Insmed Incorporated (INSM) Earnings Call Transcript & Summary

Great. Well, good afternoon, everyone. Welcome to the 2:10 session here at the Goldman Sachs Global Healthcare Conference. My name is Graig Suvannavejh. I am the firm's European Biopharma Analyst, and I cover U.S. Biopharma as well. I've got the great pleasure of hosting today, Insmed for a fireside chat. It will be about 40 minutes or so. With me joining from the company is Will Lewis, Chairman and CEO of the company; as well as Sara Bonstein, who's Chief Financial Officer. So Will, great to see you again. I wish we were doing this out in Southern California as we did last year, but hopefully, we'll be able to get to do this back out there this time next year.

I know we're all missing that experience.

Thank you again for joining us. Maybe from a bigger-picture perspective, just to start off with, for those who may not be as familiar with Insmed story, perhaps give us a sense of who Insmed is, what you're focused on and, relative to where we did this live last year, where the company has basically progressed in a year's time?

I appreciate that question because a lot has happened in the last year. I think starting off with the successful launch of our first approved product, which is ARIKAYCE for the treatment of refractory MAC NTM, or Nontuberculous Mycobacterial, lung disease. This is a bacterial infection that is caused by pathogens that are ubiquitous in the environment. It's -- we're all getting a little bit of a taste of what it is like to have that disease right now with COVID-19 because everywhere we go, proximity to certain settings, we are afraid of getting this virus. And patients with refractory NTM live with that experience every day of their lives. These infections once you get them, are very difficult to eradicate and our drug is, in fact, the first approved product to help treat this condition. So a year ago today, we were in the middle of the first part of our launch for what would have been 2 quarters under our belt. At the time, I think Wall Street, overall, thought we were going to do $40 million or $50 million in the first year. We ended up doing $136.5 million. So it was really a banner launch, one of the top 10 non-oncology orphan launches in history. And so real kudos to the entire commercial team for that accomplishment. It sets a fantastic groundwork because in the backdrop, behind that, we are also advancing a product, we call, brensocatib or INS1007, which recently and, I think, quite unexpectedly produced stellar Phase II data in what we call the WILLOW study. I'm sure we'll talk more about that. But that's a game changer for this company in terms of what it means and then finally, we have coming behind that INS1009 or treprostinil palmitil, which is the treatment of pulmonary -- for pulmonary arterial hypertension. All 3 of these programs have advanced dramatically, I would say, without exaggeration in a year. And so I think we find ourselves in probably the strongest position this company has ever been in the 8 years I've been here.

Great. Well, thanks for providing that high-level kind of perspective of where the company is. Maybe we can start with your on-market product, ARIKAYCE. Clearly, had a great first full year, as you just mentioned, in terms of sales and revenue. Earlier this year, given COVID-19, the company decided it was in the best interest to suspend guidance just on the uncertainty around sales, but before we maybe tackle that, maybe we can just talk about, again, what the unique attributes of ARIKAYCE are and what the potential is beyond the initial indication where you're approved for it?

Yes. So ARIKAYCE is a liposomally encapsulated known antibiotic, which is very potent and very effective but in its IV formulation, is very detrimental to patients. It causes permanent hearing loss, kidney damage, we're talking about the aminoglycoside amikacin. Combining that liposomally encapsulated version of amikacin with what we call our PULMOVANCE technology and a dedicated ultrasonic nebulizer, this drug-device combination effectively delivers the drug to the site of the infection in the lung. And in this way, both by virtue of its direct application and the technology' promotion of uptake of the drug to the site of the infection, which is inside the lungs' macrophage we get very good efficacy and a very workable safety profile relative to IV amikacin. And that has helped to explain why the uptake has been so dramatic. As I said before, first ever approved product in this space. So we have it to ourselves and a lot of opportunity to go with this initial starting point into broader label expansion, which includes front line use. So we talk about refractory MAC, that's 12,000 to 17,000 patients in the U.S. Frontline is more than 5x that size. That study will begin at the end of this year. We also intend and are currently underway, seeking approval in Europe and Japan for refractory approval. And this frontline study I mentioned a moment ago will also be adequate for approval, we believe, in both of those territories as well. So if we were to take the first question about where were we a year ago versus where will we be a year from now, a year from now, I would expect approval in Europe and approval in Japan, assuming things go well, and that would permit us to launch in both of those territories as well and then a couple of years down the road, being able to launch in all of those areas in frontline indication.

Great. That's helpful for setting the stage, and we'll revisit some of these indications and the potential geographic expansion in a bit. Maybe if you could tell us, kind of, as there are still a fair number of investors who are watching the U.S. trajectory and given, again, the backdrop of a very, very successful first full year of product launch. Where is ARIKAYCE today? And obviously, given the uncertainty of COVID and whether it's truly receding, whether it's going to reemerge again? What can you say about ARIKAYCE today?

Yes. The first quarter, as people saw, obviously, came down substantially to reflect I think a combination of both the arrival of COVID-19, but also we had a little bit of a delay relating to the donut hole reset, which is not uncommon for specialty products, but it's worth calling out. As we go into the second quarter, what we saw was just a complete shutdown in some areas, as we all know, in terms of how hospitals were focusing and prioritizing their time, turning attention to getting ready for the expected influx of COVID-19 patients. We call on pulmonologists and infectious disease specialists. So we were literally at ground zero. It's one of the reasons why we pulled our guidance early. We pulled our sales force early and basically communicated to everybody that this is going to be quite a serious situation, and it's going to take some time to sort out. As we move through the second quarter, what we've seen is a shift from that almost reactionary panic to the impending arrival of COVID-19 to a greater understanding of pretty significant regional variability around -- across the country and, indeed, already to the point now where we have, as of June 1, just started to return some of our sales force to the community. So we have -- on a voluntary basis, therapeutic specialists can go back and begin to call on physicians who are prepared to receive therapeutic specialists. Obviously, lots of personal protective equipment is involved and protocols appropriate for the hospitals and physicians' offices. But I think it speaks to 2 things. Number one, they want to talk to our specialists. These are very well informed people who are extremely helpful in their work with the physician community. I think that's been widely recognized and acknowledged. And I think the other is, these are patients that need this treatment. This is not an optional disease that they're walking around with. And they and the physician community are very keen to get back engaged in being able to get the appropriate treatment to these patients.

So it sounds as if, at least part of your sales force is getting back out there. Is your anticipation or expectation -- if you can comment around perhaps in the second half of the year, are you assuming, kind of in your base case, that we are beginning to see a normalization of some sort back to where the business used to be? Or how are you thinking about that right now?

Yes. I think it's cross currents. As I said, there was a regional variability that I think we need to see clarify itself. Certain parts of the country are very much getting back to normal others are still in a defensive mode, I would say. I think it's also fair to say that we don't yet know what's going to happen in the second half of the year. We don't want to get too far over our skis because, obviously, if there's a COVID-19 2.0 or whatever you want to call it, if we get a return, that could have a significant impact in the ability to reach these physicians and patients. Overall, what we've said is that it's the new patient starts that have been hit the hardest as a consequence of this. A counter for us is that the adherence rate continues to be good because these patients want to have the best possible pulmonary health they can as they face the potential threat of additional pulmonary insult in the form of COVID-19. So I think physicians' index of suspicion is raised, I think physicians' inclination to treat patients, get them into the best possible respiratory health, all those things are going to inure benefit to our patients for sure. And I think we will be ready to support that. We've seen some pretty positive trends in terms of the application of telemedicine, and I think that's going to continue. It's not a complete answer. As I said, our new patient starts are going to be an expected impact to the downside because of all of this shutdown of pulmonology to a regular way business in favor of COVID-19. But that, I think that shift is largely behind us now. People are now beginning to engage again. And so I think Q2 can be fairly described as a case study of cross currents. But as we get to the second half of the year, I'm hopeful that if we don't see a 2.0, we will see the return to the growth profile that we enjoyed in the past. Certainly, that's our hope.

Okay. I know that you've got a lot of excitement around brensocatib, but if I'll just ask maybe just a few more questions on ARIKAYCE. I think I get a lot of questions from investors around kind of -- the product has been on the market for 6 quarters now, and it seems that there still is a patient opportunity that's available for ARIKAYCE. And perhaps if you could just provide a perspective of what is needed to access those patients? Is it really education of docs? Is it trying to identify the patients? Is it some element of market access? What are the key things to really start driving increased utilization beyond, obviously, the COVID-19 impact that we're -- we just described?

Well, if you were to add up all of the data that we've given out in the past and sort of look at where we are now, we probably have roughly 2,000 physicians and 3,000 patients who've accessed -- had a prescription. And I think what's interesting about that is we size the addressable market at 12,000 to 17,000, and we call on about 5,000 physicians. So there's a lot of room left to be pursued here. And I think forces that will help that are not just the backdrop of respiratory health and the attention that's being given to it in the wake of COVID-19, but also the tactical and important elements of a publication that came out earlier this year that talks about how physicians can use our drug more effectively and manage adverse event profiles. That peer-reviewed publication, I think, is going to be very positive and well received. We are expecting almost perennially, it seems now the arrival of the new guidelines, but I think it's understandable. They were imminent. At the beginning of the year, COVID-19 hit. And so the publications that we're considering, putting the guidelines out, obviously, were suddenly flooded with important study work on COVID-19 that they wanted to get in circulation. I think now that there's a better understanding of that, the time is really now for the arrival of those guidelines. And if that were to happen, the timing is sort of perfect because as physicians turn their attention to respiratory health, they want those guidelines, they want an understanding of what's the best practice. And we know from a webinar that took place with the European Respiratory Society that we are going to be included in the guidelines, at least as was represented by a physician on that webinar. He kind of let the cat out of the bag and said, "You can expect the guidelines to include ARIKAYCE for refractory patients." So we're very excited about that. I want to see it in print, but it seems like it's around the corner. And that represents another important driver for a potential physician use and adoption of ARIKAYCE.

You've talked about the frontline opportunity and how that could meaningfully expand the patient population, so I think that gives us a sense of kind of what that could mean for ARIKAYCE. There's probably less appreciation for kind of ex U.S. and how to think about Europe relative to Japan. So maybe just a quick word on how that could look like.

Yes. So I think it's important when we talk about the international opportunity, Europe, I'm less focused on and enthused about because the addressable market there is much smaller. As it's currently represented, there are about 1,400 total refractory MAC patients in Europe. This is as of 2018, and it's what's in the literature. Now we think that the market is probably larger than that. It's understated. But I also lived in Europe for 5 years, and so I'm deeply cautious about how large and how quickly the commercial opportunity can arrive there. I will say that I think our team over there is second to none, and they've done an exceptional work in laying the groundwork. So I'm hopeful, but cautious. Japan is a different story. Japan has more diagnosed refractory MAC patients than the U.S. and the overall NTM population there reaches almost 150,000, and that's as of 2018. They do an annual X-ray, and they look for this disease. And, consequently, they have found it. And I think these -- this is an island nation with elderly patients who tend to have a history of smoking or other pulmonary conditions. So it's sort of almost a perfect breeding ground for this infection. There's great enthusiasm from the physician community and the regulatory authorities. So we feel pulled into Japan. And I think that we are hopeful that, that will be an exciting opportunity as we look in the coming years. We certainly try to take the lessons of the success of the U.S. launch to each of these areas. Education is key. We are going to be deploying in Japan a sales force prior to approval, which you can't normally do. But in this case, we've -- under the helpful leadership of Yuji Orihara, who heads our operation out there, he's entered into a very creative deal where we are going to be able to bring forth a generic antibiotic approved for the treatment of NTM in Japan that doesn't exist in Europe or U.S., but it does over there. And that will allow our sales force to build relationships with physicians by promoting this generic NTM medicine. And so when the time comes and our drug hopefully gets approved, we will be able to launch with greater momentum.

Okay. Thank you for that color on ex U.S. Let's move over to brensocatib. Clearly, there's a lot going on. It's almost -- I don't want to say too much, but it's a lot to keep track of. Maybe let's just first start about what the asset is and what the data that you saw that now gives you a lot of confidence about the program going forward?

Sure. So brensocatib, for those who don't know, was formerly known as INS1007. This is a potent DPP1 inhibitor that is reversible, and what it does is it acts to -- by inhibiting DPP1, DPP1 activates 3 neutrophil serine proteases in the neutrophil, which -- during its maturation in the bone marrow. During disease processes that recruit neutrophils like bronchiectasis, those neutrophils are now recruited but with inactive NSPs, and those NSPs are thought to be mediators of additional inflammation and tissue damage. So by modestly inhibiting DPP1, you can create a downstream benefit in the bronchiectatic patients by producing, effectively, neutrophils that shoot these NSPs that are inactive. So they don't contribute to that damage. We did a study in Phase II called the WILLOW study. Once we secured rights to this compound, this DPP1 inhibitor, which we got from AstraZeneca for $30 million upfront. It was a very, I would say, experimental novel mechanism of action. Everyone who's approached bronchiactisis historically has gone after the infection side of that disease cascade. It's a sort of circular process where inflammation can lead to poor mucociliary clearance, which creates a breeding ground for infection, which can result in inflammation, and so on and so forth. Historically, people have attacked the site of infection, that route to try to alleviate bronchiectasis without success, Barron Nektar, Grifols Aradigm, Novartis, Gilead, they've all tried and failed in this area. By going after this mechanism on the inflammatory side, we saw statistically significant Phase II data that showed an improvement and delay of onset of first exacerbation and, at the 10-milligram dose, frequency of pulmonary exacerbation. And I think the data we'll go into in greater detail, but these are absolutely eye-popping, head-turning data that people were not expecting. I used to refer to this asset as a lottery ticket. No one even asked me about it before January. By the end of February, when it had come out, it is a game changer. I mean the addressable market for non-CF bronchiectasis in the U.S. in the moderate-to-severe patient population is 1/4 million people. There's nothing approved anywhere in the world to treat it. This is a small molecule once-a-day pill, not a drug device combination, for the dropout rate in our Phase II study was higher in placebo than it was in the treatment arms. So this is a home run and very exciting stuff. We're going to have a virtual presentation at the American Thoracic Society on June 24. Put it in your calendar because we're also going to be hosting an investor meeting afterward with the principal investigator of the study. And we will go into the data in greater detail. We're talking about its potential use in a broad range of diseases. As excited as we are with ARIKAYCE and all the success we've had, this is a multiple of that opportunity.

Yes. Well, let me -- thanks for the reminder about the event that you're having. Let me also bring in the fact that just this week, you got breakthrough therapy designation, so congrats on that. We get questions from investors around the WILLOW data with respect to dosing. And so if you could just address kind of the perceived issue of dose response and what you think about dosing for the pivotal study that's currently in the works?

Sure. So I will just cut to the chase by saying, in our Phase II study, we studied 10 milligrams and 25 milligrams. And if you look at our investor deck, and I think it's on Slide 22, you'll find the Kaplan-Meier curve and the different p-values for time to first exacerbation and subsequently for the frequency of exacerbations. And what people noted was that the p-value was lower in the 10-milligram dose and the 25-milligram dose it hit stat sig for both on the primary endpoint but only on the 10-milligram dose for the secondary endpoint. Bottom line is, I think if you tease apart the data, and we'll have more to say about this at ATS, it becomes clear to us that there is more of a dose response and that there is indeed a correlation between the mechanism of action we're identifying and a dose proportionate impact on patients' clinical outcomes that are of interest to both physicians and the regulatory agency, which is how frequently do you have an exacerbation as a result of bronchiectasis. So that June 24 presentation is going to be really important to tease that out. In addition, we're hoping to publish in a major journal this year, all of these data. So more detail to come. But one thing I would just turn investors to, if they still have concerns about the dose response, it takes about 2 to 4 weeks to get the full pharmacodynamic effect with this drug. This study was only 6 months in duration. So we're talking about effectively a 5-month window. And that's not a lot of time to show effect. But if you -- we put the actual raw data at the bottom of that slide, and if you start from the end of the first month through the end of the study, you will see a very clear dose-dependent relationship.

Okay. Thanks for that clarity around that key question that I'm getting. So as we look forward to the pivotal trial, what's next? What needs to be done before you can talk about that pivotal trial?

Well, I think we're excited about the scope of all of our trials. So clearly, 1007 will be entering Phase III as soon as possible. So will the frontline study, both of these are global programs, very advanced in their planning and design. We expect to kick off the Phase III program for 1007 and the Phase III program for our frontline ARIKAYCE use by the end of this year. We'll have more details about the number of patients per arm, the statistical power and all that sort of stuff during an Analyst Day, which we hope to hold in late summer time frame. And then one of the reasons why we're going to hold that up is because we also want to be able to include the comparative animal data for 1009, our PAH program, which we're very excited about.

Okay. Great. 2 other applications of brensocatib, that I can think of at least, that are ongoing, as you've talked about, one is the STOP-COVID19 trial. And then post the data, AstraZeneca picked up their option to bring the program back in-house, so to speak, to evaluate brensocatib in larger pulmonary conditions. Can you talk about those 2 different applications?

Yes. So COVID-19, the treatment there, the thought is that if we can interrupt the cascade toward acute respiratory distress syndrome with this mechanism of action, that would obviously be beneficial to patients as they progress to needing further oxygen supplementation and ultimately going on respirators, which has a high mortality rate so the investigator of the WILLOW study, the Principal Investigator, Dr. James Chalmers from the University of Dundee, asked us if he could use this drug to pursue COVID-19 patients who are admitted to the hospital, and so we decided to provide that support. So this is an investigator-initiated study. It's underway right now. It's 10 different sites across the U.K., up to 300 patients, placebo-controlled. I think it's a very exciting study. It is robust enough in conjunction with our Phase II that it could be enough for us, although we'll have to see for some kind of regulatory pathway. I do think that we'll know more in August when he does a sample size re-estimation, that's the approximate time that we would reach 100 patients. And then we expect full results by the end of this year, give or take, maybe a little bit into next year, depending, again, on enrollment rate. But it's a very exciting program. And I think it speaks to what we see as a potential much broader application for brensocatib, any neutrophil-mediated disease. So once again, we'll have more to say about this on June 24, during our investor call, but we've already conducted and completed some preclinical animal model work in related neutrophil-mediated diseases like lupus nephritis, like rheumatoid arthritis, GPA. There's a number of diseases, irritable bowel that we've looked at that we think this could be applicable in. And so we've done some of that work, and we intend to share some of that with the community. I think that is the sort of shade of gray off of why AstraZeneca has now returned to ask if they can develop, the exercise, through the contract, this drug in indications like COPD and asthma, for which they reserved the rights. Now in order for those rights to proceed, we need to come to a commercial agreement after their Phase II work is done. So they're, right now, at a point where they need to do their Phase II work, they will need to do this at their expense and with their own drug supply, but presuming that they complete that work, then they could trigger what is called option 2, and that would cause us to get into a discussion about commercially reasonable terms for the use in COPD or asthma. We need to come to that agreement in order for them to proceed. And I think we feel like we're in a very strong position in that regard. We're anxious to hear what kind of terms they might be interested in proposing. To put a finer point on this, there are roughly 25 million people in the U.S. that have COPD. So this is a massive market. It is one of their cornerstone markets. And the direction they're planning on going here, it appears, is very much like what they've done in asthma, sub-segmenting a massive market into more specialized groupings. So here, they'd be looking at the severe end of the COPD market. Many of those patients are bronchiectatic. So this drug would be used in potentially that market segment. We look at something like a Fasenra, which is for endocytic asthma that AZ has launched, as a good proxy for this direction they're traveling. For us, the challenge of this is while we could understand a co-development deal would be potentially in our and shareholders' and patients' interest, co-commercialization is not. We would be stepping on each other's toes in these territories. And we don't really see how that's going to get resolved. So one of the ideas that we've been considering ourselves, and we've talked about publicly, is potentially regional deals. So take a look at a place like China where all of our drugs have potential huge broad applicability and impact. COPD in China is epidemic as is bronchiectasis. We estimate with our market research that there are more than 150 million people in China with COPD. So this is an area of the world AZ has particular expertise in. They have 20% of their revenue generated from China. And so we're hopeful that there may be some kind of a path forward here that will allow patients access to the medicine while we are able to move forward unimpeded on bronchiectasis.

That's certainly relative to just perhaps January and what you thought you've had with brensocatib and what you -- what the potential seems right now. It seems like there certainly is exponentially a lot more opportunity that has yet to be tapped. So that's really exciting news. You did also mention earlier about yet another pipeline asset. Perhaps, the market is not paying attention to this yet at all. So perhaps this is a good opportunity for you to kind of talk about the excitement you see and the opportunity for 1009.

Sure. So 1009, just to inform everybody, it's early, but it is a reformulation of treprostinil. And most of the time, when I hear that kind of approach, I think, oh, that's not going to be impactful enough. Here, what we've done is we've appended a 16-carbon chain onto the treprostinil, which gets cleaved by the esterases in the lung when it's inhaled. This is a dry powder formulation. What that does is it creates a slow release of treprostinil above the therapeutic index level over a sustained period of time with the consequent benefit of that sustained vasodilation experience downstream. What does that mean? Reduction in right heart hypertrophy, disease remodeling and potential removal of obliterations in the vasculature. This is very significant in terms of what we've seen in terms of animal models. So we redid the animal models. They were so compelling. And again, we found the same thing. Now what we're doing is we're comparing it to approved programs of [ Provi ], Tyvaso, others in an animal model setting so that we can show what has gotten us so excited. Will we continue to see this kind of disease remodeling profile? If we do, we believe this could be a game changer for the PAH and extended spaces. As we've heard recently, United Therapeutics is excited about the benefits of Tyvaso in ILD, interstitial lung disease as well as idiopathic pulmonary fibrosis. We haven't done any work there. I can't comment on anything about that. But what I can say is for PAH alone, this could be a really impactful compound that is a pretty straightforward path. I say it's early, but it's a known molecule. When we do produce this comparative data, which we'll do by the end of the summer, I think that will be the stepping stone for people's understanding of its potential. I view this, and I should be careful about saying this, but I used to say 1007 was a lottery ticket, and then we hit. I view this as a lottery ticket. So we'll see. But we're going to try and get it into humans as quickly as possible next year so that we can see the impact in the disease state. We will be doing our single and multiple ascending dose Phase I work this year and into Phase II-A early next year. So hopefully, by this time, when we're having this conversation, and we're back in person you'll say what has happened in the last year, and I'll say we've validated 1009.

Right. For those who haven't maybe trafficked much in the PAH space, and quite honestly, I haven't either, we think about companies that have pretty been established in PAH. Clearly, there are also, again, as you mentioned, drugs that are based on the active moiety. And so you've talked a little bit about what makes you excited, what makes you hopeful about this lottery ticket. Ultimately, let's assume all goes well, how do you foresee Insmed then competing in the marketplace against kind of your established 800 pound gorillas?

Yes. I think when we think about Johnson & Johnson, Actelion and we think about United Therapeutics, those are obviously the 2 major players in this space. What we've heard from the thought leaders is if this target product profile really does come through as it appears to in the animal model, it is a game changer. And I don't use that phrase lightly. So I think it's a -- there's a high -- it's early. I'm always conservative and cautious. So there's some risk here that it may not bear out. But for a very modest investment of capital from here, we will have those answers. And with those answers, I know will come additional interest. So we will have a break in the road up ahead where we will either decide to bring this forward ourselves or perhaps like Arena and others, we'll be able to monetize this asset, and put it in the hands of one of those capable companies and bring that value to our shareholders.

Okay. Great. Maybe we can turn attention to business development. You've talked about 3, 1 on-market assets and 2 other pipeline assets. You've been transparent and vocal in the past about looking for opportunities. You just completed a very significant financing. And so with that in mind, as it relates to BD, and given everything you've got on your plate right now, what are the BD priorities if it is a priority?

Sure. BD is always a priority, just to be clear. I've been at the company for 8 years -- coming up on 8 years, and there's never been a year when it hasn't been a subject of intense focus. The capital, the resources, all of that is there. The hurdle here is finding an asset that my entire team gives the thumbs up to. We've looked at over 100 different programs, at least. And I can tell you, many have come close, 1007 is an example of something we successfully in-licensed because everybody was universally supportive of the mechanisms. Experimental, though it seemed at the time, I think the team is exceptionally good at figuring out where there's an asymmetric return. And that's what we look for. 80% of M&A fails to create shareholder value. So I am very skeptical about action without that asymmetric return. So with that in mind, I would say, our focus is on these 3 major programs, ARIKAYCE, 1007 and 1009. But we will always be mindful of what's out there. I will just note that 2 of those 3 came from our own research labs. The third was, in fact, a business development deal. So maybe a fewer shots on goal when we take them, but we focus.

Okay. And I think it's important to remind investors about kind of the future vision and direction of the company because I think BD, I think, is obviously an important consideration. But in terms of what the company's core capabilities and core competencies are, they go well beyond just respiratory disease. Perhaps, can you provide, again, an update on kind of where you think the company could go?

Yes. We sort of describe ourselves under the umbrella of rare disease, not orphan, but rare. So bronchiectasis fits that model. It's 250,000 in the U.S. that is not in any way uncomfortable for us in terms of addressable market. And we have both capabilities in Europe and in Japan for development and commercialization. So into this infrastructure, we want to feed very productive assets. They may or may not be in respiratory. And I emphasize that because as we've looked out there, respiratory is a fairly small pond. We've had some very impactful products with great strategic overlap. But we will be looking for things outside of respiratory as well. It's just we have to feel like we can have significant impact with these assets. And when we think about what that means, my team at Insmed is made up of people who have a lot of rare disease experience. We have very few people who have deep respiratory experience. We have some, but most of the company is centered around this notion of supporting patients in specialty disease categories with drug development and commercialization.

Okay. That's helpful. Maybe a quick question on as a CEO, capital allocation, and I'm glad that we have Sara Bonstein, the CFO on as well. But you are trying to continue to build on the commercial success of ARIKAYCE, and that requires a certain amount of investments on the commercial side. You've got now a pipeline that is flushing out, and that's clinical trial spend, and we talked a little bit about BD as well. So when you think about capital allocation for the company, how are you thinking about it right now?

Yes. I think these 3 priorities that we've talked about, the ARIKAYCE, which is front line study, which will give us a fivefold increase in addressable market. That may not always be the shiniest object in the room, but we all know that's the highest probability of success. We know it already works in the disease state. We know what the safety profile is. We know it's acceptable to FDA and other regulatory agencies. So now the question is how do we expand that? How do we pick up on the Alexion model of success and take this product into additional adjacencies. That's what the frontline study is all about. It gives us a new way of treating with the new standard of care, hopefully, for NTM, this disease on a global basis, for which, right now, there is no competition. So this is an amazing opportunity for us. And I would say is eminently worth a great deal of investor return. Beyond that, that global infrastructure that supports that, 1007 permits us to go and scale that dramatically. As you -- the word you used, and I think it's completely appropriate, exponential, we're talking about a disease state that is probably very understated at 1/4 million patients in the U.S. and is equally prevalent in the other territories we call on. So capital allocation to those 2, there is a 40% overlap between bronchiectasis and NTM. 40% of bronchiectasis patients have NTM. So we know these physicians. We know how to run the trials. We know the commercial infrastructure around the world. We're in a great spot for those assets. PAH represents a very modest amount of investment to get a -- hopefully, an asymmetric return like we saw with 1007, and we'll know that within a year. So those capital allocation decisions are easy. I think beyond that, we're very careful about the deployment of capital. We had $430-odd million as of the first -- end of the first quarter. And as you said, we just supplemented that with an additional roughly $250 million. The whole goal of that was to bridge us completely out of reach of COVID-19. However long this is going to take to repair, we're fully capitalized to get to the other side of it, in our judgment. And it also fully funds accomplishment of many of these important strategic outcomes from these clinical trials. So we should get inflection points of value that will validate investors' confidence in the team.

Okay. Great. And then maybe with my last question, as we are running towards the end of this session. You've got a lot going on, but in terms of catalysts, milestones for the company, can you kind of give us a view what that looks like over the next 3 to 6 to maybe even 12 months?

Sure. I think if we were going to have this conversation a year from now, what I'd like to be able to say is that we returned to growth with ARIKAYCE and refractory U.S., we added Europe and Japan launches and those progressing effectively, we've kicked off our Phase III study for frontline indication globally for ARIKAYCE. We've kicked off our Phase III program for bronchiectasis, we've shared what other disease states we're going to be targeting and kicked off those trials, and then 1009 has been validated and potentially monetized, depending on what the strength of the data is and where we go. To that, we can add some of these kinds of unexpected opportunities like AstraZeneca's potential interest in pursuing COPD, which is, in and of itself, an entire franchise. So I think sorting all that out in the next 12 months will provide ample opportunity for value creation.

Okay. Fantastic. Thanks so much for that comprehensive update on the company. Thank you all for joining us today on our fireside chat, and Will and the team, best on continued to success.

Thanks, Graig. See you next year.

Thank you.