INSMED Inc Q3 FY2020 Earnings Call

Good morning. My name is James, and I will be your conference operator today. At this time, I would like to welcome everyone to the Insmed Third Quarter Fiscal 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. Thank you. I'd now like to turn the call over to Sara Bonstein. You may begin.

Thank you. Good morning, and welcome to today's conference call to discuss our third quarter 2020 financial results and 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 SEC for information concerning the risk factors that could affect the company. Additionally, the information on today's call is not intended for promotional purposes and 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; Dr. Martina Flammer, Chief Medical Officer; and Roger Adsett, Chief Operating Officer. Additionally, Dr. Eugene Sullivan, Chief Product Strategy Officer; and Dr. Kevin Mange, Head of Clinical Development, will be available during our Q&A portion of today's call. Let me now turn the call over to Will Lewis for prepared remarks. Upon completion of those remarks, we will open the call for your questions.

Thank you, Sara. Good morning, everyone, and thank you for joining us. We hope you and your families continue to remain safe and healthy. On behalf of Insmed, I am pleased to report a very productive third quarter. The primary drivers of potential value in the near to medium-term are all on track. Starting with our Phase 3 ASPEN study of Brensocatib in non-cystic fibrosis bronchiectasis, we are very pleased with the progress we are making. From a site initiation perspective, we have already secured health authority approval in the United States and expect approval in three additional fast-track countries before the end of the year. We are on track to start enrolling our first patients before the end of this year. We are also working to expand site openings globally and have set ambitious goals in this regard for the first quarter of 2021. Our ARIKAYCE frontline clinical trial program is also on track, with trial sites for both the ARISE and ENCORE studies already in the process of opening in the United States, with additional international sites soon to follow. Across the board, our clinical development teams are executing these trials swiftly and effectively. This is promising news for both the MAC frontline and non-cystic fibrosis bronchiectasis patient populations, neither of whom have approved treatments available for their respective conditions today. We take our role as the sponsor of these clinical trials very seriously. We are bringing all resources to bear to enroll the trials rapidly without sacrificing the focus on quality to potentially bring forth these first-in-disease medications. Our third program, Treprostinil Palmitil inhalation powder, or TPIP, continues to advance. In our Phase 1 study, forward dosing strengths have already been completed, with data currently being examined. Assuming these data are positive, we look forward to advancing this program into Phase 2a as planned in early 2021. On the commercial front, the ARIKAYCE franchise continues to perform in the face of pressures brought on by the pandemic. If we take a step back and look at our overall performance, we continue to advance the major catalysts that we believe will drive future growth. These include the physician's propensity to prescribe, the strong recommendation for use in the guidelines, the availability of a peer-reviewed paper discussing how to manage adverse events and get the most use from the medicine; and, most recently, the approval of an sNDA that highlights the long-term durability of the culture conversion seen with our drug. I continue to be impressed with our commercial team's ability to make the most of a very challenging situation, and I look forward to further growth in coming quarters, including from our international expansion. On the international fronts, I am pleased to report that we recently achieved a significant milestone with the marketing authorization for ARIKAYCE in the European Union. We plan to launch ARIKAYCE first in Germany, with the United Kingdom and other EU markets to follow. This is a significant accomplishment as we look to make ARIKAYCE available globally and an important step as we advance toward approval in Japan. As we expand in refractory NTM around the world and advance into the frontline setting in both the U.S. and internationally, we are well on our way toward establishing ARIKAYCE as the standard of care for the treatment of NTM. As many of you know, we discussed each of our three programs in greater detail during our R&D Day last month. For those of you who missed our event, I encourage you to access the presentation available on our website for a detailed update on the impressive lineup of clinical development and ongoing commercialization opportunities. As we look toward the end of 2020 and turn our focus to 2021, we believe we are well-positioned to accelerate commercial and pipeline opportunities within Insmed. I could not be prouder of the Insmed team for their efforts and their continued commitment to serving patients. With that context, let me now turn the call over to Sara to run through this quarter's financial results. Sara?

Thanks, Will, and good morning, everyone. As Will mentioned, we had a strong third quarter where we made significant progress across our programs. As we stated at our R&D Day, we are currently very well capitalized. We ended the quarter with $588.8 million of cash, which we believe will enable us to advance our key strategic priorities - global ARIKAYCE commercialization and label expansion, Phase 3 development of Brensocatib in non-cystic fibrosis bronchiectasis, and the advancement of TPIP into clinical development. Earlier today, we issued our detailed third quarter financial results in a press release. Let me highlight just a few of those for you now. Despite the ongoing impact of COVID-19 throughout the third quarter, ARIKAYCE sales reached $43.6 million. Our gross-to-net for the third quarter was approximately 10%, and cost of product revenues for the quarter was $10.6 million, with a gross margin of approximately 76%. Turning to expenses, our GAAP operating expenses for the third quarter of 2020 were $89.2 million compared to $88.9 million for the third quarter of 2019. While total operating expenses have remained generally stable period-over-period, we continue to closely manage our SG&A expenses while providing the appropriate resourcing to R&D, aligning our expense drivers to our strategic priority. Specifically, our SG&A expenses for the third quarter of 2020 were $46.6 million compared to $53.3 million for the third quarter of 2019, a decrease of more than 12% period-over-period. Conversely, our R&D expenses for the third quarter of 2020 were $41.4 million compared to $34.3 million for the third quarter of 2019, highlighting our commitment to our growing pipeline. We expect R&D expenses to continue to increase with the initiation of our clinical programs in both Brensocatib and ARIKAYCE. With that, let me turn the call over to Martina for an update on our pipeline. Martina?

Thank you, Sara, and good morning, everyone. As Will mentioned, we were excited to share important updates across our pipeline at our recent R&D Day in September. I would like to highlight our current plans, discuss our progress over the last few months, and outline the next steps for each of our three main programs. I'll start with TPIP, a new dry powder formulation of treprostinil palmitil. Treprostinil palmitil is a prodrug that is inactive by itself but becomes active when inhaled into the lungs. Now, let’s discuss our clinical progress. We are advancing TPIP for the potential treatment of pulmonary arterial hypertension, or PAH, and recently started a Phase 1 trial of TPIP in the U.S. This trial involves both single and multiple ascending doses in healthy volunteers. As Will noted, we have completed four dosing strengths, and the data are currently under review. We anticipate top-line data from the entire study in the first quarter of 2021. We are on track to enter a proof-of-mechanism Phase 2a trial in patients with PAH in early 2021. This will be a small study involving fewer than 20 patients, where we will assess single doses of TPIP to confirm our hypothesis that it can provide prolonged, clinically significant hemodynamic effects in PAH patients with low systemic levels of treprostinil, due to a notable local vasodilatory effect on the pulmonary vasculature. We aim to gather critical insights from this study, including establishing the therapeutic window, checking the exposure-response relationship in line with our hypothesis, comparing pharmacokinetics in PAH patients to healthy volunteers, and possibly establishing a link between invasive and noninvasive measurements. Over the past several months, we have worked with Dr. Ronald Oudiz, our principal investigator, to finalize the protocol for this study, which we expect to complete shortly. Following that, we plan to activate sites by the end of this year and begin dosing the first patient in this Phase 2a study early next year. We expect to have data from the trial later in 2021. Additionally, we plan to start a Phase 2b trial in the second half of 2021, aiming to gather the essential evidence needed to transition into a pivotal registrational program. Now, let's move on to Brensocatib, a novel oral reversible inhibitor of dipeptidyl peptidase 1, or DPP1. We see Brensocatib as central to our strategy for developing a portfolio targeting neutrophil-mediated diseases and the DPP1 pathway. In early September, the New England Journal of Medicine published final results from our Phase 2 WILLOW study of Brensocatib in patients with non-cystic fibrosis bronchiectasis. This publication marks the first in nearly 20 years regarding bronchiectasis, highlighting the significance of the data and its visibility in the scientific and clinical community. The rarity of publications from Phase 2 studies further underscores the importance of these results. We are proud of both the findings and the program. As a reminder, the WILLOW study met its primary endpoint with both the 10 and 25 milligram doses of Brensocatib, showing a significant prolongation in time to first pulmonary exacerbation over the 24-week treatment period compared with placebo. Moving forward with Brensocatib in bronchiectasis acknowledges both the urgent unmet need and the strength of the WILLOW data, which contributed to the FDA granting breakthrough therapy designation for the bronchiectasis program earlier this year. As outlined during our R&D Day, we plan to begin our Phase 3 study of Brensocatib in patients with non-CF bronchiectasis, known as the ASPEN trial, before year-end. ASPEN was designed with feedback from both the FDA and EMA, with agreement on conducting a single global study with a clinically relevant primary endpoint, which retains key elements from WILLOW. Our Phase 2 WILLOW study utilized the same exacerbation endpoint at six months that will be employed in ASPEN at 12 months, which we hope will enhance the success chances of our Phase 3 study. Unlike past bronchiectasis programs requiring two separate studies, we can achieve success with just this one Phase 3 study. I want to take a moment to clarify why conducting one trial is more advantageous for us than two. Specifically, our single trial has a lower statistical threshold to maintain a Type 1 error rate of 0.01, compared to a program with two trials, each set at 0.05. The error rate that must be preserved for a Phase 3 program with two trials must account for the need for both trials to be successful, resulting in a Type 1 error rate to preserve of 0.00125. Thus, the comparison stands at 0.01 for ASPEN versus 0.00125 for a two-trial approach. Moreover, ASPEN, as a single study, is designed with 90% power, whereas a program involving two trials, both set at 90% power, would yield a lesser overall power of 81%. When considering the number of trials, we have greater power for the expected treatment effect, a 30% reduction, along with a more favorable Type 1 error rate acceptable to the FDA and EMA. Similar to WILLOW, the ASPEN study will involve patients with at least two recorded bronchiectasis exacerbations treated in the past 12 months. In this single study, approximately 540 patients will receive either 10-milligram or 25-milligram Brensocatib, or a placebo once daily for 52 weeks, totaling around 1,620 patients. For the complete study design details, please refer to our R&D Day presentation available on our website. We plan to enroll patients across about 480 sites in 40 countries. To boost enrollment, we are fast-tracking several countries; the U.S. and Australia are already approved, and we expect activation by year-end. We are also focusing on sites that participated in the WILLOW study. We are encouraged by our progress as we exceed our internal benchmarks and look forward to providing updates as the trial continues. Beyond bronchiectasis, we believe that Brensocatib has broader potential applications as a novel neutrophil immunomodulator. We will prioritize seizing this opportunity and aim to build an industry-leading portfolio around Brensocatib. In the near term, we will collaborate with regulators to explore the next steps for development in cystic fibrosis. Simultaneously, we are advancing our research to support expansion into other indications, including TPA, IBD, RA, oncology, and lupus nephritis. Now, let's shift to our registrational programs to pursue FDA approval of ARIKAYCE as a frontline therapy, aiming to establish a new standard of care for patients infected with NTM lung disease. This effort involves a clinical program comprising two interconnected clinical trials conducted in parallel with staggered completions. The first is the ARISE trial, targeting approximately 100 patients with newly diagnosed MAC lung disease. This will be an interventional study aimed at validating the longitudinal characteristics of the patient-reported outcome tools that will be used in the second study, the ENCORE study. The ENCORE study will serve as the pivotal trial aimed at establishing the clinical benefit of ARIKAYCE in this new patient population. We expect to enroll around 250 patients in the ENCORE study, which is intended to meet the post-marketing requirement for full approval of ARIKAYCE in the U.S. and to support a supplemental NDA for its use as a frontline treatment for MAC lung disease. We plan to start both trials by the end of this year. Since our R&D Day, we've made significant progress, conducting numerous site initiation visits. In conclusion, we are very excited about the developments across our pipeline and the potential synergy among our programs. We look forward to sharing additional updates with you. Now, I’ll turn the call over to Roger for some key operational updates. Roger?

Thanks, Martina, and good morning, everyone. I am pleased to report that, from an operational perspective, we had a very solid third quarter. We continue to experience strong uptake in the growing ARIKAYCE franchise, with growth in new prescribers during the third quarter that we believe is in part due to the arrival of the new NTM treatment guidelines. Additionally, we were very pleased to receive approval of a supplemental new drug application, or sNDA, that allowed important new updates to our U.S. label. We also continue to make excellent progress internationally as we further the global expansion of the ARIKAYCE franchise, which we expect to be a meaningful growth driver for us in 2021. Let's begin with the FDA approval of our sNDA, which we received just last week. We are pleased to report that this approval adds important efficacy data regarding durability and sustainability of culture conversion to the ARIKAYCE label. In preparation for this approval, we tested the new durability and sustainability data in market research with healthcare professionals. Across both infectious disease and pulmonology physicians, our market research revealed that they see these new data as very promising, particularly culture conversion three months after ending all treatment. We anticipate that this update may motivate new prescribers to try ARIKAYCE for the first time and increase the confidence of existing prescribers to prescribe ARIKAYCE for additional indicated refractory MAC patients. These new data in the sNDA, along with a strong recommendation in the new NTM guidelines just published in July, give us important information and tools to build momentum for ARIKAYCE. Turning specifically to ARIKAYCE performance. As Sara mentioned, we had revenue of $43.6 million in the third quarter, resulting from our continued success engaging both healthcare providers and patients in this largely virtual setting. COVID-related restrictions continue to result in regional variability. The most important metric we are tracking is in-person patient visit volumes. These track closely and inversely the presence of COVID surges. For example, in the second quarter, the East Coast was down but began trending back in the third quarter, whereas the South and West were less affected in the second quarter but faced significant challenges in the third quarter. Overall, doctors across the country are learning how to operate in the COVID environment. And despite the challenges of COVID, we continue to see a recognition of the importance by physicians for the use of ARIKAYCE in appropriate patients. As one might expect, we are seeing stronger trends in enrollment forms in regions where offices have higher reopening rates; and, consequently, higher in-person patient visit volumes. Notably, we saw an increase in new prescribers this quarter, which we attribute in part to the new guidelines, potentially helping physicians identify refractory patients given the recommendation to add ARIKAYCE to the standard treatment regimen if a patient has not culture-converted after six months. We are hopeful this clear and strong recommendation helps physicians determine when to add ARIKAYCE to the frontline triple therapy recommended by the guidelines. Importantly, the guidelines also recommend that treatment should be continued for 12 months after culture conversion. This trend of new prescriber growth is very encouraging as it lays the groundwork for future growth as regions impacted by COVID return to something approaching normal. Overall, we believe that, as offices reopen and as NTM patients return to physician offices, we will see growth accelerating from current levels. In addition to growth in the U.S., we are also making exciting progress internationally as we work towards global expansion of the ARIKAYCE franchise. Let's begin with our efforts in Europe. As Will mentioned, we are pleased to announce that we received marketing authorization for ARIKAYCE in the EU for the treatment of MAC lung infection as part of a combination antibacterial drug regimen in adults with limited treatment options who do not have cystic fibrosis. As you heard at our R&D Day, our infrastructure in Europe is in place. Our model combines building our own commercial entities and field force in major markets while utilizing distributor models where appropriate. We expect that, by the end of this year, we will have 24 customer-facing personnel. We anticipate growing to a team of 50 by 2022, reflecting the anticipated phased launch and receipt of reimbursement approvals. Overall, we remain on track to commercially launch ARIKAYCE first in Germany, with the United Kingdom and other EU markets to follow, subject to local reimbursement processes. In addition to our recent success with European regulators, we are also excited about the potential opportunity in Japan. As we discussed at the R&D Day, Insmed decided to register and, if approved, commercialize ARIKAYCE in Japan ourselves. We believe that building a high-quality team in Japan to bring ARIKAYCE to Japanese patients initially in the refractory population, followed by frontline therapy, is the right strategy that leverages our global infrastructure and can be accomplished with a modest local footprint. To support our anticipated mid-2021 launch, we've built a strong presence in Japan with plans to have 19 customer-facing personnel by the end of this year. More broadly, given the overlap between bronchiectasis and NTM lung disease, the investments we are making now position us extremely well for a potential future launch of Brensocatib in Japan. We are excited to expand the ARIKAYCE brand and pursue the long-term potential of the franchise in the U.S., Japan and Europe. I want to sincerely thank the Insmed team for their continued commitment to the NTM community as we work to achieve these milestones. From a supply perspective, we continue to have a robust supply of ARIKAYCE and have not experienced any COVID-related or other interruptions preventing us from serving our patients. As we prepare for the potential forthcoming international launches, we have on hand sufficient API for ARIKAYCE to meet anticipated global demand through the end of 2022. For Brensocatib, we have ample supply to meet the clinical trial requirements of our global Phase 3 program. We also have clinical trial supplies manufactured for our Phase 1 and Phase 2a TPIP programs. With that, let me turn the call back to Will.

Thanks, Roger. Let me close out our prepared remarks by reiterating our focus on continued execution during this next important chapter of growth for Insmed. As you've just heard, we are making significant progress across our pipeline and commercial program, and we will carry that momentum forward through the rest of this year and into 2021. We have a demonstrated track record, strong balance sheet, and a clear pathway to potentially advance our exciting pipeline while also expanding the market opportunity for ARIKAYCE. I am confident in the Insmed team's ability to execute on our goals, and I'm grateful for the entire team's hard work, dedication, and commitment to patients and healthcare providers. With that, I'd like to open the call to questions. Operator, can we take the first question, please?

Our first question comes from Ritu Baral from Cowen.

Hi, guys. Good morning. Thanks so much for taking the question. Can you guys talk about how persistence and duration right now appear to you? Is that increasing now that the guidelines have been out for some time? And any change in trends on discontinuation in the U.S. market? And then, I've got a follow-up on Europe.

Sure. I'll ask Roger to comment. I think one of the most exciting aspects of this quarter, and in fact the recent week, is the number of elements that are leading to put wind in our sales and momentum behind the ARIKAYCE refractory franchise in the U.S., which, of course, will now pay dividends in Europe and if approved, in Japan as well. Roger, do you want to take that?

Yeah. Thanks, Will, and thanks for the question, Ritu. So I don't think that we've seen a significant change in the sustainability or the duration of therapy at this point. But you're absolutely right to point out that there's the guidelines recommending 12 additional months of therapy beyond culture conversion. And we see that resonating with physicians as we go out and discuss the guidelines. Just a reminder, although we've been talking about the guidelines for quite a long time, awaiting their issuance, they only came out in July. So we are able to actually engage with physicians and talk with them about the guidelines. There are two factors that I think are really resonating. The first is a very clear and strong recommendation as to where to use ARIKAYCE, and that gives physicians who are perhaps wondering whether they should continue to persist with the frontline triple therapy as per the guidelines beyond six months, a very clear direction that after six months, if these patients are not culture converted, you need to then move to ARIKAYCE, which is a very strong recommendation. And then once you pass culture conversion, then you will need to continue to treat for the 12 months. We expect that to be a very positive tailwind. The other thing, and I know that you're aware of this as well, that we're very pleased about, is the impact we're seeing from the practical management of adverse events for ARIKAYCE. This is a peer-reviewed paper that came out in March that helps physicians manage patients through that first few weeks, where the airway is adapting to ARIKAYCE, so helping patients manage through that. We think that that's going to help patients stay on ARIKAYCE therapy and then be able to complete that full treatment of therapy going to culture conversion, plus an additional 12 months. So we remain pleased with the persistence and the duration, and we expect to be able to leverage the guidelines to further improve that going forward.

And Ritu, I'll just add to that. We didn't really make a big deal out of it because, to be very blunt, we weren't sure we were going to get it. But the recent approval of the sNDA brings additional clinical data into the label that allows us to point to physicians, in conjunction with the arrival of the guidelines, the benefits that patients can expect to obtain as a result of using our therapy. So it's a powerful combination, and that approval of the sNDA happened only a week ago.

Got it. And I think your question goes to Roger, as well. One, do you know the U.K. reimbursement path that you guys will be facing? I know there are different expedited paths, and I was hoping for a little more clarity. And then, two, you mentioned that you'd have all 50 RevPARs by the end of 2022. Does that mean that you are expecting that the top five markets will be generally secured and reimbursement will be generally secured in the top five by the end of 2022?

Roger, you want to take those?

Yes, sure. So I'll take the first question that you asked about the United Kingdom and the reimbursement process, and I guess more specifically around England. So the pricing, as you know, is a free pricing market, but there are procedures that have to be followed before the price actually gets published and officially reimbursed. We expect that to occur over the first half of 2021. The timelines vary. In the meantime, there are reimbursement processes that can be followed to secure reimbursement for U.K. patients on an individual basis within the U.K., but it takes a little bit longer. I would say that, in that first half, probably by the second quarter is when we'll see full reimbursement that will allow us to have a robust launch in the U.K. And as we had mentioned previously, Germany will be first to launch and has that free pricing and doesn't have the sort of procedural process that the U.K. does. As far as the top five markets, the timings will vary. As we're estimating what they look like, I think we will have probably by 2021, based on the benchmarks and how long these usually take to get reimbursement, we’re anticipating that Germany, the Netherlands, the U.K., and Italy will have approval and reimbursement by 2021. We think that, based on benchmarks, France will likely take longer, so a big market for sure. We'll continue to work with the authorities there, and there's flexibility around the timeline potentially, but I think France is probably the market that will take the longest, based on history and benchmarks.

And Ritu, just one final clarification. For the U.K., just to be crystal-clear, we do not have to go through NICE. That's an important point.

Yeah. Got it. Thanks so much. It would be helpful.

Thanks.

Our next question comes from the line of Matthew Harrison with Morgan Stanley. Go ahead, please. Your line is open.

I think we probably have an issue with him. Why don't we just go to the next person in the queue please?

All right. One moment please.

He will jump back in, Matt.

Our next question comes from the line of Martin Auster with Credit Suisse. Go ahead please.

Certainly, guys, thanks for taking the question. I had a couple I guess I wanted to follow up. You mentioned, Martine, that the four dosing cohorts have been completed in the TPIP study. I was curious if you could comment on how many doses you're planning to evaluate in all. And also, if you could sort of maybe frame the doses studied relative to kind of the data that was put out on the nebulized version, the precursor form of 1,009 from a couple of years ago and just kind of frame where you're at in that kind of dose ascension. And then, secondly, just on expenses, the SG&A expenses have been pretty flat so far through 2020 versus 2019. And I know you talked a little bit about kind of some increased hiring in Europe and prepping for a Japan launch. But I was curious kind of for this year, how much of this was just intended, going forward, kind of approach to commercial expenses in the U.S. market? How much of it is maybe there's some kind of one-time reductions because of COVID within the travel restrictions and lack of access to clinician offices and things like that? I just wanted to get a little more color on that. Thanks.

Sure. So, I'll invite Kevin to comment on the first question related to TPIP, and Sara can take the question on SG&A. Kevin?

Great. Thanks. Well, hi, it's Kevin Mange. So, we're quite pleased with the progress that we've made in that study with the four dosing strengths that have been completed to date. And in terms of where we're headed, based on the modeling work from the animal data, is we've got several more strengths that we are able to continue to dose escalate through in healthy volunteers. But as with any SAD/MAD study, we expect that, at some point, we will reach a tolerability dosing strength. Again, we're happy with how far we've progressed. With respect to the prior nebulized formulation, we are at an exposure of treprostinil that is above what we saw in that earlier stage as well. I think right now, although we're looking at data, we're still blinded to the dosing strengths as we have CPOs in that arm. But again, I think, in summary, things are progressing very nicely, and we're very pleased with how it's going.

Real quick, Kevin, can you confirm whether or not you hit those tolerability limits that you're looking for so far for the four dose cohorts or do you continue to escalate the dose from here?

We're still going through dose escalation.

And then, Marty, on the expense question, so thanks for the question. As Roger mentioned, we've added appropriately and modestly in Europe and will continue to add slowly there to support the launch, but we've built infrastructure there. You're seeing that expense in our SG&A expenses to date already. We did see some savings this year from COVID-related. Obviously, folks aren't traveling as much and those types of things. We will look to continue to see how we can leverage the learnings that we had in 2020 and bring those forward into 2021 as we look to keep our SG&A expenses as stable and in line as possible so that we can invest in R&D and unlock that value.

Okay, guys. Appreciate the color. Thank you.

Our next question comes from the line of Stephen Willey with Stifel. Go ahead please, your line is open.

Yes, good morning. Thanks for taking the questions. I guess there were some comments made with respect to new enrollment forms. Just on the new patient starts front, just wondering if you can provide any directional qualitative commentary. I think there was previously mentioned not too long ago that you guys had started to see quarter-over-quarter growth from a monthly perspective. Is that a trend that you're continuing to see now?

So, I'll preface the answer that I'm going to give Roger the opportunity to take in a minute with the comment that, as a general rule, we're not going to dig into the weeds of items within the profile of the launch just because, at this stage, we feel like what matters the most is the ability to generate the revenue. We feel really good about what we've been able to do. We did note the shift in the concentration of COVID cases from the east to the south and the west in the second quarter to the third quarter, but there are a number of drivers that are positive that we think are going to carry us to future growth from here with regard to any trends or qualitative comments. Roger, do you want to address that? I don't know if you want to make any statements about that.

Yes, I believe you described it accurately. We are still seeing new prescribers, new patients, and new enrollment forms, although not at pre-COVID levels, which is somewhat expected due to regional variability. Looking ahead, I am very pleased with how our commercial team, especially our field-based personnel, has adapted to the changing dynamics of COVID and the varying situations in different regions. They have shown great flexibility in switching between in-person and virtual interactions, and the team's performance has been exceptional. We have discussed the guidelines and various catalysts that we anticipate moving forward. The strong recommendation regarding when to use ARIKAYCE has begun to influence new prescribers to start therapy, and we believe this will continue, encouraging existing prescribers to further advocate for ARIKAYCE. I want to emphasize the significant potential of the sNDA and the label update in attracting new patients and prescriptions. Including the sustainability and durability of culture conversion in our label will allow us to have impactful discussions with physicians, who can then communicate this to patients. Market research indicates that physicians value the ability to inform patients that, if they adhere to the therapy, there is a good chance of maintaining culture conversion off all therapy. I feel very optimistic about the future of the ARIKAYCE franchise. While we will keep an eye on in-person patient visits from a COVID perspective, long-term, I have strong confidence in the health of the ARIKAYCE franchise.

Understood. And I totally get it on the quantitative minutiae front. I guess when you just think about Europe, right, there's obviously a big discrepancy between the addressable patient numbers that have at least 10 reported relative to the U.S. And I guess how much of that do you actually think is just implicit NTM epidemiology versus there just being a more generalized lack of awareness and diagnosis? And I guess to what extent do you feel like you can close the gap on the latter via this commercial launch?

Yes. That's at the heart of the effort we're making. Roger, do you want to dig into that a little bit?

Yes, absolutely. I think it's a combination of both, right? So I do believe that the prevalence and the epidemiology that's been done has been quite thin prior to the launch. Given the increased intention that's now being turned to NTM, we are seeing publications where there's potentially the prevalence has been underreported. That certainly makes sense, if you think about the characteristics and way, if you think about the prevalence of NTM, the proximity to the water, history of lung disease, elderly population. All those factors are in place in Europe as they are in the U.S. So I think it is a combination of just understanding, digging into the data a little bit better, and actually looking for that; but then driving awareness. Often with rare diseases, when you will see that with the approval of a therapy for the rare disease, and then actually an effective treatment option, you'll see those diagnoses of those patients rise. Certainly our efforts will be focused on driving that awareness and establishing the treatment pathways for these patients to get the medication and the treatment that they require. It will take some time, for sure, to drive that awareness, but we believe that the opportunity is there, and with the support of the guidelines, with the support of the KOLs in Europe, we think that we have a great opportunity to impact the diagnosis of these patients in Europe and the ultimate treatment of them.

Okay. And then just one quick clinical question on Brensocatib. So I know A1AT has been kind of listed as an opportunity of interest previously. Just wondering how you're thinking about where that kind of sits in the hierarchy of things to pursue post-CF. I know that there's obviously been a lot of interest in this space, and the competitive dynamic is getting a little bit more interesting on the development side. Is this an indication where you kind of feel like you need to sit back and see what happens over the course of the next couple of years before you plot a course forward? Or is this just not an opportunity that sits that high on the hierarchy for you right now?

Sorry, Steve, I missed the indication you were talking about?

It's Alpha-1 antitrypsin.

Alpha-1, yes. I think just generally what I would tell you is we're still doing an awful lot of work on Brensocatib specifically and on the DPP1 pathway generally and the ways in which we think we can exploit that for the benefit of patients in a variety of diseases. There's a lot more to be learned. I would say that, as I think we shared to a certain degree at our R&D Day and we continue to see in preclinical models, there is a lot of promising data out there for this pathway as a potential mechanism of action for treating a number of different diseases, and the early data looks good. I think there's some real opportunities here. We are going to have to make some prioritization choices. Where we stand right now is that while more work still needs to be done, our current thinking is that CF is probably out front. It’s important to dig into that opportunity and understand that, even with the operation of the Vertex drugs in correcting patients, those that haven't been treated before, say, the age of 16 are already bronchiectatic from the damage as a result of carrying the disease for as long as they did, and so they're going to need to be treated for some time into the future. For those that are being treated at a much earlier age, we're hopeful that they're without any issue. But to the extent that, that is partially effective, they will need to be treated. So that suggests as an obvious patient population; alpha-1. I don't know, Kevin, if you want to talk any more detail about what we may know at this stage in that area. Are, we still in the midst of doing the work?

Yes. I think as you said, nicely well, I think it's something that's worth considering and exploring as we are, and that certainly CF is, I think, out in front of everything else where our focus goes after ASPEN.

Great. Thank you very much.

Thanks.

Our next question comes from the line of Joseph Schwartz with SVB Leerink. Joseph Schwartz, your line is open.

Great. Thanks for coming back to me. Can you hear me okay?

Yes, loud and clear.

Thank you. I have two questions, one regarding Brensocatib and the other about Europe. First, I understand you're not providing specific guidance on the timing of ARISE or ENCORE data. However, could you share whether you’ll be able to make adjustments based on the findings from ARISE? Also, will you release any ARISE data publicly before the ENCORE data is available?

So, I'll take the second question first. I think once we have an understanding of what that trial means, and to remind everyone, it's an open-label trial, our expectation is that we'll be able to share that publicly, although I don't want to commit to that yet, because as always, when you're looking at data, you want to make sure you understand it fully before you share it. But it would be my intention to share and be transparent with that once we have an understanding of it. In regards to those two trials and their interaction, I'll ask Kevin to comment on the design, because the one is really specifically designed for Kevin.

Great. So for ARIKAYCE, so this program for ARISE and ENCORE, we've designed it in such a way that, although they're running in parallel, the ends of the studies are staggered. ARISE is through seven months and ENCORE is through 15 months. To your question, we will have data at the end of ARISE that is specifically designed to help inform ultimately how the primary endpoint for ENCORE will be computed. There is that opportunity to take those data, digest it, work with the FDA to come to a final statistical analysis plan for ENCORE. This stepwise approach we think is the best way to take the approach to the overall program and give us the greatest chances of success at the end of the day for ENCORE.

Okay, great. Thanks. And then, my question on Europe is you guys have been very thoughtful with your use of novel tools and strategies to beat the bushes for patients in the U.S. where you had suspicions that there were patients that were not being diagnosed properly with NTM. Can you talk about the extent to which you can deploy similar or maybe different tactics in Europe, and whether, at this point, you've seen any signs that would lead you to believe that there could be some sizable pockets of NTM patients in the European Union that are being misdiagnosed or not diagnosed or otherwise overlooked? Any insights at this point into how that geographic distribution in Europe, the true geographic distribution, and where patients potentially could be hiding? I guess, what I'm getting at is some of the prevalence numbers don't really look that believable, just given the overall population and coastline and other factors, which seem important here and in places like Japan.

Yeah. Sure, appreciate that question, Joe. I'll ask Roger to comment on it in a second, but remember that whatever the prevalence numbers, they have to be set against the timeline for reimbursement approval, which is uniquely European country-by-country. That necessarily limits the degree of aggressive ramp that might come from understated populations if we were to discover that. But the AI and machine learning and all that sort of stuff, Roger, maybe you can talk about what we've done, what we might do there and what else you've learned.

Yeah, sure. I think you're spot-on in asking the question and thinking about the true prevalence of NTM in Europe compared to the U.S. I would say that, as we apply that same sort of methodology with machine learning in a slightly different way in Europe, we are seeing the same sorts of things that you might suspect. For example, there was a publication in the European Respiratory Journal where we looked at applying those machine learning algorithms to national databases. It's a little different in Europe. There's different data availability, different privacy laws, so you can't really get down to the granular level that you can in the U.S. But we're doing it country-by-country, with different timelines associated with that. But for example, in ERJ, we looked at the population in the U.K., which seemed to indicate that there was a significant untapped NTM patient population in the U.K. We think there's probably the same in Germany and we'll find out about other areas as well. A lot of these patients reside with the physicians who are still struggling to diagnose them, as much the same as in the U.S. So raising that awareness and providing treatment pathways and treatment options is an important part of this. As we really see across Europe, as you might suspect, elderly populations, history of smoking, and proximity to water, those risk factors are universal. You might expect to see the higher pockets of NTM in those areas that have those characteristics. We think as we go through this and do the data mining, that that's bearing out. Longer term, we think the opportunity is perhaps larger than what the initial epidemiology had indicated.

Okay. That’s helpful. Thank you.

And there are no further questions in queue at this time. I'd like to turn the call back over to Will Lewis for some closing remarks.

Thank you all again for joining us today.

And this concludes today's conference call. You may now disconnect.