Insmed Incorporated

Good morning and welcome to the Insmed first quarter 2023 financial results. My name is Nanduja and I will be your operator today. At the end of the presentation, there will be an opportunity to ask questions. To do so, please press star followed by one on your keypad at any time. To withdraw your question, please press star followed by two. We would request everyone to limit their questions to two at a time. I shall now hand over to Brian Dunn to begin.

Thank you, Nadija. Good day, everyone, and welcome to today's conference call to discuss INSMED's first quarter financial results for 2023 and provide a business update. I am joined today by Will Lewis, Chair and Chief Executive Officer, and Sarah Bonstein, Chief Financial Officer, who will each provide some prepared remarks. Later, they will both be joined by Dr. Martina Flammer, Chief Medical Officer, for the Q&A session. Before we start, please note that today's call will include forward-looking statements based on 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, which are available at www.sdc.gov and on our website for more information concerning the risk factors that could affect the company. 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. With that, I will turn the call over to Will Lewis for prepared remarks.

Thank you, Brian, and good morning, everyone. I am pleased to report that INSEMED began 2023 exactly how we hoped it would, with a strong quarter of commercial execution, which delivered 23% revenue growth, while also continuing to fulfill its promises from a research and development perspective. By nearly any measure, The most important pipeline milestone for InnsMed in the first quarter was the completion of enrollment in the Aspen study of rensocative in adult patients with non-cystic fibrosis bronchiectasis. On last quarter's conference call, we reiterated our goal to enroll more than 1,600 adult patients in Aspen by the end of March, which in itself would have been an unprecedented achievement for a study in this patient population, both in terms of overall patient numbers as well as the pace of enrollment. But in reality, we exceeded even that ambitious enrollment target. In total, the Aspen study enrolled more than 1,700 adult patients at more than 460 sites in nearly 40 countries. To put that in context, that is more than 75% larger than any prior Phase III program in this indication and was achieved in a similar amount of time despite enrolling during a global respiratory pandemic. In fact, the number of patients enrolled in Aspen during just the first quarter of 2023 exceeded the entire enrollment of our Phase 2 Willow study. This speaks to the number and motivation of patients seeking solutions for this condition and adds to our confidence in the potential commercial opportunity for Brenzocatib. None of this could have been achieved without the tireless dedication and passion of our Brenzocatib clinical colleagues, who deserve tremendous credit for getting us to the position we are in. Perhaps most importantly, the achievement of this enrollment goal largely de-risks the timing of the readout of the Aspen study, which we continue to believe will be in the second quarter of 2024. This data readout will be a major inflection point for Insumet with the potential to quickly transform the company from one that serves tens of thousands of patients currently to one that could serve more than a million upon Brenzocatib's potential approval as a first in disease, first in mechanism treatment for bronchiectasis. And even that number of patients could be just the beginning. Brenzocatib and the DPP-1 pathway that it targets has the potential to address a host of diseases caused by neutrophilic inflammation, with bronchiectasis representing just the first on that list. And while we're on the topic of Aspen, I hope you saw that with our earnings announcement this morning, we also released on our website the baseline characteristics of the participants in the Aspen study. To put these characteristics into context, we provided a side-by-side comparison of each attribute to that of the participants in our Phase II willow study. Although I won't talk through all of the details on this call, what you will find is that the patients enrolled in Aspen are remarkably similar to those who were enrolled in the successful willow study, including age and gender, as well as, importantly, the percentage who have had three or more exacerbations in the 12 months before entering the study. chronic macrolide use, and other relevant comorbidities such as COPD. All of this adds to our confidence that we have designed this trial to give it the best chance to successfully replicate the results shown in Phase 2, potentially opening up the pathway to the first regulatory filings for Brenzocatib. As you know, the Insumet story goes well beyond the promise of Brenzocatib. In the time between now and the Aspen readout, we expect a series of important catalysts from each of our four development pillars. Let me take a moment to update you on just a selection of these catalysts. Just days from now, on Monday, May 8th, we will host our research day, titled The Future of Rare at Insumet, Functional Genes, AI-Enhanced Proteins, Glowing Algae, and More. This is the moment that we, and many of you, have been waiting for, as we finally will have the opportunity to showcase the depth and breadth of our early stage research efforts, which have been operating behind the scenes and under the radar for nearly two years now. We are extremely excited to unveil multiple proprietary and cutting edge technologies and platforms that we have assembled. We believe these acquired capabilities have the potential to work synergistically to transform the treatment landscape for serious and rare genetic diseases. As we have said before, we expect this early stage research engine to generate at least six INDs by the end of 2025, while accounting for less than 20% of Innsmed's overall spending. We can't wait to introduce you to what we've been working on and to some of the extremely talented people behind that work. If you are not able to join us in person in New York on Monday, we invite you to tune in to the live webcast or replay, both of which will be available on our website. Right after our research day, we will quickly turn our attention to the American Thoracic Society International Conference, or ATS, in the second half of May, where we will showcase new clinical, preclinical, and real-world data in eight presentations across error case, forensicative, and TPIP. This will include real-world error case and NTM lung disease data, as well as subgroup analyses from the Phase II willow study of Brenzocatib in bronchiectasis. In addition to presenting new data at ATS, we will also be engaging with the treating community on disease state awareness as we ramp up activities to support the potential launch of Brenzocatib in bronchiectasis. In the third quarter, we continue to expect to release the top line efficacy and safety results from the ARISE trial for error case in patients with newly diagnosed or recurrent MAC lung infection who have not started antibiotics. As a reminder, the efficacy portion of this data set will include PRO or patient reported outcome data, which is required by the FDA, as well as sputum culture conversion measures which is required by regulatory authorities in Japan and other ex-US markets. This PRO continues to be a topic that comes up often in my conversations with all of you, so let me try to be as helpful as I can. The PRO measures we are using for ARISE and ENCORE consist of two separate scores. The first is focused on respiratory symptoms. These questions are taken from the respiratory domain of the Quality of Life Bronchiectasis Questionnaire. The second score is based on questions focused on fatigue-related symptoms and comes from another existing questionnaire called PROMIS Fatigue 7A. Both of these PROs have been validated in other respiratory diseases and shown to be sensitive to patient symptoms, which is why we have chosen to use them as a starting point in our trials. At this point, We don't know if all of the questions or just a subset of them will prove to be sensitive to changes in patients' symptoms in the MAC setting. The ARISE study, although not powered to show statistically significant differences between trial arms, is designed and sized appropriately to help us validate a respiratory PRO and a fatigue PRO for use in patients with MAC and to provide us with learnings about the questions that are most informative clinically. For example, if there is a specific respiratory related question that shows no change in either trial arm, even while some patients are reporting overall improvement in breathing symptoms, then we might conclude that the question is not especially meaningful. These types of analyses could result in certain questions being prioritized or deprioritized in how we ultimately calculate the PRO scores. within the registration-enabling OnCore study. This is just one example of many analyses that we will evaluate iteratively after the readout of ARISE in order to determine the most optimal set of respiratory and fatigue questions to be used in OnCore. After this thorough analysis of the ARISE data is complete, we will then need to discuss our conclusions and obtain agreement with the FDA So we do not anticipate being in a position to share any of these conclusions at the time of the ARISE top line press release. So what are we expecting to show you when the ARISE data reads out? At a minimum, we expect to disclose the following data points. First, we will provide the change in patient scores from baseline to month seven, which is one month after ending treatment. For both the quality of life bronchiectasis and the promise fatigue questionnaires, in the active and control arms. Next, we will share data measuring how much of a change in the respiratory and fatigue PRO scores is associated with a meaningful improvement for patients in terms of their symptom severity. These data will be collected from the entire population of subjects enrolled into the ARISE study and will be used to validate whether these PRO questionnaires are responsive in this population. We will also disclose the proportion of subjects achieving culture conversion within each trial arm. Although we will be looking at the correlation between changes in PRO scores and culture conversion, showing that correlation in ARISE and ENCORE is not a requirement for FDA approval. Finally, we will provide information on the safety and tolerability profile observed in the trial. We plan to schedule a call for the day of the data release in order to discuss any questions you may have. While we're on the topic of error case, let me provide you with two additional updates on the program. I'm pleased to report that the second meeting of the Data Safety Monitoring Board, or DSMB, was held for error case, where it was recommended that both the ARISE and ENCORE trials continue as planned. As you know, the DSMB only reviews for safety, so this represents the most favorable possible outcome. Separately, we continue to monitor on a blended basis, blinded data, the discontinuation rate in the ARISE trial. Encouragingly, this rate has remained consistent with the 15% figure we disclosed earlier in the year, which is less than half of the rate we observed in the refractory setting. We view both of these updates as additional points of validation for the potential success of error case in the broader MAC settings. Finally, a brief update on our TPIP program. Earlier this week, the DSMB met to review the safety data from our ongoing Phase 2 PAH-ILD and PAH trials and reported no safety concerns and a recommendation to continue the studies unmodified. This is, once again, the best possible outcome and an early positive sign for the program. Before I turn the call over to Sarah to walk you through the financial performance for the quarter, let me take just a moment to discuss the error case commercial franchise. We continue to believe error case is a growth story, particularly in the US and Japan. Despite the softness that is typical in the first quarter in the US, due to the impact of deductible and copay resets for Medicare patients, we saw sequential growth in the first quarter in US error case time since its initial launch. We see this as a sign of positive momentum for the U.S. moving forward. In Japan, as we've said before, we anticipate growth may be more weighted to the back half of 23, especially now that the nation has announced it is finally lifting its COVID restrictions. This is reported to begin next week on May 8th. In closing, I am proud of what INSPED has accomplished to date. in the research lab, in the commercial markets, and in the lives of our patients. I am excited by what the future holds as we approach a period when key clinical readouts will reshape Insumet and, I believe, provide us with multiple potential pathways to transition into a sustainable biotechnology company with a future that is even more impressive than our past. I'll now turn the