Q3 2019 Earnings Call

Good morning, and welcome to the answer my third quarter 2019 financial results Conference call.

Operator: Good morning, and welcome to the Insmed Third Quarter 2019 Financial Results Conference Call. All participants will be in listen-only mode. If you need assistance, please signal any conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch-down phone. To withdraw your question, please press star then 2. Please note, today's event is being recorded. I would now like to turn the conference over to Blaine Davis, Vice President and Head of Investor Relations. Please go ahead, sir. Thank you, Rocco. Good morning, everyone, and welcome.

All participants will be in listen only mode.

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<unk> for specialist for especially the Starkey followed by zero.

After today's presentation, there will be opportunity to ask questions.

To ask your question Your press Star then one on the Touchtone phone.

So we'll try to question. Please press Star then too.

Oh, it's very conference over to Brian Davis, Vice President and head of Investor Relations. Please go ahead Sir.

Thank you Rocco good morning, everyone and welcome to todays conference call to discuss our third quarter financial results for 2019.

Operator: This concludes today's conference call to discuss our

Unknown Executive: This concludes our third quarter financial results for 2019. Before we start, let me remind you that today's call will include forward-looking statements based on current expectations. Such statements represent our judgment as of today and may

Before we start let me remind you that today's call will include forward looking statements based on current expectations.

Such statements represent our judgment as of today and May involve risks and uncertainties that may cause actual results to differ from the results discussed in the forward looking statements.

Unknown Executive: to differ from the results discussed in the forward-looking statement. Please refer to our filings with the SEC, which are available through the SEC's website at www.sec.gov or from our website for information concerning the risk factors that could affect the company.

Please refer to our filings with the FCC, which are available through the Fccs website at www dot at DC Dot Gov work from our website for information concerning the risks factors that could affect the company.

Unknown Executive: The information on today's call is not intended for promotional purposes and is not sufficient for prescribing this. Joining me on today's call are members of the Insmed Executive Management Team, including Will Lewis, Insmed's Chairman and Chief Executive Officer. Roger that.

The information on today's call is not intended for multiple purposes and not sufficient for prescribing decisions.

Joining me on today's call are members of the Insmeds Executive management team, including will lose Insmeds, Chairman and Chief Executive Officer, Roger adds a chief commercial officer, and John Gol, Chief Accounting Officer.

Unknown Executive: Mr. Adsep, Chief Commercial Officer, and John Gall, Chief Accounting Officer. Once we complete our

Unknown Executive: Once we complete our prepared remarks, we'll open the call to your questions. Let me now turn the call over to

Once we complete our prepared remarks, well open the call to your question.

Let me now turn the call over to well.

William Lewis: Thank you, Blaine, good morning everyone, and thank you for joining us. We had another great quarter for Insmed, with continued execution and strong performance of EraCase, delivering $39 million in total revenue. As the launch continues to progress well across all metrics, so does our ability to predict and project future performance with greater confidence. As a result, we are raising and narrowing our full-year revenue guidance to a range of $133 to $138 million.

Thank you Blaine good morning, everyone and thank you for joining US we had another great quarter for in some bad with continued execution and strong performance of Eric is delivering $39 million in total revenue.

The launch continues to progress well across all metrics, so does our ability to predict and projected future performance with greater confidence as a result, we are raising and narrowing our full year revenue guidance to a range of $133 million to $138 million.

William Lewis: The breadth and depth of prescribing have continued to exceed our expectations. Additionally, the feedback we receive from treating physicians remains very positive, underscoring the significant unmet need that Ericase addresses in this difficult-to-treat patient population. Patient starts, discontinuations, and payer support remain positive, and we are seeing very encouraging trends on duration of use through the third quarter. Raja will go into each of these in greater detail in just a minute.

The breadth and depth of prescribing have continued to exceed our expectations. Additionally, the feedback we receive from treating physicians remains very positive underscoring the significant unmet need that are case addresses and it's difficult to treat patient population.

Patient starts discontinuations and payer support remain positive and we're seeing very encouraging trends on duration of use through the third quarter. Roger will go into each of these in greater detail in just a minute.

William Lewis: All of this increases our optimism for the long-term growth potential for the product as our global expansion efforts progress in the EU and Japan. As we discussed last quarter, we filed our MAA for the approval of our case with the European Medicines Agency for the treatment of patients with persistent MAC lung infection as part of a combination antibacterial drug regimen in adults. The MAA was subsequently validated by the EMA.

All of this increases our optimism for the long term growth potential for the product as our global expansion efforts progress and you and Japan.

As we discussed last quarter, we filed our EMEA for the approval of bear case with the European Medicines agency for the treatment of patients with persistent Mac lung infection as part of a combination any bacterial drug regimen in adults. The EMEA was subsequently validated by the he may we're working closely with the I made to continue to advance our application in the coming months.

William Lewis: We are working closely with the M.A. to continue to advance our application in the coming months, and we currently expect a 12-month review cycle with a potential European launch if our M.A.A. is approved in the second half of 2020, beginning with the U.K. and Germany. In Japan, we remain on track to file for regulatory approval of Eric Case in the first half of 2020. A recent meeting with the PMDA indicated that our clinical data package is sufficient for filing, and the team is now hard at work pulling together the filing for submission. We are also very focused on the expansion of the label for EraCase to allow us to potentially help more patients suffering from MAC lung disease. It is our intention to initiate a study next year in a front-line setting of patients with NTM lung disease. The study will utilize a patient-reported outcome tool, or PRO, that Insmed is currently adapting from existing validated PROs to assess the impact of treatment-with-error cases on outcomes specific to NTM lung disease patients. We are currently conducting qualitative research relating to the PROs for Frontline and M-Obsessed.

And we currently expect a 12 month review cycle with the potential European launch if our EMEA is approved in the second half of 2020, beginning with the UK and Germany.

In Japan, we remain on track to file for regulatory approval of Air case in the first half of 2020.

A recent meeting with the P.M.D.A. indicated that our clinical data package is sufficient for filing and the team is now hard at work pulling together the filing for submission.

We're also very focused on the expansion of the label for era case to allow us to potentially help more patients suffering from Mac lung disease. It is our intention to initiate a study next year in a frontline setting of patients with NTM lung disease.

This study will utilize a patient reported outcome tool or PR ROE that instead is currently adapting from existing validated bureaus to assess the impact of treatment with their case on outcomes specific to NTM lung disease patients. We are currently conducting the qualitative research relating to the pure rose for frontline and M. Abscessus.

The next step in this process is to share. These results with the F.D.A. secure their feedback and then we will be able to begin the studies.

William Lewis: The next step in this process is to share these results with the FDA, secure their feedback, and then we will be able to begin the study. We are very excited about the potential to expand our addressable patient population and plan to share more details of the study designs following our interactions and alignment with FDA. Shifting gears to our pipeline, we are looking forward to data from the Willow Study, our six-month global Phase II trial of INS 1007 in patients with non-cystic fibrosis bronchiectasis. As a reminder, we completed enrollment in this trial in the middle of the year and remain on track for top-line data in the first quarter of 2020. I'd like to spend a minute reviewing the mechanism of action and why we remain excited about the potential opportunity. INS 1007 is a novel, oral, reversible inhibitor of dipeptidase 1, or DPP-1, an enzyme that catalyzes the activation of neutrophil serine proteases, or NSPs. NSPs are key agents of neutrophil-mediated inflammation, tissue damage, and excessive mucus production involved in non-CF bronchitis.

We're very excited about the potential to expand our addressable patient population and plan to share more details of the study designs following our interactions and alignment with F.D.A.

Shifting gears to our pipeline, we're looking forward to data from the Willow study, our six month global phase two trial of I.N.S. wonder below seven in patients with non cystic fibrosis bronchiectasis.

As a reminder, we completed enrollment of this trial in the middle of the year and remain on track for topline data in the first quarter of 2020.

I'd like to spend a minute reviewing the mechanism of action and why we're we remain excited about the potential opportunity.

I just wonder below seven is a novel oral reversible inhibitor of die peptide roll up today is one or DPP, one and enzyme that catalyzes the activation of neutrophil serine proteases or Ns peas, and its piece, our key agents of neutrophil mediated inflammation tissue damage and excessive mucus production.

And involved in non CF wrong.

William Lewis: This is a new mechanism of action with the potential to address a clear unmet medical need. Non-CF bronch stands out as one of the more significant pulmonary diseases with no approved therapy. Nancy F. Bronk is a debilitating disease marked by frequent pulmonary exacerbations requiring antibiotic therapy and or hospitalization. Prevalence estimates range from about 340,000 to 520,000 in the U.S., with significant overlap with patients who have NTM lung disease.

This is a new mechanism of action with the potential to address a clear unmet medical need non CF Bronx stands out as one of the more significant pulmonary diseases with no approved therapies.

Non CF bronchus, a debilitating disease marked by frequent pulmonary exacerbations, requiring antibiotic therapy and or hospitalization.

Prevalence estimates range from about 340000 to 520000 in the U.S. with significant overlap with patients who have NTM lung disease.

William Lewis: Let me quickly review the details of the Willow study. We enrolled 256 patients of the targeted 240 patients who had at least two documented pulmonary exacerbations in the 12 months prior to screening. Patients were randomized to one of three arms, each receiving a once-daily oral dose of solid INS 1007 10 mg, 25 mg, or placebo for a period of 24 weeks. The endpoints for this study will cover a range of lung measures.

Let me quickly review the details of the Willow study, we enrolled 256 patients have a targeted 240 patients who had at least two documented pulmonary exacerbations and the 12 months prior to screening.

Patients were randomized to one of three arms each receiving in a once daily oral dose solid I N S. One to below 710 milligrams 25 milligrams or placebo for a period of 24 weeks.

The endpoints for this study will cover a range of pulmonary measures, we will be particularly focused on the frequency of pulmonary exacerbations, especially among patients with elevated levels of nsps that are seem to be reduced by our drug during the trial.

William Lewis: We will be particularly focused on the frequency of pulmonary exacerbations, especially among patients with elevated levels of NSPs that are seen to be reduced by our drug during the trial. We expect that the powering of this study and the selected endpoints will give us the necessary data to clearly evaluate whether we can have an impact on this difficult-to-treat population. As you saw in our press release issued this morning, we are very pleased to welcome Dr. Martina Flammer as our new chief medical officer. Dr. Flammer has more than 17 years of experience in both medical and commercial roles.

We expect that the powering of this study and the selected endpoints will give us the necessary data clearly evaluate whether we can have an impact on this difficult to treat population.

As you saw in our press release issued this morning, we're very pleased to welcome Dr. Martina Flammer as our new Chief Medical Officer, Dr. Flammer has more than 17 years of experience in both medical and commercial roles. She has launched global brands and manage pipeline portfolios across therapeutic areas and geographies.

William Lewis: She has launched global brands and managed pipeline portfolios across therapeutic areas and geographies, including the U.S., Europe, Japan, and China. We are thrilled to have her join the team in December and look forward to her significant contributions to Insmed. We have had a very productive year so far in 2019, with significant accomplishments and progress on our evolution.

Including the U.S., Europe , Japan and China.

We're thrilled to have her joined the team in December and look forward to her significant contributions to insmeds.

We have had a very productive year, so far in 2019 with significant accomplishments and progress on our evolution.

William Lewis: In parallel, we have also become keenly focused on the management of our operating expenses. As we have now successfully transitioned from a development stage to a commercial stage company with increased revenue growth, we are simultaneously sharpening our focus on maintaining control of operating expenses. We continue to expect our cash-based operating expenses to be flat to down from the first to second half of this year. We continue to forecast cash-based operating expenses, as defined in our press release issued this morning, for the second half of the year to be in the range of $140 million to $155 million from the $155 million spent in the first half of 2019. This reflects a disciplined approach to resourcing while also fully funding those activities that will drive top-line performance in the U.S. and abroad while also accelerating our near-term pipeline.

Parallel we've also become keenly focused on the management of our operating expenses as we have now successfully transitioned from a development stage to commercial stage company with increased revenue growth. We're simultaneously sharpening our focus on maintaining control of operating expenses.

We continue to expect our cash based operating expenses to be flat to down from the first to second half of this year. We continue to forecast cash base operating expenses as defined in our press release issued this morning for the second half of the year to be in the range of 140 million 255 million from the 150.

5 million spent in the first half of 2019.

This reflects a disciplined approach to resourcing, while also fully funding those activities that will drive topline performance in the U.S. and abroad. While also accelerating our near term pipeline. We will also continued to be opportunistic evaluating external programs. We believe may have a clear path to value creation through there.

William Lewis: We will also continue to be opportunistic, evaluating external programs we believe may have a clear path to value creation through their impact on unmet medical needs for patients suffering from serious health problems. Collectively, this has been another solid quarter of performance for Insmed. I look forward to continuing the dialogue about our progress at upcoming conferences, including during our presentation at the J.P. Morgan Healthcare Conference in January. Now, let me now turn the call over to Roger for some specifics related to the launch of Eric Case. Roger? Thanks, Will.

Packed on unmet medical needs for patients suffering from serious health problems.

Collectively this has been another solid quarter of performance for in summit I.

I look forward to continuing the dialogue about our progress at upcoming conferences, including during our presentation at the Jpmorgan Healthcare conference in January .

I'll now turn the call over to Roger for some specifics related to the launch of Eric case Roger.

Well good morning, everyone.

Roger: Thanks Will, and good morning everyone. We remain very excited about the continued strength and outperformance of the U.S. launch of our... For the third quarter of 2019, we reported global net sales of $38.9 million, of which $37.8 million is attributable to the U.S. launch, and $1.1 million is attributable to our named patient programs in France and Germany. We continue to see positive trends across the metrics we use to evaluate our launch progress. For example, during the third quarter, we saw a steady rate of new patient starts, with slightly more than 600 new patients initiating therapy during the quarter. We believe the continued strength of new patient starts since launch reflects the significant unmet treatment needs for the estimated 12,000 to 17,000 refractory MAC lung disease patients in the U.S. We anticipate that as treating physicians and patients continue to gain experience with Arrakis and continued strong execution by our commercial teams, we will continue to see solid performance in new patient starts.

We remain very excited about the continued strength and outperformance of the U.S. launch of our case.

For the third quarter of 2019, we reported global net sales of $38.9 million, which 37.8 million is attributable to the U.S. launch at 1.1 million is attributable to our named patient programs in France and Germany.

We continue to see positive trends across the metrics, we used to evaluate our launch progress.

During the third quarter, we saw a steady rate of new patient starts we slightly more than 600, new patients initiating therapy during the quarter.

We believe the continued strength of new patient starts since launch reflects the significant unmet treatment needs for the estimated 12 to 17000 refractory Mac lung disease patients in the U.S.

We anticipate that is treating physicians and patients continue to gain experience with their case and continued strong execution by our commercial teams. We will continue to see solid performance in new patient starts.

Roger: We have had very productive discussions with physicians at recent medical meetings, including the European Respiratory Society, CHEST, and Infectious Disease Week. The discussions in these medical forums continue to demonstrate the increasing attention to the importance of effectively treating patients with MAC lung disease. For example, during the recent CHESS meeting, there was a full day session dedicated to NTM lung disease with standing room only for many of the sessions.

We've had very productive discussions with physicians at recent medical meetings, including the European respiratory society chest and infectious disease week.

The discussions in these medical forms continued to demonstrate the increasing attention on the importance of effectively treating patients with Mac lung disease.

For example, during the recent chest meeting there was a full day session dedicated to NTM lung disease was standing room only for many of the sessions.

We are increasingly optimistic that the NTM treatment guidelines, which are being drafted in agreed upon by four differences scientific societies to U.S. based and to what you're in Europe will be issue before the end of this year.

Roger: We are increasingly optimistic that the NTM treatment guidelines, which are being drafted and agreed upon by four different scientific societies, two U.S.-based and two of which are in Europe, will be issued before the end of this year. We believe the guidelines will help to refocus treating physicians on the appropriate treatment options for NTM patients and also assist both payers and community-based health care providers in understanding and assisting with the unmet need for these patients. We remain very encouraged by the positive trends in the current duration of use. To date, approximately 85% of the patients who initiated therapy during the first six months of launch and who did not drop out during the first 90 days, remain on the drug throughout the end of the third quarter. As we engage with physicians, we believe that the duration of use will reflect current treatment guidelines. Today, the guidelines recommend that a patient is treated until culture conversion and, once converted, treated for an additional 12 months.

We believe the guidelines will help to refocus treating physicians on the appropriate treatment options for NTM patients and also assist both pairs and community based health care providers in understanding and assisting with the unmet need for these patients.

We remain very encouraged by the positive trends on the current duration of use to date approximately 85% of the patients who initiated therapy. During the first six months of launch who did not show up drop out during the first 90 days remain on drug throughout the ended the third quarter.

As we engage with physicians, we believe that duration of use will reflect the current treatment guidelines.

Today, the guidelines recommend that a patient is treated until culture conversion at once converted treated for another an additional 12 months.

We were also pleased to note at a high percentage of patients are remaining on drug and we wish we expect that trend to continue.

Roger: We were also pleased to note that a high percentage of patients are remaining on the drug, and we expect that trend to continue. As a reminder, prior to our case's approval, many refractory MAC lung disease patients were on guideline-based therapy indefinitely. The patients in the CONVERGE study were on background-based therapy for a medium of four years prior to entering the trial.

As a reminder, prior to our cases approval many refractory Mac lung disease patients were on the guideline based therapy indefinitely.

The patients in the converged study were on background based therapy for medium of four years prior to entering the trial.

Roger: These are very motivated patients, and they finally have an FDA-approved medicine, in our case, to treat their condition. We continue to see steady growth in our prescribers, with over 1,600 physicians having written at least one prescription since launch. And we remain very focused on driving future growth by continuing to increase the breadth and depth of prescribing. We also continue to see a positive trend with discontinuation. These have improved slightly from the prior quarter and continue to be trending better than the 34% reported in our Phase 3 CONVERT study. We believe this is the result of appropriate setting of expectations with patients and physicians as well as continued support from our CARES. We expect that this trend will continue and that the dropout rate will likely continue to improve slightly over time.

He's a very motivated patients and they finally have an FDA approved medicine in our case to treat their condition.

We continue to see steady growth in that prescribers with over 1600 physicians, having written at least one prescription since launch.

And we remain very focused on driving future growth by continuing to increase the breadth and depth prescribing.

We also continue to see a positive trend with Discontinuations.

Use of improved slightly from the prior quarter and continued to be trending better than the 34% reported that phase three convert study.

We believe this is the result of appropriate setting of expectations with patients and physicians as well as continued support from a Eric cares team.

We expect that this trend will continue and that the dropout rate will likely continue to improve slightly over time.

In addition to monitoring patient discontinuation, we're monitoring adherence to the treatment regimen, we continue to see adherence inline with our expectations and within the benchmark rates of 60% to 70% seen with other inhaled antibiotics.

Roger: In addition to monitoring patient discontinuation, we are monitoring adherence to the treatment regimen. We continue to see adherence in line with our expectations and within the benchmark rates of 60-70% seen with other inhaled antibiotics. We continue to see positive trends for reimbursement. Our product is generally being reimbursed through physician attestation for appropriate refractory MAC lung disease patients, and we are working to ensure that that process continues. We have made significant progress with the commercial launch of our case, and I'm very excited about what lies ahead for the brand and its long-term growth potential. With that, I'll hand the call over to our Chief Accounting Officer, John Gall, to review the financials. John?

We continue to see positive trends for reimbursement.

Eric cases, generally being reimbursed through physician attestation for appropriate refractory Mac lung disease patients and we are working to ensure that that process continues.

We've made significant progress with the commercial launch of our case and I'm very excited about what lies ahead for the brand and its long time growth potential.

With that I'll hand, the call over to a chief accounting Officer, John goal to review the financials John .

John Gall: Thanks, Roger. First, I'll spend just a few minutes reviewing our third quarter financial results, and then we'll discuss our financial guidance. This morning, we reported total net revenues of $38.9 million, comprising $37.8 million in U.S. net sales of Arrakis and $1.1 million of ex-U.S. net sales of Arrakis. The ex-U.S. net sales reflect utilization from our named patient programs in both France and Germany.

Thanks, Roger first I'll spend just a few minutes reviewing our third quarter financial results and then we'll cover our financial guidance. This morning, we reported total net revenues of $30.9 million comprising $37.8 million in U.S. net sales of air Keys, and 1.1 million of ex us net sales Americas, the ex us net sales.

Does reflect utilization from our named patient programs in both France and Germany.

John Gall: As you will see on our income statement, for the third quarter of 2019, we reported a net loss of $60.7 million, or $0.68 per share, compared with a net loss of $87.7 million, or $1.14 per share, for the third quarter of 2018. Our gross to nets for the third quarter were approximately 10 percent. We expect our GTN to remain low double digits for the remainder of the year.

As you will see on our income statement for the third quarter of 2019, we reported a net loss of $60.7 million or 68 cents per share compared with a net loss of 87.7 million or $1.14 cents per share for the third quarter of 2018.

Our gross to nets for the third quarter were approximately 10%, we expect our GTN to remain low double digits for the remainder of the year.

John Gall: The cost of goods sold for the third quarter was $6.4 million. The gross margin was 83% for the quarter, consistent with Q2. It's important to remind everyone that our gross margin has been and will continue to benefit in 2019 from inventory expense prior to FDA approval of ARCA. Research and development expenses were $34.3 million for the quarter, compared to $39.5 million in the third quarter of 2018. SG&A expenses were $53.3 million for the third quarter of 2019, compared to $44.4 million in the third quarter of 2018. The increase is primarily due to milestone payments and other external expenses associated with the hurricane. Our cash-based operating expenses in the third quarter were $72.6 million, and we continue to expect cash-based operating expenses to be in the range of $140 to $155 million for the second half of 2019.

Cost of goods sold for the third quarter was 6.4 million. The gross margin was 83% for the quarter consistent with Q2.

It's important I remind everyone that our gross margin has been and we'll continue to benefit in 2019 from inventory expense prior to that the approval of our case.

Research and development expenses were $34.3 million for the quarter compared to 39.5 million in the third quarter of 2018.

SGN a expenses were $53.3 million <unk> third quarter of 2019 compared to 44.4 million in the third quarter of 2018. The increase is primarily due to milestone payments and other external expenses associated with their keys.

Our cash based operating expenses in the third quarter were 72.6 million and we continue to expect cash based operating expenses to be in the range of 140 $255 million for the second half of 2019.

John Gall: We will continue to invest in our core operating business, which includes a successful U.S. launch of Aerocase, global expansion activities in Europe and Japan, and pipeline advancement. While we have not yet finalized our budget for 2020, we currently do not anticipate a substantial increase in our cash-based operating expenses as we move forward into 2020. We define cash-based operating expenses in our earnings press release as total costs and expenses excluding cost of product revenues, stock-based compensation expense, depreciation, amortization of intangibles, and milestone payments. In addition, the company continues to expect one-time capital expenditures in support of the large-scale manufacturing facility at Patreon and the company's primary U.S. location to be in the range of $20 to $30 million for the second half of In terms of revenue guidance, we now expect full-year 2019 total net revenues for our case to be in the range of $133 to $138 million. With that, I will turn the call back to Will for closing remarks.

We will continue to invest in our core operating business, which includes a successful U.S. launch of air case global expansion activities in Europe , and Japan and pipeline advancements.

While we have not yet finalized our budget for 2020, we currently do not anticipate a substantial increase in our cash based operating expenses as we move forward into 2020.

We define cash based operating expenses in our earnings press release, as total costs and expenses, excluding cost and product revenues stock based compensation expense depreciation amortization of intangibles and milestone payments. In addition, the company continues to expect onetime capital expenditures in support of the large scale.

Manufacturing facility repeat young and the company's primary U.S. location to be in the range of $20 million to $30 million for the second half to 2019.

In terms of revenue guidance, we now expect full year 2019 total net revenues were case to be in the range of $133 million to $138 million with that let me turn the call back to will for closing remarks will thank you John Let me close out our prepared remarks by reiterating that we're very pleased with the continued strong execute.

William Lewis: Thank you, John. Let me close out our prepared remarks by reiterating that we are very pleased with the continued strong execution by the team at Insmed and the progress we've made in bringing EraCase to NTM patients in need of reliable therapy. We look forward to sharing results from our Willow study of INS 1007 as a treatment for non-CF bronch in the coming months, and we are very excited about what lies ahead for the company. With that, I'd like to open the call to questions.

And by the team at Insmeds and the progress, we've made and bringing era case NTM patients in need of reliable therapy. We look forward to sharing results from our Willow study of I just wanted to below seven as a treatment for non see a bronk in the coming months and we're very excited about what lies ahead for the company with that I'd like to open the call. The questions. Operator can we take the first.

And please absolutely that's one last question your way press Star one well I've touched on telephone today's first question comes from Liisa Bayko AMC Securities. Please go ahead.

Operator: Absolutely. And as a reminder, to ask a question, you may press star 1 on your touch-tone telephone. Today's first question comes from Liisa Bayko of AMC Securities. Please go ahead.

Hi.

Thanks for taking the questions.

We have a little bit more upon some of the metrics you were talking about what's driving the slightly lower discontinuation rate can you maybe talk a little bit more about the duration of therapy. How long are patients staying on you know what kind of conversion rates are we seeing a real world, which I sense are likely higher then you know what you saw in a in phase three.

Liisa Ann Bayko: Hi, thanks for taking the question. Can you maybe expand a little bit more on some of the metrics you were talking about? You know, what's driving the slightly lower discontinuation rate? Can you maybe talk a little bit more about the duration of therapy? How long are patients staying on? You know, what kind of conversion rates are we seeing in the real world, which I sense are likely higher than, you know, what you saw in the phase three study. That'd be great; thank you.

All right. Thank you Yeah, you bet I think you put your finger on all the key metrics that we watch to understand how the launches going and of course, the topline take away is that throughout the entire launch all of these have been positive, but let me turn over to Roger for maybe some more color yeah. Thanks, Lisa. So so let me start with the discontinuation rate and as you know we put.

William Lewis: Yeah, you bet. I think, you know, you're putting your finger on all the key metrics that we watch to understand how the launch is going. And, of course, the top-line takeaway is that throughout the entire launch, all of these have been positive. But let me turn it over to Roger for maybe some more color.

A significant amount of effort into educating physicians and patients about what to expect winner on therapy, including our Eric cares feel based team who will train will train the patients on the device and also talked to them about what to expect as they take their dosing and we think that over time or.

Roger: Yeah, thanks, Lisa. So, let me start with the discontinuation rate. And as you know, we've put a significant amount of effort into educating physicians and patients about what to expect when they're on therapy, including our EricAres field-based team, who will train patients on the device and also talk to them about what to expect as they take their doses. And we think that over time, our discontinuation rate will continue to improve as physicians become more adept and better at managing these patients. And as patients learn how to manage the side effects, and as you know, in a clinical trial, we saw the majority within the first month of dropouts in that first month.

Discontinuation trend will continue to improve as as physicians become more adapt and adept at managing these patients.

And as patients are learn how to how to manage the side effects and and as you know in a clinical trial was where the first to the majority within the first the first month of dropouts or in that first month. So can get done through that first month.

And we think that there will continue to see some strong persistence, which I think was the second part of your question and so we've looked at our Q4 2018 starts in Q1 2019 starts because they have a a significant a duration of therapy.

Roger: So if we can get them through that first month, then we think that we'll continue to see some strong persistence, which I think was the second part of your question. And so we've looked at our Q4 2018 starts and our Q1 2019 starts because they have a significant duration of therapy. And we are very encouraged by what we're seeing as far as patients continuing on therapy. So we mentioned earlier that overall, 85 percent of the patients who started in those first six months are still on therapy. And we think that that speaks very strongly to the benefit that patients are seeing from this therapy, the benefit that physicians are seeing for this therapy, and the motivation of patients to stay on therapy, these refractory patients to stay on therapy. So across the board, we're seeing some very strong, very strong metrics in addition to patient starts. And we continue to be very encouraged by all of this.

And we are very encouraged by what we're seeing as far as patients continuing on therapy. So we mentioned.

Overall, 85% of the patients who started in those first six months are still on therapy, and we think that that speaks very strongly to the benefit to patients are seeing this therapy. The benefit the physicians are seeing for this therapy.

And ER and the motivation of patients to stay on therapy. These refractory patients to stay on therapy.

So oh across the board, we're seeing some very strong I'm very strong metrics. In addition to the to the patient starts and we continued to be very encouraged through all of this the duration of therapy. As we've mentioned I think the dig the best information, we have which when we talk to physicians as they look to the guy.

Hi lines for for that guidance.

So you will treat to conversion and then another 12 months of therapy to ensure that you've you've eradicated that infection.

Roger: The duration of therapy, as we've mentioned, I think the best information we have, which when we talk to physicians, they look to the guidelines for that guidance. So treat to conversion and then another 12 months of therapy to ensure that you've eradicated that infection. And that seems to be what they're looking to as far as guidance for continuation of therapy. As we mentioned, I think the conversion, the non-converters, are an interesting patient population group, and we'll have to see what happens there. As you know, in our CONVERT trial, we had a median time of four years of background therapy before they entered that trial. So certainly some of these patients will continue on therapy until they can find a resolution for their infection, and that's to be seen.

And that seems to be what they're looking to as far as guidance for continuation of therapy.

As we mentioned I think the the a conversion the non converters, our or an interesting patient population group and we'll have to see what happens there as you know in air in a convert trial. We had a median time of four years of background therapy before they entered that trial. So certainly some of these patients continue.

You want therapy until they can find.

Fine to find a resolution for for their infection and that's to be seen the conversion rates. I think are we don't have insights into the actual patient conversion rates I think it's reasonable to say that we could look for potentially higher conversion rates because of the rigor of our clinical.

Roger: The conversion rates, I think we don't have insights into the actual patient conversion rates. But I think it's reasonable to say that we could look for potentially higher conversion rates because of the rigor of our clinical trial with the three consecutive negative sputums. I don't think that that's an unusual standard that you see in a community setting. It varies as to how often they test, but you could certainly see that a doctor may do a sputum test, and a single negative may lead them to conclude that they've eradicated that infection and moved to that 12 months of continuing therapy. But we don't have actual insights into the number of patients who are converted.

Trial with that the three consecutive.

Negative sputum I don't think that that's that's an unusual standards you see in a community setting it varies as to how often they test.

But you could certainly see that a doctor may do it should be them test in a single negative may may lead them to conclude that they've eradicated that infection moved to that 12 months of continuing therapy, but we don't have actual insights into the number of patients who are converted.

Just one point of clarification, Roger was talking with 85% who remain on therapy, that's of those patients who have not dropped out.

William Lewis: Just one point of clarification, Roger was talking about the 85 percent who remain on therapy, that is, those patients who have not dropped out in that first few months on therapy due to AEs or what have you. And just one other point I wanted to ask Roger maybe to comment on, these metrics we track, and certainly, the progress we've made commercially has been really remarkable, but it's not static.

In that in that.

First first a few months on therapy due to do a easier or what have you and you know just a one other point I want to ask Roger maybe to comment on it. These metrics, we track and certainly the progress. We've made commercially has been really remarkable but it's not static it's quite dynamic and by that I mean, we're constantly looking at ways.

To improve and advance on each of these metrics and most recently, we just introduced a new group to the commercial team. The so called Pals, maybe one of his comment on them because I think that could be helpful to absolutely. Thanks, well, yes. So we as you mentioned we deployed the patient access leads.

William Lewis: and advance on each of these metrics, and most recently, we just introduced a new group to the commercial team, the so-called PALS. Maybe you want to just comment on them.

Roger: Absolutely. Yeah, so we, as you mentioned, have deployed patient access leads in the field, and they've just been in the field for a couple of weeks. And this is a team that we think is going to be very helpful for us as we look at reimbursement processes, both for getting patients started and getting through the reimbursement process, but also if there are reauthorization processes that need to occur. So this team is charged with educating healthcare professionals and their staff on the process, which for some physicians can be a new process. So this is a team that can help them understand what is required to support reimbursement and continuation of therapy. We look forward to seeing the impact of this team in short order.

To the field and they just have been in the feel for for a couple of weeks and this is a team that we think it's going to be very helpful. For us as we look at reimbursement processes both for getting.

Patients started and getting through the reimbursement process, but also if there are a reauthorization processes that need to need to occur. So just team is charged with educating healthcare professionals and and their staff on on the process, which for some physicians is can be a new process.

So this is a team that can help them understand what is required to support reimbursement and continuation of therapy.

When we look forward to seeing the impact of this team in short order, Yeah, and I think you know reimbursement trends continued to be extremely positive. This is a way to make them even more positive I guess is the way I think about it so hopefully that answers the question Lisa in terms the different metrics as best we are able to.

William Lewis: Yeah, and I think, you know, reimbursement trends continue to be extremely positive. This is a way to make them even more positive, I guess, is the way I think about it. So hopefully, that answers the question, Liisa, in terms of the different metrics as best we're able to.

Well, that's really helpful. And then just one more question for me.

Liisa Ann Bayko: Thanks, that's really helpful. And then I have just one more question for you.

We're all I'm excited and looking for their results from both.

William Lewis: We're all, you know, excited and looking forward to the results of the Willow study, and thanks for giving us some kind of high-level comments on how you're thinking about the data. It's very helpful. Can you maybe talk about kind of your strategy, assuming that you do see this kind of, you know, kind of correlation between, you know, people, the effect on the biomarker, the NSP is going down, and some sort of reduction in exacerbations, that's kind of what you're looking for. Assuming that you get there, is this a, this seems to be a very large market opportunity. Can you maybe talk about your plans or something you think about partnering on or something you can take forward yourself? Be curious about your thoughts there, and thank you very much.

Well study and thanks for giving us.

Kind of high level comments, and how you're thinking about the data very helpful.

Talk about kind of your strategy, assuming that you do see you know that's kind of some kind.

On a correlation between you know people getting that that effect on the biomarker. The NFC is going down in some sort of reduction exacerbations, that's kind of what you're looking for them and let you know that there is this a this seems to be a very large market opportunity can you maybe talk about your plans or something you think about partnering or.

Like yourselves.

The curious on your thought there. Thank you very much yes.

Did that again I'd I'd frame. This went out as a kind of a lottery ticket I think it's a it's a high.

No. There's nothing approved for the disease State no. One has been successful in cracking that code, but most of the approaches that I'm familiar with have all been inhaled antibiotic approaches to address underlying infections that may be contributing to the exacerbation and hospitalization of these patients in particular, pseudomonas and you've seen a lot of and Hilton.

William Lewis: Yeah, I appreciate that. Again, I'd frame this one out as a kind of lottery ticket. I think it's a fad. There's nothing approved for the disease state. No one has been successful in cracking that code, but most of the approaches that I'm familiar with have all been inhaled antibiotic approaches to address underlying infections that may be contributing to the exacerbation and hospitalization of these patients, in particular Pseudomonas. And you've seen a lot of inhaled ciprofloxacin tried in different formulations. Gilead tried it. Others have tried and been unsuccessful.

Flocks and tried and different formulations Gilly I'd tried a others have tried and been unsuccessful ours is a novel mechanism right. We're going at the inflammatory cascade up to try and get at it from that side and I think for that reason that it is quite interesting. Although I think it's fair to describe it as high risk.

William Lewis: Ours is a novel mechanism, right? We're going after the inflammatory cascade to try and get at it from that side. And I think for that reason, it is quite interesting, although I think it's fair to describe it as high risk. So maybe a lower probability of success here. But if we were to see something, I think you're right.

So maybe a lower probability of success here, but if we were to see something I think you're right. This is a massive opportunity and to give you. Some perspective on that three to 500000 patients in the U.S. roughly.

I think we can handle that I'm very confident our commercial teams capabilities. There is significant overlap with NTM. So strategically. This is perfectly aligned the same is true in Europe , and Japan, where we have.

William Lewis: This is a massive opportunity. And to give you some perspective on that, three to 500,000 patients in the U.S., roughly. I think we can handle that. I'm very confident in our commercial team's capabilities. There's significant overlap with NTM. So strategically, this is perfectly aligned. The same is true in Europe and Japan, where we have our operations up and running to support, if we're able to secure it, approval for error cases and the treatment of refractory NTM, and ultimately, frontline and other indications. So this is a perfect dovetail into that effort.

Operations up and running to support if we were able to secure approval for air case, and the treatment refractory NTM and ultimately frontline and other indications. So this is a perfect dovetail into though that that effort.

I'll just highlight that you know there are some parts of the world where this disease is really quite rampant China. For example, there. It's estimated that it's probably 10 times the incidence rate that it is in the U.S.

William Lewis: I'll just highlight that there are some parts of the world where this disease is really quite rampant. China, for example; it's estimated that it's probably 10 times the incidence rate that it is in the U.S. So this is a significant challenge, for example, in that region of the world. And I think we'll be putting a lot of thought into how we might be able to take advantage of that, should these data be very positive. I do want to say that if they are not very positive, in our assessment, this drug will not go forward.

So this is a significant challenge for example in that region in the World and I think we'll be putting a lot a reflection into how we might be able to take advantage of that.

Should these data be be very positive I do want to say that if they are not very positive.

In our assessment this drug will not go forward.

Thanks, well you bet.

And our next question comes from reaching overall Oh. Please go ahead.

Good morning, everyone. Thanks for taking the question first question on well the Chiaro that you mentioned for your frontline trial.

Operator: Thanks Will. You bet. And our next question today comes from Ritu Baral of Cowan. Please go ahead. Good morning, everyone.

I understand you're still in conversations with Sta, but can you give us very sort of high level thoughts on what that composition will be is that going to be like an in depth adaptation of the seat Georges or some other existing score or a mash up between a couple and then is there a high level.

Ritu Subhalaksmi Baral: Thanks for taking the question. The first question's on Will, the PRO that you mentioned for your frontline trial. I understand you're still in conversations with FPA, but can you give us some sort of high-level thoughts on what that composition will be? Is that going to be like an adaptation of St. George's or some other existing score, or a mash-up between a couple? And then, is there a high-level strategy for validating that independently of putting it into Phase III, or are you going to do it within?

Strategy for validating that independently of putting it into a phase three you can't do it within a three.

So thanks for the question the pure ROE is gonna be derived from existing bureaus and in particular, the there's a non CF Bronx respiratory questionnaire, we're working with in addition to one specifically to look at fatigue.

William Lewis: So thanks for the question. The PRO is going to be derived from existing PROs, and in particular, there's a non-CF Bronc respiratory questionnaire we're working with, in addition to one specifically to look at fatigue, and we're in the middle of the qualification work for that. I'd say we're deep into that effort now, and we expect that the completion of that will not be controversial in terms of what we produce, but we do want to make sure that we're aligned with FDA, that it, you know, correctly assesses that patient population. We've been in dialogue with them.

And we're we're in the middle of the qualification work for that I'd say, we're we're deep into that effort now.

And we expect that the completion of that will not be controversial in terms of what we produce but we do want to make sure that were aligned with the FDA that it you know correctly assesses that patient population, we've been in dialogue with them I'd say that dialogue has been very positive in productive and as soon as this process is done.

William Lewis: I'd say that the dialogue has been very positive and productive, and as soon as this process is done, and they are comfortable with the profile that we have developed based on the research we're doing, we can then move forward. The validation of the questionnaire, we will be conducting that in a number of ways, frankly, which would include not just backtesting it on existing data that we have but also looking at it in a clinical setting. I think it's entirely possible that we will break that out separately from the full approval trial, but I would tell you this: every effort is being made to move this forward as quickly as possible because, I think, you know, from the conferences we've just come from, CHESS and ID Week and ERS, the appetite to use this drug in frontline and M-obsessus is very, very strong.

And they are comfortable with the profile that we have developed based on the research we're doing a we can then move forward.

Elevation of the questionnaire, we will be conducting that in a number of ways frankly, which would include not just back testing it on existing data that we have but also I'm looking at it in a clinical setting I think it's entirely possible that we will break that out separately from the full approval trial.

But.

I would tell you. This every effort is being made to move this forward as quickly as possible because I think you know what we can save from the conferences, we've just come from chest and I'd week and Drs. The appetite to use this drug in frontline and M. Abscessus is very very strong we.

William Lewis: We need to produce the clinical data to satisfy the regulators that this drug is safe and effective in those populations, but once we're able to do that and get their blessing that this drug is appropriate for those populations, there is clearly a desire to use it in that arena based on what we're hearing from these conferences anecdotally. So I'm very, very excited about this. If I were to put my finger on the single most important value driver for this company, it would be that frontline study, and getting that done as soon as possible is our number one focus.

We need to produce the clinical data to satisfy the regulators that this drug is safe and effective in those populations, but once we're able to do that and get their blessing that this drug is appropriate for those populations.

There is clearly desire to use it in that arena based on what we're hearing from these conferences anecdotally. So I'm very very excited about this if I were to put my finger on the single most.

Important value driver for this company it would be that frontline study and getting that done as soon as possible as our number one focus right. We should expect potentially a separate perspective quick validation study for the PRM before the start the actual.

William Lewis: Right, so we should expect potentially a separate prospective quick validation study for the PRO before the start of the actual... They may well run in parallel.

They may well run in parallel.

William Lewis: Okay. Or one with a little bit of overlap on the other.

Or one with a little bit overlapping the other we haven't finalized that in of course, all this is subject to agreement with FDA.

William Lewis: We haven't finalized that, and, of course, all of this is subject to agreement with FDA. And that's going to be predicated on what we find in the qualitative research. So there's a little bit of ambiguity at the front end here as we lock down what we think is the appropriate questionnaire and its degree of sensitivity, which we'll be testing.

And that's going to be predicated on the what we found in the qualitative research. So there's a little bit of ambiguity at the front end here as we locked down what we think is the appropriate questionnaire and its.

Degree of sensitivity, which we'll be testing, but clearly getting the trial started in a way that gives us a high degree of confidence it will be successful is our number one goal and so we'll put a lot of creative thought into that and I think we've made I would say we've made a lot of progress in recent months.

William Lewis: But clearly, getting the trial started in a way that gives us a high degree of confidence it will be successful is our number one goal, and so we'll put a lot of creative thought into that. And I think we've made, I would say, we've made a lot of progress in recent months in terms of how we might be able to accelerate that. So I'm excited about where we are. I think once the FDA is signed off, then we'll feel comfortable talking about it in great detail, and it's my expectation that that would involve more than simply a conference call. It's probably an analyst day where we bring everybody in to be able to really take a close look and a deep dive at that, along with our increasingly robust pipeline, I would say.

In terms of how we might be able to accelerate that so I'm I'm excited about where we are I think once the FDA has signed off then we'll feel comfortable talking about it in great detail and it's my expectation that that would involve more than simply a conference call. It's probably an analyst day, where we bring everybody and to be able to really take a close look on a deep dive at that along with Oh.

Our increasingly us a robust pipeline I would say okay.

William Lewis: And that brings me to my follow-up question. In the Willow study, how should we think about improvements in the rate of exacerbations, given that's going to be a key focus? Do you have the baseline exacerbation rate for the patients in Willow, given that it's fully enrolled, and what sort of delta is clinically meaningful?

Very helpful and that brings into my follow up question.

The will of study how should we think about improvements in rate as exacerbations and given that's going to be a key focus you have that baseline exacerbation rate for inpatient and willow given that it's fully enrolled and what sort of delta is clinically meaningful yep great question. So.

William Lewis: Yep, great question. So, if you look at the historic trials done in non-TIF bronchiectasis, what you'd see is a rate of about 1.2 exacerbations in patients in any given calendar year. This is a six-month study, and it takes our drug about a month to get up and running through the bone marrow because of its mechanism of action. So, what we're looking to do is establish whether patients that are, you know, the entry criteria here is that they have to have had two or more exacerbations in the prior 12 months. So, as they come in, we want to see an impact on the rate of exacerbations. That is going to be the primary endpoint in phase three. In our discussions with FDA, I will just draw attention to the fact that our phase two study looks at the primary endpoint of time two pulmonary exacerbation, but that's because that historically was what the FDA wanted for a primary. They then changed their minds.

If you look at the historic trials done and non CF bronchiectasis, what you'd see is a rape. It's typically about 1.2 exacerbations in patients in any given calendar year. This is a six month study and it takes our drug about a month to get up and running through the bone marrow because of its mechanism of action. So what we're looking to do as established for.

Patients that are the entry criteria here as they have to have had two or more exacerbations in the prior 12 months so as they come in.

We want to see an impact on the rate of exacerbations that is going to be the primary endpoint in phase three in our discussions with FDA I will just draw attention to the fact that our phase two study looks as the primary endpoint at time to pulmonary exacerbation, but that's because that historically was what the FDA wanted for a primary they then change their mind.

And it's now rate of exacerbation design as we have understood. It with them. However, they said it is not necessary for us to change the primary endpoint of our phase two study because we look at both time too and rate of pulmonary exacerbations for us because of the mechanism of action and the importance of making a biologically plausible arguments.

William Lewis: It's now the rate of exacerbation, as we have understood it with them. However, they said it is not necessary for us to change the primary endpoint of our phase two study because we look at both time two and the rate of pulmonary exacerbation. For us, because of the mechanism of action and the importance of making a biologically plausible argument to FDA, we think it's important to see impact on neutrophil serine proteases using the assays that we have to identify that the drug is having the intended impact and that there is a correlation between that and the rate of pulmonary exacerbation. That rate delta between the treatment arm and placebo, from our survey work, we think needs to be 20% In this case, we think 20% is probably the right range, and we'll see. I think, as I said earlier, I think this is a high risk, high return kind of trial.

FDA, we think it's important to see impact on the neutrophil serine proteases in using the assays that we have to identify that the drug as having the intended impact and that there's a correlation between that and the rate of pulmonary exacerbations that rate delta between.

Treatment arm and placebo from our survey work, we think needs to be 20% or better in order for us to feel good if you remember for NTM. It was 15% between the two arms in this case, we think 20% is probably the right range and.

And we'll see you know I think as I said earlier I think this is a high risk high return kind of trial.

Got it very helpful. And then just very last quick follow up.

William Lewis: Got it. Very helpful. And then just a very last quick follow-up. The PALs that you mentioned, patient access leads, is there a reason you put them in the field now? Are there any sort of new hurdles to reauthorization? And how are insurance companies viewing those non-converters?

How's that you mentioned patient access leave.

They're reason you put them in the field now are there any sort of new hurdles to.

Reauthorization, how our insurance companies viewing those non workers. So just to be clear eyed. That's why I introduced it and then maybe a quick point of saying that we put these in as an example of how we're dynamically trying to further grow. This is not in response to an issue or a problem of any kind of market access has.

William Lewis: So, just to be clear, that's why I introduced it and then made a quick point of saying that we put this in as an example of how we're dynamically trying to further grow. This is not in response to an issue or a problem of any kind.

William Lewis: Market access has been, and continues to be, extremely positive, and any survey work that anyone does would reveal that. And I think that speaks to the unmet need, the severity of the patient population, and the perceived impact that our drug is having on these patients in the marketplace world. But I'll let Roger talk about PALS and the timing, and how we think they fit into some of the other programs we're looking at. I think about machine learning, for example, and targeting.

It's been continues to be extremely positive and any survey work that anyone does would reveal that and I think that speaks to the unmet need the severity of the patient population and the perceived the impact that our drug is having on these patients from market access world, but I'll, let Roger talk about the pals and the timing and and how we think they.

Fit into some of the other programs were looking at I think about the machine learning for example, and targeting yeah.

Well, yes, so it it's not in response to any any one factor in fact, I think as will said our payer environment remains a very supportive and the attestation. The true. That's required is something that we are very happy with it and.

Roger: Very supportive, and the attestation that's required is something that we are very happy with and are striving to preserve and continue, and we expect that to continue for the majority of our patients. And to date, reauthorizations have not been an issue for us. The majority of patients are not subject to a reauthorization criteria. So what we've found and why we decided to put some PALS in the field is that, particularly as you go beyond the centers of excellence and as you're talking to community physicians, there's paperwork associated with attesting that this is the appropriate refractory patient, and sometimes, depending on the experience that these offices have with securing reimbursement and submitting the paperwork to the individual plans, that process can get stuck.

Striving to preserve and continue when we expect that to continue for the for the majority of our patients.

And to date, the Reauthorizations have not been been an issue for US there. The majority of patients are not subject to it to a reauthorization criteria.

So what we thought what we found and why we decided to put some pals and the field is it particularly as you go beyond the centers of excellence in as your talk into community physicians. This paper work associated with it a testing that this is the appropriate refractory patient and sometimes depending on on on the experienced at these offices have.

With securing reimbursement and submitting the paperwork to the individual plans.

That process can get stuck so in the interest of making sure that patients received the therapy as quickly as possible to their physicians feel are appropriate.

Roger: So in the interest of making sure that patients receive the therapy as quickly as possible that their physicians feel is appropriate for them, we feel that putting the PALS in directly to talk with the office physician and the staff who are processing this paperwork and educate them on what that process really looks like is going to be beneficial for getting that enrollment form converted into a prescription and for, indeed, in those cases where there are reauthorizations to get that reauthorization done as quickly So we think that it's to the enormous benefit of the patient to continue on therapy. So, although these are early days still, we expect the payer environment to continue to

For them, we feel that putting the pals in directly to talk with the office physician and the staff who processing these paperwork and educate them on what they are what the process really looks like it's going to be beneficial for getting that a enrollment form converted into a prescription and for indeed.

Case in those cases, where there aren't a.

Reauthorizations to to get that reauthorization done as quickly as possible as well. So we can get that's too the enormous benefit of the patient to continue on therapy. So early days still we expect the payer environment to continue to be supportive, but this is just an effort to in order to accelerate the process if possible and I've. If you wouldn't mind just commenting on.

Roger: Possible And I

Roger: It is, and it's something that I think the team has done a terrific job with. We've got some great commercial minds working on this within Insmed. And so we've talked about the NTM likely patients in the past, so two NTM likely patients for every one currently diagnosed and treated NTM patient. We've also done some work looking at refractory likely patients, and so now that we have a body of patients in the database that we know have been prescribed arrow case, we can look at the characteristics of those refractory patients and identify who are the refractory likely NTM patients and then direct our, or send a report out to our therapeutic specialists to engage with physicians who may have these refractory likely NTM patients and have a discussion with them.

Patient finding I know, it's one of my personal favorite, but the machine learning that we're using I think as it is a it's such an important part about it is and it's something that I think the team has done a terrific job with we've got some great a commercial mines working on this within ends med and so we've talked about be be NTM likely patients in the path.

So to NTM likely patients for every one currently diagnosed and treated NTM patients.

We've also done some work looking at refractory likely patients and so now that we have a body of patients in the database that we know of being prescribed barricades. We can look at the the characteristics.

Of those refractory patients and identify who are the refractory likely NTM patients and then direct or send the report out to our therapeutic specialists.

To engage with physicians, who may have these these refractory likely NTM patients have a discussion with them. So of course all this information is blinded from a patient perspective, we have no access to those individual patient records, but we do know that blinded, we had that they're visa NTM likely refractory likely patients.

Roger: So, of course, all this information is blinded from a patient's perspective. We have no access to those individual patient records, but we do know, blinded, that these NTM likely, refractory likely patients, which practice they're in, and then hopefully, we'll have a timely discussion with the physician about treatment options for the appropriate refractory patients. So something that we've deployed and I think is very helpful in our field.

Which practice there in and then hopefully we'll have a timely discussion with the physician about treatment options for the the appropriate refractory patient. So something that were deployed and I think is is very helpful for our field efforts.

Roger: Great. Very helpful answers. Thanks, guys. And our next question today comes from Josh Schimmer of Evercore ISI. Please go ahead. Thanks for taking the questions. I missed the number of new starts in the third quarter. I'm not sure if you mentioned it. If so, could you repeat that? And could you also give us a sense of the cadence of the news breaks throughout the quarter and into the first weeks? 4th quarter, and then on the PRO, just trying to get a better sense of what you think the earliest possible time point at which a PRO would be available to either adjust the label.

Great Super helpful answers thanks, guys.

You bet.

And our next question today comes from Josh Schimmer of Evercore ISI. Please go ahead.

Thanks for taking my questions I missed the number of new starts over the third quarter Q.

I'm not sure. If you mentioned, if so could you repeat and kelsen give us a sense with the cadence for the new starts throughout the quarter and into the first weeks of the fourth quarter and then on the Pierre out trying to get a better sense. What do you think the earliest possible time point, which you pirow would be available to.

Hi, there adjust the label.

Josh Schimmer: So I'll let Roger speak about patient starts, one of our strong metrics that I'm particularly happy about.

And indication for air case, or at least impact a treatment paradigm. Thank you.

So I'll, let Roger speak to the patient starts one of those strong metrics that I'm perfectly happy about yes. Thanks rules. So we did have I'm slightly more than 600, new patient starts in Q3 and as far as a cadence what we're particularly encouraged about here is this was coming out of the summer months on so this was our first the first a trip through the summer.

William Lewis: Yeah, thanks, Will. So we did have slightly more than 600 new patients start in Q3. And as far as the cadence goes, what we're particularly encouraged about here is this was coming out of the summer months, and so this was our first trip through the summer. So we weren't quite sure what to expect, but we saw some very strong demand and new patients started throughout that summer period. So we remain encouraged by the demand from physicians and patients for the therapy.

So we're quite sure what to expect but we saw some very strong demand a new patient starts to throughout that summer period. So we remain encouraged by the demand from physicians and patients for for the therapy, Yeah and on the on the Piero in terms of early as time I mean, I think we are but certainly our.

Roger: Yeah,

William Lewis: Yeah, and on the PRO in terms of the earliest time, I mean, I think we are, it's certainly our intention to start the study next year, so I think between now and then.

Intention to start of the study at next year. So I think between now and then we expect to finalize the Piero.

William Lewis: And I think we can all agree that we expect to finalize the PRO, get agreement with FDA, and that introduces a little bit of uncertainty in terms of timing, not because of anything problematic, just because you're working with a very busy regulatory agency and you want to make sure that you're perfectly aligned before you flip the switch on what is going to be an incredibly important and significant study for us, the readout of which will increase the addressable It's going to increase our addressable market close to five-fold. And based on what we've seen in this first year, that is a game changer for this company.

Get agreement with FDA and that introduces a little bit of unknown in terms of timing not because of anything problematic just because you know you're working with a very busy regulatory agency and you want to make sure that you are perfectly aligned before you flip the switch on what is going to be an incredibly important and significant study for us the readout of which will increase the addressable.

Market if it goes as we expected will and the FDA approved this medicine, it's going to increase our addressable market close to five fold.

And based on what we've seen in this first year that is a game changer for this company. So I'm, particularly excited about it we're moving forward very deliberately and cautiously, but I think in a very positive direction and I'm, particularly pleased with the creativity that I've seen out of our team and being able to identify ways to show.

William Lewis: So I'm particularly excited about it. We're moving forward very deliberately and cautiously, but I think in a very positive direction. And I'm particularly pleased with the creativity that I've seen out of our team in being able to identify ways to shorten the timeline from here to that day when we're able to hopefully secure frontline approval. So I'm afraid I can't give you a specific date, Josh, but I can tell you that once we're past that FDA dialogue, we'll frame everything out in great detail. And I expect that it will be next year on analyst day, so that we can start the trial.

And the timeline from here to that day, when we're able to hopefully secure frontline approval. So I'm afraid I can't give you specific date, Josh but I can tell you that.

Once we're past that FDA dialogue will frame everything out in great detail and I expect that that will be next year on an analyst day.

So that we can start the trial.

Thanks very much.

And our next question.

Graig C. Suvannavejh: And our next question today comes from Graig Suvannavejh of Woodman Sachs. Please go ahead. Good morning.

Sorry, I know next question today comes from Greg So ran about <unk> of Goldman Sachs. Please go ahead.

Hi, good morning, Thanks for taking my questions. Congrats on the progress in the quarter I just have two questions.

Graig C. Suvannavejh: Thanks, Sara, for taking my questions. Congratulations on the progress in the quarter. I just have two questions.

One.

Just want to go back to the timing of next trials for era case, and I know you did mention a little bit about the first line study I can follow up is while the comment was about.

Graig C. Suvannavejh: One, I just want to go back to the timing of the next trials for error case, and I know you mentioned a little bit about the first-line study. I guess the follow-up is, while the comment was about, entering that study or starting that study sometime next year. It seems as if, given all the moving parts, it's looking like maybe mid-year or the second half of the year. And so I just wanted to get your thoughts around that and then if there was a comment around the timing of maybe any study in the M-obsessed population. And then just my other question just has to do with this milestone payment. In the quarter, I was just wondering how we should think about milestone payments to Perry Farm on a go-forward basis and whether these are one-offs on a periodic basis or on a sequential basis on a go-forward...going forward.

Entering that study are starting that study sometime next year.

It seems as if given all the moving parts, it's looking like more maybe mid year or second half of the year and so what I just wanted to get your thoughts around that and then if theres a comment around the timing of maybe any study and the M. Abscessus population.

And then just my other question just has to do with us.

Milestone payment.

In the quarter I was just wondering how we should think about milestone payments to Perry farm on a go forward basis and whether these are one off on a periodic basis or enough.

Sequential basis on a go forward going forward any color would be great. Thanks sure. So on the timing for next trial and trials the frontline wins that going to kick off again, it's very hard to specify went in the year because we haven't had the conversation and finalization with FDA I expect that that will be a fairly.

William Lewis: Any color would be great.

William Lewis: Sure, so on the timing for the next trial and trials, the front line, you know, when's that going to kick off? Again, it's very hard to specify when in the year because we haven't had the conversation and finalization with FDA. I expect that that will be a fairly predictable study process, but I want to wait until it's completed before we characterize what we take away from that. I think the upside of that FDA dialogue is that we're hoping it will continue to position us to move this forward on an expedited basis. And so once we have that in hand, I think we'll share where that comes out again. I think that's an analyst day next year, as soon as it is possible to get it done.

Predictable steady process, but I want to wait until its completed before we characterize what we take away from that I think the upside of that FDA dialogue is that we're hoping it will continue to position us to move this forward on an expedited basis and so once we have that in hand, I think we'll we'll share.

Where that comes out and again I think that's an analyst day next year as soon as it is possible to get it done the M. Abscessus work is happening in parallel. So we're doing bureau work for both and is my expectation that that that's something we'll be well be looking to do as well I wouldn't say as I think about obsessed.

William Lewis: The M-OBSESSUS work is happening in parallel, so we are doing PRO work for both. And it's my expectation that that's something we'll be looking to do as well.

William Lewis: I would say, as I think about OBSESSUS on the front line, we certainly have the capability to run both trials. I'm particularly excited about OBSESSUS because of the ATS study that was released, right? So we saw an investigator-initiated study that showed, using our drug for OBSESSUS patients, a 50% conversion rate in 12 months, roughly, in those patients, which is an extraordinary outcome for patients with that, you know, severe an infection profile. And I think it helps everyone understand why NTM sessions at places like CHEST are seeing standing room only, not just in the main room but in the overflow rooms for these sessions because here's a disease state that has been haunting the pulmonary arena and the infectious disease community for decades.

This in front line, we certainly have a capability to run both trials I'm, particularly excited about obsesses because of the Ats study that was released right. So we saw and investigator initiated study that showed using our drug.

For obsesses patients a 50% conversion rate in 12 months roughly in those patients, which is an extraordinary outcome for patients with that.

You know severe a and infection profile and I think it it helps everyone understand why NTM sessions at places like chest are seeing standing room, only not just in the main room, but in the overflow rooms for these sessions because here's a disease state that has been haunting the pulmonary arena and infectious disease coming.

Study for decades, and we have finally first approved drug to treat the most severe patients and it appears from investigator initiated study.

William Lewis: And we have finally a first approved drug to treat the most severe patients. And it appears from the investigator-initiated study, and certainly the appetite of people treating these patients, that this drug may have application in other places as well. Once again, we've got to complete the clinical study work to validate that perception, but I think we feel pretty confident that this drug is going to work in those populations. And so it is a timing exercise and an execution exercise for us, and it's getting our full and complete attention.

And certainly the the appetite of people treating these patients that this drug may have application in other places as well once again, we've got to complete the clinical study work to validate that perception, but.

I think we feel pretty confident that this drug is going to work in those populations and so it is a timing exercise and an execution exercise for us and it's getting our full and complete attention.

Asked a question about the milestone payment I'll just ask John do you want to just comment on that.

Graig C. Suvannavejh: Sure. Thanks, Will.

John Gall: This expense relates to milestone payments for Arracase. The milestones result from contractual obligations to the CF Foundation. These obligations were previously disclosed in our 2018 10-K financial statements. As far as the future goes, at this time, we do not expect any future material milestones related to Arracase. Great, thank you very much.

Sure. Thanks, well this expense relates to milestone payments for Eric case, the milestones result from contractual obligation to see a foundation. These obligations were previously disclosed in our 2018 10-K financial statements I mean, as you know a lot milestones tend to be lumpy when when recorded but as far as the future goals.

At this time, we do not expect any future material milestones related air case.

Great. Thank you very much thanks, Greg.

Graig C. Suvannavejh: Thanks, Greg.

Our next question today comes from Matthew Harrison of Morgan Stanley . Please go ahead.

Matthew Harrison: And our next question today comes from Matthew Harrison of Morgan Stanley. Please go ahead. Hi, good morning.

Hey, good morning, Thanks for taking my questions I guess I.

Matthew Harrison: Thanks for taking the questions. I'll guess two from me. The first one is I know you've discussed new starts a couple of times already, but maybe you could just comment in a little bit more detail on two factors. I guess the first question is, you know, are you seeing any patterns in where these new starts are coming from? Are there any shifts, not in the total number but sort of in the types of patients, kinds of patients, and kinds of physicians driving these new starts over the past couple of quarters? And then I have a follow-up appointment after that.

I guess two from me.

First one is I know I mean discussed new starts.

Already maybe you could just comment a little bit more detail.

Around Q factors I guess the first is.

Are you seeing any patterns and where are these new students are coming from are there any shifts non in total number but sort of then or types of patients anticipation kind of physicians driving new starts over the past couple of quarters.

And then I have a follow up after that.

William Lewis: You know, I appreciate the question. I think the one word I would use for this launch, and it just goes to the heart of the preparation that went into it, is steady. This, across all the major metrics that we have that we track, has just continued to perform, even through some times, as Roger was referring to, where we might have expected to see some softening, you know, in the summer months. You sometimes see that. And certainly, if you look at some of the predicate launches, they might have suggested something along those lines.

No I appreciate the question I think the one word I would use for this launch and it just goes to the heart of the preparation that went into it is steady this across all the major metrics. We have that we track has just continued to perform even through some times as Roger was referring where we might have expected to see.

Some softening in the summer months, you, sometimes see that and certainly if you look at some of the predicate launches.

They might have suggested something along those lines. So just kudos to our commercial team for the excellent work, they're doing which I think speaks to the unmet need here. There are 12 to 17000 patients that we've identified as addressable in the refractory population Roger mentioned a moment ago. We think there are two on diagnosed NTM patients for every one that is diagnosed.

William Lewis: So, just kudos to our commercial team for the excellent work they're doing, which I think speaks to the unmet need here. There are 12 to 17,000 patients that we've identified as addressable in the refractory population. Roger mentioned a moment ago that we think there are two undiagnosed NTM patients for every one that is diagnosed. So, that gives us a pretty healthy group of patients to try and go out and help. And, I don't know, Roger, do you have anything you want to add in terms of specifics about the patient starts? I know we don't usually...

So that gives us a pretty healthy group of patients to try and go out and help and I don't know Roger If you anything you want to add in terms of specifics about the patient starts I know we don't usually.

William Lewis: No, I think you characterized it well. I think we still see broad support and interest in ArraKase and prescribing for it. We have had over 1,600 unique prescribers since launch, and I haven't seen any discernible shift in trends or patients being prescribed here in the data. I think we remain encouraged and pleased with the reception that we're getting for ArraKase and the fact that doctors have a high intent to prescribe it for the appropriate patients. I would say that's across the board. We're very pleased with the progress of the launch.

No I think you characterize it well I think we still see a broad support.

And and interest in education prescribing for Okay. So we have over 1600 unique prescribers since launch I haven't seen any discernible shift in trends or patients being prescribed here that I that a in the data I think we remain encouraged and I'm pleased with the reception that we're getting for our case and the fact that doctors are.

Our have as I have a high intend to prescribe for.

For the appropriate patients and and that's what I would say that's across the board. So we're very pleased with it look with the launch progress and I'd say look the we've gone up we traveled this year. This path of understanding this market first drug ever approved to treat disease State you know here to four people hadn't really had this kind of.

Matthew Harrison: Yeah, and I'd say, look, you know, we've gone up, we traveled this year on this path of understanding this market, the first drug ever approved to treat a disease state that, you know, heretofore, people hadn't really had this kind of a tool in the toolbox to go after. And you know, it's remarkable to us; we were reflecting this morning that I think the average revenue estimate for 2019, at the time we started, was about $45 million, and we raised our guidance today to $133 to $138 million. So to say that this has gone well would be an understatement. I think people have asked, is it a bolus, is it going to roll over, all those sorts of questions, and the quarters continue to perform. And steady is the watchword. It is absolutely the descriptor for this launch. The team has done an extraordinary job, and I have every reason to believe that they're going to continue to do so.

A tool in the toolbox to go after.

And you know, it's it's remarkable the US we were reflecting this morning that I think the the average revenue estimate for 2019 at the time, we started was about $45 million and we raised our guidance today to 133 to 138 million. So to say that this has gone well I think would be an understatement I think.

People have asked is it a bolus is it going to roll over all those sorts of questions and the quarters continue to perform and steady as the watch word. It is absolutely. The descriptor for this launch the team has done an extraordinary job and I have ever reasonably that they're going to continue to do that.

Okay, great. Thanks, and then I guess.

Matthew Harrison: Okay, great. Thanks.

Matthew Harrison: And then I guess the second one is just, you know, you've talked a lot about parameters for non-CF wrong. You know, what you're looking for, maybe, and this might be premature, but I think you've talked about some parameters that are Top Line Parameters as well as, I think, factors that are more secondary endpoints in the data. So I guess what I was just going to ask you was how do you think we're going to have all of that information when you see the study, the initial results, or do you think we are going to have to wait for some secondary endpoints for you to be able to make your decision around how to proceed with this?

The second one is just you've talked a lot about parameters for non CF wrong.

What you're looking for.

Median and this might be premature, but I think you've talked about some parameters that are sort of topline parameters as well as you know I think factors that are there more secondary endpoints in the data. So I guess, what I was just going to ask about when you know how do you think you think we're going have all that information.

When you when you see this study you know initial results or do you think we are gonna have to wait for some secondary endpoints for you to be able to make your decision around.

How to progress this in my mind I really appreciate that question, let me be as clear as I can be I expect to see an impact on rate of pulmonary exacerbation. In this study within that overall dataset I expect to see our drug dropping the nsps in patients using the best available assay is we have.

William Lewis: In my mind, I really appreciate that question. Let me be as clear as I can be. I expect to see an impact on the rate of pulmonary exacerbations in this study. Within that overall data set, I expect to see our drug dropping the NSPs in patients using the best available assays we have, and those patients who have those NSP reductions should see a correlation between that and the reduction in pulmonary exacerbations. That links the primary endpoint of the phase three study, the rate of pulmonary exacerbations, that the FDA wants to see, and frankly, that treating physicians want to see, to the mechanism of action of the drug for patients that have the profile coming into this study, which is two or more exacerbations in the last year. That is a very attractive patient population.

And that those patients who have those NSP reductions should see a correlation between that and the reduction in pulmonary exacerbations that links the primary endpoint of the phase three study rate of pulmonary exacerbations at the FDA wants to see and frankly that treating physicians want to see to the mechanism.

Of action of the drug for patients that have the profile coming into this study, which are you know two or more exacerbations in the last year. That's that is a very attractive patient population.

William Lewis: This is not going to be one where there's going to be a lot of post-hoc analysis, so we will have this data at the time we release the results, and we will have a clear message about whether we think there is something there. And I want to be clear, that message may be that we don't see enough there to move forward. In order to bring this drug to approval, we will need to have two phase three studies in order to secure the necessary data for such a patient population of this size because it's non-orphan. Because of that requirement, the hurdle is higher. It's higher than it would normally be from my point of view.

This is not going to be one where theres going to be a lot of post post hoc analysis. So we will have this data at the time, we released the results and we will have a clear message about whether we think theres something there and I want to be clear that message may be that we don't see enough there to move forward in order to bring this.

Drug to approval, we will need to have two phase three studies in order to secure the necessary data for such a patient population of this size because it's not an orphan because of that requirement. The hurdle is up it's higher than it then it would normally be from my point of view, we're not going.

William Lewis: We're not going to spend that kind of capital on a drug to see if it can be improved in phase three. Phase two has to be demonstrative. It has to be easily understood how it's going to be replicated in phase three, and we have to be able to scale those studies to do this in a capital-efficient way.

To spend that kind of capital on a drug to see if it if it can be improved in phase three phase two has to be demonstrative it has to be easily.

Understood, how it's going to be replicated in phase three and we have to be able to scale. Those studies to do this in a capital efficient way.

Okay perfect. Thanks very much.

William Lewis: Okay, perfect. Thanks very much. And our next question today comes from Adam Morris at Stiefel. Please go ahead. Well, hi, good morning, everybody.

And our next question comes from Adam Walsh of Stifel. Please go ahead.

Hi, good morning, everybody. Thanks for taking my questions and congrats on the execution and progress here from me as well in terms of the Oh referenced bolus that you talked about well and the potential for drop offs. It's been a concern on the street I'm curious where.

Adam Morris: Thanks for taking my questions and congratulations on the execution and progress here from me as well. In terms of the referenced bolus that you talked about, Will, and the potential for drop-offs, it's been a concern on the street. I'm curious with respect to one of the components there, maybe reimbursement. And Roger, you talked about physician attestation being kind of the primary mechanism by which these patients get on the drug. Where are we in the reimbursement process? Would we expect the physician attestation to change over time as a mechanism for starting patients on the drug? My first question is, when would that happen? And how would you see that playing out? Thanks.

With respect to a one of the components there may be reimbursement and Roger you talked about physician attestation being kind of the primary mechanism by which these patients get on the drug where are we in the reimbursement process would we expect that position attestation to change overtime as a mechanism.

First starting patients on drug.

When would that happened and how would you see that playing out as my first question. Thanks.

Roger: Yeah, thanks, Adam. We think that that's going to continue. So even with, by the way, we're putting in, positioning ourselves for Medicare formularies for 2020. Obviously, those are ongoing. And we expect that even with the additions and the coverage ads, that plans are going to look primarily at the attestation that this is the appropriate patient getting this therapy. So according to the label, this is the refractory patient, and they're looking for physicians to attest to that. We expect that to continue, and we're in a very good position in order for that to occur. So one of the reasons why we wanted to put our pals out there was to make sure that physicians who are going to be going through this paperwork and the staff that they have to support it are educated on that process and are able to do that in the most expeditious manner.

Yeah. Thanks to them. So we can see it we think that that's going to continue so even with the <unk> by the way we were were putting in a positioning ourselves for Medicare formulary is for for 2020, obviously those are our ongoing.

And and we expect that even with the additions and then coverage ads that we'll see that the primarily plans you're going to look to the attestation that this is the appropriate patient is getting is getting this therapy. So you know according to label is the refractory patients and they're looking for physicians to attest to that we expect that to can that.

Continue and so and and we were in a very good position in order for that for that to occur. So one of the reasons why we wanted to put out pals out there was to make sure that pheno physicians, who are going to be going through this paperwork.

And the staff that they have to support that are educated on that process and are able to do that in the most expeditious manner.

Roger: That's helpful. And then in terms of duration of therapy, Roger, you had mentioned that 85% who initiated therapy during the, I think it was the fourth quarter of last year, and did not drop out in the first three months remain on the drug. I think you've been kind of following that metric, I believe, at some conferences, and I think it was 90. It's still a great retention rate. I'm just curious, of the patients that are dropping out over the longer term, over the course of the last three months, how many of those patients are still on the drug? Maybe, you know, nine to 12 months. Do you have a handle on why those patients are dropping off the drug deep into their treatment? And what are you doing? And what kind of things are you doing internally to try to, at that margin, maintain these drugs? I'm sorry, these patients on these drugs for longer periods of time? Thanks.

That's helpful. And then in terms of duration of therapy. Roger you had mentioned that 85% who initiated therapy. During the I think it was the fourth quarter of last year and did not drop out in the first three months remain on the drug I think you've been kind of following that metric I believe.

But at some conferences and I think it had been 90, it's still a great retention rate I'm just curious of the patients that are dropping out over the longer term over the course of maybe you know nine to 12 months do you have a handle on why those patients are dropping off the drug deep into their treatment and what are you doing.

And what kind of things are you doing internally to try to <unk>.

At that margin maintain these drugs, but I'm sorry, these patients on drug for longer periods of time. Thanks.

Roger: Yeah, sure. So, it's a great question. We have looked a little more deeply into that data, and there's no one driving reason for why these patients, you know, of the, you know, in the fourth quarter, I think it was 85%, why they would drop off. There are a variety of reasons. So, there are patients who want to take a break, right? So they want to take a break from therapy. There are physicians who have decided that they've completed therapy, and therefore, we'll monitor the patients going forward. Unfortunately, there's a significant mortality rate associated with the disease, so we have some patients who have died there. So, there are a variety of reasons, there is no one driving reason that I would talk to or that I could point to, but I would say that overall, we're very encouraged, and we see the trends between Q4 and Q1 as being very consistent for that patient group.

Yes sure. So so it's it's a it's a great question, we have looked a little more deeply into that data and ER and there's no. One driving reason for why these patients you know of the of the.

In the fourth quarter I think it was 85% why they would drop off there's there's a variety of reasons. So there's patients who want to take a break right. So I'm. So they want to take a break from therapy. This physicians, who have decided that they've completed therapy and a and therefore I will come we'll monitor the patients going forward. Unfortunately.

A significant mortality rates associated with the disease. So we have some patients who have died.

There. So it's a variety of reason no one driving reasons that I would talk to or I could point too, but I would say that overall that the persistence and their commitment to therapy. A once you make it passed those first three months, we're very encouraged and we see the trends between Q4 and Q1 is being very consistent for the for that patient group.

Adam Morris: Great, thanks so much. Our next question comes from Joseph Schwartz of SBP Lyrinc. Please go ahead. Hi, congrats on the strong performance and thanks for... All the helpful color.

Great. Thanks, so much.

Our next question comes from Joseph Schwartz of Leerink.

Learning. Please go ahead.

Hi, a congrats on the strong performance and thanks for.

Helpful color I.

I was just wondering with the upcoming Ats guideline update plus plus plus Crs et cetera, I was wondering.

Joseph Patrick Schwartz: Just wondering, with the upcoming ATS guideline update, plus, plus, plus, ERS, etc., if you see that there are different scenarios that could impact their case and maybe how your commercial efforts could dovetail or evolve accordingly.

If you see.

That there are different scenarios that could impact our case and maybe how your commercial efforts could dovetail or evolve accordingly.

William Lewis: Yeah, so I'll just make a quick comment about the guidelines. We've all obviously been anxious to see those come out, and it's a testament to how challenging it can be to get four different academic societies to agree on a single set of guidelines that it's taken this long. But it is quite significant in my mind that this is four different societies, right? The British Thoracic Society, the European Respiratory Society, the American Thoracic Society, and the Infectious Disease Society are all agreeing on these guidelines. And actually, it's also interesting to note that I think the Japanese Respiratory Society wanted to join in on this effort, but at the last minute, they said, you know, if they were to do that, it would add substantial additional time. So it's a statement about how unified the key opinion leader network is around NTM. It's really quite an extraordinary thing.

Yeah. So I'll just make a quick comment about the guidelines we have all obviously been anxious to see those come out and it's a testament to how challenging it can be to get four different academic societies to agree on a single set of guidelines.

That has taken this long, but it is quite significant in my mind that this is for different societies right. The British thoracic society of European Respiratory Society, The American thoracic Society, and the infectious disease Society.

All of our agreeing on these guidelines.

And it actually it's also interesting to note that I think the Japanese respiratory society wanted to to join in on this effort, but in the last minute. They said you know if they were to do that it would add substantial additional time. So there is it's a statement about how unified the key opinion leader network is around NTM, it's really quite an extraordinary.

Thing you can get all of these different groups together to have consensus on the importance of treating these patients in a certain way and for an extended period of time, you know just to dovetail to the last question that was asked you know these these 85% of patients who remain on therapy those that may be stepping away from the therapy in that.

Roger: You can get all of these different groups together to reach consensus on the importance of treating these patients in a certain way and for an extended period of time. You know, just to dovetail to the last question that was asked, you know, these 85 percent of patients who remain on therapy, those that may be stepping away from the therapy in that 15 percent, I would be very surprised if some of them were not judged to need therapy again and retreated. And that'll be something we're watching closely in the coming quarters. But overall, these guidelines are just going to confirm, we believe, what we've been seeing all along, which is the need to treat these patients. There's a very specific and agreed-upon standard of approach in terms of duration of therapy, and we're seeing that play out in our real-world experience. I don't know, Roger, if you want to add anything about...

15%.

I would be very surprised if some of them, we're not judge to need therapy, again, and get retreated and that'll be something we're watching closely in the coming quarters.

But overall these guidelines are just going to confirm we believe what we've been seeing all along which is the need to treat these patients theres a very specific and agreed upon standard of approach in terms of duration of therapy, and we're seeing that play out in our in our real world experience I don't know Roger if you want to anything about.

I think we're going to be where we've been anxiously awaiting the guidelines and expect to by the end of the year, we'll see those and you asked about the commercial efforts and what we're hoping it anticipating and I think that there was a good a good hinted ers as to.

Roger: I think we've been anxiously awaiting the guidelines and expect by the end of the year we'll see those and you asked about the commercial efforts and what we're hoping and anticipating and I think that there was a good hint at the ERS as to the data supporting ARRACASE has been reviewed in the context of the guidelines and so what we're hoping is that the guidelines reference the refractory, the use of ARRACASE in refractory patients and what that will enable us to do is utilize those guidelines with the physicians promotionally and obviously we'll have to go through and make sure we're doing that compliantly but I think that that's a great educational opportunity for our team, particularly with community physicians to really talk about the appropriate therapy and the fact that, you know, the academics and the folks who are really the experts here endorse the treatment regimen for NTM and endorse ARRACASE for the appropriate refractory patients so we think that's a very exciting opportunity for us and we're positioned to maximize that as soon as those are available.

The data supporting era case has been reviewed in the context of the guidelines and so what we're hoping is that the guidelines reference.

The refractory the use of allocation refractory patients and what that will enable us to do is utilize those guidelines.

The physicians Promotionally and obviously, we'll have to go through it make sure we're doing that compliantly, but I think that that's a great educational opportunity for our team.

Particularly weak community physicians to really talk about the appropriate therapy and the fact that.

Academics, and the folks who who are really the experts here.

Endorse endorse the treatment regimen for for NTM and endorsed our case for the appropriate refractory patients. So we think that's a very exciting opportunity for us and well positioned to a two to two too.

Joseph Patrick Schwartz: Great, thanks. That's very helpful. And then on Willow, given the mechanism of action that you're testing there, I was wondering... Do the patients that are enrolled in Willow have high, low, or a range of NSPs, and how is this biomarker related to the rate of exacerbations? Have you made any effort, or do you think there will be any opportunity to look and see in the data whether or not there's either the requirement or opportunity for patient enrichment to

Maximize that.

As soon as those are available.

Great. Thanks, that's helpful and then on Willow, a given the mechanism of action that you're testing there I was wondering.

It did the patients that are enrolled and willow have high low or a range of NSP season. How is this a biomarker related to the rate of exacerbations and.

Have you've made any effort or do you think there'll be any opportunity just to look and see in the data whether or not a there's either the requirement or opportunity for patient in Richmond to enhance response.

William Lewis: Yeah, no, I appreciate that question. So, you know, we are at the bleeding edge with the use of the assays to evaluate the three different neutrophils, serine, and proteases in both blood and sputum, and we'll be examining those and coming to some conclusions about what is the right way to quantify this, and I think we feel really good about our ability to do so. It is a relative marker, in my mind; that is to say, if it's elevated and then it is reduced, we know that that is a byproduct of the drug, and therefore correlations between that reduction and the ultimate rate of exacerbations are what we're looking for. Is there an opportunity? We don't know what those levels are now; it's a double-blind study, so we have no idea what's going on in the study right now, just to be clear.

Yeah No I appreciate that question. So you know we are at the bleeding edge with the use of the assays to evaluate the three different neutrophil serine proteases in both blood in sputum and will be examining those and and coming to some conclusions about what is the right way to quantify.

This and I think we feel really good about our ability to do so it is a relative marker in my mind that is to say if its elevated and then it is reduced we know that that is a byproduct of the drug and therefore correlations between that reduction and ultimate rate of exacerbations or what were looking for.

Is there opportunity we don't know what those levels are now has a double blind study. So we have no idea what's going on in the study right now is to be clear, but when we unblind. We will absolutely look at baseline levels of Nsps in the patient population, we segment for Macrolide use and we said or stratify, rather for Macrolide use and stratify.

William Lewis: But when we unblind, we will absolutely look at baseline levels of NSPs in the patient population. We segment for macrolide use or stratify, rather, for macrolide use and stratify also for the presence of pseudomonas. So we'll be looking at that as well. We'll be looking at NSPs, and there may indeed be a way to enrich if we see those correlations for patients in the phase three studies, either by stratification or by explicit entry criteria. So that's going to be something we're looking very closely at. Again, if we keep moving forward, we will see a sign that we've seen a strong signal here, and then all eyes will be on making those phase three studies as successful as possible.

So for the presence of Pseudomonas.

So we'll be looking at that as well will be I'm looking at NSP isn't there may indeed be away to enrich if we see those correlations for patients in the phase three studies, either by stratification or by explicit entry criteria. So that's gonna be something we're looking very closely at again, if we're moving forward.

We will see a so that means we've seen a strong signal here and then all eyes will be on making that those phase III studies as successful as possible.

Great. Thanks again.

William Lewis: Great, thanks again. And today's final question is a follow-up from Liisa Bayko at AMC Securities. Please go ahead. Hi. Just another quick question. I noticed that Nature had published an interesting article looking at the correlation between cardiovascular risk and NTM infection. And I was just wondering if that, I mean, that was news to me. Is that widely appreciated? kind of fact and Does that have any implications for your development and or marketing strategy? Thank you.

And so they just final question, there's a fall off from Liisa Bayko and AMC Securities. Please go ahead.

Hi.

Okay. Another quick question, then nature had published.

Interesting article looking at the correlation between.

Cardiovascular risk.

And Jim infection, and I was just wondering if that's I mean that was news to me is that a widely appreciated.

Kind of Fox and.

I didn't have any implications for your development and our marketing strategy. Thank you.

Liisa Ann Bayko: So that's a Nature, thanks for the question Liisa, that's a Nature article that was published I think... Yesterday, and it looked at the Korean National Health Care Database and showed a correlation between patients with NTM and higher rates of MI, myocardial infarction, and... Coronary Disease. I can't remember what the specifics were, but there were a number of different correlations between higher rates of mortality and patients who had NTM. And so that's quite an interesting study. It's hot off the press and certainly something we're going to be taking a closer look at. You know, one of the advantages of places like Korea, which are really thought leaders in research in NTM, is that they have that national database that they can look at and cross-examine. So this is news, and obviously, the fact that Nature published it tells me that it's got some real credibility. So another interesting correlate between the presence of NTM and negative sequelae relating to increased levels of mortality.

So that's the nature our thanks for the question Lisa that's the nature article It was published I think.

Yesterday.

And it it looked at the Korean National Health care database and showed a correlation between patients with NTM and a higher rates of EMI myocardial infarction and.

The.

Coronary disease.

I can't remember that the specifics, where but there were a number of different correlations between a higher rates of mortality and patients who had NTM and so that's quite an interesting study it it it's hot off the press and certainly something we're going to be taking a closer look at what advantages of places like Korea, which are really thought leaders in.

Research and NTM is that they have that national database that they can look at in cross examine a so this is a news and obviously the fact that nature published it tells me that it's got some real credibility. So another interesting correlate between the presence of NTM and negative sequential I relating to increased levels of mortality.

Operator: And ladies and gentlemen, this concludes the question and answer session. I'd like to turn the conference back over to Will Lewis for any closing remarks.

Thanks.

And ladies and gentlemen. This concludes the question answer session Zone. The conference back over what was for any closing remarks.

William Lewis: I want to thank everyone for dialing in today at the conclusion of another strong quarter for Insmed. We appreciate all the questions, and we look forward to seeing you at upcoming conferences in the coming months.

I want to thank everyone for dialing in today at the conclusion of another strong quarter for in summit. Appreciate all the questions and we look forward to seeing you at upcoming conferences in the coming months.

Operator: Thank you, sir. Today's conference has now concluded, and we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Thank you Sir todays conference I was not included only thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.