Q2 2021 Insmed Inc Earnings Call

Welcome to that and Smith second quarter 'twenty to 'twenty, 1 financial results Conference call. My name is Elliot and I will be coordinating and your call. Today. If you would like to ask a question. During the presentation. You may do so by pressing star followed by 1 on your telephone keypad will now.

Elliot: Welcome to the Insmed second quarter 2021 Financial Results Conference Call. My name is Elliot, and I will be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I'll now hand over to our host, Helena Barrissa, to begin. Eleanor, please go ahead when you're ready.

I'll hand over to will host the pulling up Irish that's big and Elena. Please go ahead when you're ready.

Thank you Elliot and good morning, and welcome to today's conference call to discuss our second quarter 2021 financial results and provide a business update.

Eleanor: Thank you, Elliot. Good morning and welcome to today's conference call second quarter 2021 financial results and provide a Before we start, let me remind you that today's call will include Overlooking, Sub-Septements represents our judgment and may involve risks and uncertainties that may cause actually differ materially from the results discussed in the forward to refer to our filing and exchange, are available, website at W, or from our website for information concerning The information on today's call is not intended for promotional purposes and not sufficient for prescribing, Joining me on today's call are members of the Inmit Executive including Will Lewis Chair.

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 materially from the results discussed in the forward looking statements.

Please refer to our filings with the Securities and Exchange Commission, which are available through the SEC website at Www Dot S. E T dot gov or from our website for information concerning risk factors that could affect the company.

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

Joining me on today's call are members of the Internet Executive management team, including will do it and chair and Chief Executive Officer, Dr. Martina Flammer, Chief Medical Officer, Roger as debt, Chief operating officer, and Sarah bonds, and Chief Financial Officer, let.

Eleanor: Dr. Martina Flummer, Chief Medical Officer, Roger Asset, who's running the call, and Sarah Bondstein. Let me now turn the call over to Will Lewis. Upon completion of those remarks, we will open the call. Thank you, Eleanor, and good morning, everyone. We are pleased to be sharing our second quarter results with you today. From Insmed's point of view, we have begun to see some signs of improvement in our commercial and clinical activities in the U.S., and we believe, given current information, that Europe and Japan are behind the U.S. in terms of recovery. While the full impact of the Delta variant remains unknown, we are closely monitoring the entire COVID-19 landscape and remain optimistic about Insmed's future.

Let me now turn the call over to will Lewis for prepared remarks.

Completion of those remarks, we will open the call up for your questions.

Thank you Ellen and good morning, everyone.

William Lewis: Let me frame out the insomid story in a way that captures the progress we have made in our plans for the future. InsMed is currently advancing programs aligned to four strategic pillars. These are Erikase, Rensocative, TPIP, and Translational Medicine. Within each pillar is the potential for significant expansion well beyond our initial near-term development plan. Let me briefly address each of these four pillars

William Lewis: Starting with Ericase, we are very excited to announce that the launch of Erick case in Japan kicked off just last month. We now have approval and launch of Error case for Refractory NTM in the U.S., Europe, and Japan. Notably, the list price in each of these territories is roughly equivalent.

William Lewis: In the U.S., while uncertainty lingers around the trajectory of the pandemic, we remain confident in growth in the second half of this year. You'll hear more about our commercial progress from Roger later on in the call. Our Erickase Frontline program also continues to advance, with the goal of establishing a new standard of care for frontline patients suffering from NTM lung disease. Now, let's turn to the second pillar, brensocatid, which we view as a launch pad for the treatment of neutrophil-mediated diseases.

Suffering from MTM lung disease.

Let's now turn to the second pillar Brynza catch it which we view as a launchpad for the treatment of neutrophil mediated diseases or.

Our phase III Aspen study is underway and if we see positive results from this study and receive regulatory approval, we see the opportunity for brands Khatib and bronchiectasis is very significant underscored by the potential applicable witty of the mechanism of action and a range of indications regulated by the DPP 1 pathway.

William Lewis: Our Phase 3 Aspen study is underway, and if we see positive results from this study and receive regulatory approval, we see the opportunity for Brenso-Katib in bronchitis as very significant, underscored by the potential applicability of the mechanism of action in a range of indications regulated by the DPP1 pathway. We believe our third pillar, coprosanol palmatil inhalation powder, or T-PIP, has the potential to be the cornerstone of therapy for the treatment of PAH and PHILD. By unlocking the full potential of proscenoid therapy, we believe TPP could provide a disease-modifying impact for patients in need.

We believe our third pillar Coprostanol palmar tilled installation powder or Tpa IP has the potential to be the cornerstone of therapy for the treatment of ph and ph ILD.

By unlocking the full potential approximately therapy, we believe TPI could provide a disease modifying impact for patients and knee.

Or for pillar translational medicine is built upon our core competency of treating serious and rare diseases and importantly is not limited to a particular technology or therapeutic area. Our approach will follow the same historic pattern, where we progressed through animal work followed by a public announcement of candidates ready to enter.

William Lewis: Our four-pillar, Translational Medicine, is built upon our core competency of treating serious and rare diseases and, importantly, is not limited to a particular technology or therapeutic area. Our approach will follow the same historic pattern where we progress through animal work, followed by a public announcement of candidates ready to enter phase one studies. We look forward to sharing developments from our translational medicine efforts in the next 12 months. We expect that these four pillars and the capital and talent behind them will enable us to achieve our vision of becoming a globally recognized leading biotechnology company.

For a phase 1 study we look forward to sharing developments from our translational medicine efforts and the next 12 months.

We expect that these for pillars, and the capital and talent behind them will enable us to achieve our vision of becoming a globally recognized leading biotechnology company I.

I believe that this framework were delivered for patients and therefore, our shareholders a very bright future for internet and with that I will turn the call over to Sarah to walk through our financial results.

William Lewis: I believe that this framework would deliver for patients and therefore our shareholders a very bright future for insomance. And with that, I'll turn the call over to Sarah to walk through our financial results. Thank you, Will, and good morning, everyone.

Thank you well and good morning, everyone.

Internet made several important and accomplishments across our business during the second quarter.

Sara M. Bonstein: Insmed made several important accomplishments across our business during the second quarter. Earlier today, we issued our detailed second quarter financial results in a press release. Let me highlight just a few of those results for you now. As reported this morning, including the proceeds from our recent financing, we ended the second quarter with $928 million in cash and cash equivalents.

Earlier today, and we issued our detailed second quarter financial results and a press release, let me highlight just a few of those results for you know.

As reported this morning, including the proceeds from a recent financing we ended the second quarter with $928 million in cash and cash equivalents.

We anticipate this cash position will support our operations for the next several year, including data Readouts from the ARIKAYCE Frontline program and Faith Street trial, and prints and Catholic and bronchiectasis as well as phase 2 results for teeth AIP.

Sara M. Bonstein: We anticipate this cash position will support our operations for the next several years, including data readouts from the Erichase Frontline Program, the Phase 3 trial in forensic captive and bronchiasis, as well as phase two results for TPIP. In line with our internal expectations, our second quarter cash burn level was lower compared to that of the first quarter, demonstrating our commitment to a prudent use of. For the second quarter, total net revenue for Our second quarter revenue reflects 13% growth compared to the first quarter of this year and 7% growth compared to the second quarter of 2020.

In line with our internal expectations are second quarter, Casper and level was lower compared to that of the first quarter, demonstrating our commitment to a prudent use of cash.

For the second quarter of 2021 total net revenue for Anarchy was $45.4 million, which marks our highest global net sales since the pandemic began.

Our second quarter revenue reflects 13 per cent growth compared to the first quarter of this year and 7 per cent growth compared to the second quarter of 2020 per.

Sara M. Bonstein: Please note, this does not include any revenue from Japan as we launched in July. Our growth to net for the second quarter was approximately 11%. As previously disclosed, we anticipate our growth to net to be in the mid-teens for the full year 2020. Cost of product revenues for the second quarter was $10.8 million, or 24% of revenue, which was in line with our cost of product revenues in the second quarter of 2020.

Please note. This does not include any revenue from Japan and to be launched in July.

Our growth to net for the second quarter of 2021 or approximately 11%.

As previously disclosed we anticipate our growth to net to be in the mid teens for the full year 2021.

Cost of product revenues for the second quarter with $10.8 million or 24 percentage of revenues, which was and lined with our cost of product revenue and the second quarter 2020.

Let's now turn to our GAAP operating expenses.

Sara M. Bonstein: Let's now turn to our Gap operating results. For the second quarter of 2021, research and development expenses were $64.7 million, and SGNA expenses were $57.2 million. These spend levels were aligned with our internal expectations as we support our growing development pipeline and invest in our research and development capabilities. With that, I'll turn the call over to Martina for an update on our pipeline. Thank you, Sarah, and good morning, everyone.

For the second quarter, 2021 research and development expenses or $64 and $7 million and SG&A fences for 50.729.

These and levels were and line that and our internal expectations as we support our growing development pipeline and and Beth and our research and development and capability.

With that I will turn the call over 2 Martina for an update on our pipeline are Tina. Thank.

Thank you Sarah and good morning, everyone.

Let me begin by addressing the ongoing efforts with and internet to generate and present data at medical Congresses around the globe.

Martina Flammer: Let me begin by addressing the ongoing efforts within the Internet to generate and present data at medical congresses around the globe. As you may recall, data from the Phase 2 Willow study of forensic cathets was included as one of the best oral presentations of 2021 at the second annual European NPM and Bronchi Exorcist Workshop, held in early July. The presentation described that the activity of neutrophocerine proteases, or NSP, was significantly reduced, both in blood and in sputum, for patients taking frontal cabinets during this trial. Furthermore, a larger reduction of NSPs was observed in sputum than in blood, which further supports the anti-inflammatory mechanism of action of Brentocats.

As you May recall data from the phase 2 will study of strength of Cat that was included as 1 of the best oral presentation of 2021 at the second annual European ATM and Bronchiectasis workshop held in early July the.

The presentation described that the activity of neutrophils area code 8 or NSP will significantly reduce.

And blood and and sputum for patient state and price of cabinet during this trial.

Further Elijah reduction of Nsc's was observed and sputum that and blood, which for to support the anti inflammatory mechanism of accent of friends for cabinet.

Tbey inhibition fiber and sarcastic during the maturation of neutrophils and the bone marrow impact inflammation Cascade. These.

Martina Flammer: DPP1 inhibition by baranthocath during the maturation of neutrophils in the bone marrow impacts the inflammation. These effects help explain the clinical efficacy of prental cathets in reducing its reservations, demonstrating a relevant role of neutrophil inflammation in the pathophysiology of these events.

These effects help explain the clinical efficacy of breath assets and reducing exacerbation.

The testing irrelevant growth of neutral inflammation in the pathophysiology of these a day.

We're also excited to report that the abstract for our TBE.

Martina Flammer: We're also excited to report that the abstract for our TPP-P-P-P-P-Face-1 study was recently accepted as a virtual oral presentation at the European Society of Cardiology Congress taking place later this month. Now, let's turn to our clinical development program. Our Phase 3 Aspen trial of forensic acid in patients with bronchi-execis and our Arise and OnCour studies for Eracase as a frontline treatment for patients with neck lung disease both remain on track, and enrollment is progressing in line with our expectations.

Phase 1 study was recently accepted as a virtual oral presentation at the European Society of Cardiology Congress, taking place later this month.

And let's now turn for a clinical development program I will phase III asked and trial of friends for packet and patients with bronchiectasis and arrived and all for steady for advocates as a frontline treatment for patients with net Glenda.

Both remain on track and and roll and progressing in line with our expectations.

In addition, and we're pleased to report that the CES therapeutic developed and the network has endorsed our standard protocol for credit for cabinet and cystic fibrosis.

Martina Flammer: In addition, we're pleased to report that the CS therapeutic development network has endorsed our study protocol for Brentocative in cystic fibrosis. The process for initiating study sites for phase two pharmacokinetic and pharmacodynamic, multiple dose studies is now underway. And we look forward to keeping you informed on our progress. Now, let's turn to TPI, a dry powder formulation of tetanil palmit. Our current plans to pursue DPI and PAH involve two phase two studies. The first study will measure the impact of TTIP on pulmonary vascular resistance, or PDR, over 24 hours. We anticipate sharing data from this study with a small number of patients.

The process for initiating set aside for the state to pharmacokinetics and pharmacodynamics multiple dose study is now underway and we look forward to keeping you informed on our progress.

Let's now turn to keep VIP, a dry powder formulation up to profit from El Palm until.

Our current plans to pursue Eas and both to phase 2 study.

The first study will measure the impact of PTSD and pulmonary vascular resistance or PDR over 24 hours.

We anticipate sharing data from this study and a small number of patients with ph in the second half of the year.

Martina Flammer: with PEH in the second half of the year. The second study will assess the impact of TTIP.

The second study will assess the impact of it.

Roger: impact of TPI on PBR and six-minute walk distance in patients with PEH over a 16-week period. We look forward to initiating the study in the fourth quarter of. We also remain on track to initiate early next year a phase two study of TPI in pulmonary hypertension associated with interstitial lungis, or pH IEL. As we'll mention, in addition to our clinical development program, our translational medicine capabilities are a key focus as we work to grow this platform, so we can continue to build our pipeline from within. Important to this work is the early identification and validation of preclinical targets based on the predictability of animal model work, which we hope will allow us to pursue potentially quicker development and regulatory pathways in a range of indications.

PDR and 6 minute walk distant and patients with P. H over a 16 week period.

We look forward to initiating this study and the fourth quarter of this year.

We also remain on track to initiate early next year, a phase 2 study of keep the IP and pulmonary hypertension associated with interstitial lung disease or.

For a P H D.

As will mentioned in addition to our clinical development program.

Translational medicine capabilities are key focus as we work to grow this platform. So we can continue to build our pipeline from weeping intimate.

Important for this work is the early identification and validation of preclinical target based on the purpose stability of animal model works, which we hope will allow us to pursue potentially quickly development and regulatory pathway and the range of indication.

We have continued to build this capability during my tenure as I'm, a strong believer and liberating the proven drop development and capabilities of Internet.

Roger: We have continued to build these capabilities during my tenure, as I'm a strong believer in leveraging the proven drug development capabilities of individuals. We will continue to support and develop novel and cutting-edge technology to address a broad range of rare diseases across the therapeutic area. We look forward to sharing updates from our translational medicine efforts in the form of expected phase one ready candidates within the next 12 months. With that, I will turn the call over to Roger to discuss some key operational updates. Thank you, Martina, and good morning, everyone.

We will continue to support and develop novel and cutting edge technology, Sydney addressed a broad range of red.

Across the therapeutic areas.

And we look forward to sharing updates from our translational medicine efforts in the form of expect that phase 1 red candidates within the next 12 months.

With that let me turn the call over to Roger to discuss some key operational update Roger.

Thank you Martinez and good morning, everyone.

From and operational perspective since May continue to make important advancements during the second quarter.

Roger: From an operational perspective, Intemek continued to make important advancements during the second quarter. Our global commercial footprint expanded during the quarter, and our case has now launched in the U.S., Europe, and Japan. While the impact of the Delta variant globally will vary, we are encouraged by the potential of Arachach in each of these markets. Our current Arachech sales reflect preliminary signs of positive growth in the U.S., as well as our early efforts in Europe. Starting with our US business, we were pleased with solid error case performance during the second quarter.

A global commercial for print expanded during the quarter and Ericaceous, Nell launched and the U S Europe and Japan.

While the impact of the Delta variant globally will vary we are encouraged by the potential of Eric H and each of these markets.

Current Eric cash sales reflect preliminary signs of positive growth and the U S as well as our early efforts and Europe.

Starting with R. U S business, we were pleased with solid ARIKAYCE performance during the second quarter.

And we continue to keep a close eye on the shifting COVID-19 landscape, where we see regional variability, particularly in the southern states for vaccination rates are generally lower than and the other regions.

Roger: We continue to keep a close eye on the shifting COVID-19 landscape, where we see regional variability, particularly in the southern states where vaccination rates are generally lower than in other regions. We anticipate U.S. Arircase growth will be accelerated by three main drivers, the return of our therapeutic specialists in person in the field, Physician office reopening, and patients returning to in-office visits. Our therapeutic specialists are largely back in the field and have achieved solid customer engagement. While regional variability persists across physician centers in the U.S., we are encouraged by the steady return to in-person interactions with a therapeutic specialist. Across the U.

We anticipate use ARIKAYCE growth will be accelerated by 3 main drivers the return of our therapeutic specialists and person in the field.

Physician offices reopening and patients returning to in office visits.

Our therapeutic specialist and largely back in the field and have achieved solid customer engagement.

While regional variability persists across physicians centers and the US we are encouraged by the steady return to in person interactions with our therapeutic specialists.

Across the U S. The majority of these interactions were in person as of the end of June.

Roger: The majority of these interactions were in person as of the end of June. We are also seeing a growing trend to what we think is a return to in-person peer-to-peer speaker programs, which we think is beneficial. We've seen similar trends with our Eric Care trainers program, with an increasing number of patients willing to be trained in their homes. We're equally encouraged by CDC data indicating that almost 80% of patients age 65 and older in the U.S. are fully vaccinated.

We're also seeing a growing trend toward a return to in person Peter Pier Speaker programs, which we think is beneficial.

We've seen similar trends with our Eric Here's trainers program with an increasing number of patients willing to be trained and their homes.

We are equally encouraged by CDC data, indicating that almost 80% of patients age 65 and older and the us are fully vaccinated. This.

This represents a large proportion of the aerospace patient population and we hope that increased vaccinations will lead to a greater number of patients returning to in person visits with their physicians.

Roger: This represents a large proportion of the Arra case patient population, and we hope that increased vaccinations will lead to a greater number of patients returning to in-person visits with their physicians. Our commercial efforts in Japan are now underway. Last month, our first product was shipped to patients. We are very excited about this milestone and equally optimistic about the opportunity in Japan, which of the territories we are currently pursuing, is estimated to be the largest global market for the refractory MAG patient population, with the U.S. as a close second. We have seen several positive signs from physicians in Japan who are actively working to manage patients in this challenging environment.

A commercial efforts and Japan are now underway.

Last month, our first product was shipped to patients and we're very excited about this milestone and equally optimistic about the opportunity and Japan, which of the territory's. We're currently pursuing is estimated to be the largest global market for the refractory and magic patient population with the U S is a close second.

We have seen several positive signs for physicians and Japan were actively working to manage patients and this challenging environment.

I'm very excited to see our team managed to these challenges and look forward to provide you updates on the Japan launched and future quarters.

Roger: I'm very excited to see our team manage through these challenges and look forward to providing you updates on that Japan launch in future quarters. Launching Europe is also underway, and we continue to make progress as we go country by country to secure reimbursement. To date, we have successfully secured reimbursement and launched our case in Germany and the Netherlands. The French government has also agreed to extend the ATU program.

And launch and Europe is also underway and we continue to make progress as we go country by country to secure reimbursement to.

To date, we have successfully secured reimbursement and launch verification, Germany, and the Netherlands. The French government also agreed to extend the HEU program.

Our efforts now turn to securing reimbursement and Ireland, the UK, Italy and France.

Roger: Our efforts now turn to securing reimbursement in Ireland, the UK, Italy, and France. Let me take a moment to address our technical operations. We are producing drug product to support demand in all three territories where Erickase is commercially available, and we continue to benefit from a strong Errikase inventory position. As we support our ongoing trials for Arracase, Renzo-Katib, and T-PIP, we continue to operate on solid footing with respect to manufacturing of clinical supply products.

Let me take a moment to address our technical operations we.

We are producing drug product to support demand and all 3 territories, where Eric cases commercially available and we continue to benefit from a strong ARIKAYCE inventory position.

As we support our ongoing trials for ARIKAYCE Renzo Khatib and cheap if we continue to operate on solid footing with respect to manufacturing of clinical surprise product.

And closing his man has made tremendous progress during the second quarter with.

Roger: In closing, Inman has made tremendous progress during the second quarter. With our lead marketed product now approved and available in three major territories around the globe, we have seen incredible growth throughout our organization, marked by expansion across our employee base, clinical programs, product revenue, and global footprint. I'll turn the call back to Will.

With a lead marketed product now approved and available and and 3 major territories around the globe. We have seen incredible growth throughout our organization marked by expansion across our employee base clinical programs product revenue and global footprint.

I will now turn the call back to will.

Thank you Roger I would like to close out our prepared remarks by thanking the entire and smoothed team who have worked tirelessly toward our goal of altering the course of disease for patients. The diligence of our employees was unwavering at a time of unprecedented uncertainty during this global pandemic.

William Lewis: Thank you, Roger. I'd like to close out our prepared remarks by thanking the entire Insomid team who have worked tirelessly toward our goal of altering the course of disease for patients. The diligence of our employees was unwavering at a time of unprecedented uncertainty during this global pandemic. I would also like to acknowledge the patients and caregivers who participate in our studies. At Insmed, patients remain at the center of everything we do, and we thank you for trusting us to advance medicines for your benefit. With that, I'd like to open the call to questions. Operator, can we take the first question, please?

I would also like to acknowledge the patients and caregivers, who participate and our studies that intimate patients remain at the centre of everything we do and we thank you for trusting us to advanced medicines for your benefit.

With that I would like to open the call to questions. Operator can we take the first question. Please.

For <unk> and I and if you would like to ask a question. Please press star followed by 1 on your telephone keypad now if you change your mind. Please crushed off followed by 2 and 1 for Brian to ask you. A question. Please ensure you will fund is on muted locally.

Operator: For our Q&A, if you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. And when preparing to ask your question, please ensure your phone is unmuted locally. Thank you for your patience as we register your questions. Our first question comes from Joseph Schatz from SVB Lirink. Joseph, your line is now open.

Thank you for your patience and should we register your questions.

Our first question comes from Joseph shops from as Phoebe Leerink, Joseph New line is and all of them.

Thanks, very much congrats on all the progress.

Joseph Patrick Schwartz: Thanks very much. Congratulations on all the progress. I was wondering first if you could talk about how patient adoption patterns in Japan have compared to what we saw play out in the U.S. early on. Can you quantify in any way for us how we should expect the launch trajectory there to compare to what we saw here in the U.S. after accounting for obvious things like the difference in prescription duration or anything else that's significantly different?

I was wondering first if you could talk about how and patient adoption patterns and Japan have compared to what we saw a play out and the U S. Early on can you quantify and any way for us how we should expect the launch trajectory there to compare to what we saw here and the U S. After accounting for obvious thing.

Things like the difference and prescription duration or anything else that's significantly different.

Roger: Sure, Roger, you want to take that? Yeah, sure, thanks, Joe. So I think it's still very early days in Japan.

Sure Roger and once again, yeah sure. Thanks, Joe So I think it's still very early days and Japan we've.

Roger: Yeah, sure, thanks, Joe. So I think it's still very early days in Japan. We have had success; the team has had quite a lot of success in engaging with the target accounts and accessing them despite the COVID situation there. And so while I think it's probably optimistic to expect that we're going to see the same kind of ramp-up in Japan that we saw in the U.S., we're really encouraged by the early signs and early indications that we're getting back from our team, the KOL engagement, and the interest from physicians to pursue this.

We have had success the team has had quite a lot of success and engaging with the targeted accounts.

And and access and them despite the COVID-19 situation there.

And so while I think it's probably optimistic to expect that we're going to see the same kind of ramp and Japan that we saw and the US we really encouraged by the early signs and early indications that we're getting back from our team. The kom engagement the interest for physicians to prescribe ARIKAYCE for their patient. So all the size, we're seeing are very and.

Roger: describe our case for their patients. So all the signs we're seeing are very encouraging for us, and we look forward to updating you further as we get more in-depth into the Japanese loan. Okay, thanks, Roger.

Urging for us and we look forward to updating you further as we get more more more in depth into the into the gyp Japanese launch.

Okay. Thanks, Roger and then a question on the pipeline can you walk us through the range of outcomes from arise and that you foresee when considering whether you will need to make any changes to encore study design and how far away from that point are we currently.

William Lewis: And then a question on the pipeline. Can you walk us through the range of outcomes from a rise that you foresee when considering whether you will need to make any changes to the encore study design, and how far away from that point are we currently? Yeah, so I appreciate the question.

Yeah. So I appreciate the question this is for the frontline.

William Lewis: This is for the potential use of error case in the treatment of frontline MAC patients, and ARISE is designed as a kind of sentinel study to test all of the assumptions that we have for our Encore study. The OnCore study will be looking at, is the full approval study for error cases for frontline patients, and Arise is sort of a small version of that to make sure that the primary endpoint that's used in the U.S., which is a PRO or patient reported outcome measure, works as intended.

Potentially use of <unk> and the treatment for frontline Mac patients and arises designed as a kind of Sentinel study to test all of your assumptions that we have for our encore study the encore study will.

And we will be looking at is the full approval study for ARIKAYCE for frontline patients and <unk> is sort of a small version of that to make sure that the primary endpoint. That's used in the U S, which is a PR row or patient reported outcome measure works as intended put this into context for everybody.

William Lewis: Put this into context for everybody, the PRO that was developed here, we have some experience, quite a bit of experience with, and we tested it through a number of different mechanisms and got alignment with FDA on this PRO. FDA has been very supportive of our efforts to bring this drug to frontline patients. They have encouraged us to do so. So this PRO effort that we're making is really intended to address their need to see what they require for full approval, which is that it helps a patient feel, function, or survive better.

The Bureau that was developed here, we have some experienced quite a bit of experience with and we've tested it through a number of different mechanisms and got alignment with FDA on this picaro FDA has been very supportive of our efforts to bring this drug for frontline patients. They are encouraged us to do so so this bureau.

Effort that we're making is really.

Intended to address their needs to see.

What they require for full approval, which is that it helps a patient feel function or survive better.

William Lewis: So ARISE, we'll look at that in 100 patients, and that trial is enrolling now. If we find that the PRO does exactly what we expect, then no change will need to be made. If we learn that some portion of the ARISE questionnaire seems to respond better in the practical setting of a clinical trial, then we have the opportunity, but not the obligation, to make modifications to the PRO itself or to the statistical analysis plan for the encore study, which will still be blinded. And this is something we've talked extensively about with the regulatory authorities. So I feel very good about the design here.

So a rise will look at that and 100 patients and that trial was enrolling if we find that the bureau does exactly what we expect and no change will be need to be made if we learn that some portion of the arise questionnaire seems to respond better and a practical setting of a clinical trial then we have the opportunity.

City, but not the obligation to make modifications to the picaro itself or to the statistical analysis plan for.

And for the Encore study, which will still be blinded and this is something we've talked extensively about with.

The regulatory authorities, so I feel very good about the design here I think it's a belt and suspenders approach to give us the best possible chance of winning we feel highly confident that we will but we will have to see how this plays out and arise gives us an early look as far as timing, we've been hesitant to give any specific.

William Lewis: I think it's a belt and suspenders approach to give us the best possible chance of winning. We feel highly confident that we will. But we'll have to see how this plays out, and a rise gives us an early look. As far as timing goes, we've been hesitant to give any specific guidance around any of our clinical trials just because of the presence of COVID and the potential influence that could have on timelines.

Guidance around any of our clinical trials, just because of the presence of COVID-19 and the potential influence that could have on timelines. We do have internal timelines, we're hitting all of those and that's very encouraging but I think the arrival of the Delta variant and the uncertainty is introduced certainly grounds the logic of our caution about providing any further.

William Lewis: We do have internal timelines. We're hitting all of those targets, and that's very encouraging. But I think the arrival of the Delta variant and the uncertainty it has introduced certainly grounds the logic of our caution about providing any further guidance. And I know it's frustrating, but we're not giving any more specifics at this time. Once we get a little further down the road, I'm sure we'll be able to give you a bookend time. We just want to make sure we're going to

<unk> and I know, it's frustrating, but but we're not giving any more specifics at this time once we get a little further down the road I am sure will be able to give you a book and time, we just want to make sure we're going to hit it.

Great. Thanks for the color.

Our next question comes from Reto borrow from Cohen <unk>. Your line is not working.

Operator: Our next question comes from Reto Barrel of Cohen. Ritu, your line is now open.

Hi, Thanks for taking my question and what's on file and the Ontario.

Ritu Subhalaksmi Baral: Hi, thanks for taking the question. This is Lila Antirutu, and congratulations on the quarter.

Quite an.

And maybe it's really quickly and teeth and.

William Lewis: Maybe just really quickly on T5 and PAHH, can you talk a little bit about how to frame expectations for that early data in terms of the 24-hour PBR? You know, based on feedback from KOLs, what improvement in 24-hour PBR would they find clinically meaningful, and what other aspects of the profile are they going to be looking for? Thank you.

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And feedback and came out 1 and 2025, PDR with a fine and meaningful and 1 of them.

Alright.

Thank you.

Sure I appreciate the question and I think.

William Lewis: Sure, I appreciate the question, and I think, you know, this is an interesting study. The first thing I want to make clear is that this Phase 2A study in no way has any impact on the other Phase 2B study work, which is running independent of that. So the PAH program that's Phase 2B that will kick off at the end of this year is not rate limited or influenced by any of the outcome of this Phase 2A study, nor is the PHAILD program we're going to be getting at the beginning of next year impacted by it. However, we think the data will be quite interesting.

This is an interesting study the first thing I want to make clear. This phase 2 a study and no way has any impact on the other phase II <unk> study work, which is running independent of that so the ph program that stays to be that will kick off at the end of this year is not right limited or influenced by any of the outcome of this phase 2 a study nor is the P. H I L D.

Program will going to beginning at the beginning of next year impacted by it.

However, we think the data will be quite interesting and this to a data is going to take ph patients and and ICU bed and monitor them through a right heart catheterization directly measuring their pulmonary vascular resistance. Following the administration of 1 dose of our T. Pip.

William Lewis: And this 2A data is going to take PAH patients in an ICU bed and monitor them through a right heart catheterization, directly measuring their pulmonary vascular resistance following the administration of one dose of our TIP compound. The interesting thing about this is, as we've seen in animal data work and certainly in phase one work, we know we can go through titration actually quite high when dosing these patients. But starting out, and because it will be only one dose, we're going to be obviously cautious and start low, and then, perhaps, depending on what happens in this two-way study, we may go up to a higher dose in subsequent patients. I mentioned that because it's not really quantitative. Of the PVR reduction we're looking for, it's the duration. And I think this is really the key to unlocking the entire logic of the program and the compound.

Compound.

The interesting thing about this is as we've seen and animal data work and certainly in phase..1 work. We know we can go through titration actually quite high and dosing these patients, but starting out and because it will be only 1 dose we're going to be obviously cautious and starting low and and.

And then perhaps depending on what happens and this to a study we may go up to a higher dose and subsequent patients I mentioned that because it's not really the quantity of PBR reduction we're looking for its the duration and I think this is really the key to unlocking the entire logic of the program and the and the compound if we were able to see a riddle.

William Lewis: If we are able to see a reduction in pulmonary vascular resistance that extends temporarily for a long period of time, in animals, we saw it out to 24 hours, just put that into context. With Tyveso, you get about an hour and a half of PVR reduction. This would be a major advance for patients because what it does is it lowers that vascular resistance, which should alleviate the downstream burden on things like the heart and its performance, and in animal models, we saw, in fact, disease modification.

Action and pulmonary vascular resistance that extends temporarily for a long period of time and animals, we start out to 24 hours.

Put that into context high VISO, you get about an hour and a half.

PBR reduction would be a major advance for patients because what it does is it lowers debt vascular resistance, which should alleviate the downstream burden on things like the heart and its performance and and animal models. We saw in fact disease modification. So I think.

William Lewis: So I think what we're looking for is an extended time of PBR reduction. We will be able to directly monitor that through the right-heart calf. And as soon as we have a handful of patients' data, we look forward to bringing that out and sharing that with you, which we expect by the end of the second, uh, by the end of this. Thank you for the helpful caller.

What we're looking for is extended time of PBR reduction and we will be able to directly monitor that through through the right heart Cath and as soon as we have a handful of patients of data and we look forward to bringing that out and sharing that with you, which we expect by the end of the second by the end of this year.

Thank you for pop for calling.

Our next question comes from <unk> from Bahrenburg, Anita and the line is now open.

Operator: Our next question comes from Anita Dushayev from Berrenberg. Anita, your line is now open.

Anita Dushayev: Hi, good morning. Just one from me here. I was kind of curious to know about whether you will still be considering investigating Brento in other conditions of neutroful LST activity now that, you know, it kind of showed some effect in COVID-19 patients.

Hi, declining just 1 for me Yeah Uhm.

And can I get to know about.

Whether you will be for considering and <unk> and not the combo from.

And.

And I'll take pity now that you know.

And it showed.

For me.

COVID-19 patients.

So I appreciate that question, we absolutely are.

William Lewis: So I appreciate that question. We absolutely are going to be bringing it forward in other indications that the work for that is well underway. As we've mentioned previously, one of the really exciting things about Brentso-Katib is that not only did it show such clearly definitive positive results in bronchiectasis, but in many of the preclinical animal models we've been looking at in other disease states, we've seen very encouraging data. Functionally, what we're doing here by inhibiting the DPP1 pathway is impacting the inflammatory cascade, and that's relevant in a whole range of neutrophil-mediated diseases.

Going to be bringing it forward and other indications that the work for that as well underway. As we've mentioned previously 1 of the really exciting things about <unk> is that not only did it show such clearly definitive positive results and bronchiectasis, but and many of the preclinical animal models, we've been looking at and other disease States.

We've seen very encouraging data for.

Functionally what we're doing here by inhibiting the DPP 1 pathway is impacting the inflammatory cascade and that's relevant and a whole range of neutrophil mediated diseases. The obvious first follow on candidate with cystic fibrosis and as you heard today that program is advancing and we're looking at several others and I would say that.

William Lewis: The obvious first follow-on candidate for cystic fibrosis, and as you heard today, that program is advancing. We are looking at several others, and I would say the preclinical work to inform the selection of those is largely completed, and so we will be able to direct you to what those programs might be and when those trials might kick off. But we're super excited about this compound, and I think, you know, if ever there was the potential for a pipeline in a product, it's BrentoCat.

Preclinical work to inform the selection of those.

Is largely completed and so we will be able to direct you to.

What those programs might be and when those trials might kick off but we're super excited about this compound and I think if ever there was the potential for a pipeline and a product it's brentsville counted.

Thank you just to clarify.

William Lewis: Thank you. Just to clarify, so it's more of a 2022 story that, you know, we might see other studies being initiated. Yeah, I think for study initiation, that's probably fair.

<unk>.

More of a.

2022 story that in and we might see at a steady Athenian channel.

Yeah, I think for study initiation, that's probably fair, but the identification is I would say well underway.

William Lewis: Yeah, I think for study initiation, that's probably fair, but the identification is, I would say, well underway.

Thank you.

As a reminder to ask any further questions. Please press star followed by 1 on your telephone keypad.

Operator: As a reminder, to ask any further questions, please press star, followed by one on your telephone key. Our next question comes from Stephen Wiley from Stiffel. Stephen, please go ahead.

Our next question comes from Stephen mining from Stifel, Steven and please go ahead.

Yes, good morning, and thanks for taking the questions.

Stephen Douglas Willey: Yeah, good morning. Thanks for taking the questions. Can you maybe just talk a little bit about the pace of site activation that's happening in the

And you may be just talk a little bit about the pace of of site activation that's happening in the registration will studies right now book for Prince Cabinet and for ARIKAYCE and.

William Lewis: Studies right now, both for Prince and Kat; I've been for Eric. Maybe just kind of frame that with respect to where internal expectations are. I guess I'm just trying to think about this from a COVID-related perspective. Yeah. If getting these sites open is kind of the rate limiting step, or do you think recruitment into the sites once open? Well, it's a great question, Steve.

Maybe just kind of frame them that with respect to wear internal expectations are and.

I guess I'm just trying to think about this from a COVID-19 related perspective.

Yeah, it's getting these sites open and.

Is it is kind of the rate limiting step or do you think that recruitment into the sides and once open will be the railing and and stuff.

So it is a great question, Steve. Thank you for it goes to the heart of strategy for clinical trial operation and drug development and so the path. We followed here for our clinical trials is to identify some fast enrolling sites like when you look at the spectrum of clinical site for good open and any clinical trial, there's some of.

William Lewis: Thank you for it. It goes to the heart of strategy for clinical trial operation and drug development. And so the path we've followed here for our clinical trials is to identify some fast enrolling sites. Like when you look at the spectrum of clinical sites that get opened in any clinical trial, there are some universal truths, and that is that if you, for example, were to open 100 sites, fully 25% of them or more will never recruit. A single patient.

These universal truths and that is that if you for example were to open 100 sites fully 25% of them are more will never recruited single patient and there will also be a selection of sites that do a.

William Lewis: And there will also be a selection of sites that do a significant number of patient recruitment efforts. Because we have experience in both of these areas, we know the sites that are high recruiters, and we targeted them first. So the priority was to get these sites open early, and we managed to do that. We have since expanded the broad range and reach of the list of sites that we were going after. We've really seen no impediment in our ability to get those sites open.

A significant number of patient recruitment efforts, because we have experienced and both of these areas. We know the sites that are high recruiters and we targeted them first so the priority was to get these sites open early and we managed to do that we have since expanded to the broad range and reach of the.

The list of site that we're going after we've really see no impediment and our ability to get those sites open and that's why I think we are able to say with some conviction that our internal timelines have been met and we continue to be excited about the progress, we're making and all are clinical trials.

William Lewis: And that's why I think we're able to say with some conviction that our internal timelines have been met, and we continue to be excited about the progress we're making on all our clinical trials. That's very helpful. And then, maybe, just a quick question for Sarah.

And that's.

That's very helpful. And then maybe just a quick question for Sarah I know you gave us a growth to net for this quarter amongst necessarily share..1 was provided for the first quarter, but just wondering if I think the implied guidance would suggest that we should see this maybe pick up by.

Sara M. Bonstein: I know you gave a gross to net for this quarter, but I'm not necessarily sure one was provided for the first quarter, wondering if I think the implied guidance would suggest that we should see this maybe pick up by, I don't know, two, 300 basis points, in the second half. Sure, Steve, happy to answer.

I don't know 2.300 basis points at some point through the through the second half of the year.

Sure Steve Happy to answer so and Q1 Arborists net was around 17% net quarter, we've around 11% of full year guidance as mid teens typical.

Sara M. Bonstein: So in Q1, our gross net was around 17%. This quarter, we were around 11%. So full year guidance is mid-teens, typical for any product like ourselves, highest growth to net in Q1 tends to drop in Q2, 23, and maybe ticks up a little in Q4. So full-year guidance is mid-teens, and then you have some of the history of Q1 and. Understood. Thank you for the call.

Any product like ourselves highest growth net and Q1.10 and drop TTC, 3 and maybe picks up a little and queue for so full year guidance mid teens and then we have some of the history of Q1 and can carry on there.

Understood. Thank you for the color.

Operator: Okay. Thank you for the caller. Our next question comes from Greg Sonanev from Goldman Sachs. Greg, please go ahead.

Our next question comes from Greg So not so non I've <unk> Goldman Sachs, Greg and please go ahead.

Greg Sonanev: Thank you very much, and thank you for taking the questions. One has to do with Japan, and I'm wondering, I realize Roger mentioned this in his very early days. Some of us may be watching the Olympics, and so I'm just trying to figure out if COVID, if you can kind of characterize what the COVID dynamic is in Japan right now and how you expect that to play out and how that might impact how we should be thinking about the launch in Japan.

Thank you very much.

And thank you for taking my questions.

1.

Has to do with Japan and.

And I'm wondering I realized Roger mentioned, it's very early days.

Of us may be watching the Olympics, and so I'm just trying to figure out if COVID-19. If if you can kind of characterize what the COVID-19 dynamic is and Japan right now and how you expect that to play out and how that might impact how we should be thinking about the launch and Japan for for my first question.

Greg Sonanev: So that's my first question. And then my second question has to do with error case quarterly sales, and Sarah, I think you mentioned that quarter over quarter growth was 13%. And I'm wondering, as we think about the second half and given the uncertainty with the Delta variant in the U.S. and the regional variability that Roger mentioned, is 13% perhaps a good or not good assumption for the kind of growth throughout the balance of the year.

And then my second question.

Has to do with ARIKAYCE quarterly sales and Sir I think you mentioned that quarter over quarter growth for 13% and I'm wondering as we think about and the second half and given the uncertainty with.

Delta variance and the U S and the regional variability and that Roger mentioned is 13%.

Perhaps.

Good.

Or not.

Roger: So I'll ask Roger to take the question. Roger, you can take the question on Japan, and Sarah, you can take the, Yeah, perfect. Thank you. So you're right.

Assumption for kind of growth throughout the balance of the year.

So I was on a Roger that's a good question.

Roger you could take a question on Japan, and so are you going to do quarterly losses.

Perfect. Thank you so you're right, so COVID-19 and Japan I think as.

Roger: So COVID in Japan, I think as we look at this, they're probably about, you know, significantly behind the U.S., and we look forward to them rolling out the vaccine and catching up as quickly as possible. I will say that, talking to the Japanese team, we have been able to access the accounts, and patients are accessing physicians and are getting treatment. We shipped our first shipment of our case to patients last month, so we are able to get those patients access to physicians. They are able to access patients, but I think it's reasonable to say that, you know, access is somewhat limited.

As we look at this they are probably about.

Significantly behind the U S.

And we look forward to them rolling out the vaccine and catching up and as quickly as possible I will say that talking to the Japanese team.

We have been able to access the accounts and patients are accessing physicians and are getting treatment.

We've shipped the first.

First shipment of ARIKAYCE to patients last month. So we are able to get those access to the physicians. They are able to access patients I think it's reasonable to say that the.

Access is somewhat limited and I think it's we don't have any basis to say that will in Japan.

Sara M. Bonstein: And I think we don't have any basis to say that in Japan, it's going to be any different than we see in the U.S. As we see higher vaccination rates, as we see more in-person visits, I think we're going to see increased traction for ARRICs. But certainly as we think about this as a, as a potentially the largest market for refractory MAC patients, we're really encouraged by the interactions, and we think that this has really very strong, long-term potential based not just on the literature and the epidemiology but also on the reaction and the engagement we're seeing from the physicians.

It's going to be any different than we see and the U S. As we see for vaccination rates as we see more in person visits.

I think we're going to see.

Increased traction for ARIKAYCE, but.

Certainly as we think about this is day potentially the largest market for refractory Mac patients were really encouraged by the interactions and and we think that this has gotten really very strong long term potential.

Based on just the literature and the epidemiology, but also the reaction and.

And the engagement, we're seeing for the physicians.

And grabbed thanks for the class and nice to hear from you. So we were obviously encouraged by TT sales highest and hence the pain.

Sara M. Bonstein: And Greg, thanks for the question. It's nice to hear from you. So we were obviously encouraged by Q2 sales, the highest in the sense of the pandemic on a global basis, actually the highest since we launched. We obviously have the Delta variant, which is, you know, adding an additional variable in the equation. We're cautiously optimistic. We now see regional variability depending on, you know, as Roger mentioned, some of maybe potentially the southern states in the U.S. that aren't, don't have the same vaccination rates as other areas.

And I make on a global basis actually highest and some blondes.

We haven't they have delta variant, which is adding an additional variable in the equation cautiously optimistic and.

Now see each of those and variability depending on.

Mentioned some of will be potentially the southern states and the U S and R.

Don't have the same activities.

Other areas, we do have that Japan lawns and now here in July. So we are not providing guidance. So I can't provide specific color certain percentage growth quarter over quarter, and hopefully that gives you a little color to it.

Sara M. Bonstein: We do have the Japan launch now here in July. So we are not providing guidance, so I can't provide, you know, specific color on a certain percentage growth quarter over quarter, but hopefully, that gives you a little color as to what we're doing.

And that day.

Thanks, and if I can follow up on Roger's comments.

Roger: Thanks, if I can follow up just on Rogers' comments. Given that you're launching in Japan, and that I assume vaccination rates are higher relative to the U.S. as the product is rolling out, but given that maybe culturally there are some differences with the elderly wanting to go to their doctors, is there a way to think about the different pushes and polls and how we should think about that Japanese launch? Should we maybe just more conservatively think of that as just a gradual, slower launch?

Kevin of that you're launching and Japan.

And that I assume faction for vaccination rates are higher relative to.

The U S. As the product is rolling out with given that maybe culturally and there are some differences with the elderly wanting to.

Go to their doctors is there a way to think about the different pushes and pulls and how we should think about and that Japan launched should we maybe just more conservatively conservatively think of that as a just a a gradual slower launch or any other color you can provide there.

Roger: any other color you can provide there.

Roger: Yeah, sure. But the information that I have from the Japanese team is that vaccination rates still lag behind the U.S. Although I think that once it's more widely available, I expect or hope that there will be more of an acceptance of the vaccine, and we'll see more people thinking that. As you think about the ramp, and I think the question embedded in your question is probably, you know, how do we think about that versus the U.S. ramp?

Yeah sure. So so the information that I have from the Japanese team is the vaccinations rates still lag behind the us although I think that once it's more widely available I expect or hope that there will be more of an acceptance of the vaccine and we will see more people.

For me as you think about the ramp and I think embedded and your question is probably you will how do we think about that versus the U S. Graham.

Roger: I think it's probably prudent to say we're probably not going to see a steeper ramp-up in Japan as we do in the U.S. A number of factors for that, as you mentioned, there's the push and pull of COVID and potentially, dampening. On the other hand, I do think that there is significant willingness to prescribe excitement about the product for these patients who have been waiting for our case to be approved and launched in Japan.

I think it's I think it's probably prudent to say will probably not going to see a steeper ramp and Japan is reduced and the U S. Number of factors for those you just mentioned is the push and pull of Covid and.

And.

And and potentially being dampening on the other hand, I do think that there is significant willingness to prescribe and excitement about the product for these patients been waiting for Eric has to be approved and launch.

And Japan is a couple of other drags I would say, there's the 2 week limitation prescriptions for.

Roger: There are a couple of other drags, I would say. For example, in Japan, there is a two-week limitation on prescriptions for the first year of any product that's approved, so that requires the patient to go back to the physician and the pharmacy to get refills. But, you know, as we think longer term, and get on the other side of this, I think there's tremendous potential there.

For the first the first year of any product is approved and Japan. So that requires for that patient to go back to the physician and the pharmacy to get refills.

As we think longer term and get on the other side of this.

I think it's there's tremendous potential there.

Okay. Thank you very much.

Roger: Okay, thank you very much.

We currently have normal questions I will not hand back to will for any further comments.

Thank you very much for joining our call today have a great day.

Operator: We currently have no more questions. I want to hand it back to Will for any further comments.

This concludes today's cool. Thank you for joining you may now disconnect your lines.

William Lewis: Thank you very much for joining our call today. Have a great day. This concludes today's call. Thank you for joining us. You may now disconnect your lines.

[music].

Operator: The