Insmed Incorporated (INSM) Earnings Call Transcript & Summary

Hi, everyone. Welcome to the Cowen 2021 Healthcare Conference. Hopefully, our only virtual conference. Thanks, everyone, for joining us, especially for this session, which is the Insmed fireside chat. I am covering biotech analyst Ritu Baral. And with us today, CEO of Insmed, Will Lewis, I'm sure many of you know. Will, thanks for joining us.

Thanks, Ritu.

Will, do you want to take maybe like just a minute to sort of level set where we are post your earnings call, maybe seeing the light at the end of the tunnel as far as COVID's impact on on ARIKAYCE, and then we'll get to some more detailed questions about potential sales in the second half in the pipeline.

Sure. Well, I would just start out by saying we've just come off of the most transformational year in the company's history without question, having gone from ARIKAYCE's approval and refractory MAC patients in the U.S. to now approval in the U.S., Europe and Japan soon expected with the frontline trial up and running. And then 2 other meaningful programs, which we'll talk about brensocatib and TPIP. But of course, we start with ARIKAYCE. And ARIKAYCE is the cornerstone of what built the company, and that program hit definitely the headwinds of COVID-19, but I think it's remained remarkably steady throughout the year, notwithstanding that pressure. And as I look at ARIKAYCE, I think about a product that has shown itself to be fairly steady, and therefore, will continue to contribute as we move forward to the investment that we're making in these other 2 pillars as well as the further expansion of ARIKAYCE.

Great. So speaking to that, ARIKAYCE had particular headwinds as did almost every respiratory franchise, just given the particular risk respiratory patients have with COVID and the fact that you're, for lack of a better word, the caregivers, the specialist caregivers were being appropriated into their hospital COVID practices. So clinics were shut down, et cetera. How -- now that we are looking at the second half and Insmed has been flagged as a COVID off-trade, how should we think about sales in the second half of 2021? Are you seeing the NTM clinics come -- open back up, take 100% of their -- or schedule 100% of their visit slots? Are you seeing patient-doctor in-person interactions increasing or even virtual?

Yes. So I think there are a number of forces at play around the return to the pre-COVID behavior, I guess, is the way I would describe it. First of all, the clinics have to open up again, the physicians have to open their offices and then patients have to feel comfortable going into the offices. The good news is, last year, during the second quarter and the third quarter, where one part of the country is shut down because of COVID, and then the other part of the country shut down because of COVID, but the East Coast had opened up again. We saw patients come back in the offices fairly rapidly. So our expectation is as COVID is in the rearview mirror, that return will be fairly rapid. Now what's that going to look like? It's going to look like the arrival of the vaccines, which President Biden yesterday or today said, are going to be -- we're going to have enough doses by the end of May for everyone in the country. I still want to see the logistics of how those get distributed, but it is a promise that the needed vaccination program is on the way. Our patients are at the front line of that vaccination. And so if we think about just the U.S. market, I do believe that, that return to growth will follow rapidly after the arrival of a successful vaccination program. To that, we would add the approval, which has just been secured in Europe, starting in Germany and now the Netherlands, where we got early reimbursement, the French ATU program will continue. And then shortly after, hopefully, we'll secure the United Kingdom, Ireland and Italy. In this calendar year. And so that will also contribute, albeit modestly because Europe is always a slow launch. And in our case, it's a smaller addressable market. And then we go to Japan. In Japan, we expect approval by the end of March or thereabouts. And then a discussion on price that usually takes 2 to 3 months so that by July 1, we would expect Japan to be coming online. And what that will contribute is not only a sizable market because there are more diagnosed patients in Japan than there are in the U.S., but a market that hopefully will be launching in a post-COVID vaccination world. Majority of patients having been vaccinated. Now there will be variables around all of these general themes. But your question about what happens in the post-COVID world as we return to the second half of the year, if that's the timing, I fully expect that all 3 of these territories will be returning to growth. Ritu, you're on mute.

Thank you. That was helpful. I want to drill into 1 thing that I want to make sure I understood you correctly. You believe that these -- I thought you said you believe these patients will feel more comfortable when this sort of societal level of COVID is reduced. And I want to just make sure that I understand that in comparison to the fact that these patients are getting vaccinated in the sort of the 1b, 1c level. So they should be one of the first ones vaccinated, but we should wait a little bit until society as a whole return to normal before that growth will come back? Why not sort of earlier, I guess? Why not right after they're vaccinated?

Yes. I think they will return quickly. I mean that's what we saw last year in Q2 when the East Coast shut down and then opened up again before the vaccination program, patients return quickly. So in the vaccination world, I think they have that extra comfort from knowing they're vacated, returning to their physicians or indeed going to them for an explanation of what diagnosis they need. So I think it will be a rapid return. I just don't know with full certainty, how that's going to unfold regionally because we've seen quite a bit of regional variability. And the drivers here include the physicians being distracted by the treatment of COVID patients as well as the patient comfort to return. Although, as you say, I think with vaccination, they should feel much more comfortable than even they did last year, when they were able to go into offices. And one final element that will drive this, the physicians in our market research have indicated that their index of suspicion is very elevated at the moment for their patients, and they are going to proactively be calling their patients into their offices. So I expect that all of these are positive drivers. And in that environment, we will be effectively relaunching our drug into the U.S. market. With the new sNDA that was approved at the end of last year with a discussion of our inclusion with a strong recommendation for use in the international guidelines. So there are a lot of positives here that should help us as we return to growth in the U.S. for ARIKAYCE, then we'll add Europe and Japan to that.

Do you think you could start seeing that sort of first signs of -- in 2Q, not even second half?

It's hard to say. I'm hesitant to -- me, I tend to be on the conservative side. Certainly, I would expect to see some green shoots in the second quarter. But we'll see what that looks like. And we'll certainly try to be as transparent as we can about trends that look like trends because they're going to be the idiosyncratic changes in different markets. But what I really want to see is a gradual trend and a return so that we know we're done with this.

What region are in most paying attention to? Either...

Well, absolutely, the centers of excellence where it all begins, right? And then from there, it floods out into the community market. We address both with our commercial efforts. So both are equally important.

Do you have any thoughts on when that field force can actually get back into the community, specifically the sort of nurse sales force that you have that assists patients who can go to the patients, wherever that might be, and assist with side effect management?

Yes. And so what we have done until now is institute what's a voluntary opportunity for our commercial operations generally to engage with patients in a setting where the physician has deemed it to be safe to do so. If their office is closed, obviously, we're not calling on them. But if their office is open, our therapeutic specialists can return to the office at their choice. We've instituted a COVID testing program, which I think will help both the physician's offices and our own employees feel good about the knowledge that they have. It's obviously not perfect because there's time delays, et cetera. But it does give us additional information, a tool in the toolkit, if you will. And then that will spread to other parts of the company as quickly as we're able to safely do so. We were one of the first companies around this time last year to pull our commercial sales force and pull our guidance. We read the tea leaves there correctly, and we intend to bring that same thought process to bear here as we return to the market, we want to do it safely.

Got it. And I know I just promised you that I would stick to the discussion outline, and you told me I wouldn't, and I told you I would. So on...

We worked together for a long time, Ritu.

Post-COVID world, post-COVID lung, is that more susceptible to NTM? Should we be thinking about a growth in the potential overall market or could it just be a function of index suspicion?

Yes. I think you're putting your finger on something that we don't have the data on yet, but that we are very aware of because we have several programs that address conditions that may be manifest in the post-COVID world. Certainly, some of the early data suggests that there are lingering issues with the pulmonary system of some patients. I hope that if those are indeed conditions that emerge, that either our treatment of gram-negative infection with ARIKAYCE and refractory MAC, if that's how it manifests itself. That we can be helpful there. Certainly, we're aware of that. The physicians are aware of that. But so to brensocatib in the treatment of patients who may have bronchiectasis, if that trial continues to be successful and approved. But this pathway of DPP1 inhibition is probably more on point for this discussion because we believe it unlocks sort of neutrophilic immunomodulation. And that means that for patients who are experiencing inflammatory cascades, or neutrophil recruitment to problems in the pulmonary setting, this DPP1 inhibitor, brensocatib, may well be a benefit, and that's something we're going to continue to study carefully in the clinic. We will have data, as you know, from our STOP-COVID-19 study from the investigator-initiated study here in the -- probably the early Q2 time frame and while we don't think we're going to be impacting COVID per se. I am anxious to see any signs within the data that might suggest benefit for exactly the kind of thing you're talking about.

The post-COVID lung mileau. Before you have that data, I mean, you are starting the Phase and have started the Phase III bronchiectasis program. Are you allowing patients with prior COVID infections in to that study?

We have to see the universe of patients as they are. And so we're taking all-comers in the bronchiectasis study, just as we did in the WILLOW study. We do look for an event rate at a certain threshold, so 2 or more exacerbations in the last 12 months because we want these patients to be in the moderate to severe categories. So we know our medicine will hopefully be a benefit and that, that will be clearly teased out in the data. And once we've done that, it affords promise obviously to a very broad range of patients.

Got it. But given your COVID trial will read out in Q2 do you -- have you reserved the ability to make any sort of additional, either statistical stratifications or change to the screening criteria? Is it going to be too late at that point if something really noteworthy comes out of your COVID study.

Yes. I think it's a really good question. We will not modify the bronchiectasis study because of what we find in the STOP-COVID study. The timing for that would have been the data safety monitoring board report on the STOP-COVID-19 study and while we don't get specific data, they did indicate that there were no safety concerns and that the study should continue. And so these 400 patients that are in Professor James Chalmers' study out of the University of Dundee. They will provide interesting data, I think, and perhaps over time, real understanding of the mechanism of action in a very sick patient population. In the absence of a safety signal there with the administration of our drug in this sick population, gives me a great deal of comfort that the safety profile that was so promising in Phase II will continue to be the case. And hopefully, we'll see some signals or some biomarkers that are suggested that the drug may have had some benefit. But this is a very difficult disease, as we all know, and we wanted to be in the fight. So we're glad to support professor Chalmers, but I don't expect this study to have a major impact. And if it does, I guess it's another lottery ticket.

Got it. So let's move to the brensocatib non-CF program. To the core of that, which is the Phase III trial, can you just remind us of expected enrollment and data time lines and just high level the structure of the study?

Yes. So this is a study that will look at 10 and 25-milligram doses of brensocatib dosed once-a-day over a period of one year in patients that have 2 or more pulmonary exacerbations within the last 12 months. And these patients will be monitored over that 12-month time frame and then one month off drug. We're targeting an enrollment of about 1,620 patients, and that is a sizable study, but this is a very sizable market. And as we think about what we're doing there, we look at WILLOW and we try to replicate the success of WILLOW, which was so unexpectedly positive that we really want to try and change as little as possible from that study. It was a very thorough study, very sizable 250-plus patients for a Phase II exploratory study. But it measured the primary endpoints that we are measuring in Phase III. We were powered 80% to show a 40% improvement, and we hit statistical significance on the primary endpoint in Phase II In Phase III were powered 90% to show a 30% reduction in frequency of pulmonary exacerbations. So a more conservative approach, and indeed, we've even lowered the assumed rate of events in Phase III. So this really should give us the best possible chance of showing the impact of our drug, and this study is now underway. We haven't given specific time line guidance yet, but that's because we are opening a lot of sites. This is going to be in 40 countries, 480 sites around the world. We're starting with the fast enrollers, those who were experienced from the WILLOW study. And once those are up and running and we see the enrollment rates, even in the COVID and post-COVID world, we can provide some more specific time lines.

Got it. Okay. So you mentioned that you're powered for that 30%. Is that also the clinical, is that also the clinically meaningful threshold if you look at the analysis on a population basis? And is there a sort of responder analysis that is a key secondary analysis that will be important to at least for doctors in figuring out how to use that?

Yes. What we've heard from the doctors is pretty consistent from KOLs to your general pulmonologist, and that is that they want to see about a 15% to 20% reduction in exacerbations. They'll obviously take much more than that. But 15% to 20% is their threshold. That's consistent with the FDA's guidance to us. And incidentally, it's consistent with what we tested for our ARIKAYCE program in Phase III. So as I look at that threshold, I feel very good about the 40% reduction we saw in Phase II targeting with a lot of statistical power, 30% reduction in Phase III, knowing that we can still be statistically significant all the way down into the low 20 percentiles that gives me a lot of enthusiasm for this study. We're also testing both 10 and 25-milligram doses and it's my expectation that if either one of those works, we have a path to approval and therefore, success.

The primary analysis sort of the blended, the blended treatment group?

No. The primary analysis will be on frequency of pulmonary exacerbations in each dose relative to placebo.

At each dose? Okay, got it. So -- okay. And are you taking an alpha hit for the fact that you're doing 2 analyses at the co-primary?

So the primary will be frequency of pulmonary exacerbation. The key secondary will be time 2 pulmonary exacerbation on the primary analysis, if either dose is successful, it's a stand-alone. The particular statistical path we're following there, we're in the middle of finalizing right now. There's some very arcane drivers of which one you might choose but there's also very specific guidance from FDA, and we just want to make sure that we're aligned with all parties on that one before we've sort of finalized the statistical analysis plan.

Fair enough. Okay. And then the idea of a responder analysis on an individual basis, you mentioned a key second earnings time to exacerbation, not just -- percentage of reduction in exacerbations. But if you look at sort of what defines a ponder in the non-CF bronch population is there an analysis in the SAP that looks at that?

That's a good question, Ritu. And I have to tell you, I don't know that level of detail. I'd have to get back to you on that one.

Sure, no problem. Any key monitoring requirements around the side effective interest, the skin irritation or the periodontitis that's an on target effect.

Yes. When we looked at Phase II, of course, we studied those in great detail. And we didn't see any signals there that we're concerning. Indeed, we had done very extensive periodontal exams that were a part of the Phase II study, you may remember, and that's not being done in Phase III. It isn't felt to be necessary based on the safety filings we found in Phase II.

Even though it's a longer treatment period.

Yes. Exactly. And we will continue to watch that, of course, but we didn't see any signs in Phase II. I'm encouraged by the STOP-COVID-19 interim analysis, that's only 28 days of treatment. But again, the data safety monitoring board, no safety signals there either. So these are things we are very focused on a medicine has to be safe and then effective. But recall that the dropout rate in the Phase II study was higher in placebo than in either of the other 2 treatment arms as far as adverse events go. And so that was very encouraging. We will always keep in mind the Papillon-Lefèvre genetic model of DPP1. So we inhibit DPP1 through this mechanism. Papillon-Lefèvre are completely deficient in DPP1 in that disease state and the side effects that you mentioned are evident in those patients. For us, we think we're at a goldilocks level where we inhibit it a little bit, but not enough to cause any of those side effects to be problematic. 2 other important points. One is that these patients return to normal levels within 30 days of baseline. And the other is that, of course, we didn't see any of these side effects in any major way during Phase II.

Got it. And I just got an e-mail question briefly reminding me of the fact that there are folks who are looking at the story who aren't so familiar and wondering why I'm spending so much time on brensocatib versus your lead selling program. Can you just briefly review for us your understanding of the market potential and the patient numbers?

Sure. So if you look at the bronchiectasis market, this is a market that represents as many of the pulmonary field have described it as the last frontier of a major market that has nothing approved to treat it globally. So we're talking about a diagnosed bronchiectatic patients today that number around 250,000 to perhaps 350,000 patients.

In the U.S., correct?

In the U.S. alone. And proportionate levels to populations and the other places where we have commercial infrastructure. The call point is the same as it is for ARIKAYCE. But importantly, behind those that are diagnosed today with bronchiectasis lies this massive and still to be defined clearly a population of people that have COPD or asthma and are comorbid with bronchiectasis. Bronchiectasis is diagnosed definitively using radiography, and so patients who are diagnosed for COPD or asthma, typically done with spirometry, you don't need the imagery. And getting that diagnosis of bronchiectasis doesn't lead to any additional treatment benefit because there's nothing approved to treat it. However, we were just hosting a rare disease day here at our company and a key opinion leader was on the phone at the time talking to our company, and he said he had just completed an analysis of some work at his center and he saw for COPD patients between 29% and 50% of them also had bronchiectasis. So if you were to consider that for the COPD market, it takes what the literature says right now, which is it's somewhere between an additional 675,000 and somewhere north of 6 million or 7 million patients in the U.S. alone that may be bronchiectatic. Now not all of those patients are going to be eligible. And of course, we'd have to get the radiography done to define them. But what lies beneath the initial incredibly promising bronchiectasis market is a whole group of patients who have nothing to treat them that we may be able to diagnose and get help to if our drug is successful in Phase III. So this looks like it could be one of the most significant pulmonary medicines if all of that were to play out and Phase III were to work and the label were to support that.

So let's move now to brensocatib for additional indications. You spent a fair amount of time on your earnings call talking about the planned CF study. I believe you mentioned you're going to start Phase II this year. Can you talk about the rationale behind that? What additional market opportunity that represents to what we just talked about? And yes, the Phase II.

Sure. And here's a shout out for Vertex, who's done just such incredible work for the cystic fibrosis patient population. What those patients now have is effectively been taken from a CF patient profile to a patient with bronchiectasis. The damage to their lungs is done. The pseudomonal infection may still exist. In any case, they are continuing to experience exacerbations. And so the last component that needs to be treated in these patients is that exacerbation. And so we believe that our drug can be very effective there. You see elevated levels of neutrophil elastase in these patients that are even above levels of neutrophil elastase and bronchiectasis patients. So the biological plausibility is very strong here, and we're anxious to get this Phase II PK/PD study initiated by the beginning of the middle of this year so that we can quickly shift to a program to get approved in that indication. This population has made major advances, but this is a problem that still remains and needs to be treated.

Got it. What about other favorite indications for this drug? And could you -- can you briefly review the deal with AstraZeneca in other indications?

Sure. What I will say is that we have global rights to this drug in every indication other than COPD and asthma, and we feel very good about the opportunities that we're [indiscernible]. Like AstraZeneca retains the right to potentially develop in those areas. We have to come to a commercial agreement in order for that to transpire, but in a world where that would be possible, then they would be able to pursue those. We have been really struggling with the right way to make that happen, given the enormous opportunity we have to treat bronchiectatic patients who may also have COPD. That comorbidity means it may not be necessary to target COPD independently of bronchiectasis. Indeed, it may be only the bronchiectatic patients with COPD who will benefit from the drug, in which case, we can address them, and there's no need to develop a COPD program. But that's to be determined. And one of the things I will say is we've had a very good relationship with AZ, and I'm sure that, that will continue. As we look at the DPP1 pathway and other areas where it could be impactful, we take note of the paper that was just published in cancer cell about a month ago, quite a striking finding. This showed that in a breast cancer model, a mouse model, that our drug, brensocatib, prevented metastases into the lung of the cancer. So we had been mentioning this during on research day last year in passing. It's something we're looking at closely. The opportunity for this drug, because of its influence on what are called neutrophil extracellular traps, in the oncology space is very real in our opinion. And so that's something that we will also be looking at. Beyond CF and bronchiectasis and potential applications in oncology, we have a very long list of potential diseases that may be affected. We've done some preclinical modeling in those and seen good results in things like lupus or rheumatoid arthritis. There are other indications, but I think we want to be very mindful of how do we continue to advance this drug in a way where we know it will have impact, and there is a clear unserved patient population. And that's why we start in these areas where the patients we're targeting really have nothing else that can address their particular condition.

Got it. So in our last few remaining minutes, I don't want to forget the ARIKAYCE frontline opportunity. You've got a Phase II trial that is confirming the PRO that is the primary endpoint in the ongoing Phase III study. Can you just -- can you, one, just give us a quick update about how those trials are going; and two, describe the PRO that you're looking to validate as the primary endpoint and where it comes from?

Yes. So that trial is underway. We actually have 2 trials that are part of that program. One is called the ARISE and the other is called the ENCORE trial. And the -- to your point about the PRO, that's the primary endpoint that the FDA requires. For full approval and frontline approval of ARIKAYCE in the treatment of refractory MAC and NTM MAC. As we turn our attention to other territories, we think Europe and Japan, for example, will continue to focus on culture conversion. So we'll also be measuring that. But specifically the PRO for FDA, that is being tested in what's called the ARISE trial. So this comes from a bronchiectasis questionnaire that has been repurposed very specifically for NTM patients. That process of validation of that questionnaire is completed. We're now doing quantitative validation of that in the ARISE trial. So it's effectively taking the test and seeing how you do before you sit the test for your final grade. And we feel really good about how that trial is going. Before we close out, I do want to just mention our Phase I data on TPIP, which just came out and is on our website.

Where are you going to present that data? And what is your plan for Phase II? We've got 2 more minutes.

Yes. So we will present that data probably at ERS. We'd like to do it sooner, but certainly no later than ERS, and that's because the late breakers are no longer allowed at ATS. But the Phase I data is very good, and I would encourage everyone to go to our website, where you can see that and an overview of our research program. TPIP, we think, could become the cornerstone of therapy in the treatment of not just PAH, but other grouped diseases for pulmonary hypertension patients like PH ILD and possibly even an area like IPF, if further data bears that out.

Great. Perfect. Well, we are at time now. Will, thank you so much. This was great. I think we -- yes, we have like 30 seconds to go. If anybody in the audience has any follow-up questions for Will, please feel free to e-mail me. I'll make sure I work with Insmed and get those answered for you. Will, thanks again for the time. Really appreciate it.

Always a pleasure.

[indiscernible] in progress. Take care. Bye.

Thank you, you too.