Good day ladies and gentlemen, and welcome to the Insmed Third Quarter 2017 Financial Results Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I'd now like to introduce your host for today’s conference, Mr. Blaine Davis, Head of Investor Relations. Sir, you may begin.

Thank you, Jimmy. Good morning, everyone and thanks so much for joining us today. We will begin by providing you with an update on our business and then discuss our third quarter 2017 financial results. Before we start, let me remind you that today's call will include forward-looking statements based on current expectations. Such statements represent our judgment as of today and may involve risks and uncertainties that may cause actual results to differ from the results discussed in the forward-looking statements. Please refer to our filings with the SEC, which are available through the SEC's Web site at www.sec.gov or from our Web site for information concerning the risk factors that could affect the company. Joining me on today's call are Will Lewis, President and CEO of Insmed; Paolo Tombesi, our Chief Financial Officer; and Roger Adsett, our Chief Commercial Officer. With that, let me turn the call over to Will.

Thank you, Blaine. Good morning, everyone, and thank you for joining us. This morning, we are pleased to update you on the excellent progress we’ve made this quarter in the wake of the very strong clinical data results we announced at the beginning of September. As a quick reminder, in early September, we announced positive top line data from our global Phase 3 CONVERT trial, which examined the impact of our drug on patients with the treatment-resistant form of the rare pulmonary lung infection called nontuberculous mycobacteria or NTM lung disease. In this clinical trial, we showed that adding our drug to a multi-drug regimen significantly improved the ability to eliminate evidence of the bacteria from sputum samples collected from the patient or what is referred to as culture conversion. The study met the primary endpoint of culture conversion with patients receiving our drug achieving culture conversion by a 20% margin, exceeding our expectations. These results were an unequivocal success and provide Insmed with the potential opportunity to bring to market a product that will help patients in a globally prevalent rare disease. The CONVERT study was the largest study in NTM undertaken to date and the first global study of Amikacin Liposome Inhalation Suspension or ALIS for the treatment of adult patients with NTM lung disease caused by MAC who had failed all guideline based therapy for a minimum of 6 months. For more than 10 years, it's been our mission to transform the lives of patients battling serious rare diseases and these results bring us one step closer to fulfilling that mission. NTM is a progressive and destructive infection that is associated with irreversible lung damage and increased rates of mortality. Current antibiotic regimens are inadequate in treating NTM lung disease. Typically, the disease affects an older population…

Thanks, Will, and good morning, everyone. Thank you for joining us today. I will spend a few minutes reviewing the quarterly results and then provide a few high-level comments related to our financials as we close out 2017 and move into 2018. This morning, we reported a net loss of $45.2 million or $0.69 per share compared with a net loss of $37.8 million or $0.61 per share for the third quarter of 2016. The main drivers of the increase versus prior year included increases in clinical development cost as well as pre-commercial spend. Research and development expenses increased to $26.7 million compared to $23.4 million in the third quarter of 2016. The increase was mainly due to higher expenses related to INS1007 versus prior year. Third quarter 2017 G&A expenses were $17.4 million versus $13.7 million in 2016. The increase was mainly due to higher expenses related to our pre-commercial planning activities for ALIS as well as higher compensation expenses related to increase in headcount due to the buildup of the field leadership team and the foundation for market access and patient service as mentioned by Will. Our cash based operating expenses for the third quarter 2017 were $39 million with a loss of $0.69 per share in line with expectations. Reconciliation of our GAAP operating expenses to our cash based operating expenses is included in our press release, which is available in the Investor Relations section of our Web site. As we discussed at our Analyst Day in Q2 earnings call, I’m pleased to confirm that our net cash balance at the end of June, $91 million, will be enough to cover the need for this full-year, and therefore, the capital we raised in September will lead [ph] the product next year, in particular, to fund the U.S.…

Thank you, Paolo. As you can see, we are catapulting ourselves forward from the moment of our strong top line data release in early September and we perceive an event filled 2018, including planning for a potential launch of ALIS in 2018. We will continue to be proactive in communicating our progress as we reach meaningful milestones along the way. As always, I want to thank the team at Insmed for their hard work and dedication to building something special that really will make a difference in patients' lives and to our investors for your support and confidence. Now let's open the line to take your question. Operator, can we go to the first question, please?

Of course. The first question comes from Joseph Schwartz from Leerink Partners. Your line is now open.

Good morning. Congrats on all the progress. I was wondering if you could talk a little bit about how close you’re to being able to file the NDA for ALIS and how much are you finding that all of the special designations that you’ve been granted from the agency is facilitating your ability to file it in an expedient quality manner?

Sure. Thanks for the question, Joe. I will tell you when we think about timing, obviously, the guiding principle is quality first. So we’ve an internal time line, we remain on track and consistent with that. We haven't had any derailing events along that path. I continue to draw your attention to [indiscernible] of 6 to 8 months from top line data to filing. We are not going to narrow it down any further today. I think we are all aware that our goal is to secure this filing as quickly as possible with quality first. From that moment, we are looking to secure priority review, which should result in a review cycle of about 6 months.

Okay. I know you noted encouraging dialogue with the FDA on the additional NTM populations. Did you -- were you able to -- have you been in constant communication with them on the core opportunity as well?

Well, let me be clear. I think that may have been an misunderstanding. We haven't been in contact or certainly haven't characterized our interaction with FDA around additional populations. All of our focus and all of our dialogue with FDA is centered around the filing of the NDA and making that happen and following, consistent with these designations we’ve, the most expedient path to secure potential approval for the product. As we think about these other areas, the push for that has really come from the KOL. So what I'd describe as a -- for me, something of a revelatory moment was the ATS and ERS experiences this year where many key opinion leaders approached me and said not only -- at ERS, congratulations on these compelling results, but here our areas we think this drug should go and be used. And that’s where we’ve come to this understanding of life cycle management opportunities, which I think are quite significant, and I’m excited about the potential there. We need to fully understand what the different regulatory agencies' perspective are in terms of requirements to secure the ability to go after those populations. But remember that severe refractory in the U.S., we estimated at about 10,000 to 15,000 patients, a kind of a similar number over in Japan, perhaps a few more. But beyond that, we think there are as many as 100,000 patients who have been diagnosed and treated with NTM in the U.S. So the severe refractory population is really the tip of the iceberg. And so the way I would characterize this is -- goal number one is to get the drug approved for the treatment of severe refractory patients and then right behind that, enter that dialogue and understand what is the pathway for potential expansion of the label should the FDA find that to be an acceptable opportunity and one that’s worth pursuing. I can simply reiterate that from the KOL's perspective, they see that as a very logical place to go beyond severe refractory.

Okay. Thanks for that clarification. That was actually when I just was able to get on the call. So I appreciate you clarifying my misunderstanding. Now I know you mentioned that you’re considering or you’re planning to do an interim blinded look in the Willow Study. I was just wondering if you’ve a rough sense of when you might get to that point?

We are not putting out that kind of guidance. Call me once bitten, twice shy on commenting on clinical trial enrollment time lines. But I think what I would say is, we are excited that we’ve gotten Willow up and running and that the sites are up and running and ready to screen patients. That was really goal number one for that particular development program and that’s running very well. So I think as that trial advances over the course of the next calendar year, we will certainly provide you some more updates and insights. And as soon as we can give visibility into when we might take that look, we will share that.

Okay, great. Thanks for taking all my questions.

You bet.

Thank you. And our next question comes from Adam Walsh from Stifel. Your line is now open.

Hey, good morning, guys. Thanks for taking my questions.

You bet.

My first question is just around, I get this from clients a lot, around the secondary outcome measures demonstrating clinical benefit in patients and the relative importance of those. In your data that you presented earlier, it looked like, on the six-minute walk test, you didn’t hit, and I think St. George's was -- you didn’t hit that either, but you did have a pre-specified endpoint there around patients who achieved culture conversion in either arm, demonstrating an improvement in the six-minute walk distance when you compare them to placebo -- I’m sorry, to patients that didn’t culture convert. Have you had any updated discussions with the FDA about the importance of clinical outcome measures? And what was their view going in on that pre-specified endpoint surrounding the culture conversions on the six-minute walk? Thank you.

Yes, it's a great question that sometimes confuses people. But I think perhaps a quick tour of the evolution of how people have come to understand NTM is important. And that begins with our Phase 2 study results, which was really the first time that anyone ever run a, to the best of my knowledge, a controlled, double-blind, placebo-controlled clinical study in this disease state. And with that information, we learned a great deal. We learned some of the endpoints we’ve talked about, we brought those forward as is appropriate and customary to reexamine in Phase 3. But our dialogue, including as a byproduct of some of the designations that Joe referred in his question, breakthrough therapy designation, QIDP, has been very robust around the appropriate trial design for our Phase 3 CONVERT study. And the agreement with FDA was that we'd look at culture conversion as the primary endpoint of this study, and that full approval would further be based on durable culture conversion. So what you should take away from that is that the clear message from FDA is that focus is on culture conversion. Now they will always look at the totality of the data. But remember that we did see some things in Phase 2, we brought those forward into Phase 3, and I think the most exciting clinical, as you refer to it, outcome here beyond culture conversion which is the clinical outcome that clinicians are focused on and payers are focused on and regulators are focused on is this six-minute walk data that showed patients who converted did walk further, and the p-value for that was less than 0.0108. So why is that significant? Because that’s actually a blinded analysis. The patients knew whether they were taking drug and that was always the discomfort with a six-minute walk results. Patients did not know whether they had culture converted. So to be able to show a low p-value relationship between those who converted walking further regardless of whether they were on our drug or another cocktail is very meaningful. And I think that, that is -- perhaps if people are looking for something beyond culture conversion, they should center on that.

That’s very helpful. And I jumped on late, I’ve been juggling conference calls this morning, but maybe I missed it. Can you talk about your planning for expansion in Japan, where you’re on that, what you’ve done to date and what the options you’re considering are, maybe partnering or how you’re approaching Japan at this point given the size of the market there?

Yes. So we are very excited about the opportunity in Japan. This goes back to the Analyst Day when we sort of started touching on that opportunity. I'd tell you that post the data, we’ve a senior team that is dedicated to answering the question of the best way to go and approach Japan. We have talked to a number of outside consultants, people on the ground over there, we are no stranger to Japan. We obviously had them in our clinical study. I personally have been over there many times, not only in regards to the clinical study, but because there was early interest in partnering this drug in Japan back before we even had our Phase 3 results going back to the Phase 2 results. People saw this as a promising therapy, and we choose not to partner at that time. Looking at where we are now, we will have an opportunity to consider alternatives. I think the best way to go about that is to first and foremost get more local presence on the ground. So we want to open an office over there. We are in the process of doing that. We will put a few people on the ground. This process will parallel pretty similar to what we did in Europe. And from that position of understanding, I think we will then make a more definitive decision on which direction we are going to go, and we will keep you updated on that. But let me just maybe pause there for a moment and ask Roger to talk about how we think about the commercial opportunity over there, because while there's still more work to be done, we do have some early understanding of what this could be for us.

Yes. Thanks, Will. So as you mentioned, the opportunity in Japan is quite sizable. So there is a fairly rigorous screening process in Japan. We know that annual physicals typically include a chest X-ray. And so physicians are tuned in, in identifying and diagnosing NTM, probably at a greater rate than we see actually in the U.S. And then once the physicians diagnose, then they also treat those patients at a higher rate. So as we previously laid out, we think approximately 15,000 to 20,000 -- 15,000 to 18,000 refractory MAC patients currently in Japan, and that compares to about 15,000 refractory MAC patients in the U.S. So a sizable opportunity, currently a larger opportunity than the U.S., so that we think, as we’ve mentioned before in the U.S., we think there's currently two undiagnosed NTM patients for every one based on the machine learning that we’ve applied to the Symphony data. So it's an interesting opportunity. We think that the pricing will also be favorable in Japan on the cost of goods plus model. But all of that work we are confirming as we lay out our plans to identify the best possible way to enter into Japan.

And then, I guess, just -- I’m sorry to take so many questions here, but I guess, just one more. When would you file in Japan? Remind me, is that after the U.S. filing?

Yes. So the plan there is, first priority, get the U.S. NDA completed. The moment that’s done, we will begin the process of translation and preparation of the equivalent of the NDA in Japan. That will involve some meetings with the Japanese regulatory authorities to ensure that, that submission is as fulsome as it needs to be. But I think we feel good about that. We’ve already had a meeting with them. So we had some sense coming in into the results of the Phase 3 data, what was going to be required. I will remind you that we’ve already done the PK work on Japanese patients as a part of our Phase 3 study. So all of that work has already been done. It puts us way ahead of the game for a company of our profile in terms of going to Japan. In terms of specific time lines, let's get the NDA done and then we will turn some attention to timing for Japan.

Hey, thanks for taking my questions. I appreciate it.

You bet.

Thank you. And our next question comes from Ritu Baral from Cowen. Your line is now open.

Good morning, guys. Thanks for taking the question. Will, can you go over when we might see the first durability data? You mentioned that major durability data will be included in the publication and in the NDA. Could we see some of that at ATS from the first few patients making it out that far or what’s the current 2018 plan? And I’ve got a follow-up.

Yes. So I appreciate the question. We are interested in getting all data out as soon as we possibly can. We’ve looked at the time lines for when -- 3-month off, all data will be in hand, we know what that looks like. What I would say is it will be our objective to try and get that two people in 2018. I think the hesitation about putting it out in the earlier is we think it's more -- we want it to be a complete picture. So we like everyone to be pass that point in time before we give information. But having said that, we are still wrestling with this a little bit internally. So right now, I can't -- I am afraid I can't give you more than that other than to say, we do plan in early '18 to put out additional data and then we will have more detailed data at ATS. Durability is something we are trying to figure out the timing of and when we can put that out, but we are on it. It will just be 2018 at some point.

Got it. And if I could ask about one of the extension opportunities, obviously, without getting into any potential off-label strategy, but what are current KOL inclinations as far as maintenance therapy with the drug like ALIS? I mean, maybe you could help us frame it in terms of what they currently do with standard of care? When a patient culture converts, they go out 12 months or 18 months, they’re still negative. What do the KOLs -- how do they manage those patients right now with triple combo and where could ALIS fit into that?

Well, just as a point of order, as you fully appreciate, I’m grateful that you made mention in your question of the calculations you did. The company will not be involved in any way, shape or form with off-label promotion. When you asked the question about additional life cycle management and opportunities, what I can share with you from the physicians' point of view is that, when they think about this drug potential in that front-line therapy setting, in that long-term treatment setting, it sits in juxtaposition to what they do currently. And as one KOL put it, once they come into my clinic, they never leave. You heard at the PFDD, and this not our characterization, this is patients themselves standing up before the FDA, telling them that they’ve been on a rotating cocktail of antibiotics for three or four decades. So in terms of how long our patient is treated, it really is -- varies by patient. But the guidelines call for treatment until culture conversion and then for an additional 12 months after that, but physicians will tell you they continue to monitor the patients and quite often keep them on their cocktail of therapy because the patients are quite motivated to ensure that they do not get reinfected. So when they think about our drug in this context, what they have socialized with us is the possibility of doing the studies that might examine if post conversion they took our drug, say, 3 times a week for the rest of their life, would that be of benefit in keeping the potential NTM infection from returning? And so I think that kind of opportunity is one we want to be responsive to because of their belief of the potential clinical benefit it would have. Front-line therapy is also another interesting opportunity, and I think about that in the same way. Here we have treated in our CONVERT study the most treatment-resistant, sickest of the sick patients and we’ve shown really positive, statistically significant results in terms of the ability to eradicate evidence of the disease in sputum. And that is very positive and it makes the physicians feel that there's a very high likelihood that we'd be efficacious and perhaps the less demanding patient profiles of long-term treatment or front-line therapy, which is why I think we feel there's a very good read-through here for our potential to demonstrate those effects.

Going back to the severe refractory for a second, have you seen any patterns as far as putting what we as doctors do as far as putting patients back on triple therapy even after conversion, if they hadn't reinfected or reconverted?

Yes. I think as you know, the triple cocktail that’s called for a guideline therapy is the best available treatment. It's quite onerous. Patients do not -- I mean, there are some significant adverse events that are experienced on it, and so some patients will discontinue it. But the key opinion leaders we talked to have said, as I mentioned before, once they come into their clinic, they never leave. Remember that the reinfection rate in this population, at least as some KOLs have characterized, it can be as high as 50% in inside of 3 years. So whether it's acute chronic treatment, in other words, they treat until they are culture negative, and then they retreat them when they get reinfected, which is a significant number of the patients or they keep them on it, add in [indiscernible], when they see these patients and they achieve that culture conversion, with the current standard of care, I think they feel it is very transient. And so the ability of our drug to potentially go in there and change that is really quite exciting for them because remember that a lot of these patients on standard of care -- are on standard of care with almost a CF-like treatment paradigm, right? They are not able to eradicate it, but they are taking it to keep the destruction at bay. And I think that is an important potential paradigm shift that we'd be able to bring about if these data continue to read out in some of these other patient populations, that you are actually able to eradicate the bacteria and then when it comes back, completely eradicate it again. So that’s our ambition. We got clinical study work to do to prove that, but we are very encouraged by what the key opinion leaders have been suggesting we do.

Great. If I can squeeze one last, a very quick one in, current thoughts on final commercial sales force size?

I will turn to Roger for that one because we are well underway.

Yes. So thank you, Will. So we are well underway. We are hiring our field leadership team and we anticipate adding about 70, 72 salespeople over the coming months.

Great. Thanks for taking the questions.

You bet.

Thank you. [Operator Instructions] Our next question comes from Liisa Bayko from JPM (sic) [JMP] Securities. Your line is now open.

Hi. Can you hear me?

Yes, we can hear you, Liisa.

Okay, great. Just a quick question, could you remind us of the hierarchy for the secondary endpoints? I think the question was, can you remind us of the hierarchy of the secondary endpoints from the CONVERT study?

Correct, yes.

So the primary endpoint was culture conversion, and then I think the secondary -- the next secondary endpoint was six-minute walk, the third was time to culture conversion and the next one was the patient reported outcomes.

Okay, great. Thank you. And then, just based on the kind of robust efficacy you’ve seen in your pivotal, can you maybe provide us some benchmarks on how to think about pricing in this market? I know you are probably still going through your pricing analysis, but just some relevant benchmark could be helpful? Thank you.

Yes, you bet. And we appreciate the question. It's obviously on a lot of people's minds. I will turn it over to Roger to talk about where we are in the work on that important question.

Yes. Thank you, Will. So pricing is, of course, a complicated and involved process. I think, it first of all starts with the -- over the decade of developments and approaching $1 billion of investments to get where we are today. But ultimately, it comes down to the value that we see and provide to patients. And I think we’ve tried to outline that and talk about the cost of this disease. And so obviously, the -- it's an expensive disease. And we see as an infection, just and of itself, leading to that lung disease, it's some significant costs associated with treating NTM. But then when you also look at the -- when it's laid on top and there is a comorbidity with other pulmonary diseases, it significantly increases the cost of those diseases as well. We previously -- as far as thinking about the pricing, we previously disclosed that the ATU price in France is over EUR80,000 per year. And as far as thinking about analogs, and I think that was the heart of your question as to what other products might look like, when we look at cystic fibrosis and when we look at IPF, when we look PAH and they are all in the rare space, but somewhere between 30,000 and 130,000 patients you can think about products and look until we part [indiscernible] case there are no [indiscernible] and the variety of PAH compounds that are available as perhaps where the payers will reimburse these products at those price points, seeing the value that they bring to those disease states.

Okay. Thank you very much.

You bet.

Thank you. And I’m showing no further questions. I would like to turn the call back to Will Lewis for any closing remarks.

Thank you all for joining us today. We look forward to updating you on our progress in early 2018. Have a good day.

Ladies and gentlemen, this does conclude your program for today and you may all disconnect. Everyone have a great day.