Intercept Pharmaceuticals, Inc.
Q2 2015 Earnings Call Transcript

Published: 6 Aug 2015

[Operator:]

Thank you for joining the Intercept Pharmaceuticals 2015 Second Quarter Financial Results 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 recorded at the company's request and a webcast of this call will be archived on the company's website for the two weeks from today's date. At this time, I would like to introduce Dr. Mark Vignola with Intercept's Director of Investor Relations. Please go ahead.

[Mark Vignola:]

Thank you and good afternoon and thanks for everyone for joining us on today's call. We are reporting on financial results for the quarter ended June 30, 2015. Before we begin, please remember we'll be making certain forward-looking statements on today's call, including statements and forecasts regarding our future, financial and operating performance, anticipated timelines for the potential approval, and commercial launch of the obeticholic acid and 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 risks and uncertainties described in our reports filed with the SEC, including the Risk Factors section of our most recent Annual Report on Form 10-K, and in Intercept's other filings with the SEC. 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 our CEO, Dr. Mark Pruzanski.

[Mark E. Pruzanski:]

Thank you, Mark, and thanks to everyone for joining us on our conference call and webcast today. I'm going to provide you with a brief update on the development of our lead product candidate, obeticholic acid, or OCA. Lisa Bright, our Chief Commercial and Corporate Affairs Officer, will provide an update on our commercial preparations. Barbara Duncan, our Chief Financial Officer, will then discuss our financial results and cash position. Rachel McMinn, our Chief Business and Strategy Officer, is also here with us today for the Q&A section at the end. The first half of 2015 has been an exciting time at Intercept, characterized by both executional success and operational growth. Key milestones over the last quarter include the submission of the company's first regulatory filings for approval of OCA in PBC, the announcement of the design of our Phase 3 REGENERATE trial in NASH, and the addition of several key members of our medical affairs and commercial teams. I look forward to reporting on additional progress during the second half of the year as we continue to build Intercept into a global biopharmaceutical company. Starting with our PBC program, I'd like to provide the following update. In June, we announced that we had completed the submission of our applications in the U.S. and Europe for marketing approval of OCA for the treatment of PBC. As the first regulatory submission in PBC in nearly two decades, this achievement marks not only an important milestone for the company, but also an important development for PBC patients who are in need of additional therapeutic options. Needless to say, I'm exceptionally proud of our team, who worked nights and weekends to make this possible. Our NDA and MAA submissions are robust, supported by data from 28 clinical trials, including three randomized double-blind clinical trials in patients with PBC that all reached their primary endpoint with high statistical significance. The submissions are also supported by two clinical databases that, between them, comprise more than 10,000 patients from the Global PBC Study Group and UK-PBC Study Group. In addition, we continue to enroll patients in the international Phase 3b COBALT study, our long-term outcomes trial to confirm the clinical benefit of OCA in PBC patients on a post-marketing basis. Assuming we get priority review from FDA, the current filing timeline suggests a potential U.S. approval date within the first quarter of 2016. In the meantime, we're preparing for the regulatory interactions that may be needed prior to approval, such as the potential FDA Advisory Committee Meeting early next year. In Europe, we anticipate a longer review time by EMA, with approval anticipated in the second half of 2016. In the meantime, we're making great progress in preparing for the anticipated launch of OCA next year. A key part of this is recruiting the best talent to build a top tier organization. And, to this end, we've recently added several key members of our medical affairs and commercial teams. In June we named Dr. Juan Carlos Lopez-Talavera Senior Vice President of Medical Affairs. And we more recently named Richard Kim, Senior Vice President, Head of U.S. Commercial. Juan Carlos and Richard both bring with them deep knowledge and experience in the hepatology field, and I'm very excited to have them as part of the team. We of course recognize that successful launches are built on a strong foundation of pre-launch activities. On the medical affairs side, we've had a highly experienced team of Medical Science Liaisons, or MSLs, in place in the U.S. for some time, who are focused on developing a deeper understanding of PBC as a disease, and seeking advice from the GI and hepatology community on how to improve the management of PBC. Since the beginning of the year, we've also been establishing our medical teams across Europe and Canada. At least 80% of those hired to-date have significant experience in hepatology or gastroenterology, reflecting the exciting scientific developments that have been occurring outside of viral liver disease. I'll leave it to Lisa to discuss the extensive launch preparations that are underway on the commercial side in just a few moments. Now turning to our NASH program. In May, we announced the details of our Phase 3 REGENERATE trial. It is the first Phase 3 registrational trial in non-cirrhotic NASH patients with fibrosis, a serious chronic liver disease with no approved therapies. The trial design was the result of substantial collaboration and interactions with both FDA and EMA and represents a key milestone for patients with the disease. REGENERATE will be a very robust trial with two key objectives

[Lisa Bright:]

Thank you, Mark. Good afternoon everyone. I'm really excited to be able to share some of the work that we're doing to prepare for a successful launch of OCA in PBC. Here at Intercept we're focused on bringing new medicines to patients with unmet liver diseases both big and small. And of course so are hepatologists and gastroenterologists. At the end of the day, we share the same focus and passion to make a meaningful impact to patient outcomes with the ultimate aim of extending transplant free survival. We're committed to building credible partnerships with patients, physicians, payers and policy makers to accelerate access to new medicines to patients who need them the most. Today though, I'd like to focus our discussions on two key areas. First infrastructure build-out and secondly the work that we've done to better understand the PBC patients and their physicians. Firstly, infrastructure. Our plan is to launch OCA for PBC in the U.S., Canada, and the major European countries with our own local teams. I'm delighted with the progress that we've made over the past few months in assembling a world-class and highly regarded global team who have a mix of expertise in successfully launching orphan and specialty products, as well as experience in launching products with a significant public health impact. The common thread though, is that they have a passion for and a deep knowledge and expertise in liver disease. Although we're preparing for launch in all of our key markets, our launch readiness in the U.S. is of course our top and immediate priority. Several of our key teams supporting the U.S. commercial team, now led by Richard Kim, have been in place for well over a year, such as marketing, managed markets, and sales leadership. We have made great progress in all of these areas. Now we're building our sales and commercial field organization. Our first regional directors are coming on board this month and the sales force hiring is targeted to be completed later this year, depending on regulatory timelines. We're also well underway with hiring outside of the U.S. To-date, we've appointed experienced regional and country general managers in nine EU countries, including the UK, France, Germany, Spain, and most recently Canada. They in turn are making great progress in hiring their teams with a strong focus on market access. And to support and guide the country teams, we've established a small, but highly experienced team of functional experts, including global market access and this global approach is already enabling a strong entrepreneurial environment that is very focused on supporting access for patients. Along with our infrastructure build, we've been focused on better understanding epidemiology and PBC from both the patient and the physician perspective. So in addition to advisory boards with physicians and community advocates, to-date we've completed over 1,500 hours of market research as part of 20 different studies in the U.S. and the EU, including a large multi-country study to understand how patients with PBC flow through the healthcare systems from presentation of symptoms, diagnosis, initiation of therapy, and unfortunately for some, the development of fibrosis, cirrhosis, liver transplant, or death. There isn't a lot of published epidemiology data. and so we've been validating and seeking consensus with thought leaders in key countries and we plan to get this published, as it will be important in helping payers understand the true burden of disease. Obviously, ensuring rapid access for patients after regularity approval is top of my mind. We've conducted rigorous qualitative and quantitative research to understand how U.S. payers will cover and reimburse for OCA in PBC patients, and our U.S. managed care markets team is in place and has extensive experience in launching and gaining coverage for specialty therapeutics in orphan diseases. We are confident that the team will be able to successfully navigate the complex U.S. coverage and reimbursement process to ensure that PBC patients and providers have appropriate access to OCA. What's very clear, though, is that payers and physicians need to be aware of the recent published literature from both the UK-PBC and the Global Supergroup data that has reinforced the correlation between lowering ALP and bilirubin, even within the normal range, and improved outcomes for patients with PBC. We are actively engaged in discussions with payers in the U.S. and with the EU, and based on our initial discussions, we believe there's a strong appreciation of the unmet therapeutic need in PBC. So as we get closer to an anticipated approval, we've been defining our customer-facing approach. Earlier this year, we worked with a number of multiple analytics firms to inform our sizing of customer-facing organizations in the U.S. and in the EU, which has helped us identify not only urso prescribing physicians, but specifically physicians that are treating PBC patients. So overall, I'm really pleased with the progress that we've made thus far, and I'm thrilled to be at Intercept during such a pivotal time for the company. I look forward to providing you with additional updates in the coming months. I'll now turn the call over to Barbara to review our financial position.

[Barbara Gayle Duncan:]

Thank you, Lisa, and good afternoon, everyone. Please refer to our press release issued earlier today for our summary of our financial results for the three- and six-month periods ended June 30, 2015. We ended the quarter with $732 million of cash, cash equivalents and investment securities available for sale on our balance sheet. For the full-year 2015, we're increasing our non-GAAP adjusted operating expense guidance from $180 million to $200 million to approximately $240 million. This represents approximately $170 million of adjusted operating expenses in the second half of 2015, with the weighting of these expenses to come in the fourth quarter. This guidance excludes stock-based compensation and other non-cash items. This increase from our previous guidance is due primarily to the accelerated infrastructure build out supporting our commercial and research and development efforts. This significant increase represents our commitment to building a world-class orphan liver disease franchise starting with the successful PBC launch, building a sustainable and leading NASH program, and maximizing opportunities for our bile acid platform. I'd like to provide some additional guidance beyond operating expenses as you update your models. I want to reiterate that with an anticipated approval within the first quarter of 2016 in the United States, we do not expect meaningful revenues until the second quarter of 2016. In addition, with an expected second half of 2016 EU approval and a product launch gated by reimbursement on a country-by-country basis, we do not expect meaningful EU revenues until 2017. Our financial results are contained in our press release issued this afternoon after the market, thus I won't go into details on this call. However, in relation to the $170.8 million warrant revaluation expense recorded in the first six months of 2014, recall that in connection with some of our pre-IPO equity financings, we issued warrants that were classified as liabilities and were adjusted to fair value on a quarterly basis, with the change in the fair value being included in net loss. The last of the warrants were exercised on a cashless basis in April 2014, so there were no such expenses after that time. Adjusted operating expense as presented above is a non-GAAP financial measure. We anticipate that the stock-based compensation expense will represent the most significant noncash item that is excluded in this adjusted operating expense guidance as compared to operating expenses under GAAP. Let me now turn the call back over to the operator to open the line for questions.

[Operator:]

Thank you. And our first question comes from Jon Eckard with Barclays. Your line is open.

[Jonathan M. Eckard:]

Good afternoon. And thanks for taking the question. And again forgive me because I've been still ramping up here, but your guidance is significantly higher than last quarter. I heard a reference and suggestion of a accelerated or priority review and hiring of the sales force. So is it fair or have you announced that you will get priority review for this filing? And is that based into your change in OpEx projections?

[Mark E. Pruzanski:]

Thanks, Jon. I'll take the first part of the question. As I mentioned in my prepared remarks, we're hoping under fast-track to be given priority review, but we cannot confirm that yet. We are planning our business on the basis of a priority review so that we're ready to launch within the first quarter of 2016.

[Jonathan M. Eckard:]

Okay. Great. And then I had a question for either I guess, Rachel or Mark. It's more of a big picture question regarding business development. Given the fact that Intercept is kind of the lead in the NASH development, how do you think about the company leveraging this position the most effectively with regards maybe bringing in a specific diagnostic, a strategic collaboration or even a small acquisition of a complementary mechanism to FXR? Any big picture thoughts there about how you think about this going forward?

[Rachel L. McMinn:]

Yeah. Jon, thanks for the question. It's Rachel. So we're not giving any specific guidance on business development. But to your point about big picture strategy, I think it is important to note that we do have a leadership position here. We have the first successful Phase 2 trial demonstrating some initial proof of concept to efficacy both on – well primarily on improving fibrosis which we think is very important. And Mark can probably elaborate a little bit more on that. But when you think about that and thinking about where the overall space is in the overall development space, most companies are behind us, right. So most companies don't actually have – they're not in Phase 2. So that does make us an attractive potential partner. I think you and I maybe have had conversations in the past about bigger picture, we are in favor of building the best regimen for NASH. So how that plays out is yet to be determined but we do think that we have an important competitive advantage.

[Jonathan M. Eckard:]

Great. Thank you.

[Mark E. Pruzanski:]

Yeah. Jon, I would just add on to that, as Rachel alluded to, OCA is the first therapy to have ever demonstrated a fibrosis benefit in the context of a chronic, active ongoing disease in a relatively short period of time. And I've mentioned this before, but there's recent studies that have been published, namely Angulo out of Mayo who showed that fibrosis is really the most important pathologic feature of this disease that predicts all cause mortality, not just liver-related complications and mortality. So I've said this before, I think that as an FXR agonist, we have really the optimal approach out there and I could see OCA being positioned as backbone therapy in this disease. But as Rachel mentioned, we are looking at other mechanisms. We do think that other drugs will find a place in the treatment of this huge heterogeneous disease population over time.

[Jonathan M. Eckard:]

Great. Thank you very much.

[Operator:]

Thank you. Our next question comes from Ying Huang with Bank of America Merrill Lynch. Your line is open.

[Ying Huang:]

Good afternoon. Thanks for taking my questions. Can you talk about first on the patent for OCA? I know that you do have plans to extend that from 2022 potentially to 2027. Can you update us where that is? And then also can you talk about the commercialization effort you are building for PBC indications? For example how many sales reps do you plan to have in both U.S. and Europe? Thank you.

[Mark E. Pruzanski:]

Yeah, thank you. Yeah, just to confirm, we have issued composition of matter patents on OCA that expire on their phase (25

[Lisa Bright:]

Okay. Thanks for the question. So I think we're in the middle of doing a significant amount for us to really understand those physicians in the U.S. and Europe who are the key prescribers for PBC, so we can take some good proxy measures looking at urso use as well, but then really focusing it down on the PBC prescribers. So in the U.S. for example, we think there are about 1,200 hepatologists and probably around 14,000 gastros, of which a proportion of those are going to be really focused on PBC. So as we start to go through that sales force sizing exercise, we recognize that what's important is that we're committed to ensuring that all physicians, regardless of really who they are, get scientific information they need about OCA in PBC. So whilst we're still doing the work, I think our initial expectation is that the sales force that we'll lead in the U.S. will be quite focused and then we certainly would expect it to be no more than about 50 sales representatives. We're still in the process of doing the sales force sizing across Europe.

[Ying Huang:]

Great. Thanks for the color.

[Operator:]

Thank you. Our next question comes from Michael Yee with RBC Capital. Your line is open.

[Michael J. Yee:]

Thanks for the questions. Two topics, one is going back to the Japanese study which is going to report out soon, can you just remind us about what work was done at higher doses and what one should expect at higher doses and why that was actually looked at here, particularly in the skinnier population? And given that information, is there any differences in the management of lipids? So is your base case to expect some possibly higher absolute rates of LDL cholesterol? Just wanted to understand a little bit about that dynamic. And then the second topic was a commercial question for Lisa or somebody else. I know you're doing work and thinking about your PBC launch, but in your discussions with payers, what type of pre-auth, what type of coverage do you expect here? And is this a sort of a situation where you've identified tons of patients that have already failed urso, is this a fast launch or how should we think about that, the pace of that? Thanks.

[Mark E. Pruzanski:]

Thanks for the questions Mike. I'll take the first one along with Rachel and then hand over to Lisa on the second part. With respect to the prior experience at higher doses, recall that our first Phase 2 actually in very similar patients, this was our initial proof of concept six-week study in NAFLD patients with diabetes, was at 25 milligrams and 50 milligrams. Really the data from that study were the only data available in this kind of patient population at the time that FLINT was designed and at the time that the Japanese NASH study was designed. We did not obviously have any data for the 25 milligram dose. And our partner, SDP, decided not having had experience in the Japanese NASH population to do more of a dose ranging study that I described, the 10 milligram, 20 milligram, 40 milligram doses. I think as I mentioned in my prepared remarks given the fact that FLINT unequivocally showed that 25 milligrams is an efficacious dose and that we also did see generally mild, moderate and lower incidence than PBC-type pruritus, we nevertheless did see pruritus in about a quarter of the patients, we did have one patient discontinue. And so that underlies that the premise for a lower dose selection – taking 25 milligrams forward, of course, in the Phase 3 REGENERATE study, but also adding the 10 milligram dose given, as I said, our expectation that we would see efficacy with that dose, and a better tolerability profile. So I can't speculate on what we'll see at the higher dose in the Japanese study, but we'll find out towards the end of this year.

[Michael J. Yee:]

What about the management of lipids or...

[Mark E. Pruzanski:]

Yes, so I'm going to ask...

[Michael J. Yee:]

(30

[Mark E. Pruzanski:]

Sure. Well, Rachel will take that part of the question.

[Rachel L. McMinn:]

Yes. And just so you have the Phase 2 data in PBC, because really this is the most experience we have with higher doses, Michael, I just figured I'd give you those numbers from the Phase 2 urso [ursodiol] study. It was 47%, nearly 50% pruritus with 10 mgs, and it went upwards of 80%, 80% to 87%, with doses from 25 mgs to 50 mgs. So while we can't make any kind of speculation on what happens in NASH, you at least have some Phase 2 data that you can consider for pruritus. In terms of lipids, we really don't have any experience above 25 mgs. There's no dose ranging data. This is the kind of information that we will be exploring a dose-ranging information on lipids in our upcoming NASH statin or lipids study that we've talked to you about. So you'll have to stay tuned on that. We don't know if there's a threshold effect. In terms of management, I think we've said before that there's not really been kind of an active management on lipids within the SDP trial, to our knowledge. So we'll have to wait and see what those data look like, but that will be the first dose-ranging data on lipids in that particular population.

[Michael J. Yee:]

Okay.

[Rachel L. McMinn:]

I'll turn it over to Lisa.

[Lisa Bright:]

Okay. So just following up on the question about payers in the U.S. So I think the first thing to say is obviously, the expectation at this stage is that OCA would be used in patients who haven't had an adequate response to urso. We are in the process right now of, through our managed markets team, talking to payers really about their understanding about PBC and where they see OCA fitting in. And I guess what's important at this stage is to say that we expect that payers will manage OCA similar to the way in which they've managed other oral orphan therapies to ensure appropriate use.

[Mark E. Pruzanski:]

Yes. And, Mike, just to add something to Rachel's comments, because I had mentioned the earlier Phase 2 study, the six-week study in diabetic NAFLD patients. If you look at the lipid data there, there is really no significant difference between the two doses tested, and it was really too small a study to be able to draw any conclusions from. Just echoing Rachel's remarks.

[Michael J. Yee:]

So there may not be a difference there, but the management was not as active, I guess. So if that was a difference, that could be – trying to preempt anything, that could be a difference why it might be higher?

[Rachel L. McMinn:]

I don't know that we can really speculate beyond what Mark just said in terms of lipids, but keep in mind, this data is going to be important and interesting because it's a second Phase 2 trial in NASH that's placebo-controlled for OCA. That being said, given all of the differences that Mark mentioned about the uniqueness of this population, it's not going to be guiding our Phase 3 plans. As you know the Phase 3, Mark spent a lot of time going through all the details there. We indeed have actually taken a lower dose forward for the reasons he's already cited. So I'm not sure that spending a lot of time thinking through the higher dose is going to have any relevance to the future of how we're thinking about OCA.

[Michael J. Yee:]

Thanks.

[Operator:]

Thank you. Our next question comes from Joel Beatty with Citi. Your line is open.

[Joel L. Beatty:]

Hi. Thanks for taking the questions. Following up on a earlier question around a strategy to build the best regimen in NASH, what type of mechanism or features would you see as complementary to OCA and NASH?

[Rachel L. McMinn:]

That's something that we're currently evaluating, and I'd love to be able to answer that question and point you to all kinds of mechanisms that we're interested in, but I think at this point, we're not ready to share any of those thoughts publicly. What I would say, though, is that we think we have a really, really good framework. So when you think about the different areas of NASH, you've got a fibrotic mechanism, you've got a metabolic mechanism, and an inflammatory mechanism and OCA actually hits across all three of those big, giant buckets of what we think contributes to the disease. So having that as a backbone therapy to build upon, we think really puts us in a nice position and an attractive position. And as Mark said earlier, I think big picture, what I can tell you is that fibrosis is really the only clinical metric that's been associated with long-term health of these patients' clinical outcomes. So that's sort of the long-term rate of how we're thinking about it.

[Joel L. Beatty:]

Sure. Thanks for that color. And then one other question. In comments about the REGENERATE trial I thought I heard up to 1,100 additional patients added for the outcome portion beyond the 1,400 patients that would be enrolled. Does that mean there will be a decision on how to decide on adding up to 1,100 or a smaller number? And if so, how would you decide that?

[Mark E. Pruzanski:]

I think you asked how did we decide on up to 1,100 patients more.

[Joel L. Beatty:]

Well I guess, will it definitely be 1,100 patients more or do you decide later on?

[Rachel L. McMinn:]

I think maybe the best way to answer that is there's a lot of different pieces that feed into this trial design. So one piece is looking at the interim analysis and what that power is. Another is looking at the total safety exposure and figuring out how many patients we need from a regulatory perspective to satisfy basic guidelines. And then a final piece that goes into the overall size is the outcomes piece, right? How many of them? So, I think we're putting rough numbers out here. We're not giving a specific number, but generally speaking we're talking about a total trial size of 2,500 patients that would satisfy all three of those buckets. It's not our expectation that somehow we'd only enroll an extra 200 because of the event. That's not the way we're thinking about it. It's both safety as well as outcomes that drive that bigger piece. Does that answer your question?

[Joel L. Beatty:]

Yes, it does. Thank you.

[Operator:]

Thank you. Our next question comes from Robyn Karnauskas with Deutsche Bank. Your line is open.

[Mohit Bansal:]

Great. Thanks for taking my question. This is Mohit filling in for Robyn. Just wanted to ask a question regarding the patient population for PBC. So in the checks we have done, we found the doctors are talking about different estimations on how many patients do not respond to urso. And then Lisa and her team have done a lot of work, lot of market research in this field. So based on that work, how confident are you in the 30,000-patient number you cite? Do you think there could be a upside to that number? Thank you.

[Lisa Bright:]

So I think that what we're doing right now is a large number of market research studies in a number of areas. So, firstly, we're trying to validate epidemiology. As you know, there's not a huge amount of published data that's available. So we've been working with thought leaders and stakeholders in the key markets to try and validate, first of all, the epidemiology. So that's been going on. We are hoping to try and publish that, so that it will really help give some guidance to payers. When it comes to number of patients with inadequate response to urso, thank you for raising this because it's a very important question. And as you know, the recent literature from the UK-PBC has really highlighted that any elevation in ALP and any elevation in bilirubin, particularly within the normal range, and this is really important, is associated with an increased risk of transplantational death. But the challenge is at the moment that there's just no consensus on what the definition of adequate response is. So giving you a direct answer to that as a percentage is actually very difficult. And I suspect it's going to be some time, probably several years, before there's widespread agreement on what that definition should look like. But that said, there's certainly a lot of interest, as I think you're picking up, and excitement about this data that is being expressed at scientific meetings and other forums.

[Mohit Bansal:]

Got it. Thanks.

[Operator:]

Thank you. Our next question comes from Liana Moussatos with Wedbush Securities. Your line is open.

[Liana Moussatos:]

Thank you for taking my question. When do you expect data release from the Phase 2 PSC trial?

[Mark E. Pruzanski:]

Hey, Liana. We have not given any public guidance on that study. It is enrolling right now and we'll be providing details in future calls.

[Liana Moussatos:]

Thank you.

[Operator:]

Thank you. Our next question comes from Adam Cohen with MLV (40

[Unknown Speaker:]

Oh, hello. Can I just ask you what is the current OCA supply? How is it manufactured? And if it's internally or externally manufactured?

[Mark E. Pruzanski:]

Thanks. It's a good question. So OCA is a derivative of chenodeoxycholic acid, which is a naturally occurring bile acid. And just like urso, the only product approved for PBC, it is synthesized right now from cow bile, and we right now are commercially ready. We are manufacturing it at scale and are confident that we will have adequate drug supply for our launch and thereafter.

[Rachel L. McMinn:]

And then just a quick additional comment to your question about internal versus external. This is all external. We do have a number of suppliers that go into the whole supply chain. That's something that's obviously important to us and I think we've mentioned in the past that we are planning our supply around success in NASH and that does require investment earlier. So while we're very confident in our supply for next year, we're also investing currently and that's part of even our operating expense guidance that we've given in the past that we're making a big investment to have adequate supplies for a much larger population.

[Unknown Speaker:]

Thank you.

[Operator:]

Thank you. Our next question comes from Matt Roden with UBS. Your line is open.

[Jeffrey Hung:]

Thanks. This is Jeff Hung in for Matt. On PBC pharmacoeconomics, how do you think about the value proposition versus the economic proposition? And then will the outcome of the Japanese study in OCA have any bearing on your registrational program? Like will it trigger any changes? And then the last one is for Lisa. I guess for the epidemiology data, you mentioned that you hope to get it published. Can you elaborate on that? Is that a form of meta-analysis of market materials (42

[Lisa Bright:]

Okay. So I'm going to take it in reverse order actually. So from an epidemiology perspective, what we've been doing is taking the literature that exists, which I've said is not that great. There's not a huge amount of data that exists around this at country level and really getting the thought leaders to try and validate that data. So we haven't yet figured out how or where we're going to do that, but we do think it's important to make this data available to help payers think about the burden of disease. Pharmacoeconomics, I thank you for raising that. Clearly it's really important for us that we develop pharmacoeconomic models that allow us to collect the costs associated with the true burden of disease. And obviously that's going to include costs of managing transplants, cirrhosis, et cetera, and there is so little published data about the true costs in PBC at the moment that we think it's going to take some time to do that. And that's clearly a very important part of inputting into the value proposition. So I think payers get the economic benefit for these patients with high unmet need with no other treatment options, but of course we will continue to look to collect the cost data that would populate those models.

[Mark E. Pruzanski:]

And just to address the third part of your question. I want to stress that the Japanese study is a Phase 2 study as was FLINT. And so we do not believe that there's any opportunity to file based on the Japanese study data coming in and look forward to getting the REGENERATE study up and running as quickly as possible this quarter.

[Rachel L. McMinn:]

And just to add on to that, in terms of your question, will these results trigger any changes? That's certainly not in any way our expectation. I'll just reiterate what Mark said earlier. This is a unique Japanese exclusive population. There are similarities to Western NASH, but there's also many, many differences. So for all those reasons and the trial size and the dosing, et cetera, that we don't see this informing our Phase 3 plans in any way.

[Jeffrey Hung:]

Thanks.

[Operator:]

Thank you. And I'm showing no further questions at this time. I'd like to turn the call back to management for any closing remarks.

[Mark E. Pruzanski:]

Okay. No, thank you very much for listening in and for your interest in Intercept and the progress we're making for PBC and NASH patients.

[Operator:]

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