INSMED Inc Q4 FY2020 Earnings Call

Good day and thank you for standing by. At this time, I would like to welcome everyone to the Insmed Fourth Quarter and Full-Year 2020 Fiscal Results Conference Call. All lines have been placed on mute to prevent any background noise. And after the speaker’s remarks, there will be a question-and-answer session. Thank you. It is now my pleasure to turn the conference over to Eleanor Barisser, Associate Director, Investor Relations. Please go ahead.

Thank you, everyone. Good morning, and welcome to today's conference call to discuss our fourth quarter and full-year financial results for 2020 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 Securities and Exchange Commission for information concerning the risk factors that could affect the company. 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; Roger Adsett, Chief Operating Officer; and Sara Bonstein, Chief Financial Officer. Additionally, Dr. Eugene Sullivan, Chief Product Strategy Officer 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 up for your questions.

Thank you, Eleanor. 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’m pleased to report on what was the most transformational year in our company’s history. As Insmed enters a new phase of growth in 2021, we are carrying forward the strong momentum of a successful 2020, marked by significant accomplishments across our business. Over the past 12 months, we have matured from a single product company to a global organization advancing three substantial programs. These programs are TPIP, Brensocatib, and ARIKAYCE, and each is positioned to potentially become a cornerstone of therapy in their disease areas. With that in mind, let me dive into some of the key highlights for the fourth quarter and full-year 2020. I'll start with Treprostinil Palmitil Inhalation Powder or TPIP. We were excited to provide an update on this program last week, when we announced top-line data from our Phase 1 Study in healthy volunteers. The results demonstrated the potential for TPIP as a once-daily treatment, which may be able to unlock the full potential of the prostanoid class of therapy for pulmonary hypertension and related diseases. The detailed review is available on our website. Our second program is Brensocatib, which represents a new way to harness the DPP1 pathway for treating neutrophil-mediated diseases. In mid-2020, we were excited to announce that the FDA had granted breakthrough therapy designation to Brensocatib for the treatment of non-cystic fibrosis bronchiectasis or NCFBE. We were also pleased to report the EMA’s decision to grant Brensocatib PRIME designation for the treatment of NCFBE. This was followed by the initiation of our Phase 3 ASPEN trial, which is now well underway. Additional information about Brensocatib’s mechanism of action will soon be available from an investigator-initiated study of Brensocatib in patients with COVID-19. We anticipate that the principal investigator will obtain and share data about our drug from this study early in the second quarter. In addition to the ASPEN Study, we will be advancing clinical development of Brensocatib in cystic fibrosis. We anticipate initiating our Phase 2 PK/PD multiple-dose study to explore the appropriate Brensocatib dosing for cystic fibrosis patients by mid-2021. Beyond bronchiectasis and cystic fibrosis, we are continuing to explore other potential disease areas where Brensocatib may have a therapeutic effect. A recent paper was published in a cancer research journal, which documented how it prevented lung metastases in an animal model of breast cancer. This provides one example of Brensocatib’s ability to show potential for a positive impact across various disease models. We look forward to keeping you updated on further advancements we expect to make across our Brensocatib program. Let's now turn to ARIKAYCE, where our franchise continues to advance around the world despite the challenges presented by the ongoing pandemic. We are all looking forward to the day when the COVID-19 pandemic subsides. In the meantime, our global expansion plans have continued to progress as expected, with European approval and the subsequent launch of ARIKAYCE in Germany and the Netherlands now underway. We also remain on track for commercial launch in Japan by mid-year if ARIKAYCE is approved in Japan. Finally, in late 2020, we were pleased to initiate our frontline clinical trial program for ARIKAYCE, which is intended to support full approval of ARIKAYCE in the U.S. and potential expansion into the larger frontline opportunity in MAC lung disease in the U.S., Europe, and Japan. We believe this program offers the potential to establish ARIKAYCE as the standard of care for frontline treatment of MAC. As we turn our focus to 2021, we believe Insmed is well-resourced with an industry-leading team and strong capital position to execute on our goals of bringing potentially life-altering treatments to patients in need. With that background, let me now turn the call over to Sara to run through our financial results. Sara?

Thank you, Will, and good morning, everyone. As Will mentioned, 2020 was a year of tremendous growth for Insmed, marked by significant progress across all of our programs. Earlier today, we issued our detailed fourth quarter and full-year financial results in a press release. Let me highlight a few of our full-year results for you now. As reported this morning, we ended the year with $532.8 million in cash and cash equivalents, which we believe will enable us to advance our three key strategic priorities: ARIKAYCE, Brensocatib, and TPIP. Total net revenue for ARIKAYCE was $164.4 million for the full-year 2020. Throughout the COVID-19 pandemic, ARIKAYCE continued to have steady performance. As we look ahead to 2021, we anticipate returning to growth when the impact of the pandemic subsides. We look forward to sharing further updates later in the year. Our gross-to-net for the full-year 2020 was approximately 12%. Looking ahead, while gross-to-net has historically been highest in Q1 due primarily to the coverage gap as a result of the benefit reset at the beginning of the year, we anticipate our full-year gross-to-net to be in the mid-teens for 2021. This modest increase year-over-year is mainly attributed to select contracting to ensure maximum patient access. Cost of product revenues for the full-year 2020 was $39.9 million or 24%, which is in the range we anticipated. As a reminder, our cost of product revenues in 2019, which was 18%, benefited more from inventory expenses prior to FDA approval of ARIKAYCE. Turning to our GAAP operating expenses, for the full-year 2020, research and development expenses were $181.2 million, compared to $131.7 million for the full-year of 2019. We anticipate R&D expenses to continue to grow year-over-year, as we support our growing development pipeline. SG&A expenses were $203.6 million in 2020, compared to $210.8 million in 2019, demonstrating our focus on prudent spending. Total operating expenses for the full-year 2020 were $429.6 million, compared to $371.7 million in 2019. Looking ahead to 2021, we will continue to invest in our core operating business, including the commercialization and clinical support of ARIKAYCE globally, the ongoing development of Brensocatib, and the continued advancement of TPIP. We remain focused on prioritizing appropriate development investment with responsible cost control. 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, 2020 was a year of remarkable achievement for Insmed, underscored by advancements across our pipeline. Let me now address our progress and next steps for each of our programs. First, TPIP is a novel dry powder formulation of Treprostinil Palmitil, which is a product of Treprostinil. We believe TPIP represents an opportunity to harness the full potential of the prostanoid pathway. Let me start by drawing your attention to the top line data we shared just last week from our Phase 1 single and multiple ascending dose trials in healthy volunteers. TPIP was generally safe and well-tolerated and showed substantially lower adverse events and longer half-life than currently available inhaled treprostinil therapy. These findings support the continued development of TPIP with once-daily dosing in patients with PAH. For an in-depth review of these results, I encourage you to visit our website for the detailed press release and conference call webcast. Regarding next steps, we remain on track to advance to the next stage of clinical development, which will follow two paths in parallel: First, we will gather information on the impact of TPIP on pulmonary vascular resistance, or PVR, over a 24-hour period in a handful of patients with PAH in an open-label study. We anticipate sharing top line patient data from this study in the second half of this year. The second path will investigate the effects of TPIP on PVR and six-minute walk distance in patients with PAH over a 16-week treatment period. We plan to initiate this trial in the fourth quarter. In addition to those two studies in PAH, we're planning to initiate a separate study for Group 3 PH-ILD patients, in addition to our work exploring a development pathway for TPIP and idiopathic pulmonary fibrosis, or IPF. We plan to use an up-titration dosing schedule to the maximum individually tolerated dose, exceeding 600 micrograms once daily. Let's now turn to Brensocatib, a novel oral reversible inhibitor of dipeptidyl peptidase 1 or DPP1. We view Brensocatib as the cornerstone of our efforts to build a program around the DPP1 pathway with enormous potential across a range of therapeutic areas. We saw several key achievements over the course of 2020, including the publication of our final results from our Phase 2 WILLOW study in the New England Journal of Medicine in September. As Will mentioned, we were also pleased to report that Brensocatib was granted breakthrough therapy designation by the FDA, as well as priority medicines, or prime designation by the EMA for NCFBE. Underscoring the strengths of our Phase 2 WILLOW data, we were pleased to announce late last year the initiation of the Phase 3 ASPEN Study of Brensocatib in patients with bronchiectasis. As you may recall, the ASPEN Study is designed to confirm the positive results we saw in our Phase 2 WILLOW study and as such, ASPEN retains many key elements of WILLOW. For a detailed overview of the trial design, I encourage you to review our R&D Day presentation, which remains available on our website. We look forward to sharing updates with you as the trial progresses. In parallel, STOP-COVID-19, an investigator-initiated study of Brensocatib in approximately 400 hospitalized patients with COVID-19 is now fully enrolled. This study is being conducted under the direction of Professor James Chalmers at the University of Dundee and across a number of hospitals in Scotland. Recall that Professor Chalmers was also the principal investigator of our Phase 2 WILLOW Study. It is our expectation that Professor Chalmers will share data from the STOP-COVID-19 study early in the second quarter of this year, and we hope it will provide further validation of the DPP1 inhibition pathway, as well as important data regarding neutrophil functioning that could provide future clinical utility. As ASPEN and STOP-COVID-19 advance, we're working to extend our focus for Brensocatib to additional potential indications as we continue to build our program based on the DPP1 pathway. Beyond bronchiectasis, we remain on track to initiate in mid-2021, a Phase 2 pharmacokinetics, pharmacodynamics multiple-dose study to explore the appropriate Brensocatib dosing for cystic fibrosis patients. At the same time, we continue to advance our research efforts to support expansion to other neutrophil-mediated indications across a range of therapeutic areas. I would like to take a moment to touch upon another exciting development opportunity for Brensocatib. In January, cancer research highlighted the role of Brensocatib in inhibiting lung metastasis of breast cancer in a mouse model. We believe this represents an exciting potential opportunity for Brensocatib in oncology. We are encouraged by this early result that suggests validation of the importance of the DPP1 pathway, and we will continue to advance our research efforts for Brensocatib in oncology. Let's now move on to our post-marketing frontline clinical trial program for ARIKAYCE. This program is designed to support full approval of ARIKAYCE in the U.S. as well as potential expansion into the larger frontline opportunity in MAC lung disease in the U.S., Europe, and Japan. These efforts support our overarching goal of shifting the treatment paradigm for patients suffering from NTM lung disease. The program involves two separate, but interrelated clinical trials, ARISE and ENCORE. Earlier this year, we were excited to announce that the ARISE and ENCORE trials were initiated and began dosing patients in December of 2020. As a reminder, a detailed look into the study schematics and designs can be found in the investor presentation available on our website. As sites open worldwide, we expect to provide an update on this program later this year. In summary, we made important advancements across our clinical programs in 2020. We remain excited and optimistic about the potential underlying our pipeline and look forward to sharing developments with you in the future. Let me now turn the call over to Roger to discuss some key operational updates. Roger?

Thanks, Martina, and good morning everyone. I'm pleased to report a strong fourth quarter and full-year from an operational perspective. Let me begin with ARIKAYCE in the U.S., where our commercial business remains steady, despite the challenges presented by COVID-19. Once the pandemic subsides, we anticipate a return to growth. This will be driven in part by leveraging tools such as the strong recommendation for use of ARIKAYCE in the international treatment guidelines for NTM lung disease, which includes a recommendation for ARIKAYCE as part of a multidrug regimen for certain patients. This is in addition to the FDA approval of our supplementary new drug application in October 2020, which added important efficacy data regarding durability and sustainability of culture conversion to the ARIKAYCE label. While we have seen the impact COVID-19 has had on reducing the volume of patient visits to physician offices and, therefore, new patient diagnoses, our team remains confident in the long-term potential of ARIKAYCE. We continue to believe that the pandemic has increased attention on the importance of respiratory health, further supporting the long-term opportunity for ARIKAYCE once patients are comfortable returning to physician visits. I will focus the balance of my comments on our international commercial expansion that is currently underway and that we anticipate will accelerate in 2021, further supported by important learnings from a successful U.S. commercial launch. Let's start with Europe, where ARIKAYCE was granted marketing authorization last October for the treatment of MAC lung infection in adults with limited treatment options who do not have cystic fibrosis. We launched in Germany first, with initial sales occurring in Q4 2020 and full launch commencing in January with a list price that is in-line with the U.S. list price for ARIKAYCE. We are launching at a time of COVID-19 lockdowns in parts of the country, which, like the U.S., have impacted in-person access for Insmed sales representatives, as well as in-person patient visits to the clinic. The German team has adapted with virtual interactions and events that have been well-received. Initial feedback from physicians is very positive, both on ARIKAYCE’s product, as well as the Patient Support Program available to patients initiating treatment with ARIKAYCE. We were also very pleased to secure early reimbursement in the Netherlands, also at a price that is in-line with the U.S. price. ARIKAYCE was only the second drug selected to undergo a process piloted by the Dutch government that aims to speed up access to innovative new medicines for Dutch patients. As a result, reimbursement for ARIKAYCE was accelerated by approximately three months compared to our expectations. This allowed Insmed to launch it in the Netherlands as of February 1st. As previously communicated, we expect reimbursement decisions across Europe to continue throughout 2021 and into 2022. In the UK, we have a list price for ARIKAYCE that is in line with the U.S. price, and we expect a decision on central reimbursement in England later this year, with the other countries within the UK initiating their own review processes as early as next month. As we've shared previously, the rollout of a European launch is supported by a solid infrastructure. Our model combines building our own commercial entities and field force in major markets while utilizing distributor models where appropriate. As we secure reimbursement in additional countries, we anticipate having approximately 40 field-based customer-facing personnel across Europe by the end of this year. Looking further ahead, we anticipate growing to a team of 50 by 2022. We are pleased with the feedback and progress made so far and look forward to providing further updates on the European launch efforts. We are equally excited about the opportunity we have in Japan. As a reminder, Insmed decided to register and commercialize ARIKAYCE if approved in Japan by ourselves. We have assembled an extremely strong, experienced, and talented team in Japan. We submitted our application to Japan's Ministry of Health, Labor, and Welfare in March of 2020 and remain on track for a 12-month review. If ARIKAYCE is approved, pricing discussions will commence, and we anticipate these discussions could take up to three months. We are therefore planning for a reimbursed launch mid-year if ARIKAYCE is approved. Key opinion leader interest in ARIKAYCE remains very strong, and we are gratified by the early support they have offered to Insmed in bringing ARIKAYCE to Japanese patients. We've had appropriate medical engagement with major medical associations in Japan, including the Japanese Association for Infectious Diseases, the Japanese Respiratory Society, and the Japanese Society of Tuberculosis and NTM. It is noteworthy that the Japanese Society of Tuberculosis added NTM to the society's name in January of 2020, indicating strong interest in NTM lung disease. In preparation for the launch of ARIKAYCE in Japan, if approved, we have deployed a team of 15 therapeutic specialists in Japan, as well as a small team of medical scientific liaisons who have been in place since the fourth quarter of 2020. As part of a co-promotion agreement, we have been promoting a generic macrolide to Japanese physicians and educating them on the appropriate NTM MAC treatment guidelines, which includes the use of macrolides. This has allowed us to engage with physicians and understand where the NTM MAC patients are being treated. While COVID has limited some interactions, we are pleased with the response of targeted physicians. Based on the opportunity we see in Japan, we plan on adding an additional five therapeutic specialists this year, bringing the total to 20. We anticipate this team will call on over 550 physicians across more than 200 hospitals in Japan, covering approximately 80% of the refractory patient population. In closing, we're extremely excited about the opportunities ahead as we expand the global footprint of ARIKAYCE and pursue the long-term potential of the franchise in the U.S., Europe, and Japan. I'd like to thank the Insmed team for their continued commitment to the NTM community as we work to achieve these milestones. And with that, let me turn the call back to Will.

Thank you, Roger. I'd like to close our prepared remarks by reiterating how proud I am of the Insmed team for achieving this remarkable progress in such a challenging year. By virtue of our evolution over the past 12 months, we now enjoy the opportunity to pursue three major clinical programs built on a strong foundation of research. 2020 was by far the most transformational year in our company's history. I would draw your attention in particular to the strength and performance of our executive team, which is an indication of the broad array of talent that makes up the global team at Insmed. Looking ahead, I truly believe we are well positioned for an even more exciting year in 2021. We are focused on delivering exciting new data as it emerges from our pipeline in support of our ambitious vision. This vision is built upon a deep and sincere commitment to help patients, and I am extremely proud of the portfolio we have developed in its pursuit. I would like to thank the entire Insmed team for its commitment to deliver as we add even more ambitious goals. With that, I'd like to open the call to questions. Operator, can we take the first question, please?

Certainly. Your first question comes from the line of Marty Auster from Credit Suisse. Your line is now open.

Will or Martina, I was curious if you could expand more? I thought Martina's comments about the potential for Brensocatib going forward and the diversity of indications that might be available to you were really interesting. How are you thinking about how many Phase 2 proof of concepts you can realistically kick off over the next year or two? What's the constraint there? Is it careful attention to the science before launching programs, personnel, workforce, or capital? And then finally, Will, could you maybe update us on where the discussions are with AstraZeneca around their potential to opt-in to conduct work in COPD and or asthma, and whether or not that option has any sort of time constraints for them to make a decision? Thanks.

Sure. Let me start with the second question first. On AstraZeneca, we remain in contact with them, and there's nothing really to update there. They are clearly interested in the drug and its potential. Each day as we discover more and more about the validity of not just this particular compound but the pathway itself, it makes this area all the more attractive. So we’ll see where that takes us. Right now, we feel very well-positioned, capitalized, and resourced to pursue all of the opportunities that this drug may provide to us. I'll segue into your first question. The first thing I want to frame for everyone's understanding is that from the moment we saw the WILLOW data, we have been working on the DPP1 pathway. This is not something we're turning our attention to now; it's something we've been sharing more as we move forward with the community. When we look at something like the cancer cell paper, it wasn't particularly surprising to us. We indicated at our research day last year that oncology was an area where we thought this could have applicability. This data validates that to a greater degree. Where do we go from here? We have a very high probability of success for non-CF bronchiectasis, which creates an enormous opportunity for this company that I would describe as disruptively positive. Cystic fibrosis is an area we believe is worthy of additional investment and clinical developments. Beyond that, oncology is clearly one area of interest, but it is not the only one. We see constraints on how much can be done all at once, but we don’t believe that's the limiting factor right now. It's about a thorough examination of the science and prudent capital use to create high-probability, impactful outcomes. We intend to reveal other areas over the year where development is warranted with this compound. I hope that's responsive.

Thank you, Will. Appreciate it.

Your next question comes from the line of Matthew Harrison from Morgan Stanley. Your line is now open.

Hi, all, thanks for taking the question. This is Connor on for Matthew. A couple from us. You mentioned the work going on in the UK, but we're just wondering if you could comment more broadly on how you see the ramp going overall. I suppose, what countries are you targeting next? How quickly do you expect uptake given the digital efforts and COVID? And then, Sara made a mention of expectations for growth in the U.S. post-COVID; do you see that inversely related with the vaccine rate? And just quickly, can you just speak to 2021 expenses? Sorry, that was kind of a lot. Thanks.

So, I want to ensure I’m responsive. For the launch, I'll ask Roger to address how that's generally going, and then we’ll cover the U.S. and vaccines. Our patients are at the frontline of receiving vaccinations, and we think that will present a lot of opportunities in 2021 in both the countries we’re approved and reimbursed in Europe, and those that will be added. The timing of the Japanese launch, if approved, should also coincide with the impending completion of the vaccination program. I think that’s positive. For more color, I’ll ask Roger to comment.

As we look at the European launch, certainly, as we mentioned, lockdowns in parts of Germany have hindered our access. That said, we are pleased with our progress. The team has built relationships with KOLs who have been eagerly anticipating launching ARIKAYCE, and we believe that as we move beyond COVID-19 restrictions, we will see the launch ramp. In Europe, there's more of a center of excellence model than in the U.S., which calls heavily on community physicians. This creates a natural rate limiter, but we still expect that Europe will have meaningful growth in the long term. As we anticipate reimbursement decisions across Europe in 2021 and 2022, we see strong potential.

In terms of expenses, I’ll turn that over to Sara.

We're not providing specific guidance, but I can share that R&D expenses will increase year-over-year to support ASPEN, ARISE, ENCORE, and TPIP. We're focused on resourcing these programs to be successful.

Your next question comes from the line of Stephen Willey from Stifel. Your line is now open.

Yeah, good morning. Thanks for taking the questions. With respect to Brensocatib and oncology, have you contemplated any earlier-stage work to look at novel DPP1 inhibitors, maybe to establish some level of differential pricing, which is presumably wider between something like bronchiectasis and where most oncology drugs are priced?

I appreciate the question. We're still in the early stages of exploration in the oncology arena, and we want to follow the science to see where it can be most impactful. This is one of those compounds that, as someone recently observed, if you're really lucky, you come across them once in a lifetime. The discovery from the WILLOW study is significant. It’s not simply that this is potentially effective in bronchiectasis; we believe we may be onto something substantial across various disease areas. Oncology is one area of interest due to clear unmet needs, strong science, and now validation.

Great. Thanks for taking the questions and congrats on the execution during what was a challenging year.

Your next question comes from the line of Graig Suvannavejh from Goldman Sachs. Your line is now open.

Hi, everyone. This is Jack, on for Graig. Congrats on the quarter. If you could talk a little more about the cadence of how you see ARIKAYCE sales recovering in the U.S. and the contribution expected as countries come online in Europe. Additionally, how do you envision the long-term breakdown and potential peak revenues between the U.S., Europe, and Japan for our model considerations?

I won’t be giving a five-year forecast right now, but I can provide some color. The last year saw steady performance amid challenging circumstances. We witnessed a rapid return of patients to physician offices when COVID subsided, and we think that bodes well for 2021, particularly with vaccinations affecting our patient population. The international launch is exciting, particularly in Europe and, if approved, Japan, where the diagnosed prevalence of refractory MAC patients is higher compared to the U.S. We anticipate momentum building through this year and the potential for label expansion potentially more significant in the long term.

If I can get a quick follow-up, how do you think about the extent to which ARIKAYCE can offset some of your cash burn as you pursue clinical programs? And how do you view your funding requirements two years out?

I’ll request Sara to address that.

ARIKAYCE has been and will continue to be a significant contribution to offsetting our burn. While we won’t provide specific guidance on our runway, we ended the year with a very strong cash position of $533 million.

Your next question comes from Ritu Baral from Cowen. Your line is now open.

Hi, this is Lila on for Ritu. Thank you for taking the question and congrats on the update. Concerning the Phase 2 trial you're planning in cystic fibrosis, can you speak a little into how you're viewing that program and where it might fit into the treatment landscape? How are you considering patient eligibility for that trial? Any reason to think it would be more refractory or in combination use? Thank you.

When we think about cystic fibrosis, we recognize that the average patient has higher levels of neutrophil elastase than those with bronchiectasis. After the baseline cause of cystic fibrosis is eradicated, patients often end up with complications like bronchiectasis. Hence, this drug may fulfill a critical need. Our expectation is that validated results will help address pulmonary exacerbations. Patients using the Vertex drugs may benefit from our drug due to its targeted action.

Got it. That’s very helpful.

Your next question comes from Joseph Schwartz from SVB Leerink. Your line is now open.

Yeah, hi. I'm Julie dialing in for Joe, thanks for taking our questions. I was wondering, as for the launch prep work goes for Japan, you mentioned that you added five additional sales reps. What motivated that? Are you detecting stronger demand from patients than anticipated, or is there more launch prep work than you thought?

I'll have Roger address that.

We had those 15 sales reps in Japan since Q4 to promote our macrolides and understand patient dynamics. The response from KOLs has been strong. This has led to the decision to add five reps to ensure adequate coverage, supporting the launch if approval occurs.

Okay, great, thanks. And then could you remind us of the number of patients you plan to study in ARISE and what the enrollment cadence is? I know that you expect an update later this year, but I was just wondering how that's going?

For specifics on the study, I'll have Martina address it.

For ARISE, we’re looking at newly diagnosed MAC lung disease patients, with 100 patients in the ARISE study and 250 in the ENCORE study. We have started dosing with patients, and these are global studies across the U.S., Europe, Asia, and Latin America with sites already initiated.

Okay, great. Thanks so much.

Your next question comes from the line of Liisa Bayko from Evercore ISI. Your line is now open.

Hi, thanks for taking my question. Could you tell us what U.S. sales were versus rest of world?

Sara, do you want to address that?

We will be providing global sales, but we will not be providing a breakdown of regional sales as we just kicked off the launch in Europe and the sales are not a material amount yet.

Okay. And then, can you just talk about what you’ve done to understand patient dynamics this year? Was it mainly driven by new patient adds, or was there any change in the duration of therapy? Just curious about the patient flow this year and when do you expect that to lift as we come out of the pandemic?

We look at a broad range of metrics while tracking ARIKAYCE performance, which has been remarkably steady. The key metric impacted has been new patient starts, which have struggled in areas where COVID has surged. As those restrictions ease, we have seen rapid returns of patients to physician visits, which supports our expectation for growth in the U.S. market and beyond.

Thank you.

Your next question comes from Anita Dushyanth from Berenberg Capital. Your line is now open.

Hi, good morning. Congrats on the quarter. Will, I know you had addressed this early on, but I wanted to clarify regarding the launch in Europe. It’s known that Germany and the UK often come on board quickly compared to France, which takes longer to set up reimbursements. Do you expect the majority of regions in Europe to come on board by the end of this year, or are there specific regions that might take more time?

Roger?

As we think about the European launch, we estimate that most of our target markets will come onboard in 2021. France may take a little longer, but we have the ATU program in place to provide access to patients in need. Overall, we aim for successful reimbursement interactions in these markets.

That’s helpful. And just regarding expenses, Sara, you mentioned R&D will go up year-over-year, but what can we expect for SG&A as commercialization efforts ramp up in the U.S. Is there expected modest growth over the quarters given the increasing vaccine availability in the latter part of the year?

Sara?

While we're not providing specific guidance, the infrastructure in both Europe and Japan has been in place throughout 2020. There will be modest growth in our sales operations, but we have key talent ready to drive these launches.

Thank you for your participation. You may now disconnect.