Insmed Incorporated (INSM) Q1 2021 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the Insmed First Quarter 2021 Financial Results Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker, Eleanor Barisser, Associate Director, Investor Relations. Thank you. Please go ahead.

Thank you, Natalia. Good morning and welcome to today’s conference call to discuss our first quarter 2021 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 from the forward-looking statements. Please refer to our filings with the Securities and Exchange Commission, 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. The 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; Dr. Martina Flammer, Chief Medical Officer; Roger Adsett, Chief Operating Officer; and Sara Bonstein, Chief Financial Officer. Let me turn the call over to Will Lewis for prepared remarks. Upon completion of those remarks, we will open the call up for your questions.

Thank you, Eleanor and good morning everyone. As you are all aware, last year was the most transformative in Insmed’s history. Several years ago, we set ourselves on a path to become a global multi-product biotechnology company. At the time, this was a bold decision, but one we felt we could accomplish if we focused on three key elements our company culture, great science and sincere ambition to help patients. Today, I am pleased to report for the first time we have secured approval of our lead product, ARIKAYCE, in the 3 major territories where we have built our own infrastructure, the U.S., Europe and now Japan. We hope and believe this will be the first of many such approvals. This accomplishment, building global capabilities for development and commercialization, is something we are very proud of, and we believe it represents just the beginning of the Insmed story. When I think about what we will be bringing forward in the coming years, our focus will center on three main areas: commercial performance, advanced clinical programs and translational research. The first area of focus is the performance of our ARIKAYCE commercial franchise, which Roger will address later on in this call. This includes our approved indication in refractory NTM in the U.S., Europe and Japan. The second area of focus is our three advanced clinical programs. These are ARIKAYCE, brensocatib and TPIP. ARIKAYCE and brensocatib overlap in the pulmonary therapeutic space and are in global registrational trials to address very sizable populations with serious diseases where there are currently no approved therapies for these specific conditions. Upon successful completion of these pivotal trials and potential regulatory approval, we plan to commercialize in the U.S., EU and Japan ourselves. Our third program, TPIP, has the potential to be the cornerstone of therapy for the treatment of not just PAH, but also PH-ILD and IPF, should relevant regulatory agencies view the data as supportive. It is our intention to bring that program through commercialization as well. Any one of these programs, if successful, will allow us to grow substantially from where we are today. Martina will provide an update on these efforts later on in the call. The third main area of focus is translational research. Our research efforts include a growing number of programs, which we believe could be ready for the clinic in the near term. We plan to develop programs in-house as well as augment our research through business development activities. While these efforts are difficult to set against specific time lines, we believe they are very promising. We are hopeful that animal work will continue to demonstrate the viability of these potential medicines, which address serious unmet medical needs in the pulmonary therapeutic area and well beyond. It is our intention to deploy our capital in a disciplined and strategic manner as we continue to add capabilities to these efforts. We look forward to sharing more details at the appropriate time in the future. From my perspective, 2021 is off to a great start as Insmed continues to make important progress across our commercial performance, advanced programs and translational research projects. We believe we have enormous potential in every geographic region where we have built capability, fueled by our growing pipeline. While the COVID-19 pandemic has lingered longer than many might have anticipated, we are in the beginning of the return to the new normal. Insmed is extremely well positioned for this future, bolstered by our strong financial position. With that, I will now turn the call over to Sara to walk through our financial results. Sara?

Thank you, Will and good morning everyone. As Will mentioned, Insmed realized several important achievements across our business in the first quarter. Earlier today, we issued our detailed first quarter financial results in a press release. At a high level, our financial results for the first quarter are in line with our internal expectations. Let me highlight just a few of those results for you now. As reported this morning, we ended the first quarter with $410 million in cash and cash equivalents, which we believe will enable us to advance our three key programs: ARIKAYCE, brensocatib and TPIP along with our research and translational medicine efforts. Before I continue, let me take a moment to provide more color on our first quarter tax burn. In the first quarter, we incurred several large onetime payments, including a milestone payment to AstraZeneca related to the first piece in dosing in our Phase 3 ASPEN trial as well as initial startup costs related to our registrational programs in both ARIKAYCE and brensocatib. Importantly, our use of cash in the first quarter was in line with our internal budget, we anticipate near-term quarterly cash burn to be below the first quarter levels. As Will mentioned, we are committed to being good stewards of cash and remain dedicated to ensuring our investments are directed to areas that support future growth and value creation. Total net revenue for ARIKAYCE was $40.2 million for the first quarter of 2021. As expected, our first quarter sales continued to be impacted by the pandemic. In addition, in the first quarter of the calendar year, like many companies in our industry, we are always impacted by the reset of the patient deductible, including the donut-hole effect. Despite these challenges, we continue to demonstrate steady performance of the ARIKAYCE franchise. Importantly, our revenues were 9% higher in the first quarter of 2021 than they were in the first quarter of 2020. We anticipate ARIKAYCE revenue returning to sequential growth as the impact of the COVID-19 pandemic subsides. We are already seeing key indicators that may lead to positive trends, which Roger will address in more detail later on the call. Our gross to nets for the first quarter of 2021 were approximately 17%. As previously disclosed, we anticipate our gross to net to be in the mid-teens for the full year 2021. As a reminder, gross to net has historically been highest in Q1, mainly attributed to the coverage gap as a result of the benefit reset at the beginning of the year. Cost of product revenues for the first quarter was $9.8 million or 24%, which was in line with our cost of product revenues in the first quarter of 2020. Turning to our GAAP operating expenses, for the first quarter of 2020, research – for the first quarter of 2021, research and development expenses were $61.4 million and SG&A expenses were $51.6 million. These spend levels were aligned with our internal expectations as we support our growing development pipeline and invest in our research and development capabilities. Of note, our first quarter SG&A expenses remained flat compared to the first quarter of 2020. In 2021, we will continue to invest in our core operating business, including the commercialization and clinical support of ARIKAYCE globally, the ongoing and planned development of brensocatib, the continued advancement of TPIP as well as our research and translational medicine capabilities. We remain laser-focused on prioritizing appropriate development investment with responsible cost control. Let me now turn the call over to Martina for an update on our pipeline. Martina?

Thank you, Sara and good morning everyone. Let me begin by speaking to our efforts in medical affairs, which is a more robust organization within Insmed than ever before with capabilities across the globe. These activities include educational efforts focused on the treatment of refractory NTM in order to ensure that our stakeholders have a complete understanding of the appropriate treatment of this disease. Further, we continue to assess the synergy across physicians who treat NTM and those who treat bronchiectasis in order to gain a deeper understanding of the ways in which these two indications overlap. Another key function of medical affairs is generating and presenting data at key conferences across the globe. Importantly, these presentations address the full spectrum of data, from preclinical research to clinical development, to health economics and outcomes research that is relevant to physicians and drives healthcare decisions. In fact, you will see data from all 3 of our programs presented in 9 posters at the American Thoracic Society, or ATS International Conference later this month. One abstract posted on the ATS website that we want to draw your attention to is a study highlighting the increased mortality of patients with COPD who also had NTM. These patients had a 44% higher annual mortality rate with steeper survival curves, meaning more patients who have COPD and NTM died and they died sooner than patients with COPD alone. These results underscore the need to urgently treat NTM patients with these comorbid conditions. We are also excited to share that an abstractive data from the Phase 2 WILLOW study, has been selected by the Board of the Second Annual European NTM & Bronchiectasis Workshop to be included in the best oral presentation session to be held on July 3, 2021. We look forward to sharing the presentation titled neutrophil serum protease levels in blood and sputum samples of patients on brensocatib from the WILLOW Phase 2 trial in non-CF bronchiectasis at that time. Let’s now turn to our clinical development program. All of our ongoing trials are moving forward and enrollment remains on schedule as anticipated. These include our Phase 3 ASPEN study designed to assess the efficacy, safety and tolerability of brensocatib in patients with bronchiectasis as well as our post-marketing ARISE and ENCORE studies for ARIKAYCE as a frontline treatment for patients with MAC lung infection. Beyond bronchiectasis, we remain on track to initiate in mid-2021, a Phase 2 pharmacokinetics, pharmacodynamics, multiple-dose study to explore the appropriate brensocatib dosing for cystic fibrosis patients. Through our discussions with CF stakeholders, including treating healthcare practitioners and CF efficacy groups, it will be clear that there is an opportunity for an anti-inflammatory agent like brensocatib and an opportunity to continue to advance the science in the treatment of CF. Let’s now turn to TPIP, a dry powder formulation of treprostinil palmitil. We believe TPIP represents an opportunity to harness the full potential of the prostanoid pathway. In February, we presented top line data from our Phase 1 single and multiple-ascending dose trial in healthy volunteers. These results demonstrated that TPIP was generally phased and well tolerated and support our plans to continue development of TPIP with once-daily dosing as well as an up titration approach in patients with PAH. We have begun the next stage of TPIP clinical development for patients with PAH. This includes two Phase 2 studies. The first will evaluate the impact of TPIP on vasodilatory effect as measured by pulmonary vascular resistance, or PVR, over a 24-hour period. We look forward to sharing preliminary data from a small number of patients with PAH in the second half of the year. The second study will evaluate the effect of TPIP on PVR and 6-minute walk distance over a 16-week period. In addition to the two studies in PAH, we are planning to initiate a separate Phase 2 study of TPIP in patients with pulmonary hypertension associated with interstitial lung disease or ILD. These patients are classified and having Group 3 pulmonary hypertension. We also continue to explore potential development pathways for TPIP in idiopathic pulmonary fibrosis or IPF. Another area of increased focus this year is the advancement of Insmed’s capabilities in translational medicine. At the intersection of research and clinical development, our goal is to identify validated preclinical targets that show significant efficacy, safety and proof-of-concept data. This will enable us to accelerate the process of bringing promising treatments from bench to bedside and increase probability that the molecule chosen will be successful. Equally important for us is the bedside community translation back to research to inform the search and design for treatment of the highest clinical relevance that address patient needs. We are already well equipped with a strong collaboration between research, clinical development and medicine, a prerequisite for successful translational efforts. This year, we plan to build additional technical capabilities across the research development and translational medicine continuum. In closing, we continue to make progress across our pipeline as we aim to deliver potentially life-changing therapies to patients with rare and serious diseases. Our efforts are focused on ensuring our clinical programs are executed with the utmost quality. We look forward to sharing developments with you. With that, let me turn the call over to Roger to discuss some key operational updates. Roger?

Thank you, Martina, and good morning, everyone. I am pleased to report a strong first quarter from an operational perspective. Our U.S. commercial business remains on solid footing with ARIKAYCE continuing its steady performance in the current COVID-19 environment. Our team continues to perform well, and customer engagement has remained solid. Encouragingly, in-person sales call numbers are trending positively. We believe these face-to-face interactions with physicians and healthcare professionals are most effective and are key to unlocking future growth. We are also encouraged by the ongoing vaccine rollout and recent CDC data indicating that in the U.S., about 70% of people aged 65 years or older have been fully vaccinated for COVID-19. We expect more physicians’ offices will reopen and anticipate more NTM patients will become comfortable returning to in-person visits. Taken together, these elements give us confidence in the long-term potential of the ARIKAYCE franchise. We anticipate that once the impact of the pandemic subsides, our U.S. commercial business will see a return to growth. Bolstered by important learnings from our successful U.S. launch, our international expansion of ARIKAYCE is well underway, and I’d like to report the highlights from the first quarter. Let’s start with Europe, where ARIKAYCE was granted marketing authorization last October for the treatment of MAC lung infection in adults with limited treatment options who do not have cystic fibrosis. We launched in Germany first with a list price that is in line with the U.S. list price for ARIKAYCE. And we were also pleased to secure early reimbursement in the Netherlands at a price that is in line with the U.S. list price. In addition, our ATU program in France has been extended providing patients access to ARIKAYCE until full reimbursement is agreed. This allows us to derive modest revenue from sales in that country. Overall, we continued to apply key learnings from our successful U.S. commercialization efforts to our ongoing launch in Europe. Interest in ARIKAYCE from the physician community is strong. We are encouraged that virtual assessments with physicians are being well received and well attended in Europe. Similar to our experience in the U.S., patient visits to physician offices have been impacted by the pandemic. We anticipate that patients returning to in-person office visits will have a positive impact on the trajectory of the European launch. Further, we expect reimbursement decisions across Europe to continue throughout 2021 and into 2022. Let’s now move to the opportunity for ARIKAYCE in Japan. In March, we were excited to report that Japan’s MHLW approved ARIKAYCE for the treatment of patients with NTM lung disease caused by MAC who did not sufficiently respond to prior treatment with a multi-drug regimen. Pricing discussions remain on track, and we anticipate the reimbursed launch by midyear. In anticipation of this milestone, preparations are progressing well, and we believe we have the right infrastructure in place to support the launch. You may recall that prior to our approval, our therapeutic specialists engaged in promotion of a macrolide to educate physicians on NTM and NTM guidelines. Immediately after approval, our therapeutic specialists engaged in branded discussions with targeted physicians. Due to the strong interest in ARIKAYCE from physicians, we were able to increase our targeted number of hospitals in Japan. To-date, we have already reached almost 80% of the targeted 330 hospitals. Virtual and in-person meetings with healthcare practitioners also occurred throughout March and April. In April, approximately 40% of those interactions were in person and additional meetings are scheduled throughout the remainder of May and into June. ARIKAYCE also continues to receive strong interest from Japanese KOLs, and we are gratified by the support that these physicians have offered to Insmed in bringing ARIKAYCE to Japanese patients. We have had appropriate medical engagement with major medical associations in Japan, including the Japanese Association for Infectious Diseases, the Japanese Respiratory Society and the Japanese Society of Tuberculosis and NTM. In fact, we were pleased that two key sessions were successfully held and enthusiastically received at the annual meeting of the Japanese Respiratory Society in April, where lead investigators of the Phase 3 study of ARIKAYCE presented to a full audience of Japanese respiratory KOLs who made the effort to attend in person. Let me now briefly touch on the status of our technical operations. Insmed continues to manufacture adequate supplies of ARIKAYCE to meet current demand. We are also confident in our ability to meet future demand of ARIKAYCE, including supporting the launch in Europe and anticipated launch in Japan. ARIKAYCE inventory position also remained strong. Finally, for our clinical development needs, we are in a solid position with respect to manufacturing and clinical supply product to support our ongoing trials for ARIKAYCE, brensocatib and TPIP. In summary, Insmed continues to perform well from an operational perspective. Against the backdrop of steady U.S. performance, our team is mobilized to support the geographic expansion of ARIKAYCE throughout Europe and Japan to ensure it reaches patients in need. I would like to thank the Insmed team for their dedication to the NTM community as we work to achieve these goals. And I will now turn the call back to Will.

Thank you, Roger. I would like to close out our prepared remarks by underscoring the tremendous commitment and performance of our employees as we have collectively transformed our company. On behalf of the entire company, I would also like to offer my thanks to the patients who participate in our studies. I would like to extend my sincere gratitude to all of the caregivers who have gone the extra mile for patients of all kinds times during the pandemic. We have all seen and appreciate the impact of your life-saving efforts. With that, I would like to open the call to questions. Operator, can we take the first question, please?

[Operator Instructions] Your first question is from the line of Joseph Schwartz with SVB Leerink.

Hi, I am Joori dialing in for Joe. Thanks for taking our questions. In the opening remarks, you mentioned that pricing discussions are on track in Japan, but I was just wondering how satisfied you are with the ongoing pricing discussions there. And then would you be able to provide a tighter timeline on your launch in Japan? I know you previously mentioned like a launch timing of July, but wanted to know your latest thinking on that as we are getting closer and if there are any gating factors to launching?

Thanks for the question. I think the process in Japan is once you have secured approval for the drug, there is typically a multi-month process where there is discussion between the Japanese Government and the company about what is the appropriate price. It’s a decision that the Japanese Government will ultimately make. And until that is complete, we don’t really have any comment on it. It’s just a typical ongoing process. I would say, across the board, our engagement with the Japanese, the regulatory authorities, the Japanese Government, everything has been very constructive and positive, and we continue to work well in that region of the world. Our prior guidance was to launch on or around July. We don’t have any reason to believe it would be any different than that at this time. As soon as we have any updated information, though, we will certainly pass it along.

Okay, great. Thank you for that. And then my second question is on brensocatib, how should we expect to see the stop-COVID data to be released? Will it likely be released to a press release or are you thinking with a medical meeting, for example, like I know ATS is coming out, maybe it could be presented there?

Yes. Thanks for the question. So, just to level set everybody, the stop COVID-19 study is a study that’s being run by – it’s an investigator-initiated study being run by James Chalmers at University of Dundee in Scotland, involving about 10 hospitals across Scotland. About a year ago, he approached us, and we agreed to provide both a drug product and a modest amount of money to support his investigation of the drug in the COVID patient population. What we get from this is – well, we have already got the first part of it, which is the safety information and that is the data safety monitoring board has met and concluded that there were no issues in the study. The second thing we are going to get, which we are really looking forward to, is information around the mechanism of action and in particular biomarkers and how they operate in this patient population during this 28-day study. As soon as the data is complete, and he has analyzed all of that. I am sure he will release it. But this being his study, it will be completely in his hands. Once that’s available, happy to talk about what the results are.

Alright. Thank you so much.

Your next question is from the line of Ritu Baral with Cowen.

Hi, good morning guys. This is Lyla on for Ritu. Congrats on the progress and thank you for taking question. Maybe as a follow-on to the positive trends you are seeing in key indicators for ARIKAYCE. Could you maybe talk a little bit about how you are – what kind of prescription trends you are seeing through Q1 and in April and if you are expecting bigger growth in the second half of the year? Thank you.

So, I will just start off and then I will turn it over to Roger to provide more thoughts. But I think we are incredibly pleased with the way the ARIKAYCE franchise has performed throughout the COVID era, if you will. We have consistently described it as steady. I think the sales infrastructure at Insmed has done stellar work in trying to find a way to get this medicine to patients by supporting physicians through every medium needed and available that’s appropriate. And the consequence of that is that we have seen that steady performance, notwithstanding the overpressure. Just to remind everybody, we are on the front lines of this pandemic, calling on pulmonologists and infectious disease specialists. And I think when we look back over this era, the one thing that will be very clear is that almost universally, the physicians have praised the support and information that our therapeutic specialists have been able to provide during this time, which has been very challenging. Roger, do you want to talk more about the trends and where we are, where we may be going?

Yes, absolutely. Thanks Will. So I think as we stated, in spite of COVID-19 and the pandemic, we continue to see patient starts. It’s at a lower level than the pre-COVID-19 levels that we had seen, but we continue to see steady demand for ARIKAYCE. I think as we think about what’s happening now and looking into the future, we do see reasons for optimism as we see more offices open. And as the pulmonologists and infectious disease specialists are able to turn their attention back to the NTM patients away from the COVID patients is a really encouraging sign. And importantly, we think as patients become vaccinated, we talked about almost 70% of over age 65 are now vaccinated in the U.S. against COVID-19, that’s a significant – because of the demographics and the phenotype of our patients, which are typically elderly and older patients. So we think that, that’s going to encourage those NTM patients to get back into the physicians’ offices. And we do think that in-person visits where the patient – the physicians are able to take a sputum and actually determine that these patients have not converted and are refractory is going to be an important trend for us. We also see that we are – as physicians’ offices are reopening and they are able to not only physician take patient visits, but also take visits from our therapeutic specialists. And we do see a positive trend towards in-person visits, and we know that the in-person visits are the most effective sales calls that we can make. And so we look forward to that continuing to trend positively. There are some regional differences. We know that Texas looks completely different than Michigan. But we think that as we get on the other side of pandemic and as things start to return to normal that we will see a return to growth for ARIKAYCE.

Got it. Thank you. That’s very helpful.

Your next question is from the line of Matthew Harrison with Morgan Stanley.

Hi all. This is Connor on for Matthew. Thanks for taking the question and congrats on the quarter. So, just a couple from us. Can you provide any analogs or I guess, recent launches in Japan that you think might be beneficial in drawing parallels to how you would see the ARIKAYCE uptake curve happening in Japan? And then I guess, what are some unique aspects that we should take into account when we model out the Japan launch? And then on Europe, did Germany and Netherlands contribute materially to the 1Q revenues? And then, I guess, how should we think about the Europe contribution going forward into the second half of the year? Thank you.

Thanks very much for the question. So on Japan, I think it’s really hard to provide a proxy, even if there was one we thought would be reasonable. We are still going to be, I think, probably more in the shadow than in the center of the COVID pandemic. If we are launching in the middle of the year, a good portion of the vaccination program in Japan should be at least well underway, if not completed. And very likely, they will be following the same pattern that we did here in the States, which is to start with the most vulnerable, who are actually many of the patients that we are targeting. I think points of encouragement that you heard from Roger’s comments really come from the fact that the KOLs and the treating community here are not only very interested and engaged, but our therapeutic sales force over there is making real progress, having reached 80% of the 330 target hospitals at this stage already with branded discussion. That’s really encouraging. When we think about Japan and its unique challenges, as we have commented on the past, this is true for every new drug in Japan. The prescription is given 2 weeks at a time because they are very focused on safety. And I think that is just something that everyone always has to deal with over there. But overall, I would say that we are very hopeful for where Japan may go as an opportunity for ARIKAYCE because there is a higher prevalence rate over there in Japan of this disease. This drug is perceived as a meaningful contributor to the treatment of the disease as proven in the Phase 3 study that included a very significant cohort of Japanese patients. So there is very good data, there is very good need and there is a drug that we think is going to have the impact. On Europe, Europe is always a slow and staggered launch. And that’s nothing to do with the drug, it has everything to do with the way Europe works. They approve the drug first centrally, and then each country sequentially goes through a process of reimbursement. Some of the early signs that are very positive there are the fact that both Germany, which is a free pricing environment; and the Netherlands, which is not, have decided to reimburse at the level equal to the U.S. So, that sets us up for additional good discussions in the rest of Europe, but those will take time. It’s very important for everyone to understand that just because you are approved in Europe does not mean you can sell in Europe. You have to come to a negotiated agreement with each country, one at a time, and those typically take, in some cases, more than a year to finalize. In our case, we have already had some early wins and some very positive trends. So, we think that’s going to lay strong groundwork for our success in Europe. The team over there has done fantastic work in – especially in places like Germany, where, frankly, when we launched, the country was basically in a lockdown. And so using some of the techniques that have worked in the U.S., telemedicine, digital outreach, remote conferences, all of which Roger had mentioned have been well attended, I think we are doing what we can and making good progress. I think we feel good about where we are in Europe, and that will continue to contribute as we add additional countries with reimbursement. So, the international picture for Insmed and ARIKAYCE in the refractory NTM market is particularly strong.

Your next question is from the line of Anita Dushyanth with Berenberg Capital.

Hi. Good morning. Congrats on the progress, and thanks for taking my question. Just have a couple here. I know you spoke to the outside U.S. adoption – I’m sorry, launch and adoption of ARIKAYCE. Just want to know how many countries in Europe do you think might come on board before the end of this year.

So I can take that question. And then you can have a follow-up. It sounds like you’ve got more than one.

Yes. Okay.

Okay. Roger, do you want to address that, our sequences for the year?

Yes, sure. So we think that over this year, we believe that the UK will secure reimbursement this year and the various countries that comprise the UK, each have their own review process. So that will come out over time, where we anticipate approval in Ireland, in Italy and Austria this year. I think the laggard, the longer time line is always associated with France. And so we think France is – probably based on history, it’s probably going to come in 2022 rather than 2021. But importantly, as we mentioned, France had extended the ATU program, which has been underway for several years. So that’s going to allow patients to continue to access – reimbursed access to ARIKAYCE until we are able to agree on the reimbursement – reimbursed price.

That’s helpful. Thank you. And also, I know you mentioned earlier that you aren’t giving guidance. I just wanted to know when you’re likely to begin giving guidance. And especially, how to think about expenses for the second half of 2021.

Yes. So I think on the guidance question, let me just talk philosophically about how I think about guidance. I think we like to provide as much transparency and clarity as we can. But first of all, we have to have confidence that what we’re looking at is a clear picture and one we can quantify. And while we have very strong conviction that we’re going to return to growth this year, COVID is a little difficult to predict. As Roger mentioned, Michigan is a good example of what can happen that is unexpected and can be a constraint. And yet at the same time, we’ve seen very positive trends that we think suggest that we are going toward growth in the not-too-distant future here. Putting a finer point on that is difficult. And historically, when we provided guidance, it has not always been to the benefit of our shareholders. There is been sometimes more confusion than clarity provided by specific guidance. So for those reasons, I think we’re a little reticent to engage in that exploration now. There may come a time when we revisit that, but I don’t see that happening in the next couple of quarters. But we will revisit it as things become more clear. In terms of guidance on expenses and other aspects of the business, I’ll just ask Sara to make any comments.

Sure. Happy to. Thanks, Will and thanks, Anita, for the question. So similarly, we have not provided expense guidance. What I can share is we do anticipate for research and development expense that to grow from the 2020 levels, that in 2021, those would grow from the 2020 levels. SG&A, I commented in my prepared remarks, interestingly, we were flat from 2020 Q1 to 2021 Q1. So you can see by those financial results that we are laser-focused on keeping our financials in check, being prudent with our spend, investing in research and development, which ultimately drives value creation and shareholder opportunity.

Okay, thank you. And then as far as enrollment on all the trials go, have you seen – as you track them, have you seen any sort of – no more delays or is that still going with some delay?

So to be clear, the trials right now are enrolling as anticipated inside – against our own models. I think we feel comfortable with what’s going on. It’s still relatively early days in the midst of everything that’s been going on more broadly. But I don’t anticipate that there will be disruptions to the enrollment patterns that we’ve been seeing. And I think a lot of work has been done in anticipation of the presence of COVID and all of the pressures that it brings to bear on so many fronts. And those things have really enabled us to, I think, meet our internal objectives as we move forward here. Remote monitoring and other state-of-the-art kind of clinical trial execution approaches have really been brought to bear here and I think that’s paid dividends.

Great. Thank you.

Your next question is from the line of Graig Suvannavejh with Goldman Sachs.

Good morning. Thanks for taking my question. I’ve got two just on TPIP. My first, just on your plans to explore the potential for TPIP in IPF, I am just wondering if you’ve done the preclinical work yet in IPF, whether some bleomycin mouse models and what you’ve seen there, whether in combination with pirfenidone or nintedanib? And then just on your PAH program, I’m just wondering if, at some point, you’re thinking that you’re going to have to run some head-to-head with an active comparator. And which compound makes the most logical sense, whether it’s from a POS perspective, given the analogs that already exist? Or whether there is another active comparative you think about from a commercial or competitive landscape perspective? Thanks.

Yes. Sure. So thanks for those questions. On the IPF front, yes, we have for treprostinil palmitil run models in the bleomycin mouse model and that data has been published, but that was with the inhalation solution, the nebulized form several years ago. What was interesting about that preclinical work, just to go to sidebar, is that not only did we see what is commonly observed in that model, which is not always strongly predictive, the prevention of the inflammatory response, but we actually saw a reduction in the fibrotic components that form as a byproduct of that provocation in that model. So it’s those two elements that we observed that we found, I would say, more encouraging than would normally be the case. We are replicating that work and other work to augment our understanding of TPIP in the mouse and then the potential treatment of IPF. And I would say, while that is a very difficult disease to treat and has a lot of issues in terms of interpretation in early models, we are encouraged to date to continue the work, and I think we will continue to report out on what we see there. With regard to the possibility of a head-to-head study against another compound, the first thing I would draw your attention to is all the preclinical animal work we did in which we did, in fact, compare TPIP in various animal models against other approved medicines that treat PAH today. And there, we saw superiority across a number of different parameters, both hemodynamic and histologic, in terms of improvement in those animal models. And I think that is one of the strongest points of encouragement for this drug and its ultimate clinical profile whether we actually end up replicating that in a human has not been finalized or discussed. I certainly don’t think it’s a point of departure that it is essential that we do so. However, there is some active discussion about whether we would like to do so to demonstrate what we believe will be a superior profile of the drug. Of course, the most important thing to do here is to get the drug to patients who can benefit as expeditiously as possible. Something like the head-to-head study could be the kind of thing that takes longer to discern a relevant benefit. And so we wouldn’t want that to be something that’s limited our ability to secure approval of the drug. So, that’s how we are thinking about it right now, but more to come as we learned more about the compound in humans.

I appreciate it. Thanks so much and congrats on the progress.

Thank you.

[Operator Instructions] Your next question is from the line of Stephen Willey with Stifel.

Good morning. Thanks for taking the question. Just a quick one for me. So I think you had mentioned on the last call that you would be providing, I guess, some kind of update of the ARISE on ENCORE development program before the end of this year. And just wondering if that’s still on the table, and if so, what does that update look like? Should we just expect some kind of qualitative commentary around where enrollment is tracking to or is there something else that we should be keeping our eye on?

No. I think it’s a fair question. For all of our clinical development programs, we obviously want to provide transparency on where things are going. It’s – call me once bitten twice shy from my history of trying to provide early and transparent predictions on where clinical trials are going to go. I’m just going to be cautious about the time that we do bring forward updates that are sort of, for lack of a better word, describing the quantitative. And that’s only because I want to make sure that things will continue in the future as they have in the past. When I start to see that predictive behavior, then we can rely on it a bit more. And I think at that time, it’s easier to provide forward-looking guidance on when we think something might complete, for example. I want to emphasize, right now, we are very comfortable with where our clinical trials are, the progress they are making against our internal objectives. And I think the team is doing exceptional work in encouraging opening of sites around the world, of securing patients screening and randomizing them. All of those things are going as we would want them to, and I hope to be able to provide more detail as the year goes on, for sure.

Understood. Thanks for taking the questions.

And we do have a question from the line of Matthew Harrison with Morgan Stanley.

This is Connor on again. Just hops back in the queue. So just a quick one, for the 6-minute walk data in the second half, can you just give us an idea of what you expect to see from that? Is it sort of – do you plan for it to be directional or is it going to be – or I guess, what do you expect to see for that data? Thank you.

So just to be clear, there are two Phase 2 studies one that Martina was referring to is the Phase, what we call, 2a study. That will be reporting out a handful of patients in the second half of this year. That will not be 6-minute walk data. That will be pulmonary vascular resistance data. That’s sort of the primary point of analysis. And just to clarify the details of that study, this is a patient who will be right heart catheterized in an intensive care unit for a 24-hour period and administered a single dose of our TPIP. We will then monitor what happens to the hemodynamic behavior of the patient through that right heart catheterization. So it will be a very accurate measurement. It will be a longitudinal measurement, but it will be limited to that 24-hour exposure that they are kept in the ICU. And as we go into Phase 2b, which we anticipate kicking off by the end of the year, that is the 16-week study that will track, over time, the impact on 6-minute walk test as well as PVR and other measures. So those are two different studies. We will not be releasing any 6-minute walk data this year, just to be clear, two different studies.

Understood. Thank you.

Sure.

There are no further questions. Are there any closing remarks?

Thanks, everyone for joining us today.

This concludes the first quarter 2021 financial results conference call. Thank you for your participation. You may now disconnect.