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Operator: Hello everyone and welcome the Insmed Fourth Quarter and Full Year 2022 Financial Results. My name is Nadia and I’ll be coordinating the call today. I will now hand over to your host Eleanor Barisser, Investor Relations to begin. Eleanor please go ahead.

Eleanor Barisser: Thank you, Nadia. Good morning and welcome to today’s conference call to discuss our fourth quarter and full year financial results for 2022, and to provide a business update. Before we start, let me remind you that today’s call will include forward-looking statements based on current expectations. Such statements represent our judgment as of today and may involve risks and uncertainties that may cause actual results to differ materially from the results discussed in the forward-looking statements. Please refer to our filings with the Securities and Exchange Commission, which are available through the SEC’s website at www.sec.gov, or from our website for information concerning the risk factors that could affect the company.

The information on today’s call is not intended for promotional purposes and it is not sufficient for prescribing decisions. Joining me on today’s call are members of the Insmed executive management team, including Will Lewis, Chair and Chief Executive Officer, and Sara Bonstein, Chief Financial Officer. Please note that today’s call include slides which are available through the webcast on the Investor Relations section of our website. Let me now turn the call over to Will Lewis for prepared remarks. Upon completion of those remarks, we will open the call up for your questions.

Will Lewis: Thank you, Eleanor, and good morning, everyone. We believe the Insmed that you know today will completely transform in less than 18 months. During this critical period, we expect to produce clinical data from each of our four pillars and as a result, we believe you will begin to see the benefit of the investments you have enabled us to make over the last several years. We expect to evolve from addressing patient populations of tens of thousands to over a million. It is our intention that each of our programs will represent first-in-class or best-in-class treatment for the disease in question. For my prepared remarks, I would like to walk through upcoming milestones in chronological order. Focusing on the first set of potentially transformative milestones anticipated in the next 18 months.

To begin, I am very excited to announce that as of today, all screening in adults is completed for our Phase 3 ASPEN study evaluating Brensocatib for the treatment of bronchiectasis. This is a major achievement and it means we can continue to expect enrollment completion in the first quarter of this year and more importantly, we remain on track to report topline results in the second quarter of 2024 as previously indicated. This is an enormous accomplishment targeting greater than 1,600 patients our ASPEN study is more than 50% larger than previous Phase 3 programs in this indication. Despite the global respiratory pandemic, we have completed all screening in adults in a similar amount of time to these previous programs. This also speaks to real-world existence of these patients and their need for treatment.

There is great enthusiasm for the potential of this clinical trial to readout as successfully as the previous WILLOW study and we all anxiously await the topline results expected in just over a year’s time. Looking ahead to the second quarter of this year, I’m excited to invite you to mark your calendars for our Research Day on May 8th in New York City. Plan to bring the top artificial intelligence protein engineering and gene therapy specialists on your teams because we will be bringing ours. This event has been a long time coming and that is because we wanted to have validating preclinical data and the first IND filing completed before we held a review of these platforms. We believe we possess world-leading research capabilities that should now be seen as a meaningful part of our business and as a result be factored into your valuations.

To be more specific, you could expect an overview of the multiple research platforms we possess with a deep-dive into several specific programs. On May 8th, the first platform we will review is the team out of Dartmouth based in the Hitchcock Medical Center. This group is focused on using artificial intelligence to create deimmunized proteins, a technological process we are calling Deimmunized by Design. Earlier this year, we were pleased to share the initial targets of this program, rheumatology, immunology, and improved viral capsids. Leading this work, our doctors and Chris Bailey-Kellogg, former professors at Dartmouth, who have been advancing their programs through a startup enterprise when we joined forces with them almost two years ago.

Second, we will provide a deep dive into several, but not all of our gene therapy programs. Including the first product candidate in a musculoskeletal indication that we anticipate will enter the clinic this year. We expect to have already filed an IND for that candidate by the time we speak with you on May 8th. We will also discuss the first indications we will target in CNS and ocular and the expected timing for their entry into the clinic, along with a review of supporting preclinical data behind these programs. Although there are many companies in the gene therapy space, we have taken a strategic approach to this technology and believe we can offer improved efficacy, safety, novel delivery as well as established capabilities in chemistry, manufacturing, and controls compared to others in this field.

Dr. Brian Kaspar, the scientific founder of AveXis, and our Chief Scientific Officer oversees our gene therapy programs based in San Diego and he is joined by several key members of the original AveXis’ scientific and regulatory team. Our third research platform is focused on a potential manufacturing capability that, if successful, we believe would dramatically lower the cost to produce proteins from the viral capsids used in gene therapy to a range of other therapeutic proteins, including those being developed by our team in New Hampshire. We are excited for the potential of these different platforms and expect them to be both cost-effective and productive. Our early stage research has represented and we expect it will continue to comprise less than 20% of our expenditures in the near-term and yet still generate at least six new INDs in or Phase 1 studies by year end 2025.

We will only advance each program to the next stage of development upon seeing successful data. If it sounds like there is enough going on in our early stage research that it could be its own company, we agree. In fact, we believe each of the four pillars at Insmed could stand as independent companies in their own right given the promise of the lead indication for each and the potential to expand beyond their first indication. However, strategically, we want to reemphasize that our approach is to use the cash flow we anticipate from our more advanced programs to fund the development work in the medium to long-term. The result we hope will be a leading self-sustaining biotechnology company. In short, we feel that progress we have made in our early stage research is substantial and we invite you to join us for this exciting first review of our capabilities.

We look forward to seeing you on May 8th, either in person in New York City or virtually for this event. Later that same month in May of this year, we will have a strong presence at the American Thoracic Society International Conference or ATS. I’m pleased to report that we submitted eight abstracts across ARIKAYCE, Brensocatib, and TPIP and all eight were accepted for presentation at ATS. Stay tuned for additional details on these presentations which will include ARIKAYCE adverse event mitigation in a real-world setting, long-term hospitalization burden in NTM, and an analysis of patients with bronchiectasis by disease severity subgroup from the WILLOW study. In addition, ATS will be an important forum for us to discuss disease state awareness in preparation for the potential launch of Brensocatib if it’s approved.

As you can appreciate, May will be a particularly busy month for us, but shortly thereafter, we expect to arrive at the next important program milestone. In mid-2023, we plan to initiate a Phase 2 trial of Brensocatib in chronic rhinosinusitis without nasal polyps or CRS. Subject to input from the FDA, the basic design of this trial will be approximately 270 patients randomized to either 10 milligrams of Brensocatib, 40 milligrams of Brensocatib, or placebo over a 24-week treatment period. The primary endpoint will be change in daily sinus total symptom score, which measures various nasal symptoms. And it is our current intention to use this same endpoint in a Phase 3 study. Similar to bronchiectasis, recall that there are no approved therapies for CRS without nasal polyps.

And while there are tens of millions of people who suffer from CRS without nasal polyps, we will be initially targeting the most severe patients who experience recurrence and potential surgery, which we estimate is 400,000 addressable patients in territories where we have commercial infrastructure. Let’s now move to catalyst in the latter half of 2023. The next major update from the ARIKAYCE frontline program will be ARISE to topline efficacy and safety data, which we expect to report in the third quarter of this year. This readout will include the differences in the patient reported outcome results between the two treatment arms using respiratory and fatigue scores, the effect of ARIKAYCE on culture conversion, time to culture conversion, and the associations between culture conversion and change in respiratory and fatigue scores.

The goal of ARISE is to show a directional effect on difference in endpoints between treatment groups. It is not powered for statistical significance. We are extremely excited about the overall progress of ARISE. Earlier this year, we reported a blinded treatment discontinuation rate in ARIZES of 15% We believe this slow discontinuation rate is an encouraging sign that patients with earlier, less severe disease may tolerate ARIKAYCE well and also suggest an exciting possible advantage of treating patients sooner versus the watch-and-wait approach currently undertaken by some physicians. As a reminder, the frontline opportunity offers a potentially multi fold increase to the current addressable market in the refractory setting. Moving to the next update.

In the second half of 2023, we anticipate sharing interim blinded dose titration and safety and tolerability levels from some of the patients in both TPIP Phase 2 studies, one in PHILD and the other in PAH. Recall that these trials utilize a max tolerated dose approach. High doses of inhaled prostaglandins have been shown to demonstrate benefit by reducing pulmonary vascular resistance and pulmonary arterial pressure. Our ability to reach higher doses in these trials should improve our chances of success. Finally, we anticipate the ENCORE trial will be fully enrolled by the end of this year. While this is an ambitious goal, our team is hard at work to meet this objective. Encouragingly, ENCORE is showing a solid pace of enrollment that has accelerated since completed in October of 2022.

This now takes us to the catalyst we can expect in the first half of 2024. We continue to anticipate reporting top line data from the TPIP Phase 2 trial and PHILD in the first half of next year. Also, in the first half of 20 24, we plan to share musculoskeletal clinical data from a few of the earliest patients we are able to enroll in a Phase 1/2 clinical study using gene therapy. All of this will lead us to the second quarter of 2024 when we anticipate top line results from the ASPEN study. The call to Phase 3 study examines two doses of Brensocatib in bronchiectasis, an indication with no currently approved therapies and approximately 1 million addressable patients at launch. In addition to those 1 million patients, there are up to 6.7 million patients misdiagnosed or co-morbid with COPD or asthma that could represent additional patients who could benefit from a reduction in pulmonary exacerbations beyond our initial launch focus.

The ASPEN trial continues to progress as planned. As we announced in January, the blended rate pulmonary exacerbations observed in the most recent three months of the study ranged from 1.12 to 1.15 events per patient per year. This is an encouraging event rate that suggests from a powering perspective enough pulmonary exacerbations are occurring and it also aligns with what we saw in the successful Phase 2 WILLOW study. Let me take a moment to review the recent cystic fibrosis or CF data we put out earlier this year, which further reinforced our confidence that the mechanism of action of Brensocatib is performing the way we anticipate. Last month, we were excited to release positive top line data from the Phase 2 pharmacokinetic pharmacodynamic study of Brensocatib in patients with CF.

We saw a clear dose-dependent and exposure-dependent inhibition of blood neutrophil siren proteases or NSP levels in patients treated with Brensocatib across all doses. Safety and tolerability were consistent with what was observed during the Phase 2 WILLOW study. With no significant drug related findings despite the fact that we used an increased dose of 40 milligrams for certain patients in the CF study. Because of the clear and significant NSP inhibition we saw in these results, we concluded that an additional cohort evaluating 65 milligram dose was not needed, although we have the clean toxicity data to allow us to treat to this level. Observing the needed efficacy and safety at 10, 25, and 40 milligrams, may allow us to leverage equivalent dose data from both the WILLOW and ASPEN trials.

Finally, I’ll close out with an update on the ARIKAYCE franchise. As previously communicated, we are pleased to have achieved 30% revenue growth in 2022. As you are also aware, the guidance we issued at the beginning of this year anticipates ARIKAYCE’s global revenues to be between $285 million and $300 million for the full year 2023. Underlying this guidance, we have confidence in our ability to continue to drive growth globally. Sara will provide additional perspective on the dynamics shaping our expectations in each of our key geographies. Let me close out my remarks by reiterating our excitement for the future of Insmed. 2023 is the year we hope to begin realizing the impact of the multiple investments we have made over the last several years.

I hope you share my anticipation for the many important clinical data events coming over the next 18 months to say nothing of what lies beyond that timeframe. We look forward to updating you on our progress. With that, I’ll turn the call over to Sara for her commentary.

Sara Bonstein: Thank you, Will and good morning everyone. Earlier today, we issued a press release with our detailed fourth quarter and full year financial results. Let me walk through a few of those results for you now. We ended 2022 with $1.15 billion in cash and cash equivalents and marketable securities. We anticipate this robust cash position will allow us to reach a re-inflection point over the next 18 months as outlined on today’s call, inclusive of pivotal ASPEN data with the potential for meaningful cash remaining on the balance sheet post-ASPEN readouts. Earlier this year, we were pleased to share with you our approach to capital allocation. To remind you, we anticipate over 80% of our total expenditures will be on our mid to late stage and commercial programs ARIKAYCE, Brensocatib, and TPIP.

We anticipate less than 20% of our overall spend will be on our early stage research programs, a level that is either new nor incremental, but reflects the approach we have followed for the past several years. Let me now walk through ARIKAYCE revenues for the full year 2022 and the regional dynamics driving performance in each market. Total net revenue for ARIKAYCE was $245.4 million for the full year 2022, reflecting the 30% growth that we set out to achieve over 2021. On a regional basis, net revenue for 2022 was $186 million in the US, $56.5 million in Japan, and $2.9 million in Europe and rest of world. As Will mentioned, we believe there is an opportunity for continued growth of across our three key geographies. Although quarterly revenue levels can fluctuate due to inventory and gross to net changes, in the US, we have been encouraged by positive trends in several key metrics, including enrollment forms and new patient starts.

In fact, these metrics grew quarter-over-quarter throughout 2022. We are also back to pre-COVID levels in terms of our therapeutic specialist ability to visit physicians in-person. Together, these positive trends point to what we anticipate will be another solid year of growth in the US market. Turning to Japan. Japan remains a crucial territory for us and we are seeing evidence that fundamental demand continues to be strong. In 2022, we did see the effect of COVID surges on the launch as well as the impact of foreign exchange rates on global revenue levels. However, as lockdown abate that eased the pressures on the Japanese healthcare system and as we roll out our relaunch initiatives, we believe the back half of this year could usher in growth in this important market.

Looking ahead to the second quarter of this year, in Japan, we anticipate a one-time price cut in the high single to mid teen range which was expected and also consistent with what we have seen in prior product launches in this territory. Moving to Europe, as expected, the European market continues to make up a relatively small percentage of global revenues. In France, we agreed to a final reimbursement price for the ATU compassionate use program, which was lower than expected. As a result, we recorded a one-time charge in the fourth quarter of 2022 of $7.5 million, of which $5.8 million was related to prior periods. Nonetheless, Europe remains an important territory for us strategically and supports our operations across the many indications we are pursuing, including medical community thought leadership, tax benefiting cost effective manufacturing, as well as a significant contribution to our clinical trial programs.

In an effort to support our development programs, it is our ambition to continue to drive global revenue growth from our commercial franchise. To that end, as previously disclosed, we expect 2023 global revenues to be between $285 million and $300 million. Let me now talk to some additional financial highlights from the year. In 2022, our gross to nets in the US were approximately 13% which is in line with our guidance of mid-teens throughout 2022 and consistent with our gross to net in prior years. In 2023, we continue to anticipate our gross to nets to be in the mid teen range. Cost of product revenues for the full year 2022 was $55.1 million or 22% of revenues on a percentage basis. Turning to our GAAP operating expenses. For the full year 2022, research and development expenses were $397.5 million and SG&A expenses were $265.8 million, reflecting continued support of the operations driving our early stage research programs and mid to late stage pipeline.

In closing, Insmed entered 2023 in a strong financial standing, with two important elements in our favor, over $1 billion of cash on the balance sheet, and a steady revenue stream that supports our pipeline. Looking ahead to our distinct transformation period, we are exactly where we want to be as we begin to realize a series of clinical catalysts that have been in the making for the past several years. I’ll now turn the call back to Will for closing remarks.

Will Lewis: Thank you, Sara. I’d like to thank our shareholders for their patience during what has been an intense execution period for Insmed. Now, we are prepared for the momentum of a catalyst-rich future. I would like to thank the patients who participate in our studies, the caregivers and families who support them, the Insmed team, and those who have sponsored us financially. We are extremely grateful for your support and are excited deliver on this for all of you. And with that, I’d like to open the call to questions. Nadia, can we take the first question please?

Q – Unidentified Analyst: Hey, this is Nick on for Jess. Thanks for taking our questions. Two from us. First on ARIKAYCE, it looks like US res were down slightly on a quarter-by-quarter basis. I know you also mentioned positive trend throughout the year, but just thinking about 2023, how should we think about the magnitude of growth versus say Japan as the product enters the fifth year? Has it — is there any plateauing that you’re seeing or is it just moderated?

Will Lewis: Yes. So, on ARIKAYCE in Q4, that quarter was a little light relative to what we were expecting. There are a number of forces that sort of augmented that including some inventory shifts. But I would just tell you that what we’re seeing right now is very positive in the US. And I think this is finally the culmination of the return to normalcy post-COVID that we’ve been waiting for. And that is manifest in the form of the ability to access physicians. We’re seeing the early signs that are the enrollment forms, etcetera, in the right direction. And if that trend continues and the US is in a good and strong position, I would say, for return to growth of the kind we would like to see in 2023.

Q – Unidentified Analyst: Great. And just a quick one on the ARISE data. I believe it takes some extra time to collect some of the culture conversion data. So, is there a scenario where we could see PRO data first and 3Q followed by culture conversion data or should we expect them all at once?

Will Lewis: So, our intention is to put it all out at once because I think context is important for interpreting anything we have by way of data. So, that’s our plan for Q3. You are right. It does take a little longer to get the results because you have to grow out cultures that can take as long as three months because you need to confirm that there’s nothing there. But the simple conclusion is topline results will be a package deal in Q3.

Unidentified Analyst: Great. Thanks so much.

Operator: Thank you. And the next question goes to Jason Zemansky of Bank of America. Jason, please go ahead. Your line is open.

Jason Zemansky: Good morning, everyone. Congratulations on the quarter and thank you so much for taking our call. Just a quick question here. Looks like research and development was up pretty significantly, both quarter-over-quarter and year-over-year. How should we think of spend moving forward? Is this primarily the result of the investments in the new fourth pillar and what does that look like moving forward?

Will Lewis : Yes, Sara, you want to take that one?

Sara Bonstein : Sure. Happy to, Jason. Thanks for the question. So, as we mentioned in our prepared remarks, the investment in the early stage research program is less than 20% that is not new or incremental and the bulk of our competitors over 80% will be on our mid to late stage programs ARIKAYCE, Brensocatib, and TPIP. You see some fluctuation and sort of some timing in R&D expenses. You see in Q4, you have ASPEN, ARISE, ENCORE, the two Phase 2s and TPIP as well as the supportive medical work for these potential opportunity in bronchiectasis assuming success in ASPEN, through seeing those — that investment what I will say is we have the cash to support ourselves through all of these very meaningful value inflection points that we outlined on today’s call inclusive of the ASPEN data.

Jason Zemansky: Great, thanks. And then maybe a follow-up on ARIKAYCE. In terms of kind of the big growth drivers in the US. Is it — do you think primarily new patient starts or access to physicians? Or is there something else in the mix that can accelerate the pace moving forward? Thanks.

Will Lewis : You’re right. It is a mix, but I think the most encouraging thing we look for is the ability to access the physicians directly. This is a very promotion sensitive product and so seeing that trend positive and then that carrying through and manifest in some of the KPIs that we looked at early indicators of success being positive is why we’ve got some enthusiasm for the United States right now in terms of its performance.

Jason Zemansky: Great. Thanks for the color.

Sara Bonstein : And one thing I would add there. One thing I would just add Jason is in the US specifically what we talk about internally is are we on year three or year five of launch because those two years during COVID. So, while we launched at the end of 2018, which would mean that we’re in year five, we believe that there could potentially be some additional opportunity thinking through being more so in year three, if that makes sense.

Jason Zemansky: Absolutely.

Sara Bonstein : Thank you.

Operator: Thank you. And the next question goes to Jeff Hung of Morgan Stanley. Jeff, please go ahead. Your line is open.

Jeff Hung : Thanks for taking my questions. Last fall, you indicated that the lowest price in US, Europe and Japan were the same. And so, with final reimbursement price in France, how should we think about European pricing relative to that in the US?

Will Lewis : Yes, I mean the simple answer is, we’ve said this for a long time, Europe is a very challenging market environment for pricing for many drugs. And indeed, you’re seeing a trend of companies leaving Europe as a consequence of the low reimbursement rates. I think that flows from real financial pressures that European countries are feeling for a whole variety of reasons that people are well aware of. The good news I guess for us is that the refractory market for NTM in Europe has always been anticipated to be a very small contributor to our global revenue number. So, while the French price is disappointing in terms of our ability to get in and be active in supporting patients more robustly, it is not material in the way we think about our revenue growth on a global basis going forward.

Jeff Hung : Great. And then for the ARISE top line results, if you have to make changes to the PRO, how should we expect best to read out in the press release? Like would it say that you need to make adjustments and then we just have to wait until you have agreement with the FDA? Or would there be any indication as to what changes might need to be made? Thanks.

Will Lewis : Yes. So, it’s a great question. I think where we are in that is we’re going to have to look at the data first, right? And then what we’ll do is share and be as transparent as we can about the implications of the data as we see it. I doubt that’s going to get captured in a press release, because I think there’s just going to be too much nuance. There’s a scenario where there might not need to be any changes. But realistically, I think, PROs sometimes surprise and so we want to look at that data, see where it takes us and the good news is we have the ability to adjust the PRO and the statistical analysis plan in a way that can enhance our probability of success in ENCORE. And that’s the whole reason for the ARISE trial and why we’re anxious to turn those data cards over.

And we will be as transparent as we can so that to be clear, if we anticipate making a change, the process for that, would be — that we would identify, we want to make some changes, we would approach FDA about what those would be, FDA needs to process that and get back to us. We probably would not hear back from FDA until the end of the year, but we would certainly be as specific as we could be, maybe directional because we don’t want to offend the FDA by sort of saying the direction we think we’re going to go. But we certainly will want to be as transparent as we can with all of you as to whether or not we intend to make — try to make changes to the PRO and what those would involve.

Jeff Hung : Great. Thank you.

Operator: Thank you. And the next question goes to Andrea Tan of Goldman Sachs. Andrea, please go ahead. Your line is open.

Andrea Tan : Good morning, everyone. Thanks for taking my question. Will, maybe a follow-up there on the PRO. Just characterize for us your level of confidence that this tool will be able to detect clinically meaningful changes? And how does your blinded look at the data support this? And then Is there a scenario where the FDA might not agree with the changes that you would look to implement for ENCORE?

Will Lewis : Yes. So, I think the confidence in the PRO and its ability to detect change is pretty high. And that comes from the fact that we’ve been treating these patients commercially for — in our fifth year of launch. We’ve got a lot of experience with these the patients and we know what the symptom changes are. The PRO reflects that. We also spent a great deal of time consistent with the FDA’s requirements talking to physicians, talking to patients to understand what are the changes they experience and help us to track and capture those. Using the modified bronchiectasis questionnaire for NTM patients, we think is gives us a high likelihood of success in detecting change in symptom scores. Your specific question about blinded data, we have looked at the blinded data and we do see collections of patients that are experiencing significant what would be considered clinically meaningful changes in symptom scores.

So, if those are, as we hope, treatment arm than we have success. So, we won’t know that till we turn over the cards, but certainly what we would need to see in order to have success is in evidence and that is very encouraging. If we were to identify changes we wanted to make, we would approach the FDA depending on what we’re proposing, I suppose the FDA might have commentary. I don’t anticipate us looking to do things that would be radically uncomfortable for the FDA. And point of fact, our relationship with FDA is really as good as we could hope for it to be. And that flows from the fact that we have done, I think, a good job over the last several years of addressing these patient populations in a responsible and compliant manner. And they’ve also been witness to all of the data from these patients’ treatment that has been so successful.

And we now have full approvals in Europe and Japan without any restriction and that has gone very successfully as well as the numbers today indicate. So, I think overall picture is very positive. We’ll have a good dialogue with FDA should we need to and I think that will lead to a very high likelihood of success in ENCORE.

Andrea Tan : Great. And then maybe just one question. As you think about Japan for you or Sara, could you speak more on your efforts there as you sit in front of these potential launches of Brenso or the frontline expansion in NTM? What learning specifically are you taking from the current experience in the refractory setting?

Will Lewis : Sure. So, the good news is we just — all of us, the executive committee, were over in Japan. We spent a week there meeting with a whole variety of people, not just our employees, but also key opinion leaders really digging into understanding that market at a more fundamental level and making sure people understand what’s coming because the market right now for refractory MAC in Japan. The fundamentals are incredibly strong. The patients are there. The ability to reach the physicians has been constrained significantly by COVID resurgence, which has been repeated. While we were there, we were all fully masked up and anyone from the US, who saw what Japan is like would be reminded of some of the more intense periods of control taking place in the United States.

The good news is that it’s beginning to abate and that’s why we say we think probably more toward the second half of this year. It could be sooner, but certainly the second half of this year that we will see improvements in that marketplace. We are augmenting our capabilities over there because of the opportunities for frontline and bronchiectasis. And I would say the learning’s we’ve got are that it is incredibly important to have strong relationships with these physicians and hospitals. And those are the kinds of things we’re trying to build out and augment because that access is what enables us to get the appropriate patient treated for ARIKAYCE and in the future frontline and Brenso and Brensocatib. I think I can’t say enough about how positive the fundamentals are over in Japan at the moment.

Andrea Tan : Thanks so much.

Operator: Thank you. And the next question goes to Ritu Baral of Cowen. Ritu, please go ahead. Your line is open.

Unidentified Analyst: Hi, guys. Good morning. This is Yanil on for Ritu. I want to talk about the Brenso study for the daily sinus to those symptoms score. What can we expect? Or what’s a reasonable delta for this endpoint? And then a follow-up.

Will Lewis: So, it’s something we’re still looking at. I think because the score, the endpoint we’re using, we’re still not past FDA’s sign off. I want to be hesitant about getting too much into the weeds about what we’re expecting to see and how that’s all going to unfold. You can expect us to communicate additional detail in the future as that study gets kicked off in terms of what we think would be adequate to measure and how the study is statistically powered around that. Once, we’ve completed our dialogue with FDA. I will say that, we feel really good about the potential in this indication. We’ve done a lot of work here. And this is a very sizable market nothing approved to treat it. So, the opportunity for Brenso just continues to grow even beyond the enormous market opportunity of bronchiectasis. But we’ll come back with a little bit more detail after we’ve completed our discussion with FDA, if that’s okay.

Unidentified Analyst: And do you have any — I was actually going to ask more about FDA interactions this year for Brenso, both for the CRS program and for Aspen. Do you plan any interactions with FDA this year for Aspen? Do you know if there’s been any change in FDA thinking about that specific NDA?

Will Lewis: No, none. Our interaction with FDA around Brenso for bronchiectasis parallels the enthusiasm we’ve encountered in both Japan and Europe. Just to remind everyone, we’re the only respiratory product received prime designation in Europe. So, the regulatory authorities, I would say, are leaning in to help in whatever way they can as they see that compelling data from the WILLOW study and are very anxiously awaiting the results of Phase 3. This is an incredibly robust very well powered study that is going to provide just an enormous amount of clinical data, which I’m sure the FDA and PMDA and EMEA and UK authorities will all review with great interest. But we don’t have any formal interaction planned for those folks with regard to Brenso and bronchiectasis. We will of course be reviewing the protocol with the regulatory authorities as we move to CRS without nasal polyps study forward.

Unidentified Analyst: Thank you. And one quick question. Will there be data for the musculoskeletal program presented after May 8th, your R&D day and before the first data in 1H?

Will Lewis: So, when you say the first data, I’m not sure I’m following your —

Unidentified Analyst: So, will there be — can we expect there to be any data after the R&D — the R&D day, but before that first declaration of the program in the first half of 2023? Talk via conference or?

Will Lewis: Yes. So, the intention is that we’ll start the clinical trial this year. And depending on how we’re able to enroll that, the earliest patients from that will certainly be data that we can share with the market and we intend to do so. With the timing for that, we would just sort of frame out as being expected before we would put out the Aspen data. So, we will have an important point is we’ll have a critical read on this gene therapy program prior to Aspen data being turned over. And that sort of feeds into our theme of having all of the pillars reporting out meaningful clinical data before the Aspen study.

Unidentified Analyst: Okay. All right. Thank you. Thanks for taking my questions

Operator: Thank you. And the next question goes to Judah Frommer of Credit Suisse. Judah, please go ahead. Your line is open.

Judah Frommer: Yes. Hi, good morning guys. Thanks for taking the questions. A couple from us. First, just maybe a little more clarification on if the PRO does change based on what you see in a rise. Can or would that affect ENCORE timing? Is it data collection analysis? Would you have to wait for that conversation with FDA or can ENCORE kind of continue as planned?

Will Lewis: So, ENCORE will continue as planned. What we’ve said with FDA and they’ve agreed to is that if we’re going to propose to make changes they obviously will want to be a part of that conversation. But so long as ENCORE is blinded, it’s perfectly appropriate to propose and make changes. Because it’s not like we’re looking at the ENCORE data and making changes post hoc. So, I don’t anticipate that, there’ll be any impact on ENCORE needing to pause or anything along those lines at all. Would we change the size of the ENCORE study I don’t anticipate that? It’s designed and powered. We think adequately based on what we know in our assumptions. There’s nothing in the blended data that would suggest that that would need to change. But of course, once we reveal the detailed data, we’ll look at that carefully. And I suppose it’s possible that I would characterize it. From what we know today is unlikely.

Judah Frommer: Okay. That’s helpful. And then somewhat connected just on the cash runway commentary. I think the commentary was you have cash to get through the next 18 months and you have cash left after a pivotal Aspen readout. Should our assumption and the market assumption be that would be the next potential capital raising opportunity? Are there any other catalysts or milestones that you’ve talked about kind of between now and Aspen that you consider going to market around or should we be thinking about 18 months from now?

Will Lewis: Sara, do you want to take that question?

Sara Bonstein: Sure. Happy to. So, we obviously augmented the balance sheet fourth quarter of last year very grateful for the supporters in that raise. We’re now in a position that we don’t have to worry about capital augmentation I obviously cannot comment on if and when we will choose to raise money, but we are now in a position that we have the balance sheet to support all these catalysts that we just spoke through inclusive of the Aspen data.

Judah Frommer: Great. Thanks.

Operator: Thank you. And the next question goes to Joseph Schwartz of SVB Securities. Joseph, please go ahead. Your line is open.

Joseph Schwartz: Hi, thanks very much. I have a couple of questions in the pipeline. First, on frontline NTM and then on Brensocatib. First, I was wondering if you can provide us with any insight to how many degrees of freedom you have to adjust the weightings of the domains to be included in the PRO — to be used for front end of ENCORE. I mean, our what you see in ARISE? And are there any other examples of other sponsors who’ve weighted individual components differently that you can share with us so we can understand what precedent for this kind of an analysis exists?

Will Lewis: Sure. So, let me take on the second half of the question and understand that there is no PRO that has been approved for NTM. And that therein lies the challenge. The process of developing one de novo takes years. So, what we’ve agreed to with FDA is to use a modified bronchiectasis questionnaire alongside a fatigue questionnaire to specifically address the symptoms we identified through our research following the FDA’s protocols for such work. When we talk with patients and physicians and indeed the FDA. So, we feel this PRO that we have is a winner. That’s based on our experience in treating these patients for more than five years. The other clinical trials we have and we utilize the bronchiectasis questionnaire in the refractory setting previously.

So, we have seen the performance of it in that setting. So, there’s a lot of good data that goes into this design and it’s what gives us a high conviction rate. There was an active debate about whether we even needed to do the ARISE study internally but what we are students of is precedents as you ask. And when we look at things like global blood where they had a PRO that they were confident in, but it missed when it finally was utilized because it had never been tested prior to that clinical trial. We thought the prudent thing to do is to test the PRO and validate it. And with that information, should we find changes are needed, we can go and enhance our probability of success in the ENCORE study by making those changes. FDA agreed with that.

So long as ENCORE is blinded, we can make changes just as if we were running two separate trials separated by time. We just run them in parallel and shortened one to ensure it reads out first. And so that design is novel, but the FDA blessed it. And because ENCORE is blinded, the changes can be made. But you would see the same approach in anyone developing a PRO where they would trial the PRO and then based on that make adjustments to it before using it in the clinical setting. All we’ve done is run those in parallel. No one to my knowledge has done it this way before, but I think it just speaks to our desire to use time and capital efficiently, while also increasing our chances of success.

Joseph Schwartz: Okay. Thank you. And then on Brensocatib, it’s interesting that the blended rate exacerbations in Aspen is 1.12 to 1.15, which is lower than what you saw in WILLOW and your powering assumptions for Aspen. So, do you have any insight into what degree this is driven by an overall lower rate of exacerbations overall during pandemic quarantine times versus the potential beneficial effects of Brensocatib? And how does this — how does the power and calculus look in scenarios where the event rate is driven more by an overall lower rate of exacerbations versus the drug performing well?

Will Lewis: Yes. So, as you might imagine, we look at many scenarios and I would characterize our conclusion from all of that work is feeling very positive about the event rate in the Brenso, Aspen bronchiectasis study. The reason for that is that despite what you’re describing, which is true, that during COVID, there was a decline in the number of events taking place in bronchiectatic patients, not specifically in our study, but just generally that was the trend that was seen. Because people were masked and they were indoors and less likely one assumes to getting sort of virally driven causes for exacerbation. The key thing to understand about Aspen and why it’s in such a good position in our mind is that we were recruiting patients during the time that everyone was locked down and those patients had to have documented two or more exacerbations in the prior 12 months during the time of lockdown.

So that means that the patients in our study were reliable exacerbating patients. And therefore if we’re seeing event rates that are consistent with WILLOW. We have a patient profile that’s consistent with WILLOW that suggests that the trial is going as needed. And if we think about historic trials again to the column of precedent, what we’ve seen in the past is that there have been an inadequate number of events to have adequately powered trials showing the effect of in these cases inhaled antibiotics. In our case, we are very well powered, 90% powered to show a 30% reduction in exacerbations. And I think given that two or more exacerbations are required, for entry into the study. We feel really good about the event rates we’re seeing, the powering of the study and therefore the likelihood our drug to show its impact and therefore have success.

Joseph Schwartz: Great. Thank you for the insights.

Operator: Thank you. And the next question goes to Stephen Willey of Stifel. Stephen, please go ahead. Your line is open.

Stephen Willey: Yes. Good morning. Sorry if I missed this earlier, but could you maybe just kind of speak a little bit to the rationale for the selection of the doses that you chose for the Phase 2 CRS study with Brensocatib? And I guess specifically why the 40 mg dose I know you had a little bit of experience with it in the CF study, but why drop 25 altogether? And then I just have a follow-up.

Will Lewis: Well, I think, yes, we’re trying to tease out in this population, which is at the severe end of the spectrum for CRS the drug’s true effect and the 40 milligram dose looked really clean in CF. Indeed, we would have gone to 40 in the original WILLOW study, but we did not have the toxicity data in hand and we did not want to hold up the initiation of that study to wait for that toxicity readout. We now have toxicity readouts for 40 and 65 and both are clean. So the ability to go up and dose does not impeded in any way. And so it seems to us, since it’s a Phase 2 study, the most effective way to get the answers we want, which are — what’s the dose response curve look like in CRS without nasal polyps, bookended with 10 and 40. And that’s sort of the logic behind it.

Stephen Willey: Okay. And then maybe just quickly on ARIKAYCE, I guess, if you assume that ENCORE works out either frontline label expansion, how do you think about just the persistency of ARIKAYCE utilization in the refractory setting. I know you’ve talked about some of these retreatment trends that you’ve been seeing, I think mostly in the US So how do you just think about the stickiness of the refractory franchise? Thanks.

Will Lewis: Yes. I think it’s unfortunately it’s going to be there. And the reason for that is we hear this from KOLs all the time and I’m sure you have as well when you talk to them. Once a patient comes into their clinic as a refractory NTM patient, they never leave. They get treated for a period of time. They’re successful in the eradication of the underlying infection that gives the patient reprieve, but these patients are vulnerable to these infections and the pathogens that give rise to the infection are ubiquitous in the environment. They’re in the soil, the air, the water and consequently vulnerable patients stand a good chance of being re-infected. And so it’s going to be necessary to retreat them when they present.

I think the promise here is that especially given the low discontinuation rate. There’s a very strong case that is being created and formed around early and aggressive intervention to prevent these patients from getting to the place where they become refractory. But we know from experience that even successfully treated patients will require retreatment. And indeed, a retreatment patient is in effect a refractory patient. So I think we will see the refractory market continue. We know that there are some refractory patients who frankly stay in acute chronic treatment for years now. And so that’s why I think it’s going to continue to be unfortunately a market that will be resilient.

Stephen Willey: Great. Thanks for taking the questions.

Operator: Thank you. And the next question goes to Leon Wang of Barclays. Leon, please go ahead. Your line is open.

Leon Wang: Hey, folks. Thanks for taking my question. I have a question on Europe. So when you’re normalizing the trend for sales, it seems like there is a year-over-year decrease. How do you expect that to kind of play out going forward in terms sales and also you took the one-time charge due to unfavorable pricing in France? Is that something that could potentially happen with other countries in Europe? I’m just trying to understand if there is potential for additional one time charges in the future and how that kind of like sales play out?

Will Lewis: Yes. So on the one-time charge, we don’t expect another one-time charge from another country and the specifics of the ATU program and the way it works. Sort of remind everybody, before a drug is approved, you can petition the French Government for the ability to use and get reimbursed for a drug under the ATU program. And we have worked very successful in doing that for a number of years and treated successfully a number of different patients. Frankly, in many cases, these were patients that had abscesses as well as MAC. And that experience was a very positive one. Regrettably because of the dynamics in the European market and in particular in France, there is significant pressure being placed on healthcare budgets and that caused them to set a very low price in France for full time going forward reimbursement.

And then there’s a make whole for whatever we have been charging through the ATU program. That’s how that operates. We don’t see that because there is no equivalent program anywhere else in Europe. So we don’t see that as a risk. The positive trends in Europe are in places like the UK where reimbursement is at a very attractive level. The patients are there. It takes a little while to get things off the ground. And of course, Europe overall is not a major driver of our revenue. But I would tell you that notwithstanding the overpressure of pricing, excuse me, I’m actually kind of bullish about what we might see out of places like the UK and Germany where we’re making some concerted efforts and think there will be some success. But the overall picture in Europe is a difficult and challenging one for healthcare and for biotech companies in general.

Sara Bonstein: And if I could just add one — Leon–

Leon Wang: Oh, sorry. Just one more. point. The 7.5 million adjustment that we booked in Q4, a reminder that 5.8 of that was related to prior period. So as you’re looking at year-over-year, there would have been an impact to the prior periods for France as well, which is all being booked in Q4 of 2022.

Leon Wang : Great. Super helpful. And one more question related to the Brenso and CRS. Can you share any of the powering assumptions?

Will Lewis : So we’re not doing that today, but we will be happy to provide that once we come to agreement with FDA, this trial as proposed is acceptable. We don’t anticipate any difficulty in that discussion, but just out of respect for them, we want to wait until that process is finalized. And then we can present what has been agreed with FDA and indeed any characterizations that come out from that interaction.

Leon Wang : Got you. Thank you.

Operator: Thank you. And the next question goes to Graig Suvannavejh of Mizuho Securities. Graig, please go ahead. Your line is open.

Graig Suvannavejh : Okay. Thanks so much for taking my question. Will, I know you started off your prepared remarks by talking about your translational medicine efforts. So maybe since the question has been asked there, and that’s maybe still your thumb during your May 8th R&D day, but I’m curious as to kind of the overall picture that maybe you can paint for me again, which is I know that you brought in some very experienced people from AveXis. There are other biotech companies that are standalones, that are spending, I would assume lots more than you might be able to spend and perhaps investors don’t want you to spend all that much. But what is it really that you think is going to help you differentiate versus the other efforts that are out there? Is it literally more about the people and the know-how? Or is there some other technological edge that you think that you have as it relates specifically to your gene therapy efforts? Thank you.

Will Lewis : Yes. So I think the gene therapy space, which is but one component of the fourth pillar and the different platforms we have that we’ll be talking about on May 8th. But it’s a particularly powerful technology. And the reason I like it so much is because I see it as a productivity tool. There aren’t many of those in biotech. It’s a tool that can shorten the time and cost to commercialize drugs that are impactful, because with a Phase 1, 2 trial, that is demonstrates real impact on a disease state, you can secure potentially a conditional approval for that and move to commercialize it earlier at less cost. And so just fundamentally, the technology as a productivity tool is an important thing for the market to digest and understand, because most of the drug development pathways you’re following are Phase 1, 2, 3, twin Phase 3s time and money are quite significant.

As we progress through gene therapy, I think we possess a number of advantages. We have a strategic view on this market. As you know, I used to sit on the Board of Uni Care, I’ve been around the gene therapy space for a very long time. And so we understand that it is a very bespoke technology, and therefore, it requires the very best people and that is what we have very quietly assembled out in San Diego. And for the last 18 or more months, they’ve been working very hard diligently to advance a number of different programs in parallel, because of their experience, they can do this very efficiently. As we’ve said, our spend for the entire fourth pillar will be less than 20% of our overall spend and that trend will continue. So this will not become a white elephant project.

This is a program that is being driven by people I consider to be the very best in the world at this and the data that we’ll be talking about on May 8th. I think we’ll support that assertion. As we think about where we can go next, there are a number of different opportunities. In addition to people, we have very specific approaches and technologies that we think could be game changing in this space. And we will be sharing those in some detail on May 8th.

Graig Suvannavejh : Okay. Thank you very much.

Will Lewis: For its people, its technology and its experience.

Operator: Thank you. And the next question goes to Jennifer Kim of Cantor Fitzgerald. Jennifer, please go ahead. Your line is open.

Jennifer Kim : Hey, thanks for taking my questions. Maybe to start off with ARIKAYCE front line. Could you just clarify for US approval, does ENCORE need to hit only on the respiratory symptoms score or does it have to hit on the fatigue symptom score as well?

Will Lewis: So those two are combined sort of mosaic of patient response to the drug. It will depend on what we see, but my guess is you’ll see impact on both measures. It’s not pre-specified that one or the other must hit. And of course, the FDA’s assessment is does the drug make a patient feel function or survive longer or better than not being on the drug. And so I think a clear win on either one of those is a very strong argument for approval. But let me remind you that this is really only the US market that is particularly focused on the PRO and the instruments that that underlie that. In Japan, culture conversion is what they’re focused on. And so we have in one trial all of the answers to both markets, but a split opportunity if you will.

If we hit on culture conversion, we’re good in Japan and that’s a very substantial market. If we hit on the PRO that’s good in the US, and that’s a very substantial market. Each will read into the other and so that will provide some I think additional opportunity to make an argument should something go a little bit sideways. We don’t anticipate that’s going to be the case. We think we know how these patients respond. We’ve seen them culture convert. And as a consequence, the study is designed to capture that and I think it’s going to do so successfully.

Jennifer Kim : Okay. And then maybe hitting on Japan, I know there’s a pricing adjustment coming up. Do you have any color on the exact timing in terms of whether or not that’s coming in the first quarter or maybe later in the second quarter?

Will Lewis : Yes. Sara, do you want to take that?

Sara Bonstein : Sure. So what we communicated is we anticipate it will occur in the second quarter of this year. And it will be in the high single to mid teen range. And that’s expected in plans and what you see for products in Japan.

Jennifer Kim : Okay. And then my last question is, TPIP, the interim blinded data coming in the second half, so it seems like it’s coming from both studies. And I think previously you said this would be PHILD only. Is there a reason for that change? And does that indicate, I guess, the enrollment rates that you’re seeing for either study so far?

Will Lewis : Yes. So what I would tell you is that we want to share as much data we can, because we think showing the blended blinded titration data really gives insight into the likelihood of success of the trial and the impact of the drug. So if there are sufficient patients in — from each study that will make the sample that we’re presenting meaningful, we will share it. If for some reason, for example, the PAH study is enrolling slowly than we might not have enough data. But our expectation right now is that by the end of the year we’d have enough data to share from both studies and that in fact data from each would be helpful to people’s understanding. I can tell you that there is a lot of enthusiasm for this program, not just among key opinion leaders, but among the sites we’re talking to. And I think we’re going to be able to get some real sense of the likely success of this drug as anecdotes build throughout the year.

Jennifer Kim : All right. Thanks so much guys.

Operator: Thank you. We have no further questions. I’ll hand back to Will Lewis for any closing remarks.

Will Lewis : Thank you all for joining us today.

Operator: Thank you. This now concludes today’s call. Thank you so much for joining. You may now disconnect your lines.