Insmed - Earnings Call - Q4 2017

Transcript

Speaker 0

Good day, ladies and gentlemen, and welcome to the Insmed Fourth Quarter twenty seventeen Financial Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer As a reminder, this conference call is being recorded. I would now like turn the conference over to Blaine Davis, Head of Investor Relations. Sir, you may begin.

Speaker 1

Thank you, and good morning, everyone, and welcome to today's conference call to discuss our fourth quarter and full year twenty seventeen results. Joining me on today's call are members of the Insmed executive management team, including Will Lewis, Insmed President and Chief Executive Officer Paulo Tambesi, Chief Financial Officer and Roger Adset, Chief Commercial Officer. For today's call, Will is going to start with a general corporate update. Roger will then discuss the progression of our commercial activities and Paula will then briefly review the fourth quarter and full year financials as well as our 2018 financial guidance. Following our prepared remarks, we'll go to your questions.

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 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. With that, let me turn

Speaker 2

the call over to Will. Thank you, Blaine. Good morning, everyone. Thank you for joining us. We have made tremendous progress over the past year and we kicked off 2018 with that same momentum.

We believe 2018 will be the year we secure approval and launch our lead drug, potentially the first ever approved inhaled therapy to treat severe refractory NTM lung disease. This is a keystone element of our effort to build a global biopharmaceutical company focused on serious rare diseases. The transformative event during 2017 that advanced this mission was the positive top line results we achieved in our Phase three INS-two 12 study. This was followed in January with additional positive interim data from the INS-two 12 and INS-three 12 extension studies. INS-two 12 and INS-three 12 are evaluating the impact of amikacin liposome inhalation suspension or ALIS on adult patients with severe refractory non tuberculous or NTM lung disease caused by Mycobacterium avium complex or MAC.

Let me start with the disease we're fighting. To remind you NTM lung disease is a rare and progressive pulmonary infection associated with irreversible lung damage and declining lung function. This disease typically affects an older population and is associated with an increased mortality rate. Strikingly the five year mortality rate for NTM MAC can be as high as thirty three percent and could actually be much higher for those patients who fall into the category we will target first, the severe refractory patients. In this regard, we have set out to address a challenging and significant unmet need in this globally prevalent disease.

Recall that our INS-two 12 study is evaluating ALICE plus guideline based therapy or GBT versus GBT alone. As we announced in September based on top line results, we met the primary endpoint of culture conversion. The addition of ALIS to GBT led the culture conversion by a twenty percent margin over GBT alone with twenty nine percent of patients converting within six months of treatment. This was a highly statistically significant result with a P value of less than 0.0001. These data will serve as the basis for our NDA filing and we remain on track to file by the March.

Our robust clinical program continues to gather additional information on the long term clinical safety and efficacy of ALIS. Patients who culture converted in two twelve are continuing in the trial for an additional twelve months of treatment and will be monitored for a year after their treatment is completed. Patients who did not culture convert by month six had the option to enroll in our INS-three 12 study in which all patients are receiving ALLOs plus guideline based therapy for an additional twelve months. In January, we shared additional positive data from these two studies that underscore the impact that the addition of ALLYS has to background GBT therapy. First, we reported interim culture conversion data from the first six months of the INS-three 12 study which mirrored what we saw in INS-two 12 with twenty eight percent of patients achieving culture conversion within six months following the addition of ALIS to GBT.

Importantly, this rate of conversion was almost identical to the treatment impact we observed in the top line data from the first six months of INS-two twelve reinforcing our confidence in the consistency of the treatment effect and the success of the program overall. Second, we saw the benefit of longer term treatment with ALIS beyond six months for patients who don't initially convert with twelve percent of prior non converters from two twelve on ALICE plus GBT achieving culture conversion on or before their fourteenth month of ALICE plus guideline based therapy treatment. Third, we've been able to show that the durability of culture conversion is substantially higher for patients receiving ALICE plus GBT versus those patients treated with GBT alone. Durability of culture conversion is significant in the treatment of NTM as this is a point of focus for regulatory authorities. The INS-two twelve interim data showed with approximately two thirds of evaluable patients the durability of culture conversion three months off all treatment was substantially higher in the ALICE plus GBT arm at sixty one percent compared to GBT alone at zero percent.

This is an encouraging result as we believe that full approval for ALICE is contingent on the FDA's examination of durability of culture conversion three months off all treatment. It is also a very important insight into the inadequacy of guideline based therapy in this patient population. Recall that GBT had never been studied in a clinical controlled trial previously. Demonstrating even on an interim basis that no GBT patient achieve a durable culture conversion may cause physicians to question the wisdom of using GBT alone. Finally, we believe these studies demonstrate a consistent and manageable safety profile.

Serious treatment emergent adverse events observed in INS-two twelve were roughly similar between ALLOs plus GBT versus GBT alone and in the INS-three twelve serious treatment emergent adverse events are similar to those seen in INS-two twelve. AEs remain consistent with those seen with the use of inhaled antibiotics. Let me remind you that both the INS-two twelve and INS-three twelve studies remain ongoing and we anticipate that they should be completed by the end of this year or early next year. In addition to the incremental interim data we announced in January, we also hope to share more data at the American Thoracic Society International Conference or ATS taking place May 18 through the twenty third in San Diego. We are organizing some events for investors.

So if you are planning to attend ATS please let us know. In parallel we also anticipate several publications including one that examines the biological significance of the liposome will be published over the coming months. With that let me segue to an update on the regulatory front for ALIS. As I mentioned earlier based on our Phase three two twelve study results we're on track to file a U. S.

NDA with the FDA before the March. We are in the final details of the NDA preparation and see no major impediment to its completion and submission. We expect to file for approval in The U. S. Under Subpart H with the division of Anti Infective Products.

We anticipate a six month priority review by the agency. We are also expecting and preparing for an advisory committee meeting prior to the PDUFA date and we look forward to a dialogue with FDA through the review process and to clarifying the specific label for ALIS. We will continue to keep you abreast of our progress on this front and we believe we're well on our way to a potential U. S. Launch for ALIS before the end of twenty eighteen.

As we previously indicated, our first priority beyond The U. S. Market is Japan. The prevalence of NTM lung disease is higher in Japan than elsewhere in the world with approximately fifteen thousand to eighteen thousand diagnosed refractory NTM patients more than are currently identified in The U. S.

We believe the data from INS-two 12 supports our filing strategy in this market. We continue to advance our dialogue with the PMDA and MHLW including pursuit of orphan drug status. We'll provide further updates on our progress in Japan throughout the year. Earlier this week we also announced that we broadened our intellectual property protection for ALICE. The U.

S. Patent and Trademark Office issued what is now our ninth patent for ALICE covering methods for treating MAC lung infections with ALICE to non cystic fibrosis patients by nebulization once daily for at least eighty four days. This is significant as it represents an extension of sixteen months over previous existing coverage providing us protection well into 02/1935. Clearly, our focus this year is on our transition to becoming a commercial organization as we strive to bring this important drug to patients around the world suffering from an intractable disease. We are rapidly moving ahead with pre commercial activities to support a potential U.

S. Approval and successful launch. The INSIMENT team is also working to advance a number of other programs in rare disease including INS1007 and INS1009. Activities for these programs continue to move forward and we look forward to sharing more details on these programs as they advance. Let me pause here and turn it over to Roger now for an update on our pre commercial activity followed by Paolo who will cover our fourth quarter financials.

Roger?

Speaker 3

Thanks. Good morning everyone. Let me spend just a few minutes providing you with an update on the build out of our pre commercial organization as we move towards a potential product launch in late twenty eighteen. First, we have completed the hiring of our therapeutic specialists, our team. We are thrilled with the talented individuals we've attracted to Insmed, all of whom are excited to be a part of Insmed and are looking forward to bringing a solution to patients with NTM once approved by the FDA.

This is an experienced and accomplished team drawn from premier orphan, pulmonary or infectious disease biotech companies. The average individual within this team has sixteen years of industry experience, four point five years of rare disease experience, has launched five products and has won three Presidents Clubs. Perhaps most importantly, this team is passionate about helping patients who suffer with rare diseases. They came to Insmed to make a difference.

Speaker 2

I'm very pleased

Speaker 3

with the talent we have attracted to be a part

Speaker 2

of our launch. Right

Speaker 3

now, this team is hard at work training on all aspects of NTM lung disease. We plan to deploy this team to the field to enhance our disease awareness campaign in mid March. The therapeutic specialists will begin meeting with targeted physicians across the country to educate and enhance the awareness of NTM lung disease. I'm proud that Insmed is investing in its educational effort as there is a clear need to enhance education of NTM. I'm also looking forward to learning more from the front lines of the treating community and how they respond to our educational efforts.

We've also completed our key account director team. I'm equally pleased with the quality of our CAD team. The typical CAD has 13 of national and regional account experience, seven years of rare disease experience and has launched over seven products with half of those product launches in the rare disease space. Our CADs are introducing Insmed to key accounts and will collaborate with our MSL team to educate payers on NTM. We have also been hard at work building out our patient support infrastructure.

We fundamentally believe that patient access for a potential first in class rare disease product will be a critical component to our success. We're working to have our infrastructure in place mid year so we can conduct dry runs to test our processes and ensure we are ready to support a positive treatment experience for patients prescribed ALIS. To that end, we have been actively producing commercial batches of ALIS to ensure we have sufficient product supply available for launch. We've also begun the important work to build out an additional third party manufacturing site. While this will be a long term project, we're encouraged by the early progress we are making alongside our partner Patheon.

We remain focused on all of these activities as the critical success factors supporting the potential launch of Alice. We still have a lot of work to do, but we are excited about the talent we have attracted to Insmed and the progress and the investments we have made to date. We believe this preparation will set us up well for a successful launch of a potential first in class rare disease product in an area of significant unmet need. And with that, I'll hand the call over to Paolo for the financial review. Paolo?

Speaker 4

Thanks Roger and good morning everyone. Thank you for joining us today. I will spend the next few minutes reviewing the fourth quarter and full year 2017 financial results. I will then discuss our 2018 financial guidance. This morning we reported a net loss of $65,400,000 or $0.85 per share compared with a net loss of $68,400,000 or $1.1 per share for the fourth quarter of twenty sixteen.

Research and development expenses were $33,900,000 for the quarter compared to $54,900,000 in the fourth quarter of twenty sixteen. The decrease was primarily due to one time $30,000,000 upfront payment related to INS1007 in October 2016, partially offset by an increase in expenses associated with the development of INS1007 and higher compensation and related expenses due to an increase in headcount as compared to the prior year. Third quarter G and A expenses were $31,400,000 versus $12,200,000 in 2016. The increase was mainly due to higher expenses related to our pre commercial planning activities for Allis, a one time payment to reduce the royalty owed to Pari Pharma and higher compensation related expenses due to an increase in accounts as compared to the prior year period. Total GAAP operating expenses for the quarter were $65,400,000 and $188,900,000 for the full year of 2017.

As you would expect, we anticipate that our expenses will rise as we remain focused on completing our NDA filing, the building of our commercial manufacturing and corporate infrastructure and other activities in support of a potential product launch at the end of this year. We ended 2017 with $381,200,000 in cash and cash equivalents and $55,000,000 in debt. These figures do not reflect the net proceeds of $435,800,000 received through the successful public offering of $450,000,000 or 1.75% senior convertible notes we completed in January 2018. Over the past six months, we have raised more than $800,000,000 to fully fund all activities for 2018 and beyond when we plan to begin generating revenue from the potential product launch of Alyx. The company is in a very strong financial position as a result of these efforts.

On February 28, we intend to repay the existing venture debt from Hercules Capital. The total payments, including the back end fee and early prepayment penalty, will be approximately $58,000,000 This debt repayment will result in an overall improved cost of capital. Turning now to cash guidance for 2018, we expect that cash operating expenses, capital and other cash investments be within the range of $145,000,000 to $165,000,000 for the first half of twenty eighteen. This range primarily reflects spending for the ongoing INS-two 12 study, the follow on INS-three 12 study for those NTM patients that do not convert, as well as continued regulatory, manufacturing and pre commercial activities that Roger discussed earlier. These estimates also include expenses related to INS1007, including ongoing clinical activities, but do not include the repayment of the venture debt I mentioned earlier.

With that, I will turn it back to Will.

Speaker 2

Thanks, Paolo. 2017 was a pivotal year for us. We made impressive progress in advancing an important new treatment option with the potential to address a serious unmet medical need. While we have a lot to accomplish this year, I have full confidence in the Insmed team and our ability to deliver. As always, I'd like to thank the team for their continued hard work and dedication.

We are here to make a difference in the lives of patients by securing approval for the first inhaled drug specifically indicated to treat NTM lung disease and the attainment of this goal is now in sight. I also want to thank the patients and physicians for their continued involvement in our clinical program. Now let's open the line and take your questions. Operator, can we have the first question please?

Speaker 0

Our first question comes from the line of Joseph Schwartz with Leerink Partners. Your line is now open.

Speaker 2

Joe, we can't hear you.

Speaker 5

Sorry about that. Was muted. Congratulations on all the progress. From your discussions with payers, do you have a sense of how much they're likely to require patients to use GBT before advancing to ELIS, given GBT is not FDA approved, doesn't seem to work well and has some toxicities?

Speaker 4

Yes. I'm going

Speaker 2

to ask Roger to respond to that.

Speaker 3

Hi, Joe. Yes, thank you for the question. So we are continuing to conduct our pricing research and engage with payers. And I think that it's fair to say that we'll see a spectrum of responses. But generally, we expect that the restrictions for access to ALIS will rely primarily on a confirmed diagnosis of NTM and that there's been appropriate therapy has prescribed.

I don't think it was a in my mind, they're not telling us that there will be a verified step through of guideline based therapy, but that an appropriate specialist has diagnosed and is recommending the treatment with ALIS.

Speaker 5

Okay. And then as far as the FDA goes, it seems like a little bit of a paradox that GBT is not FDA approved, but somehow you'll need to address its failure in patients. So how is your field force able to handle this issue?

Speaker 2

Yes, think obviously they won't be talking about it until the drug is approved. In the meantime, it will be all about disease state awareness. With regard to the label specifically, I think our approach to this because we are sensitive to the awareness of this being an off label cocktail that has been used to date. And now, of course, with the data that shows that it in some circumstances is not particularly effective, it makes it even more challenging, I think. So what we're going to target is a dialogue that explores the use of a phrase like medically appropriate therapy.

What that does is it allows the FDA to signal that they would like to see other therapy used in advance of using ALIS and that the discretion for the selection of that therapy and how it's used will be in the hands of the prescribing physician. So I think that's probably where we'll end up, but certainly that will be our proposal.

Speaker 5

Okay, that's helpful. Thanks. And then could you just talk about the medical exception process? And is there anything that you can do to help physicians and their patients navigate this requirement and get on treatment efficiently?

Speaker 2

Yes. I'm going to ask Roger to respond to that.

Speaker 3

Absolutely. So thanks for the question. And yes, this is going be an important part of our launch efforts as we are launching off cycle from a Medicare perspective, and we'll be relying heavily on a medical exception process. I think the most important thing we can do, because obviously, we cannot do any kinds of the paperwork for physicians, that all has to come out of that office, the prescribing physician. What we can do is emphasize the activities that are ongoing currently.

So raising the awareness of NTM, talking about the impact of this disease on the patient. And ultimately, that comes down to how motivated the physician is then to secure approval for the therapy. It comes down to sharing that information, obviously, clinical data that we have around ALIS and helping with directing the appropriate forms that need to be filled out for specific plans through that medical exception processes is where we will be focused.

Speaker 2

Precedents out there, right? There are other drugs that have launched off cycle that give us some comfort that this can be accomplished in an appropriate way. IPF is a good example, right? Both OFEB and ESTRA get launched off cycle. I also think that expectation setting is really key here, just explaining and getting the physician to understand the delays and frustrations associated with this.

So that they can convey that that's what their patient can expect in the early days will go a long way toward not having patients frustrated or disappointed by the process, which is of course the goal of the first encounter with the drug. Thanks a lot. You bet.

Speaker 0

Thank you. Our next question comes from the line of Adam Walsh with Stifel. Your line is now open.

Speaker 3

Hi, guys. It's Neil Carnhan on for Adam. In your INS-two 12 study, you guys had an impressive culture of conversion durability. Has the FDA updated you on what they're looking for to support full approval? And if not, do you guys have any thoughts on what they may be looking for?

Speaker 2

Thanks for the question, Neil. Actually, hasn't been any further discussion about that. I will say that our discussion to date really centered on the need for some evidence of durability. It wasn't a specific threshold. I think everyone that has seen the data is at least as struck, if not more so, by the inadequacy of guideline based therapy, which sets a pretty shockingly low bar.

As of now, we don't have any patients who have culture converted durably on guideline based therapy. So, what constitutes improvement from there isn't obviously very much. To be north of sixty percent right now makes me pretty comfortable. I don't think that we're concerned about this threshold. And one of the reasons we shared the data was it seems so overwhelmingly positive to us that it's something you all would want to be aware of.

We will provide guidance if we get any from FDA on what constitutes a threshold, but we just haven't had that discussion at that level of detail. And frankly, don't anticipate I think they're going be looking more for evidence of durability rather than the specific line in the sand. Great. Thank you, guys. Thank

Speaker 0

you. Our next question comes from Ritu Baral with Cowen and Company. Your line is now open.

Speaker 6

Hi guys, thanks for taking the question. Now that the field force is hired, how are you looking at how they're distributed geographically and also how you're targeting the docs like what number of docs are they planning to target? What is the profile of those docs? Are they tiered? And are you thinking of the market in terms of community?

How should we about that?

Speaker 2

I'm going to ask Roger to respond to that after I welcome you back, Ritu. Good to hear

Speaker 6

your voice. Thanks.

Speaker 3

Hi, Ritu. So it's Roger. And you had a great question. We've deployed our sales force using the Symphony medical claims database. And so we've been able to identify physicians who are treating NTM patients currently.

And then we've also we've talked about the fact that we've deployed machine learning against that database to understand where there may be these NTM likely patients. And we think that we've with 93% confidence, there's about two undiagnosed NTM likely patients in this currently in the system for everyone that's currently diagnosed and being treated. So we've deployed our sales team. We have 72 therapeutic specialists around those clusters of physicians. And there is geographic concentration around the coast and the Southeast and up the Atlantic Seaboard.

And so we focused our efforts there. But primarily, we'll be calling on pulmonologists and infectious diseases specialists. And there is actually an interesting regional variances as to which specialist takes the lead in treating those NTM patients currently. And for example, in Florida, we see a heavy pulmonologist influence in Southern California. It seems to be a more infectious disease.

So we've hired accordingly. We think that we've got approximately 80 to 90 target physicians for every current therapeutic specialist based on the current activity that we see with the interest and current treatment of NTM patients. But we've also built in that flexibility to address the NTM likely patients so that we can also go and do some work around education and trying to unearth those patients and getting an appropriate diagnosis for those patients. So quite a lot of work has been done on this on the patient finding, and we feel very confident that we've got the team focused on the right area and the right physicians.

Speaker 6

Do you have those physicians broken up by tiers at this point in order of importance for the call?

Speaker 3

We do. We have about I've neglected to mention, and you did ask this. So I think we've got a little bit over 5,000 physician targets. They account for about seventy percent of the current diagnosed NTM patients. And we have tiered those physicians by their activity.

And we've obviously, the higher focus will be on the physicians that have the higher count initially. But we also see that there are some physicians out there with a handful of patients that, of course, is not unusual in rare diseases, and we want to make sure that we cover those physicians as well.

Speaker 6

Those patients, especially the diagnosed patients, are they hanging out and being treated at centers of excellence? If so, how many are there? Or are they really in the community right now?

Speaker 3

It varies. I think that there are some centers of excellence. There's a handful of centers of excellence where they're being referred. I mean, Tyler and National Jewish and Oregon, I mean, there's a number of centers of excellence that take referrals. Importantly, those patients then, once they're treated, they get referred back to their home physicians, if you will.

But we also see that within regions, are physicians who have taken a special interest in NTM. And those are the ones that have more than a handful of patients, and then they get the referral even within a pulmonary practice, there may be a pulmonologist who is taking that active interest in NTM patients and gets all of those patients referred to them through practice. So I would say that the Centers of Excellence do incredible work with these difficult to treat patients, get them where they need to be, then refer them back to their the physicians who actually got them into those Centers of Excellence for ongoing management in many cases.

Speaker 6

Got it. And a quick follow-up. Can you give us a little more detail about the patient hub that you mentioned you're setting up? Is this going to handle reimbursement assistance and the exception process as well as distribution? Do you have any plans for like a co pay assist as part of that as well?

Speaker 3

Yes. So that's a great question. So we are building so within our system, we are building in case managers to help direct interaction with the patients. We are planning to put out support reimbursement support into the field. So those will be field based customer facing positions.

And we are also working on how we are going to directly assist patients, and that will be within the commercial arena. So commercially insured patients, can give direct co pay assistance to. Medicare, currently, we cannot provide direct financial assistance. And in the rare disease space, a lot of times, you'll see patients relying on charitable foundations to help offset the cost of therapy for them.

Speaker 6

Got it. Thanks for taking all the questions.

Speaker 3

Absolutely.

Speaker 0

Thank you. Our next question comes from Lisa Baker with JMP Securities. Your line is now open.

Speaker 7

Hi, thanks for taking my question. I'd be curious about what you think sort of some of the key points of discussion will be at potential AdCom. I'm just wondering if it would really be necessary. It seems that you're obviously fairly confident the data are very supportive of approval at this point. So do you think you really need that comment?

If so, what would be you think the key points of discussion?

Speaker 2

Yes, it's a good question. Thanks, Lisa. And when we get a lot, I think the FDA's practice in many cases is when it's first in disease as this is, they like to have an AdCom. And I think there are a couple of goals that are probably I'm speculating, but they may be wanting to accomplish. The first is not just the review of our drug and the opinion of the best treaters out there that they put on the panel, but also to educate the broader community because once a company like ours comes in and actually secures the first approval for a disease state, it's not uncommon to see other companies trying to come after the same space.

And so providing guidance to the community as to what would constitute acceptable thresholds for safety and approval is I think something they would view as very important and valuable. I think in our specific case, the questions will center around the usual cross examination of both safety and efficacy data. And one of the questions I speculate they may ask is what is the appropriate label given that this is at its core an antibiotic treating a gram negative infection. And while we've targeted the most severe, sick patient population within the spectrum of pulmonary NTM, there are patients in other portions of it and the data reveals that guideline based therapy is sort of inadequate in treating many of these patients. So it may be that they want to explore with treating physicians how to craft the label and they could ask a question for example, is the data adequate for safety and efficacy establishing for severe refractory or a different type of definition as an alternate question.

And we've seen that happen in other divisions within FDA. Again, this is all speculation, but it's the best that we can put together. And I think the basic answer to the question is first in disease, first approved drug, they're going to want to just make this take this as a moment to educate the community.

Speaker 7

Are you implying like a potentially broader definition?

Speaker 2

Well, we've seen that happen in other divisions within FDA. I don't know that they would do that here. Our base case assumption is that it will be for severe refractory NTM. But again, as pointed out earlier by Adam, the ability to identify prior therapy is a little bit challenged because it's all off label. So I think that creates some nuance in how you craft the label and that would alone be a basis for an adcom and exploring how to craft it.

Speaker 7

Okay, interesting. And actually your response is a perfect segue into my next question. I'm aware of some other mechanisms in development like inhaled GM CSF, for example. As you think about the future landscape, is that something you think makes sense for your portfolio? How committed are you to NTM per se?

Would you consider other mechanisms like for example, inhaled GM CSF or others? Maybe you could just comment on that. And thanks for taking my question.

Speaker 2

I saw your note. Yes, thank you. We are obviously very committed to NTM on a global basis and we intend to do all we can to help patients in this space. There will be other drugs that will come along hopefully. There's a lot of room here for improvement and I think we're excited to keep our eyes out for anything else that may come along and be complementary.

When we looked at GM CSF a while back, we paused in past at that moment doesn't mean it won't go the distance, but I think our concern was relating to any growth factor raises some regulatory questions about their comfort with introducing that and the off target intended effect. So I think that is an issue that needs to be resolved before we see how far that will go. But my hope is that it will go all the way. We're well aware of the program and we'll certainly be keeping an eye on it as we do on anything else that's in this space. And it's our hope that there will be other therapies coming along to raise additional awareness about the disease.

Speaker 7

Great. Thanks a lot Will.

Speaker 2

You bet.

Speaker 0

Thank you. Our next question comes from the line of Martin Auster with Credit Suisse. Your line is now open.

Speaker 8

Hi, this is Mark on for Marty. Thanks for taking my question. Perhaps, would you be able to provide a little more clarity around your consideration, the design of the ALIS maintenance therapy trial? And if you could also comment on the sample size needed and the background of the patients that you plan to enroll in that trial?

Speaker 2

Yes. So what I'll comment on in regards to that trial sort of the general place we are in our thinking right now because not advanced enough to be able to say with any degree of specificity. I think maintenance therapy just to orient everybody is a concept that was introduced to us by one of the key opinion leaders in the space who felt that patients who culture converts would benefit from taking our drug perhaps three days a week for the rest of their life to prevent reinfection. So the prophylaxis and avoidance of the reinfection coming back. As we know from best available data about half of the patients who are culture converted will either get reinfected or relapse within three years of their culture conversion.

So, from this perspective, having a therapy that could prevent that reinfection or relapse would be very valuable. We intend to explore the viability of that through a clinical trial, which we hope to launch this year. Our current thinking is that that would be our therapy as a monotherapy and it would be potentially against placebo for patients who have culture converted and we would run that trial for a period of years and see what the rate of reinfection is in our arm versus the non treated arm, which is the current approach to patients. We haven't confirmed that yet, but that's our current thinking and our hope would be that that would provide valuable insight into both the ability of our drug to prevent reinfection or relapse, but also to the benefits that would be associated with that. And as we develop that further with FDA this year, we will certainly update everybody.

We're excited about that space. We think it provides a very significant life cycle management opportunity for this company.

Speaker 5

Great. Thank you. Sure.

Speaker 0

Thank you. Our next question comes from Nina Garg with Robert W. Baird. Your line is now open.

Speaker 6

Hi, thanks for taking my question. So just want to go back really quickly to one of the prior questions about kind of payer discussion. So I know you mentioned earlier that payers seem to be trending towards kind of requiring verification of prior guideline based therapy. I'm just wondering how sensitive is that to pricing and have you kind of tested different price ranges and seen if that requirement may change? Thanks.

Speaker 3

Roger? Yes. Thanks for the question. Yes. So our pricing research is ongoing as I mentioned before.

I think that we've tested is a variety and a range of pricing. We've seen that across the price points, there is still going to be a desire to have a prior authorization. So again, checking that the physician is an appropriate specialist to be making that diagnosis and initiating the treatment for the patient. And I think that that's actually consistent across the price points that we're looking at. And this will be if you think about the benchmarks and where we've been looking at from an analog perspective, this will be an expensive therapy.

And it's something that the payers are interested in making sure that it gets into the hands of the appropriate patient where we can add the most value. So I think and I wanted to clarify, I don't think it's trending towards a hard verification that you've failed guideline based therapy. I think it's more along the lines of there will be the physician has selected the appropriate patient, has diagnosed and confirmed the diagnosis of NTM and then is using it consistently with a label. And that's what we're the feedback we're getting from the payers.

Speaker 6

Okay. Thanks.

Speaker 0

Thank you. I'm showing no further questions in queue at this time.

Speaker 2

Terrific. Thank you all for joining us on today's call.

Speaker 0

Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's program. You may now disconnect. Everyone

Speaker 6

have a great day.