Blaine Davis - Vice President and Head of Investor Relations William Lewis - President and Chief Executive Officer Paolo Tombesi - Chief Financial Officer Roger Adsett - Chief Commercial Officer.

Adam Walsh - Stifel Ritu Baral - Cowen Joseph Schwartz - Leerink Partners Matthew Harrison - Morgan Stanley.

Good day, ladies and gentlemen, and welcome to the Insmed Third Quarter 2018 Financial Results Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to turn the call over to Blaine Davis. You may begin..

Great, thank you Michelle. Good morning everyone and welcome to today's conference call to discuss our third quarter 2018 financial results. Before we start, let me remind you that today's call will include forward-looking statements based on our current expectations.

Such statements represent our judgment as of today and may involve risks and uncertainties that may cause actual results to differ from the results discussed in the forward-looking statements.

Please refer to our filings with the SEC, which are available through the SEC's website at www.sec.gov or from our website for information concerning the risk factors that could affect the Company. In addition, 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, Insmed's President and Chief Executive Officer; Paolo Tombesi, Chief Financial Officer; and Roger Adsett, Chief Commercial Officer.

For today's call, Will will provide a corporate update and Roger will give us an update on the progression of our commercial activities and Paolo will briefly review the third quarter financials. With that, let me turn the call over to Will..

at Wed Oct 31 11:04:00 2018 ] to provide you with a brief update around the U.S. ARIKAYCE launch.

Roger?.

at Wed Oct 31 11:06:00 2018 ] 5000 physicians split fairly evenly between pulmonologists and infectious disease specialists. These physicians account for approximately 70% of the diagnosed patient population.

We have further divided this group into two tiers based on the number of MAC patients they have with about 2000 physicians in tier 1 accounting for 50% of the opportunity and 3000 physicians in tier 2 accounting for 20%. We also have a group of opportunistic targets that our therapeutics can call on as they are identified to be treating patients.

Because our therapeutic specialists were already in the field conducting disease awareness activities since March of this year, we are ready to launch immediately upon FDA approval.

We received approval on Friday, September 28, trained our team over the weekend on the final label and we're in the field promoting ARIKAYCE with our prescribing information on Monday, October 1. In the first four weeks of launch we have reached approximately two thirds of our tier 1 targets.

In these early days we believe we are finding a level of enthusiasm among our expected key prescriber base that will support a successful launch. In addition, earlier this month we had the opportunity to present data about MAC lung disease and ARIKAYCE at two high-profile medical meetings, Infectious Disease Week and CHEST.

Together these two venues allowed us to provide important information about ARIKAYCE to both pulmonologists and infectious disease specialists. We also recently held a speaker training event in Denver and will be launching local speaker programs across the country beginning in November.

These programs are designed to enable experts speaking on behalf of Insmed to educate others on MAC lung disease and the use of ARIKAYCE. We plan to launch additional ARIKAYCE marketing resources including digital and print assets in early November following the required 30-day review period for our promotional materials.

In terms of market access, our key account directors and MSL team are advancing discussions with payers about coverage.

We continue to expect support from payers for ARIKAYCE and are directly engaging to facilitate formulary coverage and clear prior authorization processes to ensure access for appropriate patients on both the commercial and Medicare sides of the business.

Turning to patient support, our ARIKAYCE support program team has been fully trained for several months, has been running since approval. Over the past few weeks the team has already had the opportunity to engage directly with patients and physicians in the U.S. to assist them in navigating access for the product.

Again, while it's very early I am pleased with how everything is operating so far. Finally, as it relates to manufacturing, we finalized our packaging swiftly upon FDA approval. Within a month of approval we shipped 28-day kits to our distributor and from there to our specialty pharmacy partners.

We believe that we currently have appropriate levels of product inventory to support launch and our contract manufacturers continue to manufacture commercial batches. Overall we are striving to lay a strong foundation in these early days that we believe will translate into meaningful prescription growth as we advance through the launch.

As Will said, we have a clear strategy and the right team in place to bring ARIKAYCE to appropriate patients in need. And with that, I'll hand the call over to our Chief Financial Officer, Paolo Tombesi for the financial review.

Paolo?.

Thanks Roger, and good morning everyone. Thank you for joining us today. I will spend the next few minutes reviewing the third quarter 2018 financial results. This morning we reported a net loss of $87.7 million or $1.14 per share compared with a net loss of $45.2 million or $0.69 per share for the third quarter of 2017.

Research and development expenses were $39.5 million for the quarter compared to $26.7 million in the third quarter of 2017. The increase was primarily due to an increase in external manufacturer expenses for ARIKAYCE production related activities and higher compensation related expenses due to an increase in headcount.

Third quarter G&A expenses were $44.4 million versus $17.4 million in 2017. The increase is mainly due to an increase in headcount including the hiring of our field force and higher expenses related to pre-commercial planning activities for ARIKAYCE. We ended this quarter with $567.6 million in cash and cash equivalents.

Our cash-based operating expenses for the quarter were $75.1 million as our spending associated with the regulatory review, subsequent approval, and launch of ARIKAYCE ramped up during the quarter.

Reconciliation of our GAAP operating expenses to our cash based operating expenses is included in our press release which is available on the Investor Relations section of our website. We remain focused on disciplined capital deployment and utilized a state gated [ph] approach to the release of these investments.

Turning now to cash guidance for the second half of 2018, we expect that cash-based operating expenses and capital and other cash investments will be toward the low end of the range or $150 dollars to $170 million for the second half of 2018. We are continuing to invest in our launch effort for the U.S. market while also expanding geographically.

With that, I will turn it back to Will..

Thanks Paolo. I'd like to close with some thoughts around the impact that we believe ARIKAYCE can have on the MAC lung disease community. Having participated in both Infectious Disease Week and Chest we are confident that ARIKAYCE will be a critical and much-needed therapy for patients with treatment refractory MAC lung disease.

We've always believed in the transformative impact this treatment could have on patients and the feedback and anecdotes we heard from key opinion leaders coming out of these important medical meetings underscores the potential for ARIKAYCE to change the treatment paradigm for MAC lung disease.

Let me conclude with a sincere thank you once again to the Insmed team for their continued hard work and dedication. I am proud of the strong team we have built here and the achievements we've already made in bringing ARIKAYCE to patients. And with that, let's open the line to questions.

Operator can we take the first question please?.

[Operator Instructions] Our first question comes from Adam Walsh of Stifel. Your line is open..

at Wed Oct 31 11:49:00 2018 ] Roger, in the ARIKAYCE Phase 3 there was a pretty stringent definition of culture conversion, a total of nine negative cultures over three consecutive months, can you remind us of how culture conversion is actually assessed in clinical practice and whether any differences in the methodology in that setting compared to the Phase 3 trial could impact the conversion rates we would expect to see in the commercial setting?.

Yes, go ahead Roger..

at Wed Oct 31 11:50:00 2018 ]test out around six months and check for conversion at that point. Of course if the culture comes back negative at that point then it is a further 12 months to make sure that they've eradicated the bug and if not then the guidelines recommend treating for further six months and to check again after that point..

at Wed Oct 31 11:51:00 2018 ]be you could better characterize or us the payer interactions of how they are looking at reimbursement and the criteria that they might have for reimbursement relative to the Page 3 and commercial practice?.

Yes, thank you, yes, so I think that the – so first of all I think that the payers continue to like the idea of culture conversion as our primary endpoint, they see value in that.

And I would also say that it’s been a great opportunity to interact and educate them on NTM, MAC lung disease, on the guidelines, and how to think about culture conversion and the appropriate times to test.

One of the important things is, this takes some time to grow the culture and to actually ascertain whether or not the patient has flipped or not is culture negative or not, and during that time you should continue treating and that’s an opportunity to actually educate the payers on that. We've been able to do that with our medical team.

So I don’t believe that anybody that I’ve heard is looking to replicate the design and the rigor that we did in the Phase 3, and they are certainly open to understanding from the experts and from the medical experts what the appropriate time is and I think the guidelines give us the best direction at this point..

Okay that’s from me, thank you that’s helpful, I’ll jump back in the queue..

Our next question comes from Martin Auster of Credit Suisse, your line is open..

at Wed Oct 31 12:27:00 2018 ] about that dynamic? Thank you..

at Wed Oct 31 12:28:00 2018 ] late Friday. Monday morning our team was out there promoting the drug consistent with the label and I think that speaks to the energy and talent of the team we deployed, happened to be doing it right into Infectious Disease Week and CHEST which were that first week.

So we have firsthand feedback although I don’t know that we have enough to create a trend line..

Yes I think that’s right, Will, I think it’s still very early. I would say that there is nothing that's floated up to my attention that gives me any pause or anything other than positive receptiveness from both pulmonologist and infectious disease specialists.

We have talked about, previously about how in different regions of the country IDs tend to take the lead in some regions and pulmonologists in others and think we see that trend continuing to play out.

But overall, I think the reception has been very positive from physicians and we continue to be encouraged by what we’re hearing and the experience we’re seeing so far..

Great, thanks for the answer..

Our next question comes from Ritu Baral of Cowen, your line is open..

at Wed Oct 31 12:30:00 2018 ] [ph] what are you going to propose as the endpoint, even if you can’t give us the exact proposition, what are some of the endpoints that you are considering and what do you think just wouldn’t be on the table or would not be required? And I have a followup..

at Wed Oct 31 12:32:00 2018 ] that will be evident to people who observe its design in the first instance. And so what does that mean? It means that we are going to be guiding the endpoints both on culture conversion and clinical endpoint that will align in a way that can be informed by our Phase 2 and Phase 3 data.

So we will be able to extrapolate from our Phase 2 and Phase 3 trial what we think will be needed in terms of patient enrollment, impact to the greatest degree possible and so that design we’ll be bringing forward so that we have that high confidence.

What could that look like beyond culture conversion? Obviously we have data on six-minute walk and indeed if we had, had a higher number of patients in the Phase 3 trial we would have hit on six-minute walk.

As it was a secondary endpoint that we weren’t powered to show that we did show it in the culture converting patients, but six-minute walk is one patient reported outcomes. We concernedly discerned from the St.

George's questionnaire and others that we ran in the Phase 3 trial, how patients feel we know anecdotally from the experience with the drug both in the U.S. and in Europe, what are the symptoms and signs that improve over time.

So I think we’ve got a wealth of data from which we can craft this endpoint or combination of endpoints that we will use and propose with FDA and I am highly confident we will get to an agreement there and that the design will result in not only full approval but and this is really the important point, the expansion of the addressable market.

Post approval requirement is focused on frontline patients is different from the refractory population we're already approved in. And it increases the addressable market somewhere north of six-fold. So it's a significant opportunity, one we want to get underway as quickly as we can..

So one of the investor concerns has been around what you might spend on a trial like this or how long it might take offsetting your cash balance versus the - versus sales reps, can you give us roughly what you have budgeted for the confirmatory trial and how long you think it might take for a clinical endpoint?.

So I can't or I'm not going to provide any of the specific details about budget or duration until we've come to an agreement with FDA. What I will say is that our proposal and the architecture of the trial itself completely align with where we were at the beginning of this year.

We were talking about lifecycle management and it was my commentary throughout the year that if the FDA were going to for additional trial work, we would try to align around one of the trials we already had in mind and that's what this frontline trial is.

This is exactly the trial we thought we were going to be running with regard to getting an expanded label in frontline patients. And so, from a cost point of view when we began our budgeting at the beginning of the year this aligns with our expectations.

So I don't feel like we're at a point of disconnect with our original planning around frontline therapy lifecycle management study. In fact I think if anything the alignment of FDAs request with our plan to already go ahead with frontline, puts us in a pretty strong place..

Okay, then my follow is literally just the flip side of that for SG&A for Paolo, given the current burn, given what you’re guiding to the lower end of the 160 to 170 at five at for 4Q that you’re not going to have a considerable ramp for SG&A I believe, how should we think about SG&A going forward, incremental increase in sort of Q3 spend or could there be significant ramps with the ongoing launch in 2019?.

We are not giving at his movement any guidance for 2019 as usually that our earnings calls are there for the Q4 in February we will be more precise about this with the new guidance. At the movement we are not giving any specific direction on that..

But if there's a potential to significantly increase SG&A in 2019 or between larger on power or all engines sort of fully going?.

As I said at the moment that I don’t feel comfortable to give any guidance for next year, as we plan and we will give in February..

May I, well, let me just add this commentary which is that we have the commercial team in place for six months prior to the approval, so you have seen this team in place and fully loaded for a successful launch.

We have a phrase that sits on the white boards of every commercial person here at the company, "You only launch once," and that phrase informs how we've approached the resourcing of this effort. So I think this year the six months gives you some sense of the resourcing we're bringing to bear..

Fair enough guys. I had to try. Thanks for the answers..

Of course, and I appreciate the extra effort..

Our next question comes from Joseph Schwartz of Leerink Partners. Your line is open..

Good morning and congrats on all the progress.

I know and I realize that it's early in the launch, but I was just wondering if you could give us a sense of the metrics that you do expect to share with us and at what point can we look forward to this in order to gauge the progress of the launch?.

Yes, I appreciate that question and I think, as the trial develops n the launch metrics become more clear we'll be in a better placed to provide that specificity.

There's some obvious areas that people are interested in, I think we're looking on the margin and what else we might provide, but I think it's, we want to allow the trends to develop before it becomes clear what is going to be insightful.

Let me just express my commitment to the notion of transparency at this stage and my ambition to share information at the earliest possible opportunity, so that people begin to get a sense of the shape of the launch.

That doesn't need to be in any specific forum, we're just looking for the opportunity to provide it once the information has guided us that we feel confident that we know where the trends are going. So I don't think it's productive to sort of spell out what it will be just yet because I don't think we know..

Okay, sounds good. And then you mentioned that you receive some valuable anecdotes out of recent medical meetings.

So, and now that you've reached so many of the physicians in your prescriber base, I'm just wondering if you could characterize for us whether you've seen any early wins or headwinds and how representative do you think these sorts of uptake patterns might be for the shape of the launch going forward?.

So I'll say two things and I'll turn it over to Roger. The first is we're happy with what we're seeing so far and we have drug in patients today.

So Roger, I don't know if you want to add your perspective?.

Yes, I think the, thanks Will, I think I would just add to that that I'm very pleased with how the team is executing. I think the reception that we're getting from the work community as well as the broader prescribing community has been what I had hoped for and what I expected.

It started at ID Week and the CHEST we've had very well attended CME session and I think Dr Griffin [ph] and Dr. Daly [ph] had some very good insights.

I think talked about not only ARIKAYCE and the potential impact it can make for patients with MAC lung disease, but also talking about how for these patients who don't respond in those first six months that you really need to think about doing something different because the guideline based therapy is not terribly effective at converting these patients and endorsing - adding ARIKAYCE when appropriate.

That's consistent with our label that's what we had expected and obviously when they do the questions during those CME I think the audience also saw a very clear place for ARIKAYCE for their refractory patients. That's consistent with the feedback we're hearing from physicians.

I would say that, that obviously we were engaging with a broader prescriber set and physicians set then the centers of excellence that you're more familiar with and I think that the feedback and the reception there has also been positive. So I remain very pleased with the feedback and how things are going so far..

Great, thanks for taking my questions..

Sure..

Our next question comes from Matthew Harrison of Morgan Stanley. Your line is open..

Great, good morning everybody. Thanks for taking the question.

I guess two from me, so one I was curious about the discussions you've had with physicians recently about how they view the label and how narrow or not they view the population that they think they can address with the label which I know is a concern after you've got the label? And then I guess the second question is just around, can you comment on how we should think about the rate of you gaining coverage, what sort of early views you have in terms of how quickly that can occur or not? Thanks..

Sure, so I'm - I'll just comment generally that I think interactions with both physicians in the context of the label and payers in the context of our early coverage discussions, both are turning positive and that's entirely consistent with the research we had done prior to launch.

But let me turn it over to Roger to speak to both the LPAD and the Black Box Warning specifically and then also any comments on payers..

Yes, thanks Will.

So I think the feedback we've had from physicians around the label has been this is really actually a nonevent for them, it's what they had expected from a population that was the population that was studied in the Phase 3 and so as they think about their NTM MAC lung disease patients who are, who have not responded in the first six months and have limited or fewer limited or no options that can describe the vast majority of their patients at least a limited few limited with no options.

So that does not seem to be an impediment for them as they think about their patient population of where they may prescribe ARIKAYCE.

I think with coverage decisions, I think one of the things we saw about the limited population is it actually helped with our pair community, underscore the seriousness of this disease, the fact that this designation was provided from the FDA and Dr [indiscernible] came out with his quote in their press release.

So I think that was a very positive thing for us with the payer community. We will, as we've talked about it we are engaging and educating our payers on the disease, on the product. We expect over the coming months to have P&T reviews.

Until that time and that's in both the commercial and in the Medicare side of the business, until that time we'll be working on the medical exception process. And we see physicians are willing to do the paperwork and put the effort in to secure access for ARIKAYCE for their patients, so but we'll continue to update you on progress as we go..

Our next question comes from Dana Flanders of Goldman Sachs. Your line is open..

Hi guys this is Chris Darragh [ph] on for Dana. Thanks for taking the questions.

First up I was wondering if you could touch briefly on the speed and magnitude of uptake for use in CF patients with MAC on top of their existing CF medications who may be mostly followed in tertiary academic centers versus non CF patients with MAC who may be spread throughout the community?.

Sure, so I'll take that one.

As you are aware the label does not specifically include cystic fibrosis patients and as we saw at the most recent National Conference, the topic of NTM in cystic fibrosis patients is gaining more and more attention because especially for patients who already have pseudomonas infections as a byproduct of their cystic fibrosis, the arrival of an NTM infection on top of that really spells trouble.

So this is a topic of great attention of course any of those cystic fibrosis patients that have NTM MAC and are refractory to treatment are on label and so it is appropriate for those physicians to consider the use of our drug at their discretion for those cystic fibrosis patients and a lot of these patients are at concentrated centers where they focus on these patients in large groups.

So we’re not going to comment specifically on the uptake. I would just observe that we're very aware of the trend.

We're very aware of it being a topic of discussion at the Cystic Fibrosis Conference this year and that it has been an increasing topic in that community and we stand ready to support those physicians that find appropriate patients that are on label for the treatment of their MAC condition..

Great, that's very helpful.

And then secondly and I was wondering if there is a path to approval for a potential expansion to the frontline setting based on the data that can be generated from the post approval confirmatory study and if so, what would that process look like, and is there any good examples of past, present, you can point to where that’s been done?.

So I appreciate the question. I think let me lay out as clearly as I can where we think we're going to go. As we indicated at the beginning of this year, the goal was to secure approval for the drug in refractory population. We managed to accomplish that.

The FDA's requirement that was new is the additional completion of the frontline study in order to gain full approval, not just in the refractory population, but also as a byproduct of that study in the frontline population.

And you raise an important point, because with the approval in the frontline population pursuant to this one study, we would expand the addressed market we could bring the drug to bear against by about 600%. So we think there are 10,000 to 15,000 addressable patients right now that are refractory.

We think you can multiply that by six to identify those patients who have MAC lung disease and I would just highlight beyond that population we're describing when we think about the potential for this market there was some very insightful machine learning work that was done by the commercial team that went out and against the Symphony database sort of calculated those patients who are NTM likely but have not yet been diagnosed with NTM, and that population we think the ratio is about two undiagnosed patients for every one that is diagnosed.

So while we identify a six-fold increase in the addressable market from securing frontline patient status, I observed that our data suggests with a 93% confidence that there's probably two additional patients who would qualify as frontline MAC patients that have not yet been diagnosed.

So when we say six-fold increase, that's just of diagnosed patients, that did not contemplate those that have not yet been diagnosed.

And I think that's really where this experience of going into the NTM population is going to be really informative because as we all know no one has ever launched an NTM before and it's not uncommon in rare disease when you launch to find many more patients there than you might have originally thought..

Got it. That's very helpful. And if I can sneak a last one in here, I know before the ARIKAYCE ad com you mentioned that you could flip a switch on the maintenance clinical trial program if it made sense.

So now that we are in the post approval setting, how are you viewing the potential for that program and how did FDA communications leading up through to and through ARIKAYCE's approval change the strategy or execution in that program if at all? Thanks guys..

Yes, thanks for the question. So as a part of our original lifecycle management strategy we looked at both frontline therapy and maintenance therapy. We came up with some concept designs which we socialized with the key opinion leaders in this community at the American Thoracic Society Meeting back in May.

With that information we've fine tuned some of those designs and we're now reconciling the frontline therapy study with FDA and we as we indicated will provide an update on that the first half of next year in terms of what that looks like.

In parallel we're exploring the maintenance therapy indication and whether that might run in parallel to the frontline study or in some other way. And as soon as we've made final decisions on that, we'll bring that information to you.

But I would expect that is a trial that will have some visibility on if and when we're going to do it and what it would look like in the first half of next year as well..

There are no further questions at this time. I'd like to turn the call back over to Will Lewis, CEO for any closing remarks..

Thanks very much everyone for joining us today. I appreciate your interest in the early days of our launch. We look forward to providing you an update in the very near future..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day..