Insmed Incorporated (INSM) Earnings Call Transcript & Summary

Hello, everyone. I'm Max Skor, biotech analysts with Morgan Stanley. And before we get started, for important disclosures, please see the Morgan Stanley research disclosure website www.morganstanley.com/researchdisclosures. And with that, I'd like to welcome Will Lewis, the CEO of Insmed. Thank you very much for joining us today.

Thanks for having me here.

All right, great. Maybe if we could start off, we're almost a year out from a little over a year from the approval of BRINSUPRI. I was hoping you can just kind of step back and give us some key takeaways, learnings, anything that you would glean as important from the launch so far?

Yes. Well, I'll just start out by saying this launch has blown away all our expectations. We started out, I remember vividly describing that -- we were going to use a basket of other specialty respiratory launches to help benchmark whether or not we thought the launch was going well, and we took from that basket of best performers a first year revenue production of about $500 million to $700 million. And at the time, I got a lot of heat for that because people thought, well, why would you set yourself against the best launches out there. You might not be to achieve that and you set yourself on your back heel. Today, as you know, we sit with an estimate for the first full year of $1.25 billion to $1.4 billion, which is just staggering. And it is now places us on track to be one of the top 20 launches -- commercial launches of all time in any therapeutic category. So by all measures, this launch has outperformed. The team has just done an exceptional job. And I think that bodes well for the future. What we've learned from that, a number of things, actually. I think we know that this is now a highly promotion-sensitive drug. That doesn't surprise us. That's what we expected. But to see that now play out with a year under our belt, we have really good understanding of how we can activate a patient and physician interest, what channels through a media perspective are most effective and most efficient and we can close levers to the extent that we need to, to help reenergize certain parts of the country as we move forward. But we've just upped our guidance. We think peak sales for this drug will be north of USD 7 billion, and that does not include any contribution from the COPD or asthma comorbid populations. So this is going to be a very, very big drug, and we're super excited about the success that the team has produced to date.

Great. So what were you seeing in the launch that supported the rate in guidance? Any key elements or things that really kind of supported getting to the point and going above $1 billion at the end of the year?

Yes. Well, we gathered more confidence in our own commercial effectiveness estimates. We obviously have an extensive dashboard that we track every little metric within the launch very, very carefully and shout out to the commercial effectiveness team. We've now tracked along those metrics, we're either at or ahead of pretty much every one of them across the board since launch. And that gives us not only confidence that, that team is doing an exceptional job, but it allows us to lean into the forward forecast where they think we're going to go and that's why we had this guidance raise in terms of both the target for the year and the overall peak sales estimate. And the peak sales estimate just a comment about that because I've gotten a number of questions about it. We upped that guidance in August because every year in August, we not only have a Board meeting and an earnings call, but we take about 1.5 days for a strategic offsite with the Board, where we do a 10-year forward view what do we think is going on with the company, where are we going, big picture stuff and to inform that discussion go back and we redo all of our market access, all of our forecasting with the latest data. And since we had shared that with the Board, and it was very, very clear that our TPIP estimates were out of date in Super was stronger than expected, it was time to update, and we thought that was appropriate.

So should we anchor to August next year when you meet with the Board for potential...

No, I knew that, that was going to come back to haunt me to provide that level of clarity. But August is always a good time to ask us how we're feeling about things. As is the beginning of the year, those are natural breakpoints for us. But as and when we get information and get a real sense of clarity and conviction, that's when you can expect us to update.

Okay. That's fair. Now drilling down a bit on the prescriber base, what percentage of current physician base is still trialing Brine maybe prescribing less than 5 patients. What does the time line look do you think to convert these to higher prescribers?

So I think what's exciting about this is that we have gotten such strong performance, as I just was reviewing in terms of revenue generation, breadth and depth have been very, very good. We still see opportunity, though, both for breadth and depth of prescribing behavior, there are literally more than 25,000 physicians we call on for BRINSUPRI prescription writing. And of those, it's a small fraction that have actually written one or more prescriptions. So there are some that have written none. There are some that have written a handful and are, as you say, trialists. And then there are some who are higher prescribers. What's the breakdown? Well, we're not giving the exact percentages, but what I would say is if you were involved in the clinical trial and you know the drug you're much more inclined to write and write in large volume. That's not surprising. What we're trying to do is spread that knowledge and that experience base across the balance of physicians that we have reached. Those who are trialing are now hearing back from patients. And as a result of that positive feedback loop are writing more. Those who have never written before are hearing through speaker bureaus, events that they attend at American Thoracic Society Meeting or the upcoming CHEST meeting about the progress with the drug. The bottom line here is the message across the board is very, very positive. We have tens of thousands of patients who have now taken the drug. We have many, many physicians, thousands of them that have written the drug. So if you want to think about this as a normal distribution, there's a huge bolus of physicians that are now able to be aware that everyone around them is writing this prescription. And the revenue just blows away every other launch that's been out there. So all of this in ears benefit to the perception of the launch as being strong, no new yellow flags in terms of side effect profiles. I think things only continue to be strong from here. I feel very, very good about where we are and where we're going.

And from a payer perspective, everything on track, if not exceeding?

Yes. I would say, once again, another point of strength in this launch has been the market access picture I give a strong shout out to the market access team at Insmed. We identified this very early and resourced it accordingly. And consequently, the success rate at one time, we were reporting north of 90% approval. We haven't updated that number, but I can just tell you that it continues to outstrip all benchmarks that are out there. We feel very good about market access. I don't anticipate that changing between now and the end of the year, such that our gross to net update, which was 25% to low 20s, low high 20s will remain that way, we think, for the rest of the year. That just speaks to the fact that this is now a steady cadence. And I think that is a message I would leave you with when you think about BRINSUPRI, we are now past the first year of launch. We know the trajectory of the launch. We know it's strong, and we expect it to continue to be strong. and we'll just have to see how things go. I would just emphasize variability quarter-to-quarter a little bit is not the driving factor in whether or not this is going well. The main force that will influence this company's next trajectory is whether or not we're able to secure the COPD or asthma comorbid patient populations into the top of the funnel for this medicine. When we talk about our estimate of the total addressable market for BRINSUPRI, patients with bronchiectasis in the U.S., that estimate 3 years ago was around 500,000 patients. That grows every year, it grows because of patient population growth whatever number you want to use, it grows because these patients do not succumb from this disease. They're around longer. So the incidence population every year gets added to the prevalence population. It doesn't replace those that die off. And that means that the pie keeps getting bigger. And in addition, there are patients who have one or few exacerbations who now have 2 or more because people are more sensitive to them. We're tracking them more accurately. So all these things in air benefit to growing that initial TAM. Having said that, when we talk about COPD or asthma comorbid population patients, let me try and put some numbers that will ground this. It's 500,000 patients we estimate as the original TAM. There are 32 million asthma and COBD patients in the U.S. alone. Of that group, some population also are comorbid with bronchiectasis. We would guess that, that may be in the 10% to 20% range, if you include asthma and COPD. So that is literally millions of additional potential patients. Now how many of those are going to come into the top of the funnel. We think it's the moderate to severe patients. And we think it's those with 2 or more exacerbations. We know those patients are out there. We need to identify them and get them channeled into the top of the funnel because they will benefit from this medicine and they will be on label, and there are no additional clinical studies we need to pursue that. That presents an enormous opportunity to us because, as I said before, that $7 billion peak sales number does not include any of those patients. So the future we'll be focused on that, almost like a second launch within the company and bringing them into reach for treating physicians where these patients can benefit is going to be a major driving force in our future.

I think we ran a survey earlier in the year with pulmonologists. They said, I think, around 16% to 20% of their COPD or asthma patients could be comorbid bronchiectasis patients. And I believe of their bronchiectasis patients were previously diagnosed with COPD or asthma. What are -- I guess, what are you focused on to change the prescribing dynamic educating physicians and when should we start to see this play out in the revenue numbers?

Yes. I don't think we're going to -- this is turning an oil tanker, right? This is a big group of patients, and we need to get the right ones into the right channel. So I would expect that we will have data because this is all looking back in [indiscernible] site until probably the middle of next year, where we'll be able to have at least 6 months looking back or COPD patients being diagnosed with bronchiectasis at an increasing level. what's the degree of use of high-resolution CT scans in COPD patients. The work we're doing right now with the COPD Foundation across nearly a dozen centers in the United States, to find out how many of the patients who have COPD and have CT scans actually also already had bronchiectasis, but it just wasn't diagnosed. We think that number could be in the 20% range. That data will be available in the middle of next year, and it will do 2 things. It will quantify how many patients are out there with actual bronchiectasis that also have that will allow us to extrapolate. It will also change the rules at hospitals so that when they're doing hi-res CT-scans of COPD patients they will automatically look for bronchiectasis, and that should also help channel into the right places whether or not these patients should be considered for treatment. Separately, from the bronchiectasis patients the COPD patients who are comorbid, we are also bringing forward another DPP1 inhibitor that's entering Phase I as we speak. Looking at COPD patients who have more of an emphysema type phenotype that may benefit from DPP1 inhibition who are not bronchiectatic patients. So there are slices of the COPD population that we intend to reach and hopefully provide benefit to from a couple of different angles.

Okay. Well, I'll ask a couple of questions and a bit on that. But yes, overall, in regards to potential seasonality, what you're seeing in the launch currently because this is pretty much the first full year we're going through. Any comments you have there?

Well, there's been a lot of questions about whether we're seeing seasonality. And of course, we won't know until we're through the season. We'll look back and we'll say, okay, what happened in the summer, what happened in the fall? And did we see a change over so that there's more evidence of patient need because of exacerbation increases or what have you. I mean it may be as simple as people were on vacation in the summer, doctors, patients, therapeutic specialists at Insmed could be any one number of these combinations that might have some influence on it, but I want to be really clear. I continue to feel like this launch is going extremely well. We don't see the weakness that sometimes people associate with the concept of seasonality, it's not that. It's -- is there additional upside either now or in the fall or next year during this time that we can think differently about accessing for the benefit of patients.

And so I imagine everyone is tracking scripts as we are. Do you still -- are you still confident in the capture rates I think we've noticed an acceleration over the last several weeks in regards to scripts. Any commentary around that?

I think we've said repeatedly that the Symphony data that is out there, TRx data continues to be proportionately accurate as an estimate of what we are seeing that should help reduce the volatility of what the quarter will look like. I would also say that the inherent variability of launch, which can come from a dozen different sources shouldn't end up driving an interpretation of how strong this launch is going. We've had quarter after quarter of incredibly strong performance. I'm not smart one direction or the other. And I wouldn't -- as a positive if it's above or a negative of its blow, we are on a trajectory to produce a mega blockbuster performance here, and that's where our eyes are focused.

Okay. And just going back briefly next year, we'll all be interested in commentary around the COPD asthma comorbid bronchiectasis patient population. How should we expect the team to communicate that? Are we expecting an inflection? I don't think you're going to break out these patients were comorbid.

No. What we will be looking at is some of these metrics like higher CT scan rates, diagnosis rates among COPD subpopulations we have a whole dashboard, as you might imagine that we're trying to track. A lot of that is backward looking. So we need to see what are the ICD-10 codes, how those evolved what are we seeing from the data where we're doing this dozen center study across the U.S., what is the percentage of patients who have COPD today that also have bronchiectasis that wasn't previously captured. I think that's going to be quite high. So all of those things will inform whether or not those patients are there and to what degree are we able to access them and bring them into the top of the funnel as it were. I think we have a pretty good shot at that. We've already made some good inroads. If you think about what we did at the World Bronchiectasis Conference this year in Germany, we had -- we hosted 20 COPD key opinion leaders who came in not for the bronchiectasis conference, but just to talk about COPD, prongeectasis comorbidity and how they see that as an issue and what they might endeavor to do about it. We look at that as 1 point of success. The study that I mentioned before, I think there were the guidelines that were updated this summer. That's quite important. The gold guidelines that include highlighting for patients who have COPD, for example, that are on max dose treatments and are still experiencing exacerbations, those patients should have a high-res CT scan and determine whether they have bronchiectasis. And in the guidelines, it says if they do, you should consider BRINSUPRI, our drug. So I think we're making early inroads, but they're important and they will hopefully continue to support the strength of the launch as we go forward. As we get to next year, I call out the middle of the year as an approximate time frame. We don't really know when we're going to see clear signs, but my guess is by then, we should be seeing some breadcrumbs, if not actual numerical impact.

Okay. And with all successful launches, especially when there is no real standard of care, you attract competition or copy cats, can you comment on that? How should we think about that longer term? Or are there any risks to copycats?

Well, we fully expect our estimate $7 billion-plus in peak sales assumes that the next closest DPP1 competitor is not only successful and approved, but that they will take meaningful market share from us. Moreover, it assumes that in 2035, we will face price renegotiation from -- and despite all of that over pressure, we still think we'll do north of $7 billion comfortably. That opens up a whole window of opportunity when we think if either of those is different and/or if we are able to capture the COPD or asthma comorbid populations.

Okay. And then before moving on to the second-generation DPP1, could you just talk about briefly the Japanese opportunity and thoughts on Europe?

So international generally for a launch like this is never usually more than about 10% or 15% of overall global revenue. Within that, we think the bulk of that is going to come from Japan. We don't yet have our final price from Japan, but certainly, our interactions with the country so far have been very productive and positive. My expectation is that, that will go well enough that we'll be able to launch aggressively over there. I think the team is certainly ready to run through walls. I was just over there for the launch meeting, and it's a launch meeting not just for BRINSUPRI, but for the expanded label for ARIKAYCE. So we're sitting over there now with roughly 75 sales reps. We're going to add another 50 in the next year because the opportunity is significant enough. And I'm super excited about what that will yield that part of the world and its contribution to our overall performance. Japan has been a point of real strength in this company for a long time, and there's just some excellent leadership and capability out there that we've been fortunate enough to be able to work with.