Q2 2022 Insmed Inc Earnings Call
Type retention.
Our phase III trial in ph, ILD and phase II <unk> trial, and PIH are currently underway and sites are continuing to open in line with expectations.
Once we have clarity on enrollment rates for each trial, we expect to share specific timing for top line data.
At a high level, we currently anticipate having data in ph ILD first which could be as early as before the end of next year, followed thereafter by data and PIH.
For an update on the PIH Phase Iia study. This study has a novel design, which.
Practical setting from is extremely difficult to recruit them.
Unless we did managed to recruit and successfully treat one patient in this challenging study setting.
While data from a single patient has not predictive we are encouraged by a trend in improvement in various cardiac measures during the 24 hour period.
Importantly, the patient also completed the 16 week extension period and was successfully titrated to a dose of 320 micrograms.
We did not observe any safety concerns with TPI P.
Finally, our fourth pillar is translational medicine.
<unk> the important work emerging from our research Department.
We are making progress in a range of disease areas harnessing gene therapy protein engineering and novel manufacturing all of which work together as a platform of capabilities that we anticipate will yield one to two <unk> per year for the next several years.
We expect to host a comprehensive commercial and research day at which time, we will provide an in depth look across our four pillars, including details on addressable markets additional indications promising technologies and anticipated David timelines.
As you can appreciate we have made significant progress and perform very well across our four pillars building on our strong start to 2022.
We continue to execute effectively across our operations and underpinning the work supporting our four pillars is a disciplined approach to cash management let.
Let me now turn the call over to Sarah for further comments about our financial profile during the second quarter.
Thank you al and good morning, everyone.
Earlier today, we issued a press release with our detailed second quarter financial results all of which fall in line with our internal expectations.
We ended the second quarter in a position of financial strength that we believe will continue to support the four pillars of our business.
Let me highlight a few of those results to read out.
As reported this morning, we ended the quarter with $564 $6 million in cash cash equivalents and marketable securities.
Consistent with our earlier guidance, we anticipate this cash position will support our current ongoing program into 2024.
Our dedicated focus on cash preservation resulted in consistent cash burn levels in the first and second quarters of this year.
In addition, we were pleased to settle consistent burn levels in the first half of 2022, when compared to the first half of 2021.
Total net revenue for aerospace was $65 $2 million for the second quarter of 2022, showing a 44% increase versus the second quarter of 2021.
We are extremely encouraged by this performance, especially considering the headwinds related to the exchange rates in both Japan and Europe .
On a regional basis net revenue in the second quarter was $47 $2 million in the U S.
$15 $8 million in Japan, and $2 $2 million in Europe and rest of world.
Specifically in the U S. We saw a 13% increase over prior year second quarter performance showing continued overall growth in our largest market.
Let me briefly touch on Japan and important market for aerospace.
Our Japan launch has been very effective which is reflected by strong second quarter sales despite foreign exchange headwinds.
In the second quarter, we did benefit from one time inventory build in anticipation of the two week dispensing limit being lifted which we previously mentioned we do not expect this increase in future quarters.
Got it by a highly effective commercial strategy, we continue to be optimistic about the trajectory of the entire Eric each franchise and we are pleased to reiterate our guidance of at least 30% revenue growth on a global basis. This year.
Let me now touch on a few financial highlights from the quarter.
Our gross connects in the U S for the second quarter of 2022 or approximately 14%.
Aligned with our guidance of mid teens throughout 2022, as well as consistent with prior years.
Cost of product revenues for the second quarter of 2022 was $16 $4 million or 25% of Buckingham.
On a percentage basis, it's also consistent with prior periods.
Turning to our GAAP operating expenses.
In the second quarter of 2020 to research and development expenses were $88 $5 million and SG&A expenses were $60 million.
These expense levels reflect the continued support of our four pillars, including our ongoing clinical trials in our pipeline and the commercial infrastructure for aerospace in our three key geographies.
In closing we are extremely pleased with our performance in the second quarter, which built on our strong start to 2022 or.
Our position our financial strength allows us to support the ongoing execution across our commercial business clinical pipeline and early stage research.
I'll now turn the call back to Bill for closing remarks.
Thank you Sarah.
I'm more excited than ever about the future events.
Our priority is to continue executing on our strategy and working tirelessly to bring innovative therapies to patients with serious and rare diseases before we move on to questions I'd like to take a moment to extend a thank you to the entire instrument team for all of their hard work as well as the patients and caregivers who participated in our studies they all play a.
<unk> role in our success with that I'd like to open the call to questions. Operator can we take the first question. Please.
Yes at this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad and please limit yourselves to one question and one follow up questions. You may reenter the queue. If you have additional questions.
And the first question is from the line of Jessica Fye with Jpmorgan. Please go ahead.
Hey, there its Nick thanks for taking our questions and congrats on the quarter two questions from US first our previous guidance for a rise was to kind of share top line data in the first half 'twenty three but it looks like you're going be sharing that.
Data throughout 2023 is that not to say that we won't get topline in the first half of 'twenty three.
Follow up after that.
Yes, so the arise study its primary objective is to validate the underlying Bureau.
Without going into too much of the VR camera I would just say that.
We need to know that the PRA is working and the way you test status through what are called measures of sensitivity and Responsiblity and we tried to dialogue a little bit about this in the queue. So that people could understand so in the first half year, we expect to get the answer for those questions as the bureau of sensitive and responsive in terms of showing a.
Change in patients core on these various therapies.
Once that is completed and in hand, we can then assess one arm versus the other so the simplest way to think about this is the most important data from the pure working point of view will be in the first half of the year those would be the sensitivity of Responsiblity measures and then the sort of comparator. What you would think of I suppose the topline results traditionally will be in the <unk>.
Second half, but that will be one arm versus the other using those effective measures something they've been validated in the first half and that will also include culture conversion.
Okay, Great and then the second one can you just elaborate on the favorable trends we saw on cardiac measures over the first 24 hours and that one patient in the phase Iia trial is the PDR lowering effect within that range.
Six plus hours that you were thinking about.
Kind of are you using trends because of the small sample size or because of the strength of signal.
So the challenge of this study we could spend the balance of the Q&A period to discuss.
And we only have one patient so our internal view on this is we have to be very cautious about how we represent what we've seen with this patient that's why it had been sort of <unk>.
<unk>, our description that things have gone well with this patient I think what I would leave you with without going into specific details of the patient's performance.
Was that this was a positive experience.
We saw what we were hoping to see for the most part and I think.
The area, where that has caused us to sort of hold back as there are idiosyncrasies related to each patients. The way the measures are taken in the ICU setting.
Other aspects to that.
Don't suggest difficulties with the drug for its performance, but make it difficult to draw conclusions I think from this patient.
The most important thing that you should takeaway from this study is that this patient wanted to continue for 16 weeks on the drug and wishes to continue beyond the 16 weeks on the drug.
Was titrated successfully without safety issues up to 320 micro grams on a once a day treatment.
All of that we consider to be extraordinarily positive and I'll remind you that type of pesos Max dose in their label. After titration is 54 micro brands. So we got this patient to $3 20, consistent with what we were able to do in phase, one and that bodes extremely well for.
Temporal measurements that we expect to be able to produce from the phase III programs.
While <unk> is still technically open we know how difficult it's been to find the one patient. If there are additional patients that come in certainly share the data from that but right now in my mind is very focused on encouraging investigators put to place any ph patients they have and use the phase III <unk> study or the phase <unk> study.
Great. Thanks again.
Your next question is from the line of Jeff Hung with Morgan Stanley . Please go ahead.
Thanks for taking the questions.
Even after a strong quarter you reiterated the 30% growth guidance, which you can meet even if quarterly sales slightly declines from <unk>, how should we think about the seasonal dynamics of the rest of the year and are there any headwinds that we should keep in mind and then I have a follow up.
They are.
The COVID-19 experience, even hate to invoke it anymore, but it has taught US a degree of humility and caution about everything that goes on.
Just to leave everyone with one pillar is the best quarter that this company has had since I've been the CEO for 10 years.
Every part of this company is delivering and so what you see on the commercial side is mirrored by performance within the clinical trial and operational aspects all the way down for our research group I could not be happier about where we are when I think about where do we go into the second half of the year I come into the second half of the year with a tremendous sense of momentum but.
Awareness that there are puts and takes around the world in different areas and maybe.
I'll ask Sarah to comment on a couple of those things or excuse me, yes, sure happy to and thanks for that.
That's fantastic.
As you all see in the foreign exchange rate headwinds.
At this time last year versus today, 25% change in the yen about a 15% change in the euro assistant significant headwinds and as we think about foreign exchange and so we were really excited and current speed all to reiterate or at least 30% of revenue growth on a global basis. Despite these headwinds.
So that's sort of the first point that I think is important to make the second point as well mentioned.
Covid has its peaks and valleys I think we see some if you just read in the news.
Some heightened COVID-19 in Japan for instance, despite that we were able to put up a very significant quarter $15 $8 million in Japan, which essentially matched our revenue in Japan.
All of 2021, so really encouraged by the momentum and where we're going cautiously optimistic about.
Let's just start with the nature of our organization and at least a 30% reiteration on revenue guidance, we're really proud of.
Great. Thanks, and then if I could.
Or you would be prioritizing additional patients in the TPI T phase Iia.
Otherwise I guess do you still expect to share more data this year and I guess based on that first patient how many more patients do you think you would need to present a more robust.
Just enough set of data. Thanks, Yeah. We've been we've always felt on <unk>, if we could get a half a dozen patients that would probably represented an interesting cohort I think that's going to be extremely challenging we've been at this now as you all know for quite a while and really what ended up happening here is we had been giving guidance early on from very well, meaning key opinion leader who felt.
That he alone in his site.
Enroll all of the needs of patients and that it would be something that he could accomplish.
What we've discovered is that.
<unk>, we got actually wasn't even from his site.
And once we try to put into practice the challenging aspect of this study, which is a 24 hour right heart catheterization, that's ever been done to the best of my knowledge, nothing even close to and in fact, what we've encountered at most hospitals that are doing investigations. In this arena is that they've gone out perhaps a few hours, but never more than.
Then say six so this is a huge ask of patients and it makes.
The treating physicians.
Cautious the selection of the patient is highly specific the consequence of all of that is just very difficult to find someone to volunteer to get a right heart cath for 24 hours in the ICU, whether or not COVID-19 is even surging and so that teaches us that we probably had bigger eyes than we should have.
On the guidance of that one physician.
Where do we go from here, we know that the one patient that was successfully treated in that program.
Showed us what we wanted to see and has given us a lot of confidence given the 16 week exposure and the successful up titration to 320 micrograms, if we get no more patients in this study I'm not going to lose sleep over it to remind everybody. The whole idea of this study was to give a quick snapshot on the performance of the drug and this has been anything but.
Nick and we accept that but the promise of the drug remains and certainly there is nothing from the one patient in the <unk> study. It gives me pause on the contrary I'm quite encouraged by what we have seen and I would tell you that I think the next right hurdle to look forward.
The data that comes out from the ph ILD study, which as we said could be before the end of next year, that's going to be a 16 week study.
In a controlled environment and.
And longitudinal data so I'm excited about what that will show.
To be really clear if the right heart Cath procedure that is the hurdle here, we do not anticipate onerous challenges in recruiting patients for either of the phase III programs that I've described and so our attention really turns to them, where any eligible ph patients could come in and get treated.
Great. Thank you.
Okay.
Your next question is from the line of Andrea <unk> with Goldman Sachs. Please go ahead.
Good morning, Thanks for taking my question.
One are you in terms of.
Quantifying the magnitude of the inventory build that you mentioned you saw in Japan.
Sure. Thanks for the question.
So we haven't quantified it but you can view it.
Handful of weeks.
That is something we anticipated something that we had forecasted for internally and something that you see traditionally in Japan around these two weeks left.
Okay.
Wondering if you might be able to characterize what your current Medicare exposure offer Erra case, and then if you have any thoughts on what it might look like for Brent.
Yes, so the upon the former it's about 50% a little bit 55% for aerospace as of right now.
I looked at it.
Brent So we don't know the answer to that yet, but certainly for both of these and I don't know if this is why youre touching on it from our perspective the legislation that's being proposed that would cap the out of pocket costs on part D that would be a very significant positive for us from my perspective.
Great. Thanks, Mark.
Your next question is from the line of Neil Scott with Cowen. Please go ahead.
Hi.
I'm on for Ritu.
Had a question regarding the <unk> study what is the.
Ongoing event rate versus your expectations.
So we haven't disclosed what the actual event rate is on a blended basis on what I have said repeatedly is that we are tracking that on a weekly basis at the regional and even a more specific level.
The goal here is to ensure that we're seeing events that would match our expectations and I can tell you. We are we're very happy with.
What we are seeing recognizing that we're totally blinded to the study.
<unk>.
The elements that make up a successful study are one where we see enough events that our medicine would be able to demonstrated effect.
That is what we're seeing so I feel extremely good about where we are with Brent So I feel extremely.
Really good about where we are with Eric as all of our studies and the performance, albeit on a blinded basis.
Very good.
Thanks, and one quick follow up regarding the Crs study.
Can you give us similar detail on the design of the study how many patients are the endpoints you're pursuing.
And potentially what would be approvable endpoint for the study would be.
So that's something we're still looking at I think we've got.
A pretty solid handle around the design and the sizing of it et cetera.
I would say about that is it's probably best handled at research and commercial day, we'll go into that design and detail and importantly, the logic behind what we are going to be looking at I will just reiterate that we're focused on the more severe end of the spectrum of Crs without nasal polyps that several hundred thousand patients.
On a global basis a year.
Incident population not prevalence.
A very very substantial opportunity nothing approved to treat that condition and every reason to believe that the neutrophil driven.
Inflammatory cascade could be mitigated with DPP, one inhibition and that gives us a great deal of confidence that this this could be successful.
Can't emphasize how significant that additional population would be and thats. One of the reasons why we are really spending a lot of time on the design to make sure that we're looking at different phenotypes of patients coming into the study.
Which will kick off in the first half of next year.
Thanks Bill.
Yeah.
Okay.
Once again, if you would like to ask a question simply press Star then the number one on your telephone keypad.
Your next question is from the line of Judah Frommer with Credit Suisse. Please go ahead.
Yeah, Hi, guys. Thanks for taking the questions and congrats on the quarter I just was hoping for a little more color on the re treatment you are seeing with our case, where is that information coming from is it tracking scripts is it talking to docs and kind of what's the message that youre getting and then separately can you just remind us of.
The script dynamics Youre anticipating in Japan as you come off the two week dispensing women and how that could impact trajectory.
Yes, so we haven't given a lot of detail around the more menu should elements that are that are driving things I would just say overall things are very positive with respect to re treatment. Specifically there are a number of ways. We look at that and what I. What I can say is that we've seen a definitive.
[noise] trend there so we're comfortable talking about it.
And I think that bodes extremely well, we've now been on the market long enough and in a post COVID-19 world environment at least in areas for long enough to be able to identify patients coming back in that we believe are being retreated for a new infection and that is <unk>.
Accretable for the patients because they're obviously getting the confection again, but it's encouraging for us that they feel comfortable returning to erra case for treatment and the physician is thinking the same way and is consistent with what we saw in phase III, where we were successfully able to eradicate evidenced the infection and keep it that way for a long.
Period of time, but ultimately because of these pathogens are ubiquitous in the environment. These patients have susceptibility, they do get reinfected with new infections, and Thats, where <unk> can play a meaningful role in the re treatment of patients and we are now seeing that trend with.
With respect to the script trends in Japan.
Because of the two week.
James I would just say what that really represents the opportunity for patients to get.
Larger prescription amount of drug.
We're restricted to two weeks as every new drug is for the first calendar year with the lift that restriction. They can get up to three months they have to get a handset every month anyway. So they are probably youre not going to see a dramatic inflection around that but you will see some longer.
Prescription fills.
Albeit recognizing the patient comes back once a month for the new handset anyway.
Got it thank you.
Your next question is from the line of Joseph Schwartz with <unk> Securities. Please go ahead.
Yeah, Hi, Andrew dialing in for Joe. Thank you for taking our question.
Thank you.
How representative is the one ph patients in your phase III trial, and when can we expect to see the data for that.
Yes so.
My hope would be that we will.
We might see other patients, but I'm not holding my breath on that one I think as I said before my mentally I have shifted to focusing on the phase II ph ILD and phase <unk> studies, which are each 16 weeks in length and are very traditional designs I think there'll be much easier to enroll I know there'll be much easier.
To enroll than the two way.
I think you're always going to see idiosyncrasies in individual patients, which is why it's hard to draw broad conclusions from a single patient of data I think the most important and universal takeaway is if you can treat these patients with a more Andy that you know results in basal dilatation, which is what <unk> will do.
And you can titrate them up to higher levels than what they have previously been able to accomplish than you were accomplishing the objective of the target product profile. You are getting these physicians, what they want which is the ability to administer more drug and you're doing it in an unbelievably convenient way once a day dry powder inhalation.
And I think what we've heard from key opinion leaders is.
A great deal of enthusiasm for what this represents.
For the treatment profile of these patients and clearly with type data out there.
Going to pave the way looking at ph ILD is looking at other group III patients right chief running trials in ph COPD.
H IPF right. Those indications are additional theres nothing approved to treat them and wherever <unk> goes and is successful we will go to and we should be more successful because of the specific PK PD profile that this drug is producing we saw that in phase one we certainly saw it in the <unk>.
Phase.
One patient in the <unk> and I expect to see it in the phase III <unk> studies as well. This is an incredibly promising therapy, which is dosed once a day as a dry powder formulation, that's going to open the doors to a significant market opportunity at a fairly low risk profile and I think thats something that we intend to.
<unk> by the end of next year.
Okay.
Question around Brexit.
<unk>.
I guess.
We're lucky to PK PD study.
Like what should we expect to see this year and how does that read through to your point on chart nine.
Yes.
So again the PK PD study, we're doing is to examine whether cystic fibrosis patients who metabolized drug slightly differently as a result of complications in the Gi track related to their condition, whether those patients will need to be dosed at a higher level to get the same PK PD profile.
We would see in other patients. So this is a 28 day study looking at different doses of the drug and what the PK PD profile is it's not designed to be an efficacy study certainly will be looking at biomarkers, but in that short period of time, particularly given that the drug takes about two to four weeks to get the full pharmacodynamic effect, we wouldn't expect.
To see major changes, but if we did I think those would be startling positives.
And so I don't expect to have a lot to say after the PK PD program other than we know what dose we need to go to for CF patients and that allows us to go right into the CF study.
That could secure approval for the drug and Thats and Thats I think what is particularly exciting about it.
If we see anything we certainly will share it but.
But I would say, it's sort of upsides not not expectation.
Okay. Thank you very much.
Your next question is from the line of Stephen Willey with Stifel. Please go ahead.
Yes, thanks for taking the questions maybe just to follow up on a couple of prior ones. So.
On the fee to CFS can you speak to the proportion of patients that are on background Cotr therapy, and I guess do you expect to see a meaningful differential between the two just in terms of peak.
PK and PD based on how the drugs where tablets.
Yes, so in terms of the two.
Obviously, many more patients that are being treated with <unk> modulators and so that the <unk>.
Our techs drug is fairly ubiquitous for those patients that are responsive we wanted to check. If this is a really important point our drug we expect to work in all CF patients and what we're trying to treat the exacerbations, which these patients still experience whether they're on CFT, our modulators or not so we have.
Split the study to have patients who are on background therapy, and those who are not its a smaller number that are that are not honestly FTR modulators. Those are harder to find because there are fewer of them, obviously, but I don't expect to see a major distinction between the two and that's one of the points, we want to make by completing the study which is that this.
Would be applicable to all.
CF patients at the appropriate dose.
Okay. That's helpful and then.
Maybe just for Sarah can you speak to.
Gross to net.
During the quarter and forgive me if that was provided earlier and then.
I know you've characterized the inventory build in Japan.
As representing kind of a handful of weeks I guess, but is there any way that you can provide just some rough quantification of that just to get a sense of how we should be thinking about sequential growth in that geography.
Thanks sure, Yes, no problem. Thanks Steven.
Gross to net in the U S for the quarter was 14% so reiterated our mid teens guidance for the full year again that was consistent with last year. So no surprises there.
In Japan, we had said that inventory build a handful of weeks you can estimate probably about two weeks ish.
I would like of course enough estimate for you.
We talked a little bit about the foreign exchange rate headwinds, specifically in Japan previously and so to put up at $15 8 million in the quarter. Despite those headwinds I think is really really encouraging more broadly as you think about trends.
If you look at last year Q2 has historically always been a strong quarter for US Q3, just seasonality is already it has historically when you look at trends and then a little bit of a later quarter, but again, we are really encouraged by this.
Performance ever and Eric Cape franchise history.
On a global basis as well as in the U S with some of them.
Rental that will stop.
Great. Thanks for taking questions.
Your next question is from the line of Jennifer <unk> with Cantor Fitzgerald. Please go ahead.
Hey, Thanks for taking my question.
First on your color in terms of how arise would read out I know you said that the topline is coming in the second half of 2000 and I'm. Just wondering did anything drive that change or was that all in.
You saw the data coming out throughout the year.
As always how we saw the data coming out when we were making reference to the arrival of data. The thing we're focused on first and foremost from a rise is what it teaches us about the underlying.
Crow instrument itself and so again the measures that are important there are sensitivity and even more importantly, responsiblity. What we mean by that is the ability for the questionnaire two documents are meaningful clinically meaningful change based on the patient's experience and for that change to be.
Correlated to an overall feeling of improved well be in those two components are essential for the <unk> to be considered valid in the mind of the FDA.
And so that's what we'll know in the first half of next year does the <unk> do what we think it's meant to do.
And I would say that we feel good about that being the outcome. There are two instruments. We're using just to remind you what is the qol B and then the other is a measure of fatigue, a fatigue instrument and so if we can capture in both of those that they are sensitive and responsive to the measurement of these patients and they are feeling of well being then we will have a.
Accomplish the primary goal of the study.
Our mines and then of course with that validation. We can then look at the two arms and see which one perform better and so we're looking forward to providing that along with culture conversion data, which is also important is the primary endpoint of the encore study for Japan, whereas the <unk> is the primary endpoint of the study for the U S. So hopefully that helps.
Explain how that is going to unfold next year.
Yes. Thank you my second question is going back to our case.
You've given a lot of color on Japan, like the inventory build and FX impacts and how we should think about that but specifically in the U S.
16% quarter over quarter growth.
Is there anything there that we should keep in mind or is that something that you think you.
It's a fair way to think about future quarterly calls.
<unk> made some comments about trends.
We see with regard to seasonality that would be my only cautionary watchword, there, but I have to say coming into the second half of the year, we feel very good about where we are and where we're going I think in the U S. The more we see that return to in person office visits the more successful we have been.
And in a post COVID-19 world or in a world where people are choosing to live with Covid.
Way that allowed them to still engage in day to day normal activities.
That just plays to our strengths and I I just have to call out the exceptional work that our commercial team has done.
And this effort I mean, if we think about what has happened over the last year last year diagnosis rates for MTM or down 25%, 30% and we maintained steady revenue performance, which means we were gaining share in the midst of a corrected diagnosis rates.
Due to Covid, where patients weren't coming in physicians were able to diagnose them as we return to normalcy. My expectation is we could see that diagnosis rate pick up again and that would provide some some tailwind to our efforts.
Let's see where things go but we also saw the improvement in re treatment trends. There's a lot to be excited about but I think caution is the watch word and as we approach the third quarter seasonality.
We will see which of these different trends becomes more manifest.
I think in Japan, the only thing I would call out is the presence of Covid over there is quite extensive at the moment.
We'll have to see what that that results in but if you were to if.
If you would ask me at the beginning of the year do I think the first or the second half of the year is going to be stronger I would've said the second half as we entered the second half of the year I continue to have conservatism and caution, but we will see how we how we go from here I mean, 30% year over year growth with the kind of headwinds, we're describing and FX I mean, Japan is.
25% from where it was a year ago.
Those are real accomplishments that I think the company feels very proud of.
Great very helpful. Thanks, guys and congrats on the quarter.
This concludes the Q&A portion of today's call I will now turn the call back to will Lewis for any closing remarks.
Thank you all for joining our call today.
Okay.
Ladies and gentlemen, thank you for joining the <unk> second quarter 2022 financial results Conference call.
You may now disconnect.
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