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Edited Transcript of BIOD earnings conference call or presentation 6-Nov-19 3:00pm GMT

Q3 2019 Albireo Pharma Inc Earnings Call

DANBURY Nov 12, 2019 (Thomson StreetEvents) -- Edited Transcript of Albireo Pharma Inc earnings conference call or presentation Wednesday, November 6, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Pamela Stephenson

Albireo Pharma, Inc. - Chief Commercial Officer

* Patrick T. Horn

Albireo Pharma, Inc. - Chief Medical Officer

* Paul Arndt;LifeSci Advisors, LLC;Managing Director

* Ronald H. W. Cooper

Albireo Pharma, Inc. - CEO, President & Director

* Simon N.R. Harford

Albireo Pharma, Inc. - CFO & Treasurer

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Conference Call Participants

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* Alan Carr

Needham & Company, LLC, Research Division - Senior Analyst

* Antonio Eduardo Arce

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

* Eun Kyung Yang

Jefferies LLC, Research Division - MD & Senior Equity Research Analyst

* Matthew Lee Kaplan

Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research

* Ritu Subhalaksmi Baral

Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst

* Timothy Francis Lugo

William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research

* Vasiliana Vireen Moussatos

Wedbush Securities Inc., Research Division - MD of Equity Research

* Yasmeen Rahimi

Roth Capital Partners, LLC, Research Division - MD, Senior Research Analyst & Co-Head of Biotechnology Research

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Presentation

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Operator [1]

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Greetings, and welcome to the Albireo Pharma Inc. Third Quarter 2019 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Paul Arndt with LifeScience (sic) [LifeSci] Advisors. Thank you, Mr. Arndt. You may begin.

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Paul Arndt;LifeSci Advisors, LLC;Managing Director, [2]

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Thank you, Operator, and good morning, everyone. Thank you for joining today's call. This morning, Albireo issued a press release highlighting its recent business accomplishments and reporting its financial results for the third quarter ended September 30, 2019. This press release is accessible via the company's website at www.albireopharma.com.

Before proceeding, we would like to note that management's comments today may include forward-looking statements regarding the company's plans and expectations. These statements are being made under the Private Securities Litigation Reform Act of 1995, and they are subject to various risks and uncertainties. Actual results may differ materially due to various important factors, including those described in the Risk Factors section of our most recent Form 10-K and our subsequent SEC filings. These filings can be accessed from the Media and Investor section of our website, albireopharma.com, or on the SEC's website. Any forward-looking statements represent our views as of today, Wednesday, November 6, 2019, and should not be relied upon as representing our views as of any subsequent date. We undertake no obligation to publicly update these statements.

And now, I'll turn the call over to Ron Cooper, Albireo's President and CEO. Ron?

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [3]

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Thank you, Paul, and thanks to all of you who have joined us on this morning's conference call. With me today is Albireo's Chief Medical Officer, Dr. Pat Horn; our Chief Commercial Officer, Pamela Stephenson, and our Chief Financial Officer, Simon Harford.

We're pleased to have the opportunity to update you on the meaningful progress we've made in recent months in the development of odevixibat, our proprietary ileal bile acid, or IBAT inhibitor. We believe this product candidate holds the potential to be a compelling treatment option for a wide range of pediatric cholestatic liver diseases. Our lead indication is progressive familial intrahepatic cholestasis, or PFIG, and we plan to study odevixibat in other cholestatic diseases.

Now, for those of you that are new to Albireo, there are multiple types of PFIG, all caused by genetic mutations that can result in bile acid buildup in the liver. We estimate that PFIG affects about 8,000 to 10,000 patients across the spectrum of the disease in the U.S. and in Europe. Patients tend to be diagnosed early in life, often at the ages of 1 or 2, and they can quickly progress to cirrhosis, liver failure, and death if untreated. They also experience a variety of symptoms, with pruritis, which is an intense, insatiable itch, tending to be the most troublesome for both the patients and their families.

There are no medications approved to treat PFIG. Treatment options are limited to invasive surgical procedures, such as biliary diversion surgery, or a permanent stoma bag that's used to drain bile acids, or liver transplant. Our ultimate goal is to provide patients with a well-tolerated treatment option that can reduce bile acid, ease their pruritis, and hopefully prevent or postpone a liver transplant.

PEDFIC-1 is a randomized, double-blind, placebo-controlled clinical trial that is evaluating odevixibat in 60 patients ages 6 months to 18 years with PFIG type 1 or 2. Patients are receiving either 40 or 120 microgram per kilogram oral dose of the planned commercial formulation of odevixibat, or placebo once-daily for 24 weeks. The primary endpoint for the FDA evaluation is an assessment of the change in pruritis. The primary endpoint for the EMA is the serum bile acid responder rate.

Enrollment in PEDFIC-1 has progressed well since our summer update. We continue to be encouraged by the number of patients who've been entering screening at the over 40 actively recruiting sites around the world. As of the end of October, we'd randomized more than 3/4 of the patients needed to complete the trial. It's also important to note that we believe there are adequate additional patients in screening or prescreening today to complete randomization in this trial.

Now, we plan to announce when randomization is finished in the trial, and we remain confident that we'll be in position to report top-line results from the trial in mid-2020. PFIG is an ultra-rare disease, and the exact timing of the top line results will be determined by the last few patients. Assuming a positive outcome for this study, that will put us firmly on track for potential end launch in 2021.

Meanwhile, PEDFIC-1 patients have been rolling over to the voluntary extension portion of the study, which we refer to as cohort 1 or the rollover cohort, of our PEDFIC-2 trial. We now have patients who are approaching a year on odevixibat treatment. All patients in this 72-week extension trial receive the higher dose of odevixibat, 120 micrograms per kilogram daily.

In the third quarter, we also screened our first patient in cohort 2, or the expanded cohort of PEDFIC-2. The expanded cohort is composed of PFIG patients who do not meet the eligibility criteria for PEDFIC-1 but who still have elevated serum bile acid levels and pruritis. This includes patients with all types of PFIG and patients younger than 6 months or older than 18 years of age. The second cohort reflects our commitment to providing a potential new treatment option for many different types of patients with PFIG, if possible, while maximizing the body of data and evidence for odevixibat. The new set of patients will be analyzed separately without affecting cohort one of PEDFIC-2.

Now, as we continue to make great headway with our robust phase 3 program, we also are deepening our engagement with key opinion leaders to provide critical feedback on our plans for odevixibat. For instance, at the AASLD liver meeting, which is taking place here in Boston this week, we have multiple events that engage preeminent cholestatic liver disease clinicians from the U.S., Europe, and around the world.

We're advancing our work on multiple important pre-commercial fronts as well, from manufacturing to market access, regulatory engagement and patient advocacy. From a manufacturing perspective, work to produce our chemistry manufacturing and controls, or CMC validation batches is well underway. We're also pleased to report that we've completed all preclinical and toxicology studies required for regulatory filings.

From a payer perspective, our market access planning for the U.S. and the EU is well underway as we've continued to refine health economics work and the value story for odevixibat. And in terms of advocacy, we've been really pleased with the early success of our PFIG Voices campaign. We are teaming up with the PFIG community on this initiative with the aim of growing awareness and understanding of the disease across key audiences. The pfigvoices.com website is just one of the vehicles we're employing. On this site, there are a growing number of powerful patient and family profiles.

One such story is of Eleanor, who was diagnosed with PFIG when she was just 3 months old. And her mother, Claire, who became a PFIG expert by necessity after discovering that her local doctors and hospitals were unaware of the disease. Claire describes the struggle during diagnosis, the inability to comfort her daughter with chronic pain, as well as the strain that the disease put on her marriage, work life, and mental well-being. You also hear about the debilitating pruritis that patients experience and the resulting sleep deprivation that so often affects entire families.

The PFIG Voices campaign also includes media outreach element that has generated significant traction in recent months. Media outlets in Colorado to Delaware to Kentucky have been profiling patients. And the reception by the PFIG community has been very positive.

Despite all the challenges they face, parents and patients want to be involved, but they lacked an outlet. They'd find support in sharing experiences and bringing to focus the unmet needs in PFIG. We thank and commend them for sharing their stories with the world.

Now, let's touch on our work to provide odevixibat as a treatment option for another group of children in desperate need of an approved therapy, namely patients with biliary atresia. While still a rare disease, biliary atresia is a larger indication of PFIG, impacting, we estimate, to be about 15,000 to 20,000 patients in the U.S. and in Europe. BA is caused by blocked or non-existent bile ducts which, if left untreated, generally cause liver failure within months.

Virtually all children with BA receive their diagnosis within the first months of life. Children quickly undergo a Kasai procedure, which surgically connects part of the small intestine to the liver to restore bile flow. While this procedure is lifesaving for the infant, about 50% of the patients still require a liver transplant within 2 years, and approximately 80% require a liver transplant by the age of 20. Both the FDA and the EMA have granted odevixibat Orphan designation in biliary atresia, and we're pleased to report that we've had further very constructive interactions with the FDA in recent months regarding a clinical path for odevixibat.

Since a pivotal trial in biliary atresia has never been undertaken, there's been quite a bit of work to work through with the agency. And we believe the bulk of this work is complete. We look forward to sharing details about the trial and continue to plan for initiation in 2020.

So, in summary, odevixibat is a product candidate that we believe holds tremendous potential and has several distinct advantages. First, it's the most potent IBAT inhibitor in humans. Second, it is dosed as a once-daily oral medication. Also, our oral capsules do not need to be refrigerated. They allow for the medication to be sprinkled onto and into food, which we believe is a big advantage when dealing with the pediatric population.

From a PK perspective, we've demonstrated that odevixibat remains in the gastrointestinal (inaudible) with minimal systemic exposure. In the phase 2 study, there were no reports of diarrhea in patients receiving multiple doses of odevixibat of up to 200 micrograms per kilogram per day. We're using the planned commercial formulation of odevixibat in our ongoing phase 3 program. And finally, we believe odevixibat will be the first approved treatment for PFIG in the world.

With a strong patent estate that takes us into 2034, including potential extensions, unencumbered global rights, expected orphan pricing, and a very small physician target audience, we believe that odevixibat represents an attractive opportunity.

Turning to our other IBAT inhibitor, elobixibat, we randomized first patients in our phase 2 trial in NAFLD and NASH during the third quarter. As most of our investors know, we view our NASH program as pure upside for Albireo at this stage and well-worthy of a relatively small investment.

It's becoming increasingly apparent that NASH is fundamentally a metabolic disease, and our belief, based on preclinical work, is that IBAT [inefficient] holds real promise as a therapeutic approach for the treatment of NASH based on potential to show a cumulative impact across multiple disease parameters, including serum bile acids, cholesterol, liver inflammation, liver fibrosis, and GLP-1.

We're testing this theory in our multi-center, placebo-controlled phase 2 study. The trial will enroll 46 patients with biopsy-confirmed NASH or a diagnosis of suspected NAFLD or NASH based on metabolic syndrome definition. The trial continues to enroll, and we plan to provide an update when enrollment is completed.

Naturally, all this progress is made possible by an outstanding team and a special culture at Albireo. As we look forward to 2020 and our company growth accelerates, I'm really excited to welcome Michelle Graham to our leadership team as Chief Human Resources Officer. Michelle has extensive global experience developing successful biopharma organizations. She has held senior human resources and organizational development roles at TESARO, Parexel, Integer, Bausch & Lomb, and Bristol-Meyers Squibb. Michelle will play a key role as we need to build a world-class organization that attracts, develops, and retains top talent.

So with that, my pleasure to turn the call over to Simon for a financial update. Simon?

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Simon N.R. Harford, Albireo Pharma, Inc. - CFO & Treasurer [4]

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Thank you, Ron. Let me quickly summarize our financial results for the third quarter 2019. Our revenue was $1.4 million for the quarter ended September 30, 2019 compared to revenue of $0.2 million in the same period last year. The increase of $1.2 million was primarily due to the estimated royalty revenue received from EA Pharma for elobixibat for the treatment of chronic constipation in Japan.

Our research and development expenses in the quarter were $12 million compared to $9.7 million in the third quarter of 2018. The increase of $2.3 million was mainly related to headcount and program expenses for odevixibat and the elobixibat phase 2 trial. Our Q3 general and administrative expenses were $6 million compared to $3.9 million in the prior year period. The increase of $2.2 million was primarily attributable to headcount as we put in place support for the transition from an R&D to commercial organization.

Other operating expense of $4 million in the quarter versus other operating income of $0.6 million last year, an increase of $4.6 million due to the impact of foreign exchange rates on the inter-company loans as the Swedish kroner declined in value. There is no cash impact of these changes.

Net loss for the third quarter ended September 30, 2019 was $21.9 million, or a loss of $1.73 per share compared to a net loss of $14 million, or $1.17 per share in the third quarter of 2018. As of September 30, 2019, we had a balance of $142.7 million in cash and cash equivalents compared to $157.7 million on June 30, 2019. We are revising our guidance on total operating expenses for 2019 to a range of $70 million to $75 million from our previous estimate of $75 million to $80 million. We continue to anticipate that our cash balance will be sufficient to meet our operating needs into 2021.

With that, let me turn the call back over to Ron for closing remarks.

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [5]

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Great. Thanks very much, Simon. So in summary, our excitement continues to build as we approach full randomization in our pivotal trial in PFIG, scale up our precommercial activities, and finalize our plans for a second pivotal trial in biliary atresia.

With that, we'll open up the call to questions. Operator, over to you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Liana Moussatos with Wedbush Securities.

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Vasiliana Vireen Moussatos, Wedbush Securities Inc., Research Division - MD of Equity Research [2]

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The biliary atresia trial, will the dosing be similar to PFIG? And thinking about commercialization later, would you view the commercialization in the U.S. for PFIG and biliary atresia? And what are your thoughts on pricing since PFIG's smaller and would come first?

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Patrick T. Horn, Albireo Pharma, Inc. - Chief Medical Officer [3]

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So this is Pat. I can take the first of those questions. So, yes, we will use the same dose in biliary atresia. It's on a weight basis. It's micrograms per kilogram. So we would use the same dose in biliary atresia that we used in PFIG.

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Pamela Stephenson, Albireo Pharma, Inc. - Chief Commercial Officer [4]

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Hi, it's Pamela. On the commercialization question, given the fact that the targets are relatively the same, a similar group, we could absolutely -- we would plan to commercialize in the U.S. and Europe, as planned. And on your pricing question, it's also considered a rare condition, and it would be a similar approach.

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Operator [5]

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Our next question comes from the line of Yasmeen Rahimi with Roth Capital Partners.

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Yasmeen Rahimi, Roth Capital Partners, LLC, Research Division - MD, Senior Research Analyst & Co-Head of Biotechnology Research [6]

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Congrats on the continued progress. I have 2 questions for you. The first question is can you tell us a little bit more about sort of the PK profile of going with the sprinkle formulation of 40 and 120 micrograms per kg per day? What is that comparable to the doses in phase 2? That would be very helpful for us. And then, can you give us a little bit more color on what percentage of the patients from PFIG-I study have already enrolled into PFIG-2? And then maybe a little bit more color on the enrollment of the second study would be helpful for us.

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [7]

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Yes, Yasmeen, thanks very much for your questions. First off, the beauty of odevixibat is that this is a product that is pretty much a non-systemic drug, right? So we have very little, very low systemic absorption. So, Pat, maybe you want to talk a little bit through some of Yasmeen's questions, give a little more color on that?

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Patrick T. Horn, Albireo Pharma, Inc. - Chief Medical Officer [8]

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Yes. And so we actually had a poster recently that we showed of the PK data. But as Ron said, so this is systemically -- very little is absorbed. So it's only at the higher doses that we see any measurable plasma concentration, and that is the [C Max] in the single-digit nanogram per mL, so very, very low exposure.

In terms of the dosing, the dosing of 40 microgram and 120 microgram is within the bracket that was tested in the phase 2 study. So in the phase 2 study, we looked at 10 micrograms [up] per kilogram. These are per kilogram. So we looked at 10 micrograms per kilogram up to 200 microgram per kilogram, so both of those doses are within the brackets tested there.

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [9]

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And then, yes, to your question in regards to PEDFIC-2 rollover, we're not going to give details on that right now. Suffice it to say that it's been an attractive trial for parents to put their children into. We anticipate that the majority will roll into the long-term extension. And right now, the good thing is that we now have patients that have been up to a year on therapy, so we're pretty excited about that.

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Operator [10]

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Our next question comes from the line of Ritu Baral with Cowen and Company.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [11]

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My first question is on the PEDFIC-1 primary analysis [stats]. Given you have 2 doses, what will be the primary analysis? Is it going to be both active groups versus placebo? Or are you primarily focused on the high-dose versus placebo? And does that change for either geography?

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Patrick T. Horn, Albireo Pharma, Inc. - Chief Medical Officer [12]

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So in the primary analysis, we will look at the pooled dose versus placebo first, and then step down to the individual doses. (Multiple speakers)

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [13]

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From a geography perspective? Yes. Well, remember, from a geography perspective, the primary endpoint is different in Europe. So, in Europe, we have a bile acid responder definition, so that will be the primary endpoint. And a secondary endpoint -- a key secondary endpoint will be -- a key secondary endpoint will be the price, [but] we'll do the same analysis for that.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [14]

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But it's pooled for both of those analyses?

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [15]

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That's correct.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [16]

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And then, you mentioned, Ron, that you're conducting health economics work and starting with your payer discussions. Can you give us very broad strokes the strategy behind the health economic arguments that you intend to take with payers? Like, are we talking about sort of clarifying the relationship to liver transplant, quality of life with pruritis? What are the main arguments right now that you intend to take with payers?

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [17]

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Thanks for that question, Ritu. I think the most important thing is that we are really making great progress on our value story overall, and we're going to be ready. We're going to be ready with a comprehensive package. Maybe, Pamela, you want to give a little more detail around that?

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Pamela Stephenson, Albireo Pharma, Inc. - Chief Commercial Officer [18]

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Sure, happy to do so. As Ron [said], we're well underway in preparing the cost effectiveness model, looking at the budget impact and the relative budget impact by payer. As we know, with this high unmet need and the lack of options currently available and the small populations involved, that this will be relatively straightforward with payers. But we are building this robust evidence base to support our story.

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [19]

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Yes. What's been great -- sorry, Ritu. Just to finish up, what's been great is we've reached out to payers and done some pretty extensive market research. And what the payers have said to us, first of all, tell us more about the disease. We need to educate them about the disease. They already see the unmet medical needs, right, and then they said, okay, we need some evidence, right? And so, obviously our phase 3 study and the phase 3 program, both the PEDFIC-1 and the PEDFIC-2, will be important, but also the natural history data that's been put together, NAPPED consortium. That's now over 600 patients, excellent longitudinal data. That will help inform our overall payer discussion.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [20]

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What are the biggest inputs into that cost-effectiveness analysis and model, Pamela, that you mentioned?

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Pamela Stephenson, Albireo Pharma, Inc. - Chief Commercial Officer [21]

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Oh, sure. I mean, it really is looking at the size of the patient population, the sort of preliminary outcomes. And then, as Ron has suggested, matching them to sort of what we know of the natural history and the natural course of the disease eventually can be looking, as you mentioned earlier, at the longer-term outcomes, so the transplants, et cetera.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [22]

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Got it. And last quick question. At the time of top line for PEDFIC-1, would it be possible to get some initial data, especially tolerability data, from first cohort of PEDFIC-2, or even cohort 2 of PEDFIC-2, given I suppose the more robust set of data from the higher dose for tolerability reasons?

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Patrick T. Horn, Albireo Pharma, Inc. - Chief Medical Officer [23]

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Yes, this is Pat. So yes, that would be entirely possible in -- to any (inaudible).

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Operator [24]

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Our next question comes from the line of Tim Lugo with William Blair.

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Timothy Francis Lugo, William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research [25]

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You specifically called on your press release for the dosing in PEDFIC-1 and 2, the commercial formulation. That seemed to be kind of an area of difference between you and the other IBAT inhibitors in development. Can you maybe expand upon that formulation, why you think that's going to be best-in-class and a differentiation?

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [26]

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Thanks for the question, Tim. I think there's a couple of comments within that. The formulation itself, where we believe it's a competitive formulation is, first of all, it is oral formulation. It's a once-daily dosage. But also, we have 2 preparations. We have a capsule preparation and, for younger children, it's a sprinkle formulation. And that sprinkle formulation can be sprinkled on food. These formulations do not need to be refrigerated, so they can be transported if families are traveling. So we believe that's a competitive advantage, and we believe that that will be the formulation for the families.

That's the practical part of it. But in a technical part, we've been working through our supply chain for a number of years. We have experience with elobixibat, taking it from [a baby] all the way to commercial with our partners, EA Pharma. That's the exact same supply chain that we will be using for odevixibat. And we're pleased with our CMC [work]. We have the registration batches sitting on stability right now as we speak. And in the PEDFIC-1 and PEDFIC-2 studies, we are using our plan commercial formulation. So we do not anticipate that our pharmaceutical development will be a gating factor towards the launch and availability of odevixibat.

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Timothy Francis Lugo, William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research [27]

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For biliary atresia, obviously you're going to update us some time before -- or some time probably around when the trial is announced and it is kicked off. So looking forward a bit, you did mention that 50% require liver transplants within 2 years? That seems like a level of time that could be addressed in a trial. Can you maybe discuss the potential for the hard outcome, like liver transplants, being looked at in a pivotal study where maybe a serum bile acid could also be -- or just maybe the level of serum bile acid being accepted as a biomarker [NDA]?

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [28]

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Got you. And thanks very much for your enthusiasm about the biliary atresia study. We're really excited about that as well, because we believe it's probably one of the largest pediatric cholestatic liver diseases, estimated between 15,000 to 20,000 individuals, unmet need, super-high. I think that we're pretty excited, and we've had really a great dialogue with the regulatory authorities, really constructive dialogue. And we shared the thoughts from our key opinion leaders who have been advising us on this study, as well.

And as I said in my prepared comments, we made really great progress, and I think we're almost there. And once we kind of put the bow on it, we'll share with you a little bit more of the details at that time.

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Operator [29]

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Our next question comes from the line of Ed Arce with H.C. Wainright.

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Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [30]

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First for me on commercial, this could be either for Ron or Pamela, just thinking through, as you had described earlier, your package around cost-effectiveness and the budget impact in discussions with payers, how much would you have at launch, do you think, in terms of data around long-term outcomes, specifically avoiding or delaying transplant, or perhaps hospitalization? And how does that play regarding -- or versus surrogate endpoints that you would have hard data on?

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [31]

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Yes, thanks for the question, Ed. And Pamela, why don't you have a few comments on that?

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Pamela Stephenson, Albireo Pharma, Inc. - Chief Commercial Officer [32]

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Hi, Ed. I would say that, with this, we will have data from our extension study. That obviously will be helpful as sort of the near-term outcomes. And we will need to also, as any product, that [they] be modeling those efforts out over the longer-term. Again, as mentioned earlier, we'll be looking at the NAPPED data as well and building our models in that way, and then tracking patients over the longer-term. But there will be significant modeling required to kind of project over the longer-term. And in my past experience, this has been accepted by the health authorities when you are negotiating with them.

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [33]

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And Ed, the nice thing about it is we anticipate our plan launch in 2021, right, so we have time. And the joy of having a bit of time is we have the opportunity to generate data, but also take that generated data and run it by some payers just to see if it's compelling, because as I said in my earlier comments, a lot of work is being done already right now on the value story. And as we look at even the preliminary value story, it's a pretty robust story already.

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Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [34]

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So you'll be coming out to market already with some degree of long-term outcome data and will continue to generate more as you go through the early launch?

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [35]

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Yes. I think the way to characterize it, we'll come to market with whatever data we've generated at that time, right, between PEDFIC-1 and PEDFIC-2, but we also have other studies ongoing, or planned studies, plus we have the NAPPED data, which is the natural history data, in now over 600 patients. That'll be all put together to create what I believe will be a compelling package for our payers.

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Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [36]

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And then, if I may, a couple more follow-ups. First, on your biliary atresia trial, I know that you've had ongoing discussions with the agency around the key parameters, and there's still a lack of some clarity around the regulatory pathway there. I know this has been asked already, but is there perhaps any sort of detail that you could share with us specifically regarding your confidence in starting this trial next year?

And then, separately from that, with odevixibat in a phase 3 now and looking for a second one, I know it's perhaps a bit late. But just wondering if you were thinking about pursuing a breakthrough therapy designation for the drug.

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [37]

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Great. Thanks for those questions, Ed. I think as it relates to the biliary atresia study, I think we feel very confident in our ability to get that study up and going and execute on that. As I said, we've had really productive discussions with the agency.

I think the challenge with the agency is that there's never been a phase 3 biliary atresia study before. And so, really, it's a white piece of paper, and they've been collaborating with us, and I think we've made tremendous progress. The other challenge is that this study is not going to be like the PEDFIC-1 study because biliary atresia patients, not all of them are pruritic, right? So that's a big difference versus the PFIG patients themselves. Designing against that and agreeing on endpoints, agreeing on size and length of trial, it is different, and it will be different from the PEDFIC-1 study. But as I said at the very beginning, we feel very confident in our ability to get up and going with this study as our discussions with the agency have been very productive.

Now, as it relates to breakthrough designation -- thanks for that question as well -- why do you get breakthrough designation? What does that give you? There's a number of things. We get the key things, really, are it allows you to have a more regular dialogue with the regulatory agencies, right? It expedites your regulatory submission approval process. And it allows you some flexibility in COC, as well.

And we think about it in sort of reverse order, from our perspective. As I've indicated from a CMC perspective, we feel very confident in where we are right now. That should not be gating to the approval of the drug according to our current plants. And so, that' really not needed.

In terms of expedited regulatory process, we do have fast-track designation for odevixibat, so we feel very good about that. And in terms of dialogue, I'm chuckling a little bit to myself. We have had a lot of dialogue with the agency, and we're grateful to the agency for a collaborative approach. So there is no shortage of dialogue for us.

So, and given those needs and given where we are, it's not a high priority for us. The higher priority for us is getting the biliary atresia study up and going and closing out the PEDFIC-1 study. It's now more than 3/4 enrolled.

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Operator [38]

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Our next question comes from the line of Eun Yang with Jeffries.

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Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [39]

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Another question on biliary atresia. So once the final design is in place, will you start the trial independent of phase 3 data in PEDFIC, or would you want to see the data before you start the trial in BA for perhaps better [powering] assumptions?

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [40]

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Yes, thanks for the question, Eun. I think in our current plans, our guidance for PEDFIC-1 will be mid-2020. We've not refined our guidance for the biliary atresia studies yet. We said 2020 for the study. Let us finish up with the regulatory authorities, and then you'll have a better sense of kind of where we are.

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Operator [41]

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Our next question comes from the line of Alan Carr with Needham & Company.

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Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [42]

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One, any added info you can give around enrollment for PEDFIC-1? At some point you had some issues with screen failures, and I know you moved many of those into PEDFIC-2. But can you give us the latest on that? And is this a hockey stick-type enrollment rate for this PEDFIC-1 trial? And then also, with respect to elobixibat in Japan, how are the sales coming along there? And the reason I ask is I think you have a $15 million milestone payment from the buyer of your royalty stream, and want to get a sense of when that might be coming.

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [43]

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Alan, thanks for the questions. We appreciate that. I think as we think about PEDFIC-1 enrollment, we're really pleased, right? We have 45 sites around the world that are actively open, actively recruiting. The reality is, though, is that randomization's not a linear process, right? And I think that where we are now is that we have really nice, tight inclusion criteria which we believe will create greater homogeneity in the PEDFIC-1 and PEDFIC-2 patients enrolling in the trial and hopefully should preserve the predictability of the clinical response.

As we said in our comments, we're more than 3/4 of the way there, right, so I'd like to talk about this as kind of the home stretch. And as we see now the number of patients that are in the screening period, so that screening period is the [5-day -- week] screening period, the number of patients that are in that screening period and the number of patients that are entering screening. If we net that against the screen failure rate that we've experienced, we feel very confident in our ability to finalize the study and provide top line data early to mid-2020, remembering that it is a 24-week treatment period. And Simon, maybe you want to talk a little bit about elobixibat in Japan.

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Simon N.R. Harford, Albireo Pharma, Inc. - CFO & Treasurer [44]

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Yes. So elobixibat in Japan, I would say it's actually doing better than our original anticipation. I think that the thing you have to think about in the Japanese market is the product launched in April of 2018. For the first 12 months or so, you're only allowed to have a 2-week prescription, and then, after that, it jumps up to a monthly prescription, and we have clearly seen through the royalty stream a benefit from that jump-up to monthly prescriptions. It's premature to talk exactly about when or if we will get the $15 million additional payment from EA Pharma. I think the way to think of it is, from our perspective as we do our budgeting for cash, we treat an item like that as an upside rather than an integral part of our financing.

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [45]

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Thank you, Simon, and thank you for the question, Alan. Just remind folks that we monetize the elobixibat royalty in Japan, and that brought us $45 million upfront. And so, as Simon's articulated, we'll think about that next payment as upside. Thanks for the question, Alan.

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Operator [46]

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Our next question comes from the line of Matt Kaplan with Ladenburg Thalmann.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [47]

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Not to beat a dead horse, but just wanted to dig in a little bit more to the biliary atresia phase 3. Given I guess that you're almost there in terms of reaching agreement with the authorities in terms of design, can you just paint a picture for us in terms of a timeline, if you start the study in 2020, how long the study would take to complete, and help us understand the timeline to potential readout and market, if positive, market launch?

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [48]

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Yes. I love all the enthusiasm for our biliary atresia study. We share the same enthusiasm about it, Matt, so thanks for the question. I think it really goes back to the unmet medical need. Our pediatric hepatologists are desperate for a treatment in this space for this disease, in particular because you see the need for liver transplant is really significant and happens quickly. So we're really excited to get going on this, and we think that it's a major opportunity, from an unmet medical need and a major commercial opportunity. It's just a little early for me now, Matt, to give you a [a little bit] more details on that. So as I said, I think that we're finalizing our discussions with the regulatory authorities. Let us get it all buttoned down so we don't have to go in reverse into anything that we have to say. And when we've got it buttoned down, we'll share some details with you, and I think that once you see the program and what we're doing, that it's a real big commitment for us to these patients, to the pediatric hepatology community and a big commitment to expanding the use of odevixibat across a wider range of patients and increasing the commercial opportunity.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [49]

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And then, with elobixibat in NAFLD and NASH indication, can you give us a sense in terms of where you are in that study? I think we are anticipating potential top line results middle of next year as well, the phase 2?

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [50]

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Yes. So, Matt, as it relates to the elobixibat NASH study, you remember, this is the study that we see as a proof-of-concept study. We're not spending a lot of money on this. But if we can show a signal of some sort, that'll be valuable for elobixibat, but also for our preclinical compounds. Yes, we had given guidance to say that we would get the study up and going middle of this year. We did get it up and going, so we're delighted to have sites actively enrolling. Our guidance for top-line data is mid-2020, so we'd reiterate that guidance, and we'll update that once the study is fully enrolled.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [51]

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And how are you thinking about that from a strategic point of view in terms of the indication? Is that something you think you'll pursue on your own in phase 3, or is this an indication that you'll like to partner?

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [52]

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Yes. I think as we think of the strategy of the company, we're going to build the company on the back of odevixibat. And we plan to commercialize odevixibat in the U.S. and in selected European countries. We believe that since the target audience is relatively small, the key physician in each of those regions is about 100. That's a manageable field deployed organization and manageable for a company like ourselves.

As we start thinking about larger indication such as NASH, we really believe we can create more value by working with partners on that both from a financial perspective, a risk perspective, and a resource perspective. So our plans for anything outside of our pediatric hepatology footprint, our current plans are that we would seek partners for that.

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Operator [53]

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There are no more questions in the queue. I'd like to hand the call back to management for closing remarks.

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Ronald H. W. Cooper, Albireo Pharma, Inc. - CEO, President & Director [54]

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Thank you very much, Operator. I think just to close, I think we've had a quarter where we've executed very well and delivered a lot. We plan to close the year strong, and we look forward to sharing with everybody when we have full enrollment of the PEDFIC-1 study and when we have final agreement on the biliary atresia study with the regulatory agencies. But I really appreciate everybody tuning in today. Thank you very much.

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Operator [55]

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Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.