Insmed Incorporated (INSM) Earnings Call Transcript & Summary

All right. So wrapping up day 2 of the Barclays Global Healthcare Conference, I'd like to welcome CFO of Insmed, Sara Bonstein. Sara, great to be here, and thank you for joining us.

Yes. Thanks so much for having us. Really appreciate it.

Yes. And let me know if you have any introductions or any opening statements. But otherwise, we can kind of jump into Q&A.

Yes. Yes, I guess, the only thing I would just comment on is this is probably the most transformational year in Insmed's history. We're really excited about the upcoming pending data readouts in Q2 and wishing the calendar would turn faster. So happy to address any questions that you have.

All right. Perfect. So yes, just diving right in, I guess, more on the news in the recent front. So AZ exercised its licensing agreement to further develop brenso and commercialize it, potentially commercialize it in COPD and asthma. Can you give those who might be unfamiliar a quick overview of the agreement? And what's your thoughts on kind of like why now?

Sure. Well, I obviously can't comment specifically why AZ decided to take an action. They notified us on Friday of their desire to exercise what's called the second option in the agreement that triggers the ability for both companies to enter in good faith negotiations for commercially reasonable terms to move brensocatib forward into either COPD or asthma. We locked -- obviously, enter into those discussions in good faith with AZ. What I can say is, from our perspective, it changes nothing. We continue to be full steam ahead. We continue to have laser focus on the upcoming ASPEN data readout in Q2 of -- second half of Q2 of this year and are excited to hopefully deliver what could be a very meaningful [ study into patient safety ].

Got you. And there is some overlap between like COPD, bronchiectasis and such. So when you're thinking about this and AZ's potential to go into COPD and asthma, can you give us this idea of kind of how much overlap is there? Number one, how much overlap is there in a real-world setting? And just how clear cut kind of is the diagnosis between, let's say, like COPD and bronchiectasis?

Yes. So as you know, to diagnose bronchiectasis, it's actually pretty straightforward. High-res CT scan, you could see the tree-in-bud patterns in the lungs. And so it's very -- it's a pretty clear diagnosis. Today, we estimate there to be about 1 million patients at -- as our initial TAM between our 3 geographies in the U.S., Japan and Europe that are diagnosed with a diagnosis code, all of those good things. I think what you also saw in both the WILLOW study as well as the ASPEN study is you saw patients that have comorbidities. And so patients that are -- that have bronchiectasis but they are also comorbid with COPD and/or asthma. And you saw a representation of those, as I mentioned, in both WILLOW and ASPEN. Assuming success on ASPEN, I would anticipate those patients would be on label for our drug as long. As you have a primary diagnosis of bronchiectasis, you would be on label for the drug, assuming success, and the patients that I believe can benefit from brensocatib will be able to benefit as such. The literature is really all over the place. So it's -- I almost kind of feel silly even quoting some of the literature. But per the literature, anywhere between 4% and 54% of COPD patients are also comorbid with bronchiectasis. Like I said earlier, it's a simple diagnosis. But patients may not be getting that CT scan because there is no available treatments today. Some of the disease data awareness activities that we kicked off last year in ATS continue to have ongoing with medical education. And now in the payer conversation, I think, it's bringing bronchiectasis to the forefront and may allow for patients to take the action to get that high-res CT scan.

Great. And so in terms of -- like you mentioned, there's going to be patients that may not know that they have the actual disease. So when you're thinking about market size and penetration, you're using a very objective endpoint on the ASPEN study in terms of rate of exacerbation, right? And I understand that that's because it's a very hard endpoint and you can derive performance from how the drug affects the patient and p-values from this. But I guess, a more skeptical person might look at this and say, well, the KOLs say it's a 15% level reduction in exacerbations. But these patients are having 2 exacerbations a year coming in. When you look at the actual, I guess, nominal number of exacerbations, one might say, it doesn't seem like that's a huge difference. But on the other side, when I'm thinking about bronchiectasis, it's not like one day, you're perfectly fine. And then the next day, you're waking up with exacerbations -- or I could be wrong. With that, can you talk about what constitutes as an exacerbation in ASPEN? And kind of maybe the most convincing element in terms of where you can discern between where you can really control the placebo effect? Why don't we start there?

Yes, sure. So we abide by the strictest definition of exacerbation, very -- I'm very consistent with how we defined it in WILLOW. So the entry criteria for our program is 2 or more exacerbations in the prior 12 months. That needs to be a documented exacerbation, meaning that this is a patient that had an incident, they contacted their physician, the physician then either changed their medication and/or the patient was hospitalized. So it can't be that the patient thinks they might have had a flare and kind of decided that themselves. There needed to be patient interaction. It needed to be documented as such. This is a high bar. We thought that was the best way to define and the most respected way to define what an exacerbation is and again, consistent with WILLOW, and really helps us to ensure that we have exacerbating patients that enter the trial. As you may have heard us say before, and I obviously don't have a medical background, in sort of a nonmedical way to describe it, an exacerbation is somewhat like a heart attack for the lung. So this is something that causes damage and then it continues to build on one another. So exacerbations are not linear events. But every time an exacerbation occurs, it causes damage to the patient's lung and then their disease essentially progresses, right? They now have this permanent damage to their lung, and so those are things we obviously want to stop. Well, you hear the medical community say, if anywhere between a 15% to 20% clinical effect, they view will be meaningful. We get similar feedback from some of the payer conversations that have already begun and are underway now. I'll remind everybody that in WILLOW, we studied exacerbations. So a lot of the studies that have happened in this space, they didn't study exacerbations as a primary endpoint or as an endpoint in their Phase II. And then they jump to Phase III and started studying exacerbations for the first time. So we studied exacerbations in Phase II, we were stat sig on both the primary and secondary exacerbation endpoints for our 10-milligram dose. And we were trending towards the 25-milligram dose. I would also remind folks that in WILLOW, if you look at the rate of exacerbation and what was the clinical effect that we actually saw in WILLOW, for the 10-milligram dose, we saw a 36% clinical effect. For the 25-milligram dose, we saw a 25% clinical effect. So very meaningful effect. And so we're really excited about the opportunity that ASPEN affords to potential patients here. And if we can't make Q2, the second half of Q2 come fast enough in our world.

Got you. And so let's say, we are in Q2 and you have positive ASPEN readout. What other metrics do you think that investors should focus on? And any kind of read-through into what we could -- in terms of understanding potential penetration rates into this patient population?

Yes. So what we've committed to is we appreciate that there's a lot to digest with the Insmed story. So we will obviously have a call, share the clinical results from the ASPEN study. We've outlined what a clear win is, a p-value of less than 0.01 with the clinical effect anywhere sort of north of 20%, that we would view as a very clear win. And we have every reason to believe that is what the outcome will be. We obviously need to turn over the data card. In the event that we have a p-value between 0.01 and 0.05, we still [ have ] viable drug because of the strength of the WILLOW data. What we've promised is within a week, so within short order, a handful of days within a week, we will then host a commercial event. It will be a webinar type event, and we will go through each of our 3 programs, ARIKAYCE, brensocatib and TPIP. Over the last 6 to 9 months, we will have put out what we believe is very important in de-risking data from each of those pillars, and we'll be able to walk through some of those assumptions as you're trying to build your commercial models, such as pricing, all of those kind of components. But we've said thus far, we have not provided pricing guidance. What we said thus far is a Fasenra-like price at around $40,000 is a reasonable floor. Once we have that clinical effect in hand, we'll be able to provide some clear direction as you're building your models. We said earlier this year, a $5 billion peak sales opportunity is the way we view brensocatib in just bronchiectasis and CRS, the 2 indications that are ongoing.

And to clarify, that $5 billion, that's -- is that something that you see at the 20% reduction? Or is that something you see as a 30% reduction? Can you give more guidance on that?

Yes. We're comfortable with that at a 20% reduction.

At a 20%. Got you. Okay. And on the ASPEN study, there's been a lot of questions on powering, and this is going to be another one of them. So you mentioned that the ASPEN study is 90% powered to show a 30% risk reduction in bronchiectasis. And to clarify now, is that 90% for like each contrast in terms of like the 10-milligram dose versus the placebo that has 90% power? Or is 25 versus placebo has 90% power? Or is this just an overall 90% powering on the statistical side?

We need one dose to win, so any dose is powered at 90%. Each individual dose is powered at 90%.

Got you. Okay. And another question that we're getting from investors to kind of just suss out this -- how this trial may actually flip when you guys flip the cards over. So you previously mentioned the [ mask ] rate of bronchiectasis was trending at 1.12 to 1.15 per year. But have you -- or can you give any indication on -- it has changed, but can you give any indication on has this gone up? Or has this gone down? Has there been a direction on how this [ mask ] rate has evolved?

Yes, sure. So I guess, 2 Januaries ago, January of '23, we put out the blended blinded exacerbation rate, 1.12 to 1.15. The reason and rationale we put that out was to show confidence that we continue to see in ASPEN, what we saw at WILLOW at the time, and the consistency of the 2 programs. It is blended and blinded. There is not a way to kind of back yourself into what does that sort of mean for each of the arms. I know folks have tried, and so we have not specifically updated it because I think folks are trying to do a calculation that you cannot do while the trial is blended and blinded. What we want to make sure people understand and see is if you look at all the past trials in this space, one of the issues was they did not have enough events. So by looking at the blended blinded rate, and this is something we continuously look at and we continue to like what we're seeing and continues to track, what I can share is we feel very confident that we're seeing enough events. And that should really be the takeaway, that we are seeing events out of this program. Now we don't know where those events are, which arm, the trial remains [ blinded ]. But we are seeing events, and we feel we will get a definitive answer when we turn over the [ statehood ] in the second half of Q2 because we will have enough events. We have overpowered this trial. We have designed this study in a way to give us definitive answers. That is what we are very eager to share with all of you in that sort of 45-day window that we've committed to.

Great. And another question. So back in January, the -- you guys mentioned that the dropout rate was less than what you saw in WILLOW, and WILLOW was overall a 6-month study. Obviously, ASPEN is a lot longer. To clarify, you mean that the dropout is, I would say, relative when you adjust for the time difference, right? Is that less than a WILLOW even when you adjust for the fact that ASPEN itself is a longer study?

Yes. What I can say is we continue to track and be very happy that the dropout rate is either at or less than what we've seen in WILLOW. And I think that really speaks to the safety profile of this drug. As a reminder, we had a higher dropout rate in placebo in WILLOW than we did in the drug arms. This is -- this has been shown in WILLOW to be a very safe product. We've gone through 5 DSMBs now in ASPEN. No safety concerns. To be clear, DSMB only looks for safety, no futility. We do not want to give up alpha, but we are really -- we feel really great about the safety profile of this drug. And as we all know, the first thing that we look at is safety and then obviously, efficacy. So I feel as much confidence as we can as we enter into this period.

Okay. Perfect. And when you're thinking about just -- and a lot of people have thought about different scenarios of what could happen when we flip the -- when you guys flip the ASPEN card over. Now one of the thoughts that I have is in terms of a possible scenario, let's say, you get statistical significance on just the 25-milligram arm, and the 10-milligram did not get stat sig. Can you just clarify, in this situation, would you go forward with approval using both the WILLOW and the ASPEN data? And also, your level of confidence in this type of readout? It's perhaps an unfair question, but...

Yes. No, I appreciate you asking the question because I know this gets to the heart of people are trying to understand. To be as clear as I can on this, we need one dose to win regardless of the dose. And we feel -- obviously, we will need to file an FDA, we'll need to opine on that. But we feel very comfortable about one dose wins. It's a clear win for this drug and a clear win for patients, irrespective of which dose that is. There's a high likelihood that if both doses are stat sig, that we may choose to only move one forward. We'll obviously need to see the data. But in a lot of ways, simple is better as we're thinking about commercialization. So we need one dose to win here. We moved both doses forward because we thought we saw enough in the WILLOW data that with the longer study, there could be benefit to patients at the higher dose. We don't need to see that. And we will get all questions answered. What I get very confident about in our design and how we approach this is when we turn over that data card and find out the p-values of the primary and the secondaries and all of those good things, we're going to feel confident that we've designed it in a way to get the questions answered that we need answered. That we're not going to wake up and say, well, what if we just enrolled another 100 patients? What if we just moved both doses forward? We will answer all of these questions, and I appreciate the investors' patience and their capital support to get ourselves to this point.

Got you. Excellent. Let's move on to TPIP, another pillar of Insmed and one that doesn't get as much screen time as brenso. But also, there is a tremendous opportunity here as well. Can you quickly go over, well, your thoughts on differentiation in TPIP versus what's currently on the market and perhaps what's going to come on the market?

Yes, absolutely. So I think we all appreciate that PAH and PH-ILD is going to be a [ patient ] space, and there's a need for that with patients. These are obviously life-altering life-ending conditions for patients, and it's our duty to try and find the best available treatment for these patients. I believe that there will be a need for a prostanoid as part of that treatment paradigm. And we are hopeful that if we continue with what we've been able to show thus far, that TPIP has the potential to be the [ postulated ] choice if you listen to what the medical community says. So, why do we believe that? What data will be coming out? I'm sure you would -- it's probably kind of the next place that we'll go. We'll look to put out data before ASPEN. We'll look to put out the top line results for PH-ILD. As a reminder, that is predominantly a safety study. We've overenrolled it, so 39 patients. We'll be able to share with the investment community the tolerability profile on an unblinded basis, what patients were able to max titrate up to from a dose perspective. It was randomized three-to-one, so you do have a fair amount of patients that are on drug, which is wonderful. Obviously, be able to look at any adverse events. There are some exploratory end points, but those will be available. They will not be available at the time of top line. Those will be available later, and we'll share those as soon as possible. The data just won't be available at the time. So a couple of points that I just want to highlight on the dose. We are up-titrating max titrated dose from 80 to 640 micrograms. Why is that important? I think we all appreciate that the more treprostinil you can get into the lung, the more beneficial to patients. And our prodrug formulation allows for that sustainable release of the treprostinil, including overnight coverage. Our max titrated dose, if you adjust for the -- ours is once daily, other available therapies are multiple times a day. The carbon chain weight, all of those things. If you truly put it apples-to-apples, at the max titrated dose, we provide 60% more drug. And that is really encouraging as we see the importance of getting more treprostinil into the body. We will also, at that time, update the blended blinded PAH data. And so why are we excited about that? It's blended and blinded, and we appreciate sort of the nuances with that. The PVR, pulmonary vascular resistance, does not happen spontaneously. And so what we were able to show last October was in the first 22 patients in PAH, we were able to show a 21.5% overall reduction on a blended blinded basis of PVR. If you look at comparable studies, in the drug arms, you usually don't even get to that. And then if you just look at the 64% of patients that actually had a PVR reduction and why is that important, that's important because this doesn't happen spontaneously. So if you look at just those patients, you see a 47% PVR reduction. Those are unheard of type numbers. So we'll update that blended blinded PVR data. We'll have about 40 patients, almost double the amount of data. So there could be some additional kind of efficacy endpoints while blended and blinded, but also shared at the same time as ILD. So you'll get the dose information, you'll get the safety, the tolerability as well as you've got the updated PVR data from PAH.

Yes. And remind me, that's -- for that study, it's a one-to-one randomization for patients in drug arm? For placebo and drug arm?

So for the PAH study, it's two-to-one randomized, which is ironically pretty close to the -- we saw 64% of the patients actually having a PVR reduction. It's all blended and blinded. You can think -- take whatever inferences you want there, but it was definitely of interest.

Exactly. Great. And so to move this forward, you still need to do registrational, much larger studies. And when I'm looking at that, probably will get you to more -- closer to the second half near the end of the decade for potential commercialization in, I would say, PAH, PH-ILD. One of the questions I'm getting and just curious about it is in terms of the patent IP protection, how -- what is the patent that you have right now? And how are you thinking about protecting it, let's say, into 2030 and beyond?

Yes. So a couple of comments. We've committed to initiating Phase III for the TPIP program in '25, so that's something we're looking forward to next year. As we think about TPIP, this is a product that we developed in our own research labs, similar to ARIKAYCE. So we developed this [ drug and patented ] through 2034. So that does not include any extensions that we would obviously continue to work through, and we feel very confident in our patent protection.

Got you. Okay. Great. And we're running up on time. But perhaps, just one last question. This one is on the ARIKAYCE, the other pillar. Can you clarify on the time lines and next steps for filing under Subpart H? And how should investors think about -- essentially, what's the next update that you're going to get and the time frame that you could potentially show those updates?

Yes. So ENCORE remains our base case. We have been very consistent in that message. We do feel, based on the strength of the ARISE data, that it's appropriate to ask the question. So we received some encouraging feedback from the FDA latter part of last year. We'll look to finalize the PRO and the statistical plan for ENCORE, I would say, probably around the Q2 time frame. And once that's finalized, then we'll pivot to the other side of the agency to have the Subpart H conversation. So we feel these are appropriate questions to ask, but ENCORE remains our base case and we're really encouraged by the ARISE data that we saw last year.

Okay. Got you. And with that, we'll wrap this up. Sara, thanks again for coming.

Thank you so much.