Susan Mesco - Head, Investor Relations Will Lewis - President and CEO Andy Drechsler - CFO.

Kevin Patel - Cowen and Company Liisa Bayko - JMP Securities.

Good day, ladies and gentlemen, and welcome to the Insmed Third Quarter 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce you to your host for today's conference, Susan Mesco, Head of Investor Relations. You may begin..

Thank you, James. Good morning and welcome to today's conference call to discuss our third quarter financial results. Before we start, let me remind you that today’s call will include forward-looking statements based on current expectations.

Such statements represents 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 from the SEC or our website for information concerning the risk factors that could affect the company.

Joining me on today's call are members of our Executive Management Team including Will Lewis, Insmed's President and Chief Executive Officer; and Andy Drechsler, our Chief Financial Officer. At this time, let me pass the call over to Will..

Good morning and thank you for joining us today. The past several months have been a very productive time for Insmed as we advance our goal of building a self sustaining biopharmaceutical company that addresses the unmet needs of patients with rare diseases.

As you know we are developing our lead product candidate ARIKAYCE initially for the benefit of the thousands of patients who suffer from refractory NTM lung disease. This is a debilitating, pervasive and costly disorder with no approved therapies in the U.S. or Europe.

Our global Phase 3 study, which is known as CONVERT is the largest study ever conducted in NTM lung disease. It is taking place in 18 countries around the world.

Thanks to the diligent efforts of our entire team and our CRO, we're very happy to report today that the enrollment phase of the study is now complete and topline data are on track for the second half of next year. We will of course fine-tune the timing of the release of those results as we gain additional visibility.

The study's protocol is robust involving multiple doctor visits and frequent sampling for almost two years beyond the initial six month primary endpoint. When fully completed, we believe the data will inform the most thorough understanding of the treatment of NTM ever undertaken.

It will represent the gold standard in the industry for this disease state. The primary endpoint for this study is three consecutive negative monthly sputum cultures by month six. As of today, not only is the study enrollment phase complete, approximately half of the patients have already completed their six-month visit.

Patients who achieve culture conversion by month six will continue in the CONVERT study for an additional 12 months of treatment as they would in clinical practice. All others have the option of enrolling in the 312 open label study in which all patients receive ARIKAYCE plus guideline-based background therapy for 12 months.

We believe the primary endpoint from CONVERT will allow us to file for U.S. approval under Subpart H. This regulation enable sponsors the file on an accelerated basis and subsequently complete post-market activities to verify and further describe clinical benefit.

In our case, we anticipate this would be the remainder of the CONVERT study, which has been designed to demonstrate durability of culture conversion consistent with what we saw in our Phase 2 study. On finalizing the CONVERT protocol, we incorporated feedback from FDA, EMA in Europe and PMBA in Japan.

So we expect CONVERT will ultimately fulfill the regulatory requirements for the U.S., EU, Japan as well as other countries that we decide to pursue. Our first submission will be our U.S. NDA and our regulatory team is now preparing the necessary components. Upon the successful approval of ARIKAYCE, we will be ready.

We have invested significantly in our manufacturing capability and our supply chain around the world. We now have two sources of clinical and commercial supply. Our second facility is online and is fully automated at a 200-liter scale. This gives us both improved margins and adequate supply to address the global demand we anticipate for ARIKAYCE.

On the commercial side of our business, we recently appointed Roger Adsett as Chief Commercial Officer, Roger brings more than 20 years of global biopharmaceutical experience to our leadership team. Most recently at Shire, Roger had P&L responsibility for six specialty and two rare disease brands representing $1.7 billion of net revenue.

We are thrilled to have him on board to lead our effort as we evolve into a commercial stage company. Other recent pre-commercial priorities include conducting pricing research and building disease awareness. We will continue to refine our understanding of the size of the target addressable market based upon our expected label.

Insmed's pricing strategy for ARIKAYCE will be value-based and data-driven. The value proposition will focus on the unmet need, the significant disease burden, health system costs, the investment we have made over the past 10-plus years and the innovation we are offering.

Three recent pharmacoeconomic studies were presented last month at the International Society for Pharmacoeconomic and Outcomes Research or ISPOR European Congress. First, a survey of positions in Canada, France, Germany and the U.K. collected healthcare resource utilization data among patients with newly diagnosed and existing NTM caused by MAC.

63 physicians provided data from 182 patients. The results demonstrated that patients with refractory NTM caused by MAC utilize substantial resources with annual cost exceeding asthma, COPD or tuberculosis. A second study categorized patient cost during three phases of NTM lung disease.

Positive sputum cultures, negative sputum cultures and cured meaning no evidence of positive culture after conversion. The average monthly cost for patients with positive sputum cultures with nearly five times higher than patients who are considered cured and nearly four times higher than patients with negative sputum cultures.

This highlights the fact that it pays to treat NTM patients and that it pays to continue to treat them as you pursue the goal of culture conversion. And third, data collected from the German Health Risk Institute Database show that patients with NTM lung disease had a mortality rate that exceeded patients with COPD bronchiectasis or cystic fibrosis.

Patients whose NTM coexist with COPD had almost triple the mortality rate observed for patients with COPD who did not have NTM. This study also show that managing NTM was associated with substantial healthcare resource utilization.

In the first year following diagnosis, inpatient and outpatient costs were four times higher for NTM patients versus mass controls. In summary these studies demonstrate the cost burden of NTM and the benefit of curative patients and the health systems that support them.

When we speak of a cure, we define this as durable off treatment culture conversion. We have a number of other studies looking into these and other issues both in the U.S. and around the world and expect to publish more in this regard in the coming months and years.

Another critical component of our launch strategy centers around disease awareness and education. Our non-branded disease awareness campaign continues to deliver impressive results.

Our dynamic website NTMfacts.com is designed to help physicians understand the importance of an appropriate diagnosis and provides valuable information on how to recognize the signs and symptoms early to better manage NTM lung disease. The site also features an award-winning creative campaign called a Thousand Words about NTM.

Patients discuss the daily challenges of living with NTM and their stories are told through the eyes of artists from around the world. We've been driving awareness of this campaign to pulmonologist through medical meetings, emails, banner ads and journal ads. The response so far has been overwhelming with a high level of physician engagement.

In fact since its launch date last year, the level of agreement among sample pulmonologists around the importance of making a definitive NTM diagnosis has increased by nearly 30%. This is just one example of the bridges we're building between Insmed, physicians, and NTM patients.

Now I would like to turn to recent developments on the corporate development front. Last month, we announced a highly strategic transaction with AstraZeneca that gave us the global rights to INS1007 a reversible oral DPP1 inhibitor.

This compound aligns perfectly with our established expertise in the rare pulmonary space and directly overlaps with NTM lung disease. The initial indication we will pursue is non-CF bronchiectasis, but we are also looking at several other indications in parallel. Non-CF bronchiectasis is a rare chronic pulmonary disorder.

Patients with bronchiectasis experience a vicious cycle of bacterial colonization, inflammation, airway destruction and abnormal mucus clearance. There are currently no FDA approved treatments for bronchiectasis.

Current supportive care approaches do not target the inflammation, rather they focus on clearing the airway, reducing infection and managing exacerbations. 1007 is a novel oral inhibitor of DPP1. This enzyme catalyzes the activation of neutrophil serine proteases that reside within our neutrophils.

The three neutrophil serine proteases, neutrophil elastase, proteinase 3, and cathepsin G are involved in the regulation of inflammation. When they're released in excess of endogenous inhibitors, they become destructive and trigger excessive mucus release and pro-inflammatory events.

The therapeutic inhibition of DPP1, represents a novel approach because it is impairing the production of active neutrophil serine proteases and their accumulation at inflammatory sites, which is what contributes to lung matrix destruction and inflammation.

A compound with a related mechanism of action, the neutrophil elastase inhibitor AZD9668 was evaluated in a randomized placebo-controlled Phase 2 study in bronchiectasis. After four weeks of treatment there was a significant increase in lung function in the AZD9668 group, specifically FEV1 and slow vital capacity.

There were also positive trends favoring 9668 for other pulmonary function markers such as forced vital capacity and quality of life scores.

As a DPP1 Inhibitor, INS1007 acts upstream of neutrophil elastase inhibitors, rather than trying to inhibit neutrophil elastase after it is released locally a DPP1 inhibitor prevents the activation of neutrophil elastase in the neutrophils as they mature. In addition 1007 targets additional neutrophil serine proteases.

This suggests that an enhanced effect could be expected. In a Phase 1 study of healthy volunteers, 1007 was well tolerated and demonstrated dose-response of inhibition of neutrophil elastase activity.

While the potential for off-target effects are always a concern, it is important to note that there is a genetic model of DPP1 inhibition in humans called Papillon-Lefèvre syndrome. This is an extremely rare genetic disease that results in severely reduced activity and stability of neutrophil serine proteases.

Despite this severe deficiency, there are no consistent reports of generalized immunodeficiency in these patients. Since announcing this transaction, we have been very encouraged by the number of physicians who have reached out to us and expressed interest in our clinical development program for 1NS1007.

Bronchiectasis is an underserved market and INS1007 is the only DPP1 inhibitor in human studies and the only compound that looks to prevent the development and evolution of the disease instead of its consequence like infection that are the result of the disease.

We're currently finalizing our plans for a Phase 2 study, key next steps include a pre-IND meeting with FDA where we'll discuss our proposed study design and development program in non-CF bronchiectasis. We expect the study to begin next year. Now let's turn to our internal research efforts.

As you know, we have a talented team of scientists at Insmed for advancing a number of preclinical programs in rare pulmonary disorders using a variety of homegrown formulation and delivery technologies such as nanoparticles, liposomes and inhalation to name a few.

The most advanced program from our internal pipeline is INS1009 a nebulized prodrug formulation of Treprostinil. We believe this compound will be ready to interface to next year. At the ERS Conference in September, we presented the results from our Phase 1 dose escalation study in healthy volunteers.

24 subjects were enrolled and received INS1009 at doses of 85 micrograms, 170 micrograms, 340 micrograms or placebo. Participants in the first eight patient cohort received a single 54 micrograms dose of Treprostinil 24 hours before they received an 85 micrograms dose of INS1009, allowing us to compare the two compounds.

The 85 micrograms dose of INS1009 provides an equivalent amount of Treprostinil on a molar basis as the single 54 micrograms targeted maintenance dose of inhaled Treprostinil.

Inhaled Treprostinil has proven efficacy; however, it's half-life requires multiple daily doses and efficacy may not be maintained over a 24-hour period and it's high peak blood concentrations are likely associated with a number of adverse side effects that can limit the dose. We designed INS1009 to address these limitations.

It is an inhaled formulation of our Treprostinil prodrug which is Treprostinil attached to a long alkyl chain in lipid nanoparticles. This formulation provides sustained release of Treprostinil after it is inhaled in the lungs.

The prodrug compound is inactive toward prostanoid receptors, but once in the body it is converted to active Treprostinil when the pulmonary esterase is cleaved the alkyl chain. Our Phase 1 study was designed to determine the safety, tolerability and pharmacokinetics in healthy volunteers.

We were especially eager to see the PK profile as we believe the very high peak concentration observed with the currently available inhaled Treprostinil treatment may be responsible for some of the side effects of the drug. The phase 1 study showed that the CMAX was approximately 90% lower for our formulation when compared with inhaled Treprostinil.

This could suggest a reduced future AE profile. The PK characteristics also supported once or twice daily dosing. The adverse event profile of INS1009 at the 85 microgram dose showed good tolerability with adverse events consistent with those seen with inhaled prostanoid.

We plan to continue to explore the best development pathway for all of the compounds under development in our internal lab.

The last item I will touch on is our financial position, we ended the quarter with roughly $200 million in cash, leaving us well-positioned to answer the key question that underlies the ARIKAYCE program, top line results from converts primary endpoint.

We will also be able to continue setting the foundation for long-term success through our Phase 2 study of INS1007 and non-CF bronchiectasis. So in summary we're pleased to share the progress that has been taking place at Insmed.

We've concluded the enrollment phase of the CONVERT study, which places us on track for topline results next year, again it's too soon to predict the specific timing of the data, but we will provide greater detail as soon as we're able to do so.

Our regulatory activities are ramping to support our US NDA submission for ARIKAYCE, we bolster our executive leadership with the addition of Roger Adsett as our Chief Commercial Officer, our pre-commercial activities continue to support the ARIKAYCE value proposition and build NTM disease awareness among physicians.

We enhanced our clinical stage pipeline with INS1007 and we plan to launch a Phase 2 study in non-CF bronchiectasis next year and importantly, we are managing our resources to accomplish all of the above.

Now before we turn to financials, I wanted to touch on the 8K we filed this morning reporting Andy Drechsler's plan to resign from his position as CFO in March 2017. Andy's decision is solely due to personal reasons. As some of you may know, Andy was the first employee I hired at Insmed in the fall of 2012.

Since then he has played an instrumental role in transforming Insmed both strategically and financially. He personally orchestrated the turnaround and establishment of a sophisticated international financial infrastructure and his contribution stretched far beyond finance, across multiple operational areas of Insmed.

Without Andy's steadfast commitment, we would not be where we are today as a company. While Andy will be with us full-time for the next five months, I want to take this opportunity to personally and publicly thank him.

I have profound respect for Andy's decision to step away from Insmed and we will honor his contribution by continuing to uphold his high standards of integrity and excellence. He will remain in the office for the coming months, so we will have ample time to ensure a seamless transition.

His insistence on handling his transition in this way speaks to his desire to see Insmed succeed.

We are initiating a search for a new CFO, as we pivot to becoming more focused on our commercial future, we intend to recruit a financial executive with solid managerial skills, extensive international commercial experience and a history of working with multiple commercial and development stage products.

With that, I will turn the call over to Andy for this quarter's financial update.

Andy?.

Thanks Will. Good morning, everyone. As Bill just reviewed, we have made important progress on multiple fronts. As we prepare for our transition into a commercial organization, we continue to invest in manufacturing and pre-commercial preparation.

As Will referenced, I'm pleased to report that we have our second source of ARIKAYCE supply online at Therapure Biopharma in Toronto, Canada. We recently shipped ARIKAYCE made at this facility to our distributors for use in our 312 clinical trial.

Therapure manufactures ARIKAYCE at 200 liter scale, which is a fourfold increase over our initial capacity for this will enable us to achieve more attractive market. Between our two facilities, we'll have both adequate and redundancy of supply that is sufficient for the global launch of ARIKAYCE.

Turning now to our quarterly results, this morning we reported a net loss of $37.8 million or $0.61 per share, compared with a net loss of $31 million or $0.50 per share for the third quarter 2015. Research and development expenses increased to $23.4 million compared to $19.2 million in the third quarter of 2015.

The increase was primarily due to the advancement of our global Phase 3 CONVERT study of ARIKAYCE in NTM lung disease. This was partially offset by a decline in our manufacturing expenses now that we have completed the build-out of our production capacity at Therapure. Third quarter G&A expenses were $13.7 million versus $11 million last year.

The increase was driven primarily by our pre-commercial activities in the United States and Europe, which include a robust disease awareness campaign. We ended the third quarter with $201 million of cash. This cash balance includes $10 million of proceeds from our amended debt agreement with Hercules Capital.

On September 30, we closed a $55 million debt agreement with Hercules Capital. The transaction refinanced $25 million of existing debt and provided us with an additional $30 million of proceeds, $10 million, which we borrowed in the third quarter and $20 million, which we borrowed in early October.

This transaction effectively funded the $30 million upfront payment to AstraZeneca for the global rights through INS1007. This amount was recently paid to AstraZeneca and will be recognized as a onetime R&D expense in the fourth quarter.

With regard to cash guidance, we continue to expect recurring cash operating expenses to land within the range of $62 million to $72 million for the second half of 2016. This reflects spending for the CONVERT study, regulatory and pre-commercial activities for ARIKAYCE and cost associated with INS1007.

Going forward we will remain disciplined in our use of capital by ensuring our two priority programs ARIKAYCE and INS1007 are fully resourced. Lastly, I would like to touch on my decision to resign from Insmed at the end of March 2017.

As Will noted, this was a personal decision and one that was not easy, especially given the talented and passionate group that I've had the privilege to work with at Insmed. I am very proud of what we've accomplished to date and have every confidence that the foundation is set for sustained growth.

I'll continue to be very involved over the next several months to ensure that the transition is seamless and my successor is positioned for success. I am also committed to providing Insmed with the necessary time and consulting services to support the on-boarding of a new CFO.

This is important to me both personally and professionally for the patients who are in need of new potential treatment like ARIKAYCE, INS1007 and INS1009. With that, I'll turn the call back to Will..

Thank you, Andy. As we focus on execution and work diligently to advance our programs, we are encouraged by the growing awareness of NTM and its impact on patients and cost to the healthcare system. We find ourselves in an unusual and enviable position.

We are developing what we hope will be the first approved drug for a globally prevalent rare disease where to the best of our knowledge, there is no competition, nothing approved and nothing beyond the earlier stages of development.

The disease burden and unmet need are significant and the more we study the pharmacoeconomic landscape, it is clear that the ARIKAYCE value proposition has the potential to trigger a significant shift in the entire NTM treatment paradigm. In this regard the global opportunity before us is extraordinary.

As a team, we appreciate the encouragement we receive every day from patients suffering from NTM lung disease and doctors attempting to treat it and we expect the awareness and the need to continue to expand it. This is what motivates us and keeps us focused every day on executing and getting this product to the finish line.

There are people who are counting on us.

With that I will turn the call back to the operator to begin Q&A, operator?.

Thank you. [Operator Instructions] Our first question comes from Joseph Schwartz with Leerink Partners. Your question please..

Good morning. This is [Dave] dialing in for Joe. Thanks for taking the question. I just had a couple. So first of all congratulations on the enrollment completion long time coming and we're very excited for next year. So for the Phase 3 CONVERT study you mentioned Subpart H as well as the follow-up protocol for that study.

So I am wondering if any of that follow-up data, the open label extension data, will be included in your submission of the NDA package.

Second is in, terms of anticipating the approval, what kind of pre-commercialization or clarity can you provide at this point and at what point can you provide your strategy on the ex-US side for ARIKAYCE? And lastly can you briefly talk a little more about the INS1007 deal, given that AstraZeneca also has the last ace inhibitor molecule that it's already advancing thanks..

So I am going to have to retrace your three questions because they were complicated. The first one related to….

The CONVERT study and the follow-up data, will any of that be included in your initial NDA submission..

Our discussion with FDA contemplates sub-part H filing base in the primary endpoint alone. The availability of that subsequent data is not contemplated to be incorporated. If our dialogue with FDA encourages us to do so, we obviously will have that at our disposal.

But the purpose for the ongoing study, which will extend for several years is to both establish durability and also to tease out other effects over time that could be beneficial for example mortality benefit. We would love to be able to see trends like that from this data.

We'll see whether or not that they will be in evident, but for purposes of approval and the value creation in the immediate term, it's all about the CONVERT primary endpoint and the secondary endpoints and they're going to be available in the second half of next year..

And then the second question was on the pre-commercialization work, you briefly mentioned about patient serving across the world and just wanted to get clarity on the ex-US site strategy, where we can get some clarity on that..

Yeah so if I'm understanding you correctly, the work we're doing internationally certainly we've been very active in Europe for a while. We have a modest, but dedicated group of folks over there who have been advancing across a number of fronts.

First and foremost compassionate used programs that include things like the ATU program in France and approved compassionate program in Germany and it's important to realize that this teaches us a great deal about how patients are dealing with our products in the real world, so outside the world of clinical trials.

And so there has been a great deal of learning about that, both in terms of physician perception, how we can use that to our advantages, we expanded in the U.S. and also frankly how we can do a better job of delivering and making it possible for patients to use the drug successfully.

I would tell you that we continue to trend upward in terms of the interest and utilization of the drug through these compassionate used programs and we expect that trend to continue through the end of next year, which will be significant because as we turn the page and ultimately hopefully secure approval in the U.S., those patients can turn into name patient use in Europe and would represent a fully reimbursed patient..

Okay.

And then the last question was on the 1007 from AstraZeneca, since they also are advancing a Phase 2 elastase inhibitor?.

The Phase 2 elastase inhibitor was -- and this is an important nuance about why we grab the DPP1 inhibitor. The Phase 2 neutrophil elastase inhibitor is acting on one of those through new three neutrophil serine proteases, DPP1 acts on all three of them and so believe it will be more efficacious.

AstraZeneca is not advancing that compound beyond Phase 2, in fact this compound represents if you will the next generation of thinking around how to interact with neutrophil serine proteases such that you may end up with a positive result in these conditions that have a cascade of inflammatory effect that results in subsequent inflammation and infection and in degradation of the lung matrix.

So what this means practically is that we've got the most advanced compound out of AZ using this kind of mechanism of action.

They are not moving that Phase 2 program forward and the reason they were willing to part with it, which I think is the most significant issue behind this program is because when they first looked at it for their areas of interest, which are COPD and asthma, they saw greater effect and potential in non-CF bronchiectasis and potentially CF where you see much greater concentrations of neutrophils in the sputum.

And so those are areas that are rare diseases that they simply don't target and as a result they were willing to part with the program. So we're really encouraged by it.

It's in the right home in our hands because this is our sweet spot and it's also a good win for them as well because they're frankly not interested in going after these orphan diseases..

That's very cool. Thanks for the color and Andy best of luck in your future endeavors. Thanks a lot..

Thank you. Appreciate it..

Thank you. Our next question comes from Ritu Baral of Cowen. Your question please..

Hi it's Kevin Patel for Rity. Thank you for taking my questions and congrats on Phase 2 enrollment completion.

So first for ARIKAYCE, could you further comment on the trial conduct and secondly, for the DPP1 Inhibitor, could you discuss more details about the Phase 2 trial? When in 2017 do you plan to start or what measures are you planning on assessing and will there be any in terms of efficacy the FEV or the SEC that you mentioned?.

Right, so with regard to trial conduct, I think what we've guided throughout the trial so far and I would tell it remains the case is that the parameters we set things like screen failure and dropout rates are within range of the targets that we had originally set out.

There are now that we have half of the patient past the primary endpoint of six months, we can say that we're observing and what I would characterize as an interesting trend toward a lower dropout rate in the study than we had expected.

It is yet to be determined whether that will hold, but it certainly looks that way and there's been fairly good consistency across the study around the world. So we would put that in the category of interesting and potentially positive trends that are emerging from the study.

The study itself ended up with just north of 170 sites in 18 countries around the world. The enrollment process was remarkably consistent month in month out. Roughly the same number of patients came across the transom. So we didn't see large boluses or ebbs and flows throughout the study.

And I think that speaks to the consistency that we have observed around the world despite the geographic disparity in the disease state in the way physicians approach it, which I would put in the category of encouraging. We didn't find anything aberrant through this experience in the different regions around the world.

Some of the other nuances, clearly there is a significant amount of NTM in Asia-Pacific and I would put that as slightly higher than what we thought we were going to see. It also happens to be concentrated at sites. So easy to access I guess is the way to put that in terms of getting to the patients.

So that's another interesting and I would say positive trend especially since as you know we've already cleared the pre-MDA that this trial will be adequate for registration and approval in Japan. And it includes the necessary PK study built into it to satisfy the PMBAs requirements.

So those are some anecdotes I guess I would provide you with in the study. And then you asked about the timing and the measures and the efficacy. As mentioned, I think what we really want to do here is incorporate the learnings from prior development programs and the secret to running a trial quickly and efficiently is to slow down the beginning.

So we're going to take the time upfront here to spend reflecting talking to KOLs about design, the mechanism of action of DPP1 and what patients within the construct of non-CF bronchiectasis may be more or less responsive. So we want to think carefully about are there any subgroups we might want to target one way or another within this study.

We want to think about dosing carefully, based on the data that's available and we want to then incorporate those discussions with various regulatory authorities. So we're all aligned on what this Phase 2 study is going to be able to read out.

As you may be aware back in 2012, the FDA actually held a endpoints workshop for non-CF bronchiectasis, which we attended and so there were a number of things observed back then.

We also want to make sure that that continues to be the current thinking of FDA, some of the things they looked at where time to exacerbation or number of exacerbations in non-CF bronch setting.

So that's something I think we want to just make sure we tease out to make sure that we're all in alignment and then we can proceed with the study in due haste. We have completed some of the legwork upfront of interviewing CRO's.

So this is a process where we have some protocols in mind, but as I said before, I want to make sure we're talking to KOLs about them, so that we're getting the best thoughts from around the world..

Okay. Great. So thank you for taking the questions and Andy we would like to wish you the best of luck in the future..

Thank Kevin. Appreciate it..

Thank you. [Operator Instructions] Our next question is from Liisa Bayko with JMP Securities. Your question..

Hi. Congratulations on the enrollment and also good luck to Andy in the future.

Question on just the open label that you mentioned, can you maybe provide some color on to kind of the rate of on-boarding to that part of the study you're seeing?.

So to be clear we're not looking at what's happening in patients that are going into 312 because that would give some insight into what conversion rates might be beginning to look like. So we don't get to see that data and that's by design. So there isn’t really an update on that front.

We're very focused on just getting to the primary endpoint and flipping that data card over for folks as soon as we can. And maybe I'll just take this opportunity to explain why there isn’t greater granularity on the timing of that.

Quite specifically as you know to determine whether a sample is culture positive or negative, to confirm its negative, you have to grow it in broth for up to six weeks and to demonstrate that there is no evidence of the bacteria growing.

If the final cultures are positive, we could know that on up on at our plate very quickly, but if they're negative, the extra time it would take would need to be incorporated into our estimate. So you're talking about a variance when you also add on to it the cleaning of the database and locking etcetera of a couple of months.

So we'll provide more clarity when we can, but at this stage we can't say with certainty if topline data will be a third quarter event. Lisa, do we still have you..

Okay. Sorry, my phone was a little stuck.

Just one more question just for the PH for the Treprostinil product, where do you think that might be, if you could provide some color and if you have insight on that thing?.

Sure, so 1009 I think we would say we're very happy with the Phase 1 results. I think there is a real drug here.

We're also going to be presenting some additional data coming up in future posters that further explore the compound and other features about it, but as I sit back today and look at the shortest path to value creation for this company shareholders, clearly all of the focus is on ARIKAYCE's data readout next year.

And resourcing INS1009 into a Phase 2 study in a market that is highly competitive with large players and has some recently introduced oral programs or compound that at least appear to be influencing that market a little bit, there is a nuanced and an expertise there that may make this program better suited in one of those homes.

So we're explore all options bringing forward ourselves through Phase II we're going to explore out-licensing it and the logical places for that would be the current Titans in that space as well as anyone who is interested in gaining access to the PA base and once we have more clarity on that we'll obviously provided it..

Okay. Great. Thank you. And then just final question, obviously pricing has become phase, I was just curious on how you think about the NTM market.

One hand you have antibody inhibitor and you're kind of an interesting mix, can you give us either some benchmark or an [update]?.

Sure, so I think there are a couple of very important points about this product and its profile and the short answer is we're doing a lot of work in this area. We have been doing a lot of work in this area not just in the U.S. but also in Europe.

I would tell you that the landscape is very encouraging for what we see in terms of our ability to explain the important role that culture conversion can have on -- quite apart from the benefit it has for the patient candidly, which is the primary objective.

The cost burden in the system will be influenced we believe pretty dramatically by the ability to provide that kind of culture conversion. So that's an important point of departure.

When you think about culture conversion and the ability through this very extensive study to demonstrate durable culture conversion, you're effectively talking about a cure for an infection. So the ability to position this compound with that objective in mind changes the nature of the dialogue you're having with a lot of the payers in our view.

There's a lot of work to be done on this and we have not yet centered on our final positioning on the product or our full understanding of the cost or burden or profile and subsequently what price we think we need to charge.

Were very aware of the dialogue that's out there, but what is very clear from the payors and our discussions to date is this is clearly significant innovation. They are willing to pay for innovation where there is good data.

We believe there is going to be good data and there aren’t many companies that can enter the realm of discussion about what is effectively acute treatment to potentially achieve a cure for an infection of this kind where there's nothing approved. So I would say everything is lining up in our favor, but there's a lot more work to be done..

Thank you very much..

I show no further questions at this time. I would now like to turn the call back over to Mr. Lewis for closing comments..

Thank you for your questions and participation on today's call. We appreciate your continued interest and support and look forward to updating you again on our future quarterly calls. Have a great day..

Ladies and gentlemen, this does conclude today's program. Thank you for your participation in today's conference. You may now disconnect.