Insmed Incorporated (INSM) Earnings Call Transcript & Summary

Good morning, everyone. Thanks for joining the session -- fireside session was Insmed and my name is Clara Dong, one of the biotech analysts here. Sitting next to me is the Chief Executive Officer of Insmed. Will Lewis, welcome.

Thank you very much. I appreciate you having us here.

Great. And it has really been a landmark year for Insmed. I have to say a first in disease FDA approval and very strong launch and impressive data in PAH and then really more to comment. I'll pass it to you to give an audience of what's going on at Insmed and what have kept you really busy for the past year.

Yes. It's been an interesting last 18 months for sure. But as we like to point out, we're facing an even more eventful next 18 months because we've just had the ASPEN trial readout, which was successful, obviously, and then the approval of brensocatib for the treatment of bronchiectasis. Beyond that, we have the TPIP data that came out and then [ Uther's ] data, which validated TPIP, its potential in IPF and PPF. So we are now looking at 3 programs at the company ARIKAYCE, which is approved for refractory MAC lung disease, conditionally in the U.S. and full approvals in Europe and Japan that is going to enjoy the ENCORE trial readout, which should expand that market opportunity from 30,000 patients to over 250,000. So that's a big expansion should that data read out as we expect it to. The second program we have is brensocatib, the DPP1 inhibitor that, as you just pointed out, is approved in bronchiectasis. This is a disease that has been around since '18, '19 and never had anything approved to treat it. So we're very proud of the fact that this medicine has cleared that hurdle and is now available for patients. The launch early days, it's just a handful of weeks, but certainly was going well. I think we want to be cautious about where it goes next. We're going to be learning more with this first full quarter but we've said publicly, we think this medicine could clear $5 billion in peak sales just in that indication. So we're very excited about that and are resourcing that effort. It has the potential to be used in other diseases as well. Anywhere there's a neutrophil component to the disease. We think it may have applicability. So we're studying it in CRS and HS to other diseases. The CRS data will read out by the end of the year. We'll make that public shortly thereafter, probably in early January. And then HS will read out in the first half of next year. And while that's a longer shot as we like to describe it, both are really interesting opportunities and very substantial. We've said CRS could be bigger than bronchiectasis. So another major readout here in the near term. As we look out beyond that, we think of next-generation DPP1s that we have in our library, they're going to be entering the clinic next year for sizable market indications like rheumatoid arthritis, IBD and others, COPD, asthma. So there's a lot more to come with DPP1 assuming that it is working as effectively in these other diseases as it has in bronchiectasis. And then finally, TPIP, which is going to be kicking off Phase III trials in PAH, PH-ILD, IPF and PPF. So if you take a snapshot of where we're going to be in the next 18 months, all of those things kicking off, all of the data reading out plus the commercial launch update in the U.S., the addition of Europe and Japan. The sales force we use for ARIKAYCE is the same one we're using for bronchiectasis. So this is a territory we know very well. And that gives us an awful lot to talk about over the next 18 months. Next year, for example, we could be kicking off as many as close to a dozen Phase III programs.

So before we talk about BRINSUPRI launch in bronchiectasis, let me also just want to talk about your vision here. So you're kind of moving into a multi-franchise commercial company. You have a lot of R&D going on as well. So how are you thinking about the prioritization between your commercial execution for ARIKAYCE and BRINSUPRI and your R&D efforts?

Well, this is the byproduct of rational design. So we are hitting our stride here just as we intended to and try to create a kind of news flywheel, if you will, where in the next 18 months, these data readouts will give us additional momentum in addition to the performance of the commercial launch of the drug. Beyond that, we have 30 programs in preclinical development right now that span a range of diseases and technologies in therapeutic areas. Several of those are in the clinic right now, gene therapy for DMD, for ALS and Stargardt will all be in the clinic next year. Beyond that, we have programs using our deimmunized therapeutic technology for proteins, it's driven by AI, which is kind of interesting. It's obviously a buzzword right now, but we've been doing this for several years, and we think we may have successfully de-immunized a version of your case, so that will be entering the clinic probably in '27. That's a pretty exciting program for us and would be a landmark achievement if we were to be able to successfully bring that all the way through. We also have efforts for novel mechanisms of action that are complementary to DPP1, which are being developed in our New Jersey research labs. And then finally, we have a program using a technology called synthetic rescue, which is looking at CNS disorders out of Cambridge England that's a few years away from the clinic, but exciting, nonetheless. So I mentioned all this stuff because we've always referred to that as our fourth pillar, and there's always been a little bit of discomfort with why are you investing in that. Now it becomes apparent why because with the 3 main commercial programs we were just describing and these 30 programs internally, we really don't need to do anything else in order to continue to build value for the company. In this franchise, we just need to execute on what we have. Now we will be selectively engaging in business development as well, but we'll be looking at very high hurdle to bring those programs in, and we are going to be targeting low upfronts for asymmetric returns in these novel MOAs. One of the lessons of our industry is that if you get a novel mechanism of action, like DPP1, the upside potential of that is almost unlimited, whether it's CFTR modulation and Vertex, the franchise they built or PD-1 at Merck, that's a $30 billion franchise. We all know GLP-1 and where that could go. So that's what we're focused on. Novel MOAs that are first in disease or best-in-class for these various diseases. And we've got a lot in-house that we're executing on right now and thanks to the excellent work of our Chief Financial Officer. We are well capitalized to be able to pursue all of that. I think your question really goes to how you're going to prioritize. Right now, the pedal is down, and we are full on development because of all the positive readouts we've had and we're going to continue to do so. I think even in that circumstance, we're very fortunate because the revenue generation potential of BRINSUPRI will outstrip the expenses related to these development programs. So we're on -- what we like to think of as an almost inevitable journey to cash flow positivity. We haven't timed that yet for the market, but it's coming.

Great. And let's maybe dive deeper a little bit to BRINSUPRI launch, and there has been a lot of -- has been a lot of recent focus in the first partial quarter fresh out of the gate, it has been really strong. And how does the initial performance kind of compared to your initial launch expectations? And what has been the key drivers contributed to this early traction?

So it was a partial quarter, and we obviously posted $28 million in revenue, which was very encouraging. I think we want to urge a little bit of caution around that because some of that is inventory build on the part of the pharmacies. And it's still too soon to know what this launch curve is going to look like. We really need a few quarters under our belt. But certainly out of the gate, this is positive. And I think the greatest positive that we see in the launch so far is the breadth of prescribing. So we're very encouraged that we've seen script writing not just in the centers of excellence. We believe over time, the centers of excellence will get there and write high volume for their patients. What we're really trying to make sure is that we also get the community-level physicians to be writing early and then focus on creating depth of prescribing behavior there. We are just now beginning to turn on some of the additional elements that can drive a launch of success, things like speaker programs, advertising, there's a lot of awareness of this disease among the patient community, and we're seeing a lot of proactive outreach by them to their physicians. So I think all of these are positives directionally, but it's still very early, and we need to see where things go before we know what the true demand is versus things like inventory build market access is going to be a huge driver. So far, that's gone very well, but we don't know what the final program decisions will be from the different plans, and that will obviously potentially put a break on some of the uptake. So we'll just have to see. We'll know much more with the fourth quarter and the first quarter of next year.

And in terms of the market access criteria, so you mentioned some of them are being finalized. So how should we think about the time line for those criteria to be finalized? And what's your expectation?

So we're going to see some of those plans finalize their decisions between now, really in the first quarter of next year, and that's -- that will give us a clearer picture on what we can expect for uptake. What we're trying to do with a little bit of outreach and some discounting modest is ensure both frictionless uptake and then also a frictionless reauthorization process. which we think is important for this because it is a chronic medication that's going to be used for life. So we want to make that as easy as possible for patients, and we'll see how that goes.

And you also have other regions following on their way. So kind of -- tell us what are the key milestones for ex U.S. launches. And how do you plan to set the pricing? I think you mentioned in Europe, you're going to set the pricing in parallel.

Yes. So Europe has already come out with a recommendation to approve the medicine. So we expect that, that will happen sort of between now and the end of the year. That puts us in a very positive position, obviously, with the European launch next year. We already have all the infrastructure in place to execute that launch, because of ARIKAYCE, which has been on the market for -- in the U.S. almost 8 years now. Europe, similarly, has been on the market for several years. Japan is right behind it. And I'll remind you that our Japanese colleagues have just done fantastic work in terms of driving volumes for ARIKAYCE's use, and I expect that, that will lay the groundwork for a very successful launch of BRINSUPRI. When we think about pricing in a world of MFN, we obviously want to be sensitive to this but I'll remind everyone that we priced ARIKAYCE at list price parity between the U.S., Europe and Japan. There is discounting that goes on. Some of that is visible. That may change with the MFN pressures that are being brought to bear, particularly in Europe, and it's something we're watching carefully. But our ambition is obviously to bring the medicine wherever patients will benefit. And if the systems that provide that final pricing structure are constructive, then we'll bring the medicine there. And if they're not, we frankly won't. So we'll have to see how that unfolds. We don't have a lot of leverage over the country of, say, Germany to dictate that they're going to accept a particular price. It's up to them what they'll ultimately offer to pay, and then we'll have to make a difficult decision about whether or not we can support bringing the medicine forward. but list price parity is the way we're going to approach all of these markets.

And how are you thinking about the long-term opportunity, maybe in COPD patients as well?

So if we just talk about bronchiectasis as a target market, we've said that there are in the U.S., 500,000 patients that are diagnosed today with the disease, and about half of those have 2 or more exacerbations. Beyond that, we know there are patients with COPD, some 20 million of them in the United States and some portion of them experienced exacerbations, which are probably indicating that the underlying disease may also include a diagnosis of bronchiectasis if examined. So we're encouraging that examination to take place. And I think in the medium term, not upfront. But in the medium term, that may fill the top of the funnel with more patients, the literature right now suggests somewhere between 4% and 60% of COPD patients are also bronchiectatic. So you can see behind that 250,000 initial patient target group that we're going after in the U.S. which are 2 or more exacerbations in the last 12 months are all these COPD and asthmatic patients who may be comorbid and that could number in the millions. So there's a lot further for us to go, and that's why we are comfortable with the guidance that we think this could be a $5 billion-plus peak sales drug in this indication.

And I also want to talk about another disease that BRINSUPRI is being studied for and you have the data -- upcoming data in early next year, that CRS without nasal polyps. So for those might be less familiar with the disease. Can you just maybe talk a little bit about what are the unmet needs for this disease? And how do you see BRINSUPRI might potentially address them?

So CRS comes in sort of 2 forms with nasal polyps and without nasal polyps. With nasal polyps, there are surgical options to treat it. There are also a lot of the biologics available approved like DUPIXENT and HUMIRA are available to treat that population. CRS without nasal polyps, which is what we're targeting, has nothing approved treated except for a generic steroid. So there is a clear unmet medical need. There are some more than 30 million patients in the U.S. that have this condition. We're going to be targeting those who are at the severe end of the spectrum. And indeed, the entry criteria for this study are patients who have a score on a what's called a total symptom score or TSS above 5 on a scale of 1 to 9. So these are highly symptomatic patients. They come in with that score. They then are randomized -- then they are placed on the generic steroid for 30 days, and that's to ensure that the best available treatments are already been -- they've already been exposed to. They still have to have a score of 5 or greater at the end of that 30-day run-in period, then they're randomized in the trial. That should, we hope, mute the placebo effect that is sometimes seen in the treatment of these patients. We're targeting in this trial, a 0.7 improvement. If we see 0.7 or greater, we will move forward into Phase III, and we set that number based on the fact that, that's what Optinose, the only approved generic steroid in this indication achieved and they secured approval. So on the basis of that, we think that's the right target. If we get above that, obviously, that would be a home run. But 0.7 is the threshold we're looking for. Probably won't be statistically significant just to set everyone's expectations. Trial is not designed or powered that way. But if we get the directional benefit or indeed, if we see a subpopulation of patients that are responders, we would go forward with them because this market is so substantial.

And are you going to show any secondary endpoints as well? Maybe SNOT 22? And what's the significance of that secondary endpoint?

Yes, it's unfortunate that someone with a sense of humor named the symptom score, the SNOT-22 score, but that is actually the benchmark that is used in clinical practice. The TSS or total symptom score, which is the primary endpoint of our study is what the FDA look at. So we are studying both, and we'll have the data from both of those. And as we've commented publicly, we do see directionally in the blended blinded data improvement on both measures. It's always dangerous to look at blended blinded data, so buyer beware. But we like to look at that because if the drug is having an effect, you should see something in the blended blinded data. And indeed, we do, we see a 2-point move in the totality of the data. So that could lay the groundwork for a success. We just won't know until we unblind. That will be by the end of the year, and then we'll probably report at the early part of January.

And then maybe just when we are thinking about the bronchiectasis and CRS without nasal polyps, how should we think about when we extrapolate the advocacy we've seen in bronchiectasis to CRS and maybe talk about the overlap of patient populations between these 2 diseases as well.

There's quite a bit of overlap between those populations and also with NTM. Indeed, the COPD Foundation has gone about qualifying centers of excellence in the United States to treat both NTM and bronchiectasis. And so that will lay the groundwork for additional patients coming into the funnel. But what's interesting about CRS without nasal polyps and bronchiectasis is that they are part of this thing called the integrated airway, where it's believed that anything that starts out of the nose essentially ends up in the lungs. And so it may be that bronchiectasis is a downstream manifestation of people who get CRS with or without nasal polyps, and it results in bronchiectasis down the road. So this could be a really important aspect of the treatment paradigm for these patients. Of note, we talked about subpopulations and CRS without nasal polyps that we may be able to treat. One of the things we looked at was eosinophil count, so patients above and below 750 down to 300 and then below 300 that we stratified the statistical analysis plan initially for CRS without nasal polyps for that particular subpopulation. Having looked now at the ASPEN data, we can see that we are able to treat patients successfully regardless of eosinophil count, and that puts us in a very strong position. It means we may be able to go after CRS with nasal polyps as well. So there's a lot more room for this to run. If this trial reads out successfully. And I would say the biggest point of intrinsic value creation for this company in the next 6 months is the readout of CRS because if CRS works and we move into Phase III. We probably have unlocked what we like to call a skeleton key of medicine, which means that this should be applicable in multiple diseases. And so then you start to adjust the probability of success for things like rheumatoid arthritis, irritable bowel disease, COPD, asthma. These are massive market opportunities that we'll be bringing DPP1s into, and that just gives us an awful lot of room to run as a company.

And maybe just talk about how large exactly is this opportunity for CRS, if you have to put a number.

Well, we can say that the bronchiectatic patient population we're targeting with 2 or more exacerbations right now in the U.S. is 250,000. As I mentioned before, there are more than 30 million that have CRS without nasal polyps. So even if we're going after the most severe end of the spectrum, this is in massive prevalence population and a significant incidence population every year exceeding the size of the bronchiectatic population. So if we talk about being $5 billion in peak sales just for bronchiectasis, and we are successful in CRS, you can see where this can go. This could be a very substantial additional opportunity for us, and we'll know that answer in a couple of months.

And I also want to -- for the rest of the time, I want to talk about TPIP as well. And maybe can you talk about your -- the trials you're running and the pivotal opportunities for TPIP in multiple indications?

So TPIP is -- has advantages because it is once a day. It is a dry powder, it is able to show benefit 24 hours after administration. So you're getting benefit in these patients, not only during the daytime, but while they sleep. And so with those data that came out showing the best available pulmonary vascular resistance reduction. We had a 35.5% reduction. That's better than Sotatercept has. So this is a very significant finding, and it opens the door to the use of this drug in PAH, PH-ILD, IPF and PPF. So we are going to be running 4 different Phase III programs with this medicine, and we have advantages, not only the kind I've described, but also because we can titrate up to much higher doses. We went up to 640 micrograms in these studies. We're going to be able to go up as high as 1,280 in the next set of studies. We're also going to be measuring 3 hours after administration as opposed to 24 hours after administration in the Phase III trial that parallels what's been studied by companies like United Therapeutics, our ambition here is to simply put forward the best-in-class medicine and we have seen such positive results to date that we are really bullish on where this could go for all 4 of these indications. So if you think about where the company is, we have ARIKAYCE, it's about to get an expanded opportunity. We have bronchiectasis, and we're looking at CRS and HS and then IBD, RA, COPD and asthma. We look at TPIP going into PAH, PH-ILD, IPF and PPF. That's just the first 3 medicines, which have been largely derisked. This company has had a very good run in the last 18 months. But from our point of view, because of all of these programs and their probability of success, we have a lot further to go. And I think what you're looking at is the creation of the company we had in our vision, which is the next biotechnology company on par with the likes of Vertex and others.

So what kind of regulatory feedback have you received on the TPIP clinical development strategy so far?

We've talked to them only about PAH and ILD, and what's encouraging is that we're only going to have to run a single Phase III study. So that lowers the cost and hopefully the time line to accomplish this. We always say that the order is quality first, speed second and budget third in terms of our prioritization, but that served us well to date. And I think just given the promise of the data we've seen we'll be powering these studies conservatively to make sure that we show a treatment effect, but if we see something like 35.5% PVR reduction in the PAH Phase II study, and we can replicate that in Phase III, we will be clearly not only best-in-class but best in disease with that kind of performance. Right now, there is some that models Sotatercept just in PAH at $7 billion in peak sales. Even if you take a discount to that, we're going after PH-ILD IPF and PPF. So this is a very substantial program.

And for the last 2 minutes, I also want to touch on your first product, ARIKAYCE. I mean you do have clinical readout in the frontline disease coming up. So what's your expectation for that data readout? And what's the opportunity for that?

So right now, we're going to be -- we've got guidance of $425 million to $435 million, $440 million. What is it? $420 million to $430 million. I never remember, but that's because we just raised it. So it's been a very successful year despite the launch of BRINSUPRI, shout out to Sara Bonstein, our Chief Financial Officer for knowing things I should know. But what's really interesting about this is we're about to expand that. If ENCORE works as well as ARISE did in terms of Phase III readout, which will be in the first half of next year, we're going to go from an addressable patient population between the U.S., Europe and Japan of 30,000 to 250,000. It's a very substantial expansion. Every other company that has come along and tried to create a medicine for NTM has failed. This is a very, very difficult disease to treat and the success we've had to date should be able to put us in a strong position to target the broader market opportunity as well. Japan, just as an example, is now responsible for more than 20% -- almost 30% of our revenue, and it is a very exciting time to think that they could expand as well. because it's going to drive our revenue into '26 and beyond without competition.

And I also want to quickly touch on the gene therapy you mentioned earlier, I think it's pretty under the radar. So maybe talk about what's the next milestone we should expect from your gene therapy?

So this is part of our fourth pillar, gene therapy. We have programs in Duchenne muscular dystrophy. We're using an intrathecal delivery approach, which lowers the amount of virus you have to deliver and should improve the safety profile while also ensuring good transduction in both skeletal muscle tissue and cardiac tissue, which is what we've seen in our work to date. We've already completed the first cohort of treatment without any issue. So we're excited about that and progressing into others. We're going to be bringing forward treatment for ALS. We're looking at both SOD1 patients and sporadic patients. So there is a very substantial opportunity if ALS works. It's a terrible disease and the ability to have an impact there would be a capstone in a career as far as I'm concerned, and the possibility that we could actually treat sporadic patients makes that a blockbuster drug, if it works. And we're hopeful that it will. Beyond that, we also have a treatment for Stargardt. So there are 3 gene therapy programs in the clinic next year, and we're excited about what those will yield. There's a lot more in our pipeline. We don't tend to talk about it as you say, but that's because we want the data to speak for itself.

Perfect. That brings to the end of our discussion. And thank you all for joining us here, and thank you for all the audience joining us in person and online.

Thank you.

Enjoy the rest of the conference.