Insmed Incorporated (INSM) Earnings Call Transcript & Summary

All right. Let's go ahead and get started. So thanks for joining us, everyone. Next up, we have Insmed's CFO, Sara Bonstein. Sara, over to you for an overview of the company, where things stand today on the back of a huge 2025 and another exciting '26. After that, we'll get into it.

Great. Great. Thank you so much, Gavin, for having us, and thank you to Evercore for hosting this great conference. It's nice to be in some warm weather coming from an area where there was snow today. And so Insmed, as you said, we've had a tremendous 2025. And what I think is most important for everyone to walk away from is we are not done yet. We believe we have the ability to have a tremendous '26 and beyond, pending additional data readouts. So let's maybe just dig into each one of those just really quickly, and then we'll go into your questions, of course. ARIKAYCE specifically, this is our program that has been on the market for about 8 years. In first half of next year, we could have the potential to increase our addressable patient population today. We treat about 25,000 patients in our 3 geographic territories. We have the potential to grow that to 250,000 patients in our 3 territories, assuming success in ENCORE. So look out for that data readout first half of next year. As you move forward into BRINSUPRI, we are now happy to say we're a 2-product company. We launched our second product back in August. And so that launch, we put out, obviously, our first quarter. It was a short quarter with 6 weeks of revenue, but cautiously optimistic about the progress we've been able to make with BRINSUPRI and the lives that we've been able to touch with that very important therapy, and now it is also approved in Europe, which is great. If you think about the clinical side of that world under brensocatib, we have chronic rhinosinusitis, we refer to it as our BiRCh trial. That data will read out by early January, and that we believe could be just as large, if not larger, than the bronchiectasis opportunity and patient reach. And then HS, also known as our CEDAR trial, we'll look for that Phase II to read out first half of next year. So a lot going on with that program. Treprostinil palmitil inhalation powder, we'll call TPIP because it's a much better way to say it. That we will look to move forward in 4 different indications in Phase III. PH-ILD, that Phase III now is underway with sites initiating the PAH Phase III, we'll look to start that early next year. And then 2 additional indications, IPF and start those Phase IIIs. Hopefully, next year, we just have to make some more drug now that we're moving forward into those 2 additional indications. And then what we have historically referred to as our early-stage research, but a ton there and things now progressing into the clinic. So we have our DMD program that completed its first cohort. We'll look to expand into Cohort 2 and 3. Our ALS program that now has a cleared IND, and that's in both sporadic and SOD1. So we'll be able to potentially have an impact on a broad amount of patients there, we'll move that forward into clinic next year. Our DPP1 follow-ons, we'll move those into IND next year, the great work being done in Cambridge, U.K. on synthetic rescue in New Hampshire on deimmunizing capsids, tremendous amount of opportunity forthcoming. I'll just ground this with about 1,600 employees that I feel so talented to work alongside of around the globe to be able to move this program forward -- all these programs forward in what I believe could be a really tremendous 2026 setup. So happy to dig into any of it.

Awesome. Way too much to talk about in the 16 minutes here. Let's try. Starting off on the bronchiectasis launch. I guess most frequent question is cadence of new patients starting on drug, especially as you're thinking about the rate kind of exiting Q3 into -- into Q4, and then we should also probably say into 2026.

Yes, yes. So underwhelming, we're not going to talk intra-quarter. So apologies about that right off the start. But we -- again, we're cautiously optimistic about the performance in that first 6 weeks. We were able to show over 2,500 new patient starts. And I think also just as important, if not more important, the 1,700 prescribers. So having that very wide breadth of prescribing. Now what we commented on is we believe most of those prescribers wrote 1 to 2 scripts. So now seeing depth as well as increased breadth will bode really well for the future success of the launch. So I ask you to watch really closely to the next 2 quarters. So our first full quarter of revenue. That will be an important piece of information for you as you're shaping your curve. And then Q1 revenue will also be important as you're flipping the calendar year and seeing -- but cautiously optimistic, we have the ability, 500,000 diagnosed patients in the U.S. We believe about half of those have 2 or more exacerbations now on the heels of the Europe approval and what that label looks like. Great sales force, great medical team driving this program forward into -- for patients that are very, very needed of a treatment.

Awesome. I guess one of the questions is big population. So as you're adding additional prescribers as well, like why should the cadence not be picking up of patients coming on to drug? You previously have mentioned that some of the prescribers kind of sampled a little bit like 1 or 2 and maybe we'll take a little break before kind of coming back in more detail. Like how do we think about that dynamic?

Yes, yes. So it's typical any new mechanism of action. So I'll remind you, first ever DPP1 that has ever been approved. So a new mechanism of action and first time anything has ever been approved for bronchiectasis patients. So you got 2 first time. So it's standard and typical that doctors will typically write a script or 2, see other patients sort of feel function, how the medicine does before they go sort of broader. So that's why I highlighted the depth and breadth is definitely something we want to track. We have a high level of confidence that we'll be able to continue to see both increases in depth and breadth, but we need to see that. And that's why I point to getting those first 2 full quarters under our belt and being able to use that to appropriately shape what the curve looks like from a slope perspective will be important data points for all of us as we enter 2026.

Yes. I guess this calls for a little bit of speculation, right? But thinking ahead next year after you do have another couple of quarters, where do you think the curve is going to go from there? Is it kind of flat, up, down? Like I guess also like outside of your own data, what do your analog suggest that it will be...

Yes. So a couple of things here. So we've said -- we've given a peak sales number just for bronchiectasis. We've said $5 billion peak sales. And a couple of just important pieces in that. That is based on the diagnosed patients today. So unlike most first-in disease medicines, there was already an ICD-10 code. So we already knew how many patients were diagnosed, the claims data, how many had 2 or more exacerbations. So we had some of that data. And we had said, based on the patients that are diagnosed, we believe our global peak sales number is $5 billion. What that does not take into account is the broad potential of underdiagnosed or misdiagnosed patients. So as you think more broadly, there could be several million patients pick your number. The literature says 4% to 54%. So it's all over the map. There's 30 million patients that have COPD or asthma, right? So pick whatever number you want on that, but it's a significant number of potentially additional patients that could potentially benefit by just getting a simple CT scan and getting a bronchiectasis diagnosis. This is a noninvasive diagnosis pathway. And we are continuing to do work compliantly on the medical side, on continuing medical education and appropriate programs on having folks relook at scans to make sure did you even -- have we considered bronchiectasis as a potential indication for that depth and breadth. So the shape of the curve, there's a lot of factors in there. We obviously have a lot of conviction in being able to put the $5 billion out there, but there could be additional opportunity on top of that. If you think about analogs, we've done a ton of work on analogs, shout out to the amazing Investor Relations team that supports Insmed. They've done a ton of work on analogs and looked at what do really good launches look like. And so we've studied all of those. And if you look at those, their first 2 full quarters are $70 million to $80-ish million, sort of the best is maybe closer to $90-ish million. And then their next 4 full quarters are in the $500 million to $600 million range. So those are just analogs. It's not guidance. We're just saying what does -- what do really, really good launches look like and what would we want to aspire to try and be like.

Awesome. All right. I'm aware you're not giving a ton of quantitative metrics on this point, but I'll ask anyways is just what you're seeing from the prescription start forms kind of the enrollment side, converting to paid drug -- so whatever kind of qualitative comments you can give on that process, like timing, how smoothly it's going, any of those metrics are helpful.

Yes, sure, sure. So we invested early on a couple of items. We had our field force in place in October of last year. So our field force was in trains, ARIKAYCE on brands, bronchiectasis, disease state awareness to build up those relationships. We also invested early in the payer access and the market access, both internally and externally. So we started the conversations with the payers well in advance and with the goal of frictionless launch. So how can we have the most frictionless launch for both the treating physicians as well as the patients. The benefit for all of us is to get patients on drug as fast as possible. That's going to benefit patient, and that's obviously going to help with the shape of the revenue curve. So we had those conversations early and often on physician attestation on the initial approval and the reauthorization. Yes, I have bronchiectasis. Yes, I've had 2 or more exacerbations. Those were the conversations pre-label. Obviously, we're only -- we're not talking intra-quarter. So there's only 6 weeks of information. Those conversations, as you would expect, are continuing to be happening now or all ordinary course. The other piece that we also invested in is what's called a field access manager. So these are folks that help with the back office. So we brought in, we expanded this. We had this capability already with ARIKAYCE. We expanded this capability earlier this year to allow some of that service to the back office to help with the processing of paperwork as well as have what we call our case managers, our enlighten program to help if patients compliantly opt into this program, they can compliantly interact with the case manager to help with white glove service on the patient experience side.

All right. Great. I guess on the payer access side, what's your assumption for how the policies are going to read? Specifically, if it's kind of more aligned to the label or the clinical trial criteria. I think the most specific criteria most investors are focusing on is that 2 or more exacerbations. But I guess maybe more importantly, like even if there are criteria around 2-plus exacerbations, what does that really mean? Like is it really restrictive criteria?

Yes. So a couple of comments there. We were very open and transparent with the payers initially, which they appreciate, I believe, is 500,000 diagnosed based on literature, about half of them are 2 or more exacerbating patients. While the label is broad, we have assumed that the payers would look more stringent to the inclusion/exclusion criteria of the clinical trial. And so no sort of new information there. So that's sort of point one. Give me the question again.

So even if the criteria does read with 2-plus exacerbations, like what does that really mean? Is the documentation really is it actually a restrictive requirement?

Yes. The other important piece here is our goal is the frictionless launch. So frictionless launch is not going through medical records, it's that physician attestation of the 2 or more. The other important piece is as there is now an approved product, there was never an approved product, the benefit of documenting an exacerbation, we're not going to treat the patient any different. Now that there's an approved product, just that ongoing conversation of, did I have an exacerbation, was this an exacerbation? Should I document that, that typically across all different therapeutic areas when there's an approved medicine, usually the medical records and the documentation sort of catch up. So exacerbations, when you have an exacerbation, you're more likely to have a future exacerbation. They're nonlinear. If you had 1 in the last 12 months, in the next 12 months, could you have 1, could you have 3? Could you -- they're nonlinear and each exacerbation causes permanent lung damage. So we think this will continue to evolve over time.

I guess on the documentation of the exacerbations, right, like if it's physician at a station to kind of check off, there's a little more flexibility than if providers -- if payers are going out and requesting a whole boat load of EMR, et cetera, data, right? So there's that dynamic to consider, too.

Correct. Yes.

Okay. All right. Makes sense. Maybe we can talk about the EU side of things actually. Maybe just big picture, in the EU, how should we think about the speed of that launch relative to the U.S.

Yes. Yes. So EU, we were obviously very pleased that much earlier than I think folks even internally anticipated. So that bodes really well for their confidence in the medicine. The label is 25 milligrams in 2 or more exacerbations. We were actually very pleased with that label. I think that helps on the access side and the payer side. Broadly speaking, the vast majority of our revenue, we believe, will be from the United States, but we are very grateful that we now have the ability to impact patients and patient lives in Europe.

Awesome. And how do you think about the, I guess, the sequencing of different ex-U.S. countries coming online, kind of the relative contribution for those companies historically for other products versus U.S. products?

Yes. So throughout sort of first half, we'll look to launch in the various countries as well as U.K. and then second half would be Japan. Again, if you look sort of broadly at companies that are only in those 3 regions, not sort of some of the broader regions, their typical revenue is -- the vast majority is the United States from a revenue perspective. And so you shouldn't think anything different sort of in the model here. ARIKAYCE was a little bit more of an anomaly as you think about the contribution that we had from Japan.

Perfect. All right. Going over to the BiRCh data on the CRS side. I mean there was a lot of discussion on the last earnings call about some of the blinded data, clinical meaningfulness. Maybe we can skip some of that. Maybe just from like a modeling perspective, what's the best way to think about this? Because there's kind of a prevalent patient dynamic. There's also an incident patient going on a surgery each year dynamic, which you could kind of stack? Like what's the best way to think about that?

Yes. So we know we owe all of you more education on sort of the TAM, the funnel, all that good stuff as we have done with bronchiectasis, we had some data before we gave you that education. So we need to see the data ourselves as well. But if you look at the patient population, close to 30 million, around 30 million U.S.-only CRS without nasal polyps patients. So tremendous, tremendous -- about 3 million, I think it's about 3.1 million are steroid nonresponders. So this is a very, very significant patient population. And on an annual basis, in the United States alone, 200,000 patients get surgery. And this is a very onerous surgery for these patients. And so obviously, we need to see the data. What we have said, depending on the data is CRS has the potential ability to be just as large, if not larger, from a revenue contribution perspective as bronchiectasis. We have stated that the 3 indications that we've gone forward with brensocatib, BE, CRS and HS, we believe the WACC of 88 would be supportive across all 3.

Perfect. And they harmonize on a net price basis and payer access basis, too, do you think?

Data will prevail, but that would be the expectation.

All right. That makes sense. Additional, I guess, next-gen DPP1 molecules that I believe we're entering the clinic fairly soon. What's the indication plan there? Like how quickly can you go into a whole host of indications, like not just on the respiratory side, but also beyond respiratory.

Yes. Yes. So we view ourselves as a broad, how can we have biggest impact for patient on either first-in-class or best-in-class. So we have a lot of success in respiratory, but we believe we're much broader than that as well. So the follow-on DPP1s, we started doing work on this 5 years ago. On the heels of the WILLOW data, we had said we believe in this mechanism, and we have developed now over 800 different follow-on DPP1s in our research lab. So kudos to the great scientists that we have as part of the Insmed community. We'll look to move forward. The first of those into IND next year. We plan on the first being most likely in RA and IBD, so very significant patient populations and then obviously have plans thereafter to go into additional indications with additional future DPP1 candidates.

Awesome. TPIP how quickly can you move through recruitment and kind of through everything clinically there?

Yes. So we had a couple of really big wins. The FDA agreed to one Phase III program in PAH powered at 0.05. So that is a huge, huge win for us. These trials, obviously, they will take some time. I think the strength of the data that we saw in the Phase II will provide some excitement -- has provided excitement in the medical community, and you can potentially be able to see through that as you think about recruiting. But we will put the resources behind it, and I know you're all eagerly waiting. The one shout out I will give all of you is the PAH open-label extension program. That you may be able to start seeing the first of those data potentially as early as second half next year. It would be the 12 month, not the 2-year, but be able to start seeing potentially even at some higher doses, not PVR data because that isn't measured in OLE, but things like 6-minute walk and those kind of things, and that could be an interesting data point for you to kind of circle on your calendar for second half of next year.

Have you said anything about the retention in the OLE for that study?

What we have said is a huge amount rolled from the base study into the OLE. So it was 90% plus from the base study went into OLE. We haven't provided any further comments beyond that.

Got it. I guess on the financial side of things, consensus right now is not modeling that much step-up really at all in SG&A and R&D as you go into next year, kind of exiting fourth quarter and into next year, it's pretty flat. It feels like given everything you just laid out, there should be some step-up. What's the right way to think about that next year, but also bigger picture, like over the next 5 years, how much you're going to kind of reinvest in that?

Yes. While we don't provide formal guidance on OpEx, I think it's important to recognize that we have had Phase IIIs ongoing between ASPEN and ENCORE. The amount of Phase IIIs, assuming clinical success that we have forthcoming can be substantial. We could have CRS, HS, 4 different TPIP programs. There may be 1, maybe 2 Phase III. So a significant amount of Phase IIIs. And that's a good problem to have, right? That means we're having clinical success. All those costs will not happen at once. So they will ramp over time. And so you just need to be thoughtful on sort of the ramp over time. That will then be sort of overlaid by the revenue contributions for both brensocatib in BE as well as ARIKAYCE potential label expansion.

All right. Well, right on time. I think we'll wrap it up there. Thank you very much, Sara.

Thank you so much. Thank you.