Thank you for your patience. My name is Caleb Baker, and I will be your conference operator today. I would like to welcome everyone to the Insmed Third Quarter 2023 Financial Results. I will now hand the call over to Bryan Dunn. Please proceed.

Thank you, Caleb. Good day everyone and welcome to today's conference call to discuss Insmed's third quarter 2023 financial results and provide a business update. I'm joined today by Will Lewis, Chair and Chief Executive Officer; and Sara Bonstein, Chief Financial Officer, who will each provide prepared remarks before we open it up for your questions. Before we start, please note that today's call will include forward-looking statements based on our 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 for more information concerning the risk factors that could affect the company. Our call today will also include blinded observations from our ongoing Phase II studies of TPIP. These observations may not be representative of results once the studies are completed, and all data is collected and analyzed. As a result, later interim data readouts and final data from these studies may be materially different from the observations described today, including with respect to efficacy, safety, and tolerability of TPIP. Finally, 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. I'll now turn the call over to Will Lewis for prepared remarks.

Thank you, Bryan. Good morning, everyone. This quarter has been remarkable for Insmed. We have achieved record-setting revenues for ARIKAYCE for the second consecutive quarter, with growth driven by both the U.S. and Japan. Year-over-year, revenues increased by 17% compared to the same quarter last year and by 19% for the first nine months of 2023 versus the same timeframe last year. It's noteworthy that this drug, which had one of the top 10 rare disease launches in history, continues to show significant year-over-year growth as we celebrate its 5-year anniversary since launch. In addition, this quarter, we announced the top-line results of our ARISE trial of ARIKAYCE for patients with newly diagnosed or recurrent MAC lung disease who have not yet started antibiotics. I’m proud to share that the results surpassed our expectations in every way. The ARISE trial established the quality of life bronchiectasis respiratory domain questionnaire as a valid patient-reported outcome measure for this patient group, meeting the main objective of the study. Additionally, it showed that when ARIKAYCE is added to a conventional drug regimen, it reliably enhances the likelihood of significant improvements in patient-reported outcome scores. The trial also revealed compelling benefits in culture conversion for patients receiving ARIKAYCE compared to the control group, including the number of patients who converted during the 6-month treatment and the speed and durability of the conversion one month post-treatment, which boosts our confidence in the ongoing ENCORE trial. We are also witnessing an increase in enrollment for ENCORE since the ARISE results were released, as it has generated considerable interest. We still expect to enroll 250 patients by the end of 2023 and plan to keep enrollment open into 2024, subject to further discussions with the FDA. While we believe that full approval will be granted based on ENCORE data, the strength of the ARISE results compels us to explore accelerated approval options with regulators. We anticipate that discussions regarding a potential filing pathway in the U.S. will begin in early next year following the validation of our PRO work by the FDA, a process that has commenced with our recent submission of PRO results for their review. As optimistic as we are about these developments for ARIKAYCE, we understand that many are focused on the forthcoming data from the Phase III ASPEN trial of brensocatib in bronchiectasis patients, which is set to read out in the second quarter of 2024. Over the past year, attention to bronchiectasis within the medical community has significantly increased. For example, at the recent CHEST Medical Conference, there was a long line extending across the convention center for a session dedicated to bronchiectasis. It's clear that our colleagues’ efforts in raising disease awareness are making an impact. Regarding ASPEN, we don’t have any significant updates, which is a positive sign as the study is on schedule and we are confident in the expected outcome. Our data monitoring committee has not flagged any safety concerns to date, and investigators report anecdotal improvements among patients, although they cannot distinguish between those receiving brensocatib or placebo. We are also excited to announce that we have opened several sites in our Phase IIb BIRCH trial of brensocatib in patients with chronic rhinosinusitis without nasal polyps and are close to randomizing our first patients. There are about 26 million patients affected by this condition in the U.S. alone, with no approved treatments currently available. While we will initially focus on the severe end of this patient population, estimated in the hundreds of thousands each year, we see this as a significant opportunity for brensocatib. Moving on to our TPIP program, we remain enthusiastic and impressed with the data from our two ongoing Phase II studies of TPIP in patients with PAH and PH-ILD. I want to share some of the blinded data that demonstrates our ability to safely increase the delivery of treprostinil to the lungs compared to existing therapies and early signs of positive patient impact. To provide context, Tyvaso, a different form of inhaled treprostinil, has a maximum labeled dose of 64 micrograms for its dry powder formulation, which is taken four times daily. This equates to a maximum of 256 micrograms of treprostinil per day. In our studies, we are increasing the dose up to a maximum of 640 micrograms of TPIP administered just once daily, providing 24-hour coverage. After excluding the weight of the 16-carbon chain in our formulation, this maximum dose delivers nearly 60% more treprostinil than Tyvaso at its maximum approved dosing schedule. In our PAH study, of the 24 patients who reached their week 5 visit, which is the last opportunity for dose increase, 83% successfully titrated to the maximum dose of 640 micrograms. In our PH-ILD study, 80% of the 10 patients reached the highest dose at week 5. As you consider these blinded data, keep in mind that our PAH and PH-ILD studies follow randomization ratios of 2:1 and 3:1 respectively, so about 67% of PAH patients and 75% of PH-ILD patients in these blinded results are likely receiving TPIP. Importantly, we have not observed any new or unexpected safety issues from either trial at this time. Adverse events have been in line with what is typically seen in PAH or PH-ILD patients and with the known effects of inhaled prostacyclin therapies. Most adverse events related to cough have been mild, and there have been no reports of throat irritation or pain, which are common reasons for limiting inhaled treprostinil dosages in practice. While these studies are ongoing and the safety profile could develop as we monitor more patients, we feel confident about what we’ve seen so far. Additionally, our Data Safety Monitoring Committee met recently and expressed no concerns regarding either trial. Alongside the ability to safely increase treprostinil delivery, we have also noted promising signs that the higher dose may be influencing vasodilation, with observed reductions in pulmonary vascular resistance, or PVR, which have, in some cases, been striking. It’s worth noting that these observations occurred in patients already on one or two other medications, making the reductions even more significant. In our PAH study, the average rate of PVR reduction among all 22 participants who completed the study was 21.5%. If we focus solely on the 64% of trial participants who experienced a decrease in PVR, the average reduction was 47%, with several patients achieving reductions exceeding 65%. Spontaneous PVR reductions are uncommon in PAH patients, and we believe this metric offers valuable insight into the potential benefits of administering considerably higher doses of treprostinil safely. That said, we do not identify which patients in the dataset are on TPIP, and this trial was not designed to compare therapies. Thus, we leave it to you to assess the significance of these data within the broader treatment landscape of PAH. Notably, across all clinical studies of existing marketed and investigational treatments of which we are aware, PVR percentage reductions in treated patients generally range from the low 10s to mid-30s, with most centered around the high teens to low 20s. When looking exclusively at inhaled treprostinil products, public domain data is limited, but a Phase III trial of oral treprostinil showed a 21.5% reduction in PVR from baseline after 24 weeks. Given our PVR reduction of 21.5% in our trial, including patients on placebo, achieved in just 16 weeks, you can understand our excitement about this program, which we consider a hidden gem for Insmed. Beyond the noteworthy PVR data, we are also seeing promising signs of activity in this trial. The average improvement in the six-minute walk distance across all 22 patients stands at 31 meters, and it reaches an average of 36 meters in those patients who also showed a reduction in PVR. Improvements in cardiac index, an important measure of heart efficiency, have also been noted. Impressively, the accomplishments I've shared may only be the beginning. The investigators conducting these TPIP studies and the key opinion leaders on the steering committee advocate for raising the maximum allowable dose in the studies beyond 640 micrograms. We plan to submit a protocol amendment to the FDA to permit patients to increase their dose up to a new ceiling of 1,280 micrograms once daily, based on the favorable safety record we've seen with most patients already achieving levels as high as 640 micrograms, along with the promising blinded data results. The potential for patients already experiencing meaningful PVR reductions at 640 micrograms is exciting. We believe this could position TPIP as a top-tier treatment option for these patients if these results translate to unblinded data. Before handing off to Sara, I want to take a moment to reflect on the bigger picture of Insmed and the unique position we currently occupy. We are witnessing strong performance of ARIKAYCE through our existing commercial platforms in the U.S., Japan, and E.U. The positive ARISE data support the possibility of ARIKAYCE becoming the standard of care in treating all patients with NTM MAC lung disease, potentially expanding its addressable patient population significantly. We are approaching the anticipated Phase III ASPEN results due in the second quarter of next year, and we are excited about the potential of this compound. If successful, we are prepared to leverage its breakthrough medicine status for rapid delivery to an eager patient community. Today, we also highlighted our steps toward initiating the BIRCH study of brensocatib in CRS without nasal polyps, showcasing the wide range of patients who may benefit from this new treatment mechanism aimed at addressing neutrophil-mediated diseases. Lastly, we discussed the encouraging developments in TPIP, including high dose achievements, a reassuring safety profile, and initial data on PVR reductions, which are all very promising. Adding the possibility of increasing the dose further and having a unique once-daily DPI formulation could lead to a significant new product addressing a major unmet medical need. A quick overview of these three programs reveals opportunities rarely available to a company at our stage of development. Collectively, this represents Insmed's commercial and late-stage respiratory portfolio, which we believe is unmatched in the small to mid-cap sector. We are on track to deliver first-in-class or best-in-class therapies that demonstrably benefit patients. Although we are not discussing our extensive pipeline today, it remains robust with over 30 identified preclinical programs in development that will only advance with substantial supporting data. We expect these pipeline efforts to constitute less than 20% of our total expenditure. This foundational work continues thoughtfully and systematically, generating numerous promising first-in-class or best-in-class therapies likely to have expedited commercialization paths if initial results validate our preclinical findings. Our strategy is to use financial gains from our initial pillars to fund further pipeline developments resulting from their commercial success, driving us towards financial stability and enabling the support of clinical and commercial efforts for these latter pipeline programs if they succeed. We are thrilled to announce our recent collaboration with Google Cloud, which aims to revolutionize the life sciences industry through generative artificial intelligence. We have identified multiple projects to target over the next 18 months, across drug discovery, development, commercialization, and support functions, which will significantly shorten drug development timelines and improve patient delivery. Google Cloud is our ideal partner for this endeavor, and we are excited about our pursuit of groundbreaking therapies with unprecedented speed and accuracy. We look forward to updating you as this initiative progresses. In summary, we believe we are meticulously building a powerful biotechnology company poised for transformation in a short timeframe as we work through various clinical, regulatory, and commercial milestones. It's an exciting time at Insmed for our team, shareholders, and most importantly, the patients we serve. I’ll now pass the call to Sara for our third-quarter financial review.

Thank you, Will, and good morning, everyone. I'm happy to share some of the details of Insmed's financial performance for the third quarter of 2023. We ended the quarter with approximately $786 million in cash, cash equivalents, and marketable securities. This represents a cash burn for the quarter of $132 million, which is consistent with our underlying cash burn in the second quarter. I want to point out that a large portion of our quarterly cash burn is directly related to brensocatib's development, including the cost inherent in conducting a very large Phase III trial as well as ongoing launch readiness activities, all of which we expect to be high-return on investment endeavors. We continue to believe that our current cash on hand can support our operations through the ASPEN results in the second quarter of 2024, leaving a meaningful amount of cash remaining on the balance sheet at that time. Now, turning to our commercial performance in the third quarter of 2023. Total net revenues for ARIKAYCE was $79.1 million, reflecting 17% growth year-over-year. For the second quarter in a row, this represents the strongest quarter for ARIKAYCE sales since its launch, up 2.4% compared to an already strong second quarter. On a regional basis, net revenue was $59.2 million in the U.S. and $16 million in Japan, both of which represent the highest quarterly sales for ARIKAYCE in those regions to date. This supports our belief that both of these regions continue to be in a growth phase. Additionally, sales in Europe in the third quarter were $3.8 million. Today, we are reiterating our full-year 2023 revenue guidance range of $295 million to $305 million, which represents expected year-over-year sales growth for the company in excess of 20%. In the U.S., ARIKAYCE delivered another very strong quarter with revenues up 20% compared to the prior year's third quarter. This quarter's results further support our belief that ARIKAYCE is still in a growth phase. In Japan, ARIKAYCE revenues grew 11% this quarter compared to the third quarter of last year despite the planned 9% price decrease, which went into effect this past June. Recall that we highlighted on our last quarterly call that the growth we had been expecting in Japan in the second half of this year started earlier than we had anticipated, making the second quarter very strong. Nevertheless, we saw sequential growth of 2.8% this quarter in Japan, which is an encouraging sign for continued growth in this region. Let me now turn to a few additional financial highlights. In the third quarter of 2023, our gross-to-net in the U.S. was approximately 14%, which is consistent with what we have normally seen in the third quarter. We continue to expect our gross-to-net to be in the mid-teen range for the full year, in line with our historical performance. The cost of product revenues for the third quarter of 2023 was $16.7 million or 21.1% of revenues, which is also relatively consistent with our past performance. Turning to our GAAP operating expenses. In the third quarter of 2023, research and development expenses were $109.1 million and SG&A expenses were $90.6 million, reflecting continued investment in both our early and mid- to late-stage pipelines as well as launch readiness activities for brensocatib. In closing, we are proud of Insmed's performance this quarter as we continue to deliver on our promises to our patients, shareholders, and other stakeholders. I'll now turn the call back to Will for closing remarks.

Thank you, Sara. Before we move to Q&A, I just want to take a brief moment to thank all of our investigators and clinical trial participants around the world. We could not achieve any of the bold ambitions embedded in our mission without their courage and commitment. I also want to thank our patients for providing us with the passion to keep pushing every day for life-changing innovations. To our investors for entrusting us with the financial fuel required to make those dreams a reality and our colleagues for their tireless efforts to execute on this vision. Thank you all. Now I'd like to open the call to questions. Operator, can we take the first question, please?

And your first question comes from the line of Andrea Tan with Goldman Sachs.

Two for me. First, Will, recognize it's early, but just wondering if you could characterize your level of confidence in the ARISE data supporting a path towards accelerated approval for ARIKAYCE.

Yes. So I think - as we mentioned, I think, a number of times, we still consider the base case assumption to be that the ENCORE data is the thing that will allow us to get the approval. But having said that, I think given the strength of the ARISE data, we'd be remiss if we didn't at least engage with the FDA and with Japan to see about their willingness to permit a faster pathway. And the way I think about this is, if you think about the U.S. Subpart H, if you have a validated surrogate that's reasonably likely to predict clinical benefit, then you have a case to at least present. And once the PRO is validated, which we expect will happen by roughly the end of this year, that would then enable us to go to the FDA and say, we've seen clear signs of culture conversion, which is linked to, as a surrogate to this clinical benefit of PRO improvement. And so that's the basis for the Subpart H request. They may quickly dismiss it or they may want to engage. We're not going to push this. If FDA shows interest, we will absolutely communicate that and move quickly to try to take advantage of it. In the case of Japan, on the one hand, the strength of the data on the culture conversion side, which is what they focus on, creates an opportunity to have that dialogue - on the other hand, as we've disclosed in the ARISE, we didn't have any Japanese patients. So that's a limitation. At the same time, the drug is approved in Japan. It's fully approved and it's widely used successfully. So I think there's a comfort there that may permit that to be bridged. But we'll see. I mean, I'm not - I don't want to be unrealistic about it, but I think it's hand on heart, a very reasonable thing to ask of both regulatory bodies.

And then just for TPIP, congrats on the disclosures today. But maybe one question here as you think about dose escalating beyond the 640. Just can you remind us what you've seen from the preclinical data that supports maybe your comfort in going higher and mechanistically, how are you thinking about the potential that you'll be coming up on a ceiling effect?

Yes. What we've seen so far is a dose response curve in the use of treprostinil where - and this is also clinical practice, the higher you go, the better. And so what is the enabling ability to go higher? Well, you push it as high as you can in clinical practice and the use of something like Tyvaso or other forms of treprostinil. What ends up happening is because of the peak of that drug because the drug diffuses through tissue so quickly, it creates things like throat pain, headache, tightness in the chest, those kinds of side effects. And the numbers that we presented today that more than 80% or higher are getting to the 640 dose, and these are disease patients, PAH and PH-ILB patients suggest that we've still got further to go. I think we're all not surprised but encouraged by what we've seen. Our formulation has a 16 carbon chain appended to the treprostinil molecule. That means when they breathe it in as a dry powder, it's inert. It's not an active drug. So the esterases in the lung cleave off that 16 carbon chain and result in a slow release in the lung of the active drug. So you sort of - that's why we think we're not seeing the throat pain and irritation that is commonly the dose-limiting side effect of other forms of treprostinil. We're able to get to 640. The PVR reductions here, I think, have, in some cases, been jaw-dropping. Again, I want to emphasize, we don't know who's on drug and who isn't, but at the same time, to see that and to know the background that we've seen with other drugs, it's really, I would say those discussions during KOL dialogue and with our steering committee have been very exciting. And so that's the reason why they have encouraged us to go higher. And in practice, that's what physicians do. They go to max tolerated dose on an individual patient basis. So I think everything we've seen so far gives us a lot of comfort that the safety is there, and we'll be cautious, but I'm not concerned about going above 640.

And your next question comes from the line of Jennifer Kim with Cantor.

Congrats on the quarter. I want to start off on TPIP. I think you talked about the 6-minute walk test. If my math is right, I think the patients who didn't show PVR improvement average 20-minute walk improvement and the ones who did show improvement showed an average of 36-minute walk improvement. First of all, is that math right? But also, can you sort of contextualize that data for us? And I recognize this is at 16 weeks.

Yes, it is challenging. When discussing the 6-minute walk test, it's important to be clear that the results can vary significantly. However, seeing an improvement of over 30 meters across all patients, and even more so among those with a reduction in pulmonary vascular resistance, is very promising. Considering the limitations of blended blinded data, we seek indications of changes that are unlikely to happen naturally in these severely ill patients, as decreases in pulmonary vascular resistance typically do not occur spontaneously. It’s quite noteworthy that around two-thirds of the patients in the trial, which was randomized 2:1, showed these reductions. The 6-minute walk test improvements in such small groups are quite remarkable. I understand that some public data led to the approval of one of the treprostinil forms with only a 20-meter improvement in the 6-minute walk test among treated patients, so the actual outcome here remains uncertain. I want to point out that there is usually a wide variation in the results of the 6-minute walk test across different settings, but it appears to be the best available metric to give the FDA confidence and facilitate approval. The reduction in pulmonary vascular resistance is exciting, and its link to improvements in the 6-minute walk test is also promising. We shared this information, and the key opinion leaders and steering committee are very enthusiastic about these findings. We share their excitement and look forward to what the future holds.

I know you mentioned that enrollment in ARIKAYCE has been increasing following the recent data. Can you provide more details on whether this momentum is continuing as we head into Q4? Additionally, how might this influence the number of patients you could enroll throughout 2024?

Look, I think what's striking about it is everyone knows NTM trials can be challenging to enroll, perhaps not as challenging as PAH, but they're pretty challenging. And so I would just compliment once again, our clinical operations team for producing the ARISE data on time. And on the basis of that strong data, we have seen a notable uptick in enrollment since then. Now that was given out at the beginning of September. So it's been a fairly short period of time, but it has remained, and it is significant. So we're hoping that will continue. It does give us encouragement that we think whenever we end up deciding to enroll in ENCORE, we'll be able to get there in a fairly efficient way, but we'll have to see if that continues to be the pattern. But I would say I'm very encouraged by what we've seen. And I'm not surprised. When I was at ERS walking through the hotel lobby in Italy, we had people coming up and stopping us and saying those ARISE data are really unbelievably good.

If I could add one more thing regarding the R&D expenses. I understand that in the 10-Q, the focus was on manufacturing and the reduction in associated costs. However, I'm curious about the changes in R&D expenses for your mid to late-stage programs. It seems there was a decrease quarter-over-quarter in the external expenses. Do you anticipate that these expenses will stabilize, or how should we view that over the next year?

Yes. Thanks, Jennifer, for the question. We obviously haven't provided forward-looking guidance, but what I can say is we continue to have investment in research and development to support all of our programs. Obviously, our early-stage efforts are less than 20% as we've committed to our ARIKAYCE TPIP and brensocatib are 80% plus from an overall investment perspective. The ARISE and ENCORE programs are obviously ongoing. ASPEN is ongoing; data readout Q2 of next year; and then TPIP, the Phase II is ongoing. And then obviously, the start-up costs for some of the launch readiness activities. Manufacturing costs tend to be lumpy in nature. So I wouldn't read more into manufacturing costs are lumpy in nature.

And your next question comes from Vamil Divan with Guggenheim Securities.

Maybe first on the TPIP side. I'm curious about the 20% of patients who are not reaching the highest dose across the two different groups. What’s preventing them from getting there? Is it just cough or something else? I assume it’s not throat irritation or pain. Additionally, some investors have been asking about reasonable placebo responses we should expect in PH and PH-ILB. Although we’ll gather more data going forward, any insights into how the placebo group may have performed with the information we have right now would be helpful.

I believe both trials are progressing very well. The feedback from the steering committee and the key opinion leaders is extremely positive, with some even referring to the drug as a category killer. I am very encouraged by what we've observed so far. It’s still early in the trials, and we want to emphasize that point. The 20% not reaching the maximum tolerated dose should not lead you to think there are significant adverse events. Some individuals have various reasons for not increasing their dose, which is not a large number, but those who are increasing are still achieving substantial levels. They may not reach 640 within the five-week cutoff, but they are still attaining high levels, often significantly exceeding what the best available Tyvaso dry powder can achieve. This gives us a positive outlook on all aspects of this trial. Specifically, concerning pulmonary vascular resistance, the normal level hovers around 2 Wood units, and we are observing some patients nearing that level. Given how this drug functions—providing 24-hour coverage with a single administration, akin to a continuous infusion of treprostinil via inhalation—this is not something currently attainable. If the results continue in this direction, we have every reason to believe this could be a game-changing compound. I hope that addresses your question.

Placebo response.

Yes. I'm hesitant to give background information on other meds. I know that public - that information is publicly available. So perhaps we can help you dig that up at a sidebar and get that around.

And your next question comes from the line of Ritu Baral with TD Cowen.

I wanted to - for my first question, pivot to ASPEN a little bit. Will, can you comment a little bit about how you're seeing the blinded data come in with respect to baseline event rates, exacerbation rates, and also the blended event rate for that trial? And how should we be thinking about the powering or any additional detail on powering an MCID that you could give us after your discussions at ERS?

Yes. So what I would say about the ASPEN trial is that it is continuing exactly as we would want it to. We start with the awareness that the inbound patients fit the profile of WILLOW almost perfectly. And so that is an encouraging base of information. As we released once before, the event rate hasn't really changed. So there's no real reason to update it. And so - I mean, it will move around a little bit, but the vast majority of this trial is now completed. And so what I would also say is that along the way, we are cleaning the data as we go. So we are in a very strong position with regard to the completion of the trial and being able to move to the production of the data and ultimately into what we hope will be a filing. So I don't know if there's a lot more to update in terms of blended blinded data we're seeing, except to say that the elements I look for are remaining consistent with what we've publicly stated before, and we continue to hear the anecdotes from physicians that they are seeing patients with notable improvements, although once again, we don't know whether they're on placebo or treatment. From a powering point of view, this study was powered for at least 90% to show a 30% reduction. In Phase II, we were 80% powered to show a 40% reduction, and we were stat-sig. So I think we are well powered. We have conservative assumptions behind event rates. The event rates we're seeing are consistent with WILLOW. I mean this study, it may be big multiples of the size of WILLOW and certainly bigger than anything else that's ever been done in the space before. But we like to say internally that this trial design will not fail the drug. It is always possible that the drug may have some unexpected results, but I do not think that we will be lacking for powering, and I expect that to convey a clear message at the time we unblind.

And then moving to TPIP and its tolerability. You mentioned that most of the cough was mild. Can you comment on the rate of moderate cough? Did you see any serious cough or severe cough?

Actually, cough is one of the points of great strength of this compound. And we did a ton of preclinical work on this. One of our physicians who is an expert in this area, Dick Chapman, really did some pioneering work for us and using gold standard models established that this compound was really able to be used without a lot of that sort of side effect profile. There are patients who experience cough, particularly with PH-ILD because cough is a feature of the disease. And anytime you're using a dry powder in that setting, you're going to expect some cough. But I don't - again, the message today should be heard that we're not seeing anything out of the ordinary for PAH or PH-ILD patients who are treated receiving treprostinil in other forms and in many ways, ours, to our mind, materially better.

And your next question comes from the line of Jeff Hung with Morgan Stanley.

This quarter, you reiterated your guidance, which at the midpoint would suggest that Q4 could be flat. Last year's fourth quarter ended up declining sequentially. So can you just talk about the factors that we should be keeping in mind for the rest of this year? And then how they compare to those from last year? And then I have a follow-up.

Yes. Sure. Happy to address that, Jeff. Thanks for the question. So we were really encouraged by the performance of ARIKAYCE this quarter, the second sequential quarter of substantial growth guidance, obviously tracks - over 20% growth year-over-year with us now getting to our 5th year anniversary. So again, really encouraged by the performance. Japan is, we have always said, is the second half of the year story. That growth started a little bit earlier than we expected, yet we still saw sequential growth this quarter in Japan, and we continue to have expectations for Japan to continue to be strong. Q4, as you can look at historical performance, Q4 in the U.S., gross to net usually is a little bit higher. So just some kind of seasonality there, if you just look at historical performance. But overall, we're really proud of the performance that ARIKAYCE has been able to do now entering its sixth year in the most mature territory.

And then can you talk about the brensocatib commercial readiness activities that you've undertaken so far? And what additional activities are still expected before the data readout next year?

Yes. So on the brenso front, the team has just done exceptional work. And this is medical education. It's preparing the market access story so that we can educate the market access world. I mean, we've got a lot of lessons learned from a first in disease launch that we're applying for bronchiectasis because, again, this like NTM is a disease that has nothing approved to treat it. So there's some upfront work we want to do. I think if you benchmark us against any best-in-class effort for drug launch, the efforts that we're making now and the maturity of those efforts and the success of those efforts as seen at recent congresses by the interest level of the medical community are really just top shelf. And they're very early. We are getting underway with this work well over a year in advance of when we expect we'd be filing. So that is a pretty good timeline to be out in front of all this. So I'm really happy with what we've done so far. I expect that we will continue this effort, and you will continue to see, at the congresses, the significant interest in bronchiectasis and potential treatments.

And I would just remind folks of the synergies between our commercial product ARIKAYCE and brensocatib as you think about the call and the relationships that we have already in the NTM community with the pulmonologists and ID docs. Many of those same prescribers would be assuming success on ASPEN. So just the synergies from an infrastructure perspective are tremendous.

And the efforts are underway and the hiring plan is already locked down. We know exactly what we're going to do and trigger it off of data down to the day.

And your next question comes from the line of Jason Zemansky with Bank of America.

Congrats on both the quarter and the data. In terms of TPIP, if I may, the response is, it sounds like there was a bit of a range here. Granted, it's still early, but I was hoping you could speculate a little bit on what are some of the key drivers here? I mean, is it dose exposure? Or do you think this is more patient-based in terms of, I don't know, where they are in their disease progression or fundamental level of lung esterases? What I'm trying to get at is, to what extent do you think that moving to higher doses will collectively push responses up?

The brief answer to the question is that the dose response curve for treprostinil is already well established. Therefore, increasing the dose is expected to yield a greater effect, as simple as that. Historically, the challenge has been the side effect profile. In its earlier approved forms, treprostinil has a very high peak that declines quickly, necessitating frequent redosing to maintain efficacy and benefit for patients. There is no nighttime coverage, and increasing the dosage raises that peak further, contributing to the troublesome side effect profile. What’s notable about our formulation is that the peak is significantly lower, even with a higher dosage. This slow-release formulation helps maintain effective levels for up to 24 hours, providing a sort of constant infusion of the drug. Over time and with a larger patient population, I believe this will help reduce variability. However, these patients often show a lot of variability. For instance, one patient we know may have their 6-minute walk test affected by a separate medical condition causing hip issues, which has nothing to do with the drug itself. This highlights the confounding factors present in treating very sick patients with terminal conditions, making it challenging to interpret results. This might explain the intense debate surrounding the predictive value of the 6-minute walk test in these patients. In contrast, I am confident that hemodynamic changes are directly linked to the drug’s effects. We are witnessing significant reductions in pulmonary vascular resistance, which we would expect based on dosage effects observed with other forms of treprostinil. If we find that those responding to treatment are aligned with those on the drug, a 47% reduction in pulmonary vascular resistance would be unprecedented and is very exciting, which has encouraged key opinion leaders and the steering committee.

And then maybe a quick one on ARIKAYCE. You highlighted that you're in a growth phase certainly looks like it. But what are some of the remaining levers out there in terms of the refractory setting? And how sustainable do you think they are?

Well, I think we continue to show growth. We think there are many more patients out there. So that's not our concern. The thing that people have to remember is that there is a variable utilization of the drug in terms of duration of use. And so in a sense, after patients have had success with the drug, there will come a time when they'll stop using it. And so you're replenishing that patient population on a regular basis as patients come off. Now there's a - we've noticed that there's a decent percentage of those patients who are coming back on because they get reinfected. But that's really the dynamic that's at play is that some of these patients are going to stop using the drug. And so it's a kind of acute chronic therapy, if that makes sense.

And your next question comes from the line of Joseph Schwartz with Leerink Partners.

We've heard that seasonality can play a role in promoting some bronchitis exacerbations. And so given you've looked at and shared some of your blended blinded exacerbation data for ASPEN, I was wondering if you have any insight you can share on the seasonality patterns for patients before and after they entered the study? And do you have any sense whether patients who had exacerbations historically during a certain time of the year have been able to live exacerbation-free during these difficult periods based on blinded data from ASPEN? And then I have a follow-up.

Yes. So the seasonality question is always a tricky one because it's not a clear pattern that is going to apply to everybody. And remember that the trial is designed with both north and south geographies and across the globe so that you get different seasons, if you will, and that necessarily will mute any effect of any one particular area if, in fact, it's on display. I think what gives us the greatest comfort and certainly, what we've heard from the KOLs is the fact that we require patients to have 2 or more exacerbations in order to get into the trial, documented in the last 12 months. And that means regardless of what seasonality they're experiencing, this is a 12-month study; you're going to see events, and that's what we need in order for the drug to show its effect. So from that perspective, I think we're pretty well insulated. That is true. We saw 2 or more exacerbations in the last 12 months, whether it was during the COVID lockdown or outside of the COVID lockdown where the rates were going up or down, we know our patients are exacerbating patients, and that's what we need in order to demonstrate the impact of the drug.

I would just add the baseline characteristics that we put out from WILLOW and ASPEN, just the consistency between those on exacerbations, number of exacerbations, history of COPD asthma, that also just gives us comfort on very similar patients and the strength of the WILLOW data. We all are very aware of and looking forward to turning over the ASPEN data card in Q2 of next year.

And then, just to add to that, as we think about these projects in the future, speaking to the KOLs, it appears that the primary reason for exacerbations is related to infection, so that will always loom large. If you think about the drivers of why the trials are observational studies, we have randomized CONTROL trials that are established, so we're excited that the learning will continue to occur. The attention, I think, is all being directed toward the data that we'll eventually produce, and we're excited about that.

And then your next question comes from the line of Leiyang Wang with Barclays.

And thanks for giving us a peek the TPIP data. And on safety, have you seen any GI issues in these patients? And any discontinuations that you've seen in either the PAH or PH-ILD patient population?

Nothing that is notable, but it didn't rise to the level of discussion among the medical colleagues. So I'm not aware of anything in that arena.

And one more question on safety as well. Given the differences in dosing, do you think the reason behind having 0 incidents of throat irritation is that more of a kind of driven by TPIP? Or could this also be a factor in that for drugs like Tyvaso, we've seen even the placebo arm there is around mid-teens throat irritation, but that's also dosed 4 times a day. So I'm just kind of curious on like what do you think is the factor driving the results on the safety side?

Yes. I think, as I mentioned earlier, I think the fact that this drug is inhaled as a dry powder in inert form and only once a day is the key to the safety profile we're seeing. You are correct. There are certainly placebo response rates. But as you say, if you're taking a placebo 4 times a day and you're affected by a disease that naturally causes cough already, it's not surprising that you would see some of that irritation. But we've seen remarkably low levels, I would say, and the throat pain that is sometimes indicated and can be a dose-limiting effect for treprostinil, we don't have that - we haven't seen that in a way that has limited our ability to go up. So I think, once again, the safety profile here is what is permitting us to ask to go to double the current MAX dose, which is already at 640, 60% higher than the highest dose of Tyvaso in dry powder form, and we're planning on going again double that. So it's really extraordinarily high levels. If you were going to see the similar kind of effect in terms of negative impact on the throat, you would have seen it by now in our opinion. But we'll continue to monitor it. And if we see that shift at all or as we go up in even higher doses, we encounter that, we'll share it. I think at this level, given the PVR reductions that we're seeing and assuming that they're correlated with drug use, we're really happy with the profile of this drug.

And your next question comes from the line of Graig Suvannavejh with Mizuho Securities.

Congrats on the quarter. Two questions, please. Maybe I'll ask a question actually on the earlier-stage pipeline. I just wanted to get an update maybe on your DMD program. I think the trial was supposed to start this year. It looks like maybe it's not starting this year. So maybe you could just review kind of the ongoing activities there. And then with that in mind, I didn't know if you had a view on Sarepta's Phase III EMBARK data and whether that data will inform how you think about the program that you're developing? And then my second question is really a financially oriented question. You've got cash well through the readout of ASPEN. And I just wanted to get a sense of assuming that you do get positive data, which I think we're all hoping that you'll see. Can you give us a sense of how you're thinking about any kind of next financing, what that might look like, whether you're thinking about equity debt, a mix of both? Or is there another alternative financing solution that you're considering?

In response to your first question about our research pillar, which is the fourth pillar, we currently have over 30 pre-IND programs underway. Within this area of gene therapy, we are actively pursuing about six programs, one of which is DMD. Each of these programs reflects our strategy of utilizing advanced technology to significantly enhance the effectiveness of these therapies for patients. Specifically for DMD, we're focusing on intrathecal delivery, which has required ongoing discussions with the agency to ensure their comfort with this method. This dialogue is productive, and it's not unexpected given the innovative nature of our approach. We plan to introduce deimmunized capsids and engage in RNA End-Joining, connecting multiple capsids to create longer proteins. We believe these advancements will greatly transform gene therapy and its impact on patients. As for our progress, we internally aim for our programs to reach Phase I/II trials, as that is when we know investor interest will increase. Although the current work is vital, it gains more relevance once it involves patients. We will keep you informed as we progress. Regarding Sarepta, we plan to carefully monitor their data, and while we hope for their success for the patients' sake, we believe our intrathecal method will provide greater benefits, as indicated by the data we've shared during our Research Day. Now, I will hand it over to Sara to discuss our cash position and future plans.

Sure. Thanks for the question, Graig. Just to remind you, less than 20% of our investment is in the early stage sector, which is very important, but we can manage that investment closely. On cash, we are fortunate to have over $0.75 billion on the balance sheet at the end of the quarter. We continue to unlock value here and have managed to outperform in a challenging macro market, which is encouraging. As mentioned, we're clear that we are not funded through profitability and will need to raise capital in the future. However, I feel privileged because we have numerous options available for enhancing our balance sheet when we choose to do so. Currently, our shareholder value stands at over $0.75 billion, providing us with significant flexibility moving forward.

And your next question comes from the line of Stephen Willey with Stifel.

This is Steve speaking. I hope everyone can hear me okay. Congratulations on the data and quarterly earnings. My question is primarily about the TPIP data that you always release. First, could you provide more clarity on the rationale for stopping dose titration at week 5? Do you anticipate a greater proportion of patients reaching the top dose? Lastly, regarding the protocol amendment, when do you expect it to be finalized? Will there be a plan to communicate this finalization through a press release or similar?

The study design aligns with other research in PAH and PH-ILD. There's no particular significance to the timing of the dose titration cutoff. I believe the clinical practice aims to elevate patients to the highest tolerable dose. This is the rationale behind the structure. In reality, physicians will likely take time to adjust the dose, and with increased dosing, as long as there are no adverse effects, benefits should continue to emerge. The prospect of increasing the dose further is promising. Regarding the protocol amendment, we will communicate its acceptance in our disclosures, but I don't anticipate a separate press release. This will likely be addressed during a quarterly call or other means. Additionally, the purpose of an earlier cutoff is to track patient outcomes at the maximum tolerated dose, ensuring they remain on that dose for a minimum of 11 weeks. However, I believe that in practice, the dose will be adjusted higher after just 5 weeks.

And there are no further questions at this time. Will Lewis, I will now turn it back over to you.

Great. Thank you all for joining us on this morning's call.

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