INSMED Inc (INSM) Q3 2026 Earnings Call Transcript

Hello, everyone. Thank you for joining us and welcome to the InsMed third quarter 2026 Financial Results Conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Please note that today's call will include forward-looking statements. These statements represent the company's judgment as of today and inherently involve risks and uncertainties that may cause actual results to differ materially from the projections discussed. Please refer to INSmed's most recent filings with the Securities and Exchange Commission for a full description of these risk factors. The information discussed on today's call is meant for the benefit of the investment community. It is not intended for promotional purposes, and it is not sufficient for prescribing decisions. Today's call will feature prepared remarks about INSMED's quarterly performance and financial position by Will Lewis, Chair and Chief Executive Officer, and Sarah Bonstein, Chief Financial Officer, respectively. After their remarks, they will be joined by Martina Flamer, Chief Medical Officer, for the Q&A session. I would now like to turn the call over to Will Lewis.

Good morning. Today's updates are intended to illustrate three overarching ideas. The first is that Insomed has evolved into a diversified biotechnology company that we believe can generate significant revenue and earnings with substantial growth over the next 10 years and beyond. In addition to exceeding a billion dollars in total company revenue year to date, I am pleased to announce that Brinsupri has already achieved blockbuster status, having generated more than a billion in revenue in its first four full quarters of launch. We believe we have only scratched the surface of the potential addressable patients who may benefit from this first ever approved foundational medicine in And bronchiectasis. While we have treated tens of thousands of patients in the first year, there remain hundreds of thousands of patients already diagnosed and waiting, with potentially millions more who may benefit. We have literally only just begun to see the benefit Brinsupi will bring to patients, and this has been achieved while continuing to deliver for patients with NTM with EraCase. As a result of this performance, we are raising our full-year 2026 guidance for both products. I am very proud of the work we have done, but there is always more we can improve upon. I continue to believe the growth road ahead for our medicines is very substantial. Looking ahead, we have forecasted our three lead respiratory assets to collectively grow at a compound annual growth rate of more than 20 percent over the next 10-plus years. In doing so, we expect our three lead respiratory assets to collectively exceed $14 billion in estimated peak sales, with room for potential upside. Brent Supri's peak sales estimate of more than $7 billion does not include the COPD and asthma comorbid patient populations, which we estimate number in the low single-digit millions of additional patients. We believe the future impact of Brent Supri on these additional patients who are on max dose treatments for their conditions but are still suffering damage from exacerbations could be significant. The consequent revenue generation from success in treating these patients could represent potentially as much as or even more than the current $7 billion peak sales estimate, and in a moment, I will speak to the initiatives we are deploying to tackle this important opportunity. TPIP is also expected to be a massive product, potentially hitting the market by the end of this decade with a peak sales estimate of more than $6 billion from four separate indications. Thus far, TPIP has distinguished itself within the prosenoid class with superior improvement in six-minute walk distance and PVR reduction, among other efficacy measures, as well as better safety and convenience with its clearly differentiated profile. We believe TPIP, a once-daily inhaled treprosynol prodrug, has the potential to unlock previously unknown clinical safety and convenience benefits through a validated mechanism of action. I want to be very clear that we remain fully prepared for any and all challenges brought by companies who try to stand in the way of patients potentially gaining access to this innovative therapy. Finally, we believe ERACASE, with an expanded label possible next year, has the potential to achieve more than a billion dollars in peak sales, with launch preparation in the U.S. and Japan well underway, assuming approvals in both territories. We believe that having a diversified portfolio of respiratory assets, each of which we believe have the potential to be a blockbuster, will enable us to deliver among the best revenue The second idea is that INSMED continues to demonstrate operational excellence. We measure operational excellence by our ability to deliver strong revenue performance while scaling commercial, clinical, and technical capabilities designed to meet our future. Today, operational excellence is seen in the continued advancement of our four Phase III TPIP trials, as well as the And PHILD, PAH, PPF, and IPF. It will continue to be demonstrated through the anticipated initiation of multiple Phase II programs over the next several years. Pending positive data from the Phase I Healthy Volunteer Study of INS-1033, we expect to initiate a Phase II study in rheumatoid arthritis in 2027, followed by ulcerative colitis and COPD. Also in 2027, we plan to begin a Phase II study of INS1148 in IPF, with plans to evaluate it in PPF and other inflammatory and fibrotic diseases thereafter. And the third idea is that our research engine continues to advance therapies that we believe have the potential to be first or best in class. In 2027, we expect to share data from our Phase I gene therapy programs in DMD and ALS. We are also reiterating our guidance to submit one to two INDs per year through the end of the decade. While there are many more programs under evaluation, we currently have line of sight to nine research programs from across our four research centers, all of which we believe could be first or best-in-class medicines. These programs have the potential to enter the clinic between now and 2029, and we believe several could qualify for accelerated approval. Beyond our internal pipeline, we continue to have an active business development effort in search of medicines like Brinsupri. They are very hard to find, but we believe they are out there. The takeaway should be that our combination of sustained commercial growth, operational excellence, and differentiated scientific innovation has the potential to set Insumet apart from its peers and position it at the forefront of high-performing biotechnology companies. Now let's take a closer look at Brinsupri. Brinsupri produced $400.1 million in revenue in the third quarter of 2026. This represents 29% sequential growth versus the prior quarter. On slide 7, you can see that Brinsupri revenues continue to far exceed those of other strong respiratory launches, including blockbusters like Dupixen, Despire, Acendra, and Winrevere, on a launch-aligned quarterly revenue basis. On August 12th, we celebrated Brinsupri's one-year anniversary of FDA approval and U.S. launch. With more than one year of commercial launch behind us, I am pleased to report that we remain excited by our performance relative to key internal launch benchmarks, and we continue to be comfortable with the historic direction we have provided on metrics like new patient starts, which we believe has the potential to expand as we move through 2027. As previously communicated, now that we are past the first full year of launch, we no longer plan to provide specific updates to each individual launch metric. We are extremely happy with our performance, and we are seeing particular strength in payer approval rates, reauthorization rates, persistency, and dispenses, and continued positive feedback from patients that say they feel better on Brinsupri. Across the board, we are happy with where we are and where we are going. We remain focused on continuously refining our commercial strategy and optimizing resource allocation to maximize the launch's potential. For example, we continue to sharpen our physician engagement strategy, prioritizing top-tier prescribers where we see the greatest potential for increased depth. We also look forward to launching our first branded TV campaign, which will contemplate our existing collection of unbranded campaigns and hopefully help patients with bronchiectasis understand that an approved once-daily oral treatment option may be right for them. We have determined that this type of commercial outreach usually has a very high return on investment, and we are excited for its launch next month. Given Brinsupri's consistent outperformance to date, we are raising our full-year 2026 revenue guidance range to $1.35 to $1.4 billion, which represents an increase to the low end of our previous guidance range by $100 million. Turning now to Japan. Last week, we officially launched Brinsupri 25-milligram tablets in Japan. Brinsupri is the first and only approved medicine for patients with bronchiectasis in Japan. Recall, Japan is home to approximately 150,000 patients currently diagnosed with bronchiectasis. In our Phase III Aspen study, Japanese patients demonstrated a substantially greater reduction in exacerbations, with a 68% reduction in annualized exacerbation rate compared to approximately 20% in the global study. In addition, Japanese patients demonstrated more than twice the improvement in lung function observed in the global study as measured by a change in FEV1 and FVC. While the biological reasons for this differentiation are not known, the difference is dramatic and underscores the potential of Brinsupri to make a profound difference in the lives of Japanese patients with bronchiectasis. As a result of this positive clinical impact on Japanese patients, we are also pleased to have secured very favorable pricing for Brinsupri in Japan. We expect Japan to be the main driver of any ex-U.S. Brinsupri sales. As a reminder, precedent from other specialty medicines launched in the U.S., Europe, and Japan suggests that collectively ex-U.S. markets typically represent approximately 10 to 15 percent of global peak sales. We are energized by the opportunity to serve Japanese patients, and we celebrate the hard work of our Japanese colleagues for reaching this important milestone while continuing to deliver strong air case performance over the last several years. Turning now to our efforts to generate real-world evidence for Brinsupri. Our medical and clinical teams have been hard at work building a robust body of long-term evidence to support Brinsupri. In August, the Bronchiectasis and NTM Association announced our collaboration on the first in disease observational study evaluating the real-world effectiveness of 10 and 25 milligrams of Brensocadib. The Brensocadib effectiveness, safety, and tolerability in bronchiectasis, or BEST-BE, study is designed to measure the incidence and frequency of pulmonary exacerbations in patients with non-cystic fibrosis bronchiectasis over a two-year period. The study will also track changes in patients' quality of life and the incidence and frequency of adverse events. The study plans to enroll 1,000 adults across 13 U.S. sites with key secondary measures including changes in lung function, time to next exacerbation, rate of severe exacerbations, and the presence of respiratory pathogens and NTM culture conversion. We believe the BEST-BE study will strengthen the long-term evidence base for Brinsupri in the U.S. and corroborate insights from our strategic collaboration with Embark in Europe. As a reminder, Embark is conducting a three-year open-label study of 25 milligrams of Brinsucatib in up to 3,000 patients across six European countries. The study will evaluate whether long-term treatment with Brensocadib can modify the course of bronchiectasis and whether earlier use of Brensocadib can further slow disease progression. We look forward to working with the bronchiectasis and NTM Association and EMBARC to translate real-world evidence into actionable strategies that improve the diagnosis and treatment of patients with bronchiectasis while further strengthening INSMED's leadership position in the space. In parallel with our Brinsupri real-world evidence generation efforts, a dedicated task force has been hard at work advancing initiatives that raise awareness of comorbid bronchiectasis among patients with COPD and asthma and help physicians make more appropriate treatment decisions. We believe this comorbid bronchiectasis opportunity from within the COPD and asthma populations represents one of INSMED's most significant potential value drivers, an underdiagnosed bronchiectasis population that could be several times larger than the approximately 500,000 patients diagnosed in the U.S. today. If even a single-digit percentage of the approximately 32 million patients with COPD or asthma in the U.S. are found to have undiagnosed bronchiectasis, the addressable population for Brinsupri could expand to several million patients. Importantly, this comorbid opportunity is not included in Brinsupri's current peak sales opportunity of more than $7 billion, which is why I previously mentioned that this peak sales estimate may have room for significant upside. You've previously heard us discuss the work at the American Thoracic Society is doing on the diagnosis front, as well as our launch of the Suspect BE Celebrity Awareness Campaign. As a reminder, ATS is evaluating how physicians identify bronchiectasis in clinical practice to help alter default diagnostic practices to specifically contemplate bronchiectasis. And the suspect BE campaign aims to encourage patients with COPD or asthma still experiencing symptoms to explore a further diagnosis with a pulmonologist. Today, I'm pleased to provide more details from our broader diagnosis strategy. Our initiatives are arranged into three strategic priorities. The first is the generation of evidence to establish the prevalence and scale of undiagnosed bronchiectasis in patients with COPD or asthma. The second is building strategic The third is educating healthcare providers to improve their understanding and identification of bronchiectasis in their patients. Our evidence generation initiatives began earlier this year with three leading COPD and asthma centers in the U.S. using retrospective imaging analyses to identify previously undiagnosed bronchiectasis and evaluate approaches to improve detection. Our goal is to change how bronchiectasis is identified in clinical practice by raising pulmonologists and radiologists' suspicion of the disease, encouraging the systematic evaluation of high-res CT scans for the presence of the disease, and strengthening hospital protocols to reinforce this process on behalf of patients. We believe these efforts can facilitate earlier diagnosis, improve disease management, and help patients make more informed decisions about their care. In addition to our evidence generation efforts, I'm excited to share that we are in the early stages of developing AI-powered diagnostic tools with strategic partners. These tools are intended to integrate into existing healthcare provider software to help identify bronchiectasis in patients' medical records and use predictive analytics to flag potential cases of bronchiectasis alongside other common pulmonary conditions like lung cancer, COPD, and asthma. To help physicians better detect bronchiectatic patients in their practices, we recently launched a disease educator program, deploying an initial team of 16 trained nurses across the U.S. These educators engage directly with pulmonologists where our data indicate there's a high concentration of patients with COPD and asthma. Their role is to help physicians recognize signs of underlying bronchiectasis in patients who may have the disease in addition to or instead of their current COPD or asthma diagnosis. As we evaluate the program's impact, we see an opportunity to expand this approach to additional U.S. sites. These are just a few of the initiatives we have invested in thus far. We remain incredibly excited about the insights these efforts will generate and the strategies we expect to implement as a result. Given that many of these insights are a derivative of lagging indicators, we anticipate sharing our initial findings in the middle of next year. Let me now turn to Eric Case. Commercially, Eric Case continues to deliver, generating $124.4 million in revenue in the third quarter of 2026, which represents 9% annual growth versus the prior year period. Following three-quarters of strong performance, we are raising our full-year 2026 error case revenue guidance range to $460 to $470 million, which represents an increase to the low end of our previous guidance range by $10 million. On the regulatory front, I'm delighted to report that in September, the FDA granted error case priority review for its supplemental new drug application for the treatment of MAC lung disease. The PDUFA target action date is set for January 28th, 2027. Importantly, the FDA indicated that it does not currently plan to convene an advisory committee meeting to discuss this application. This application's acceptance marks a pivotal moment in our ambition to change the treatment paradigm for MAC lung disease patients. If full approval is granted, ARCase could reach patients earlier in their disease progression, including those newly diagnosed or facing recurrent infections. In addition, InSumet plans to submit the Encore data to Japan's Pharmaceuticals and Medical Devices Agency in the fourth quarter of 2026 to support a potential label expansion in Japan. If both submissions are successful, we would expect to launch ErrorCase under an expanded label in the U.S. and Japan in the first half of 2027. Label expansions that include all patients with MAC lung disease in the U.S. and Japan could increase error cases addressable market in each region from approximately 15,000 patients today to more than 100,000 patients in the future. This represents a potential total addressable market of more than 200,000 patients across the U.S. and Japan. We look forward to engaging with the FDA and the PMDA throughout these review processes. Let me now turn to TPIP, which I believe will supercharge our growth as we close out this decade. Earlier this month, InsMed featured the global Phase III PALM clinical development program at the CHEST 2026 annual meeting. The PALM program, which is comprised of four Phase III studies in PHILD, PAH, PPF, and IPF, represents one of the broadest active clinical programs in the pulmonary space. If successful, TPIP, a once-daily inhaled treprosynol prodrug, could emerge as the prosenoid of choice for clinicians and patients. Let me provide an update on each study. The Palm ILD study of TPIP and PHILD continues to enroll ahead of expectations. After enrolling its first patient in December of last year, the study is now more than 35% enrolled, reflecting the medical community's enthusiasm for the strength of TPIP's clinical profile. Based on these enrollment trends, we expect to complete enrollment no later than the first half of 2028, less than two and a half years after initiation. In the PALM PAH study, we are pleased to announce that we have enrolled our first patient and believe continued enrollment will benefit from the strength of our 12-month open-label extension data of TPIP and PAH patients presented in July. In the third quarter, the PALM PPF study initiated its first site. The study remains on track to begin enrollment before the end of the year. And lastly, the Palm IPF study remains on track to be initiated in the first half of 2027. Turning now to the progress we're making in the rest of our pipeline. As we prepare for the long-term success of InsMed, we continue to invest in our earlier stage programs. In September, our second DPP1 candidate, INS1033, began actively recruiting patients in a Phase I healthy volunteer study. We expect data on pharmacokinetic exposure and blood NSP levels will be available next year. If these data are positive, we would progress into Phase II development in rheumatoid arthritis in 2027, followed by ulcerative colitis and COPD. Also in 2027, we plan to initiate a Phase II development program for INS-1148 in IPF, With plans to evaluate PPF and other diseases where inhibition of the pro-inflammatory and pro-fibrotic responses mediated by stem cell factor 248 may be beneficial. Within our gene therapy portfolio, both our DMD and ALS programs continue to progress on track. Our Phase I Ascend study of INS-1201 in DMD is now fully enrolled, with 12 pediatric patients across four cohorts. We are encouraged by the data we have seen to date. As a reminder, this study is evaluating two-dose levels across two pediatric age groups with three patients in each cohort. INS-1201 is designed for intrathecal delivery with the goal of minimizing liver exposure and delivering therapy directly to skeletal muscle and cardiac tissue. We look forward to sharing initial data from multiple cohorts within this program in 2027. Our phase one armor study of INS-1202 and ALS has progressed into cohort two and is actively enrolling patients with both sporadic and SOD-1 ALS. The study is expected to enroll up to 23 patients, three of which were already enrolled in cohort one, all with sporadic ALS and treated at the lowest dose. Cohort two is evaluating a We have the option to advance to cohort 3, which would also enroll sporadic and SOD1 patients and evaluate them at the highest dose. We expect to share initial data from this program in 2027. Before I turn the call over to Sarah, let me take a moment to publicly thank her for being a critical part of the team that brought us to this position of strength. As today's results demonstrate, INCMED sits in as strong a position today as it ever has, and Sarah has played an important role in getting us here through the securing of capital, the creation and management of our internal financial architecture, and the fielding and supporting of the collective inputs of the investment community. Sarah remains as well-regarded within INCMED as she does outside of it, and we wish her the best in her future endeavors. With that, let me turn the call over to Sarah, who will walk you through our financial results.

Thank you, Will. I'm pleased to share our third quarter, 2026 financial results and updated guidance. Brent Supri produced $400.1 million in revenue in the third quarter, up 29% sequentially from an exceptionally strong second quarter. Our case produced $124.4 million in revenue this quarter, representing 9% annual growth compared to the third quarter of 2025. Based on our strong performance to date, we are raising the low end of our revenue guidance for both our commercial products. For Brent Supri, full-year revenue guidance of $1.35 to $1.4 billion represents a $50 million raise to the midpoint of our previous guidance range And reflects the strong execution and performance we have delivered to date. For Aircase, full-year revenue guidance of $460 to $470 million reflects the continued strength and durability of the franchise, which is now in its ninth year since launch. We continue to view potential U.S. and Japan label expansions in 2027 as an important upside catalyst for Aircase. On Gross to Nets, we are reiterating our 2026 guidance ranges for Brent Supri of mid-to-high 20s and for Aircase of low-to-mid 20s. Both products have performed within these ranges to date. As a reminder, the IRA's small manufacturer provision has allowed us to delay the impact of covering catastrophic coverage costs for Medicare patients on Aircase over the last two years, Increasing only 1% each year in 2025 and 2026. According to the small manufacturer phase-in protocol, manufacturer coverage costs for INSMED will increase to 5% in 2027, which will expand ERACASE's gross to net. These phase-in increases will continue annually until the maximum 20% of catastrophic coverage costs are covered by INSMED in 2031. Moving now to the other relevant financial metrics for the third quarter, cost of product revenues was $78.2 million, or 14.9% of revenues, which is lower on a percentage basis than the 20.6% we saw in the third quarter of the prior year, reflecting the positive contribution of Brent Supri to the company's gross margin profile. As expected, combined research and Development and SG&A expenses increased 40% compared to the prior year period due to the necessary investments made to support the launch of Brent Supri and to continue to fund our pipeline. We continue to manage our investments docilely as Brent Supri scales, balancing the opportunity in front of us with disciplined resource allocation. Let me now spend a moment on our cash position and burn rate. As of the end of the third quarter, we had approximately $1.1 billion in cash, cash equivalents, and marketable securities. Combined with the continued strong performance of Brent Supri, this gives us a clear line of sight towards achieving cash flow positivity in 2027, even as we continue to be a growth story. Before we open the call to your questions, I want to take a moment to share my deep appreciation for my time at INSMED. When I joined INSMED nearly seven years ago, we were a single product company with enormous ambition. Today, we have transformed into a multi-product company on track for cash flow positivity next year. I leave with immense pride in what we have built together, and more importantly, in what this organization has accomplished for patients. I want to close with two thank yous. To the INS-Med team, every milestone, every patient reached, every obstacle we navigated together, that is the work that matters, and you are extraordinary. And to the financial community, Your conviction, your capital, and your willingness to believe in our mission made it possible to unlock this potential. Our financial foundation has never been stronger, thanks to your partnership. With that, we would now like to open the call to your question. Operator, may we please take the first question.

We will now begin the question and answer session. Please limit yourself to one question and rejoin the queue for any follow-up questions. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Gavin Clark-Gartner with Evercore ISI. Your line is now open. Please go ahead.

Hi, this is Yashon for Gavin. We understand you're not providing specific metrics, but directionally, we were wondering if you could speak to how discontinuation trends are evolving, especially as the earlier cohorts mature. Are you seeing them stabilize with the longer-term treatment, and are newer cohorts tracking similarly? Thank you.

Yeah, thanks for the question. I would tell you all of the metrics are positive from my point of view, and I would say in specific response to your question about that, that is doing better than expected. And as we look out, and I know I'm sure the questions will come in about new patient starts and everything else, while we gave guidance that after a year we were going to stop providing the specific metrics, I just want to be very clear that that is positive, and where we are going next year, I think that's going to continue to grow. So, across the board, I feel very good about where we are, and I would just say, you know, the things to look at are TRXs off the Symphony data. While October's not out yet, it's trending in the right way relative to what we see. And then, as you look at revenue, those are the two things that I think matter for a product that's now already a blockbuster in its first year of launch.

Thank you, guys. Your next question comes from the line of Jessica Fai with J.P. Morgan. Your line is now open. Please go ahead.

Hey, guys. Good morning. Congrats on the quarter. Thanks for taking my questions. Can we expect you to guide for Brin Supri in January, similar to what you've historically done for Era Case? And then on TPIP, congrats on the enrollment traction in the ILD trial. What timeframe are you circling for top-line data for that one and the PAH trial?

Yeah. Here, I'm just taking notes. So, you know, it's our usual practice to provide guidance if we're going to do it at the, you know, around your conference, frankly. And my expectation is that we would do that again, looking at next year for Brin Supri. As you ask. On TPIP, we indicate that the enrollment will be completed by the first half of 28, no later than that. And so the data would come with whatever time it takes to sort of, you know, make sure the database is in submission ready form and all that kind of stuff. It usually doesn't take that long. Our team is pretty good at flipping results. But once the full enrollment has taken place, then obviously they have to go through the length of the trial and then we lock the database and do the primary input. We'll get that done just as quickly as we can. PAH just got started. It's hard to give guidance on when we think that's going to happen. The thing I'm going to be watching there, much as we have in ILD, is, you know, how is the market of physicians responding to the data that we just put out? We're hopeful that PAH, because of the open-label data, will see acceleration in the enrollment timeline as ILD did. Now, obviously, PAH is more competitive in terms of the number of trials going on. But our data is really quite strong, and so we're pretty bullish on that. The ILD study, just to put it in a frame of reference relative to expectations, is about six months ahead of schedule.

Great. Thank you.

Your next question comes from the line of Faisal Kirshed with Jeffries. Your line is now open. Please go ahead.

Hey, guys. Thank you so much for taking the question. I understand you guys are not giving metrics. Rick, I just want to ask if you can speak at least qualitatively to what you are seeing and what investors should expect with respect to seasonal dynamics for this product. Do you see anything meaningful that you can comment on so far with regards to how the summer has shaped up compared to what you're seeing in the fall, for example, and also how that's kind of informing how you're thinking about the fourth quarter?

Yeah, you know, there's a lot of information around August and what was seen in Symphony data. You know, I think the Symphony data is pretty accurate, but not always, and I would just say I think it's too early for us to make commentary about seasonality. I don't think it's a big force, to be honest. We didn't really see it in the clinical trial setting to any great degree, but we're going to know a lot more once we see this cold and flu season kick in and what that results in. Do I think there's a theoretical possibility that that could raise awareness about exacerbations and get people into their pulmonologist? I do. I think that's not an unreasonable thing to consider might happen. I don't know how that's going to play out in Q4 or into the early part of next year, but I would not model in a lot on seasonality until we can make something more definitive by way of a statement. And I think that won't be until probably the spring of next year when we can look back at the totality of this time frame and comment on what we've seen. The trends within the launch are incredibly strong. I just want to be crystal clear about that. And the metrics that we provided, as I've said, new patient starts, I think you will see that grow through next year. I think you're going to see the other metrics that we've talked about in the past, things like persistency. See, they are way ahead of benchmarks, and so we feel fantastic about the way this launch is looking. If I could give one piece of insight, I think probably the most powerful force operating behind this launch is persistency. The patients who go on this drug, many of them feel better, and they are staying on the drug. And that is, you know, you see that in a lot of the public commentary by patients. It's just things are going very, very well.

That's awesome. Thank you, Will. And yeah, nice to have a little upset surprise at the Guard Symphony. So I appreciate the progress you guys are making. Thank you.

Your next question comes from the line of Andrea Newkirk with Goldman Sachs. Your line is now open. Please go ahead.

Good morning. Thanks for taking the question. And first, maybe Sarah, I'll just say thank you for your partnership and best of luck in your next leadership role. Will, just as you think about forward growth for Prinsupi, what are you seeing on the evolution of prescriber breadth versus depth, and what percentage would you estimate right now currently originate outside of those specialists and into the broader community pulmonology setting? And then if I could squeeze one quick one in for Sarah, just on the path to cash flow positivity, if you could help us think about modeling expenses over the next year-ish as the TPIP studies get underway, and what quarterly product revenue threshold across Brent Supri and Eric Case are you anticipating would be required to cross into operating cash flow break-even? Thanks so much.

So, on the, you know, doctor's breadth and depth, what I would say there is obviously we're pushing for both, but there's a particular emphasis on depth among the physicians who are already writing, and I would make a further distinction between some of the centers of excellence and some of those doctors who are, you know, in robust places but are not necessarily considered like National Jewish in terms of the prominence of their practice. At places like Like National Jewish, almost every patient coming in who has bronchiectasis is being offered for in Supri. The rate limiter there is scheduling patients. So the volume that we can get out of there has been great, as an example. There are others that are like that as well. But our breadth and depth opportunity, depth goes to the sort of groups behind those centers of excellence who have many patients and have now been, are now in a place where we can I would say, literally tens of thousands of patients have been put on this medicine. The AE profile is incredibly benign. The reports of patients feeling better, although we can't detail on that, are now ubiquitous. And the consequence of that is this medicine has a very favorable profile among the treating community. And I think, you know, one of the contributions of Samuel Butera, who has joined as our therapeutic area head for respiratory, has been to really direct a much more focused calling effort on certain pulmonology practices and generally to be more direct in the discussion about the benefit of this drug to patients in an appropriate and compliant way. What I mean by that is we now have ample evidence that going on this drug is going to provide benefit to patients beyond the clinical trial setting. The real-world evidence data is very strong behind this drug, and that's That's a message we need to be taking directly to physicians. So depth first on many of the bigger practices that lie below the Centers of Excellence, which are already almost maxed out, and then opportunity for breadth as well. And now over to Sarah to talk about the cash flow story.

Great. Thanks for the question and thanks for the kind words, Andrea. Always been a pleasure. A couple things on costs. While I obviously won't be providing specific quarterly revenue numbers, what I will say is your sort of percentage of revenue to SG&A that we continue to see has the ability to continue to improve and see better and increase margins there. The strong trajectory of the Brent Supri revenue, as you heard Will say in the prepared remarks and myself say, that continues it being blockbuster status already, and we continue to see that growth continue in subsequent years. Specifically on expenses on TPIP, what you saw in our financials this year is you actually saw some significant expenses in TPIP, and if you sort of go through the MD&A section In the queue, you'll see we had to invest in manufacturing to get ready for those four phase threes. And so while that investment we have now had, that will then flip to the clinical trial investment. So we feel really confident on our cash flow positivity next year, given the trajectory of our revenue, and we will invest appropriately as the science tells us to invest.

Your next question comes from the line of Ritu Boral with T.D. Cohen. Your line is now open. Please go ahead.

Good morning, guys, and congratulations on the performance this quarter for Brinsupri. I wanted to ask about the comorbid population, Will. You mentioned that campaigns will be underway and some big numbers, I think 200, sorry, and just some big numbers on comorbid, and it doesn't seem to align with at least our KOL's opinions of the undiagnosed, misdiagnosed comorbid population. Can you go into the specifics on awareness? And also, is that – do you continue to believe that that will start being a tailwind for Bryn Supri in 2027? Thanks.

Yeah, so just so I can clarify, when you say it doesn't comport with what you've heard from KOLs, what is the frame of reference? Just – I mean, is there anything I can react to specifically?

They just don't think there's that many of them that are comorbid or undiagnosed, at least with bronchiectasis, worth treating. So wondering, you know, what's planned to sort of raise awareness on those numbers?

Yeah, so, I mean, where I would start is with what the medical community has already produced. It is a wide range, so we can focus on the low end of the range to be conservative, but the literature right now suggests that between 4 and 64 percent of COPD patients, this is in published literature, are comorbid with bronchiectasis. And at the low end of that range, That would be 800,000 patients. So more than the existing diagnosed population. We think it's actually higher than that. Most of the KOLs we've spoken to, and it must be different from the folks you're speaking to, and these include people who are at centers of excellence for COPD and asthma, estimated it's in the 20% range, which is why we think it's single-digit millions. We're going to know with much more accuracy in the next, you know, call it year, as we do a lot of refined work going into centers of excellence, retroactively looking at past CT scans, finding evidence of bronchiectasis, et cetera. We hear a loud volume that there is a lot of comorbidity. So I'm interested in where that perspective is coming from. I'm sure it's somebody who has a point of view, but I think it's pretty overwhelming that these patients are out there. We had a get-together in Germany, and I'll ask Martina to talk in a moment about the experience, but we brought in some experts from the COPD and asthma world at the World Bronchiectasis Conference, and they flew in specifically to talk on this point. And probably the best evidence we have that it's a real issue, and there's a lot of it, is that they have already modified the gold guidelines for COPD that say if your patient is on max dose treatments and is still exacerbating, that these guidelines now recommend they get a high-res CT scan to look for bronchiectasis, and if it's there, to put them on Brinsupri. Martina, do you want to add anything?

Yeah, maybe, Ritu, this is speaking also about the importance of both of those physician and expert communities now to work together and look at their patient population, what might be driving the disease, and if patients continue to exacerbate, is it the underlying COPD, or is it truly bronchiectasis? And that importance of looking at what drives it and even asking that question is where now COPD and PE experts join forces. This is not only in Germany. This was the World Frontier Ectasis Conference where the first of those meetings took place. It also has taken place as a second meeting now at CHEST. And I think there is where we see the international community of those experts coming together. Remember, when there was no treatment for bronchiectasis, it was not on top of mind of the pulmonary community. Now there is, and we've seen this with other areas of diseases. It solicits a different thinking about what is it that drives my patient. You have to ask the question of if my patient is optimally treated for COPD, but they still exacerbate, what is it that's driving it? And then you, as a second question, have to look, is there a diagnosis that I might not have seen or I might have actually seen it, but I have not done something about it? And that's what the COPD and PE community is right now discussing. And we can expect that they will, in due time, also take a position on that. But we are still at the early beginnings of it, but it's well-recognized by the expert community, and it soon will be by the broader pulmonary community.

Yeah, and I would just add one other thought, which is when we talk about COPD and asthma comorbidity with bronchiectasis, we're literally looking for bronchiectasis in those populations, and that means there's no additional clinical trial work we have to do to treat these patients. Once diagnosed with bronchiectasis, they are then eligible and on-label for Brinsupri. This is to be distinguished from the COPD patients we are targeting with 1033. Assuming that the Phase I study next year goes as we expect it will, we will launch a Phase II study in COPD patients. Martina, do you want to talk a little bit about the profile of those patients and how they differ from patients who are comorbid with bronchiectasis?

Yeah. If we think about the COPD population, most of COPD is driven by neutrophils as an inflammatory factor. They take here a leading role in COPD. So what we're looking for with 1033 as a new TPP1 is to address the drivers of disease and the inflammation of patients with COPD. It is not the bronchiectasis component. It is COPD as a disease that is driven by neutrophils. This will be the focus and the indication that we pursue with 1033. The reason we are feeling that there is a strong component of that is because there is an overlap of those type of disease pathophysiologies. So, PEN33, having already been, from a mechanistic perspective, well-characterized, and with a good understanding about what Brinsupri does, we've known what the profiles are, it gives us already, I think, a better insight into how the development program goes. And this will be the focus, as Will mentioned, on COPD as a sustained-alone disease.

Great. Thank you.

Your next question comes from the line of Jason Zemansky with Bank of America. Jason, your line is now open. Please go ahead.

Good morning. Congrats on the great progress, and thanks for taking our question. Will, maybe to connect a few dots here, we wanted to get a sense of how patient mix is evolving now that you're essentially a year into the launch. Are you seeing new starts from the diagnosed high exacerbators who are waiting, or has there been a shift to those lower severe patients in earlier line use? And then, you know, what does this tell us about how much demand is still waiting to be treated, especially as you go deeper with existing prescribers? Thanks.

Yeah, I think we're going to encounter another leg of growth for this drug in this indication as physicians adjust their mindset from treating their most severe patients, which is how they typically start with a new medicine, particularly a new mechanism, and the experience of that being so positive, and they shift to those who are perhaps less severe, more moderate. That is a huge part of this market opportunity, and getting that urgency to treat and not waiting for the exacerbation to do the permanent damage it will do is an important part of the therapeutic specialist discussions with physicians to make sure, hey, look, this is a medicine that is working. Patients feel better on it in many, many occasions, and the consequence of that is you really should be thinking about this for, you know, your broader populations, and as that begins to tip, I think we're going to see this become a default medicine for this condition, as opposed to a patient comes in, they present with a certain profile, and then the physician takes a proactive, you know, move to prescribe it. I think you're going to see this become a very cornerstone element of any bronchiectasis patient. As one physician said to me, and it's a quote I repeat over and over again, when I was at one of these conferences, he slapped me on the shoulder and said, how does it feel to have the statin for the lungs? And I think that's where this is going to go. Thanks for the caller.

Your next question comes from the line of Joe Schwartz with Leerink Partners. Your line is now open. Please go ahead.

Hi, thanks. Will and team, congrats on the strong performance. Sarah, thank you for the excellent financial leadership. With branded marketing for Brunsupri, what are you assuming for the lift in new patient starts and the time it takes to see that response? And what return would you need to see before materially scaling that spend? And how are you measuring success of that initiative? Thanks.

Yeah, so, you know, direct-to-consumer advertising works, typically, and so I think it particularly is effective when there's already a groundwork that has been done and laid for a perception of the medicine is very positive in the minds of the physician community, and there's good track record of success already in place. So I think this will give us a better chance to get an even greater return. Typically, what you see if you were to do an AI search is somewhere in the 2 to 3x range return on capital. I think it could be higher than that in this case, but we'll see. We'll certainly be watching it very carefully. Do I expect it to lift demand? I do, and I think that will begin to show up in probably the first half of next year. We'll be tracking it very closely, and we are, to be clear, not pulling from one area of advertising and going into DTC. This is additive. It is also going to be something that isn't just singularly TV ads. We also have digital campaigns going on and other ways to vector in on both patients and physicians in an appropriate way. And so I think what you're going to see is a bigger push across the board, and I think that's going to in-air benefit to the brand for sure.

Your next question comes from the line of Maxwell Score with Morgan Stanley. Your line is now open. Please go ahead.

Great. Thank you very much for taking my question. Just following up on the comorbid COPD and asthma opportunity, identifying these patients seem to be one piece of the puzzle. Maybe you can elaborate a bit more on how AI is contributing to that effort. But on the other side, what has to change, or do you see any challenges regarding reimbursement? And then finally, could you narrow, potentially, when we can expect greater visibility into this opportunity? Thank you very much.

Sure. So the comorbid opportunity, I'm glad it's the subject of a lot of attention. I think this is really, without a question of a doubt, the biggest opportunity sitting within Insimate today, followed closely by TPIP, when it is, you know, assuming that Phase 3's work, as we have seen in Phase 2, what that opportunity represents. These two elements are going to drive growth at this company for the next decade. When we look at identifying these patients, yes, we are working with AI tools to try to accomplish that. It's a multilayer effort. We're going directly to some of the manufacturers of some of the machinery to try to see if it can get embedded within the software. We're talking to hospitals who set their rules for what happens when a patient comes in and gets a high-res CT scan to hopefully increase the possibility that they could be included as a default examination. Right now, if a radiologist is not asked to look for bronchiectasis, they may not identify it if it's there. So changing that in light of the fact that there's now a medicine to treat it makes total sense for a hospital. It'll improve their outcome performance scores in all likelihood. There's a lot of benefit and a lot of momentum behind this, but this is an oil tanker. It's going to take a little while to turn. Your question is, you know, how will that ultimately result in patients coming into the top of the funnel, as it were? That will begin to see, I think, in 27 and certainly in 28 and beyond, but this is a massive potential opportunity and one we intend to heavily resource. Do I think it's going to change reimbursement? We haven't seen that yet. We don't expect that that will be the case. The reality is that these patients are all on label. There's nothing that is a non-bronchiotatic patient in terms of a definitive diagnosis. And importantly, those patients as they come through right now, even for the insurance companies that do not have a deal with us, as it were, and we're going through on medical exception, our approval rates continue to be exceptionally high. So whether it's medical exception process or through what's required under their agreement with the agreements we've reached, the patients are getting approved, and this is out there as an understanding among physicians. So I don't anticipate that to be a friction point. If it gets to be so big that it becomes a friction point, that would be a welcome circumstance, I think, for everybody, most importantly the patients. And the visibility on when we're going to start to see it, as I said, sort of middle of next year, I think we're going to start to be able to quantify this with greater refinements, which I think will be helpful because it is quite a wide range right now. By any measure, we think it's a very substantial population that warrants the complete attention of a separate task force within the company, and that's how it's staffed. Great.

Thank you very much. Yes, congrats on the quarter again. Thank you.

Your next question comes from the line of Leonid Timoshev with RBC Capital Markets. Your line is now open. Please go ahead.

Hey, thanks for taking my question. I wanted to ask on the long-term studies that you're running, some of these strategic collaborations, I guess, in particular for the best study. What is your expectation there? Are you broadly expecting the exacerbation rate to mirror what you saw in the clinical trials, or is it because the patient population may be different, you might see a different rate? I guess what I'm getting at, is there any risk if patients don't perform as well to how physicians may view the drug? And then ultimately, is this something that you can get on label or into a publication that you can detail around? Thanks.

Certainly, we expect that all the data that gets out from these studies will be circulated in publications, and that always helps a brand or a medicine. I think that long-term evidence is going to be particularly important as we move into a competitive field where the arrival of another company's DPP-1, we presume, gets approved. We want to make sure that we have the ability to articulate the long-term benefit, including potentially, you know, modifying the disease, which is part of the intent behind the study in Europe. So there's a lot that's going to be learned from this. I don't anticipate different performance unless we have an over-enrolled section that happens to be Asian patients, where we would expect it to be, you know, more than three times more effective. But that's just sort of a quirky outcome from this medicine in those different populations, which we've now well-documented, as have others. So that's an important distinction, particularly as you look at the mix of competitive DPP-1 clinical trials that are run. You know, we have a 68 percent reduction in exacerbations in Japanese patients. So whatever else anyone brings forward, I would index to that reduction in exacerbations against their Asian population and then do a separate analysis for other patients because it affects people very, very differently. But these long-term studies are intended to tease out some of those kinds of elements and look at the benefit over many years to a large group of patients, and I think that's going to be nothing but a positive story.

Your next question comes from the line of Olivia Brayer with Cantor Fitzgerald. Your line is now open. Please go ahead.

Hi, good morning. Thank you for the question. I also wanted to give a quick thanks to Sarah for all her help and contributions over the year. On Bryn Supri, given how strong the launch has been, has anything changed in how you guys are thinking about the addressable patient population? Is $250,000 still the right number for us to be thinking about, or are you guys maybe starting to see that opportunity expand, maybe even from Brinsupri driving awareness and diagnosis since being on the market? And then also wanted to follow up on TPIP. Will, you mentioned earlier that enrollment in the ILD study is tracking ahead of expectations. Can you give us a sense of how the monthly enrollment pace has evolved now that you have a lot more sites activated? Thank you very much.

Sure. On Brinsupri, the addressable market is definitely growing. The last time we provided guidance, it was roughly 500 or 550,000 overall diagnosed non-CF bronchiectatic patients in the U.S. That was based on claims data, so it was very specific. We certainly believe that, and that was three years ago, so we certainly believe it's grown since then. What are the drivers of growth? One driver is just population growth. The second driver is clearly the arrival of the medicine always brings patients out of the woodwork because up until now, they've had nothing to treat them. We saw this with Eracase as well, and that launch was very strong as a consequence of that patient-finding exercise and the awareness that the medicine was finally available for these patients. And then the third growth driver here is clearly patients who are less severe historically but are now more aware of the exacerbations they're experiencing. They're doing a better job of reporting those exacerbations. People are more aware of exacerbations and looking for them. Physicians and offices are asking patients about them. That's going to shift some patients from the mild to moderate, less than two exacerbations in a given year, to a greater number. And so that will increase the population of patients that are two or more, which is where we've focused most of our effort. Remember that the label allows for any non-CF bronchiectatic patient to use the medicine. We've focused on the moderate to severe based on our interaction with key opinion leaders. We think those are the patients that are going to benefit the most out of the gate. But I do think this ultimately expands into broader populations. And I would expect that if all that takes place, you're going to see this population continue to grow at a healthy rate. And that is independent of the COPD and asthma comorbid patients we've talked about earlier. Your question on TPIP, I think, was the monthly enrollment pattern. We don't, that level of granularity, we're not going to get into, but I would just tell you that as time has gone on, and we saw this with our Phase II work, the arrival of new data on TPIP definitely catalyzes an increased enrollment pattern and response. And so this summer, when we put out the open-label data in PAH, that generates a noteworthy increase in interest and desire to enroll patients in both ILD and PAH. So we're excited about that. I think the ability for this medicine to be used once a day with essentially a single inhalation and to be able to provide higher levels of the medicine to titrate up to the patient's max tolerated dose all the way up to 1,280, which is a very significant increase over what's available today. It's convenient. It's more medicine. It's better side effects. You know, to date, what we've seen with this is nothing short of stunning, and I think that's going to continue, and as evidence of that gets circulated and physicians become more aware, it certainly accelerates their desire to get patients on the trial.

There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.