Good morning, and welcome to the Insmed Second Quarter Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Stacey Jurchison. Please go ahead.

Thank you, Debbie. Good morning, and welcome to today’s conference call to discuss our second quarter 2020 financial results and provide a business update. 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 materially from the results discussed in the forward-looking statements. Please refer to our filings with the SEC, which are available through the SEC’s website at www.sec.gov or from our website for information concerning the risk factors that could affect the company. We plan to reference a non-GAAP financial measure during today’s call. For a reconciliation of that measure to our GAAP results, please refer to the earnings release we issued earlier today. Additionally, this information on today’s call is not intended for promotional purposes and not sufficient for prescribing decisions. Joining me on today’s call are members of the Insmed executive management team, including Will Lewis, Chair and Chief Executive Officer; Sara Bonstein, Chief Financial Officer; Roger Adsett, Chief Operating Officer; and Dr. Martina Flammer, Chief Medical Officer. Let me now turn the call over to Will Lewis for prepared remarks. Upon completion of those remarks, we will open up the call for your questions. Will?

Thank you, Stacey. Good morning, everyone, and thank you for joining us. We hope you and your families continue to remain safe and healthy. On behalf of Insmed in the midst of unprecedented challenges, I’m pleased to report a strong second quarter. Starting with the ARIKAYCE franchise, there were several noteworthy accomplishments. First, we were included in the updated international treatment guidelines with a strong recommendation for use. Second, we received a positive opinion from the European Committee for Medicinal Products for Human Use, or CHMP. We, therefore, anticipate approval by the European Commission by the end of September. This will enable us to add Europe as a commercial territory before the end of 2020 right on schedule. Third, we were able to increase revenue quarter-over-quarter despite the presence of COVID-19 and established a stable base from which to try to return to growth. Fourth, we made final preparations for our confirmatory study, evaluating the potential of ARIKAYCE to become the new standard of care in the front-line treatment setting around the world. For brensocatib, our novel potential first-in-class DPP1 inhibitor, we made significant strides advancing our understanding of this unique molecule’s potential. As a first-in-kind neutrophil immunomodulator, we believe this has potential in a wide range of diseases. Initially, our focus will be on the longstanding unmet need for patients suffering from bronchiectasis. Driven by both the strength of the WILLOW data and synergies with our existing ARIKAYCE franchise, Insmed is in a unique position to bring this compound to market if it secures approval. At the same time, we continue to explore additional potential disease indications for this unique and promising mechanism of action. Lastly, we are excited to advance the next candidate in our pipeline, treprostinil palmitil, given the early results seen to date. We will explore all of these programs in detail during a virtual Research and Development Day on September 30. So please stay tuned for more information. As we look towards the second-half of 2020, we believe we are well-positioned to continue our momentum. I want to commend the entire Insmed team for their efforts and for their ability to excel in this challenging environment. This quarter, more than ever before, we have delivered for our patients around the world, and that is something I know the whole team is proud of. With that context, let me now turn the call over to Sara to run through this quarter’s financial results. Sara?

Thanks, Will, and good morning, everyone. As Will mentioned, we had a strong second quarter, where we made significant progress across our programs. In my capacity as Chief Financial Officer, I’ve tried to bring a keen focus on managing our operating expenses, while fully supporting our key strategic priorities. I believe this approach leaves us well-positioned for continued success. With the proceeds of our recent financing, we are currently very well capitalized, and our capital resources are appropriately aligned to advance our key strategic priorities. Global ARIKAYCE commercialization and label expansion, brensocatib Phase 3 advancement in bronchiectasis, an advancement of treprostinil palmitil into clinical development. Earlier today, we issued our detailed second quarter financial results in a press release. Let me highlight just a few of those results for you now. Notably, despite the ongoing impact of COVID-19 throughout the second quarter, ARIKAYCE sales for the quarter showed strong sequential growth over the first quarter. We reported total net revenue for the second quarter of $42.5 million. And when looking year-over-year, total net revenue increased 42% as compared to the second quarter. Our gross-to-net for the second quarter were approximately 13%. Given this result, we reiterate our previous guidance of our gross-to-net for the full-year to be in the mid-teens. Cost of product revenues for the quarter was $10 million and the gross margin was approximately 77%. Turning to expenses. For the second quarter of 2020, research and development expenses were $35.7 million and SG&A expenses were $49.7 million. Our GAAP operating expenses for the second quarter were $86.7 million, compared to $87.2 million for the second quarter of 2019. Please note that, we do expect expenses to increase upon initiation of our Phase 3 program for brensocatib and our confirmatory study of ARIKAYCE in the front-line treatment setting. In the second quarter of 2020, our adjusted operating expense, as defined in our earnings release, was $73.7 million compared to $74.4 million in the second quarter of 2019, highlighting our continued focus and efforts on cash discipline and preservation. Finally, we ended the quarter with a strong cash position of $641.9 million, which includes proceeds from our recent financing, further strengthening our ability to execute on our core strategic priorities. With that, let me turn the call over to Martina for an update on our pipeline. Martina?

Thank you, Sara, and good morning, everyone. As Chief Medical Officer for Insmed, I’m focusing the company on three primary programs. Let me start with brensocatib, a novel oral reversible inhibitor of dipeptidyl peptidase 1, or DPP1. As was indicated previously, we believe brensocatib holds significant promise for patients as a potential first-in-class, disease-modifying immunomodulator for the treatment of a multitude of diseases characterized by uncontrolled neutrophilic inflammation, and importantly, represents an opportunity for us to build a pipeline around the product. Earlier this quarter, we were pleased to share final positive results from our Phase 2 WILLOW study of brensocatib in patients with non-cystic fibrosis bronchiectasis as part of a virtual American Thoracic Society session, followed by an investor call with Professor James Chalmers, the primary investigator for our study. A recording of this event is available on our website and provides an excellent overview of the compound, its performance to date and its future potential. Recall that the WILLOW study met its primary endpoint with both the 10 and 25-milligram doses of brensocatib significantly prolonged time to first pulmonary exacerbation over the 24-week treatment period versus placebo. We also saw a very clear dose response reduction in the levels of neutrophil elastase, or NE, in sputum with a larger reduction in concentration of active NE in sputum from baseline in both brensocatib doses versus placebo. This finding supports the mechanism of action of brensocatib to reduce neutrophil test serine protease activation. One striking aspect of the WILLOW study results is the consistency of the data for both the primary endpoint and the key secondary endpoint. Frequency of pulmonary exacerbation across a variety of subgroups, for both the 10 and 25-milligram doses, the point estimate of the hazard ratios favored brensocatib for nearly every subgroup. We view the consistency…

Thanks, Martina. Good morning, everyone. I’m pleased to report that from an operational perspective, we had a solid second quarter across the organization. Performance was marked by the commercial team’s success in growing the ARIKAYCE franchise, as well as the company’s ability to advance our programs through the build-out of a global infrastructure. Turning specifically to ARIKAYCE performance this quarter, as Sara mentioned, we had revenue of $42.5 million for the second quarter, which results from our continued success engaging both health care providers and patients in this virtual setting. We are still seeing significant regional variability, which we expected, as some states have seen COVID-19 infection rates decline, while other states are only now reaching their peak levels. In short, the landscape remains unpredictable. However, should we see recovery time lines in the south and the west similar to those which we saw in the Northeast during the second quarter, we believe we have clear potential for growth in the second-half of the year. I continue to be proud of the company’s ability to adapt so effectively to these unusual circumstances. Despite these challenging times, we remain confident in the long-term strength of the ARIKAYCE franchise, and we’ll continue our efforts to innovate and adapt going forward. Within the second quarter, we saw new patient adds starting to tick up again month-over-month, thanks in part to the seamless remote support our Arikares team provided the patients and physicians. We believe ARIKAYCE may also benefit from two other potential catalysts for growth in the back-half of the year. First, we were pleased to report that ARIKAYCE was included in the new international treatment guidelines for NTM lung disease. The clinical practice guidelines are issued collectively by four major medical societies, ATS, the European Respiratory Society, the European Society of Clinical…

Thanks, Roger. Let me close out our prepared remarks by reiterating that we are extremely proud of the continued execution by the Insmed team. We managed to grow revenue and advance all our clinical programs this quarter during one of the most challenging environment the company has ever faced. We remain as committed as ever to our mission of serving patients, as well as the healthcare providers who care for them. We are pursuing this mission from a position of strength. We have an impressive team with a demonstrated ability to successfully adapt to these challenging circumstances. And finally, we have a strong balance sheet that will enable us to stay the course as we build towards our promising future. With that, I’d like to open the call to questions. Operator, can we take the first question, please?

Yes. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Marty Auster with Credit Suisse. Please go ahead.

Hey, guys, thanks for taking my question, and congrats on the execution of the quarter. I just had a couple of questions. I guess, one for Roger. As you’re thinking about the launch in Europe, I’m curious if you can just update us on kind of your thoughts around pricing across the different regions there? And also kind of – I think it’s Roger or Will, but maybe a little bit about your – how you’re thinking about how wide of a global pricing band kind of you’re amenable to? And then a second question for Martina on 1009 treprostinil palmitil. I’m curious if going to the dry powder from the nebulized formulation, that you’d previously developed, beyond kind of usability and administrative advantage, I’m curious if you’re expecting the tolerability profile to improve with that change and whether you think you might be able to achieve higher doses with the dry powder inhaler? Thanks.

Roger, why don’t you take the pricing questions?

Yes, sure. Thanks, Will. So thanks for the question, Marty. So as you may recall, when we priced ARIKAYCE in the U.S., we actually had quite a large scope to price quite high on the scale, given the value that we provide and the rare nature of the disease. And we chose to price it towards that lower-end. And I think that what that sets us up for is a fairly narrow band as we think about pricing in Europe and Japan. We’re not, at this point, disclosing that price. But I think that my comments sort of give you an idea as to how we’re thinking about that. Just to reiterate, the first pricing will be in those free pricing markets, Germany and the UK, followed by negotiations with markets over the coming 12 to 24 months in Europe. And just a reminder that the prices – the list prices in the UK and Germany will be used as a foreign price – basis for price adjustment in Japan. So we believe we’ll be eligible for the cost-plus pricing model in Japan, where they take a look at the cost going into the product and then take a look at foreign prices to make a final adjustment before agreeing on that final price in Japan.

Martina, maybe you can take the question on 1009.

Yes, Marty. So from – yes, we do expect that we would have a better safety profile, especially in the area of the elevated heart rate and consistency also in blood pressure and also less frequency with what are the more troublesome side effects with current therapies, which is tachyphylaxis, which is also called NTI effect.

Martina, in the Phase 1 then, are you expecting? Is the target to kind of achieve a comparable area into the curve to current comparable therapies? Or do you think it’s possible to even exceed that?

Well, we’ll have to do the study. But I think what we will plan to see is that we have greater consistency in pulmonary arterial pressure over time, and that is also less frequent dosing. I mean, as you know, right now, we’re up to nine times dosing in current therapies, which is high burden of disease for patients and for physicians. And so we will be looking forward to potentially once-a-day dosing.

Okay, thanks. I appreciate your answers.

The next question comes from Ritu Baral with Cowen. Please go ahead.

Hi. This is Lyla on for Ritu. Congrats on the quarter, and thank you for taking the question. Do you think that the impressive revenue for the quarter reflects backlog and new prescriptions delayed at the start of COVID? And have your conversations with physicians indicated that they still have a backlog of patients that they’d like to have NTM testing, but haven’t been able to interact with in person? Thank you.

Yes. Thanks very much for the question. Actually, I’ll ask Roger to address those two points.

Yes, sure. Thanks, Will. Thank you for the question. So what we did see, as we mentioned in the prepared remarks, is that we did see that new patient starts were ticking up month-over-month within that second quarter. And I do think that, that reflects some return to normalcy that was beginning to occur. Now having said that, as we all know, the COVID cases spiked in different states and abated in others, so it’s very hard to predict. But I think what we had seen and as we’ve mentioned previously was patients putting off those visits. And that, of course, makes it a challenge. But as we’ve talked about in the first quarter and as we continue to see as we refresh our market research, physicians are – do intend to proactively call patients back into their office to discuss NTM treatment options, and their index of suspicion around NTM has been raised. So we see increased attention to the patients who are actually on therapy already and also this intent to prescribe and this index of suspicion increasing. So we do believe that once COVID abates and allows patients to go back into those physicians’ offices that we could certainly see that – if they follow through on what they say their intentions that we could certainly see increased patient adds on ARIKAYCE. I will also say from a growth perspective, we talked about some of those catalysts. We’re really excited about the guideline add. And I think that, that really helps us in talking, particularly with community pulmonologists and community IDs around the appropriate use of ARIKAYCE, those refractory patients, reinforcing the standard of care and also the duration of therapy. So treat to culture conversion plus another 12 months. So all of those things, I think, are lining up. We believe the ARIKAYCE opportunity is firmly intact and really excited about the growth opportunities going forward.

Gotcha. Thank you. That’s very helpful.

The next question comes from Joseph Schwartz with SVB Leerink. Please go ahead.

Thanks very much. Congrats on a very strong quarter. I was wondering if you could talk a little bit about how the geographic distribution of new patient adds has been trending during the pandemic period relative to before, when I believe, you said that it was fairly evenly distributed. How have new patient adds been trending in hotspots versus colder spots?

Thanks for the question, Joe. And I think we’re all well aware from watching the news of the significant variability across the country. But maybe Roger, you can – I don’t know if we can provide anymore detailed insight. I don’t think we’ve given that out to date, but any qualitative comments.

Yes. I don’t have any specific quantitative numbers for you, Joe. But I do think that what we had seen initially was sort of that rebound, as you might imagine, in states that had – that were still open and then we saw that start to abate a little bit. In the Northeast, for example, we’re starting to get more access. And importantly, these pulmonologists have been pulled in to treat the COVID patients and their hospital duties have been taking them away. So now, we’re starting to see that as, I think, doctors become better at treating these patients as the hospital burden doesn’t seem to be so heavy in certain regions, that allows them to then return and focus on their practice, including the NTM patients. So it’s very variable. But as you might imagine, I think, as the spikes and the trends in the states, the ability for physicians to treat NTM, start NTM patients and really turn their attention away from the hospital back to their own practices, that follows that kind of – those kinds of spikes in outbreaks. I hope that answers your question.

Joe, the only thing I would add to that is, look, when this started in March/April, we were in a completely unknown situation. Everybody was sort of experimenting with how to respond. There’s a lot of dialogue that is happening among and between infectious disease and pulmonologists across the country and indeed around the world. And so I think as these new spikes arrive, there is a much better understanding of how to respond. And so consequently, I think, the ability to spring back from the response to COVID-19 surges is understood and the importance of doing so for patients who are suffering from conditions outside of COVID-19 is also much more appreciated. So it’s a different circumstance. But I wouldn’t skate over the important impact of that variability on a regional basis. We’re going to be watching very carefully for the rebound in those areas that are hardest hit now, like Arizona, Texas and Florida.

Okay. That’s really a helpful color. Thanks. And then I wanted to ask about Europe and get your latest views on the size of that market, perhaps relative to the U.S. In places like Germany and the UK, for example, do you have estimates for how many patients could be addressable? And are there any reasons beyond the obvious differences presented by the country-by-country reimbursement process that a launch there will look much different from the strong launch you’ve had here in the U.S.?

Yes. I think we are excited about the total international program that we’re going to be kicking off at the end of this year and into next year, assuming approval in Japan. And those two are very interrelated. On Europe, specifically, I’ll ask Roger to talk about what we understand now.

Yes. Thanks, Will. So Joe, the – I think we – as we previously discussed, the medical literature will tell you that there’s approximately 1,400 refractory MAC patients in Europe, which I think seems probably on the low side we’ll see. But if you think about the overall population within Europe, if you think about the underlying lung disease and smoking rates, for example, the elderly population, it seems that that’s probably underdiagnosed. But I think that, that probably reflects the maturity of the market and the work that we will need to do to drive the identification of these patients. I think, look, Europe always launches slower than the U.S., in my experience. And I think, we’ll see that here. The center of excellence model that Europe largely uses for these rare diseases also puts somewhat of a break on uptake. I think that the long-term opportunity is robust and perhaps underestimated right now. But I think the initial uptake that we saw in the U.S. where we saw community physicians and pulmonologists and IDs really jump on ARIKAYCE early on, that opportunity just doesn’t exist so robustly in Europe as we mostly go through that center of excellence model. So I would say, it’s probably – the uptake probably not going to look like the U.S. in the near-term. But long-term, we think this is certainly a robust opportunity.

That makes sense. Thanks. And then maybe a quick one on Japan, since you alluded to that, and I appreciate the color about the things that you’re doing to prepare for a successful launch there now. How do you get to the field force size that you’re deploying there? And do you think that’s sufficient to make ARIKAYCE a success in Japan?

Yes. Again, I’ll turn that one over to Roger.

Yes. Thanks, Will. So again, this is the work that our Japanese team, as we’ve been building out, have been doing. So looking at the – again, the Japanese centers of excellence and then working with the KOLs and then evaluating where these patients are being treated. So it’s looking at the data, the domestic data for patients. And certainly, there are patients, as you know, in Japan, the prevalence of NTM is quite high. It’s larger, more diagnosed patients in Japan than in the U.S. So there’s some pretty good information out there as to where these patients currently are. And so the Japanese team, under the capable leadership of Yuji Orihara, has mapped out the resource needs. So we certainly think for the refractory population, this 15 sales team – sales reps and the five MSLs that we’re looking to deploy will be sufficient to support a successful launch there.

Thanks, again.

Our next question comes from Matthew Harrison of Morgan Stanley. Please go ahead.

Great. Good morning. Thanks for taking the question. I guess, two for me. Can you talk just a little bit – I know people are focused on the patient demand side. But can you talk a little bit about what you’re seeing from the physician side? I know a lot of pulmonologists were having to treat COVID patients. And so I’m wondering how that impact has shifted over the course of the quarter and going into the second-half of the year? And then I just have a follow-up on Europe after that.

Sure. So on the doctor side, I mean, the good news is, we are doing constant market research to stay close to the trends in the U.S. commercial launch. And Roger, maybe you can comment on some of that feedback.

Yes. Sure. So again, as we have mentioned before, we repeated the research that we had talked about in that first quarter. And the index of suspicion amongst pulmonologists and thinking about the index of suspicion for NTM. And so in July, we had about almost two-thirds of healthcare professionals anticipated an increase in the index of suspicion for pulmonary infections, including NTM, post-COVID-19. So that’s actually increased from the last time we shared the results and the market research in April. And this is approximately 75 physicians that we did this market research with. And we still see the healthcare professionals, about two-thirds of them will proactively bring in NTM patients who have previously missed their appointments as COVID-19 subsides. The difficulty, of course, is trying to predict the course of this disease and the ebbs and flows of these infections. But certainly, as we get some – return to some sense of normalcy, we expect that physicians will be able to reach out to these patients and bring them back into their offices. And that’s going to be particularly helpful for diagnosing those new patients. So if you put together that index of suspicion and proactive outreach to bring patients into the office, we think that bodes well for us once we have a better handle on COVID-19. We do see the pulmonologists – and again, this is regional variability. We do see that pulmonologists are now being able to turn their attention away from sort of hospital duties and taking care of these patients and more towards the – to their own practice. So hopefully, that’s going to continue, hopefully, with the – as we better understand how to treat the disease, the burden on these pulmonologists will lessen and they will be able to – and continue to treat patients who obviously do need therapy beyond COVID-19. And we do see that – as part of this research, that physicians are much more attuned, I would say, to respiratory health and maintaining outreach in connection with the patients who are currently being treated for NTM, and we think that, that’s a positive trend and is likely to continue.

Okay. Thanks. That’s helpful. And then on Europe, I guess, what I wanted to ask is, outside of Germany, obviously, where you can set a price and launch pretty rapidly. We all know that the reimbursement discussions can take a while in some of the other countries. And so I guess, what I was trying to ask about is, can you give us any sense for what you think the pace of launch could be in other countries? And then maybe more specifically, any analog products that you look at in terms of the amount of reimbursement, let’s say, France or UK or Italy has given to similar products? Thanks.

Yes. I appreciate that question. And I think the good news is that, we will fall outside of NICE in the UK, so that is also a free pricing market for us. So both Germany and UK will be free pricing markets. And we have, obviously, extensive experience in France already through the ATU program in terms of securing an attractive reimbursement price prior to approval. There, we were getting reimbursed fully by the government for well in excess of 100 patients and that was around US$100,000 a year. That’s not, in any sense, an indication of where we will price in Europe, but it is just an indication of the recognition of the severity of the disease and the need for this product to be used and its efficacy. Roger, you want to add any comments about the roll out and pace?

Yes. It’s a great question and, of course, this is always the trick with Europe. So as you mentioned, we’ll price in Germany and launch by the end of the year. We’ll follow that by the UK. There are some procedures in the UK, where there has to be a process to improve sort of the NHS reimbursement. But, as Will suggested, we don’t have to work through NICE, which is a credit to the UK team, who’ve been working proactively with NICE throughout over the past few years. But that will potentially mean that the meaningful uptake in reimbursement will be delayed by a couple of months. The pace throughout the rest of the markets, I think, France is probably the longest and we could probably expect probably that to take over a year to get a reimbursed launch. Other markets, we expect to be able to roll out over the – probably by the second-half of 2021 for those markets, including Italy, Belgium, Austria, those kinds of markets.

Great. Thanks very much.

Operator, are there any other questions?

Graig Suvannavejh with Goldman Sachs. Take on the podium. So please go ahead.

Hi, everyone. This is Jack [ph] on for Graig. Congrats on the quarter, and thanks for taking the questions. If we could talk a little bit about the front-line study and PRO tool that you plan to use there, what is left for you to align on with the FDA to kind of get that underway and get their blessing? Thanks.

Yes. I appreciate the question. I think, I would say, we are very excited about where we are very excited about where we are in our dialogue on the front-line study with the FDA. We’ve had a very collaborative relationship with them. And we remain very much on track to start that study by the end of this year. We will reveal a great deal of detail about that study at our Research Day that will be on September 30, alongside a great deal of detail on the design of our Phase 3 program for brensocatib and where we are with 1009. We’re not going to be providing any more detail today. But I would just characterize that as all, but locked and loaded. And so we’re going to be super excited to explore the details of those studies with you on September 30.

Okay. Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Will Lewis for any closing remarks.

Thank you all very much for joining us today. Stay safe and healthy.