Insmed Incorporated

Thank you for standing by and welcome to the INSMED second quarter 2026 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one in your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I'd now like to turn the call over to Bryan Dunn, head of investor relations. You may begin.

Thank you, Rob. And good day, everyone. Welcome to INSMED's second quarter 2026 earnings conference call. Before we get started, please note that today's call will include forward-looking statements. These statements represent our judgment as of today and inherently involve risks and uncertainties that may cause actual results to differ materially from the projections discussed. Please refer to our most recent filings with the Securities and Exchange Commission for a full description of these risk factors. The information we will discuss on today's call is meant for the benefit of the investment community. It is not intended for promotional purposes, and it is not sufficient for prescribing decisions. Today's call will feature prepared comments from Inns Med's quarterly performance and financial position by Will Lewis, Chair and Chief Executive Officer, and Sara Bonstein, Chief Financial Officer, respectively. After their remarks, we will welcome Martina Flammer, Chief Medical Officer, for the Q&A session. I will now turn the call over to Will.

Good morning. I want to start off today's call by framing what I believe are our two key accomplishments this quarter, operational excellence and positioning for our future. Across our commercial, clinical and research efforts, we've demonstrated exceptional operating performance. This has laid the groundwork for Innsmed's potential evolution into a reliably consistent revenue and earnings growth story over the next decade and beyond. Let me briefly summarize what I mean. Brinsupri's launch continues at a truly historic pace, delivering another quarter of performance that more than doubled the results of the best specialty respiratory launches our industry has ever seen at this stage. With the potential to expand its reach with improved diagnosis of appropriate patients and a projected approval in Japan later this year, we believe the Brinsuper story is just getting started. Aircase continues to perform well in its eighth year of launch, growing globally by high single digits this quarter compared to the second quarter of last year. Beyond the current opportunity, there is also potential to expand the label to include all patients with MAC lung disease in the U.S. and Japan next year. From a commercial readiness perspective, we are on track to serve a broader base of appropriate patients while providing education for physicians as we enable them to use Ericase earlier in the treatment paradigm for MAC lung disease. TPIP is emerging as a potentially differentiated asset across four large indications, PHILD, PAH, PPF, and IPF. We believe the data from our ongoing open-label extension study of TPIP in patients with PAH shared last month are further evidence of the strength of TPIP's profile, which we believe has the potential to be the prostanoid of choice. In addition to the progress Our top three assets are making. We are also positioning the company for continued success in the future. We are steadily progressing a broad and diversified early stage pipeline consisting of multiple potential blockbuster treatments for a wide range of serious diseases. The FDA recently cleared the IND for INS1033, the first of several next generation DPP-1 inhibitors advancing within our pipeline. to proceed into the clinic. The first planned indication for INS1033 will be in patients with rheumatoid arthritis for which we have promising preclinical data. We anticipate following that with additional clinical programs in ulcerative colitis and COPD for which there is also supportive preclinical data. These indications highlight the potential relevance of DPP-1 inhibition beyond bronchiectasis and other large neutrophil-mediated inflammatory diseases. We also added new talent to our leadership team with the hiring of Samuel A. Butera as our Senior Vice President and General Manager of our Global Respiratory Therapeutic Area. Samuel A. brings with him a wealth of commercial experience in U.S. and international markets, having led multiple global launches at Johnson & Johnson and Novartis throughout his career. We view his hiring as a huge win for Insumid and an equally large endorsement of Insmed's future. Finally, it is important to mention that we are making all these strides while maintaining our financial strength. We continue to believe we are sufficiently resourced to fund our business through cash flow positivity next year without raising additional capital. With Brinsupri's remarkable performance through nearly one full year of launch and the latest results from our ongoing open label study of TPIP and PAH, Our confidence in the future potential of these assets has grown. As a result, we are raising our peak sales estimates for both assets. For Brinsupri, we now estimate global peak sales of greater than $7 billion, up from our previous projection of greater than $5 billion. This updated estimate reflects expected growth of the current addressable market, driven by earlier and more consistent diagnosis due to increased awareness among physicians and patients. Importantly, this peak sales projection does not include contributions from the potentially meaningful opportunity to identify additional bronchiectasis patients from the comorbid COPD and asthma populations, which would represent upside to this outlook. For TPIP, we believe the peak sales opportunity is greater than $6 billion, up from our previous peak sales projection of greater than $2 billion, which was provided prior to seeing the strength of our phase two readouts in PHILD and PAH and before we chose to pursue PPF and IPF. This assumes clinical and regulatory success in all four indications and the TPIP's profile continues to distinguish itself as meaningfully differentiated versus other prostanoids with comparable efficacy to Sotatercept. while maintaining a favorable tolerability profile, which allows for higher dosing. Along with the reiterated peak sales estimate of greater than $1 billion for EraCase, the combined peak sales estimates for our three lead assets now exceeds $14 billion U.S. dollars, up 75% from the greater than $8 billion peak sales estimate we previously provided for these three products. Let's now move to a deeper discussion of Brinsupri's ongoing launch. In its third full quarter of launch, Brinsupri produced $309.2 million in revenue. We believe Brinsupri is on its way to becoming the most successful launch in the history of specialty respiratory medicine and has the potential to become one of the top 20 medicine launches of all time in any category. This outstanding performance gives us confidence to increase our full year 2026 Brinsupri revenue guidance to between 1.25 and 1.4 billion from our previous guidance of greater than 1 billion. This quarter's impressive results demonstrate the remarkable momentum of Bransupri's launch and reinforce our confidence in its future. All detailed metrics we monitor, including payer access, patient compliance and continuation rates, continue to track ahead of our expectations. Bransupri added approximately 7,000 new patients in the second quarter. exceeding our previous expectation of approximately 6,300 new patient starts. This result demonstrates the robust ongoing demand for the treatment. We now expect approximately 7,000 new patient starts per quarter for the remaining quarters in 2026, which is reflected in our updated revenue guidance. Strong new patient demand was driven by an acceleration in new prescribers and a deepening of prescribing. As of the end of June, We had more than 6,300 cumulative prescribers, which was the increase of approximately 1,300 writers compared to the end of March. We are also making good progress on depth of prescribing. Approximately 30% of Brunsupre's writers have prescribed it for at least five of their patients, up from around 20% at the end of March. However, there is still significant opportunity here. Many doctors, including some who treat large numbers of patients with bronchiectasis, are still trialing the medicine and have considerable capacity to write for more patients if their experience is positive. This quarter, the European Multi-Center Bronchiectasis Audit and Research Collaboration, or MBARC, announced its intention to collaborate with us to evaluate Brenzocatib's 25 milligram dose in a three-year open-label study of up to 3,000 patients with bronchiectasis in six European countries. Embark's intention with this study is to shed light on two important questions. First, whether long-term use of Brenzocatib has the potential to modify the course of the disease. And second, whether earlier upstream use of Brenzocatib is effective in further slowing disease progression. We look forward to collaborating with Embark to address these important questions. We also have ongoing plans to support additional long-term data generation through phase four and real-world evidence trials in the U.S. to further solidify our position as the leader in bronchiectasis and DPP-1 inhibition and to show the long-term benefits of Brinsupre. Beyond what we have just discussed, we see a significant opportunity to expand the diagnosed bronchiectasis population by improving diagnosis among patients with comorbid COPD or asthma. This effort to identify patients with comorbid bronchiectasis is being resourced like its own separate launch and is expected to yield increased diagnosis over the next several years. Some of our initial efforts around improving diagnosis, including our support behind an ATS-led initiative to analyze electronic health records across seven large academic medical systems, the Suspect BE Celebrity Campaign with Ty Pennington, and hosting the inaugural Bronchiectasis and COPD Stakeholder Summit at the World Bronchiectasis Conference, just to name a few. And we are just getting started with other initiatives currently being piloted, which could advance our efforts to support earlier and more accurate diagnosis of appropriate patients. We will track a variety of indicators to look for signals of progress, including monitoring claims data for increased diagnosis rates and high resolution CT scans. Given the time it takes for this information to become available, and the fact that they are trailing indicators, we will have insights from these data in approximately the middle of next year. We look forward to sharing updates as these initiatives progress. We are convinced that the best of this story is yet to come as more patients receive a proper diagnosis and gain access to appropriate treatment. Now let me provide an update on error case. In addition to continued sales growth, we are making progress toward a potential expansion from refractory MAC into all MAC lung disease. Backed by robust clinical evidence and an experienced commercial organization, we believe EraCase is well positioned to make the transition to this larger opportunity in the US and Japan. We recently submitted the supplemental new drug application to the FDA for EraCase in newly diagnosed patients with MAC lung disease, and we intend to submit an application to Japanese regulators in the second half of this year in support of potential launches in 2027. This sets the stage for a particularly dynamic time for our Japan team, who could be simultaneously launching both the expanded error case indication and Brinsupri in bronchiectasis. These products have clear synergies in terms of their call points, which we expect to benefit both launches. Given the impressive results we have seen from that team as they have executed on error cases current indication, we are excited to see the positive impact they can have on patients once presented with this expanded opportunity. We look forward to sharing additional updates on error cases progress as the regulatory process continues. Let's turn to TPIP. Last month, we announced positive 12-month data from our ongoing open-label extension study of TPIP in patients with PAH. To contextualize how unique and impressive those results were, let's begin with a recap of the randomized Phase IIb trial that preceded it. On a placebo-adjusted basis, T P I P demonstrated a 35% reduction in PBR, a 35.5 meter improvement in six minute walk distance and a 60% reduction in NT pro BNP at the end of 16 weeks of treatment. Recall each of these efficacy metrics was measured at trough or approximately 20 hours after the previous dose was administered. The magnitude of these benefits support our belief that T P I P has the potential to become the clear prostanoid of choice. This study also showed good tolerability with a low 10% dropout rate and 95% of completers choosing to continue in the OLE study. Let's move now to the results of the OLE study. At 12 months, patients who remained on TPIP maintained or improved across all efficacy measures. Moreover, patients who had been on placebo in the lead-in study and switched to taking TPIP in the OLE not only improved, but fully caught up to the continued TPIP group. This trend is something rarely observed in other open-label extension studies in PAH patients. At month 12, compared to the baseline of the lead-in study, patients in the OLE experienced an approximately 55-meter improvement in six-minute walk distance and an approximately 60% reduction in NT-proBNP. like the phase two B study, these endpoints were measured at trough. Additionally, about 80% of patients achieved functional class one or two with over 25% of all patients achieving functional class one, meaning these patients no longer have symptoms of PAH. We also looked at Reveal Light 2.0 scores, which are a validated measure of the risk of morbidity and mortality in patients with PAH. Impressively, the average reveal risk status for all OLE patients improved by two categories from intermediate risk to refined low risk status. This improvement in score is associated with moving from a five to 10% risk of mortality in the next year to less than 5% risk of mortality in the next three years, along with meaningful improvements in the risk of clinical worsening. Remarkably, 65% of all patients achieved refined low risk status by month 12. Together, these efficacy benefits far exceeded anything we have seen from other inhaled prostanoids in PAH and were comparable to Sotatercept. On safety, we identified no new safety signals despite longer duration of use and higher doses in the OLE. Notably, we also saw a low 15% rate of treatment emergent cough which was predominantly mild and only one discontinuation due to cough over the first 12 months of the study. In addition, we saw a high continuation rate with 91% of patients remaining on treatment at the 12-month point. Overall, these results add to our confidence in TPIP's potential to be the next major advancement in the treatment of PAH. Our comprehensive phase three development program is progressing well with both our PHILD and PAH studies actively enrolling patients. In the past, we have seen a boost in enrollment after sharing positive data updates from the program. We hope that the strength of the OLE data will once again bolster interest in our trials. We're also pleased to report the first data monitoring committee meeting for the Palm ILD study recently occurred, resulting in a positive recommendation for the study to continue unmodified. Additional Phase III studies in PPF and IPF to additional large indications remain on track to initiate in the second half of 2026 and the first half of 2027, respectively. In the Phase III studies, patients begin with an initial titration phase to a target dose of 640 micrograms once daily. Upon completing titration, investigators may further escalate the dose to a maximum of 1280 micrograms once daily when clinically appropriate. The decision to escalate is based on individualized clinical judgment, taking into account the patient's treatment tolerability and clinical status, including evidence of disease progression or the potential for additional therapeutic benefit. We believe TPIP's broad dosing range could provide physicians with the flexibility to optimize the balance between efficacy and tolerability while also allowing treatment strength to be adjusted as a patient's clinical needs change. The flexibility to quickly and safely dose to much higher levels than other inhaled trypanosomal products could represent a meaningful differentiator within the class and resembles the individualized dosing approach physicians already use with parenteral therapy since patients respond differently across trypanosomal dose levels and their dose requirements may increase over time. The ability to continue to dose higher could also expand the duration of time patients spend on inhaled therapy, delaying the need for patients to switch to parenteral options. As I look across our portfolio at Brinsupri's historic launch trajectory, EraCase's steady contributions, and TPIP's potential to be the prosonoid of choice in our earlier stage programs, which are steadily producing encouraging data, I am energized by what the future can hold for Insmed. I believe we are only just scratching the surface of the positive impact this company can have on patients in need. With that, I'll turn the call over to Sara, who will walk you through the financial details of the quarter.

Thank you, Will, and good morning, everyone. I'm pleased to share our second quarter 2026 financial results and updated guidance and to provide some commentary to help with your modeling. Rensubri produced $309.2 million in revenue in the second quarter, up 49% sequentially from an already strong first quarter in which we saw a sequential growth of 44%. This growth was primarily driven by strength in new and existing patient demands. This quarter also benefited from better than expected growth to net dynamics, which brought GTN towards the lower end of our previous guidance range of mid-20s to low 30s. Aerocase produced $116.3 million in revenue this quarter, representing 8% growth compared to the second quarter of 2025. GTN for Aerocase this quarter fell within the guidance range for the year of low to mid-20s. On this slide, you can see our current guidance ranges for Brent Supri and Aerocase revenue for full year 2026, as well as our gross to net expectations for each product. As Will mentioned, Based on the strong results we have produced in the first half of the year, we are raising our full year 2026 Brent Supri revenue from greater than a billion to a range of $1.25 to $1.4 billion. While we continue to expect a regulatory decision in Japan for Brent Supri in the second half of the year, we do not expect a meaningful revenue contribution from Japan in 2026. Aerocase continues to perform as the steady, reliable contributor it has been for nearly eight years. We are reiterating our full-year revenue guidance for Aerocase of $450 to $470 million. We continue to see potential for expanded label in the U.S. and Japan next year as an upside catalyst for this program. On gross-to-net, we are updating our 2026 gross-to-net guidance for Brent Supri to mid- to high-20s, which represents an improvement from our previous guidance range of mid-20s to low-30s. Given we are at the midpoint of 2026, we have confidence in this improvement as we do not foresee any large changes in our contracting strategy for the remainder of the year. Therefore, we expect gross to net for Brent Supri to remain within this updated guidance range for each of the remaining quarters in 2026. In addition, we are reiterating our GTN guidance for error case of low to mid 20s. Moving now to the other relevant financial metrics for the second quarter, which are displayed on this slide. Cost of product revenues was $67.2 million, or 16% of revenues, which is lower on a percentage basis than the 26% we saw in the second quarter of the prior year, reflecting the positive contributions of Brent Supri to the company's gross margin profile. As expected, combined research and development and SG&A expenses increased this quarter, up 38% compared to the prior year period due to the necessary investments made to support the U.S. launch of Brent Supri and to continue to fund our pipeline. Let me now spend a moment on our cash position and burn rate. As of the end of the second quarter of 2026, we had approximately $1.2 billion in cash, cash equivalents, and marketable securities. which represents a meaningfully lower burn rate than we have seen in recent quarters. This is attributed to higher revenue generation as well as appropriate financial discipline. While we continue to expect to increase revenue generation in the second half of the year, we simultaneously expect to invest more in important initiatives to drive future growth, including the phase three programs for TPIP across four indications the launch and branded direct-to-consumer advertising for Brunsupre, and incremental investments in Japan to build out an appropriate sales force and other commercial infrastructure to support future launches of both Brunsupre and Firstline Aircase. We also anticipate incurring payments totaling $50 million to AstraZeneca related to regulatory and sales-based milestones for Brunsupre in the second half of 2026. We believe we are sufficiently funded to support these initiatives and the current operations of the company until we reach cash flow positivity, which we continue to expect to occur in 2027. As a reminder, we do not currently intend to raise additional capital before reaching that milestone. Finally, I want to share our perspective on the long-term financial profile of this company because I believe it is not fully appreciated. Based on the value drivers Will described, we expect our revenue trajectory to continue to grow well into the 2030s. But what makes this growth profile even more compelling is that it is driven by a largely synergistic portfolio of respiratory assets with similar infrastructure and overlapping call points. These synergies set us up to leverage our strong expected revenue category into attractive and persistent EPS growth. Intimate is not simply a revenue growth story. We are building towards a financial profile that we believe will be highly compelling from both a top and bottom line perspective and one that we expect to translate into a period of lasting value creation. With that, we would now like to open the call to questions. Operator, may we take the first question, please?

Certainly. We will now begin the question and answer session. If you would like to ask a question, please press star 1 in your telephone keypad. We ask that you please limit yourself to one question. You may reach you for additional questions. Your first question comes from a line of Jessica Fai from JP Morgan. Your line is open.

Hey guys, good morning. Thanks for taking my questions and congrats on the strong quarter. For the increase to brinsupre's peak potential, can you expand a bit on what underpins that? Anything you can add around the earlier and more consistent diagnosis that you're seeing?

So what I would say about the increase in peak sales and our guidance for the year, they're obviously informed by what's now basically our first year under our belt. We launched last year in August. And the data, I would say, I would describe as remarkably consistent, not only in terms of performance, because first quarter was strong, this quarter is strong, maybe even stronger. And I would say that that matches our internal modeling or it exceeds it. and that is what is really the core of our confidence that this is gonna continue for some time. Every year at this time, we do not only our board meeting, but we do an offsite, a strategic review of everything at the company. We take a whole day to do that with our board. And the completion of that has resulted in our obviously assessing everything going on in the company and taking a longer term view on all of those trends and directions. And as a result of that, We have the latest and greatest thinking surrounding peak sales estimates and year estimates, and that's why we've chosen this time to update everybody.

Thank you. Your next question comes from a line of Joe Schwartz from Laring Partners. Your line is open.

Thanks. Congratulations on the strong performance and outlook. You now have a larger cohort of patients with sufficient time on therapy to begin evaluating refilled behavior. What can you share about persistence, refill timing, discontinuations, and adherence? And how are those things tracking relative to the assumptions you shared with us previously?

Yeah, what I would say is that this is possibly one of the great strengths of this launch. across all the metrics you just mentioned, we are at or ahead of our internal benchmarks. Not only that, but those elements are both strong and I would say stable. So again, giving us confidence as we look forward that this is going to continue in this favorable way. One thing I will just say about some of these forward and new numbers, things like the peak sales number That assumes a very strong DPP-1 competitor gets introduced into the market, and it also assumes the IRA, Health and Human Services, price negotiation takes effect in 2035. So this is a real-world assessment of where we're going to go. Very helpful. Thank you.

Your next question comes from a line of Emile Devon from Guggenheim Securities. Your line is open.

Great, thanks for taking my questions. Congrats on the impressive results here. So I just have a question on the new patient starts. You mentioned there's 7,000 new patient starts this quarter, and then the guidance being to sort of expect around that number remaining quarters of the year. So that's obviously quite a bit higher than the 6,300 that you were expecting just a little bit ago. So here's the confidence you have on that number staying flat and not continuing to rise, since we're still relatively early in the launch. and you can just comment, was all of the 7,000 then so-called organic patients or was there still some of that ready and waiting group that you talked about previously? Thanks.

Yeah, no, thanks for the question. That is all organic. The 7,000 number is just, it's an impressive expansion from the 6,300 we thought we were going to get and it speaks to the strength of the commercial team and the performance they've delivered. I fully expect that that 7,000 will remain. Is there room for it to increase? Of course. We'll see how that goes, but our current guidance for the year assumes it will be $7,000 every quarter for the remainder of the year.

Okay. Thank you.

Your next question comes from a line of Jason Zemanski from Bank of America.

Your line is open. Great. Good morning. Congrats on the stellar quarter and thanks so much for taking our question. I wanted to dig into prescribing depth for ProBrenzo a little bit more. I think you said about 30% of prescribers are now writing for at least five patients. But what typically gives physicians enough confidence to reach that level? And once they do, do you see prescribing accelerate as they gain experience with the drug? I guess, you know, is there a point at which Brenzupri shifts from being evaluated patient by patient to becoming the default treatment within a practice? Thanks.

Well, thanks for the question. I think your final line conclusion is exactly what we anticipate will ultimately happen, that there will be a point at which this switches from the trial list sort of going patient by patient to this becoming the default for the treatment of bronchiectasis. And I think that is something we see taking place in the future. Right now, we're pleased to see the improvement. Remember that last quarter, we had 20% of physicians who had written more than five, that's now moved to 30%. And the impressive results this quarter reflect that. However, what I'm particularly excited about is that there's so much more room to run here with only 30% having written more than five and remembering that our tier one physicians have over a hundred patients each. There is a lot of room for even our tier one physicians who are writing more than five to really pick up the pace. and that's something we're focused on very much in terms of our commercial calling effort. Some of the very metrics that we're putting out today actually go into the hands of our therapeutic specialists to inform physicians, hey, look, 26,350 new patients start since this drug was launched. There are 28,000 physicians of whom we have managed to convince 6,300 to write a prescription. so there is a lot of room to run here and that's why we see this guidance for the year and the ultimate peak sales number increasing the way we have just reflected.

Great, thanks for the color. Your next question comes from a line of Olivia Saunders from Cantor Fitzgerald. Your line is open.

Hi, good morning. Thank you for the question. You guys noted that the growth to net obviously came in at the lower end of the range this quarter and I know you've tightened Boyer Guidance to the mid to high 20s. So as we think about 2027 and beyond, is that steady state GTN profile, is that how we should assume it'll be going forward in that kind of mid to high 20s? Just trying to think through where that number could eventually settle and whether we're already at that point in the launch. Thank you, guys.

Sir, you want to take that? Thanks for that. Sir, do you want to take that question?

Thanks, Olivia, for the question. Now that we're obviously at the midpoint of the year, we have a clear line of sight. We don't expect any changes for the remainder of this year and expect that the coming quarters this year will be within that range. Payer access has been really favorable, about 90% approval rate, approval in less than a week from majority of patients, so access sort of top-notch piece of this launch. As you think about 27 and beyond, we're obviously not providing forward-looking guidance but you should naturally what you expect to see with gross net is gross net does naturally go up a little bit each year again not going to provide forward-looking guidance but for this year we have confidence in the mid to high 20s.

Your next question comes from a line of Ritu Baral from TD Cowan. Your line is open.

Good morning guys and I want to add my congrats on these metrics to One of the things that we have been watching on Symphony TRXs is seemingly an improved compliance rate or at least fill rate. Can you go over sort of what initiatives you may be conducting to promote compliance? Is it patient focused? Is it insurance focused? Is it doctor focused? And if you could just comment on continuing Symphony TRXs and how accurate they'll be through the end of the year. Thanks.

Yeah, so the first and most important point to understand as it relates to persistence, which again is both strong and stable, is that the medicine itself, I think, is the greatest form of advertising. Patients, many of them, feel better taking this medicine, and so they want to stay on the medicine. The physicians are hearing that that becomes something that they reflect to future potential patients and that they themselves trial and experiment with. That then dovetails and extends out into our education of the insurance and physician and patient efforts that we undertake in compliant ways. This medicine is Simply put, it's a good medicine. It has a low dropout rate. It is something that makes many patients feel better. And the avoidance of what we refer to as the heart attack for the lung, an exacerbation or a flare, is a very meaningful thing for these patients. Interestingly, those where there are patients who stop taking the medicine, they are inevitably going to have one of those flares or experiences, and that's going to drive them right back into the physician's office with a question of what can I do about it? And the answer being, you can take Brinsupre. So I think we really have a very sort of unique ecosystem around this medicine in terms of its profile and how it's perceived and taken up. And just to address your other question on Symphony TRXs, yes, that continues to track very tightly with what we see internally through its most recent report.

Thank you.

Your next question comes from a line of Gavin Clark Gartner from Evercore ISI. Your line is open.

Hey guys, thanks for taking the question. Could you just help us understand the 2026 Brinsupre guidance a little more? I mean, we're sitting here in August and it's still a fairly wide range for the course of this year. So you noted 7,000 patient ads moving forward. Beyond that, what takes you to the high end or the low end of this Brinsupre guidance? Thank you.

Well, I think, you know, it's important to remember that at the beginning of the year, we had gone from what was a referenceable indication of what success looked like that was $500 to $700 million in revenue in the first full year. That was based on other specialty respiratory launches. We then increased guidance to over a billion dollars at the beginning of the year, and here we sit with only three full quarters under our belt, and we have just raised that guidance by 25 to 40%. So, That is a way to capture the journey that we have gone on. We're now more than double what we initially thought we might do in the first full year. We will see what the next quarter holds, but I think the guidance is trying to be responsible and saying, there's a lot of opportunity here. We can't assume it's going to fall into our lap. I have tremendous confidence in the commercial team, and I'm convinced that whatever can be accomplished with this medicine, They're going to bring it over the finish line. But I think right now we feel comfortable raising to this new level of 125 to 14. And as we move through the rest of the year, we'll certainly provide guidance on where we might end up within that and how that might change. That's as much as we can really say at this point. Great.

Your next question comes from a line of Leonid Timoshev from RBC Capital Markets. Your line is open.

Hey, guys. Thanks for taking my question. Just wanted to ask on the TPIP guide, actually, in the $6 billion, I guess, how are you thinking about the components there? And then, you know, specifically on IPF, are you assuming that you succeed in breaking orphan designation there? Is it sort of probability adjusted weighted? I'm just trying to understand sort of how you get to that $6 billion across all the components. Thanks.

Yeah, so I think, you know, it's very important for people to understand we assume that we will be approved in all four of the indications, PAH, PHILD, IPF, and PPF. We assume we do overcome the orphan status for IPF, and we assume that we have a profile that is not only clearly superior to other prostanoids, but is comparable to Sotatercept. One of the interesting comments made when we were reviewing our phase two open label extension data was the description by the key opinion leader we had invited to join the call that from his point of view, not only does the profile we produced represent the holy grail, to use his words, of data, but it represents something that causes him to rethink the positioning of this prostanoid relative to something like cetatercept. So I'm very excited about where these results, should they continue, where they will take us in each of those four indications. We're not breaking down what part of the six comes from where. I will just observe that I've seen some published estimates that Sotatercept alone in PAH will achieve somewhere in the neighborhood of $7 billion in revenue. From that perspective and assuming comparability and hearing the instinct of the KOL that Insamed may be with TPIP in a place to compete there. I think the $6 billion feels pretty comfortable.

Your next question comes from a line of Faisal Khurshid from Jefferies. Your line is open.

Hey guys, thanks for the question. I wanted to ask you, I made some comments in the past about the Brunsupre XUS launch sort of pending clarity on MFN. Can we just get an update on your latest views on that and also how the Japan launch plays into that potentially? Thank you.

Sure. So, you know, MFN is but one component part of the assessment of how to bring the medicine to Europe. It's relevant, but it is not controlling. I would say the bigger issue going on in Europe right now is the lack of apparent willingness or interest on the part of most of the European countries because of budget constraints to really lean in and pay for the innovation that all these years and billions of dollars require. That lack of willingness makes it less attractive to go there with a traditional commercial approach to Europe But nonetheless, we have tested this drug in the European market. We want to find ways to make sure that the drug can get to patients who are appropriate. And we have some ideas about how we're going to accomplish that. But there's no doubt that the European opportunity is less today than it was in the distant past. And that's true not just for us, but for everybody. In contrast, Japan, where we have just come from the launch meeting for Brinsupri, In terms of getting ready, the senior team was over there visiting with our team, getting the review of where they are and how they're positioned for both the Brinsupri launch when it gets approved and the EraCase label expansion. And I can reflect my own enthusiasm for the capabilities of that team and what they're going to be able to produce. Overall, international sales and revenue for this kind of a product tend to be in the sort of 10% to 15% range. I would expect the majority of that will come from Japan, and I couldn't be more excited about what that team is able to deliver. And based on their history and the expanded efforts they've made, including increasing the sales force, I think there is a very good reason to believe that Japan is going to deliver starting next year.

Got it. Thanks, Will. And that implies Japan pricing is comparable to the U.S.?

So the assumption is that we get a price from Japan that is acceptable. That is a process that is still underway, and when it's resolved, that's when we'll give full-throated support to the launch in Japan and its expected success.

Great. Thank you so much.

Your next question comes from a line of Matt Phipps from William Blair. Your line is open.

Thanks for taking my question, and congrats on great execution here. Last quarter there was a lot of talk about ready and wait patients versus organic demand. So just wondering if this 7,000 patients you feel really fits into that organic demand category you described previously and if that should be the assumption for the rest of the year. Thank you.

Yeah, it is 100% organic demand. Ready and waiting patients are gone. They are no more. And that was a comment we made last quarter and we stick to it from now and going forward. So all the 7,000 new patients starts that we saw this quarter and expect to see in future quarters will be organic demand. Great, thank you.

Your next question comes from the line of Ben Burnett from Wells Fargo. Your line is open.

Hey, good morning. I want to ask one on TPIP and just back to one of your prior comments that the sales potential that you outlined could include, you know, IPF among other things. With regards to IPF, I guess what gives you the confidence that you would be able to navigate around a potential Tybeso ODE?

Yeah, and I'll ask Martina to chime in here in a second. I think there are many ways you can, I guess the way to say it is to break the orphan status of a particular product. And we feel we have a number of different levers and approaches we can use there. Certainly the phase two data The once a day dosing, many different features of this product and what it can do for patients, I think presents an almost self-evident case for why we're superior. But Martina, do you want to add any comments?

Yeah, I think one thing I would add here is that you've seen that the agency, the FDA here has also recognized the potential and plausible hypotheses. that TPIP is clinically superior. We don't know, but we assume and we've seen some of those that there may also be better safety and tolerability that we can show. And the third element is how you might impact patient care. Now, a once daily drug with a better PK profile certainly would be one of them. That's the reason we have received also the PAH orphan drug designation because the agency already recognized the potential for TPIP Again, I want to emphasize that we are a molecular different design as a prodrug has that potential opportunity for superiority.

Thanks so much.

Your next question comes from the line of Maxwell Score from Morgan Stanley. Your line is open.

Great. Thank you very much for taking my question. So you reiterated cash flow positivity in 2027, even with increased second half spend on DTC and launching in Japan. Can you just give us a sense of what's the Brinsupri level that underpins that, and how much flexibility do you have if you pursue BD? Thank you.

Eric, do you want to take that one?

Sure, happy to. Thanks for the question, Max. Yes, we reiterated cash flow positivity in 2027. I obviously will not comment specifically on what revenue guide that is implying for Brent Supri for 2027 but we feel like the trajectory of this launch is going extremely well as you can see in our revenue guide increase for this year and our peak sales revenue guide overall and that we have confidence in cash flow positivity through 2027 to fund our current business as well as the items that we have in our pipeline without raising additional capital.

Your next question comes from a line of Andy Chen from Wolf Research. Your line is open.

Hey, this is Brandon for Andy, and thanks for taking the question. So curious to know, what was the reason for the lower GTN? Was it Medicare patients fewer than previously anticipated, rebates less stringent than previously anticipated? Curious to know on that front. Thank you. Sara, over to you.

Yeah, sure. So we obviously provided a GTN earlier in the launch. Now that we're in the midpoint of the year and we have a clear line of sight into contracting for the year, we have confidence in being able to narrow that range, tighten that range to the mid to high 20s. Importantly, access for patients is going great. I commented earlier on 90% payer approval, less than a week for the majority of patients and that is the most important. So we're able to have this sort of narrow, tight end GTN and patient access is exactly where we want it to be.

Your next question comes from a line of Steve and Willie from Stiefel.

Your line is open. Yeah, good morning and congrats on the execution. just given what we know about tryprothenol dose dependency, can you comment on how you're powering into phase three T-PIP trials? Like contemplate the percentage of patients that you're expecting to be titrated up to the highest 1280 dose. And are you expecting those percentages to be meaningfully different across the different disease states? Thanks.

Yeah, so I'll put this one over to Martina to talk about it. It's really important that people understand that the objective of the trial is not per se to push people up to the highest possible dose. It's for the physician to know that they have the flexibility that they can increase dose to achieve the ultimate best outcome for that particular patient. Patients respond to these drugs differently and it's a very unique and unusual disease state where the FDA permits that kind of a dosing regimen. But what we can do with 1280 micrograms is the upper end is give them that room, that headspace to continue to increase the dose should they not be able to achieve the best possible outcome at a lower dose. If we look at just some of the recent data that we put out for TPIP, 25% of these patients in PAH in the OLE study get to class one, which means they have no symptoms of the disease. That is a remarkable increase in outcome for what is a fatal condition. and it is facilitated by this medicine and that extra room you have to increase dose. And that is something we want physicians to understand can happen with a modest side effect profile here. And that too was one of the remarkable things in the open label extension study. But let me flip it over to Martina who can perhaps dive a little deeper.

Yeah, so when you think about how we designed the trial, you designed the trial from a regulatory perspective What do we need to show functional improvement? And that is the six-minute walk test. And that's what we are also powering for. We're powering the trial with a very high confidence of 96% to get a due treatment difference of 30 meters. And that is a p-value of 0.05. So what we're looking for is that patients in the trial have the opportunity to reach the dose that they need to be in a better clinical state and to reach a better functional class as well as a risk score. Because in the real world, that is how physicians decide whether they will change or increase a treatment for patients when it comes to prostanoid treatment. So if you think about what we've looked at in the open label extension, which is over 12 months, 77% of these patients have not only reached doses of at least 640, but they also maintained that dose. So what's important for us and for these patients are to have a runway that they can increase dose if they need to. That enables patients and physicians to potentially keep patients on a drug like TPIP for longer. They may not have to go on a pump and that of IV or parenteral tropostomales. That is a huge burden. That is what we're really looking for to put patients in a better clinical state, but we're powering for an approvable endpoint that is functional improvement.

All right, that's helpful. Thank you.

Your next question comes from a line of Kize Ding from Rothschild and Company Redburn. Your line is open.

Congrats on the results. Thanks for taking my question. I have one on the capital allocation. So given your balance sheet and active internal programs going forward, how do you balance the development of your internal pipeline assets versus looking now for external opportunities?

Yeah, I appreciate the question. I think this is always the challenge that every biotech company faces, especially as it progresses. We are in the enviable position that we have three very substantial franchises that are in the same therapeutic area in the respiratory field. And we also have for the last four years a very developed research program across four different platforms that are now beginning to yield clinical drug candidates. The criteria for internal development and advancement is that the medicine in question is either first or best in class. and next year we will be able to share with you the clinical trial results of our first programs emerging from this research area which include a gene therapy for ALS, a gene therapy for Duchenne muscular dystrophy and as we mentioned today entering the clinic just now INS1033, a new next generation DPP-1 for the treatment initially of rheumatoid arthritis and then ulcerative colitis and COPD. So there is more to come from this internal research pipeline. however at the same time we are constantly evaluating what is out there because we want to make sure that capital gets deployed against the best opportunities available and so that too is a high bar it must be first or best in class that we're bringing aboard but we will continue to look and evaluate for those opportunities as well but this is going to be something we're going to return to again and again as we update you on the progress of the programs coming out of our research department and their progress through the clinic set against what we see in the landscape of business development. Okay, thanks.

Your final question comes from a line of Danielle Brill from Truist. Your line is open.

Hi, guys. Good morning. Congrats on the execution and thanks so much for the question. I did have a follow-up on the peak sales assumption. So you noted the high-level rationale, but I'm curious if you could kind of break down What specific assumptions changed to move the needle from 5 billion to 7 billion at peak? Was it expansion of the diagnosed population, penetration, persistence, duration on therapy, or anything else? If you could just comment on what assumptions changed the most meaningfully, that'd be helpful. Thank you.

Thanks for the question. I think when it comes to Bryn Supri, yes we assume that the addressable market will continue to grow over time and that's going to be driven by not only population growth but increased diagnosis we anticipate patients who are in the one or fewer exacerbation category to shift to a certain degree into the two or more exacerbation category and that's because of improved awareness and reporting of exacerbations we also think that over time as this medicine's reputation continues to expand, that the default will be to turn to bronchiectasis patients and think of Brinsupri in their treatment. I would also say that as we look internally at our modeling efforts, what we have seen is remarkable alignment with what our commercial effectiveness team has forecast. And I have to call them out for the exceptional work that they have done associated with this launch. It allows us to be confident in our presentation of today's new and improved numbers and it is driven by both strong and stable performance across all the main metrics that we track.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.