Hello, everyone, and welcome to the Insmed First Quarter 2022 Financial Results Call. My name is Daisy, and I'll be coordinating today's call. I will now hand the call over to your host, Eleanor Barisser, Investor Relations at Insmed to begin. So Eleanor, please, go ahead.

Thank you, Daisy. Good morning, and welcome to today's conference call to discuss our first quarter financial results for 2022 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, which are available through the SEC's website at www.sec.gov, or from our website for information concerning the risk factors that could affect the company. The information on today's call is not intended for promotional purposes and is not sufficient for prescribing decisions. Joining me on today's call are members of the Insmed executive management team, including Will Lewis, Chair and Chief Executive Officer; and Sara Bonstein, Chief Financial Officer. Insmed business is currently segmented into four pillars: ARIKAYCE, Brensocatib, TPIP, and Translational Medicine. We will keep our prepared remarks brief on today's call, focusing on the key activities and milestones within each of these four pillars, followed by a financial overview. 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, and good morning, everyone. Insmed had a strong start to 2022, marked by continued execution across our four pillars. All of our prior guidance remains intact, and we are executing effectively across our global operations. This is evidenced by strong first quarter revenue growth of 32% year-over-year during what is typically our most challenging quarter, giving us continued confidence in our anticipated growth of at least 30% this year. Let's start with our first pillar, ARIKAYCE, our marketed product for the treatment of refractory NTM lung disease. ARIKAYCE is also being explored in a frontline clinical trial program consisting of the ARISE and the ENCORE trials, which we believe will support full FDA and select international approvals of ARIKAYCE for newly diagnosed NTM patients. Enrollment in the ARISE study remains on track, and we still anticipate reaching full enrollment this year with top-line data to follow in the first half of next year. In line with prior guidance, we anticipate ENCORE will be fully enrolled in 2023. I'm also pleased to share that the first meeting of the Data Safety Monitoring Board, or DSMB, was held in March, and that the DSMB recommended the ARISE and ENCORE trials continue as planned. Our second pillar is Brensocatib, a reversible DPP1 inhibitor, targeting the release of neutrophil serine proteases in a range of neutrophil-mediated diseases. This mechanism of action would be a novel approach in the anti-inflammatory class of therapies. We are currently pursuing four separate indications within the Brensocatib pillar. First, in bronchiectasis, we continue to anticipate completing enrollment in early 2023 for the Phase III ASPEN study. The second meeting of the DSMB for this trial was held in March, and it was again recommended that the ASPEN trial continue as planned. When we look to the market size in bronchiectasis, we see that it is a very substantial opportunity. At the time of potential launch, we will be targeting a patient population that aligns with the patient population we are studying in ASPEN. Further, our commercial preparations for Brensocatib dovetail off the infrastructure we have already built for ARIKAYCE. For our cystic fibrosis program, the Phase II PK/PD study continues to progress as planned, and we look forward to sharing top-line data later this year or early 2023. In line with our strategy of building an anti-inflammatory portfolio, harnessing the DPP1 inhibition pathway, we recently announced that we are advancing the development of Brensocatib into two additional indications, which we believe represent substantial potential market opportunities. The first is chronic rhinosinusitis without nasal polyps or CRS. As a reminder, CRS without nasal polyps, which we are targeting, generally involves more neutrophil recruitment in the inflammatory process versus CRS with nasal polyps. Currently, there are no approved treatments for the approximately 26 million patients with CRS without polyps in the U.S. We will be targeting patients with severe disease characterized by eligibility for endoscopic sinus surgery. Each year in the U.S., approximately 155,000 patients undergo surgery for CRS without nasal polyps. Of those, approximately 15% or 23,000 patients require revision or repeat surgery. The second indication is Hidradenitis suppurativa, or HS, for which the only approved therapy is HUMIRA. We believe a well-tolerated once-a-day oral therapy, such as Brensocatib, would be a welcome addition to the treatment armamentarium. We anticipate the success in these four indications, bronchiectasis, cystic fibrosis, CRS without nasal polyps, and HS, could position Brensocatib as a leading anti-inflammatory therapy for neutrophil-driven diseases. Our third pillar, TPIP, a dry powder formulation of treprostinil palmitil for the treatment of pulmonary hypertension, is in three parallel Phase II trials. The Phase IIa trial evaluating TPIP for the treatment of PAH is currently underway. We plan to share preliminary data from a small number of patients over the course of this year. As a reminder, this study is not getting to the other Phase II trials for TPIP. These are the Phase IIb trial in PAH and the Phase II trial in PH-ILD, both of which are currently active in recruiting patients. We look forward to providing updates for these three trials throughout the year. Finally, our fourth pillar, translational medicine, encompasses a wide range of innovative technologies and modalities, including gene therapy, gene editing, protein deimmunization, and manufacturing capabilities. From this platform, we plan to file at least one IND per year. Preclinical work in our two most advanced indications continues to look very encouraging. Upon completion of these studies, we will look to provide a comprehensive update of our translational medicine work and its anticipated next steps. Turning to the upcoming American Thoracic Society Conference, or ATS, taking place later this month. We will have a number of presentations across three of our pillars at ATS, and I'd like to highlight two of those for you now. The first of these is a retrospective cohort study of ARIKAYCE patients, demonstrating a reduction in hospitalizations after initiating ARIKAYCE treatment. Another noteworthy presentation provides a post-hoc analysis of the Phase II WILLOW study, assessing the number needed to treat and the number needed to harm, indicating a favorable benefit-risk profile for Brensocatib in non-cystic fibrosis bronchiectasis. In closing, Insmed is in a period of execution in our late-stage pipeline alongside our commercial franchise. Broadly, we are keenly aware that these are the most challenging biotech market conditions seen in our lifetime, which we anticipate will persist throughout the year. However, Insmed is in the enviable position of having the resources to see through the current market conditions and beyond. We are a revenue-generating company that benefits from a rich late-stage pipeline and a strong cash position to support further development. And with that, let me now turn the call over to Sara.

Thank you, Will, and good morning, everyone. We ended the first quarter in a position of financial strength that we believe will continue to support the four pillars of our business. Earlier today, we issued a press release with our detailed first quarter financial results, all of which fall in line with our internal expectations. Let me highlight a few of those results for you now. As reported this morning, we ended the quarter with $664.7 million in cash and cash equivalents and marketable securities. Consistent with our earlier guidance, we anticipate this cash position will support our ongoing business into 2024. Total net revenue for ARIKAYCE was $53.1 million for the first quarter of 2022. We are encouraged by strong first quarter sales, which showed a 32% increase compared to first quarter 2021 performance, despite significant unfavorable exchange rates in both Japan and Europe. On a regional basis, net revenue in the first quarter was $40.8 million in the U.S., $10.7 million in Japan, and $1.6 million in Europe and Rest of World. Our three key regions, Japan and Europe were hit the hardest as a result of Omicron. But we remain excited about what the rest of the year may bring as those territories continue to emerge from the pandemic. In Japan, specifically, we look forward to the lift of the two-week dispensing limit in June, which should lead to a more affordable co-pay for patients. Despite the mixed trends worldwide, we reiterate our guidance of at least 30% revenue growth on a global basis this year. Let me now touch on a few financial highlights from the quarter. Our gross to net in the U.S. for the first quarter of 2022 was approximately 16.6%. Recall that the gross to net in the first quarter of each year are typically the highest. And this is in line with what we have seen historically with higher cost treatments for rare diseases. We are reiterating our previous guidance of U.S. gross to net to be in the mid-teens for 2022, which is consistent with prior years. Cost of product revenues for the first quarter of 2022 was $12.2 million or 23% of revenues, which, on a percentage basis, is consistent with prior periods. Turning to our GAAP operating expenses. In the first quarter of 2022, research and development expenses were $84.4 million, and SG&A expenses were $56.7 million. These expense levels reflect the continued support of our four pillars, including seven ongoing clinical trials in our pipeline and the commercial infrastructure to support ARIKAYCE in our three key regions in this difficult biotech market. In closing, Insmed finished the first quarter of 2022 in a position of financial strength that supports continued execution across our commercial business, clinical pipeline, and early-stage research. I'll now turn the call back to Will for closing remarks.

Thank you, Sara. Insmed continues to deliver against our strategic objectives. We have an exciting future on the horizon, and the remainder of 2022 will be an extremely important execution period across our programs. The catalyst for all of this work is our vigilant pursuit to create medicines that have a meaningful positive impact on patients' lives. I'd like to extend a thank you to the entire Insmed team as well as the patients and caregivers who participate in our studies. And with that, I'd like to open the call to questions. Operator, can we take the first question, please?

Our first question is from Jessica Fye from JPMorgan.

First one is about ARIKAYCE. I was hoping you could just characterize the extent to which you see COVID still affecting your business in the U.S. and in Japan in the rest of the year? And just kind of compare and contrast that relative to the first quarter of this year? And then the second question is, with this Phase IIb for TPIP in PAH and the Phase II for PH-ILD, is there any chance we could see data from either of those in 2023?

Thanks, Jessica. The first question, ARIKAYCE, I would say, COVID was certainly evident in the first quarter especially in Japan and Europe. The Omicron variant to put a finer point on it, was very severe in Japan, much more so than, for example, Delta was here in the U.S. And that is both in terms of hospitalization, death rates, etc. And although we're on the downslope now significantly, that return to normal had been slower than it was in the aftermath of the Omicron treatment in the U.S. That is probably because the rate in Japan was about 7% in January; it was quite low. But as we've moved through that, I think we started to see some, to steal the phrase, green shoots. And the best example of that was the Japanese Respiratory Society, which just took place about a week ago or so. And it was actually held in person, and we had a tremendous showing, interest, and support at that conference. So I'm bullish about Japan for the balance of the year, particularly after June, when the two-week restriction on prescriptions gets lifted. I'm hopeful that we won't see a resurgence of another variant in any of the territories. I'm hoping that Omicron is the last stand, if you will. And if that's the case, I would expect everywhere to improve. It was also quite severe in Europe, I would say, and that's still dragging on now. The U.S. is, by contrast, much more open. I'd say we're probably 80% of the way there. Our best guess. And I would expect, in contrast to last year where we saw ebbs and flows of different variants, even if we were to see some Omicron-like variant return in some of these territories, I think the attitude of everybody has changed a lot. People are going to find a way to work through whatever is presenting itself unless we go back to lockdown. Because the key to this at the end of the day is not whether people are infected with COVID, it's whether they're being hospitalized. Because it's the hospitalization that blocks the onboarding of patients in Japan, it's the hospitalization in the U.S. that ties up the physicians who would otherwise be able to prescribe to patients. I think the only lingering effect of COVID throughout the year, and we're hopeful that the labor market will repair is actually the availability of health care personnel. There was a real downdraft in the U.S. in that regard. And I would say, the picture there is better on the commercial front than it is on the clinical trial front. The challenges on the clinical trial front are largely due to staffing around the centers and people that are involved in clinical trial enrollment. I'd say the commercial side, the treatment of patients is in a much better place. So hopefully, that detail is helpful. With regard to the PAH trials, it's going to take a while to enroll IIb and the Phase II in PH-ILD. But as soon as we get that sense of what the tempo for that is, we'll update it. But that is not distinct to us and you'll see that across the board in any PAH trial setting.

Our next question is from Andrea Tan from Goldman Sachs.

My first one is a follow-up question on ARIKAYCE in Japan. A strong performance here despite the COVID and FX headwinds, and you've spoken about this lift of the two-week dispensing limit that's coming post-June. Just wondering if you can provide more clarity on how you expect that to translate to sales? Is it pretty immediate? Or should we expect a lag before physicians really change how they prescribe the drug? And then I have a follow-up question.

Yes. No. So I think on the particular issue related to the two-week lift, it's always hard to know what kind of a response you'll get. But just to clarify this, right now, patients have to go back every two weeks. This is true for every new drug in Japan. In the first calendar year, they have to get their prescription two weeks at a time. That's because of an instinct to want to watch very carefully the safety profile of any new drug arriving in Japan. After the first calendar year, that two-week restriction is lifted. And so for example, our patients could get a more typical three-month allocation of medication in a prescription, and they pay a co-pay every time they return to get a prescription filled. So you go from getting two weeks' worth of product to getting perhaps three months' worth of product. It's a substantial savings to these people. And that I think will generate less resistance to onboarding of new patients. So we would expect to see a response from that, and I would expect it to be immediate.

Got it. And then just as you look to the emerging data for ARIKAYCE, including the hospitalization reduction data that you're presenting at this upcoming ATS meeting, how does that shape in any way? How you can go out and market the product to pulmonologists? I guess maybe if you could speak to how meaningful that endpoint is compared to sputum conversion or exacerbation rate?

In the end, our commercial effort will focus on the label itself. However, data shared at conferences like ATS and later this year at the European Respiratory Society and the Japanese Respiratory Society are important for exchanging information. These forums allow physicians to discuss best practices, and the information we release highlights what patients experience during the treatment cycle. According to the data and label, culture conversion is a potential outcome for patients, which may also lead to reduced hospitalizations if treatment is successful. This presents a strong case. We are already included in global guidelines in the U.S., Europe, and Japan, where ARIKAYCE is strongly recommended for refractory patients. This further strengthens our argument by providing another clear example of patient benefit.

Our next question comes from Jeff Hung from Morgan Stanley.

For the TPIP Phase IIa study, you remain on track to share preliminary data. Have any patients gone through the 24-hour monitoring? Or do you have better visibility on when that might start? And then when you say a small number of patients, the study was already going to be in a relatively limited number of patients. So would the preliminary data be a subset of the patients you plan to enroll?

Yes. And I'm just going to be very transparent with everybody. This is an incredibly frustrating study for us because we think the information will be quite valuable. At the same time, we probably almost certainly underestimated the demand it puts on patients and on physicians in the context of executing against this protocol. This is for everyone's education, a 24-hour right heart catheterization of a PAH patient in an ICU setting where we administer a single dose of our drug and then track the impact on pulmonary vascular resistance through various measurements across the course of that 24-hour time frame. What we're hoping to establish is that there will be a reduction in pulmonary vascular resistance that will occur and will remain. And if that does happen, although no one has ever done a study like this before, we think it ties directly to the preclinical animal data, where we showed that by accomplishing that, you resulted in disease modification. And that's really the daisy chain link that we're after here. How many patients do we have to see to establish that link, I think that's a little bit of qualitative judgment. What we're trying to do is get enough so that there's credibility in the assertion that that PVR reduction and sustainability is established. Once that has taken place, I think this trial will have served its purpose. What we're doing right now is concentrating on trying to get the appropriate patients who are not only willing to undergo this procedure but at sites that are now free and clear of other demands related to COVID, and that needle has been very difficult for us to tread. I don't think that this has manifested in any of our other clinical trials, just to be crystal clear. We have executed extremely well on Brensocatib and the ARIKAYCE trials. But this one has been a challenge and will remain so, I suspect. So we're a little hesitant to give any more clarity until actually we have the data in hand. I think perhaps a handful, two or three patients would be enough for us to present data to the outside world, but we're going to kind of make that judgment once we get to the other side of it. Hope that helps.

Our next question is from Ritu Baral from Cowen.

Going to start with my usual how our ASPEN event rates? And also, how has the conduct of ASPEN, ARISE, and the Phase III been affected by the war in Ukraine? And what are you seeing as far as enrollment rates in Eastern European countries and tight broadly and whether you have specific sites in Ukraine for any of those three studies?

Sure. So let me just start at the back end first. Eastern Europe was one of our earliest regions that was enrolling in these trials and we have capped now Eastern Europe because of the significant number of patients that we were able to enroll early on. That's not in any way disrupted by what's going on in Ukraine. Ukraine is an absolute tragedy, and I could riff for a long time on my thoughts surrounding this. I will simply tell you that out of respect for those patients, we have effectively set them aside from the study and used additional patient counts elsewhere to ensure that we have the adequate powering. That's consistent with guidance from the FDA and our interactions there. So people in Ukraine have better things to do right now than worry about participating or following up on a clinical study. We had, just to be specific, almost a dozen sites across Ukraine. There were 44 patients we had enrolled. So it's a small number. We had none in Russia for any of our clinical trials. And for Ukraine, it was only in ASPEN in those 44 patients. And as I said, they are already accounted for and that will not have any impact on our timelines. With respect to ASPEN event rates, they continue to track, as expected, and consistent with the WILLOW study. So we consider that a positive. And to refresh everyone's recollection, we examined event rates on a blinded basis on a very regular basis inside the company and at a country level. So we are tracking this worldwide to assess whether or not the surge or abatement of COVID has had any impact on event rates. And I would say we are in a very good position with regard to that information, albeit on a blinded basis.

Got it. And a very quick follow-up. The turnover to six-month prescriptions in Japan, is that automatic? Or is there anything gating that that could delay the conversion?

That's automatic. It will happen in June.

Our next question is from Judah Frommer from Credit Suisse.

A couple of financial ones. First, you did hit that 30% sales growth guidance in Q1 with what sounds like maybe a more intense open environment than anticipated. So just curious if kind of the COVID impact was in expectations in Q1. And as that subsides, would you say that perhaps COVID is receding quicker than you anticipated for this year?

Sure. I'm happy to address that. So we were encouraged by our Q1 performance, 32% increase quarter-over-quarter. So we were very pleased with that performance and gives us continued confidence in our global 30% growth on an annual basis. And as Will mentioned earlier, COVID has impacted Europe and Japan the toughest in Q1 because of Omicron and the challenges there, less so in the U.S., and we continue to look to build on that momentum that we've seen in the U.S. and the abating of COVID in both Europe and Japan.

Okay. And then just on the cash run rate guidance. Does that anticipate the launch of another drug or indication? Or is there anything you can give us on kind of what's contemplated within building the organization up into '24 in that runway?

Yes. So the guidance into 2024 is based on our ongoing programs today. So it does not contemplate additional work to begin. We feel very encouraged with our cash guidance, $665 million, roughly on balance sheet, and we've been very diligent on capital expenditures where we allocate funds. And as we think about the next indications for Brensocatib, we're being smart on sort of gating additional activities and spend as we think about those new indications. We think they're valuable and the right thing to do from an overall franchise perspective and just balancing the capital deployment of those programs.

Our next question is from Stephen Willey from Stifel.

Maybe one on the ARIKAYCE business and then just a quick follow-up. So I guess in the U.S., it's good to see almost 10% year-over-year growth. Is there anything that you can say about just your confidence at this point and potentially seeing a normalization of new patient starts and maybe a return to levels that were observed in the first 5, 6 quarters post-launch?

Yes. So I appreciate the question. I mean I think what I would say about where we are is that the first quarter, we did see some COVID Omicron effect in the U.S., particularly at the beginning of the quarter. I would say that the early signs as we exited February and got into March were certainly positive trend-wise, and my expectation is that that will continue. I'm a little bit hyped up because we finished our national meeting this week here in New Jersey. And so we had the entire commercial team in-house. And I think things look good for the year. I mean that's where our guidance came from. That's why we're reiterating it today. I think the U.S. is going to be put in a good performance, and that's my expectation. I think Europe will continue to be challenged. The good news is, in that sense, Europe has a relatively small number of refractory patients, 1,400. They're doing very well for the opportunity that's there. And that expectation of challenge is consistent with the guidance that we had provided. Japan is really a more substantial opportunity than anywhere else in terms of the number of patients. And I think early signs there are positive, the abatement of COVID Omicron variant in Japan is slower than expected. But we still, as people have observed, put in a good performance in the first quarter. And my expectation is that as that gradually recedes and the enthusiasm from something like JRS and the two-week restriction lifts, Japan, I'm hoping will accelerate through the year.

Okay. And then maybe just a quick follow-up for Sara. We saw a pretty meaningful sequential SG&A spend during the quarter. And just wondering if this is a Q1 specific reduction or if this is a lever that you're actively pulling on the OpEx front right now?

Yes. No. So we continue to look at how we can be most efficient with our capital deployment. So I see sort of ebbs and flows and some lumpiness in some of our expenditures, but we do keenly look at where we can reduce expenses, investing in the future, investing in development while still ensuring that our commercial business has the fuel that you need. So I wouldn’t read into sort of the lumpiness of SG&A. Our infrastructure is built in all three of our regions, our launch in both Japan, Europe, and the U.S., and you’ll continue to see sort of those levels of expenditures.

Our next question is from Joseph Schwartz from SVB Securities.

I have a couple of questions regarding Brensocatib. Some key opinion leaders have mentioned that the rate of bronchiectasis exacerbations can vary quite a bit among individual patients over time. It's noted that the rate of exacerbations was not statistically significant in the Willow study, likely due to some patients experiencing frequent exacerbations. I'm curious if your recent assessment of the event rate in the ASPEN trial indicates that this variability is not present now. Additionally, did you observe any patterns in those frequent exacerbators before the trial that you can leverage when enrolling participants in ASPEN to avoid similar issues in the upcoming study?

So this is a really important point. The key to success in any bronchiectasis trial, as we've learned from the many precedent trials that have not been successful, is to have an adequate event rate to determine whether or not your medicine is actually having an impact on that very important measure. As everyone knows, we actually conducted that measurement process during the Phase II WILLOW study, which many have characterized as kind of mini Phase III because it was 256 patients. It actually looked at the clinically relevant endpoint of time-to-first pulmonary exacerbation and frequency of pulmonary exacerbation. And at the 10-milligram dose, we were statistically significant on both of those measures. At the 25-milligram dose, we were statistically significant on the primary endpoint and trending on the secondary. That, overall, was a very strong performance because it showed a 40% reduction. So when we think about replicating that for Phase III, we adhere to some of the same entry criteria that gave us that opportunity to reveal that performance. The first is that we have moderate to severe patients in the study characterized who have had two or more exacerbations in the last 12 months. So the idiosyncrasies that surround patient and their variability with regard to exacerbations are controlled for by ensuring that these are patients that have regular exacerbations. Importantly, the definition of an exacerbation is also quite strict. It isn't just the patient characterizing it. It is also the physician who has to agree and change the treatment paradigm for that patient, either by virtue of hospitalization or changing on medication. So it's quite a high hurdle to say that the patient has had an exacerbation. That means that the patients we're getting into the study are those who are going to continue to exacerbate. We saw that in the Phase II study. We expect to see it in Phase III, and that's why we track the blended event rate across the study and compare it to WILLOW to ensure that we're seeing consistency. And indeed, that is the case. So I feel very good about the event rate profile of this study and the way we are proceeding. And the issue of the 25-milligram arm in the Phase II study having a handful, and I think it was only two or three hyper-exacerbating patients, these were patients that had as many as six exacerbations in as little as six months, skewing a little bit of the results. We control for that in Phase III by stratifying. So that shouldn't be an issue, both that stratification adjustment and the fact that we are going to be enrolling more than 1,600 patients in the Phase III study should give us the best possible controls around these important variables.

Our next question is from Anita Dushyanth from Berenberg.

I have two here. Could you please talk about the size of the team in Japan that is currently there? And do you have any plans to sort of expand that going forward now that you see signs of the pandemic sort of abating? And then the next question is as the ARISE study continues to enroll, and then to gain insight from that. Are you seeing any additional signals that you might want to incorporate into the ENCORE study?

With regard to the size of the effort in Japan. We have roughly the equivalent of 20 sales reps or therapeutic specialists in the field in Japan right now. That gives us access to all of the primary areas we want to call on at the time of launch. Of course, we're dynamic as we move through and find success in Japan, we will always consider augmenting that should we feel that there is adequate demand in the business model sense for investing in those additional resources. Right now, I think we feel really good about the 20 that we have. They're doing a great job, and we want to see that play out, particularly as we get through this two-week changeover. On the issue of ARISE and any insights we're gaining there. It's a little too early to say. I think one thing that can be said, though, is that ARISE is going to provide a wealth of information and data, and it will be interesting to see what we've learned from that study. Yes, the top-line very straightforward issue of did the patient's culture convert, how do they respond as measured by the PRO. But even within that, I think we're going to learn lots of details and trends that we're going to want to reflect on as ENCORE continues to move forward. And we're designed to do that, that we can adjust as needed in ENCORE based on what we learned from ARISE. So I'd say those studies are moving forward in a time sense relative to one another exactly as we want. We preferentially enroll in ARISE two-to-one over ENCORE. We think that probably will mean that we'll see some acceleration in the enrollment of ENCORE once ARISE is completed because of that difference in enrollment priority. And because ENCORE, frankly, is a more attractive study for patients and physicians because it runs a full 12 months of treatment, whereas ARISE is only six months. For these patients that want to be treated and are symptomatic in a frontline setting, a shortened time frame of treatment upfront can be a little discouraging to them. So I think we'll get through the ARISE enrollment, and we'll see some pickup in ENCORE enrollment in the aftermath of that.

Our next question is from Jennifer Kim from Cantor Fitzgerald.

My first question is for ARIKAYCE. I know the plus-30% guidance is intact. But do you still expect growth in all regions, specifically for Europe? I know it's a small market, but wondering what your latest thoughts are there, and maybe what your expectations are for additional reimbursement opportunities.

Yes, I believe the answer to your question is that in developing our overall guidance, we aimed for a global perspective. We anticipate that each region will perform well, although we recognize the exceptional efforts underway in Europe. However, it is, relatively speaking, the smallest region in terms of market potential and opportunities. There are certainly challenges with reimbursement across Europe due to the costs associated with COVID and other current issues in the region. This has generally put pressure on health care authorities. As I have mentioned before, we expect this situation to persist and possibly worsen, impacting not just us, but all companies with rare disease products in Europe. For our part, the performance has been mixed, with some areas showing great success and others facing more challenges. Overall, our guidance is still supported by our observations in Europe. I am not worried about the circumstances in Europe affecting our guidance. I anticipate updates from regions like Belgium and England, followed by Italy and France. There are encouraging developments in these areas, especially in France, where we continue to receive support from the ATU program. There is a clear acknowledgment of the value of this therapy, and I take great pride in the efforts made to assist patients in these regions through specialized programs. Hence, while the situation in Europe presents some pricing pressures, it represents a minor portion of our overall revenue. We remain confident in our guidance of at least 30%, and we will continue to hope for positive outcomes moving forward.

Okay. That's helpful. And maybe one more for ARIKAYCE. I think you've commented on this before, but does that guidance have flexibility to remain intact even if we see a smaller winter resurgence for COVID?

So the honest answer to that question is it depends on the resurgence. And I think while we're all aware that that could happen, I think the key to understanding its impact on our overall opportunity set, as I sort of alluded to a little bit earlier, is this idea of hospitalization. So I wouldn't look so much to the infection rate; I would look to the hospitalization rate because the hospitalization rate is where the practical blocks begin in the different regions. In Japan, they often hospitalize these patients as they're onboarded. That's just a common practice over there. And so when beds are set aside to treat COVID patients, it makes it very difficult to onboard as many patients as easily. In the U.S., when patients are hospitalized, it makes it difficult for them to see and initiate new patients on therapy. I think what has been universal in the U.S. and in Japan, as we've gone through this time frame, is that notwithstanding those hospitalizations, patients who are already on medication tend to be able to stay on medication. And so notwithstanding what we saw in Japan in the first quarter. We did not see any impact on patients remaining on drug, which was very encouraging and consistent with what we've seen in the U.S. in the past. So as we get to the fall, we'll see what we're facing, but my guess is that unless we see a spike in hospitalizations and calls for lockdown, we should be able to find our way through that and navigate successfully.

Thank you very much. With that, that concludes our Q&A. So I'll hand back over to Will Lewis for any closing remarks.

Thanks, everyone, and have a great day.

Thank you, everyone, for joining today's call. You may now disconnect your lines, and have a lovely day.