Good morning, everyone. My name is Daniel Wolle. I'm one of the analysts on the mid-cap biotech teams at JP Morgan. I'm delighted to continue the conference with Ironwood Pharmaceuticals. It's my pleasure to introduce Tom McCourt. Following his presentation, we'll have a Q&A session. You can either ask the question through the portal, and I can pass on to the management team, or you can raise your hands, and there'll be a mic. All right. Without further ado, Tom.
Thanks, Daniel. My name is Tom McCourt. I'm the CEO of Ironwood Pharmaceuticals, and I'm joined this morning by Sravan Emany, who's our Chief Financial Officer, and Michael Shetzline, who's our Chief Medical Officer. We're absolutely delighted to be here this morning to share with you the progress that Ironwood's made in 2022 and why we're so excited about the path forward for 2023 and beyond. You know, we are focusing on advancing the organization, and many of you have been on this journey for quite some time as we've continued to evolve and advance the organization.
You know, what we've done over the last couple of years is really focus on restructuring the organization, focusing on kind of where our core growth opportunities are, as well as strengthen certainly the talent in the organization and the capabilities as we continue to proceed with our core strategy. We certainly have a number of forward-looking statements, so certainly, these are our disclosures. Ironwood today is now a profitable GI-focused healthcare company. Our aspiration and vision is to become the leading U.S., GI healthcare company. We have a very strong track record of success. The launch of LINZESS in 2012 has shown remarkable growth. It is now the market leading, a blockbuster brand that continues to thrive. Of course, that just doesn't happen.
It's really the result of relentless effort on the commercial side as well as the development side, you know, to evolve the marketing mix and really continue to expand the utility of the drug. You know, over the years, we've focused on strengthening the clinical profile, certainly expanding the clinical utility, which has obviously enabled the brand to grow. We've also continued to focus on strengthening our GI capabilities. Over the last few years, we've brought on a new medical leader in Mike, who's certainly one of the veterans and one of the best in this space with regard to drug development in the GI space. He's attracted a number of very talented people to the organization, you know, as we continue to advance LINZESS but also our portfolio.
We've also over the past year, really strengthened, you know, our corporate development team, which is really gonna be critical for our long-term success. We've also really been laser-focused on what we need to do and what we need to do well. We have very clear and focused strategic priorities that start with maximizing LINZESS. This is a growing brand, and we need to continue to drive demand growth. It is the lifeblood of the product. We'll continue to expand the clinical utility and new indications, which we'll talk a little bit this morning. Also, we continue to work with our partner, AbbVie, to evolve the marketing mix. We're increasing our margins. Come on in. Increasing our margins and delivering strong profits to the bottom line. Second, we need to strengthen and progress an innovative GI portfolio.
Certainly, that starts with LINZESS as we continue to expand its clinical utility and claims, as well as resolve any lingering safety concerns that the FDA has. As well as, we have brought in a new product, CNP- 104, which really could be a game changer. It's a disease-modifying agent for the treatment of primary biliary cholangitis, and we'll talk a little bit more about that later. If we're right, could really unlock value in the marketplace. Finally, IW- 3300, which is a wholly owned asset by Ironwood, it's a second-generation GC-C agonist, similar to linaclotide, focused on visceral pain disorders. More specifically, we are running a proof of concept for the treatment of interstitial cystitis and bladder pain syndrome. Finally, the third core priority is deliver sustained cash or sustain profits and generate cash flow.
We've made tremendous progress there, in accumulating cash. In 2022, we delivered EBITDA of around $250 million. This is an ongoing execution, a task for us, and we're seeing strong execution across all three strategic priorities as we position the organization for future growth. In 2022, I mentioned we continue to see strong demand growth. In 2022, we actually saw a 10% increase in demand. Now we're talking about year 10, you know, in a brand's life cycle on a base of 3.5 million prescriptions. To see this kind of growth really speaks to the health of the brand.
In addition, we continue to expand the market share, and we're expanding the market share even in the face of four emerging competitors, which is rarely seen. We're seeing all-time highs in new to brand, which really is the lead indicator for how healthy the brand is as far as ongoing growth. The mission here is to bring additional patients out of the over-the-counter prescription laxative market into the prescription market. Literally 70%-80% of our new patient starts are coming right out of that OTC market. As we look at 2023, we are gonna continue to invest in LINZESS, as this continues to be extremely promotionally sensitive. It's gonna require an ongoing effort to continue to drive its growth, but it's becoming a very, very profitable brand.
We'll be expanding the clinical utility of the drug in 2023. In terms of strengthening and progressing our innovative pipeline, I mentioned we've talked a little bit about the pediatric indication. We filed a supplemental NDA with the FDA in December for functional constipation in children from 6 - 17 years of age, which is really the largest part of the, of the pediatric market and really needs to be our beachhead, you know, as we continue to move forward. We, based on the unmet medical need as well as the strong clinical and tolerability data, have requested a priority review. We've initiated the proof of concept study for CNP-104 for primary biliary cholangitis.
In 2022, we initiate or we've completed our phase I trial for IW-3300, and we initiated a proof of concept trial for interstitial cystitis and bladder pain syndrome. As we look to 2023, we fully anticipate an approval for the pediatric indication coming midyear, assuming that we get a priority review. We will also see data by the end of the year on CNP-104, which will really enable us to make a decision as to whether we move forward with the licensing agreement or not. We'll talk a little bit more specifically about that in a moment. 3300, we initiated the study late in 2022. We'll be actively enrolling and dosing patients early in 2023.
We continue to actively pursue additional GI assets in the marketplace. We're seeing a lot of activity currently, and the team is grinding through those opportunities. In terms of delivering sustained profits and cash flow, you know, I mentioned earlier that we delivered $250 million in EBITDA. We finished the year with over $650 million in cash, and that's after we completed a $150 million share repurchase program as well as repaying the initial tranche of our convertible notes to the tune of $120 million. As we look to 2023, we continue to anticipate and see strong EBITDA growth and solid cash flow.
We have the financial strength and resources to be able to continue to move forward, you know, with our strategy. This is actually probably my favorite slide in the deck showing, you know, LINZESS's health over time. As you can see, it's a growing market-leading brand with significant opportunity to reach, you know, millions of additional patients. On the graph on the left is certainly the demand curve. As you can see, we have consistently seen robust linear growth over a 10-year period of time. You rarely see brands like this in the industry because they all follow an S-curve, right? We're not, which really speaks to the opportunity still out in front of us.
The key drivers for ongoing growth really starts with the strong clinical profile that we've continued to secure. We see very high level of patient satisfaction as well as physician satisfaction, you know, with the brand. I mentioned we're continuing to see an acceleration in new-to-brand patients, and those patients are coming out of the OTC market, which enables the product to continue to thrive. You know, we're absolutely delighted to see the updated clinical practice guidelines that came out by the American College of Gastroenterology as well as the American Gastroenterological Association, both of which designated LINZESS as the top choice and the most strongly recommended treatment for IBS-C based on the clinical evidence and the experience that the experts have had with the brand.
We also have class-leading payer access. This is absolutely paramount to the success of the brand. It's something that we continue to invest in, and it really enables patients to access the drugs at an affordable price. Also, it makes it easy for the physician to prescribe the drug. Finally, we'll be expanding the clinical utility into the pediatric population in 2023. On the right really is an illustration of the magnitude of opportunity in the marketplace. As successful as we've been, we've treated about 4 million patients, which is a lot of patients. Keep in mind there's still tens of millions of adult patients still suffering from IBS-C and chronic constipation, and they're struggling with the use of OTC laxative, which just are not adequate to relieve their symptoms.
In addition, we'll be expanding the clinical utility, as I mentioned earlier, into the pediatric population. The group from 6 - 17, you know, represents about 4 million-6 million patients. This is an illustration of just the relentless commitment that both AbbVie and Ironwood have made to drive ongoing net sales growth. As you can see, we hit $1 billion in net sales in 2021. We exceeded $1 billion in sales in 2022. Our portion of that's about $350 million as we split the profits 50/50 with the partner. We look to 2023, we certainly don't see the demand growth slowing down.
We're anticipating high single-digit growth in demand. And we're gonna be able to maintain, you know, very, very broad payer access, but with an improved level of price erosion. You know, we really invested to make sure we secured access, which, you know, caused about between 9% and 10% price erosion on the brand. But as we look at 2023, the price looks far more favorable, and we're projecting net sales to increase by 3% - 5%, which is really healthy growth for a brand in its 10th year. We're gonna continue to refine the marketing mix and investment, you know, to broaden the margins and deliver very strong profits in 2023.
2023 is gonna be an exciting year for us from a clinical development perspective. We have a number of new clinical milestones that we anticipate achieving. It starts with certainly LINZESS. I mentioned earlier, we're very confident in the pediatric submission to the FDA. The data is very, very strong. What's been remarkable in the clinical trials was the tolerability data. You know, this is an area and it's been a concern with the FDA in the pediatric population of excessive diarrhea and hydration. In the clinical trials, we actually saw less than 5% diarrhea, you know, which is really remarkable.
You know, based on, you know, the unmet medical need, and certainly, the strong clinical data, we believe we'll be granted prior to review, you know, for a midyear approval. We also submitted a great deal of the phase III data for the Digestive Disease Week meeting in May, you know, which comes right before, hopefully, the approval of the drug, which gives us an opportunity to share those data with thousands of gastroenterologists as we kinda turn into the wind and introduce this opportunity to clinicians. Ironwood and COUR are working very closely, on CNP-104. I mentioned we see this as a disease-modifying agent for primary biliary cholangitis.
Those of you that are familiar with this disease know how debilitating and how progressive this is that, you know, at times leads to requirement of liver transplant. It affects about 130,000 individuals in the U.S., we're in a proof of concept study right now that we believe, you know, will certainly have data to inform a decision moving forward by the end of the year. Finally, IW-3300. This is a second-generation GC-C agonist similar to linaclotide. It's a wholly owned asset by Ironwood, we are focusing on interstitial cystitis and bladder pain syndrome, which affects about 4 million-12 million Americans in the U.S.
Those of you who are familiar with this disorder, it's extremely painful, and there's really not many effective therapies out there. This is a significant opportunity to help patients. I wanna take just a couple minutes and dive a little bit deeper into this pediatric opportunity. LINZESS could be the first and only FDA-approved prescription therapy to treat functional constipation. Initially, the indication will be for pediatric patients 6-17. We have an ongoing program for younger kids, we chose to file this because there is such a significant unmet medical need. Those of you that have had children that have suffered from chronic constipation or functional constipation know how distressing this can be to kids.
You know, one of the things that we've observed as we've dug into the market is, the far majority of these patients are actively seeking care. If you have a child that is struggling with constipation and has fairly significant abdominal discomfort and bloating, you're talking to your clinician. It isn't just once a year, it's multiple times a year. It provides a very available patient population, you know, for LINZESS to help. We, as I mentioned, we are expecting the approval midyear, and this is at a 72 microgram dose. Therefore, we do not have to come up with a new formulation or a new dose. This is currently on the market.
Parents can simply break open the capsule and sprinkle LINZESS on food or put it in juice, whatever the child, you know, prefers to eat, which is a challenge with Polyethylene glycol. Those of you who have taken polyethylene glycol know it's not particularly pleasant, you might be able to get it down your child once, but try to get it down a second and third time. As we continue to move forward, one of the other things that we've discovered is while there's a lot of pediatricians out there managing the disease, it's a fairly concentrated prescriber base. There's about 2,000 or 3,000 pediatric gastroenterologists or pediatricians who are really managing a disproportionate share of this business.
We see our ability to be able to fold these 2,000-3,000 physicians into our existing call plan. We're currently calling about 35,000 physicians. You know, we'll continue to assess the promotional response in this space. We anticipate physicians responding very favorably. We've certainly seen that in market research. We'll continue to refine our selling model to make sure that we're expanding and driving overall productivity of the sales force. CNP-104 is an extremely exciting technology and introduces the potential for truly a game-changing therapy in primary biliary cholangitis, and it's really almost a clear example of precision medicine.
You know, currently available therapies really don't address the root cause, which is an autoimmune response that destroys bile ducts in the liver, which then leads to progressive liver disease and damage and inevitably liver transplants. Certainly, the currently available therapies can slow the progression of the disease and provide some relief of symptoms, but it just doesn't address the root cause. The root cause is a very specific antigen, the PDC-E2 antigen, which is present in literally all patients that suffer from PBC. It's this antigen that triggers these activated T cells to be generated and then attack the bile ducts and destroy the bile ducts, which leads to the damage. CNP-104 is actually a PDC-E2, a targeted therapy for a PDC-E2 problem.
What we've done is we've taken the antigen, the PDC antigen, and encapsulated it with a nanoparticle. When administered, it preferentially goes to the spleen and actually tolerizes the immune system. The body reduces the concentration of activated T cells, which, you know, do not no longer attack the bile ducts. You can see this could potentially be an enormous disease-modifying agent and almost cure the disease. We're very excited to see, you know, what the data looks like later this year. You know, this is, as I mentioned, an clear example of precision medicine, and we're gonna be able to very closely monitor not just the safety and tolerability of the drug, but also be monitoring alkaline phosphatase, which is certainly the recognized leader for liver health.
We'll also be able to measure the activated T cells. We've seen a proof of technology in this technology in the celiac space, where literally, within a couple of weeks, you see a decrease, a dramatic decrease in T cells. We're hoping to see a very similar response, you know, as we move forward with the program, and we'll certainly keep you posted as the data emerges. I mentioned earlier, we really strengthened our corporate development team. This is obviously a critical part of our strategy, core to our ongoing growth. Our goal is to identify assets and diseases that are primarily managed by Gastroenterologists and Hepatologists, which then create our next growth horizon in GI. You know, we have a two-pronged strategy.
Certainly, we're seeing a number of opportunities out there as first-in-class or first-mover advantages, as well as differentiated plans or products. We're, as I mentioned, we're following a two-pronged strategy. First, we're looking at transformational M&A deal with commercial stage products that really leverages our current capabilities, both on the commercial and development side, which also provides the opportunity to accelerate our revenue growth and broaden our foundation as we continue to pull, you know, the pipeline through. In addition, you know, we're looking at a number of clinical stage in-licensing opportunities or assets that we can acquire, very similar to what we've been able to do with COUR.
Which I think is a great model in which we identified an area of very specific and significant unmet medical need with a clear target. Importantly, very clear decision points as to whether we move forward with the licensing opportunity or not. Cash flow is absolutely critical to our long-term success. As you can see, over the last THREE years, we've seen dramatic increases in the cash available to the organization. We finished this year with about $650 million in cash. Keep in mind, over the last 18 months, we deployed $270 million to strengthen our balance sheet. First, with a $150 million share repurchase program, also paid off $120 million in debt from our convertible notes.
I think we're gonna certainly be very thoughtful in our capital allocation, both with regard to investing in LINZESS, advancing the pipeline, but also in the past, we've seen that we're returning capital. It's something we will constantly be evaluating and trading off, you know, as we move forward, as the bar is very, very high for us as far as acquiring additional assets. We're updating our 2022 financial guidance and providing guidance for 2023. You can see our guidance, our previous guidance on the left. I mentioned we saw very strong demand growth. We saw a 10% increase in TRX growth. I also mentioned that we invested in payer access, so we had a 78% or 8% or 9% erosion in price.
We also saw some fluctuation in our inventory, particularly in the retail channel. You know, the work and our leadership really focused on managing expenses, so we delivered our bottom line number of $250 million. I'm extremely proud of the leadership of this organization to control the things that we can control, which is certainly driving demand, securing access for patients and docs, and managing our expense line so we can deliver profits to the bottom line. As we look at 2023, it certainly looks more promising. We anticipate a high single-digit growth, as I mentioned, more favorable pricing position, and we're projecting 3%-5% increase in net sales, which equates to $420 million-$450 million.
We're projecting greater than $250 million in EBITDA. Keep in mind, you know, the EBITDA number also includes a significant investment to continue the pediatric program in the younger kids, which is an obligation that we have to the FDA, and hopefully, we can further expand the clinical utility of the drug. In addition, we'll be investing in CNP, the CNP-104 program, as well as the IW-3300 program. We believe we're well-positioned to deliver shareholder existing and future shareholder value. We have a market-leading brand that continues to thrive. It's highly profitable, and we're gonna continue to broaden margins and deliver profits. In addition, we'll be expanding the clinical utility, which provides upside and demand growth, you know, for the brand.
We have a highly capable team, both on the commercial side as well as the development side, with real expertise in GI, you know, which we will continue to leverage, certainly with LINZESS, but also the pipeline. As we look at additional opportunities, you know, to license an additional asset to build our portfolio. We do have a number of catalysts in 2023 with LINZESS, CNP-104, and certainly the ongoing program with IW-3300. We have a very strong balance sheet, you know, that we will continue to be thoughtful as far as capital allocation as we move forward to maximizing LINZESS, strengthening and progressing our innovative portfolio, and delivering sustained profits and cash flow. You know, on behalf of the leadership team, we're absolutely delighted in the progress we've made.
You think about where this organization was three or four years ago and where it is today, in which now we are a very profitable, growing, healthy organization, and we're extremely excited to continue to shape the future and certainly continue to keep you posted on our progress. Thank you.
As a reminder, you can either send the questions to the portal or you can raise your hands. Maybe I'll start the first question.
Of course, Daniel.
We're beginning to get, you know, some questions on the preliminary 2022 results, and you briefly mentioned fluctuation in inventory, but maybe can you walk us through on why, you know, some of those numbers came in below expectations?
Sure. Sravan, you wanna take a shot at that?
I'll start by saying hi, everyone. I'm SRAVAN. I'm the CFO of Ironwood. As Tom mentioned, demand growth, double digits in line with our expectations. Price, high single digit. Price erosion, in line with our expectations. As you know, we have a fair amount of. The remainder was essentially inventory fluctuations that occurred at the retail level, which we have no control over, which was a headwind this year that was essentially the difference between us hitting our guidance and where we landed. And there's, some pharma companies, as you know, can exert some amount of influence over their wholesaler inventory. Their retail inventory is just another level beyond that we just don't have control or influence over.
To Tom's point, everything we could control this year, everything that we could have influence on, it was in line with expectations.
Yeah, I think it's also important to remember, you know, when you're dealing with a brand that has $3.5 million prescriptions, you know, two or three days of inventory represents real money. You know, that slight fluctuation, you know, depending on whether the retailers draw off inventory off the wholesalers, really can be meaningful. We certainly saw this early on. We really anticipated it to kinda catch up by the end of the year, but it didn't. As we move forward, obviously as long as the demand's strong, you know, certainly the inventory levels are gonna have to be maintained to avoid stockouts, which, you know, obviously is bad for everybody.
Daniel, one last thing is fluctuations happen both positively and negatively over the life cycle of the company. A lot of it's timing. Some years we've benefited from it in the past, and some years we've faced headwinds. If you look over the long run, the demand generally lines up with the bottles we've sent out in terms of LINZESS. To Tom's point, as we've double-digit demand growth, we feel really positive about where the amount of units we're actually shipping at the end of the day.
Okay. I'll continue then. For the pediatric, you know, opportunity, why not deploy a new sales force to cover the pediatricians with the launch right away?
I'm sorry. Say again the question again, Daniel. I didn't quite-
For the pediatric population.
Yeah.
Why not launch a new sales force to cover pediatric GIs or pediatricians who actually might be seeing those patients?
Sure. I think it's really about, ensuring that we, you know, we increase the productivity of the sales force. I mean, the reality is, you know, we have a new set of prescribers that are already in the geographies that we're in. Those patient or those physicians are very accessible in those geographies. Essentially, you know, what we're doing is trading off lower potential primary care physicians with higher potential pediatric physicians or pediatric gastroenterologists. You know, we may expand the selling effort, but we wanna make sure we're making a very sound decision. The first question we wanted to answer is, how promotionally responsive will this target physician base be? Based on that, we'll continue to figure out how we evolve, you know, the selling model.
You know, we already have about 400, 500 reps between both Ironwood and AbbVie out there. So we certainly have the sales muscle on the street To pull these high prescribers in, you know, without having to go to an additional expense on the P&L, which would then compromise certainly our profits and bottom line, but we can continue to drive growth.
Assuming potential approval in mid 2023, how much contribution to the U.S. LINZESS sales should investors expect? When you gave that guidance for 2023, do you assume contribution or?
Yeah.
Not factor in that.
Yes.
Reuben, you want to take that?
Yeah, I'll take that. Our guidance does assume contribution from pediatrics in 2023, just given the timing of our launch and how we plan to approach the market in the back half of the year. I think pediatrics will be more of a 2024 through 2029 story for Ironwood in terms of heavy contribution or meaningful contribution. This year our guidance does encapsulate any contribution from pediatric sales.
I'll continue. Ultimately considering the 4 million-6 million potential addressable patients, how could the ramp look like? I guess you mentioned 2024 as the main year, how much of a contribution to LINZESS's growth should investors expect from this opportunity?
I don't think we're gonna really know the answer to the question till we get into the market and see how promotion responsive this is. I mean, this is certainly the pediatric space is new to us and relatively new to AbbVie, and it's something that, you know, we're gonna learn as we go. I certainly wanna see the data as we continue, because a lot of it's, we know this market is very promotionally sensitive, and so the upside is really gonna be dependent on what level of promotion and investment we make in the brand. Once we have a better line of sight on the promotional response, I think we can give a much better idea of what the upside could be, you know, over time. At this point, I think, you know, we're seeing it as a future opportunity for growth.
As we have more information, more intel, we'll certainly share that, you know, with all of you.
That's a good question.
Could you just talk about CNP-104 and what kind of T-cell reduction would be interesting and maybe what kind of ALP reduction would matter?
Sure. I'm gonna have Michael Shetzline, our head of medical, share. This is a technology, actually, you know, he is very familiar with. He actually was at Takeda when they brought this technology into Takeda for celiac disease. Michael, maybe you can share your experience of, you know, what you saw in previous, you know, technologies and response rates and what would you hope to see, you know, in the PBC model.
Yeah, sure. I think it's a great question, and certainly one on our minds as well. The reality of the opportunity is the fact that we're extremely excited because the medical need's so great and the science is so strong. The science, as you're alluding to, is right around the T-cells. We certainly saw in this, Takeda, actually certainly saw in the celiac population a 90% reduction in the autoreactive T-cells. The T-cells that respond to deamidated gliadin peptides in the systemic circulation. That happened over 2 weeks. Most importantly, that actually correlated with epithelial histologic improvement, which you may know within the celiac space is the endpoint of importance as defined by the agency.
In our case, we actually think we have a even a more unique proposition with PBC, because in PBC is really driven by 1 antigen, as Tom alluded to, the PDC-E2 antigen. Celiac's driven by deamidated gliadin peptides, which is a heterogeneous group of peptides that stimulate the immune system. We already know it works in celiac disease. We think we have a great opportunity in PBC. You may also know that PBC is diagnosed with a positive antimitochondrial antibody. Okay? That antibody is directed against the PDC-E2 antigen, we know that 90%-95% of patients with PBC actually have the antimitochondrial antibody. We also know from earlier research that literally three-fourths of people who are AMA negative, antimitochondrial antibody negative, have actually the HLA signature for the PDC-E2 antigen, right?
The AMA is a great test, it's not perfect. You can see with this 1 antigen, we really think we're covering the whole population. For the T-cell response, if we see a 90% reduction, that clearly should translate, you know, into a liver histologic improvement. We actually think it's a huge opportunity to focus on the T-cells, 'cause you may know with other assets in this space, using the Alk Phos is well accepted, Alk Phos is a biomarker, right? When you use Alk Phos, you're then required to get objective assessment related around liver histology. We're gonna pursue liver histology, make no bones about that. The reality is the T-cell response is a very objective assessment of improvement in the autoimmune disease and the autoimmune destruction in the bile duct cells. We think it's a great opportunity.
I think the science is fantastic. It's long overdue, honestly, because the PDC-E2 antigen's been known about in this space pathologically for decades. That's kinda what we're trying to do at Ironwood, is sort of focus on these real opportunities with huge medical needs, but really well-grounded science. Maybe, Mike, taking a step back on that. Sorry. The approach makes sense biologically, but besides celiac, do we know if this approach, immunological approach works for PBC? Are there any other clinical studies that just-
Well, actually, yes. COUR did early preclinical evidence. There are animal models for PBC, and it actually worked in the PBC models. There are also delayed-type hypersensitivity models, which is one of the other immunologic pathways for this mechanism, and it worked in there. There is strong preclinical evidence for this effect as well. Again, it's always great to Well, not great. What always amazes me in my job is translating, you know, preclinical to clinical. That's why I go back to the science around the PDC-E2. It is just so amazingly strong that we have a real high round of excitement in this space.
How reflective is the entry criteria for patients being enrolled in the study of the overall PBC patient population? I guess, what percentage of the patient population would be eligible for treatment as defined by the phase II?
Yeah.
Eligibility criteria?
The phase IIa we're running is specifically directed towards URSO, Ursodeoxycholic acid failures, right. URSO is an accepted standard of care. That's primarily because we have absolutely no data, right. As a physician scientist, I'm all into making sure patients get treated appropriately. I think at this stage, having URSO non-responders is appropriate. We certainly look at the fact that this mechanism, as Tom has alluded to, is potentially curative regardless of therapy with URSO or even Obeticholic acid. Because URSO and Obeticholic acid, as you may know, are really just chemically semi-synthetic bile acids. They just increase bile flow. The patients get help from that. That's very factually accurate, but it does not address the autoimmunity at all.
The initial study is in URSO non-responders, but we certainly look at the opportunity eventually, and actually near term in my mind, the minute we can get data, because I think the agency will understand that this mechanism should be relevant to all patients with PBC, regardless of the therapy they're on. Even if I dare say it, responders to URSO. Also be aware, a responder to URSO only has to have their Alk Phos at 1.67 x normal. That's not a normal Alk Phos. They still have ongoing hepatic injury and hepatic destruction, although they're considered an URSO responder. I fully support it because there's no therapies available. Don't get me wrong, I think it's something the patients benefit from, but the reality is even URSO responders and Obeticholic acids in large still have ongoing liver destruction.
Is there then, you know, given that opportunity, is there a potential accelerated path towards registration based on this data alone?
When you added on, "Based on this data alone," that's sort of the caveat. There certainly is an opportunity for an accelerated development path here for sure, but not based on this study alone, okay? I think we're gonna at least have to do another development study. Okay. This is our first study taking two doses of CNP-104 into patients. We certainly look at once we have this data, we'll design a sort of robust phase III trial, which we look at could stand as a single pivotal. Please be aware, we have no data to date, right? We have a lot of discussions with the agency.
Given, as we talked about earlier, the objectivity around T cells, right, the eventual ability to show the other biomarker improvement, we think if this hits, which I'm very excited about, I think it's going to be actually a very good discussion with the agency because I think they'll see it too, again, because the science is so clear.
If I could just intervene there, Daniel. Mike, though, on this data, though, we should be able to make a decision with respect to whether or not we exercise the option.
Yes. This data will give us clarity. Again, that's why I said it's such a great opportunity for us. You know, within this single hawk-like study, we think we'll have clarity on clinical and commercial value, you know, downstream because the science is strong and the T cell response should be quantifiable. We'll actually follow patients with other biomarkers as well. Yes, we'll have that for sure.
I think we're out of time. With that, I would like to thank Mike, Sravan, and Tom.
All right. Thank you.
Thanks, Daniel.
Thank you.