Good morning, and welcome to the Insmed First Quarter 2023 Financial Results. My name is Nandaja, and I will be your operator today. At the end of the presentation, there will be an opportunity to ask questions. I shall now hand over to Bryan Dunn to begin.

Thank you, Nandaja. Good day, everyone, and welcome to today's conference call to discuss Insmed's first quarter financial results for 2023 and provide a business update. I am joined today by Will Lewis, Chair and Chief Executive Officer; and Sara Bonstein, Chief Financial Officer, who will each provide some prepared remarks. Later, they will both be joined by Dr. Martina Flammer, Chief Medical Officer for the Q&A session. Before we start, please note that today's call will include forward-looking statements based on current expectations. These statements represent our judgment as of today and inherently involve risks and uncertainties that may cause actual results to differ materially from the results discussed. Please refer to our filings with the Securities and Exchange Commission, which are available at www.sec.gov and on our website for more information concerning the risk factors that could affect the company. The information on today's call is for the benefit of the investment community. It is not intended for promotional purposes and it is not sufficient for prescribing decisions. With that, I will turn the call over to Will Lewis for prepared remarks.

Thank you, Bryan, and good morning, everyone. I am pleased to report that Insmed began 2023 exactly how we hoped it would, with a strong quarter of commercial execution, which delivered 23% revenue growth, while also continuing to fulfill its promises from a research and development perspective. By nearly any measure, the most important pipeline milestone for Insmed in the first quarter was the completion of enrollment in the ASPEN study of brensocatib in adult patients with non-cystic fibrosis bronchiectasis. On last quarter's conference call, we reiterated our goal to enroll more than 1,600 adult patients in ASPEN by the end of March, which in itself would have been an unprecedented achievement for a study in this patient population, both in terms of overall patient numbers as well as the pace of enrollment. But in reality, we exceeded even that ambitious enrollment target. In total, the ASPEN study enrolled more than 1,700 adult patients at more than 460 sites in nearly 40 countries. To put that in context, that is more than 75% larger than any prior Phase III program in this indication and was achieved in a similar amount of time despite enrolling during the global respiratory pandemic. In fact, the number of patients enrolled in ASPEN during just the first quarter of 2023 exceeded the entire enrollment of our Phase II WILLOW study. This speaks to the number and motivation of patients seeking solutions for this condition and adds to our confidence in the potential commercial opportunity for brensocatib. None of this could have been achieved without the tireless dedication and passion of our brensocatib clinical colleagues, who deserve tremendous credit for getting us to the position we are in. Perhaps most importantly, the achievement of this enrollment goal largely derisks the timing of the readout of the ASPEN study, which we continue to believe will be in the second quarter of 2024. This data readout will be a major inflection point for Insmed with the potential to quickly transform the company from one that serves tens of thousands of patients currently to one that could serve more than 1 million upon brensocatib's potential approval as a first-in-disease, first-in-mechanism treatment for bronchiectasis. And even that number of patients could be just the beginning. Brensocatib and the DPP1 pathway that it targets has the potential to address the host of diseases caused by neutrophilic inflammation with bronchiectasis representing just the first on that list. And while we're on the topic of ASPEN, I hope you saw that with our earnings announcement this morning, we also released on our website the baseline characteristics of the participants in the ASPEN study. To put these characteristics into context, we provided a side-by-side comparison of each attribute to that of the participants in our Phase II WILLOW study. Although I won't talk through all of the details on this call, what you will find is that the patients enrolled in ASPEN are remarkably similar to those who were enrolled in the successful WILLOW study, including age and gender as well as importantly, the percentage who have had 3 or more exacerbations in the 12 months before entering the study; chronic macrolide use and other relevant comorbidities, such as COPD. All of this adds to our confidence that we have designed this trial to give us the best chance to successfully replicate the results shown in Phase II, potentially opening up the pathway to the first regulatory filings for brensocatib. As you know, the Insmed story goes well beyond the promise of brensocatib. In the time between now and the ASPEN readout, we expect a series of important catalysts from each of our four development pillars. Let me take a moment to update you on just a selection of these catalysts. Just days from now, on Monday, May 8, we will host our Research Day, titled, The Future of Rare at Insmed: Functional Genes, AI-Enhanced Proteins, Glowing Algae, and More. This is the moment that we and many of you have been waiting for, as we finally will have the opportunity to showcase the depth and breadth of our early-stage research efforts, which have been operating behind the scenes and under the radar for nearly two years now. We are extremely excited to unveil multiple proprietary and cutting-edge technologies and platforms that we have assembled. We believe these acquired capabilities have the potential to work synergistically to transform the treatment landscape for serious and rare genetic diseases. As we have said before, we expect this early-stage research engine to generate at least six INDs by the end of 2025 while accounting for less than 20% of Insmed's overall spending. We can't wait to introduce you to what we've been working on and to some of the extremely talented people behind that work. If you are not able to join us in person in New York on Monday, we invite you to tune in to the live webcast or replay, both of which will be available on our website. Right after our Research Day, we will quickly turn our attention to the American Thoracic Society International Conference or ATS in the second half of May, where we will showcase new clinical, preclinical, and real-world data in 8 presentations across ARIKAYCE, brensocatib, and TPIP. This will include real-world ARIKAYCE and NTM lung disease data as well as subgroup analyses from the Phase II WILLOW study of brensocatib in bronchiectasis. In addition to presenting new data at ATS, we will also be engaging with the treating community on disease state awareness as we ramp up activities to support the potential launch of brensocatib in bronchiectasis. In the third quarter, we continue to expect to release the top-line efficacy and safety results from the ARISE trial for ARIKAYCE in patients with newly diagnosed or recurrent MAC lung infection who have not started antibiotics. As a reminder, the efficacy portion of this data set will include PRO or patient-reported outcome data, which is required by the FDA as well as sputum culture conversion measures, which is required by regulatory authorities in Japan and other ex-U.S. markets. This PRO continues to be a topic that comes up often in my conversations with all of you. So let me try to be as helpful as I can. The PRO measures we are using for ARISE and ENCORE consist of two separate scores. The first is focused on respiratory symptoms. These questions are taken from the respiratory domain of the quality of life bronchiectasis questionnaire. The second score is based on questions focused on fatigue-related symptoms and comes from another existing questionnaire called PROMIS Fatigue 7a. Both of these PROs have been validated in other respiratory diseases and shown to be sensitive to patient symptoms, which is why we have chosen to use them as a starting point in our trials. At this point, we don't know if all of the questions or just a subset of them will prove to be sensitive to changes in patients' symptoms in the MAC setting. The ARISE study, although not powered to show statistically significant differences between trial arms, is designed and sized appropriately to help us validate a respiratory PRO and a fatigue PRO for use in patients with MAC and to provide us with learnings about the questions that are most informative clinically. For example, if there is a specific respiratory-related question that shows no change in either trial arm even while some patients are reporting overall improvement in breathing symptoms, then we might conclude that the question is not especially meaningful. These types of analyses could result in certain questions being prioritized or deprioritized in how we ultimately calculate the PRO scores within the registration-enabling ENCORE study. This is just one example of many analyses that we will evaluate iteratively after the readout of ARISE in order to determine the most optimal set of respiratory and fatigue questions to be used in ENCORE. After this thorough analysis of the ARISE data is complete, we will then need to discuss our conclusions and obtain agreement with the FDA. So we do not anticipate being in a position to share any of these conclusions at the time of the ARISE top-line press release. So what are we expecting to show you when the ARISE data reads out? At a minimum, we expect to disclose the following data points. First, we will provide the change in patient scores from baseline to month seven, which is one month after ending treatment for both the quality of life bronchiectasis and the PROMIS Fatigue questionnaires in the active and control arms. Next, we will share data measuring how much of a change in the respiratory and fatigue PRO scores is associated with a meaningful improvement for patients in terms of their symptom severity. These data will be collected from the entire population of subjects enrolled into the ARISE study and will be used to validate whether these PRO questionnaires are responsive in this population. We will also disclose the proportion of subjects achieving culture conversion within each trial arm. Although we will be looking at the correlation between changes in PRO scores and culture conversion, showing that correlation in ARISE and ENCORE is not a requirement for FDA approval. Finally, we will provide information on the safety and tolerability profile observed in the trial. We plan to schedule a call for the day of the data release in order to discuss any questions you may have. While we're on the topic of ARIKAYCE, let me provide you with two additional updates on the program. I'm pleased to report that the second meeting of the Data Safety Monitoring Board or DSMB was held for ARIKAYCE, where it was recommended that both the ARISE and ENCORE trials continue as planned. As you know, the DSMB only reviews for safety. So this represents the most favorable possible outcome. Separately, we continue to monitor on a blended basis, blinded data, the discontinuation rate in the ARISE trial. Encouragingly, this rate has remained consistent with the 15% figure we disclosed earlier in the year, which is less than half of the rate we observed in the refractory setting. We view both of these updates as additional points of validation for the potential success of ARIKAYCE in the broader MAC setting. Finally, a brief update on our TPIP program. Earlier this week, the DSMB met to review the safety data from our ongoing Phase II PH-ILD and PAH trials and reported no safety concerns and a recommendation to continue the studies unmodified. This is once again the best possible outcome and an early positive sign for the program. Before I turn the call over to Sara to walk you through the financial performance for the quarter, let me take just a moment to discuss the ARIKAYCE commercial franchise. We continue to believe ARIKAYCE is a growth story, particularly in the U.S. and Japan. Despite the softness that is typical in the first quarter in the U.S. due to the impact of deductible and copay resets for Medicare patients, we saw sequential growth in the first quarter in U.S. ARIKAYCE sales for the first time since its initial launch. We see this as a sign of positive momentum for the U.S. moving forward. In Japan, as we've said before, we anticipate growth may be more weighted to the back half of '23, especially now that the nation has announced it is finally lifting its COVID restrictions. This is reported to begin next week on May 8. In closing, I'm proud of what Insmed has accomplished to date in the research lab, in the commercial markets and in the lives of our patients. I am excited by what the future holds as we approach a period when key clinical readouts will reshape Insmed, and I believe provide us with multiple potential pathways to transition into a sustainable biotechnology company with a future that is even more impressive than our past. I'll now turn the remarks to Sara to walk through our first quarter financials.

Thank you, Will, and good morning, everyone. I am pleased to share with you some of the details of Insmed's financial performance for the first quarter of 2023. We ended the quarter with $999 million in cash and cash equivalents and marketable securities. This represents a cash burn of approximately $150 million since year-end 2022. Although this level inferred is higher than we have seen historically, we do not expect it to continue into future quarters this year. While we do have some additional costs that are expected to recur, such as the incremental payments related to our newly issued debt, which accounted for approximately $12 million this quarter, the majority of the increase was specific to this quarter, such as our annual employee incentive compensation payouts. It continues to be our expectation that our current cash position will comfortably support our operations as we read out the upcoming string of important clinical catalysts from each of our pillars, leaving us with meaningful cash remaining on hand even after the ASPEN data readout in the second quarter of 2024. Looking at ARIKAYCE performance for the first quarter of 2023. Total net revenue for ARIKAYCE was $65.2 million, reflecting 23% growth year-over-year. On a regional basis, net revenue was $49.1 million in the U.S., $13.2 million in Japan and $3 million in Europe and Rest of World. As Will mentioned, despite the deductible and copay dynamics that always negatively impact U.S. sales in the first quarter, ARIKAYCE posted sequential growth in the U.S. compared to the fourth quarter of 2022 and was up 20% compared to the first quarter of last year. We are encouraged by the continued positive momentum we've seen in the U.S. in terms of enrollment forms and new patient starts on ARIKAYCE, which supports our belief that there is still more room for growth for the brand in its current indication. In Japan, ARIKAYCE grew 23% this quarter compared to the first quarter of 2022 despite our sales activities being negatively impacted due to persistent COVID restrictions in the country, which have led to revenue coming in slightly below the fourth quarter. As a parallel example, when the U.S. entered a period of strict COVID restrictions in 2020 and 2021, we saw a plateauing of ARIKAYCE revenues while those restrictions were in place before returning to growth as people resumed their normal activities. We are seeing the first part of that play out in Japan right now as the recent sequential performance of ARIKAYCE plateauing indicates. As a result, we expect ARIKAYCE revenues in Japan to remain range-bound through the second quarter when we expect these restrictions to begin to lift, setting up the second half of 2023 for a potential return to sequential growth for the territory. In addition, as we anticipated, next month, a one-time 9% price decline will go into effect in Japan. Encouragingly, this adjustment is on the low end of the expected range that we laid out on our last earnings call and adds to our confidence that ARIKAYCE will be able to achieve attractive growth in Japan in the second half. Finally, Europe continues to contribute modestly to global revenues in line with our expectations. Today, we are reiterating our 2023 revenue guidance for global revenue of ARIKAYCE of $285 million to $300 million, reflecting continued strong growth for the brand. Let me now turn to a few additional financial items from the first quarter. In the first quarter of 2023, our gross to net in the U.S. were approximately 18%. This is consistent with our internal expectations for the first quarter, which always had higher gross to nets in the remaining quarters of the year. On a full-year basis, we continue to expect our gross to nets will be in the mid-teen range, which is in line with our historical performance. Cost of product revenues for the first quarter of 2023 was $13.8 million or 21.2% of revenues on a percentage basis, which is also in line with prior year's first quarter. Turning to our GAAP operating expenses. In the first quarter of 2023, research and development expenses were $127.9 million, and SG&A expenses were $79.9 million, reflecting continued investment in both our early and mid- to late-stage pipelines as well as launch readiness activities for brensocatib. Importantly, R&D expenses this quarter included a noncash charge of $10.3 million related to the previously announced acquisition of Vertuis Bio. Excluding that charge, R&D expenses for the quarter would have been slightly down compared to the fourth quarter of 2022. In closing, Insmed continues to perform well with strong commercial execution across the geographies where we operate and a solid cash position that can support the business through the upcoming period of important clinical readouts and beyond. I'll now turn the call back to Will for closing remarks.

Thank you, Sara. I have never been more excited about the trajectory for Insmed. Our team is energized, inspired, and determined to meet the ambitious goals we have set out for ourselves. We believe we are well on our way to creating the next great biotechnology success story with multiple meaningful clinical catalysts poised to read out in the near term and an early-stage research engine that we can't wait to share with you in just four days. I would like to thank the patients who participate in our studies and the caregivers and families who support them as well as our shareholders, all of whom have placed their trust in us to deliver great things for patients with serious and rare diseases. We don't take that trust lightly, and we are committed to delivering on those promises. With that, I'd like to open the call to questions. Operator, can we take the first question, please?

Hello, can you hear me?

We can hear you now. Yes, thank you. Could we take the first question, please?

It's Nick on for Jessica. I had one on the baseline characteristics of ASPEN that you recently showed against WILLOW. I believe in the past that you've said positively you could possibly address patients with secondary diagnosis of asthma and COPD. Can you just provide a recap of that thinking? And does that thinking change at all with regard to the percent of patients in ASPEN with secondary diagnosis of asthma or COPD?

No. So I appreciate that question very much. I think one of the great hidden second-order potentials of brensocatib in bronchiectasis is this phenomenon of patients who currently have COPD or asthma as their primary diagnosis. They may well in a large percentage of cases actually also have bronchiectasis. As of right now, with nothing approved to treat bronchiectasis, there is little reason for physicians to diagnose it. Consequently, the literature suggests that there are a good number of these patients who are actually suffering from bronchiectasis as well or even potentially misdiagnosed with COPD when they actually have bronchiectasis. I want to be really clear on two points, though. The first is that we have estimated the addressable market at the time of launch to be approximately 1 million patients. Those are patients that are today diagnosed with bronchiectasis as their primary diagnosis and who are already symptomatic with exacerbations. So our medicine and the entry criteria for our trial perfectly align with this population in the U.S., Europe, and Japan. What we're talking about now is the potential to go beyond that 1 million patients to those patients who are comorbid with COPD and asthma, and in the event that our drug is approved for the treatment of bronchiectasis in patients who experience exacerbations, those patients who also have COPD or asthma and are experiencing exacerbations could well be on label for treatment of that condition. Let me pause just for a second and turn it over to Martina, who happens to be joining us today and can comment perhaps further on that and what we've seen in the data.

So we've seen that patients with COPD or with asthma as a secondary diagnosis are definitely an important patient group, and we see a strong overlap there with bronchiectasis. The numerical differences that you see between ASPEN and WILLOW don't really have any relevance from a clinical perspective. There's no reason to believe that there is less risk for exacerbation for these patients than there was before. And so from what we've seen in the enrollment here, it is really what we have anticipated.

And let me just finish with one other observation. If you look at the literature and just taking the COPD population in the U.S., it's estimated that somewhere between 4% and 54% of COPD patients also have bronchiectasis. There are 20 million people in the U.S. diagnosed with COPD. So when we talk about the secondary population that may be appropriate for treatment with this drug, it is an enormous additional opportunity. We need to begin the work of understanding which of these patients are actually bronchiectatic with exacerbations, and that starts with education. That is why our medical education effort is kicking off at the American Thoracic Society in just a couple of weeks' time.

Could you provide a quick follow-up regarding the baseline characteristics of ASPEN and WILLOW? In the past, you've mentioned that since ASPEN enrolled patients during COVID, there may have been a higher number of reliably exacerbating patients. How does that perspective align with the baseline characteristics we are currently observing?

So the single most important thing to realize is that the patients that are in this trial as those in the WILLOW trial are exacerbating patients. The entry criteria of the trial required that they have at least two or more exacerbations in the prior 12 months. The fact that we were able to identify those patients during a time when people were sequestered and exacerbation rates generally were going down in this population speaks to both the prevalence of this population and the very real clinical need. So what we see here is almost identical between WILLOW and ASPEN, and that is a very encouraging point. I know Martina may have some additional comments and thoughts.

Yes, it is very encouraging regarding the baseline characteristics we observe. If you haven't seen it, there's a publication from EMBARC that covers patient data from 2015 to 2022, which includes the pre-COVID era and the lockdown period. This data encompasses almost 17,000 patients. What we observe is consistent with what we see in ASPEN. A high burden of disease remains, with nearly 30% of these patients classified as frequent exacerbators, meaning they experienced at least three exacerbations. This aligns with data from before COVID, where 26% of these patients were hospitalized. Hospitalization rates are returning as reflected in discussions with investigators and experts, who report similar trends across Europe, Japan, and the U.S. The baseline characteristics we observe truly represent what the data indicates on a much larger scale for this patient population.

The next question comes from the line of Andrea Tan from Goldman Sachs.

Will, thanks for the color on ARISE. Recognize that regulatory agencies may not require this, but just given your conversations with physicians, how important do you think or are you hearing that it is to correlate the PRO score to culture conversion? Just curious if you think this is a direct link that they would need to see in order to gain maybe more comfort with the use of PROs?

I think the direct answer to that is any time you can get harmony between various measures, it makes it a much easier discussion. But the important point to understand here is that the physicians, the market access world, this is our experience with the refractory MAC as well, and indeed, the regulatory authorities outside of the U.S. are all centrally focused on the ability to eradicate the underlying infection. So that culture conversion rate in isolation is very powerful. We saw a very good impact in the refractory MAC population as we extend to all MAC NTM patients, continuing to see the ability to not only culture convert but to do so fast, more rapidly, and durably are 3 dimensions of culture conversion that we'll be looking at closely. To the extent that, that correlates in the abbreviated time frame we're going to be looking at with PRO symptoms is also a benefit. But I think because it's just a snapshot in time, it isn't necessarily controlling the interpretation of the elimination of the underlying bacteria. It may, in fact, take more time, for example, to manifest that correlation, and that would be fine. The important point is for approval, if the PRO shows an improving trend, then we are good in the U.S.; if we see a culture conversion trend, we're good in Japan and elsewhere. From a market access point of view, there'll be a lot of attention that will continue to be paid to culture conversion. So I hope that sort of delineates the different measures and how we're thinking about them.

The next question comes from the line of Judah Frommer from Credit Suisse.

A couple on ARIKAYCE. First, anything you can comment related to retreatment trend, I guess, specifically in the U.S. for ARIKAYCE that you're seeing in the refractory setting? And then hopping over to Japan. Can you give us just a reminder of where the price cut came in relative to internal expectations? And then maybe what the message is from the Japanese authorities on where they see peak ARIKAYCE sales, if there is any conclusion you can draw from the price cut?

So starting with the retreatment trend question in the U.S., we continue to see retreatment taking place. Of course, the challenge is how do you define retreatment in the context of physicians who use the drug differently? Sometimes they might give a patient a break for a period of time from using the drug. Some physicians like to extend the duration of treatment. Some will shorten the length of treatment but then retreat more aggressively. So there's a mix out there, and it makes it difficult to interpret this. But there's no doubt that the underlying trend is that we are seeing patients, much as we did in the Phase III trial, successfully culture converted durably so. Then after a period of time, some of them get reinfected with new infections and consequently are eligible for retreatment and on label. So we'll continue to monitor that. I think all of the trends that we're seeing in the U.S. right now are positive, and that's a notion we wanted to make sure we convey today. It really does feel like the U.S. is back. And as you know, the diagnosis rates in the U.S. were lower during the COVID era. I think there's probably a backlog of patients out there that are getting back to see physicians, and we'll be looking for those trends to manifest in the coming quarters. As we think about Japan, I'll ask Sara to address the price cut question in a second, but I will just take the issue of the message from the Japanese authorities. We were all just over in Japan, and I can tell you to a person from a KOL or from a patient or patient advocacy group point of view, there is universal support and enthusiasm for the use of our drug in this patient population. So I think that probably speaks to the reason why we ended up at the low end of the price cut range. I don't know, Sara, if you want to add any color?

During our last call, we indicated there would be a price reduction in the second quarter, estimated to be in the high single to mid-teens range. Today, we can confirm that the price cut will occur in June, marking the end of the second quarter, which is certainly a positive development. The reduction will be 9%, falling at the lower end of our initial estimate. As Will mentioned, this news provides us with significant encouragement regarding our performance thus far in Japan, which accounts for over 20% of our global revenue. The diagnosed rate in Japan is quite substantial, with 15,000 to 18,000 refractory patients, and we believe Japan has been and will continue to be a key contributor to our global revenue growth.

The next question comes from Jennifer Kim from Cantor Fitzgerald.

I have a few here. Maybe first to follow up on your comments on the second order potential for brensocatib, do you have any thoughts on how the role of your biologics like Dupixent might play into that opportunity given the recent data? And is that a tailwind or a headwind in your view?

So it's really important to understand that what we think we have with brensocatib, the DPP1 inhibitor, is unlocking the neutrophil-driven inflammation cascade, right, inhibiting that and blocking that from taking place is really the exploration of a new pathway. So when you think about complement at Alexion or you think about CFTR modulation at Vertex, these are pathways that unlock enormous potential because it is not simply a disease treatment; it's really understanding the biology of how a disease process begins and can be impacted. From that perspective, bronchiectasis, while the first and most logical and interesting arena for us to pursue, is just the beginning. Within bronchiectasis, there are sort of 2 layers of opportunity. One is those that are identified as exacerbating and diagnosed bronchiectatic patients today. Then as we discussed, those who are comorbid, perhaps with asthma or COPD, but perhaps with other conditions. There is tremendous overlap in bronchiectasis with NTM as well, and that's what makes this such a powerful second compound for us if it's approved and the trial is successful. We have all of the infrastructure already in place, all of the call points, all of the KOL relationships, it's all there. All we're going to do is expand it to be able to address this much larger population. But when we think about other drugs that are out there, what we've noticed is that there have been several that have tried to think about going after bronchiectasis and have dropped out. So we take note of Fasenra, we take note of others that have explored this possibility and stepped away. I think the picture here has only gotten stronger in the wake of the success of our trial. We know others who are targeting bronchiectasis have struggled with enrollment. Again, I think this speaks to both the enthusiasm among the treating community for our approach as well as the opportunity that is out there just among the patient need.

And just to remind folks on what we had in the prepared comments, this trial, over 1,700 patients, is 75% plus larger than any other Phase III program that has ever been done in bronchiectasis. We enrolled it in just around the same amount of time in the middle of a global respiratory pandemic. So those types of actions show the medical communities' embracement of the DPP1 pathway and what that could potentially do for patients. We're obviously all very eager for Q2 of '24 to see the data, but we're really encouraged. Martina?

Maybe one thing, and I think this is also regarding your question with Dupixent, is actually something that we think is supportive. It shows the importance on the relevance of pulmonary exacerbations in the clinical management. That is what you've seen in the Dupixent Phase III trial in patients with COPD. Now remember, with the COPD population predominantly, 70% of those populations are neutrophil-driven and about 30% have an eosinophilic-driven pattern. The important part is this is in a population that has a lot of comorbidities. Seeing that the focus is really on pulmonary exacerbations, which is the most important clinical impact for patients because of the lung damage that can occur over a period of time, we see that it's actually supportive.

Could you provide any insights on the enrollment rate? Specifically, how did the pace of enrollment change as the trial progressed? Did you notice an increase in enrollment towards the end of the trial as physicians and participants became more experienced, or is there anything else you can share on this topic?

Well, what I can tell you is that it followed a not atypical pattern of clinical trial enrollment. It takes a while to get this freight train going, if you will. But importantly, we had a couple of specific actions we took during the trial that did not have a surge perhaps as it otherwise might. That included the fact that we capped countries in terms of the number of patients that they could enroll, so that we ensured diversity of the patient population that we were drawing from. One of the lessons from prior trials is you don't want to over-enroll from any particular part of the world, and you want to track carefully the underlying population's behaviors in terms of the symptoms that you're trying to draw in. We think that has enhanced the probability of success of this trial. I would say that the final surge we made reference to in the first quarter was really a byproduct of people becoming aware that the trial was going to be closing down. When that happens, physicians who are excited about the medicine and patients who want to be in the trial suddenly find time in their calendar to come and see the physician to try and get into the trial before it closes. That accounts for a little bit of a surge at the end, but it wasn't that dramatic. We had a pretty good rate going along. We are super excited about the quality of the data we are collecting. You don't know until you unblind. But certainly, internally, we talk openly about how we feel this trial will not fail this drug. It is very well designed and very well executed, and we are looking forward to Q2 of next year.

The next question comes from the line of Leon Wang from Barclays.

Congrats on the quarter. So two from me, one from the commercial side. So for ARIKAYCE, can you provide any incremental color on previously, you mentioned that pulmonologists are working through a backlog of patients. So how does that compare this quarter against past quarters? And if you can characterize the level of influence that to ARIKAYCE sales? And the other question on the research side. So on the baseline characteristics in the WILLOW study, there were some additional parameters such as bronchiectasis severity score and FEV1. I was just wondering if you plan to show those in the future and how do those kind of trend compare to between ASPEN and WILLOW?

So on the backlog question, it's hard to know about this in a quantitative way. What I can share with you is that we are aware that there have been difficulties in getting appointments with pulmonologists and physicians among patients who are desiring to get in and have their condition examined, and that always can provide some headwinds to more uptake. What is important is that we have access to the physicians, patients are coming in, and this is continuing at a steady rate. All the preliminary indicators that we track are positive in a way that gives us some comfort that this is probably going to be sustained. But as I said before, it's something we'll track carefully. We'll see how the growth continues to evolve in the U.S. in that regard. On the research side, the baseline characteristics, there are some other things we're looking at. Of course, what we really want to get across from a headline point of view is that the ASPEN population and the WILLOW population look remarkably similar. This is what we wanted to see. It is, in fact, what we do see. We shared these data here. Certainly, there are other data that we are going to be looking at, but nothing we think that would send this in a different conclusion direction than the one we're providing today. Frankly, we intend to turn this into a publication. This is going to be a very important trial. We intend to share these data at the right time and make sure they're in a peer-reviewed journal. So you'll have the opportunity to examine this in great detail in the future.

The next question comes from Graig Suvannavejh from Mizuho Securities.

This is Richard on behalf of Graig Suvannavejh. Congratulations on the quarter. I have two questions. You mentioned two disclosures related to the scores for the ARIKAYCE ARISE study. Can you provide more context on what a positive outcome would look like? Additionally, could you offer a comparison for reference?

So as you're aware, no one has ever used any PRO in the NTM setting before. So it's a little difficult to provide a frame of reference for what good would look like. What we can say and what we've shared previously is that on a blended blinded basis, we have seen a separation among some of these measures that suggest that there is a pool of patients who are seeing significant change in the score. There is another pool on the same question that is not seeing a significant change. Now we don't know which population they are. They might be something other than what we would hope, which would be quite simply that those that are treated with ARIKAYCE are seeing the bigger change and those that are not are not. If that's the case, then we have a very clean and winning study. That degree of change historically for something like the quality of life bronchiectasis questionnaire is usually around an 8-point change; that's considered clinically meaningful. That has not been established in the NTM population yet. But if we were to use that as the benchmark, we're seeing that degree of change in these population pooling that I described earlier, and that is certainly, I would say, necessary but not sufficient at this stage. We won't know, of course, until we unblind. However, very much like many of our clinical trials, all of the parameters we're examining are trending positive. They're going the right way. We believe these trials have been well designed. We think we'll get the answers we need, and that will enable us to ensure that ENCORE is as successful as it can be.

And one other question on ARIKAYCE sales in Japan, specifically growth there. You mentioned that restrictions are going to be lifted on May 8. Just wondering what dynamics are there that give you confidence that sales will grow in the future and what we can expect there?

So again, it's hard to predict, of course, but what I can tell you is that the fundamental elements that make that market interesting to us are, as Sara mentioned, there's a high diagnosed population of refractory MAC patients. The patient support societies are very focused on bringing medicine to bear to help these patients. Indeed, the tuberculosis society in Japan renamed itself to the tuberculosis and NTM society, highlighting the importance of this population within the country of Japan. The physicians we spoke with, and as I mentioned, we were all just over there as an executive team not that long ago, were very enthusiastic about the use of ARIKAYCE for appropriate patients. I think we're just aware from our experience in the U.S. that COVID restrictions really matter; they have a big impact on the ability to get patients appropriate therapy. We can't see the physicians in all cases, and the hospitals have restrictions. It's hard for us to realize this right now because we've been out of it in the U.S. for a while. But Japan is only intending to lift its restrictions next Monday. We were there, and we were masked 24 hours a day—all that stuff we remember so unpleasantly from the past in the U.S. That should allow for the society to begin to open up patients to get to physicians, our people to be able to get to physicians, and that should result in, as Sara said, better performance in the second half of the year.

Our next question comes from the line of Stephen Willey from Stifel.

So I think in ASPEN, there's no upper limit on patient exacerbation. So I guess, have you been able to drill down into the proportion of patients who had annualized exacerbation rates that are much higher than 3? And I guess, would you expect this proportion to also be consistent with WILLOW, and I guess, maybe more importantly, balance between the 3 arms of ASPEN? Then I have a follow-up.

Yes, the answer to the first part of that question is, remember that from WILLOW, we made it a criteria for our allocation across the trial, patients who have 3 or more exacerbations to ensure that we did not have a concentration of hyper-exacerbating patients. Martina, I don't know if you want to comment on what we can say from what we know now.

There is no upper limit. We are still analyzing the data. Keep in mind that the ASPEN study has not concluded yet. What we expect is that there are several patients exceeding three exacerbations, and likely a significant number in the range of four to five. This situation probably represents the higher thresholds we observe regarding exacerbations at the time of entering the study.

And then, I guess, just following up on ARISE and the PRO narrative here. I think patients in this trial are also completing additional PRO instruments, I think St. George, EXACT. I know this is a mechanism for validating the respiratory portion of the QOL-B and PROMIS. But is this tertiary data something that we should expect to see at some point, or is that just intended to inform the conclusions that you hope to make here?

So the most important thing to understand is that the two PROs we've identified are the quality of life bronchiectasis questionnaire and the PROMIS Fatigue 7a questionnaire. Those will be the primary endpoints for the study that we will share with the FDA as we're evaluating the conclusions from ARISE and how they influence ENCORE. I don't know, Martina, if you want to comment on the others?

In CONVERT, we saw that we used the St. George questionnaire, but that is not really a questionnaire that is validated in the MAC population. We also didn't really see that it was well responded to in CONVERT. The reason being that this is the questionnaire mainly developed for obstructive pulmonary disease, patients like COPD, not as much for infectious disease questionnaire. So when you look at the QOL-B, the respiratory domain in the QOL-B, that is more reflective really of what the symptoms are and those are the ones that are relevant for patients. If you look at the PROMIS Fatigue 7a, that is an instrument that is symptom-specific, and it has been tested and validated in many disease areas, which is why we've chosen them. Those are really the 2 instruments that are relevant for the ARISE study.

So these additional challenges...

Steve, we lost you.

There may be aspects that could be interesting to look into from other data we collect. However, the key point is that we will be using QOL-B and PROMIS Fatigue to assess the drug's effects on patient-reported outcomes. We expect to have that data in the third quarter of this year from ARISE.

Our next question comes from Ritu Baral from TD Cowen.

You previously mentioned expecting about a 50% placebo response in ARISE for your primary endpoints. How comfortable are you in that placebo effect considering it can range a bit higher in the literature? What are your expectations around the placebo at this point? Also, what culture conversion rates and deltas are you expecting for ARISE?

The literature is a bit all over the place. Part of the reason for that is if you dig into the literature and get to know the KOLs the way we do, you begin to understand that most of that data comes from single-center studies. Those single centers also have a kind of incentive to ensure that the culture conversion rate is as high as it possibly can be, which incentivizes people to select that particular hospital. No disparagement, but it is sometimes a facet of these data sets that they will exclude patients from the denominator as they examine the percentage culture conversion rate. That is why when we sort of give our best guess, we say it's somewhere in the range of 50%. That is by no means controlling; I wouldn't be surprised to see it very different. Remember that this is the first study of its kind looking at patients in a controlled way to see what kind of culture conversion is actually achieved and how that compares to what we're going to be bringing forward. The data points on culture conversion that I think are particularly important are not only the overall conversion rate but also time to culture conversion. As you'll recall from the CONVERT study in refractory patients, we saw a remarkably rapid onset in culture conversion, which the FDA noted and was very complimentary. That, too, could serve as an important element in the assessment of the overall impact of the drug in these populations. Beyond that, it's tough to say what we'll see in the study. We're super excited to flip over the data card and share it with you all. As we said, we'll do a conference call to enable you to ask whatever questions once the data is in hand.

I wanted to follow up quickly. How do you think full approval of ARIKAYCE will impact your sales trends in relapsed refractory NTM?

Well, to be clear, when we think about the all NTM MAC market, which is what we would be in a position to command if the ENCORE study is successful and we find ourselves approved. In that world, we're talking about an addressable population in the U.S. that's well over 100,000 patients compared to somewhere in the 12,000 range now. And in Japan, that's almost 150,000 patients compared to upwards of 18,000 right now. While it will hopefully prevent some of the early diagnosed patients from becoming refractory, one of the noteworthy conclusions we heard from a KOL is that once a patient comes in with MAC NTM to their clinic, they never leave, meaning they're on and off with different treatments over time. We imagine we could enter a world where the addressable population gets much larger. As those patients fight off new infections over time, they would return to acute settings of use of ARIKAYCE for the treatment of those infections.

Our next question comes from Joseph Schwartz from SVB Securities.

I'm dialing in for Joe. We have two questions regarding ARISE. First, you mentioned that two existing PROs will be evaluated and then tailored based on their benefits in ARISE. However, it appears that the two PROs might be analyzed separately. So my question is, is there a possibility of combining elements from both existing PROs related to respiratory symptoms and fatigue to demonstrate benefit, or will you simply choose one and tailor your PRO based on which one shows better data? The second question is, I know you provided baseline characteristics for ASPEN and WILLOW. I'm curious if you will make baseline characteristics of patients in ARISE available before you report your data next quarter?

On the question about the two PROs, those are distinct. The data points from each will not be sort of handpicked and melded into a kind of a new PRO, if you will. They are intended to be viewed differently as instruments. It will be interesting to see if both have clear signs of benefit or only one. Of course, we only need to have one, in a way. This gives us 2 shots on goal with 2 separate PROs, which we think is a benefit to the trial design and provides some additional opportunity for interpretation. But once we have that data, we'll share it, and I'm sure there will be some interesting and hopefully clear conclusions from it. The baseline data on ARISE, to be honest, we haven't even considered that as something to share. I think we'll take that one offline and talk to the clinical team to see where we are and what we know. Obviously, the ASPEN study, I think why the baseline characteristics needed to be shared so early is that it is such a massive trial in terms of size. WILLOW was so clearly a success both statistically significant and in terms of its publication in the New England Journal that one would think that if you could have baseline characteristics similar to that and that trial, where we saw a 40% reduction in pulmonary exacerbations, given the way ASPEN is powered, that should provide encouragement that the likelihood is we could see a benefit, assuming that the populations behave the same. There would be no reason to think they wouldn't. In that light, this is incredibly encouraging data from our point of view.

The next question comes from Jason Zemansky from Bank of America.

One, if I may, on ASPEN. Looking at the baseline characteristics, apart from maybe the number of participants with asthma, every category seems fairly in line. Is there anything in here that would necessarily explain the blended rate you observed last quarter that I think it was 1.12 to 1.15, which was lower than the placebo rate in WILLOW at 1.37. Basically, is the placebo rate in ASPEN likely to be in line with WILLOW?

So I think that's one of the implications of the baseline characteristics. As Martina has pointed out to us with some degree of enthusiasm, with more than 3 exacerbations in the prior 12 months, those levels are comparable to WILLOW, and knowing that we have 2 exacerbations in the prior 12 months at the levels we saw in WILLOW, those are really the key. You need to have enough events to give the medicine the opportunity to show its benefit. We have every reason to be encouraged to think that this will result in the same kind of performance of the medicine in ASPEN that we saw in WILLOW. Hopefully, because we've stratified for the hyper-exacerbating patients, we won't get the concentration that we got in WILLOW that raised the question of whether we had hit a dose plateau in the WILLOW study. I want to remind you that success in ASPEN means either one of the doses work. If either one of them works, that will be what we take forward. That gives us the opportunity for approval of the first medicine in a population of over 1 million addressable patients at launch. It's a huge opportunity, unlocking and validating the potential of DPP1.

The next question comes from Liisa Bayko from Evercore.

One question I had was regarding the upcoming ARISE readout was time. If you have enough sort of time to see the improvement in any of these PROs, because it seems like that can obviously take some time to improve? The fact that you're seeing a separation on a blended blinded basis of different groups. Does that tell you that there is enough time, or is that still kind of a question?

I think until we unblinded data, we're never going to sleep easy. But the fact of the matter is that it is a very encouraging sign to see that separation. It is also consistent with our commercial experience in the field, where we know what happens to these patients when they start to take our drug, albeit in the refractory setting; those patients see symptomatic benefits, and we do know what those changes are. Over the last several years, as we've been out in the field, we've seen that take place. I think that informs our confidence that the 6-month treatment and 1-month off should be adequate to extract both quality of life bronchiectasis and PROMIS Fatigue benefit that we can interpret.

So did you do any beta testing of your ARISE kind of measures in the real-world setting in patients? Have you done any of that?

So the way the PRO gets developed is in conjunction with a specific group at the FDA. You have to do engagement with physicians, the FDA, and patients in a third-party controlled way, where you identify the questions that will manifest the symptoms that are of most importance to the patients. Once you have done that, and we use QOL-B and PROMIS Fatigue, you can bring those questionnaires forward with the FDA's blessing. In a sense, the beta test you're talking about is ARISE. If ARISE works, then we know it will work in ENCORE. I don't know, Martina, if you want to add any comment on that?

Maybe one comment. What we already completed and before ARISE started is the qualitative work. This is concept elicitation or cognitive interviews with patients that tell you whether these are the relevant symptoms that we're using in the PRO. Are these the ones that are most bothersome to them? We've done that for the QOL-B as well as for the PROMIS Fatigue, and we've shared that already with the FDA. The qualitative work is already done. Now with ARISE, we are seeing the quantitative work being completed, that will lead us to the validation, whether we know that this is the right PRO that is responsive for this patient population.

So what you're saying is just what you see clinically through your ARIKAYCE experiences; you should see–you expect to see improvements within six months?

Yes.

And then just a point of clarification for culture conversion. Are you going to be using those rigorous definitions you used in your Phase III study for the refractory setting?

Yes, it will be the same as from culture conversions, patients after two negative cultures. At month two is the first time you will see that the patient actually converted or is considered a converter.

So just two...

Our next question comes from Jeffrey Hung from Morgan Stanley.

This is Michael Riad on for Jeff Hung. More generally, could you just give us what regulatory concerns led the U.S. to prioritize the PRO versus Japan to focus on culture conversion? And then as a follow-up, with sensitivity for the 2 PROs still uncertain, is there a rationale where the use of culture conversion versus PRO could lead to different intent-to-treat populations, maybe like stratified by symptom severity?

The regulatory environment has influenced our current studies. In Japan, culture conversion is the main criterion for assessing a drug's effectiveness for this bacterial infection. In contrast, the FDA in the U.S. requires patients to demonstrate better feelings, functioning, or survival to establish a drug’s efficacy. This is a specific requirement of the FDA. Consequently, we received conditional approval based on culture conversion for the refractory population, while we have full approval in Europe and Japan for the same group. As we progress and analyze more data, we anticipate Japan will continue to prioritize culture conversion, while the U.S. will rely on patient-reported outcomes. It is worth noting that when ARIKAYCE was initially examined for this population, there was no data beyond our refractory Phase III study to predict the effects of this drug on a broader population with the disease. Regulatory authorities considered this a successful case study, as the drug has been adopted by physicians at a strong rate and has shown effective use without significant safety concerns emerging post-approval. This outcome is much more favorable compared to the uncertainties present during its original approval. It is unlikely we will find that one region has a different subpopulation than another, which is not a discussion we've had with regulatory authorities. The examination appears straightforward. We will analyze the data, report our findings, and engage in ongoing discussions with regulatory authorities.

With that, our Q&A session comes to an end. I'll now hand back to Will Lewis to continue.

Thanks everyone for joining us, and we hope to see you or have you join us next Monday, May 8, at 8 a.m. in New York City.

That brings us to the end of our call. Thank you for joining. You can now disconnect.