Q3 2023 Insmed Inc Earnings Call

Thank you for standing by my name is Kayla Baker and I will be your conference operator today.

At this time I would like to welcome everyone to the N Smith third quarter 2023 financial results.

All lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session if.

If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

If you would like to withdraw your question again press the star and one.

These women to two questions. One prompted if you have additional questions you may rejoin the queue as time allows.

I would now like to turn the call over to Brian done you may begin.

Thank you Kayla and good day, everyone and welcome to today's conference call to discuss <unk> third quarter 2023 financial results and provide a business update.

I'm joined today by will Lewis, Chairman, and Chief Executive Officer, and Sara <unk>, Chief Financial Officer, who will each provide prepared remarks before we open it up for your questions.

Before we start please note that today's call will include forward looking statements based on our current expectations. These statements represent our judgment as of today and inherently involve risks and uncertainties that may cause actual results to differ materially from the results discussed.

Please refer to our filings with the Securities and Exchange Commission for more information concerning the risk factors that could affect the company.

Our call today will also include blinded observations from our ongoing phase two studies of TPI P C.

These observations may not be representative of results. Once the studies are completed and all data is collected and analyzed as a result later interim data Readouts and final data from these studies may be materially different than the observations described today, including with respect to efficacy safety and Tolerability of TPI.

Finally, the information on today's call is for the benefit of the investment community. It is not intended for promotional purposes and it is not sufficient for prescribing decisions.

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

Thank you Brian Good morning, everyone, what our quarter. This has been for Internet <unk>.

Starting with our commercial performance, we have now posted our second quarter in a row of record setting revenues for Eric case with sequential growth coming from both the U S and Japan on.

On a year over year basis revenues grew 17% compared to the third quarter last year and 19% for the first nine months of 2023 compared to the same period last year. It is impressive to recognize that this drug after posting one of the top 10 rare disease launches in history continues to deliver this level.

Year over year growth as we cross the five year anniversary of its original launch.

Even more exciting this quarter, we released the topline results from our arise trial of <unk> in patients with newly diagnosed or recurrent Mac lung disease, we have not started antibiotics.

To say that it really couldnt have been a better result from our perspective, the performance of Erra case exceeded our expectations in every measurable way.

Arise was clearly established.

Nearly established the quality of life bronchiectasis respiratory domain questionnaire as a patient reported outcome measure that works in this patient population, which was the main goal of the trial.

But beyond that it also demonstrated that erra case when added to a true drug control regimen consistently increases the likelihood that a patient will have a meaningful improvement in their <unk> scores, regardless of what level score improvement is considered meaningful. Additionally.

Additionally, and very importantly, Orion showed extremely compelling benefits on culture conversion for the aerospace arm compared to the control arm, including the number of patients who converted during the six month treatment period, how quickly those patients converted and how durable that conversion was one month after the end of treatment all of which.

Gives us tremendous confidence in the likelihood of success for the larger ongoing encore trial.

I'm also happy to report that we have seen a notable uptick in the rate of enrollment for encore Cynthia rise topline readout, given the amount of attention and excitement generated we continue to expect to reach our goal of enrolling 250 patients in encore by the end of 2023 and plan to leave enrolment open into 2020 for Penn.

Additional discussions with the FDA.

Although we continue to believe the base case is that full approval will be granted by oncor data given the strength of the arise data, we feel that duty to our patients to at least explore with regulators the possibility of accelerated approval.

In the U S. We expect that these conversations about a potential filing pathway won't happen until the first part of next year given the required first step of validating our <unk> work with the FDA that process has begun with our recent submission of the <unk> results to the FDA for their review, we will provide you with updates as we know more.

As encouraging as these developments for Eric case have been we recognize that the focus for many who follow our company is on the upcoming top line data from the phase III Aspen trial of <unk> in patients with bronchiectasis, which remains on track to read out in the second quarter of 2024.

It is difficult to overstate the increase in attention and focus being paid to bronchiectasis by the medical community just in the past year as.

As an example at the chest Medical conference earlier. This month there was a line across the convention center the length of a city block and standing room only in the room, where assertion on bronchiectasis was being held.

Clearly the incredible disease state awareness work being done by our colleagues is already making an impact.

As far as the Aspen goes we have no meaningful updates to give which is actually a really good thing. The trial continues to progress on schedule towards its ultimate readout and we remain as confident as ever in the outcome no safety concerns have been flagged by our data monitoring committee to date and we continue to hear from investigators in the study who are reporting anecdote.

Italy, they're seeing improvements in some of their patients although granted they don't know who is getting <unk> or a placebo.

In addition to Aspen I am pleased to share today that we have already opened several sites in our phase II B <unk> trial of <unk> in patients with chronic rhinosinusitis without nasal polyps and are nearing randomization of our first patients.

As we've mentioned before there are approximately 26 million patients suffering with this condition in the U S alone and there are currently no approved therapies available to them.

And while and while we will initially target only the severe end of that population, which we estimated the number in the hundreds of thousands every year, we believe that a successful it represents another very large opportunity for <unk>.

Now moving to our <unk> program we.

We continue to be excited and impressed by the blinded data being generated from our two ongoing phase III studies of <unk> in patients with ph and ph ILD.

Today I want to give you a peek into some of the blinded data to illustrate how profoundly we've been able to safely increase the delivery from <unk> to the lungs over currently approved <unk> therapies and some of the early signs we are seeing of the potential impact it may be having on patients.

Let me start with dose titration as background, let me remind you that <unk>, which is another form of inhaled <unk> as a maximum labeled dose of 64 micrograms for its dry powder formulation. The label direct that it has to be administered four times per day for the treatment of PIH or ph ILD.

Kayla Baker: Thank you for standing by. My name is Kayla Baker and I will be your conference operator today. At this time, I would like to welcome everyone to the Insmed third quarter, 2023 financial results.

Assuming all four doses or taken the maximum amount of proportional being delivered during the daytime is 256 micrograms.

Kayla Baker: All lines have been placed on mute to prevent any background noise. After the speakers are marked, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star and one. Please limit to two questions when prompted. If you have additional questions, you may rejoin the queue as time allows.

And our current studies were titrated up to a maximum of 640 micrograms of TPI P. Administered just once per day to provide 24 hours of coverage.

After excluding the weight of the 16 carbon chain in our formulation that maximum dose administered nearly 60% more true <unk>, then tie VSO DPI and it's 24 hour maximum approved dosing schedule now.

Bryan Dunn: I would now like to turn the call over to Bryan Dunn. You may begin. Thank you Kayla.

Now for our latest data.

Bryan Dunn: Good day everyone and welcome to today's conference call to discuss Insmed's third quarter, 2023 financial results and provide a business update. I am joined today by Will Lewis, Chair and Chief Executive Officer and Sara Bonstein, Chief Financial Officer, who will each provide prepared remarks before we open it up for your questions. Before we start, please note that today's call will include four looking statements based on our current expectations. These statements represent our judgment as of today and inherently involve risks and uncertainties that may cause actual results to differ materially from the results discussed.

And the ph study of the 24 patients who had reached their week five visit which is the last possible point at which the dose can be increased in the trial, 83% of patients were able to titrate up to the maximum dose of 640 micrograms in the ph ILD study of the 10 patients who had reached the week five visit.

80% reached the highest dose as you consider these blinded data. Please keep in mind that our PIH in ph ILD studies are randomized two to one in three to one respectively, meaning that roughly 67% of ph patients and 75% of ph ILD patients in these blinded results are likely to risk.

Bryan Dunn: Please refer to our filings with the Securities and Exchange Commission for more information concerning the risk factors that could affect the company. Our call today will also include blinded observations from our ongoing phase two studies of T.P.I.P. These observations may not be representative of results once the studies are completed and all data is collected and analyzed. As a result, later interim data readouts and final data from these studies may be materially different than the observations described today, including with respect to efficacy, safety and tolerability of T.P.I.P. Finally, the information on today's call is for the benefit of the investment community.

<unk> TP IP.

Importantly, we have seen no new or unexpected safety concerns arising from either trials. So far adverse events observed to date have been consistent with the events, commonly seen in patients with ph or ph ILD and with the known effects of inhaled prostacyclin therapies, notably adverse events related to cough have been mostly.

Bryan Dunn: It is not intended for promotional purposes, and it is not sufficient for prescribing decisions.

Mild and we have seen no instances of throat irritation or pain, which are among the most common reasons for limiting the dose of inhaled <unk> in clinical practice.

Will Lewis: I will now turn the call over to Will Lewis for prepared remarks. Thank you, Bryan. Good morning. Thank you, everyone.

Given that these studies are currently ongoing the safety profile could certainly evolve as we continue to enroll and monitor more patients, but we feel very good about what we have seen to date.

Will Lewis: What a quarter this has been for Insumet. Starting with our commercial performance, we have now posted our second quarter in a row of record-setting revenues for error case with sequential growth coming from both the US and Japan. On a year-over-year basis, revenues grew 17% compared to the third quarter last year and 19% for the first nine months of 2023 compared to the same period last year. It is impressive to recognize that this drug, after posting one of the top 10 rare disease launches in history, continues to deliver this level of year-over-year growth as we cross the five-year anniversary of its original launch.

We are further encouraged by the fact that our data safety monitoring Committee met most recently earlier this week and indicated no concerns with either trial.

In addition to being able to safely reach these high levels of <unk> delivery to the local pulmonary vasculature. In these patients. We are also seeing encouraging signs that the increased dose is potentially having the desired effect on visa dilation observing reductions in pulmonary vascular resistance or PBR that have been in certain cases.

Is dramatic.

Will Lewis: Even more exciting, this quarter we released the top-line results from our arise trial of error case in patients with newly diagnosed or recurrent mac lung disease who have not started antibiotics. I am proud to say that it really couldn't have been a better result from our perspective. The performance of error case exceeded our expectations in every measurable way. Our rise was clearly established, clearly established the quality of life bronchi-ectasis respiratory domain questionnaire as a patient reported outcome measure that works in this patient population, which was the main goal of the trial.

And please note. This is occurring in patients who are already on at least one or two additional medications, making the observed reductions all the more striking.

So how dramatic is the reduction in PBR that we're seeing in our ph study.

While we recognize the limitations of analyzing blended in blinded data. Nonetheless, just looking at the averages across the entire study it seems fairly clear that something meaningful is happening.

Specifically the average rate of PBR reduction in all 22 patients who completed the study at the time of data cut off was 21, 5% if.

Will Lewis: But beyond that, it also demonstrated that error case, when added to a true drug control regimen, consistently increases the likelihood that a patient will have a meaningful improvement in their PRO scores regardless of what level score improvement is considered meaning. Fult. Additionally and very importantly, a rise showed extremely compelling benefits on culture conversion for the error case arm compared to the control arm, including the number of patients who converted during the six month treatment period, how quickly those patients converted and how durable that conversion was one month after the end of treatment, all of which gives us tremendous confidence in the likelihood of success for the larger ongoing encore trial.

If we examine just the 64% of trial participants who saw their PBR go down the average rate of reduction was 47% and we have several patients who have seen PBR reductions in excess of 65%.

Reductions in PBR that are spontaneous are not common in ph patients. So we feel this particular metric provides good insight into the significant potential benefit resulting from administering substantially higher doses of <unk> in a safe manner.

I want to acknowledge again that we don't know which patients within the data set are actually taking TP IP nor is this trial designed to draw comparisons against other therapies. So I will leave it to all of you to decide how meaningful these data are and how they fit into the context of the broader treatment landscape in ph.

Will Lewis: I'm also happy to report that we have seen a notable uptick in the rate of enrollment for encore since the arise top line readout given the amount of attention and excitement that generated. We continue to expect to reach our goal of enrolling 250 patients in encore by the end of 2023 and plan to leave enrollment open into 2024 pending additional discussions with the FDA. Although we continue to believe the base case is that full approval will be granted by encore data given the strength of the arise data we feel a duty to our patients to at least explore with regulators the possibility of accelerated approval.

However, it is worth noting that across all clinical studies of current marketed an investigational treatments of which we are aware which include not just vasodilator is like <unk>.

But also other treatment modalities PBR percentage of reductions from baseline in treated patients range from the low tens to the mid <unk> with most coming in at or around the high teens to low twenties, if you drill down and look only at other inhaled <unk> products PBR data in the public domain is relatively sparse.

Will Lewis: In the US we expect that these conversations about a potential filing pathway won't happen until the first part of next year given the required first step of validating our PRO work with the FDA. That process has begun with our recent submission of the PRO results to the FDA for their review.

But a phase III trial of oral <unk> has shown a 21, 5% reduction in PBR from baseline after 24 weeks of treatment.

When you remember that we are showing a PBR reduction of 21, 5% in our trial, including patients who are on placebo and that this was achieved in just 16 weeks of treatment. We hope you can understand why we have been so excited about the potential of this program and why we have referred to it as the sleeper within intimate.

Will Lewis: We will provide you with updates as we know more.

Will Lewis: As encouraging as these developments for error case have been, we recognize that the focus for many who follow our company is on the upcoming top line data from the phase three Aspen trial of Brent subcadab in patients with bronchiectasis which remains on track to read out in the second quarter of 2024.

Beyond this exciting PBR data. We are also seeing other encouraging signs of potential activity within this trial on six minute walk distance, we have seen a 31 meter average improvement across all 22 patients and a 36 meter average improvement in those patients who also exhibited a reduction in PBR.

Will Lewis: It is difficult to overstate the increase in attention and focus being paid to bronchiectasis by the medical community just in the past year. As an example at the chest medical conference earlier this month there was a line across the convention center. The length of a city block and standing room only in the room where a session on bronchiectasis was being held. Clearly the incredible disease state awareness work being done by our colleagues is already making an impact.

We are also seeing improvements in cardiac index, which is an important measure of heart pump efficiency.

As impressive as everything I. Just told you is it may be just the beginning.

Notwithstanding the extraordinary levels of <unk>, we have been able to administer to date to these patients. The investigators running these TPI <unk> studies and the key opinion leaders, who make up the steering committee have strongly advocated for us to further increase the maximum allowable dose in the study's beyond 640 micrograms.

Will Lewis: As far as Aspen goes we have no meaningful updates to give which is actually a really good thing. The trial continues to progress on schedule toward its ultimate readout and we remain as confident as ever in the outcome. No safety concerns have been flagged by our data monitoring committee to date. And we can continue to hear from investigators in the study who are reporting anecdotally they are seeing improvements in some of their patients, although granted they don't know who is getting Brent subcadab or a placebo.

Practically speaking this means we plan to submit a protocol amendment to the FDA to enable patients to continue to increase the dose to their individual maximum tolerated level up to a new ceiling as highest twice the current level or one 280 micrograms once a day.

Will Lewis: In addition to Aspen I am pleased to share today that we have already opened several sites in our phase two B Birch trial of Brent subcadab in patients with chronic rhinocinusitis without nasal polyps and are nearing randomization of our first patients. As we've mentioned before there are approximately 26 million patients suffering with this condition in the US alone and there are currently no approved therapies available to them. And while we will initially target only the severe end of that population which we estimate to number in the hundreds of thousands every year we believe that if successful it represents another very large opportunity for Brent subcadab. Now moving to our TPI-P program, we continue to be excited and impressed by the blinded data being generated from our two ongoing phase two studies of TPI-P in patients with PAH and Ph. I.L.D.

We are pursuing this approach based on the favorable safety profile shown to date among the vast majority of patients who have already achieved levels as high as 640 micrograms and the highly encouraging results. We have observed in the blinded data we can only imagine what this could mean for patients who may already be experiencing meaningful PBR reduction.

<unk> at 640 micrograms.

We believe this has the potential to position <unk> as a best in class treatment option for these patients should these results to be indicative of unblinded data from these trials.

Now before I turn it over to Sarah I want to take a moment to step back and look at the bigger picture of <unk> and the truly unique and wonderful position and which had currently finds itself.

First we see the continued strong performance of Erra case through our existing commercial infrastructure in the U S. Japan and EU, we see incredibly strong arise data for Erra case, which we believe positions us to potentially become the standard of care as part of a multi drug regimen for the treatment of all patients with MTM Mac lung disease potentially.

Will Lewis: Today, I want to give you a peek into some of the blinded data to illustrate how profoundly we have been able to safely increase the delivery of prostinal to the lungs over currently approved prostinoid therapies and some of the early signs we are seeing of the potential impact it may be having on patients. Let me start with dose titration. As background, let me remind you that Tyvezo, which is another form of inhaled prostinal, has a maximum labeled dose of 64 micrograms for its dry powder formulation.

Increasing the drug's addressable patient population by three to five times.

Next we're rounding the corner on the Aspen Phase III results anticipated in the second quarter of next year and remain excited about the prospects for that compound in the initial indication for bronchiectasis. If that study proves successful we are poised to take advantage of its status as a breakthrough medicine with priority review to bring it as quickly as possible.

Will Lewis: The labeled directs that it is to be administered four times per day for the treatment of PAH or Ph. I.L.D. Assuming all four doses are taken, the maximum amount of prostinal being delivered during the daytime is 256 micrograms. In our current studies, we are titrating up to a maximum of 640 micrograms of TPI-P, administered just once per day to provide 24 hours of coverage. After excluding the weight of the 16 carbon chain in our formulation, that maximum dose administers nearly 60% more prostinal than Tyvezo DPI at its 24-hour maximum approved dosing schedule.

<unk> to a community of patients and physicians, who have never been more engaged and excited about this potential treatment.

In addition, today, we shared our progress toward initiating the <unk> study of <unk> and Crs without nasal polyps highlighting the broad range of patients that this treatment can potentially serve due to it being an entirely new mechanism of action focused on mitigating neutrophil mediated diseases.

Finally today, we shared with you the compelling developments and TPI P. The high doses achieved the encouraging safety profile and the early data on PBR reductions all of which are extremely exciting add to that the potential to go up in dose to as high as double what we were originally targeting and the fact that this is the first and only <unk>.

Will Lewis: Now for our latest data. In the PAH study of the 24 patients who had reached their week five visit, which is the last possible point at which the dose can be increased in the trial, 83% of patients were able to titrate up to the maximum dose of 640 micrograms. In the PAH study of the 10 patients who had reached the week five visit, 80% reached the highest dose. As you consider these blinded data, please keep in mind that our PAH and PAH I.L.D, studies are randomized two to one and three to one respectively, meaning that roughly 67% of PAH patients and 75% of PAH I.L.D, patients in these blinded results are likely receiving TPI-P.

Once daily DPI formulation and you have what we believe could be a game changing product addressing a substantial unmet medical need.

A quick glance across these three programs highlights opportunities rarely seen in a company at our stage of development and valuation.

Collectively this is the commercial and late stage respiratory portfolio of in Smith, We believe it is unmatched in the small to mid cap space. We are delivering on our goal of bringing forward first in class or best in class therapies that have a clear benefit to patients.

We are not spending any time today discussing the pipeline behind these late stage programs. It is extremely robust with more than 30 identified preclinical programs under development.

Will Lewis: Importantly, we have seen no new or unexpected safety concerns arising from either trial so far. Adverse events observed to date have been consistent with the events commonly seen in patients with PAH or PAH I.L.D, and with the known effects of inhaled processed cyclone therapies. Notably, adverse events related to cough have been mostly mild and we have seen no instances of throat irritation or pain, which are among the most common reasons for limiting the dose of inhaled troprostonyl in clinical practice.

These programs will only be moved into further development, if they produce validating and compelling data and we continue to expect the totality of these efforts to account for less than 20% of our overall spend.

This early stage work continues quietly and deliberately all the while generating a range of promising potential first in class or best in class therapies and diseases, which we also believe may have an accelerated pathway to commercialization should their early stage results prove as promising as preclinical data to date suggest are.

Will Lewis: Given that these studies are currently ongoing, the safety profile could certainly evolve as we continue to enroll and monitor more patients, but we feel very good about what we have seen today. We are further encouraged by the fact that our Data Safety Monitoring Committee met most recently earlier this week and indicated no concerns with either trial. In addition to being able to safely reach these high levels of troprostonyl delivery to the local pulmonary vasculature in these patients, we have also seen encouraging signs that the increased dose is potentially having the desired effect on vasodilation.

Strategy is to use the financial resources generated by the first three pillars to support the pipeline development that emerges on the heels of their commercial success. We expect this strategy to bring about both financial sustainability in the form of a cash flow positive company and ample financial firepower to support the clinical and commercial development of the subsea.

<unk> pipeline programs should they be successful.

Will Lewis: Observing reductions in pulmonary vascular resistance or PVR that have been in certain cases dramatic. Jack, and please note, this is occurring in patients who are already on at least one or two additional medications making the observed reductions all the more striking. So how dramatic is the reduction in PVR that we're seeing in our PAH study? While we recognize the limitations of analyzing blended and blinded data, nonetheless, just looking at the averages across the entire study, it seems fairly clear that something meaningful is happening.

Finally, we're extremely excited to announce just recently our collaboration with Google Cloud, which aims to transform the landscape of the life sciences industry through the use of generative artificial intelligence, we've already identified multiple projects to target within the next 18 months spending drug discovery drug.

Commercialization and enabling functions, reducing the timeline for drug development and enhancing the delivery of drugs to appropriate patients would represent a major breakthrough for the application of AI.

Cloud is the clear partner of choice in this effort and we are thrilled to work together to pursue a future where groundbreaking therapies are developed with unprecedented speed and precision we look forward to providing you with updates as this work progresses.

Will Lewis: Specifically, the average rate of PVR reduction in all 22 patients who completed the study at the time of data cutoff was 21.5%. If we examine just the 64% of trial participants who saw their PVR go down, the average rate of reduction was 47% and we have several patients who have seen PVR reductions in excess of 65%. Reductions in PVR that are spontaneous are not common in PAH patients. So we feel this particular metric provides good insight into the significant potential benefit resulting from administering substantially higher doses of propostonal in a safe manner. Now, I want to acknowledge, again, that we don't know which patients within the data set are actually taking TPIP nor is this trial designed to draw comparisons against other therapies.

In short we believe we are building a powerhouse of a biotechnology company and a very deliberate way.

This transformation is set to take shape over a relatively short period of time as we executed against a range of clinical regulatory and commercial milestones. It is truly an exciting time at <unk> Smith for our colleagues our shareholders and most importantly for the patients we serve.

I'll now turn the call over to Sarah to walk through our third quarter financials.

Thank you will and good morning, everyone.

I am happy to share some of the details of <unk> financial performance for the third quarter of 2023, we.

We ended the quarter with approximately $786 million in cash cash equivalents and marketable securities.

Will Lewis: So I will leave it to all of you to decide how meaningful these data are and how they fit into the context of the broader treatment landscape in PAH. However, it is worth noting that across all clinical studies of current marketed and investigational treatments of which we are aware, which include not just vasodilators like TPIP but also other treatment modalities, PVR percentage reductions from baseline and treated patients range from the low tens to the mid-30s with most coming in at or around the high teens to low 20s.

This represents a cash burn for the quarter of $132 million, which is consistent with our underlying cash burn in the second quarter.

I want to point out that a large portion of our quarterly cash burn is directly related to Brexit catheter development, including the cost inherent in conducting a very large phase III trial as well as ongoing launch readiness activities all of which we expect to be high return on investment endeavors.

Will Lewis: If you drill down and look only at other inhaled propostonal products, PVR data in the public domain is relatively sparse but a phase three trial of oral propostonal has shown a 21.5% reduction in PVR from baseline after 24 weeks of treatment. When you remember that we are showing a PVR reduction of 21.5% in our trial, including patients who are on placebo, and that this was achieved in just 16 weeks of treatment, we hope you can understand why we have been so excited about the potential of this program and why we've referred to it as the sleeper within insumet.

We continue to believe that our current cash on hand can support our operations through the Aspen and results in the second quarter of 2024, leaving a meaningful amount of cash remaining on the balance sheet at that time.

Now turning to our commercial performance in the third quarter of 2023.

Total net revenues for aerospace was $79 $1 million, reflecting 17% growth year over year.

For the second quarter in a row. This represents the strongest quarter for <unk> sales since its launch up to 4% compared to an already strong second quarter.

Will Lewis: Beyond this exciting PVR data, we are also seeing other encouraging signs of potential activity within this trial. On six minute walk distance, we have seen a 31 meter average improvement across all 22 patients and a 36 meter average improvement in those patients who also exhibited a reduction in PVR. We are also seeing improvements in cardiac index which is an important measure of heart pump efficiency.

On a regional basis net revenue was $59 $2 million in the U S and $16 million in Japan, both of which represent the highest quarterly sales for <unk> in those regions to date.

This supports our belief that both of these regions continue to be in a growth phase.

Additionally, sales in Europe in the third quarter were $3 $8 million.

Will Lewis: As impressive as everything I've just told you is, it may be just the beginning. Notwithstanding the extraordinary levels of propostonal, we have been able to administer to date to these patients, the investigators running these TPP studies and the key opinion leaders who make up the steering committee have strongly advocated for us to further increase the maximum allowable dose in the studies beyond 640 micrograms. Practically speaking, this means we plan to submit a protocol amendment to the FDA to enable patients to continue to increase the dose to their individual maximum tolerated level, up to a new ceiling as high as twice the current level or 1,280 micrograms once a day.

We are reiterating our full year 2023 revenue guidance range of $295 million to $305 million, which represents expected year over year sales growth for the company in excess of 20%.

In the U S aerospace delivered another very strong quarter with revenues up 20% compared to the prior year's third quarter fifth.

This quarter's results further supports our belief that aerospace is still in a growth phase.

In Japan Aerospace revenues grew 11% this quarter compared to the third quarter of last year. Despite the planned 9% price decrease which went into effect. This past June.

Will Lewis: We are pursuing this approach based on the favorable safety profile shown to date among the vast majority of patients who have already achieved levels as high as 640 micrograms and the highly encouraging results we have observed in the blinded data. We can only imagine what this could mean for patients who may already be experiencing meaningful PBR reductions at 640 micrograms. We believe this has the potential to position TPI P as a best in class treatment option for the patients should these results be indicative of unblinded data from these trials.

Recall that we highlighted on our last quarterly call that the growth that we had been expecting in Japan in the second half of this year started earlier than we had anticipated, making the second quarter very strong.

Nevertheless, we saw sequential growth of two 8% this quarter in Japan, which is an encouraging sign for continued growth in this region.

Let me now turn to a few additional financial highlights.

In the third quarter of 2023, our gross to nets in the U S were approximately 14%, which is consistent with what we have normally seen in the third quarter.

Will Lewis: Now before I turn it over to Sara, I want to take a moment to step back and look at the bigger picture of Insmed and the truly unique and wonderful position in which it currently finds itself. First, we see the continued strong performance of error case through our existing commercial infrastructure in the US, Japan and EU. We see incredibly strong arise data for error case, which we believe positions it to potentially become the standard of care as part of a multi-drug regimen for the treatment of all patients with NTM MAC lung disease, potentially increasing the drug's addressable patient population by 3-5 times.

We continue to expect our gross to net to be in the mid teen range for the full year in line with our historical performance.

Cost of product revenues for the third quarter of 2023 was $16 $7 million or 21, 1% of revenues, which is also relatively consistent with our past performance.

Turning to our GAAP operating expenses.

In the third quarter of 2023 research and development expenses were $109 1 million and SG&A expenses were $96 million, reflecting continued investment in both our early and mid to late stage pipelines as well its launch readiness activities for <unk>.

Will Lewis: Next, we are rounding the corner on the Aspen Phase III results anticipated in the second quarter of next year and remain excited about the prospects for that compound in the initial indication for bronchiectasis. If that study proves successful, we are poised to take advantage of its status as a breakthrough medicine with priority review to bring it as quickly as possible to a community of patients and physicians who have never been more engaged and excited about this potential treatment.

In closing we are proud of <unk> performance this quarter as we continue to deliver on our promises to our patients shareholders and other stakeholders I will now turn the call back to well for closing remarks. Thank you Sarah before we move to Q&A I just want to take a brief moment to thank all of our investigators and clinical trial participants.

Will Lewis: In addition, today we shared our progress toward initiating the Birch study of Brensocadid and CRS without nasal polyps, highlighting the broad range of patients that this treatment can potentially serve due to it being an entirely new mechanism of action focused on mitigating neutrophil mediated diseases.

Around the world, we could not achieve any of the bold ambitions embedded in our mission without their courage and commitment.

Also want to thank our patients for providing us with the passion to keep pushing every day for life changing innovations.

To our investors for entrusting us with the financial fuel required to make those dreams, a reality and our colleagues for their tireless efforts to execute on this vision.

Will Lewis: Finally, today we shared with you the compelling developments in TPI P. The high doses achieved the encouraging safety profile and the early data on PBR reductions, all of which are extremely exciting. Add to that the potential to go up and dose to as high as double what we were originally targeting and the fact that this is the first and only once daily DPI formulation and you have what we believe could be a game changing product addressing a substantial on that medical need.

You all now I would like to open the call to questions. Operator can we take the first question. Please.

At this time I would like to remind everyone in order to ask a question press star and the number one on your telephone keypad. Please limit to two questions. When prompted if you have additional questions you may rejoin the queue as time allows.

And your first question comes from the line of Andrea <unk> with Goldman Sachs. Your line is open.

Will Lewis: A quick glance across these three programs highlights opportunities rarely seen in a company at our stage of development and valuation. Collectively, this is the commercial and late stage respiratory portfolio of insumet. We believe it is unmatched in the small, the mid cap space. We are delivering on our goal of bringing forward first in class or best in class therapies that have a clear benefit to patients.

Good morning, guys. Thanks for taking my question two for me first will recognize its early but just wondering if you could characterize your level of confidence in the arrive data supporting a path towards accelerated approval for arrow keys.

Yes, So I think as we mentioned I think a number of times, we still consider the base case assumption to be the <unk>.

Will Lewis: While we are not spending any time today discussing the pipeline behind these late stage programs, it is extremely robust with more than 30 identified pre clinical programs under development. These programs will only be moved into further development if they produce validating and compelling data and we continue to expect the totality of these efforts to account for less than 20% of our overall spend. This early stage work continues quietly and deliberately all the while generating a range of promising and potential first in class or best in class therapies and diseases which we also believe may have an accelerated pathway to commercialization. Should their early stage results prove as promising as pre clinical data to date suggest?

Encore data is the thing that will.

Allow us to get the approval, but having said that I think given the strength of the arrays data we'd be remiss, if we didn't at least engage with FDA and with Japan to see about their willingness to two.

Permit a faster pathway and the way I think about this is if you think about the U S. Subpart H as if you have a validated surrogate.

Reasonably likely to predict clinical benefit then you have a case to at least present and once the <unk> is validated which we expect will happen by roughly the end of this year that would then enable us to go to the FDA and say, we've seen clear signs of culture conversion, which is which is linked to as a surrogate to this clinical benefit of <unk>.

Will Lewis: Test. Our strategies to use the financial resources generated by the first three pillars to support the pipeline development that emerges on the heels of their commercial success. We expect this strategy to bring about both financial sustainability in the form of a cash flow positive company and ample financial firepower to support the clinical and commercial development of these subsequent pipeline programs should they be successful.

Improvement and so that's the basis for the Subpart H request they may quickly dismiss it or they may want to engage.

We're not going to push this FDA.

Shows interest, we will absolutely communicate that and moved quickly to try to take advantage of it in the case of Japan.

Will Lewis: Finally, we are extremely excited to announce just recently our collaboration with Google Cloud, which aims to transform the landscape of the life sciences industry through the use of generative artificial intelligence. We have already identified multiple projects to target within the next 18 months, spanning drug discovery, drug development, commercialization, and enabling functions, reducing the timeline for drug development and enhancing the delivery of drugs to appropriate patients would represent a major breakthrough for the application of AI. Google Cloud is the clear partner of choice in this effort, and we are thrilled to work together to pursue a future where groundbreaking therapies are developed with unprecedented speed and precision.

On one hand, the strength of the data on the culture conversion side, which is what they focus on creates an opportunity to have that dialogue on the other hand as we've disclosed in a rise we didn't have any Japanese patients. So thats a limitation at the same time the drug is approved in Japan, It's fully approved and it's it's widely used successfully so I think.

There is a comfort there that may permit that to be bridged.

But we'll see.

Not I don't want to be unrealistic about it but I think its hand on heart, a very reasonable thing to ask of both regulatory bodies.

Got it and then just for <unk> congrats on the disclosures today.

Maybe one question here as you think about dose escalating beyond the six <unk> just can you remind us what you've seen from the preclinical data that supports maybe your comfort in going higher and Mechanistically. How are you thinking about the potential that youll be coming up on a ceiling effect.

Will Lewis: We look forward to providing you with updates as this work progresses. In short, we believe we are building a powerhouse of a biotechnology company in a very deliberate way. This transformation is set to take shape over a relatively short period of time as we execute it against a range of clinical, regulatory, and commercial milestones. It is truly an exciting time at insmet for our colleagues, our shareholders, and most importantly for the patients we serve.

Yes, what we've seen so far is a dose response curve and the use of <unk>, Delaware and this is also clinical practice the higher you go the better.

And so what is the enabling.

Our ability to go higher well you push it as high as you can in clinical practice and the use of something like <unk> or other forms of <unk>. What ends up happening is because of the peak of that drug because the drug defuses from tissue so quickly.

Sara Bonstein: I will now turn the call over to Sarah to walk through our third-quarter financials. Thank you, Will, and good morning, everyone. I am happy to share some of the details of insmed financial performance for the third quarter of 2023.

Sara Bonstein: We enter the quarter with approximately $786 million in cash, cash equivalence, and marketable securities. This represents a cash burden for the quarter of $132 million, which is consistent with our underlying cash burden in the second quarter. I want to point out that a large portion of our quarterly cash burden is directly related to breads of cash of development, including the cost inheriting, conducting, a very large phase three trial, as well as ongoing launch readiness activities, all of which we expect to be high return on investment endeavors.

Is so high it creates things like throat pain headache.

Tightness in the chest those kinds of side effects and.

<unk>.

The numbers that we presented today that more than 80% or higher are getting to the 640 <unk> dose and these are disease patients PIH in ph ILD patients suggests.

We've still got further to go I think we're all not surprised but encouraged by what we've seen our formulation has a 16 carbon chain appended to the <unk> molecule that means when they breathe it in as a dry powder. It's inert it's not an active drug so the <unk> in the lung cleave off that 16 carbon <unk>.

Sara Bonstein: We continue to believe that our current cash on hand can support our operations through the Aspen results in the second quarter of 2024, leaving a meaningful amount of cash remaining on the balance sheet at that time.

Jane and result in a slow release in the lung of the active drug so you're sort of that's why we think we're not seeing the throat pain and irritation that is commonly the dose limiting side effect of other forms of <unk>, we're able to get to $6 40, the PBR reductions here I think have some.

Sara Bonstein: Now, turning to our commercial performance in third quarter of 2023. Total net revenues for error case was $79.1 million, reflecting 17 percent growth year over year. For the second quarter in a row, this represents the strongest quarter for error case sales since its launch, up 2.4 percent compared to an already strong second quarter. On a regional basis, net revenue was $59.2 million in the US and $16 million in Japan, both of which represent the highest quarterly sales for error case in those regions to date. This supports our belief that both of these regions continue to be in a growth phase. Additionally, sales in Europe in the third quarter were $3.8 million.

Cases been jaw dropping again I would emphasize we don't know who is on drug and who isn't but at the same time to see that and to know the background that we've seen with other drugs. It is really I would say those discussions during KOL dialogue and with our steering committee have been very exciting and so that's the reason why they are.

Encouraged us to go higher.

And in practice, that's what physicians do they go to Max tolerated dose on an individual patient basis. So I think everything we've seen so far gives us a lot of comfort that the safety is there and we'll be cautious, but but I'm not concerned about.

Sara Bonstein: Today, we are reiterating our full year 2023 revenue guidance range of $295 to $305 million, which represents expected year-over-year sales growth for the company in excess of 20%. This quarter's results further supports our belief that error case is still in a growth phase. In Japan, error case revenues grew 11% this quarter compared to the third quarter of last year, despite the plan's 9% price decrease, which went into effect this past June.

Going above 640.

Great. Thanks, so much Bob.

And your next question comes from the line of Jennifer Kim with Cantor. Your line is open.

Hey, guys. Thanks for taking my questions and congrats on the quarter.

I want to start off on <unk>.

You talked about the six minute walk test.

If my math is right I think.

The patients Didnt show P. Vera and Susan averaged 20 minute walk improvement than the ones. You did show improvement showed an average of 36 minute walk improvement.

First of all is that math right, but also can you sort of contextualize that data for us and a recognized 16 week. Thanks.

Sara Bonstein: Recall that we highlighted on our last quarterly call that the growth that we had been expecting in Japan in the second half of this year started earlier than we had anticipated, making the second quarter very strong. Nevertheless, we saw sequential growth of 2.8% this quarter in Japan, which is an encouraging sign for continued growth in this region.

Yes, it's difficult of course.

When we talk about the six minute walk test, let's let's be very transparent about this this is always a highly variable readout, but to see improvement.

Above 30 meters in these.

Across all patients and an even higher than that among patients with the PBR reduction is highly encouraging.

Sara Bonstein: Let me now turn to a few additional financial highlights. In the third quarter of 2023, our growth synests in the US were approximately 14%, which is consistent with what we have normally seen in the third quarter. We continue to expect our growth synests to be in the mid-teen range for the full year in line with our historical performance. Cost of product revenues for the third quarter of 2023 was $16.7 million or 21.1% of revenues, which is also relatively consistent with our past performance.

We think about blended blinded data and its limitations, we look for signs of.

Elements that cant that are unlikely to be spontaneously adjusted so pulmonary vascular resistance does not typically spontaneously occur in these sick patients. So that would be highly unusual so to see those reductions and to think that okay. It's roughly two thirds of the patients in the trial it's ran.

<unk> two to one is pretty interesting to.

Sara Bonstein: Turning to our gap operating expenses. In the third quarter of 2023, research and development expenses were $109.1 million. Reflecting continued investment in both our early and mid-to-late-stage pipelines, as well as launch readiness activities for Brunsocacid.

To see six minute walk test improvement on these small numbers already I think is quite striking.

I'm aware that there was some public data.

<unk> got one of the <unk> forms approved with I think only a 20 meter six minute walk improvement and that was among patients who receive drug. So here. We don't know what the actual outcome will be I do want to highlight that there is often a wide.

Sara Bonstein: In closing, we are proud of intense performance this quarter, as we continue to deliver on our promises to our patients, shareholders, and other stakeholders.

Standard deviation around six minute walk test in every.

Place, it's use but it seems to be the best available measure.

Will Lewis: I'll now turn the call back to Will for closing remarks. Thank you, Sarah.

To give the FDA comfort and secure path to approval. So not only is the PBR reduction exciting, but its correlation with six minute walk improvement is also suggests a an exciting and for that reason, we provided it but again I think I want to highlight.

Will Lewis: Before we move to Q&A, I just want to take a brief moment to thank all of our investigators and clinical trial participants around the world. We could not achieve any of the bold ambitions embedded in our mission without their courage and commitment. I also want to thank our patients for providing us with the passion to keep pushing every day for life-changing innovations. To our investors for entrusting us with the financial fuel required to make those dreams a reality and our colleagues for their tireless efforts to execute on this vision. Thank you, Will.

The Kols the steering committee. They are very excited by these results. So we are excited by these results and we will see what what comes in the future.

Okay. That's really helpful. Thanks, and then I know you talked about enrollment.

Kayla Baker: Now I'd like to open the call to questions. Operator, can we take the first question, please? At this time, I would like to remind everyone in order to ask a question, press star and the number one on your telephone keypad. Please limit to two questions when prompted. If you have additional questions, you may rejoin the queue as time allows.

Kicking up.

Our case after the recent data.

Could you give any more color on that in terms of is that continuing to accelerate.

So on buy and how does that impact.

Impact.

How many patients you could potentially enroll during the course of 2024.

Andrea Tan: And your first question comes from the line of Andrea Tan with Goldman Sachs. Your line is open.

Look I think what's striking about it as everyone knows MTM trials can be challenging to enroll perhaps not as challenging as ph, but theyre pretty challenging.

Will Lewis: Good morning, guys. Thanks for taking my question. Two for me. First, Will recognize it's early, but just wondering if you could characterize your level of confidence in the arise data supporting a path towards accelerated approval for our case. Yeah, so I think the, as we mentioned, I think a number of times, we still consider the base case assumption to be the on-core data is the thing that will allow us to get the approval.

Will Lewis: But having said that, I think given the strength of the arise data, we'd be remiss if we didn't at least engage with FDA and with Japan to see about their willingness to permit a faster pathway. And the way I think about this is, you think about the US subpart H is if you have a validated surrogate that's reasonably likely to predict clinical benefit, then you have a case to at least present.

So I would just complement once again, our clinical operations team for producing the arise data on time and on the basis of that strong data. We have seen a notable uptick in enrollment. Since then now that was given out at the beginning of September. So it's been a fairly short period of time, but it has remained.

And it is.

It is significant so we're hoping that will continue it does give us encouragement that we think.

Whatever we end up deciding to enroll in encore will be able to get there in a fairly efficient way, but we'll have to see if that continues to be the pattern, but I would say I'm very encouraged by what we've seen and I am not surprised when I was in E. R. S.

Walking through the hotel lobby in Italy.

People coming up and stopping us and saying those arise data are really unbelievably good.

Will Lewis: And once the PRO is validated, which we expect will happen by roughly the end of this year, that would then enable us to go to the FDA and say, we've seen clear signs of culture conversion, which is linked to as a surrogate to this clinical benefit of PRO improvement. And so that's the basis for the subpart H request. They may quickly dismiss it, or they may want to engage. We're not going to push this if FDA shows interest.

Okay, great if I could.

I'd sneak one more in just on the R&D expenses.

And the 10-Q.

Manufacturing lower costs around manufacturing with the driver.

I'm wondering how do you think about that.

And the R&D expenses in your mid to late stage program, because I thought it took a bit down quarter over quarter.

Will Lewis: We will absolutely communicate that and move quickly to try to take advantage of it. In the case of Japan, on the one hand, the strength of the data on the culture conversion side, which is what they focus on, creates an opportunity to have that dialogue. On the other hand, we've disclosed in a rise, we didn't have any Japanese patients. So that's a limitation. At the same time, the drug is approved in Japan.

Perfect Renzo, Eric like sort of across the lineup on the external expenses.

Expect it to.

Sort of stay where it is or how should we think about that over the next year or so thank you.

Yes, Thanks, Jennifer for the question, we obviously haven't provided forward looking guidance, but what I can say is we continue to have investment in.

Will Lewis: It's fully approved, and it's widely used successfully. So I think there's a comfort there that may permit that to be bridged. But we'll see. I mean, I don't want to be unrealistic about it, but I think it's hand on heart a very reasonable thing to ask of both regulatory bodies. Got it.

Research and development to support all of our programs obviously, our early early stage.

Efforts are less than 20% as we've committed to R. R.

<unk> and <unk> are 80% plus from an overall investment perspective.

Will Lewis: And then just for TPP, congrats on the disclosures today. But maybe one question here is you think about dose escalating beyond the 640.

Arise at Encore programs are obviously ongoing Aspen is ongoing data read out Q2 of next year and then TPI P. The phase two is ongoing and then obviously the startup costs for <unk>.

Will Lewis: Just can you remind us what you've seen from the preclinical data that supports, you know, maybe you're comfort and going higher and mechanistically, how are you thinking about the potential that you'll be coming up on a ceiling effect? Yeah, you know, what we've seen so far is a dose response curve in the use of Croprocnil where, and this is also clinical practice, the higher you go, the better. And so what is the enabling ability to go higher?

Some of the launch readiness activities manufacturing costs tend to be lumpy in nature.

No I wouldn't read more into manufacturing costs are lumpy in nature.

And your next question comes from the Mill Diovan with Guggenheim Securities. Your line is open.

Great. Thanks, Alright, taking my questions, maybe first just on the TPS side again.

Will Lewis: Well, you push it as high as you can in clinical practice in the use of something like Tevezo or other forms of Croprocnil. What ends up happening is because the peak of that drug, because the drug diffuses through tissues so quickly, is so high, it creates things like throat pain, headache, tightness in the chest, those kinds of side effects, and the numbers that we presented today that more than 80% or higher are getting to the 640 dose.

One question I had.

So about 80% or 80.

Patients are getting to the highest dose across the two different groups I'm curious sort of what's preventing the 20% or so that are not getting there is it just call.

Or something else.

Doug invitation for Haynesville.

And it's not that.

Dan.

Just a question we're getting from some investors I'm curious you talked about this a little bit. So what would you say is a reasonable placebo responses that we should expect in ph in ph ILD.

Will Lewis: And these are disease patients, P-A-H-N-P-H-I-D patients, suggests that we've still got further to go. I think we're all not surprised, but encouraged by what we've seen. Our formulation has a 16-carbon chain appended to the Croprocnil molecule. That means when they breathe it in as a dry powder, it's inert, it's not an active drug. So the esterase is in the lung, cleave off that 16-carbon chain and result in a slow release in the lung of the active drug.

Okay.

Sort of sort out obviously, we're still going to get more data here as we go.

All forward, but from what we have right now to sort of even groups.

Poland.

It would be helpful.

Thank you.

So I think.

What I would say about the.

Trial is that so far it is both trials are progressing very well. The perception is we're trying to convey from the steering committee and from the Kols, who see these data is incredibly encouraging.

Will Lewis: So you sort of, that's why we think we're not seeing the throat pain and irritation that is commonly the dose limiting side effect of other forms of Croprocnil. We're able to get to 640. The PBR reductions here, I think, have in some cases been jaw-dropping. Again, I want to emphasize, we don't know who's on drug and who isn't. But at the same time, to see that and to know the background that we've seen with other drugs, it's really, I would say, those discussions during KOL dialogue and with our Steering Committee have been very exciting.

And some have even used the phrase which I appreciated category killer.

For the description of this drug so I am incredibly encouraged by what we've seen it is early in the trials and so we want to always footnote that aspect of what we're seeing the 20%.

Are not getting to the Max tolerated dose I don't want you to walk away and think that there are people who are having significant adverse events here.

Will Lewis: And so that's the reason why they have encouraged us to go higher. And in practice, that's what physicians do. They go to max-tolerated dose on an individual patient basis. So I think everything we've seen so far gives us a lot of comfort that the safety is there, and we'll be cautious, but I'm not concerned about going above 640. Great, thanks so much, Paul.

Some arent going higher for any any number of reasons. It is not that many but those who are still getting to substantial levels. So they may not make it to $6 40 in the five week time, which is the cut off.

Timeframe, but they are still getting to high levels.

And so.

Jennifer Kim: And your next question comes from the line of Jennifer Kim with Canter, your line is open. Hey guys, thanks for taking my questions and compressing the quarter. I want to start off on TPPIT. I think you talked about the six minute walk as if my math is right. I think the patients who didn't show PVR improvement average 20 minute walk and solution and the ones who did show improvement showed an average of 36 minute walk and solution. First of all, is that math right? But also, can you sort of contextualize that data for us? And I recognize this is that 16 weeks. Thanks.

That are in some cases significantly still significantly above where the best available Tvs or dry powder can can achieve so from that perspective, we feel really good about every aspect of this trial I mean on the extreme side I would say that when you think about PBR the normal level is around <unk>.

<unk> Woods units.

And we are seeing some patients who are approaching that level.

So that if you think about the way this drug works 24 hours of coverage.

With a single administration.

This is like a continuous infusion to the lung of <unk> through installation and that is.

Will Lewis: Yeah, it's difficult, of course, when we talk about the six minute walk test, let's be very transparent about this. This is always a highly variable readout, but to see improvement above 30 meters in these across all patients and even higher than that among patients with a PVR reduction is highly encouraging. If we think about blended blended data and its limitations, we look for signs of elements that can't, you know, that are unlikely to be spontaneously adjusted.

Not something that is currently possible. So if this continues to read out the way. It is I think there's every reason to believe that this is going to be a game changing compound I don't know if I answered the other aspect.

Of your question.

Yes, so Steve.

Placebo response, yes, I'm hesitant to give a background information on other meds I know that public and that information is publicly available. So perhaps we can we can help you dig that up at side bar and get that around.

Okay. Okay. Thank you.

Will Lewis: So pulmonary vascular resistance does not typically spontaneously occur in these sick patients. So that would be highly unusual. So to see those reductions and to think that, okay, it's, you know, roughly two thirds of the patients and a trial that's randomized two to one is pretty interesting. To see six minute walk test improvement on these small numbers already, I think is quite striking. I'm aware that there was some public data which got one of the traprosonal forms approved with, I think, only a 20 meter six minute walk improvement.

And your next question comes from the line of Ricky Burrell with TD Cowen Your line is open.

Good morning, guys. Thanks for taking my question I wanted to hit for my first question to ask then a little bit.

Well can you comment a little bit about how you're seeing the blinded data come in with respect to.

Baseline event rate.

Exacerbation rates and also the blended.

The blended event rate for that trial.

Will Lewis: And that was among patients who received drug. So here, we don't know what the actual outcome will be. I do want to highlight that there is often a wide standard deviation around six minute walk test in every place it's used, but it seems to be the best available measure to give the FDA comfort and secure a path to approval. So not only is the PVR reduction exciting, but it's correlation with six minute walk improvement is also suggestive and exciting.

And how should we be thinking about the powering or any additional detail on empowering and Mci.

You could give us after your discussion today.

Yes.

Yes, so what I would say about the.

Aspen trial is that it is continuing exactly as we would want it to we start with the awareness that the inbound patients fit the profile of Willow almost perfectly.

So that that is an encouraging base of of information as we released once before.

Will Lewis: And for that reason, we provided it. But again, I think I want to highlight the KOLs, the steering committee. They're very excited by these results. So we are excited by these results. And we'll see what what comes in the future.

The event rate.

It Hasnt really changed so there's no real reason to update it and so I mean, it will move around a little bit but the vast majority of this trial is now.

Will Lewis: Okay, that's real helpful. Thanks. And then I know you talked about enrollment sort of kicking up in the air case after the recent data. Could you give any more color in that in terms of, is that continuing to accelerate as the week's going by? And how does that impact how many patients you could potentially enroll through the course of 2024? Look, I think what's striking about it is everyone knows NTM trials can be challenging to enroll.

<unk> is now completed and so what I would also say is that along the way we are cleaning the data as we go so.

We are in a very strong position with regard to the completion of the trial and being able to move to the production of the data and ultimately into what we hope will be a filing so I don't know if theres a lot more to update in terms of blended blinded data, we're seeing except to say that the elements I look for are remaining consistent with what.

What we've publicly stated before and we continue to hear the anecdotes from physicians that they are seeing patients with notable improvements. Although once again, we don't know whether they're on placebo or treatment.

Will Lewis: Perhaps not as challenging as PA age, but they're pretty challenging. And so I would just compliment once again our clinical operations team for producing the arise data on time. And on the basis of that strong data, we have seen a notable uptick in enrollment since then. Now that was given out at the beginning of September. So it's been a fairly short period of time, but it has remained. And it is it is significant.

From a powering point of view. This study was powered for at least 90%.

To show a 30% reduction in phase II, we were 80% powered to show a 40% reduction in we were stat. Sig. So I think we are well powered we are conservative assumptions behind event rates. The event rates. We're seeing are consistent with Willow study it may be big multiples of the size of Willow.

Will Lewis: So we're hoping that will continue. It does give us encouragement that we think, you know, whatever we end up deciding to enroll in an encore, we'll be able to get there in a fairly efficient way, but we'll have to see if that continues to be the pattern. But I would say I'm very encouraged by what we've seen. And I'm not surprised when I was at ERS, you know, walking through the hotel lobby in Italy, we had people coming up and stopping us and saying those arise data are really unbelievably good.

And certainly bigger than anything else that's ever been done in this space before but we like to say internally that this trial design will not fail the drug.

It is always possible that the drug may have some unexpected.

Results, but I do not think that we will be lacking for powering and I expect that to convey a clear message at the time, we underlined.

Jennifer Kim: Okay, great. If I could sneak one more in just on the R&D expenses, I know in the time Q, it's a manufacturing, lower cost around manufacturing with the driver, but I'm wondering, how do you think about the move in the R&D expenses in your mid to late stage programs, because I thought it took a bit down quarter quarter for rent, so like sort of across the line on the external expenses, do you expect it to sort of stay where it is, or how should we think about that over the next year or so?

Got it and then moving to T Pip and its Tolerability you mentioned that most of the cost was mild.

Can you comment on the rate.

Moderate cost did you see any series.

Sirius call for severe cost.

Oh actually cough is one of the points of great strength of this compound and we did a ton of preclinical work on this.

One of our physicians, who is an expert in this area <expletive> Chapman.

Did some pioneering work for us and using gold standard models establish that.

Jennifer Kim: Thank you. Yeah, thanks Jennifer for the question. We obviously haven't provided forward thinking guidance, but what I can say is we continue to have investment in research and development to support all of our programs. Obviously our early stage efforts are less than 20%. As we've committed to our error case, TPI and Breadsocative are 80% plus from an overall investment perspective. The arise and on-core programs are obviously ongoing. Aspen is ongoing data readout to two of next year, and then TPI, the phase two is ongoing, and then obviously to start up costs for some of the launch readiness activities. Manufacturing costs tend to be lumpy in nature, so I wouldn't read more into manufacturer costs or lumpy in nature.

This this compound was really able to be used without a lot of that sort of side effect profile.

There are patients who experienced cough, particularly with ph ILD because cough is a feature of the disease and anytime youre using a dry powder in that setting that youre going to expect some cough, but I don't again the message today should be heard that we're not seeing anything out of the ordinary for ph or ph ILD patients who are treated receiving.

<unk> and other forms and in many ways ours as to our mind materially better.

Got it thanks for taking the question.

Sure.

And your next question comes from the line of Jeff Hung with Morgan Stanley. Your line is open.

Thank you for taking my questions. This quarter, you reiterated guidance, which at the midpoint would suggest that <unk> could be flat last year's fourth quarter ended up declining sequentially. So can you just talk about the factors that we should be keeping in mind for the rest of this year and then how they compare to those from last year and then I have a follow up.

Vamil Divan: And your next question comes from the Mill Diven with Guggenheim Securities. Your line is open. Great, thanks for taking my question.

Will Lewis: Maybe first just on the TPI beside again. One question I have, it just looks at about 80% of patients are getting to the highest dose across the two different groups. I'm curious what's preventing the 20% or so that are not getting there, is it just called or something else? I don't think there's no throat irritation or pain, so assume it's not that.

Yes, sure happy to address that Geoff. Thanks for the question. So we were really encouraged by the performance of aerospace this quarter, a second sequential quarter of substantial growth guidance obviously.

Attracts over 20% growth year over here with us now getting to our fifth year anniversary. So again really encouraged by the performance Japan.

Will Lewis: And then I'm just, the question we're getting in from some investors, you talked about this a little bit, but from what would you say is a reasonable placebo response that we should expect in pH and pH algae, just I think because for sort out how we're still going to get more data here as we go forward, but from what we have right now, sort out how the placebo group may have performed, it would be helpful, you can give any insights. Thank you.

As we've always said is the second half of the year story that started a little bit earlier than we expected yet we still saw sequential growth this quarter in Japan, and we continue to.

Has.

Expectations for Japan to continue to be strong Q4, as you can look at historical performance Q4 in the U S. Gross to net usually is a little bit higher so just some kind of.

Seasonality there if you just look at historical performance, but overall, we're really proud of the performance at aerospace has been able to do now entering.

Will Lewis: So I think what I would say about the trial is that so far both trials are progressing very well. The perception as we're trying to convey from the steering committee and from the KOLs who see these data is incredibly encouraging, and some have even used the phrase which I appreciated a category killer for the description of drug. So I am incredibly encouraged by what we've seen, it is early in the trials, and so we want to always footnote that aspect of what we're seeing.

Its sixth year.

In the most mature territory.

Great. Thanks, and then can you talk about the Presto catch up commercial readiness activities that you've undertaken so far and what additional activities are still expected before the data readout next year. Thanks.

Yes, so on the Brent So front. The team has just done exceptional work and this is the medical education, it's preparing.

The market access story, so that we can educate the market access world I mean, we've got a lot of lessons learned from our first in disease launch that we're applying for bronchiectasis because again. This like MTM is a disease that has nothing approved to treat it. So there's some upfront work we want to do I think if you benchmark.

Will Lewis: The 20% that are not getting to the max tolerated dose, I don't want you to walk away and think that there are people who are having significant adverse events here. Some aren't going higher for any number of reasons, it's not that many, but those who are are still getting to substantial levels. So they may not make it to 640 in the five week time which is the cutoff timeframe, but they are still getting to high level.

US against any best in class effort for drug launch.

The efforts that we're making now and the maturity of those efforts and the success of those efforts as seen at recent congresses by the interest level of the medical community are really just top shelf.

Will Lewis: Hills, and so that are in some cases significantly still significantly above where the best available tabais are dry powder can achieve. So from that perspective, we feel really good about every aspect of this trial. I mean, on the extreme side, I would say that when you think about PBR, the normal level is around two woods units and we are seeing some patients who are approaching that level. So that, if you think about the way this drug works, 24 hours of coverage, with a single administration, this is like a continuous infusion to the lung of Traprasnel through inhalation.

And they're very early we're getting underway with this work.

Well over a year in advance of when we expect.

We'd be filing so that is.

A pretty a pretty good timeline to be out in front of all of this so.

I'm really happy with what we've done so far I expect that we will continue this effort and you will continue to see at the Congresses the significant interest in bronchiectasis.

And potential treatments and I would just remind folks of the synergies between our commercial product <unk> and <unk> as you think about the call and the relationships that we have already in the MTM community with the Pulmonologists and I'd docks on many of those same prescribers would be assuming success on Aspen. So just <unk>.

Will Lewis: And that is not something that is currently possible. So if this continues to read out the way it is, I think there's every reason to believe that this is going to be a game-changing compound. I don't know if I answered the other aspect of your question.

<unk> from an infrastructure perspective are tremendous many efforts are underway in the hiring plan is already locked down we know exactly what we're going to do and trigger it off of data.

Will Lewis: Yeah, the placebo response. Yeah, I'm hesitant to give a background information on other meds. I know that public and that information is publicly available. So perhaps we can help you dig that up at Sidebar and get that around. Okay, okay, thank you.

Down to the day.

Great. Thank you.

And your next question comes from the line of Jason Domanski with Bank of America. Your line is open.

Ritu Baral: And your next question comes from the line of Ritu Borrell with TD Cohen. Your line is open. Good morning, guys. Thanks for taking my question. I wanted to, for my first question, pivot to ask in a little bit. Will, can you comment a little bit about how you're seeing the blinded data come in with respect to baseline event rates, exacerbation rates, and also the blended event rate for that trial. And how should we be thinking about the powering or any additional detail on powering and MCID, but you could give us after your discussion that ERS.

Good morning, Thank you for taking our questions and congrats on both the quarter and the data.

In terms of T. Pip, if I may the responses it sounds like there was a bit of a range here.

Granted it's still early but I was hoping you could speculate a little bit on what are some of the key drivers here I mean is it dose exposure or do you think this is more patient based in terms of I don't know where they are in their disease progression or fundamental level of lung <unk>, what I'm trying to get at is to what extent do you think that.

Moving to higher doses will collectively push responses up.

So I think the short answer to the question is the dose response curve is already well established for <unk> and so by going higher in dose we would expect greater effect simple is that the challenge in.

Will Lewis: Yeah, so what I would say about the Aspen trial is that it is continuing exactly as we would want it to. We start with the awareness that the inbound patients fit the profile of willow almost perfectly. And so that that is an encouraging base of information as we released once before the event rate hasn't really changed. So there's no real reason to update it. And so I mean, it'll move around a little bit, but the vast majority of this trial is now, is now completed. And so what I would also say is that along the way we are cleaning the data as we go.

With that historically is.

The side effect profile and if you look at the actual PK PD profile of <unk>.

Coprostanol in its earlier approved forms Theres, a very high peak and then it collapsed as very very quickly and Thats why its re dosed over and over again and that's an attempt to stay above the therapeutic index and provide benefit to patients.

There isn't any night time coverage and there are similar limitations.

As you try to go up that peak gets higher and higher and that's really the origin of the side effect profile that has the most troublesome what is interesting about our drug is the peak is substantially lower even though you are administering much more drug and so the peak as it comes down.

Will Lewis: So we are in a very strong position with regard to the completion of the trial and being able to move to the production of the data and ultimately into what we hope will be filing. So I don't know if there's a lot more to update in terms of blended, blinded data we're seeing except to say that the elements I look for are remaining consistent with what we've publicly stated before. And we continue to hear the anecdotes from physicians that they are seeing patients with notable improvements.

It's a slow release formulation is the way to think about it and as a result, you stay above the therapeutic index for up to 24 hours. So you are getting as I was describing earlier kind of constant infusion of the drug I would think that will over time and with more patients actually reduce the variability, but these patients do have a lot of variance if you look at other.

Will Lewis: Although once again, we don't know whether they're on placebo or treatment. From a powering point of view, this study was powered for at least 90% to show a 30% reduction. In phase two, we were 80% powered to show a 40% reduction and we were static. So I think we are well powered. We have conservative assumptions behind event rates. The event rates we're seeing are consistent with willow. I mean this study, it may be big, multiples of the size of willow and certainly bigger than anything else it's ever been done in the space before.

<unk>.

Studies in history, but the variance we really see is more around six minute walk and I want to just point out an example.

There is one of the patients that we know we don't know whether they're on drug not that has a different medical condition that is going to impact their six minute walk test.

Because it creates.

Hip problem for them and as a consequence their six minute walk test is going to go down now I don't know, whether they're on drug or not but I do know that that has nothing to do with the drug and so that's the kind of confounding factor for these patients who are very sick.

Will Lewis: But we like to say internally that this trial design will not fail the drug. It is always possible that the drug may have some unexpected results, but I do not think that we will be lacking for powering. And I expect that to convey a clear message at the time we unblock. Got it. And then moving to T-Pip and its tolerability, you mentioned that most of the cough was mild. Can you comment on the rate of moderate cough? Did you see any serious cough or severe cough?

With a terminal disease that is going to make it very difficult to read through and I think that's historically why six minute walk has been such a.

And intense.

Debate for its benefit predictive capability in these patients what is not.

<unk> question in my mind are things that our hemodynamic changes, where you know what's taking place there with higher confidence as a byproduct of the drug and that's why we're seeing these dramatic reductions in PBR.

You would expect if you just extrapolate the dose impact from other forms of <unk>, you would assume that there would be better PBR reduction and indeed, that's what we're seeing I mean, if it turns out that the alignment between those who are showing a response is consistent with those who are on drug that 47% reduction.

Will Lewis: Oh, actually cough is one of the points of great strength of this compound. We did a ton of preclinical work on this. One of our physicians who was an expert in this area, Dick Chapman, really did some pioneering work for us, and using gold standard models established that this compound was really able to be used without a lot of that sort of side effect profile. There are patients who experience cough, particularly with Ph.

In PBR is without precedent.

And that is what is really exciting and I think it's what's got the kols and the steering committee. So so encouraged.

Will Lewis: L.D., because cough is a feature of the disease. And anytime you're using a dry powder in that setting, you're going to expect some cough. But I don't, you know, again, the message today should be heard that we're not seeing anything out of the ordinary for a PAH or Ph. I.L.D, patients who are treated receiving for prostinal and other forms, and in many ways ours is to our mind materially better. Got it. Thanks for taking the question. Sure.

Got it that's helpful and then maybe a quick one on aerospace.

<unk> that you are in a growth phase certainly looks like it but what are some of the remaining levers out there in terms of the refractory setting and how sustainable do you think they are.

Well I think we've continued to show growth. We think there are many more patients out there. So that's not our concern the thing that people have to remember is that there is a variable utilization of the drug in terms of duration of use and so in a sense. After patients have had success with the drug there will come a time when they'll stop using it and so.

Jeff Hung: And your next question comes from the line of Jeff Hong with Morgan Stanley, your line of open. Thank you for taking my questions. This quarter, you read our guidance, which at the midpoint would suggest that 4Q could be flat last year's fourth quarter ended up declining sequentially.

You are replenishing that patient population on a regular basis as patients come off now there is we've noticed that there's a decent percentage of those patients who are coming back on because they get reinfected.

Sara Bonstein: Can you just talk about the factors that we should be keeping in mind to the rest of this year and then how they compared those from last year, and then I will follow up. Yeah, sure. Happy to address that Jeff. Thanks for the question. So we were really encouraged by the performance of air case this quarter, second sequential quarter of substantial growth guidance. Obviously tracks, you know, over 20% growth year over here with us now getting to our 50 year anniversary.

But that's really the dynamic that's at play is that some of these patients are going to are going to stop using the drug and so it's a it's a kind of acute chronic therapy because that makes sense.

Sara Bonstein: So again, really encouraged by the performance Japan is we've always said is the second half of the year story that growth started a little bit earlier than we expected. Yet we still saw sequential growth this quarter in Japan, and we continue to have expectations for Japan to continue to be strong. Q4, as you can look at historical performance, Q4 in the US grows to net usually is a little bit higher. So just some kind of seasonality there if you just look at historical performance. But overall, we're really proud of the performance that air case has been able to do now entering. It's six year in in the most mature territory. Great. Thanks.

Yes, thanks, so much for the color.

And your next question comes from the line of Joseph Schwartz with Leerink Partners. Your line is open.

Great. Thanks, very much we've heard that seasonality can play a role in promoting some bronchiectasis as exacerbations and so given you've looked at and shared some of your blended blinded exacerbation data for Aspen I was wondering if you have any insight you can share on the seasonality patterns for patients before.

And after they entered this study and do you have any sense, whether patients who had exacerbations historically during a certain time of the year have been able to live exacerbation free during these difficult periods based on blinded data from Aspen and then I have a follow up thank you.

Yes. So the seasonality question is always a tricky one because it's not a clear pattern that is going to apply to everybody and remember that the trial is designed with both north and south geographies.

Will Lewis: And then can you talk about the Brent, so catch it commercial readiness activities that you have undertaken so far and what additional activities are still expected before the data readout next year. Thanks. Yeah, so on the Brent, so front, the team has just done exceptional work and this is the medical education. It's preparing the market access story so that we can educate the market access world. I mean, we've got a lot of lessons learned from a first in disease launch that we're applying for bronchi actresses because again, this like NTM is a disease that has nothing approved to treat it.

Across the globe, so that you get different.

Seasons, if you will and that necessarily will mute any effect of any one particular area. If in fact, that's on display I think what gives us the greatest comfort and certainly what we've heard from the Kols is the fact that we require patients to have two or more exacerbations in order to get into the trial documented in.

The last 12 months and that means regardless of what season.

Seasonality. They are experiencing this is a 12 month study youre going to see events and Thats, what we need in order for the drug to show its effect. So from that perspective, I think we're pretty well insulated that is true we saw two or more exacerbations in the last 12 months, whether it was during the COVID-19 lockdown or outside of the Covid Lockdown, where the rates were going up or down.

Will Lewis: So there's some upfront work we want to do. I think if you benchmark us against any best in class effort for drug launch, the efforts that we're making now and the maturity of those efforts and the success of those efforts has seen it at recent congresses by the interest level, the medical community are really just top shelf. And they're very early. We are getting underway with this work well over a year in advance of when we expect, you know, we'd be filing.

We know our patients are exacerbating patients and Thats, what we need in order to demonstrate the impact of the drug and I would just add the baseline characteristics that we put out from Willow and asked vendors the consistency on those on exacerbations number of exacerbations.

Will Lewis: So that is, you know, a pretty pretty good timeline to be out in front of all this. So I'm really happy with what we've done so far. I expect that we will continue this effort and you will continue to see at the congresses the significant interest in bronchi actresses and potential treatments. And I would just remind folks of the synergies between our commercial product error case and Brent so cats, as you think about the call and the relationships that we have already in the NTM community with the pulmonologist and ID docs, many of those same prescribers would be assuming success on Aspen.

History of COPD asthma that also could just gives us comfort on very similar patients in the strength of the Willow data, where you all are very aware of and looking forward to turning over the Aspen data card Q2 of next year.

Okay. Thank you and then given you've been on the market in Japan with their case for a little while now I was wondering if you can give us any insight into how the performance has been and how your trajectory looks relative to the U S. At a similar point in the launch in terms of things like sales rep productivity.

And Penn.

Penetration of physician practices or anything else, you think might be important.

Will Lewis: So just the synergies from an infrastructure perspective are tremendous. And the efforts are underway and the hiring plan is already locked down. We know exactly what we're going to do and trigger it off of data down to the day. Great.

Yes, so I'm bullish on Japan, and the reasons for that are several fold number one I think the team out there has done.

Really good job in a very difficult environment its hard for us to remember because we basically largely forgotten about the Covid era I think for a whole number of reasons, but it was only lifted in Japan and sort of the May June timeframe of this year.

Jason Zemansky: Thank you. And your next question comes from the line of Jason Zemansky would think of America, your line is open. Good morning.

Those restrictions.

Full on until that that moment in time and so they were working through that in the middle of a respiratory drug launch, which is hard to imagine the other thing I would remind us that there were a number of surges of Covid, where hospitals got filled up and those were far more frequent and severe at the end.

Jason Zemansky: Thank you for taking our questions and grads on both the quarter and the data. In terms of tea pip if I may, the response is it sounds like there was a bit of a range here. Granted, it's still early, but I was hoping you could speculate a little bit on what or some of the key drivers here. I mean, is it dose exposure or do you think this is more patient based in terms of, I don't know where they are in their disease progression or, you know, fundamental level of lung esterases.

In the last 12 to 18 months and they were in the U S and that made it even more challenging so the lifting of those restrictions is one driver that affords us the opportunity, but the more important one in my opinion is the new leadership, we have in our Japanese territory, we brought on several key.

Jason Zemansky: What I'm trying to get at is, to what extent do you think that moving to higher doses will collectively push responses up? So I think the short answer to the question is that dose response curve is already well established for prostinal. And so by going higher in dose we would expect greater effect. Simple as that. The challenge in with that historically is the side effect profile. And if you look at the actual PKPD profile of troprosinol and it's earlier approved forms, there's a very high peak.

Senior people in at the beginning of this year and they have really transformed.

The culture and the capability set of that team and their performance has matched that and the reason we did that was because we knew not only do we have the refractory market to go and pursue but we also have to get ready for bronchiectasis and what we expect will be frontline NTN, so all MTM patients and and this.

The team that can do it and they've demonstrated that so there are more patients there are more hospitals theyre more relationships and those are growing by the day.

Jason Zemansky: And then it collapses very, very quickly. And that's why it's re-dosed over and over again. And that's an attempt to stay above the therapeutic index and provide benefit to patients. There isn't any nighttime coverage. And there are similar limitations. As you try to go up, that peak gets higher and higher. And that's really the origin of the side effect profile that is the most troublesome. What is interesting about our drug is the peak is substantially lower even though you're administering much more drug.

Thank you.

And your next question comes from the line of Lisa <unk> with Evercore ISI. Your line is open.

Hi, congratulations on the data and thanks for taking my question first can you.

Jason Zemansky: And so the peak as it comes down, it's a slow release formulation is the way to think about it. And as a result you stay above the therapeutic index for up to 24 hours. So you're getting, as I was describing earlier, a kind of constant infusion of the drug. I would think that will over time and with more patients actually reduce the variability. But these patients do have a lot of variance if you look at other studies and history.

Give us a sense of when we can expect the next update from I know youre going to obviously amend the protocol.

Got to peek at that data or more patients through the study.

Core <unk>.

Yes so.

I know that what I can tell you with confidence today is that we believe that we will have ph ILD data in the first half of next year. The results of the study and Thats, probably the one anchor point I can give you.

Jason Zemansky: But the variance we really see is more around six minute walk. And I want to just point out an example. There's one of the patients that we know we don't know whether they're on drug not that has a different medical condition that is going to impact their six minute walk test because it creates a hip problem for them. And as a consequence, their six minute walk test is going to go down.

Will we update with additional ph data I suppose we can give that some consideration I don't see why we wouldn't want to continue to at least give people. The perspective that we're seeing the same thing or what the trends are.

This is an incredibly exciting data set that we have seen grow and be consistent each time, we've cut the data. So I don't have a reason to expect it to change dramatically, but it could and it is important to highlight that but so far.

Jason Zemansky: Now I don't know whether they're on drug or not. But I do know that that has nothing to do with the drug. And so that's the kind of confounding factor for these patients who are very sick. With a terminal disease that is going to make it very difficult to read through. And I think that's historically why six minute walk has been such an intense debate for its benefit predictive capability in these patients.

It looks good it looks consistent and so I would expect to continue to be able to share that message, but as far as anchor points in time I would look for ph ILD trial results in the first half of next year.

And while you make the same protocol amendment to that study as well.

Okay.

Jason Zemansky: What is not in question in my mind are things that are hemodynamic changes where you know what's taking place there with higher confidence is a byproduct of the drug. And that's why we're seeing these dramatic reductions in PVR, which you would expect. If you just extrapolate the dose impact from other forms of trappostinol, you would assume that there would be better PVR reduction and indeed that's what we're seeing. I mean, if it turns out that the alignment between those who are showing a response is consistent with those who are on drug that 47% reduction in PVR is without presence. And that is what is really exciting and I think it's what's got the KOLs and the steering committee so, so encouraged.

No. It's the ph study is the one that we're doing the protocol amendment for the open label extension.

Higher doses for ph.

Okay, Great and then just a question on arise so.

Will Lewis: Got it, that's helpful.

Now on the placebo arm you were kind of.

60% response rate and much higher response rate on Eric <unk>.

If you look at Q.

12 months, how are you thinking of that placebo rate evolving if we look at kind of some papers out there it looks like that could push into the 80% range just based on where it is today.

Yeah.

I know, that's some papers microphone et cetera, but I was just wondering how youre thinking about that.

Yeah, I think you actually have like minus 4% rate how that would evolve over the course of the second set of six months.

Will Lewis: And then maybe a quick one on air case, you highlighted that you're in a growth phase certainly looks like it, but what are some of the remaining levers out there in terms of the refractory setting and how sustainable do you think they are? Well, I think, you know, we've continued to show growth. We think there are many more patients out there, so that's not our concern. The thing that people have to remember is that there is a variable utilization of the drug in terms of duration of use.

12 months.

Yes, so I don't.

We don't believe there is much risk of the control arm sort of closing the gap with air case, and any kind of significant way over the 12 month period that you would see in encore, it's not the pattern we've seen in the other well controlled clinical trials and Mac lung patients that we've run for example, if you think about convert and refractory Mac patients in now in the arise study.

Will Lewis: And so, in a sense, after patients have had success with the drug, there will come a time when they'll stop using it. And so you're replenishing that patient population on a regular basis as patients come off. Now, there's a, we've noticed that there's a decent percentage of those patients who are coming back on because they get reinfected. But that's really the dynamic that's at play is that some of these patients are going to are going to stop using the drug and so it's a, it's a kind of acute chronic therapy that makes sense.

We saw that the patients who converted on standard of care therapies largely did so in the first two to four months of treatment in fact and arise I think the conversion rate in the control arm stayed relatively consistent for months three through month six with the peak conversion rate occurring at month, four so I don't I.

Really don't worry about that at all.

And that is certainly what you would hear if you if you talk to the Kols that are that are out there.

Who are in the disease, but we'll see we'll flip the oncor card and see where we go.

Will Lewis: Yep, thanks so much for the color.

I just would reemphasize that the perception of the arise data is.

Joseph Schwartz: And your next question comes from the line of Joseph Swarth with Lee Rink Partners. Your line is open. Great. Thanks very much. We've heard that seasonality can play a role in promoting some bronchi exorcist exacerbations. And so given you've looked at and shared some of your blended blinded exacerbation data for Aspen, I was wondering if you have any insight you can share on the seasonality patterns for patients before and after they entered the study.

Sort of universally.

Joseph Schwartz: And do you have any sense whether patients who had exacerbations historically during a certain time of the year have been able to live exacerbation free during these difficult periods based on blinded data from Aspen. And then I have a follow up. Thank you.

And overwhelmingly positive and I don't think people feel like it's.

<unk> I guess is the right way to respond.

Will Lewis: Yeah, so the seasonality question is always a tricky one because, you know, it's not a clear pattern that is going to apply to everybody and remember that the trial is designed with both North and South geographies. And across the globe so that you get different seasons, if you will, and that necessarily will mute any effect of any one particular area, if in fact, it's on display. I think what gives us the greatest comfort and certainly what we've heard from the KOLs is the fact that we require patients to have two or more exacerbations in order to get into the trial documented in the last 12 months.

Yeah, I think the I mean, the most impressive things you come off therapy.

Very few people who are about box I think thats.

You know that that's just another point, but anyway I'm just curious how you think about that thank you for taking my questions.

Yeah.

And your next question comes from the line of Leon Wang with Barclays. Your line is open.

Alright, Thank you for taking my question.

Thanks for giving us a peak.

The <unk> data.

On safety.

Alright. Thanks.

In terms of euro.

That's pretty impressive.

So on this have you seen any.

I'm, sorry, I'm, having a hard time hearing you can you get closer to your microphone I apologize I want to make sure I can hear your question clearly yeah sure is this better.

Yes. Thanks.

Yes always have some problem with his mic, but so anyways.

So my question is in terms of safety.

Have you seen any Gi issues in these patients and any discontinuation as I've seen in the either the PPA H or ph ILD patient population.

Will Lewis: And that means regardless of what seasonality they're experiencing, this is a 12 month study, you're going to see events and that's what we need in order for the drug to show its effect. So from that perspective, I think we're pretty well insulated. That is true. We saw two or more exacerbations in the last 12 months, whether it was during the COVID lockdown or outside of the COVID lockdown, whether rates were going up or down, we know our patients are exacerbating patients.

Nothing that is notable.

It didn't rise to the level of discussion among.

The medical colleagues so.

I'm not aware of anything in that in that arena.

Gotcha.

One more question on safety as well.

Given the differences in dosing do you think the reasons behind having zero incidents.

Will Lewis: And that's what we need in order to demonstrate the impact of the drug. You know, we just add the baseline characteristics that we put out from Willow and Aspen, just the consistency on those on exacerbations, number of exacerbations, history of COPD asthma, that also gives us comfort on very similar patients and the strength of the willow data.

Throat irritation is that more of a kind.

Kind of driven by TPI P or could this also be.

Factor in that.

For drugs like survey, so we've seen even in the placebo arm there is around mid teens.

Throat irritation.

Will Lewis: We're all very aware of and looking forward to turning over the Aspen data card Q2 of next. Thank you.

But that's also a dose four times a day. So I'm just kind of curious on like what do you think is what do you think is the factor driving that.

Will Lewis: And then given you've been on the market in Japan with Air Case for a little while now, I was wondering if you can give us any insight into how the performance has been and how your trajectory looks relative to the US at a similar point in the launch in terms of things like sales rep productivity and penetration of physician practices or anything else you think might be important. Yeah, so I'm bullish on Japan and the reasons for that are several fold.

Also on the safety side.

Yes, I think as I mentioned earlier I think the fact that this drug is inhaled dry powder inert and inert form.

And only once a day is the key to the to the safety profile. We are seeing you are correct. There are certainly placebo response rates, but as you say if youre, taking a placebo four times a day and Youre.

By disease that naturally causes cough already it's not surprising that you would see.

Will Lewis: Number one, I think the team out there has done a really good job in a very difficult environment. It's hard for us to remember because we've basically largely forgotten about the COVID era, I think for a whole number of reasons, but it was only lifted in Japan and sort of the May, June timeframe of this year. Those restrictions were full on until that moment in time. And so they were working through that in the middle of a respiratory drug launch, which is hard to imagine.

Some of that irritation, but we've seen remarkably.

Will Lewis: The other thing I was going to remind is that there were a number of surges of COVID where hospitals got filled up and those were far more frequent and severe at the end in the last 12 to 18 months than they were in the US. And that made it even more challenging. So the lifting of those restrictions is one driver that affords us the opportunity. But the more important one, in my opinion, is the new leadership we have in our Japanese territory.

<unk>.

Low levels I would say in the throat pain that is sometimes indicated and can be a dose limiting.

Effect for <unk>, we don't have that we haven't seen that in a way that is that has limited our ability to go up so I think once again the safety profile here is what is permitting us to <unk>.

Ask to go to double the current Max dose, which is already at 60 40, 60% higher than the highest dose of <unk> and dry powder form and were planning on going again double that so it's really extraordinarily high levels. If you were going to see.

The similar kind of effect in terms of negative impact on the throat you would've seen it by now in our opinion.

Will Lewis: We brought on several key senior people in at the beginning of this year, and they have really transformed the culture and the capability set of that team and their performance has matched that. And the reason we did that was because we knew not only do we have the refractory market to go and pursue, but we also have to get ready for bronchiactasis and what we expect will be frontline NTF. So all NTM patients and and this is the team that can do it. And they've demonstrated that. So there are more patients. There are more hospitals. There are more relationships. And those are growing by the day. Thank you.

But we'll continue to monitor it and if we see that shift at all or as we go up into even higher doses.

We encounter that will we'll share it I think.

At this level given the PBR reductions that we're seeing and assuming that they are correlated with drug use.

<unk>.

We're really happy with the profile of this drug.

Got you. Thank you.

And your next question comes from the line of Greg Savannah, <unk> with Mizuho Securities. Your line is open.

Okay. Thank you very much thanks for taking my questions and congrats on the quarter too.

Two questions. Please.

Maybe I'll ask a question actually on the earlier stage pipeline.

I just wanted to get an update maybe on your DMD program I think the trial was supposed to start.

Lisa Baker: And your next question comes from the line of Lisa Baker with Evercore ISI. Your line is open. Hi, congratulations on the data. I'm taking the question. First, you give us a sense of when we can expect the next update from, I know you're going to obviously amend the protocol. We get a peek at that data or more patients through the study for TPIP. Yeah, so I know that what I can tell you with confidence today is that we believe that we will have PHLD data in the first half of next year, the results of the study.

This year it looks like maybe it's not starting this year. So maybe if you could just.

Review kind of the ongoing activities.

There.

And then with that in mind I.

Didn't know if you had a view on <unk> phase III embarked data and whether that data will inform how you think about the program that youre developing and then my second question is really a financially oriented question.

You've got cash.

<unk> through.

The readout of Aspen.

Lisa Baker: And that's probably the one anchor point I can give you. Will we update with additional PH data? I suppose we can give that some consideration. I don't see why we wouldn't want to continue to at least give people the perspective that we're seeing the same thing or what the trends are. This is an incredibly exciting data set that we've seen grow and be consistent each time we've cut the data. So I don't have a reason to expect it to change dramatically, but it could, and it's important to highlight that.

And just wanted to.

Get a sense of assuming that you do get positive data, which I think we're all hoping that youll see.

Can you give us a sense of how youre thinking about any kind of next financing.

Might look like whether you're thinking about equity that a mix of both or is there another.

Alternative financing solution that you are considering thanks.

So on the first question when we think about our research pillar so called fourth pillar as I was saying earlier today like there are now more than 30 pre IND programs.

Lisa Baker: But so far, it looks good. It looks consistent, and so I would expect to continue to be able to share that message. But as far as anchor points in time, I would look for PHLD trial results in the first half of next year. And will you make the same protocol amendment to that study as well? No, it's the pH study is the one that we're doing the protocol amendment to for the open label extension. Yes, the higher dose is for pH. Okay, great.

In that.

And that effort.

Underneath that umbrella for gene therapy, we have half a dozen that we're pursuing at the moment.

DMD is one of those but they all sort of exemplify the same strategy that we have for this area, which is that we're going to be bringing some really cutting edge technology to try to advance and improve dramatically on the ability of these modalities to have impact on patients in the case of DMD in the first instance that.

Will Lewis: And then just a question on a rise. So I know in the placebo arm, you were kind of 60% response rate and much higher response rate on error case. As you look out to 12 months, how are you thinking of that placebo rate evolving? If we look at kind of some papers out there, it looks like that can push into the 80% range just based on where it is today, you know, I know that's some papers by Griffin, etc.

Will Lewis: But I just wondered how you're thinking about that, you know, I think you actually have like more like a 54% rate, but how that would evolve over the course of, you know, the second set of six months over just 12 months. Thanks. Yeah, so I don't we don't believe there's much risk of the control arm sort of closing the gap with error case in any kind of significant way over the 12 month period that you would see an encore.

Will involve interests equal delivery and so that.

It has involved some back and forth with the agency to make sure that they're comfortable with that technology being deployed in that way.

So that process is ongoing I would say, it's very productive, but I'm not surprised that we're going to be having this kind of dialogue with the agency because we're bringing.

We intend to bring forward <unk> capsules, we intend to manufacture them in algae, we intend to do RNA enjoining, which has multiple caps, it's creating longer length proteins theres a lot of stuff. We're bringing forward that is really going to be able we think to transform the way gene therapy is used and the impact that it has on patients.

So I expect some some puts and takes there, but overall I would say to all of our programs and all the science behind them continues to get better.

Will Lewis: It's not the pattern we've seen in the other well controlled clinical trials and Mac lung patients that we've run. For example, if you think about convert in refractory Mac patients and now in the arise study, we saw that the patients who converted on standard of care therapies largely did so in the first two to four months of treatment. In fact, in a rise, I think the conversion rate and the control arm stayed relatively consistent from month three through month six with the peak conversion rate occurring at month four.

So as those programs advance I think that the benchmark. We look for internally is when are they in phase one two because we know that's when you all will start to pay more attention to work as an important or that isn't significant. It's just it doesn't have as much relevance to the investment community until it sort of in patients. So we'll continue to keep you updated as we make.

Will Lewis: So I don't I really don't worry about that at all. And that is certainly what you would hear if you if you talk to the KOLs that are that are out there who are in the disease, but we'll see, you know, we'll flip the encore card and see where we go. I just would reemphasize that the perception of the arise data is sort of universally and overwhelmingly positive, and I don't think people feel like it's vulnerable, I guess, is the right way to respond.

Progress there.

With regard to Raptor.

We will be watching their data as well everybody else I think we are hopeful that they will have success for the benefit of the patients, but we certainly will look at that data and learn whatever we can from it once again, we think that our interest equal approach is going to have a significantly greater benefit to patients and that's.

Based on the fact that the data that we shared with you at our research day suggest that to be the case with regard to the cash position and what we're doing in the future I will turn it over to Sarah sure. Yeah happy. Thanks for the question, Greg and just a reminder, on the early stage less than 20% of our investment is in that in that arena, obviously very important but can.

Will Lewis: Yeah, I think I mean, the most impressive thing is you come off therapy and you have a, you know, very few people who revert back. So I think that's, you know, that's just another point. But anyway, just curious, I think about that. Thank you for taking the questions. Yeah.

States gate that investment.

Leon Wang: And your next question comes from the line of Leon Wang with Barclays. Your line is open. Hi, thank you for taking my question. And thanks for giving us a peek. The TIP data. And on safety. With effects of incidents on in terms of your rotation is pretty impressive. So on this, have you seen any eye issue? I'm sorry, I'm having a hard time hearing you. Can you get closer to your microphone?

Pretty closely so on cash we feel really blessed to be in the position. We are over three quarters of $1 billion on the balance sheet as at the end of the quarter been able to continue to unlock value here and continue to stock it.

Tough macro market, but we have been able to continue to outperform which is which is great.

He said we've been very clear we are not funded through profitability, we will need to raise at some point in the future, but we are I feel very privileged that compared to many we have a lot of different levers and have the ability to take them to be.

Leon Wang: I apologize. I want to make sure I can hear your question clearly. Yeah. Sure. Is this better? Yeah, thanks. Okay. Yeah, I always have some problems with my, but so anyways, so my question is in terms of safety. Have you seen any GI issues in these patients and any discontinuations that you've seen in either the PPH or PHILD patient population? Nothing that is notable, but it didn't rise to the level of discussion among the medical colleagues, so I'm not aware of anything in that arena.

Kind of thoughtful as we think about balance sheet augmentation.

And be able to do it in many different ways, if and when researches to sell where we are now shareholder value over three quarters of $1 billion and have a lot of optionality down the road.

And your next question comes from the line of Stephen Wiley with Stifel. Your line is open.

Good morning, guys. This is Tony on for Steve I Hope everyone can hear me okay.

Thank you for taking my question and congrats on the data quarter Okay.

Leon Wang: Gotcha. And one more question on safety as well. Given the differences in dosing, do you think the reason behind having zero incidence and throw irritation, is that more of a kind of driven by GPIP, or could this also be a factor in that, you know, for drugs like Hubei, so we've seen even the placebo arm, there's around mid-teens throw irritation, but that's also those four times a day. So I'm just kind of curious on like, what do you think is what do you think is the factor driving the results on the safety side?

Thanks.

Uh huh.

My questions, mostly around TPI P data that you're right Ravi.

The very first question that everyone is back with is that.

Could you guys. Please provide us with a little bit more clarity on the rationale.

Regarding like why unit to stop those penetration at week, five and would you expect an even greater.

The proportion of patients to get to the top dose.

Blakney no question related to a protocol amendment. So when do you expect this protocol amendment to be finalized and is there any plan to communicate this protocol Amendment finalization.

Leon Wang: Yeah, I think, as I mentioned earlier, I think the fact that this drug is inhaled as a dry powder inert in inert form, and only once a day is the key to the safety profile we're seeing. You are correct, there are certainly placebo response rates, but as you say, if you're taking a placebo four times a day, and you're affected by disease that naturally causes cough already, it's not surprising that you would see some of that irritation.

This release or something like that thank you.

So the design of the study is sort of consistent with with other.

Studies in ph in ph ILD.

If there is any particular magic to the to the moment of cutoff for titration, all I would say is that the practice.

Leon Wang: But we've seen remarkably low levels, I would say, and the throat pain that is sometimes indicated and can be a dose-limiting effect for Croprostonil, we haven't seen that in a way that has limited our ability to go up. So I think, once again, the safety profile here is what is permitting us to ask to go to double the current max dose, which is already at 640, 60% higher than the highest dose of tavezo in dry powder form, and we're planning on going again double that.

The clinic is to get.

Patients to as higher doses, you can I think to get equivalency.

Sure.

That's just the reason for the structure and I'm sure that in practice physicians will will take time to increase dose.

And I do think that as you go up in dose as long as there's not an adverse event profile youre not going to.

You should continue to see benefit.

The idea that you can go even higher.

Pretty exciting with regard to the protocol Amendment, we press release when that is accepted or not Im sure will included in our disclosure at some point, but I don't expect a separate Standalone press release, I think that'd just be something we'd convey in a quarterly call or or some other medium.

Leon Wang: So it's really extraordinarily high levels. If you were going to see the similar kind of effect in terms of negative impact on the throat, you would have seen it by now in our opinion. But we'll continue to monitor it, and if we see that shifted all, or as we go up into even higher doses, we encounter that, we'll share it. I think at this level, given the PBR reductions that we're seeing and assuming that they're correlated with drug use, we're really happy with the profile of this drug. Gotcha. Thank you.

Great. Thank you very much.

I will just add that I think the objective of of cutting it off earlier is once you get to your Max tolerated dose you want to track what happens with patients at that highest dose and so you want at least.

11 weeks on the on the final dose that you titrate to in practice, though as I said they'll go higher I am sure <unk>.

After five weeks.

Greg Savinavajra: And your next question comes from the line of Greg Savinavajra with Mizzouho Securities. Your line is open. Thank you very much. Thanks for taking my questions and congrats on the quarter. Two questions, please. Maybe I'll ask a question actually on the earlier stage pipeline. I just want to get an update maybe on your DMD program. I think the trial was a post to start. This year it looks like maybe it's not starting this year, so maybe you could just review kind of the ongoing activities there.

Thank you understood. Thank you.

And there are no further questions at this time, we will Lewis I will now turn it back over to you.

Great. Thank you all for joining us on this morning's call.

And this concludes today's conference you may now disconnect.

Yeah.

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Yeah.

Okay.

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Greg Savinavajra: And then with that in mind, I didn't know if you had a view on Syrup does a phase three embark data and whether that data will inform how you think about the program that you're developing. And then my second question is really a financially oriented question. You've got cash, you know, wealth through the readout of Aspen and just wanted to get a sense of assuming that you do get positive data, which I think we're all hoping that you'll see.

Yes.

Yeah.

Okay.

Okay.

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Yes.

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Greg Savinavajra: Can you give us a sense of how you're thinking about any kind of next financing, what that might look like, whether you're thinking about, you know, equity, debt, a mix of both or is there another alternative financing solution that you're considering, thanks.

Will Lewis: So on the first question, you know, we think about our research pillar, so-called fourth pillar, as I was saying earlier today, like there are now more than 30 pre-IMD programs in that effort. Underneath that umbrella for gene therapy, we have half a dozen that we're pursuing at the moment. DMD is one of those, but they all sort of exemplify the same strategy that we have for this area, which is that we're going to be bringing some really cutting-edge technology to try to advance and improve dramatically on the ability of these modalities to have impact on patients.

Will Lewis: In the case of DMD, in the first instance, that will involve interethical delivery, and so that has involved some back and forth with the agency to make sure that they're comfortable with that technology being deployed in that way. So that process is ongoing, I would say it's very productive, but I'm not surprised that we're going to be having this kind of dialogue with the agency, because we're bringing that we intend to bring forward DMNI's capsids, we intend to manufacture them in algae, we intend to do RNA-in joining, which is multiple capsids creating longer-length proteins.

Will Lewis: There's a lot of stuff we're bringing forward that is really going to be able, we think, to transform the waging therapy as used and the impact that it has on patients. So I expect some puts in takes there, but overall, I would say that all of our programs and all the science behind them continues to get better. So as those programs advance, I think that the benchmark we look for internally is when are they in phase one, two, because we know that's when you all will start to pay more attention.

Will Lewis: It's not that work isn't important, or that it isn't significant, it's just, it doesn't have as much relevance to the investment community until it's sort of in patients. So we'll continue to keep you updated as we make progress there. With regard to Syrupta, I'm not, you know, we'll be watching their data as will everybody else. I think we are hopeful that they'll have success for the benefit of the patients, but we certainly will look at that data and learn whatever we can from it.

Will Lewis: Once again, we think that our interethical approach is going to have a significantly greater benefit to patients. And that's based on the fact that the data that we shared with you in our research day suggests that to be the case.

Sara Bonstein: With regard to the cash position and what we're doing in the future, I'll turn that over to Syrup. Sure. Yeah, happy. Thanks for the question, Greg. And just a reminder on the early stage, less than 20% of our investment is in that arena. Obviously, very important, but can state gate that investment pretty closely. So on cash, you know, we feel really blessed to be in the position we are over three quarters of a billion dollars on the balance sheet as at the end of the quarter, been able to continue to unlock value here, continue to stock.

Sara Bonstein: You know, it's a tough macro market, but we have been able to continue to outperform, which is, which is great. As you said, we've been very clear. We are not funded through profitability. We will need to raise at some point in the future. But we, I feel very privileged that compared to to many, we have a lot of different levers and have the ability to take to be. You know, kind of thoughtful as we think about balance, seed augmentation, and be able to do it in many different ways if and when we so choose to. So where we are now, shareholder value over three quarters of a billion dollars, and have a lot of optionality down the road.

Stephen Willey: And your next question comes from the line of Stephen Wiley with stifle, your line is open. Good morning guys, this is truly on for Steve. I hope everyone can share me okay.

Stephen Willey: Thank you for taking my question and congrats on the data and character of the earnings. I have my questions mostly around TPI data that you are really. So very first question that I want to start with is that could you guys please provide us with a little bit more clarity on the rationale regarding like why you need to stop those types of situation at week five, and would you expect an even greater proportion of patients to get to the top those.

Stephen Willey: And lastly, the question related to protocol amendment. So when do you expect this protocol amendment to be finalized and is there any plan to communicate this protocol amendment finalization through press release or something like that. Thank you. So the design of the study is sort of consistent with with other studies in pH and pH, I don't think there's any particular magic to the to the moment of cutoff for titration. All I would say is that the practice in the clinic is to get patients to as high a dose as you can.

Stephen Willey: I think to get equivalency your. That's just the reason for the structure and I'm sure that in practice positions will will take time to increase dose. And I do think that as you go up and dose as long as there's not an adverse event profile, you're not going to you should continue to see benefit and the idea that you can go even higher is pretty exciting with regard to the protocol amendment.

Stephen Willey: And will we press release when that's accepted or not. I'm sure we'll include it in our disclosure at some point, but I don't expect a separate stand alone press release. I think that it just be something we convey in a quarterly call or some other medium. Great. Thank you very much. I will just add that I think the objective of of cutting it off earlier is once you get your max tolerated dose, you want to track what happens with patients at that highest dose.

Stephen Willey: And so you want at least, you know, 11 weeks on the on the final dose that you titrate to in practice, though, as I said, they'll go higher. I'm sure after five weeks. Thank you. And there are no further questions at this time. Will Lewis. I will now turn it back over to you. Great. Thank you all for joining us on this morning's call. And this concludes today's conference. You may now disconnect.