question. I’ll let Tom address the question in regards to the ATM. I think, we’ve spent the last couple of years designing our A4250 PFIC trial. We’ve been able to get good feedback from the regulatory authorities, and we’re pretty excited to be up and going in the spring with the trial in PFIC. Our approach for the other indications is moving along as well. I think, you know that we showed some promising data in Phase 2 in the other indications. And what we’re doing now is [indiscernible] we are spending a lot of time with key opinion leaders really making sure that the next study design sets us up for success. The other diseases are similar, but the patient populations are a bit more heterogeneous. So, looking at what’s the right end point, what’s the right patient population; and until, we are comfortable with the feedback that we have, and we have a good design, we won’t be proceeding until that time. But, we plan to go forward generating data in many of these other indications. Tom?

[Tom Shea:]

Hi, Liana. Yes. The ATM, we’ve put in place with a $15 million ATM. So, we do have approximately $25 million remaining.

[Liana Moussatos:]

And $15 million sales milestone, will that go to HealthCare Royalty Partners?

[Ron Cooper:]

The $15 million milestone is from HealthCare Royalty to us if EA Pharma achieves certain sales threshold. If that sales threshold is achieved, that $15 million we will see from HealthCare Royalty.

[Liana Moussatos:]

Okay. And it’s 50, not 15?

[Ron Cooper:]

No, no 15.

[Liana Moussatos:]

15? Okay. Thank you.

[Ron Cooper:]

Thank you.

[Operator:]

Thank you. Our next question comes from Katherine Xu with William Blair and Co. Please proceed with your question.

[Katherine Xu:]

Thank you and good morning. As you are starting -- you are starting the Phase 3 study of PFIC, can you talk us a little bit more in detail what were the major issues you were tackling leading to the start of the study? Understand there is the protection [ph] of the pruritus [indiscernible] I would love to hear some details of that. And also, you talked of elobixibat [indiscernible]. Can you talk about [ph] method of use the and also what geographical areas, US, Europe, you have NASH, [ph] right in Japan and [indiscernible] but just curious about whether there will be a problem. And lastly, from your research of elobixibat versus 4250, which was better. [Ph] Understand that you’re not -- it’s not practical to push 4250 into NASH for reasons. I’m just curious about a scientific and product profile perspective, which one is better.

[Ron Cooper:]

Okay, good morning, Katherine. Thanks for those questions. So, first of all, your questions were on A4205 around, just to make sure I’m getting them, the major issues for starting elobixibat, NASH, patent in areas, and then which indication personnel work together on, on those ones. So, I think that for the A4205 trial start, actually there are no major issues. It is completely around logistics. So, from a patient perspective, Paresh and the team retained our CRO at the end of 2016, top quality CRO. We’ve actually done a lot of feasibility. We pretty much know who all the patients are. From a regulatory perspective, as I said, we’ve had a robust dialogue with both regulators. They’ve been fantastic in working with us. They’ve given us good feedback. But we’re good to go from the regulatory perspective. So, really, all of it is about blocking and tackling. And I’ll remind you, while the study is 60 patients in some ways a small study; in other ways, it’s a large study because it’s a global study. We are in multiple countries, multiple sites. And in those countries, in each place we have regulatory and contract to get through. And so, that’s what we’re actually following through. We’ve hired a top quality person to lead that effort for us to personally clean up the effort. So, we’re well on track. So, we’re pretty confident about our start in the spring of this year. Anything else to add on that, Paresh? Have I covered it?

[Paresh Soni:]

Yes. You covered it.

[Ron Cooper:]

Okay. So, let’s then talk about NASH. I think, we’re excited about the potential of our IBAT inhibition in NASH. I think, it is something that is not fully appreciated yet, but I think in NASH when you think of the hallmarks of NASH, cholesterol problems, glucose transport problems, liver inflammation, liver fibrosis, and even in recent publications, comments about elevated bile acids in NASH patients, we think that we could be very interesting. So, it’s two-pronged approach, as I mentioned in my comment. Elobixibat, well-characterized drug, over a 1,000 exposures taking that into NASH and the preclinical assets. From a patent perspective for elobixibat, we expect the method of use patent to be issued this year in NASH. We already have that patent for A4250. So, we’re hopeful that we will receive that patent as well. And then, from a rights perspective, we have all of the rights, all over the world except for EA Pharma. They have the right for elobixibat for Japan and five other countries in that area. Paresh, maybe you want to talk about two compounds in NASH?

[Paresh Soni:]

Yes. Thanks Katherine. You mentioned the possibility of diarrhea with elobixibat in NASH patients. So, we have a large safety database and a large efficacy database of elobixibat. We exceeded more than a 1,000 patients in multiple clinical trials. So, we have quite a large body of safety data and efficacy data in chronic constipation. And this goes across a range of doses, range of very low doses to much higher doses and including the approved doses in Japan. And we think we can get a dose that gives you the right therapeutic window and therapeutic index for efficacy, and based on the parameters [ph] that we’ve looked at and low incidence of diarrhea. Also, when you look at the diarrhea with the elobixibat, it starts with a very -- the first few days and it’s transient -- the discontinuation rate from diarrhea is not high with elobixibat. So, when we look at that, we’ve also looked at data from our Phase 1 studies and showed good effect of metabolic parameters [ph] including LDL cholesterol lowering. As you know, these molecules [indiscernible] develop for cholesterol lowering. And there is improvements in GLP-1, also that we’ve seen which indicates improvement in incidence sensitivity. So, it’s a good rationale for elobixibat. We think we have a good efficacy profile and the safety profile is not of concern to us. In terms of the two molecules, A4250 versus elobixibat, again we’ve spent quite a bit of time, profiling these two molecules, looking at them particularly in Phase 1 studies and in other efficacy studies that we’ve done. And A4250 is more potent, and we’d like to keep that both pediatric cholestatic liver diseases which have shown a very good effect, as you know and a very good tolerability profile thus far related to any adverse event in our Phase 2 study and even in the Phase 1 study. So, that we think has a good profile, clinical profile for pediatric cholestatic liver disease. NASH is probably a better suited for elobixibat, which is a bit less potent and has a lot of safety data. We can actually go into a Phase 2 study with NASH without having to do any other work, like Phase 1 work or preclinical tox work because we have a large body of data behind it. So, we think that will be a better molecular study in NASH patients.

[Operator:]

Thank you. Our next question comes from Alan Carr with Needham & Company. Please proceed with your questions.

[Alan Carr:]

Hi, thanks for taking my questions. A couple, just to clarify your plans for A4250, and biliary atresia and Alagille that may not happen in 2018, and it might be in 2019. And then, also what’s the -- I guess, what’s still being worked on when it comes to 3384? Why no start for bile acid malabsorption in the first half of ‘19 as opposed to this year? Last one is, you mentioned that you’ll data from the Phase 3 A4250 and PFIC end of ‘19. What else might you be needed -- might need for NDA submission, anything else that might push the NDA submission out substantially, past that point? Thanks.

[Ron Cooper:]

Thanks for your questions, Alan. I think, let me answer your question by -- the first two questions are really around prioritization of the organization and making sure we have operational excellence. We believe that there is a tremendous opportunity of A4250. And so -- and we really want to make sure we get that first indication as quickly as possible. So, the priority for the organization is to get that PFIC trial up and going and it enrolled as quickly as possible. And so, that’s where we’re spending the majority of our resources and time. Both the initiation in other indication in A3384, are important things that we are going to be doing. But they are secondary to that first objective. And so, starting a second indication either in biliary atresia, Alagille or something else is really a game of being comfortable with the study design, gated against the dialogue that we’re having with key opinion leaders. I want to assure you, we’re having a very active dialogue. We’ve got a number of add boards. [Ph] We just want to make sure we get it right. So, we’ve guided for a start in the first part of ‘19. But to be honest, it is really about making sure we get it right. And then, the same thing in regards to A3384. We are working on the development program. We are working on a good design for A3384; we plan to engage the regulators. But that is secondary to making sure we get up with A4250 with the PFIC trial. And we’ve guided there we start in the first half of 2019 as well. And then, to your question regards to what will we need from a regulatory perspective, after we have the top-line data for the A4250, PFIC trial, we’ve guided that we should have by the end of 2019. The regulators have said to us that they expect -- they’re going to look at the totality of the data. So, what’s going to be important, what they’ll need is that study, so the 60 -- approximately 60 patients in the Phase 3 study, all of those patients will roll into a long-term open label observation study. Whatever data we have at that time, we’ll have to submit. And the third thing they’ve asked for us is some natural history data. And we support an independent group, which is generating that data. So, all of those things should be on track for being ready once we have the top line data for submission on time.

[Operator:]

Thank you. Our next question comes from Ritu Baral with Cowen Please proceed with your question.

[Ritu Baral:]

Good morning, guys. Thanks for taking the question. On to elobixibat NASH program, what do you anticipate your first Phase 2 trial to look at structure wise and [indiscernible], are you taking into straight into a biopsy or would you consider an emerging end point of PFS [ph]? And then, do you confident enough in the safety profile to not do any safety work in say patients [ph] ahead of time?

[Ron Cooper:]

I think, I’ll start with the second comment. I think we are extremely confident about the safety profile. And I think if you think about the beauty of our mechanism in general, in the 20 years of history that our team has been working with these bile acid modulators, the fact that they are non-systemic, theoretically confers really great safety profile. But, then, if you look into the clinical data both across elobixibat and A4250, we’ve never seen any signal of any sort. If you look at the data with elobixibat, we have long-term data with elobixibat over a year; we also have over a 1,000 exposures. So, I think that we’re very confident about the safety aspects of things. In regards to the design part, let me Paresh to comment on that. But the shorter answer to that is it’s still work in progress.

[Paresh Soni:]

Yes. I think that summarizes it, Ron. We’ve just started looking at elobixibat in NASH and thinking of trial design and we’re starting to talk to external group and experts. So, we haven’t made a decision yet as to whether -- what kind of study design will be it, what will be the kind [ph] of the endpoint. It will likely obviously include imaging markers and a lot of other markers. [Ph] But whether it will include a biopsy or not, it’s something that’s still under discussion.

[Ritu Baral:]

What is your current inclination on where this could fall in paradigm, [ph] whether earlier stage, patients [ph] or whether the mechanism would provide better utility and sort of the F3 [ph] patients?

[Ron Cooper:]

Yes. I think that’s really a great question, Ritu. I think for me, what I think we’re excited about is when we talk to the key opinion leaders, and let me reflect their comments to us. So, I think, key opinion leaders are saying to us that they’re excited, there’s a lot of compounds that are being developed in NASH. They believe there’s going to be a lot of changes in the treatment paradigm overall. And they’re not exactly sure, which is the mechanism that makes the most sense. What they look at is from a patient perspective, from a utility perspective. And when you look at NASH patients, in general, they have other things going on as well, right? So, many of them will have diabetes, high cholesterol, high blood pressure, they’re on multiple medications, they have co-morbidities. They are pretty excited about the fact that our medicine is in general non-systemic. And the ability to use a bile acid modulator mechanism across the various stages either as monotherapy or in combination with something else I think intrigues them. So that -- getting back to your earlier comment about your perceived safety profile that we’ve had in the data that we’ve now, plus the fact that we’re non-systematic, I think when we talk to the key opinion leaders, they’re very much intrigued about our approach.

[Operator:]

Thank you. Our next question comes from the line of Yasmeen Rahimi with Roth Capital Partners. Please proceed with your question.

[Yasmeen Rahimi:]

Good morning and thank you for taking my questions. Two questions. Question one is on recently [indiscernible] published the paper that showed that different compositions of bile acids have different pathogenesis effect on NASH. So, with that in mid, what is your thought process as an IBAT [ph] inhibitor on changing the composition of bile acid? And then the second question is, given the fact, although we don’t know if it [ph] has officially started enrollment, but according to clinicaltrials.gov, they are planning to do a study in 150 patients. So, do you believe that with that potential study, if it is initiated in the next upcoming months that there would be any sort of delay in your timeline of completion of enrollment, given the fact that they’re trying to enroll 150 patients? Thank you for taking the questions.

[Ron Cooper:]

Thank you, Yasmeen. I appreciate your questions. We have a lot of excitement about our approach around NASH. Just to remind everybody that right now what we’re trying to do is getting A4250 up and going in the PFIC trial and so that it could be used in PFIC and then generate data across some of the other indications. In general, I would consider our NASH toward both the preclinical work and elobixibat work in its formative stages but we will get to that as the year goes on. But Paresh, maybe you can address that if you have any comments.

[Paresh Soni:]

So, thanks, Yasmeen. We’re actually very excited to see the paper by Arun Sanyal’s group which actually is very much in line with our hypothesis and our thinking of what’s the role of bile acids in NASH and especially progressing from as you may have seen in that paper comes controls, to NAFL to NASH. You see a greater -- you see more significant changes in bile acid levels and even as you get to more severe disease in fibrosis, you see a change in the composition of the bile acids and the change in the quantity of bile acids, which is telling you -- and basically I bet inhibitors are designed to effectively reduce the bile acid load in the liver by blocking the enterohepatic circulation. So, it actually releases the posterior hypothesis that using bile acid - using IBAT inhibitors will have a beneficial effect in NASH. And obviously it needs to be proven in a well controlled and adequately designed trial. But, we have shown in our earlier studies, both with the 4250 and with elobixibat that we see beneficial changes in bile acid composition. And we see reductions in serum bile acid levels. We haven’t measured liver bile acid levels obviously. But, this bodes well for us in terms of the rationale of studying IBAT inhibition in NASH.

[Operator:]

[Operator Instructions] Our next question comes from the line of Ed Arce with H.C. Wainwright. Please proceed with your questions.

[Ed Arce:]

Hi, Ron, Tom and Paresh. Thanks for taking my questions and it’s good to talk to you. Congrats on all the recent progress. I had one question around the NASH program, probably been asked in a couple of ways before. But, I just wanted to really focus on the effects that you expect to see and sort of how you see this fit? I mean, I understand your rationale with IBAT inhibition and bile acid reductions and your focus around co-morbidities and the non-systemic nature of the safety. But specifically with the elements of NASH, how do you see this as more of a kind of an anti-steatosis drug, anti-inflammatory or do you expect to see perhaps direct antifibrotic activity. Just trying to gauge your understanding at the moment as how do you see effect directly in NASH. Thank you.

[Ron Cooper:]

I think as Paresh said, we obviously want to generate full clinical data within NASH. But, I think if we step back, I think we’d like to share with you what we have -- what are some of the facts. When you look at the NASH and the parameters that we’ve talked about, cholesterol, IBAT inhibitors were originally developed as cholesterol lowering agents. We have some promising data in the clinic with elobixibat that shows an improvement in cholesterol level. NASH is associated with issues of glucose transport. Again with elobixibat, we have some promising data that looks at GLP-1. And so, we’re encouraged by that. NASH is associated with liver inflammation and liver fibrosis. Here, pre-clinically with A4250 we have some interesting data from that perspective, and we’ve taken A4250 into the STAM mouse model and shown some interesting effect on that. And then the last thing, as Paresh has mentioned, recent publication looks at the levels of bile acids in patients with NASH interested to see control to NAFL, the patients with NASH that’s been increased. So, that’s the fact that we have in front of us. That brings us we believe into a good hypothesis that our mechanism could be exciting and interesting in NASH and we need to go forward and generate that data in the clinic, and that’s our plan.

[Ed Arce:]

Okay, great. Thank you for laying that out. That’s helpful. The only other question I had was around the planned initiation of your Phase 2. You mentioned obviously the method of use patent is pending. And I know -- I recognize as you’ve said already the floor that it is still early that you’re still working through different aspects of potential design with KOLs and others. But just wondering, if there was anything else besides the pending patent, other things that you’re working on just sort of a gating factor to start that trial? Thanks.

[Ron Cooper:]

So, I think our planning is full speed ahead. So, Paresh and the team are interacting with key opinion leaders. We’ve retained advisors in terms of trial design. So, we’re up and going in trying to figure this out. We anticipate during that timeframe, we will receive, and we’re hopeful of receiving the method of use patent in NASH, it’s involved [ph] and we’re fairly confident that that’s going to occur. So, as that occurs and as we have a better line of sight as to what our development would be, then we should be able to execute on our planned Phase 2 trial. So, there’s nothing else specific. And as you are aware from a financial resourcing perspective, we’re in good shape as well to be able to pay for the trial.

[Operator:]

Thank you. Our next question comes from the line of Patrick Dolezal with LifeSci Capital. Please proceed with your question.

[Patrick Dolezal:]

Hi. Thanks for taking my questions. I do have a couple on 4250 and the Phase 3 program. So, to start, I was just curious if you could provide a bit more granularity on which credit measurements you’ll be using for the FDA endpoint? And then, if you could just briefly compare that with some of the prior pruritus measurements that we’ve seen in Phase 2?

[Ron Cooper:]

Thanks for the question, Patrick. As you know, this is an area that we’ve spent a lot of time to try and make sure that we get it right. Paresh, maybe you want to talk a little bit about that?

[Paresh Soni:]

So, as Ron mentioned, we’ve been working on pruritus tool for quite a while now, since we decided to study A4250 in PFIC. And we’ve developed a proprietary tool with close guidance and working closely with the FDA and input from the EMA. We appointed a very established and a very experienced vendor to who work on PRO tool. [Ph] So, it’s a proprietary tool that we have designed, which -- we are disclosing some of that later this year hopefully. Its abstracts are accepted, and it shows a different schedule. In terms of the Phase 2 study, we used three pruritus scales; they were off the shelf scales used in an adult and children studies. But we used that as a basis to look at which question worked best with their families and the patients and develop the tool out of those existing scales and developed a novel proprietary scale, which we’ll be using in the study. And we’ve tested that with the patients and the caregivers. And they are very comfortable filling it and they understand it, it’s very simple and easy to use. And we hope to disclose more at an upcoming scientific meeting on that scale.

[Ron Cooper:]

Thank you, Paresh. I think Patrick, to summarize, the way to think about this is in Phase 2, we showed tremendous impact on pruritus using general relatively blunt tool. The FDA insists on a proprietary tool for Phase 3. As Paresh just said, we’ve taken the best of that in kids and with their caregivers. And I think we’re pretty excited that we have a tool that will be effective in our Phase 3. And as Paresh said, we’re hopeful that we’ll be able to share more of those details with you as the year kind of rolls through. Thanks for the question.

[Patrick Dolezal:]

Great, thank you. And then, I have a similar one for the EMA endpoint of serum bile acid responder rate. Just kind of curios, again, if you could provide any details on how exactly this metric will be defined. And then, obviously we’ve seen on the bile acid reductions such as kind of how that compares to the responder rate? Thank you.

[Ron Cooper:]

Thanks for that question as well. I think, when we think about the Phase 3 design overall, we’re pretty excited about what we’ve been able to agree to with both the FDA and the EMA. The nice thing about the Phase 3 design is a lot of the elements that we’ve done in Phase 2 we’ll study again in Phase 3 but almost in a more refined state, both to your question in pruritus and I think for serum bile acids. So, just to remind everybody that the primary endpoint for the EMA is to measure serum bile acid responder -- the difference in response between the treated group and the placebo growth. If you look at sort of the natural history of the disease, our expectation of placebo group, it’s hard to see patients getting a decrease in bile acids during that timeframe, but we’ve sort of accounted for any sort of variability. The definition of a response is two as either/or. So, either a 70% reduction in serum bile acids or reaching a level of serum bile acids between 50 and below 100, so, one of those two. And if we go back to our Phase 2 data, the majority of patients would have met that definition.

[Operator:]

Thank you. There are no further questions at this time. I would like to turn the call back over to Mr. Cooper for any closing remarks.

[Ron Cooper:]

Well, thank you, operator. I think, we’ve got a great start to 2018 at Albireo. We’re excited about starting our Phase 3 trial with A4250 and executing on the rest of the plan. And we want to thank everybody for their interest and for dialing in today.

[Operator:]

Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.