Welcome to the Insmed Fourth Quarter and full-year 2021 financial results. My name is Juan and I will be coordinating your call today. If you would like to ask a question during the presentation, [Operator Instructions]. I will now hand over to your host, Eleanor Barisser, Investor Relations at Insmed to begin with, please Eleanor, go ahead.

Thank you, Juan. Good morning, and welcome to today's conference call to discuss our full-year financial results for 2021 and to provide a business and pipeline update. Before we start, let me remind you that today's call will include forward-looking statements based on current expectations.

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

Please refer to our filings with the 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 now 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. Today is a very exciting day for us at Insmed.

We're going to share with you a robust set of updates that will clarify how we are thinking about our program catalysts, commercial franchise, and capital allocation over the next several years to support our mission of transforming the lives of patients with serious and rare diseases.

At Insmed, we're building what we believe is one of the few companies in our industry capable of producing potentially multi-billion dollars of revenue by the end of this decade. During the course of today's call, we're excited to review the path we will be following as we pursue this ambitious goal.

Our strategy is centered on developing medicines that have a significant positive impact on patients’ lives.

Today, Insmed has seven ongoing mid and late-stage clinical trials, commercial operations in three territories around the globe, and a research engine working behind the scenes to identify the most promising early-stage candidates by harnessing innovative technologies. We have segmented all of this work into four pillars.

The first of these pillars is the ARIKAYCE franchise, our marketed product for the treatment of refractory MAC lung disease, where we benefit from a commercial footprint in the U.S., Europe, and Japan. As these launches mature, we intend to grow revenue globally by at least 30% this year compared to 2021.

In parallel, our front-line clinical trial program is advancing to support full FDA and select international approvals of ARIKAYCE in newly diagnosed NTM patients. This front-line indication represents a multi-fold increase in the addressable opportunity compared to the refractory setting alone.

The ARISE study, which is the first of the two studies needed on our path to approval, is currently 50% enrolled, and we anticipate enrollment to be complete this year with top-line data in the first half of next year. We also anticipate the second study; ENCORE will be fully enrolled next year.

For our second pillar, brensocatib, our DPP1 inhibitor, the ASPEN trial exploring the potential of treatment of bronchiectasis is now 50% enrolled ahead of internal projections and we anticipate it will be fully enrolled by approximately this time next year.

There is real enthusiasm for this trial around the world as this rapid rate of enrollment testifies. In addition to ASPEN, the Phase 2 PK/PD study in cystic fibrosis patients is underway and we anticipate topline data by the end of this year or early 2023.

In line with our strategy to build a portfolio around neutrophil-mediated diseases using our DPP1 inhibitor, we are excited to report that we have identified the next two potential indications for brensocatib along with Phase 2 clinical trial designs for their exploration. You will hear more about these later on today's call.

Our third pillar TPIP is a specialized treprostinil prodrug formulation with three parallel Phase 2 programs underway with an initial focus on potential treatments for PAH and PH-ILD. We will also review those trial designs later on the call. Finally, translational medicine is our fourth pillar.

Led by several world-class teams, our research engine is working with exciting new technologies to identify the next round of Insmed's early-stage pipeline candidates in the serious and rare disease space. Within this framework, we intend to generate on average one new IND per year.

We look forward to hosting a detailed research day in the second half of this year to update you on our progress. Set against the backdrop of one of the more challenging healthcare markets in recent years, I believe Insmed is poised to weather the storm of these turbulent times.

Our goals are ambitious, but we have been deliberate in our pursuit, and we have a track record of achieving what we set out to do.

The next stage of our growth will depend on advancing more treatments in strategically complementary indications and from there building additional therapeutic areas from our fourth pillar to follow the first three pillars. Let's take a moment to consider what we have accomplished. Our global commercial franchise and infrastructure is already built.

We benefit from revenue generation from our marketed products. We have two strategically overlapping pivotal stage programs with brensocatib and ARIKAYCE front line. We have a robust pipeline of focused research efforts to generate impactful medicines in new therapeutic areas and a strong cash position.

Insmed is on a path to realize this bright future for the benefit of our patients and our shareholders. All of this is overseen by a world-class leadership team with an impressive track record of executing commercial, clinical, and regulatory pathways, who will now review where we stand in greater detail.

Let me start that process by turning the call over to Sara to walk through our financial results..

Thank you, Will. Good morning, everyone. A key priority for 2021 was maintaining financial strength and we made important strides on this front. We bolstered our balance sheet and continue to benefit from the ARIKAYCE revenue stream, while exercising fiscal discipline.

As a result, we're in a favorable position with balance sheet strength as we evaluate the many opportunities inherent in our existing portfolio. Earlier today, we issued our detailed fourth quarter and full-year financial results in a press release. All of those results are aligned with our internal expectations.

Let me highlight a few of our full-year results for you now. As reported this morning, we ended the year with $766.8 million in cash and cash equivalents and marketable securities. We believe this cash position will support our ongoing business into 2024. There are three main variables that impact our cash position.

First, revenue from our marketed products. Second, how fully and broadly as well as when we choose to pursue the progress in our development pipeline. And third, how we resource launch readiness for several of these substantial programs, including inventory build. We will carefully consider these elements as we craft our plan forward.

Now, turning to the financials, total net revenue for ARIKAYCE was $188.5 million for the full year, 2021. As we look to each of our commercial regions, net revenue for 2021 was $159.5 million in the U.S., $16 million in Japan, and $12.9 million in Europe and rest of world. Notably, our U.S.

revenue number for the full year 2021 demonstrates steady performance of the ARIKAYCE franchise over the prior year, despite the rise and fall in [infection] (ph) and hospitalization rates in the shifting COVID landscape.

We are encouraged by the overall improvement in the way in which people have adapted to the new reality presented by COVID around the globe. Consequently, these elements give us confidence that we will return to growth this year in all of the regions we are pursuing.

On a global basis, we anticipate seeing meaningful growth in ARIKAYCE revenue this year and are prepared to forecast at least 30% revenue growth year-over-year for 2022. Our gross to net in the U.S. for the full year 2021 were approximately 13.2%. Looking ahead at 2022, we anticipate gross to nets in the U.S.

to be in the mid-teens consistent with our estimates from prior years. Recall that in the U.S. the first quarter is typically the toughest due to the deductible and co-pay resets for our Medicare patients that occur at the beginning of the year, resulting in the donut hole effect.

As a result, we expect to see a similar trend to what we have historically experienced from fourth quarter to first quarter revenue levels. Cost of product revenues for the full-year 2021 was $44.2 million or 23% of revenues. This is consistent on a percentage basis with the cost of product revenues in the full-year 2020.

Turning to our GAAP operating expenses. For the full-year 2021, research and development expenses were $272.7 million and SG&A expenses were $234.3 million. In closing, Insmed has entered 2022 in a very strong capital position as we support the four pillars of our business.

We intend to be responsible stewards of cash with the foresight to invest now to unlock the potential for candidates that may represent real improvements in healthcare for patients. I will now turn the call over to Martina for an update on our clinical development pipeline. Martina..

translational medicine. This pillar is led by multiple teams and contains several exciting technology programs running in parallel, some of which are complementary to one another and others that are standalone therapies targeting different and unrelated conditions.

We envisioned that some programs within these four pillars may act as platform capabilities, for example, the potential deimmunization of capsids in gene therapy.

We anticipate that translational medicine will serve as the IND engine for incoming future, thereby addressing the question of what may follow the anticipated success of our first three pillars.

We hope to make significant progress from these efforts in 2022, culminating in the filing of an IND in a new non-pulmonary indication by the end of the year.

In parallel to this program, there's several other components of our fourth pillar, and we envision a detailed research date in the second half of this year, at which time we anticipate sharing pre -clinical data.

While this represents an important pillar for our future, I continue to work closely with Sara (ph) to ensure capital allocations to these areas remains measured and it's deployed only with successful data along the way. In summary, Insmed realized several major clinical achievements over the past year.

2022 is poised to be a critical year of execution across our clinical operations. And we look forward to delivering on the catalysts we've outlined today. With that, let me turn the call over to Roger, to discuss some key operational updates. Roger..

Thank you, Martina, and good morning, everyone. From an operational standpoint, there are two main areas I want to focus on today. I'll start with the commercial operations surrounding our first pillar, ARIKAYCE. From there, I'll turn to the expansion of our second pillar, brensocatib and the additional clinical indications we have decided to target.

For our ARIKAYCE franchise, Insmed's commercial operations continue to perform extremely well over the course of 2021. Last year ushered in a new era for ARIKAYCE, which is now launched in the U.S., Europe, and Japan. I'd like to take a moment to walk you through our recent progress in each of these regions. Let's begin with the U.S.

The ARIKAYCE franchise has remained resilient throughout the ongoing pandemic underscored by a solid fourth quarter performance, despite the arrival of the Omicron surges that rapidly slept the country beginning late last year. We continue to see regional variability across the U.S. with some areas more impacted by COVID than others.

In particular, we have noted the impact of Omicron on the availability of workers in the medical setting, and we are all keenly aware of the pressure on healthcare professionals, particularly pulmonologists, infectious disease doctors, and respiratory therapists.

However, despite these challenges, we believe we have the resources to achieve growth as our therapeutic specialist continue to have positive interactions with physicians, treating refractory NTM patients.

Although COVID has impacted physician's ability to see NTM patients, we also believe that the pandemic has brought to light a larger focus on pulmonary disease. A potentially higher index is suspicion for refractory NTM. These factors combined with our ability to adapt to the new circumstances of COVID, create potential for growth in the U.S.

and our international markets. Let's drill down into our ex-U.S. commercial efforts beginning with Japan, where we are extremely pleased with the launch progress thus far. As a reminder, the launch in Japan began in July of last year.

We believe that the opportunity in this market is significant and that in terms of revenue, Japan will be the second largest market for ARIKAYCE after the U.S. Recall that for the first-year market availability in Japan, all drugs are restricted to a two-week dispensing limit.

Practically, this requires the patient to return to their physician's office [Indiscernible]. This two-week restriction also impacts affordability for patients. Multi-patient co-pays are kept in Japan. So, one of the current restriction a patient would receive a maximum of one month supply for their co-payment.

Once this [Indiscernible], patients will be able to receive up to three months of ARIKAYCE for the same co-payment.

In addition, the Japanese Society for Tuberculosis and Non-tuberculosis Micro-bacteria published guidelines on the appropriate use of ARIKAYCE, recommending usage for patients who do not achieve culture conversion with a multi-drug regimen over six months. The guidelines also offer advice on managing adverse events.

We see this as a positive development and may help physicians better understand the key considerations as they think about prescribing ARIKAYCE to their patients and managing the side effect profile. We are extremely excited about the opportunity in Japan and look forward to updating you on our progress. I'll now turn to Europe.

We anticipate the addressable market is smaller than those in the U.S. and Japan. However, we have made excellent progress with physicians, and as reimbursement occurs in additional countries, we anticipate Europe will be a meaning revenue contributor to the overall franchise.

As we work to drive growth in this market, we continue to believe that the literature estimation of 1,400 diagnosed refractory MAC patients in Europe may be understated. ARIKAYCE is currently available under our free pricing program in Germany and the price is renegotiated after the first year on the market.

We await a final pricing decision in Germany in the first half of this year with the product also available and reimbursed in the Netherlands, Wales, and Scotland. We now turn our attention to England, France, and Italy as we await reimbursement decisions from those territories throughout this year.

We have confidence in the future growth from each of our three regions where ARIKAYCE is available. As we continue to learn about and adapt to the realities of COVID, we believe we have the resources for our commercial operations to succeed in this challenging environment. I'd like to now turn to our second pillar, brensocatib.

And the market opportunity in our newly announced indications, CRS and HS. CRS without nasal polyps represents a significant opportunity. There are approximately 33 million patients diagnosed with CRS in the U.S. Of those patients, approximately 26 million patients have CRS without nasal polyps.

We are targeting the severe end of the disease spectrum, which represents a smaller, though still substantial portion of the overall CRS without nasal polyp’s market. We believe a good proxy for severe disease are those patients who require surgical intervention.

Each year in the U.S., approximately 155,000 patients undergo surgery for CRS without nasal polyps. Of those, approximately 15% or 23,000 patients require revision or a repeat surgery. We consider those patients undergoing repeat surgical intervention to be most severe.

To be clear, these are annual incidents numbers and pending supportive clinical data, we expect these patients to take brensocatib chronically. As Martina mentioned, there are currently no approved treatments for this indication.

If we are able to demonstrate clinically meaningful impact on this disease, we believe physicians may be inclined to try a well-tolerated effective therapy prior to recommending either initial or repeat surgery. We believe patients may also prefer a well-tolerated effective oral medication to surgical intervention.

With ARIKAYCE, we estimate there are approximately 300,000 patients in the U.S. Approximately 1/3 of these patients or about a 100,000 have moderate to severe disease. We will be targeting the more severe patient group with brensocatib.

HUMIRA is currently the only approved treatment for HS patients, and we believe that brensocatib, a well-tolerated oral therapy with an attractive safety profile will be a welcome edition to the treatment on momentary. We anticipate brensocatib will launch in broad yet business first.

We believe this indication may support our attractive pricing if we are able to show clinically meaningful impact on this disease. As we selected additional diseases to target, we wanted to ensure that the pricing was sustainable, assuming we are also able to show clinically meaningful results.

We believe the presence of improved biologics in both severe CRS with nasal polyps and HS validates the potential of these disease states to support strong pricing as well. When we take a step back and look at the overall picture of our brensocatib targeted indications, bronchiectasis, cystic fibrosis, CRS, and HS.

We see a pathway to what we believe is a very sizable market opportunity. In summary, the operational outlook in Insmed is strong. I'm proud of the team has helped us to execute on our milestones during our productive 2021. I look forward to what I believe will be another transformational year for the company. So, I'll now turn the call back to Will..

Thank you, Roger. I'd like to close out my remarks by emphasizing Insmed's position of strength, backed by a seasoned leadership team, a reliable and growing commercial franchise, a diverse pipeline of early to late-stage assets, and a solid cash position. We have the elements we need to advance this company to the next level of growth.

I believe Insmed can reach our goal of becoming one of the next great biotechnology companies. We will work to execute against the objectives we have laid out for you today for the benefit of our patients and our shareholders.

I'd like to acknowledge the hard work from the entire Insmed team, and I would like to extend my gratitude to the patients and caregivers who participate in our clinical studies. And with that, I'd like to open the call to questions.

Operator, can we take the first question, please?.

[Operator Instructions] And the first question comes from Jessica Fye from JP Morgan. Please, Jessica, your line is now open..

Hey, guys. Good morning. Thanks for all the updates and for taking my question. For the '22 revenue guidance pointing to sales of at least $245 million for ARIKAYCE this year. I know you talked about growth in all regions, but can you help us think about the contribution from each geography that underpins that floor.

And maybe talk about the extent to which this might be conservative or how much conservatism you kind of reflect in that number. Thank you..

Yeah, sure. I appreciate that question. Look, I think we've all experienced the uncertainties that surround the pandemic's ebb and flow. What we tried to do with this forecast was to put out there a number that we feel very good about in terms of its defensibility, despite whatever may happen in the pandemic market.

So, I think there -- certainly the first quarter, as you know, is always the most challenging for the rare disease products, but we see a positive year across the board.

I don't know, Sara, if you want to add anything to that?.

Yeah. No. Thanks Jess for the question. Maybe just a couple of other things to add. We're obviously very encouraged and excited to be able to share at least a 30% growth that's obviously a meaningful growth year-over-year from '21 to '22, as Will mentioned, Q1 is always sort of the most challenging quarter in the U.S.

due to the donut hole, reset and all those good things that we see across high-price rare disease products.

And as the year progresses Japan, we expect to be a meaningful contributor, as Roger mentioned, the second largest contributor in our three regions with that June time point as the list of the two-week prescription, which really helps patients from a copay perspective. So hopefully that gives you a little more color..

Great, thanks. And if I can have a second question on TPIP.

For that Phase 2b in PAH, what background therapies are allowed and what do you expect the mix of single and dual agent background meds to be? And I know you're expecting better coverage with TPIP relative to Tyvaso, but do you expect the PVR data in the Phase 2b to compare well to Tyvaso?.

So, I'll ask Martina maybe to take that question..

Yes. So, we expect that TPIP, what we've seen from TPIP in the healthy volunteer study is that we don't go up to such a high Cmax when we have a larger and a prolonged exposure along the AUC perspective, we've seen the key half-life in this study going out even with our lowest dose to 24, 36, and even to 48 hours.

So, we expect that we will have a good impact on the PVR. And from the PK profile that what we saw in the healthy volunteer study, there's no reason to believe that that will be significantly different in the PAH patients..

Thank you. Our next question comes from Jeff Hung from Morgan Stanley. Your line is now open..

Hi, this is Melina on for Jeff. Thanks for taking our questions. Can you talk a little bit more about for brensocatib, the CRS and HS indications? What are the determining factors to advance those indications into the clinic this year? Is there any specific data that you are waiting on for each indication? Yeah, thank you..

No, appreciate that. I would say that we went through a pretty significant process and maybe Roger, you want to talk a little bit about that? And then Martina, I'll ask you to comment on the logic scientifically..

Yes. Sure. Thanks, Will. So, we actually did a pretty exhaustive process. We're working with some external partners. We screened diseases and we actually ended up screening about 150 neutrophil-mediated diseases. Our next step as we sort of narrowed that down, was to look at those disease states that were primarily driven by neutrophil involvement.

And we [Indiscernible] that list out to about little more than 60 diseases. From there, we then looked at the API, we wanted to understand the size of the opportunity, we looked at the burden of the disease and narrowed that final list down.

And then as we selected CRS and HS, we really focused on number 1, the science, so obviously driven by neutrophil involvement, the unmet need of the patients, and importantly the competitive intensity, which is somewhat related to the unmet need of the patients. But in HS, there's only one approved therapy, as we mentioned, which is Humira.

And in CRS without nasal polyps, which is the neutrophillic phenotype of the disease, there are no approved therapies and that's counter to the CRS with nasal polyps where there's a number of biologic depictions, Nucala, for example, that are targeting that portion of the population. So, the competitive intensity is really attractive to us.

And then finally, as I mentioned in my prepared comments, as we've looked at pricing, we expect that brensocatib will be supported in bronchiectasis with some attractive pricing. And we wanted to make sure that across our indications, that we felt that payers would reimburse this at that same sustainable attractive pricing.

And we think across our disease states with bronchiectasis CF, CRS, and HS that we will be able to achieve that. So, we feel very good about these disease states where we're targeting now and the impact that we’re going to bring to patients..

Yeah, and about scientific rationale. So, there's no really good preclinical models for both of these diseases, but they are both associated with neutrophil inflammation. And if you look at CRS without nasal polyps, neutrophil play a key role in the fibrotic remodeling of the mucus membrane inside the sinuses.

This re-modeling leads over time to tissue damage and worsening and worsening of that disease. So, from both in CRS and in HS the neutrophil component is an important driver. And in HS, the neutrophils are prominent and you see them in the effective skin lesions.

But you also see in the defective skin lesions, is that an uncontrolled release of this NSPs leads to a high contribution and a presence of net. And there is a correlation between this net formation and the severity of the disease. So, for both of them, brensocatib attracts what is the affector cell.

And that is the neutrophilic activity through the DPP1 inhibition..

And I would just say, we're moving forward with all speed in both of these indications. You saw draft designs of clinical trials in the slides today and the discussion that Martina provided. Those are going to continue to be refined.

We've had very good KOL interactions, very strongly supportive of pursuing these - the only thing that holds us back from doing perhaps even more of what Roger was indicating is resource and thinking carefully about balancing how many eggs to put in this particular basket. We have excellent data in bronchiectasis.

We have a very strong scientific rationale for these next three indications as you've just heard. And I think what this really represents is the tip of the iceberg or DPP1 inhibition in neutrophil-mediated diseases. We have really unlocked a pathway here. And I think the potential for brensocatib to get even bigger than it already is, is very real.

And that puts this into a pretty enticing blockbuster category. So, lots of work to be done and validation to be provided behind that ambition. But I think the more we look at this and the more science we study, the more excited we get..

Thank you for all the detail and if I can just ask one more quick one on the TPIP program. I think the Phase 2 that I did that was push-back originally from the first half this year to just 2022.

Have you gotten any sense from perspective participants what they need to see in order to be willing to go into the ICU, particularly during these winter months when COVID rates maybe higher?.

Yeah. This is a frustrating one for all of us. Look, the Phase 2a study has been in design and out there for some time. The big challenge here is that as far as we know, there is no precedent for the study. Doing a right heart catheterization on somebody that lasts more than about four hours, we're not aware of studies that have ever done that.

We're proposing to do it for 24 hours. And what's interesting about that is that the key opinion leaders who have opened their centers to pursue this are enthusiastic about doing so. They really think this data is going to de -risk this program's potential very substantially.

So, we are excited to get the data, finding someone to volunteer who has PAH in an advanced state and is willing to have a right heart catheterization for 24 hours while they sit in an ICU surrounded by COVID infected patients. That's a very high bar. I think we probably underestimated how severe and harsh that step was. But we're pursuing it.

We have identified some patients by name. They will indicate they time that they want to come in and then they get a little bit nervous. So, we're trying to work as productively as we can. And as Omicron recedes, I think we have a very good chance of getting those patients.

That's why we've said, look, to get all the data it may take a little bit longer. But importantly we plan to get the data and once we get it, we will share it. And that could be at any time across the year..

Great. Thanks very much..

Thank you, our next question comes from Ritu Baral from Cowen. Please Ritu, your line is now open..

Good morning, guys. Thanks for taking the question. I wanted to ask about ASPEN and what you're seeing so far.

Have you been looking at event rates -- in a blended event rates for exacerbations in ASPEN? How are they comparing to expectations and frankly should we be thinking about any COVID impacts on exacerbation rates in this population, up, down with waves and whether this seems to be happening more with COVID in this population? If you could just help frame that..

Yes. So, what we're doing is we're in a blinded fashion looking at the events rate on a weekly basis, and is what we're seeing matching our assumption. So, from that perspective, what we're seeing is matching our assumptions at this time. When it comes to COVID, there is an additional aspect in every respiratory study right now.

So, we also know which patients, how many patients have COVID. So, remember all of this is in applying this mesh in a blinded way. We're not -- we don't see who the individual are, but we have a clear view of what is the patient population, do we see anything that deviates right now from our assumptions.

And at this point in time, we see what we were -- what we had estimated..

And similar to what we saw at Willow..

And similar to what we saw in Willow..

So, we're in a great spot right now [Indiscernible] too. I mean, this trial is not only enrolling quickly, but the monitoring that Martina is describing has gone remarkably well and that is something that she said we're tracking on a weekly basis, so we're all over this..

Got it.

And then a question for Roger, just on the -- on new Brenso indications, as we think about that severe CRS population, you think about HS, who were the treating physicians that you think will ultimately be commercially targeted, are they like EMTs, and then specific derms or are they more broad than how I might be thinking about it?.

Yes. Thanks, Ritu. So, you're right. It's the -- for the for CRS, it's the ENTs. So, these would be the folks that will primarily be performing the surgeries. So, we will be targeting the ENTs. And to be honest, we'll need to figure out. There is about 10,000 to 12,000 ENTs in the U.S., approximately same number for derms.

We'll need to segment that population and do the work to figure out who we're going to be reaching out to address these diseases and see who are the experts in that field. But yes, the ENTs and then with the derms, we'll do the same process, right, about 10,000 to 12,000.

We'll take a look at probably a really good indicator as you see a dermatologist is using HUMIRA, that's going to give you a really good lead as to who you need to be talking about to bring brenso to them. So, we'll update you later with more specifics about that, but that -- those are the specialists that we're focusing on..

Thank you. Our next question comes from Judah Frommer from Credit Suisse. Please. Judah, your line is now open..

Hi, guys. Thanks for taking the question. First, just a quick follow-up on asset. You mentioned the 50% enrollment versus internal projections. Did those change at any time tied to COVID or is that an initial projection that stock.

And then you did talk about enrollment timelines does that foretell or readout in the mid 2024-inch?.

Well, these are consistent -- the internal projections were set after COVID was underway as you might recall. So, they certainly contemplated that. I would say we took a pretty aggressive line on what we were trying to accomplish here. As we described early on, we were going to really resource this trial and give it our best efforts.

And I would say even in the context of those ambitions, this has outperformed. And I think what we are trying to put our finger on today is that a part of that is coming from the enthusiasm that surrounds the arrival of this potential medicine prescribed by someone at the American Thoracic Society is potentially the holy grail of pulmonary medicine.

So, there's real palpable enthusiasm for this program out there and that's affecting enrollment. I think the other question was --.

Timing for data..

Timing for data. So, this is a 13 months study, 12 months on drug and then one month off drug. So, you can run the math off. Whenever we're finally fully enrolled, it'll be roughly 13 months, plus the time to lock the database and release it in top-line form. So, we say approximately this time next year, we should be fully enrolled..

Okay. That's helpful. And then there were a couple of comments just around cash allocation priorities, upfront in the presentation and then towards the end of not allocating -- over allocating to that Pillar 4.

Can you give us a little bit more color around priorities for cash allocation? Are there specific areas you're thinking about that you may need more, whether it's accelerating ENCORE enrollment, or maybe to allocate sales for us or pushing these new brands or indications? Just any color would be helpful..

Well, the first thing I would say is as we think about the four pillars, the largest spend is on the first two at the moment where we have pivotal trials that are global in reach and large in scope. TPIP probably follows behind that. And then the fourth pillar punches way above its weight with very little resource because it's an earlier stage.

And importantly, the medicines that are being produced there they prove to be effective, have a potentially shorter pathway through the regulatory maze because they can be highly impactful to very severe patients. So, we have a long way to go to accomplish that, but I'm excited about the prospects of that.

And we'll have more to say about the fourth pillar in detail in the second half of this year when you're at our R&D Day. Hopefully you noticed on the slide where we've enumerated nine different programs, you get some sense for how productive this engine already is and where it could lead us as a company is very exciting.

I don't know Sara if you want to talk about guidance or any of those different spends and how we're thinking about it..

Yes, sure. As Will mentioned, our largest focus from a capital prioritization perspective is around ARIKAYCE and Brenso programs, and so as we think about Aspen encore, we are resourcing those programs and ensuring those programs heads are as successful as they could be.

And so, as you see the success that we've had with ASPEN, over 50% in involves just a degree of that study, just them as a reminder. That means it's over 800 patients that we in about a year. That's pretty remarkable as you think about comparator trials.

So, we are resourcing these programs appropriately and Martina and I staying close contact around prioritizations around all four pillars. Translational medicine, it's an immaterial spend for the number of answers and questions we're going to be able to get out of that pillar..

Okay. Thank you..

Thank you. Our next question comes from Joseph Schwartz from SVB Leerink. Please Joseph, your line is now open..

Hi, I'm Joori Park for Joe. Thank you for taking our questions. First is on pricing in Japan.

Does ARIKAYCE get renegotiated after the first year in Japan?.

Yes. Thanks for the question. There will be pricing adjustments for ARIKAYCE in Japan. We're not anticipating it for the first year, but there are -- I think it's every two years that we were anticipating that there will be pricing adjustments potentially in Japan.

It's not given but we're anticipating that there maybe those negotiations every couple of years..

Okay. Great. Thank you. I'm going to just squeeze one in. [Indiscernible]. I believe the first patient was dosed last late December, and it's like about 14 months to get 50% enrollment.

Curious what gives you confidence that the ramp up of enrollment can happen in the next 10 months or so of the year that's remaining, you're planning to add more sites or are you detecting more interest? Any color on that would be helpful. Thank you very much..

Yeah, if you heard in Martina's comments one of the challenges of NTM studies is just that these patients are very skittish and particularly in the global pandemic. We've been through this before with two other studies and the refractory population, both Phase 2 and Phase 3. So, we're accustomed to it.

If you look across this disease state, this is the typical approach. What's interesting is that notwithstanding, getting them in the clinical setting, the commercial opportunity that gets represented by this, the uptake is quite substantial.

So, we're excited to get to the other side of ARISE and ENCORE because of what we think it's going to represent. There are a lot of patients out there, they are going to benefit from this. It is also important to remember that we're asking in the ARISE study for patients to take the drug for six months and then one month off.

And that is not what guidelines call for. So, it's a little bit of a higher hurdle to get them to step into ARISE. It's one of the reasons why we think ENCORE is going to enroll faster. There are several countries that are not participating in ARISE that are participating in ENCORE.

And so that will also add additional sites and enrollment horsepower to ENCORE once ARISE is completed. But we know what the screening is. We know what the front end of the funnel is if you will and that's where our confidence comes from that we think we'll be able to complete this in due time..

Thank you. Our next question comes from Stephen Willey from Stifel. Please, Stephen, your line is now open..

Yeah. Good morning. Thanks for taking the questions. Maybe just to follow up on the last question.

I think there was a comment that Martina made around screen failure rate that you guys were seeing in, I believe, it was ARISE or ENCORE being, I think, somewhere north of 40% and was just wondering if you could maybe you provide some commentary around what seems to be driving that specifically and whether or not that's in line with prior studies that you've done in this disease setting, I guess, specifically convert..

Yes. The first thing to remember is that prior studies that we've done, the convert study within a refractory population. So those are already patients that are diagnosed and they haven't responded to treatment, so you would get this positive sputum cultures already when patients come to physicians and DAR site.

In the frontline indication, so these naive patients, and very often for these patients to produce sputum is already hard. Then to actually get a positive sputum culture is the next hurdle. In addition, today, what you often have to do with these patients, you actually help to improve them to induce sputum production.

Today is an element of that the sites don't do this today. That's related to the COVID guidance’s that they often have and then it takes a significant amount of time until you really get to a culture that is positive. And we want to ensure that we have a high-quality culture and we have the right patient.

You don't want patients in the study who just have colonization, but they don't really have a good positive culture. So that is part of that. Now it's a different environment when you are in the study situation than what you would be having in the normal clinical practice setting, there is a higher hurdle on that. And that's part of it.

So, we've seen this higher screen failure rates often because it's very hard for them to produce it. They just can't come up it, then you have to wait until you get that positive culture to make sure we have the right patients in this study as those are very big drivers for the screen failure rates as well..

Okay. That's helpful. And then I guess just with respect to the Phase 2a study for brensocatib in CS, I think prior guidance maybe suggested that was going to be a '22 disclosure.

I think you're now maybe talking really '23, maybe it's just semantics, but is there anything really limiting there in terms of enrollment? Is that COVID-related? Is that you pushing dose escalation a little bit higher than you perhaps were before?.

No, that doesn't really -- that hasn't really changed. All we're really trying to indicate is that at this stage, it's hard to predict exactly what the enrollment path will be. There's no new information that would redirect the timing of that. We'll update you throughout the year as we see what the progress is.

I think if we've added that extra little bit of space, it's in the event that we were to go up to 65 milligrams, for example. Martina talked about the three doses we're currently targeting. Depending on how patients respond, we may need to go to 65. And so, to do that might take a little bit longer. That's all that's really playing out there..

All right. Thanks for your questions..

Thank you. Our next question comes from Liisa Bayko from Evercore. Please Liisa, your line is now open..

Hi. Thanks for taking my question, and I'll reason out the updates. I understand a little bit more about the dynamics of how you're thinking about ARIKAYCE. You're well into the quarter already for the first quarter.

Any updates on sort of trends you're seeing? And then as you think about guidance for next year, can you give any color on what is the growth coming primarily X-U.S., U.S. maybe you can give us some breakdown of how you're thinking about the 30% growth across the different regions..

Sure, happy to. Thanks, Liisa for the question. So, we're excited and encouraged to be able to reinstate our revenue guidance first time in two years that we've been coming out with revenue guidance with a 30% year-over-year growth is a substantial growth. We anticipate that we will see growth from all three of our regions.

As I mentioned earlier in the prepared remarks, Q1 is at least the toughest in the U.S. due to the donut hole reset and all those good things as you've historically seen throughout our Q1 and as Roger mentioned in his remarks around the nuances.

And the Japan market the two-week restrictions being lifted in the June time-frame, so some nuances as you think about the different regions, but we do expect to see growth in all three of our regions. And we have as a global society gotten to a place where we understand COVID and folks are learning how to live in this new environment.

So hopefully that gives you a little more color..

Maybe I'll just add in a couple of comments because I think what we're seeing, and as Sara had said, first quarter is always a tough quarter for the U.S. with the co-pays and the deductible resets and so forth. But we're really encouraged.

If we look at Omicron and look what's happened with COVID, we got -- the whole country got hit with that and at various times. And we're seeing -- it's still a regional impact. But we're seeing trends in Northeast where hospitalization is just plummeting in the U.S.

And we're seeing some specific areas that we – where our sales reps are able to get back in front of customers and have more in-person calls. And we think that that's really important. We know we've the pulmonologists have been particularly hit hard and IDs with the whole COVID situation.

And as we see that start to subside and knock-on wood, we're all hoping we're getting to the other side of this. We think mostly patients coming back in, we think a lot of these pulmonologists are going to be really focused on respiratory health. Everybody is focused on long lung COVID, understanding the impact of that disease.

I think that's going to drive index of suspicion for NTM and for other co - morbidities and focusing on lung health. So, we're really optimistic for growth across our regions. We've got a number of catalysts in Europe with the reimbursement decisions. In Japan, we're really thrilled with how the launch has progressed in Japan.

We'll watch -- watching what's happening with Omicron there as well, I would say that it's interesting the data I've just seen showed that actually, it seems to be hitting their population harder than it has hit the U.S. and Europe.

The deaths that they've actually recorded in Japan were higher than what they saw in the summer, which was the Delta variant. So, it had a really pretty profound impact. There are some theories floating around.

I think the boosted population in Japan is about 9% was the data that I heard, which is significantly less than what we've seen in western countries. So, if we see the same pattern there where you see it peaking and then receding dramatically, I think that we'll continue that launch of pace.

And we have the catalyst of the Japanese Society providing that input and a recommendation for ARIKAYCE, the co-pay dynamic that will come with the two-week restrictions being lifted in June. We're really optimistic that we'll drive that growth in Japan as well.

So, across our regions, we're really optimistic and that's reflected in what we've tried to lay out there as our guidance..

Okay. Great. And then just on the -- for Japan and in Europe.

Does this reflect that the kind of 2021 numbers you provided, is that mostly end-user demand or is there any kind of channel sell their anything about if I know you at least in Japan launch fairly recently, I'm just trying to understand if there's this channel sell dynamic or that's really reflecting end user demand.

And then for Europe, how do you get to a point where you have a better sense of the patient number.

Is it just like, sorry, just because where you're out already in terms of the share, you seem to be getting, it's already pretty substantial, and just wondering when you might have a better handle on actually how many patients that are available out there?.

Yeah. We don't see that -- I think your first question was really are we seeing stocking, right? So, are we putting products into the channel? And we work with wholesalers in Japan. And this is reflecting user demand. So, we sell the devices directly into the hospitals and ARIKAYCE goes to the wholesalers and to the hospitals.

But because it's fairly expensive product, you don't see a lot of stocking in carrying of that inventory. And in Europe it's the same phenomenon, right? So, we don't have that kind of phenomenon occurring.

And what was the second question?.

1,400 patients..

More than 1,400 patients, yes, sorry. Thanks. Look, I think we're allowed to put out estimates that aren't supported by the literature. Right? So, I think everything we've looked at and as we -- and all the literature is available points to those 1,400 refractory patients.

We're really skeptical about that, we think it is a larger number for a number of reasons. The KOLs, CDS patients, they are anxious for the therapy as you mentioned. We're actually seeing some substantial revenue already from Europe without reimbursement and we had the name patient program in place there.

And so, we think over time, if you think about the risk factors for NTM, it's an elderly population, if you've had a history of smoking, its proximity to the water. All of those things are true in Europe as they are in the U.S. and Japan. So, we think that the population may be understated in the literature.

We don't want -- we don't have anything hard that we can point to around that, so we're conservative as we think about what we represent as the market might look like, but over time, we'll see that and we'll validate that. It will take longer for us to grow that market.

There is more of a Medical Center of Excellence approach in Europe, but we think with an approved therapy that's reimbursed, you'll see these patients be treated, you will see them identified, and we'll see that opportunity grow over time..

Thank you. [Operator Instructions] Our next question comes from Jennifer Kim from Cantor. Ms. Jennifer, your line is now open..

Hey, everyone. Thanks for taking my questions. Maybe starting with TPIP, in terms of timing for the Phase 2b trial, clinical trials have an estimated primary completion date of February 2024. I know that's not the most reliable indicator, but I'm wondering based on how enrollment has moved for that asset in the Phase 2a.

And then enrollment we've seen with other assets as well, is it fair to call that an aggressive timeline or is it too early to say for now?.

I think it's too early to say what the timeline will be, for that's where we didn't provide it in the risks in the spoken comments. When I wouldn't draw your attention to it, that I think it's very different to be enrolling for this Phase 2B trial and the Phase 2 PHILD trial than it is the 2A trial.

2A is really blocked by the onerous nature of the protocol where a patient has to have the right hard cap for 24 hours. And so, getting volunteers to go into that is challenging.

Both of these Phase 2 trials, the Phase 2B and PAH and the Phase 2 with PHILD are following a fairly standard protocol approach and so there's good precedent out there for enrolling patients in this kind of trial. The patients are accustomed to it. It's just a question of executing it, and I think the team has proven its worth in that regard.

So, I'm confident that they will deliver the enrollment in this rapid a time as quality will allow..

Okay. Great. And maybe one quick second question. For ARIKAYCE in Japan, you've talked about the two-week prescription limit and the COVID impact as I guess, the two things sort of restricting growth in 2022.

And I'm wondering broadly what level of impact do each of these things have in 2022 in your mind? I'm just thinking about how we should start to think about 2023 as those factors go away. Thanks..

Yeah, thanks. It's -- so first of all, I just want to say I think the Japanese team has done an amazing job in launching ARIKAYCE. And you've seen the sales that we reported from last year in just a little bit more than six months, a little less than six months of sales. And so, we expect this trajectory to continue apace.

I think the impact of COVID and Omicron is real. We are having trouble accessing physicians in-person because they are being pulled to their hospital duties to take care of these patients. And the government is restricting hospital beds.

So even if there are unused, which if you look at the numbers, they're probably not a lot of unused right now, but they're restricting hospital beds and reserving them for COVID patients.

And recall, we had talked about earlier, there's a predication in Japan for physicians to start our case patients in the hospital for at least a couple of days so they can monitor them, make sure they take tolerating the product okay. So, we think that it's hopefully a first quarter phenomenon.

So, where we're seeing that Omicron will peak, we're getting on the side of this, and be able to return to some sense of normalcy. The two-week prescription I think is a real issue.

I think what we've seen is the early adoption has been for those patients who have been waiting for ARIKAYCE have more severe patients and are willing to look past that co-pay burden for them to start.

I think once that's lifted, we'll see a pretty strong reaction, both from the physicians in prescribing for their patients because of course, they're sensitive to the economic burden of the patient, and it is mostly elderly.

And also from the patient, they will be able to receive up to three months of medicine for the same co-pay that they are currently receive up to one month right now. So, I think we're really excited about -- and have confidence in the Japanese launch.

I think we've got a couple of catalysts, and the second half I think will be a stronger uptake because of those factors..

Thank you. [Operator Instructions] The next question comes from Anita Dushyanth from Berenberg. Please Anita, your line is now open..

Hi. Good morning. Thank you for the update and guidance and also congrats on the results. I had a question. Sorry if I missed this in your commentary.

As for your application of brensocatib and CRS and HS, would you be taking both -- investigating that in both of those indications this year or is there a preference one or the other and if so, are you able to talk about the rationales why?.

So, in response to the first question, I would say we're moving both forward. We have thought in our minds that we would bring one into the clinic by the end of this year. It's not final yet, but that is certainly our current inclination. Both are equally compelling. It's hard to choose between them to be very candid.

I think our preference because of the potential in these diseases is to bring them both forward as quickly as possible, but we're trying to work a balance between resource deployment and the opportunity that they represent..

Okay. Thank you. And then, I know you mentioned that there's about 150 neutrophil-mediated diseases that you're looking at. And from the screening, these two indications that are kind of what are given preference.

I just wanted to know potentially, would brensocatib find applications in some percentage of that number that you had mentioned?.

Yeah. To be clear, we think that what we've been unlocked here is the DPP1 inhibition pathway. That interference with the inflammatory cascade is really quiet a profound in its potential application.

So we start with these four indications which rise to the top as the most profitable for impact, but to remind you, we've already done preclinical work and other indications as well, like rheumatoid arthritis and lupus nephritis and some other various substantial indications.

For a variety of reasons, it doesn't make sense for us to pursue those clinically, but we certainly are protecting them from an intellectual property standpoint. And so where that preclinical work gets done and validates its potential application we have pursued the IP around that.

When we go into diseases beyond this, if we had the resources down the road, yes, we would. I think this pathway presents a very substantial and broad opportunity. I Can't emphasize that enough. And I think as we learn more and the scientific rationale is clear, and the patient need is clear.

Those are things we will continue to evaluate and seriously consider pursuing..

Thank you. We currently have no further questions. So I will hand over back to Will Lewis for any final remarks..

Thank you all for joining us this morning..

This concludes today's call. Thank you so much for joining. You may now disconnect your line..