Good day and thank you for standing by. At this time, I would like to welcome everyone to the Insmed 4th Quarter and Full Year 2020 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you.
It is now my pleasure to turn the conference over to Eleonore Barister, Associate Director, Investor Relations. Please go ahead.
Thank you, Lee. Good morning, and welcome to today's conference call to discuss our Q4 and full year financial results for 2020 and provide a business update.
Before we start, let me remind you
that today's call will include forward looking statements based on current expectations. Such statements represent our judgment as of today and may involve risks and uncertainties that may cause actual results to differ materially from the results discussed 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 Web site 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 Insulet executive management team, including Will Lewis, Chair and Chief Executive Officer Doctor. Martina Flammer, Chief Medical Officer Doctor. Adsett, Chief Operating Officer and Sarah Bohnstein, Chief Financial Officer. Additionally, Doctor. Eugene Sullivan, Chief Product Strategy Officer, will be available during the Q and A portion of today's call.
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, Elanor. Good morning, everyone, and thank you for joining us. We hope you and your families continue to remain safe and healthy. On behalf of Insmed, I am pleased to report on what was the most transformational year in our company's history. As Insmed enters a new phase of growth in 2021, we are Over the past 12 months, we have matured from a single product company to a global organization advancing 3 substantial programs.
These programs are TPIP, brinsocatib and ARIKAYCE and each is positioned to become potentially a cornerstone of therapy in their disease areas. With that in mind, let me dive into some of the key highlights for the Q4 and full year 2020. I'll start with treprostinil palmitil inhalation powder or TPIP. We were very excited to provide an update on this program just last week when we announced top line data from our Phase 1 study in healthy volunteers. The results demonstrated the potential for TPIP as a once daily treatment which may be able to unlock the full potential of the prostenoid class of therapy for pulmonary hypertension and related diseases.
The detailed review is available on our website. Our second program is brincetaptan, which represents a new way to harness the DPP-one pathway for treating neutrophil mediated diseases. In the middle of last year, we were excited to announce that the FDA had granted breakthrough therapy designation to brenzocatib for the treatment of non cystic fibrosis bronchiectasis or NCFBE. We were also pleased to report the EMA's decision to grant brencicatib prime designation for the treatment of NCFBE. This was followed shortly thereafter by the initiation of our Phase 3 ASPEN trial, which is now well underway.
Additional information about brincicativ's mechanism of action will soon be available from an investigator initiated study of brincicazib in patients with COVID-nineteen. We anticipate that the principal investigator will obtain and share data about our drug from this study early in the Q2. In addition to the Aspen study, we will be advancing clinical development of brincocazib in cystic fibrosis. We anticipate initiating our Phase 2 PKPD multiple dose study to explore the appropriate brincicazib dosing for cystic fibrosis patients by mid-twenty 21. Beyond bronchiectasis and cystic fibrosis, we are continuing to explore other potential disease areas where brincicata may have a therapeutic effect.
As an example, a recent paper was published in the cancer research journal, Cancer Cell. In this article, researchers who used our drug brincicatin documented how it prevented lung metastases in an animal model of breast cancer. As you may recall from our R and D Day last September, we've begun our own exploration of the potential role of brincicativ in oncology among other potential diseases. This paper provides one example of brincicativ's ability to demonstrate the potential for a positive impact across a variety of disease models. We look forward to keeping you updated on further advancements we expect to make across our brincicatib program.
Let's now turn to ARIKAYCE, where our franchise continues to advance around the world despite the headwinds from the impact of the ongoing pandemic. We are all looking forward to the day when the COVID-nineteen pandemic subsides. In the meantime, our global expansion plans have continued to progress as expected, with European approval and the subsequent launch of ARIKAYCE in Germany and the Netherlands now underway. We also remain on track for commercial launch Japan by mid year if ARIKAYCE is approved in Japan. Finally, in late 2020, we were pleased to initiate our frontline clinical trial program for ARIKAYCE, which is intended to support full approval of ARIKAYCE in the U.
S. And potential expansion into the larger frontline opportunity in MAC lung disease in the U. S, Europe and Japan. We believe this program offers the potential to establish ARIKAYCE as the standard of care for the frontline treatment of NTM. As we now turn our focus to 2021, we believe Insmed is well resourced with an industry leading team and a strong capital position to execute on our goals of bringing potentially life altering treatments to patients in need.
With that background, let me now turn the call over to Sarah to run through our financial results. Sarah?
Thank you, Will, and good morning, everyone. As Will mentioned, 2020 was a year of tremendous growth for Insmed, marked by significant progress across all of our programs. Earlier today, we issued our detailed 4th quarter and full year financial results in a press release. Let me highlight just a few of our full year results for you now. As reported this morning, we ended the year with $532,800,000 in cash and cash equivalents, which we believe will enable us to advance our 3 key strategic priorities ARIKAYCE, FREDSOCASTIVE and CPIP.
Total net revenue for ARIKAYCE was $164,400,000 for the full year 2020. Throughout the COVID-nineteen pandemic in 2020, Veracase continued to have steady performance. As we look ahead to 2021, we anticipate returning to growth when the impact of the pandemic subsides. We look forward to sharing further updates later in the year. Our gross to nets for the full year 2020 were approximately 12%.
Looking ahead, while gross to nets historically have been highest in Q1 due primarily to the coverage gap as a result of the benefit reset at the beginning of the year, we anticipate our full year gross to nets to be in the mid teens for 2021. This modest increase year over year is mainly attributed to select contracting to ensure maximum patient access. Cost of product revenues for the full year 2020 was $39,900,000 or 24%, which is in the range we anticipated. As a reminder, our cost of product revenues in 2019, which was 18%, benefited more from inventory expense prior to FDA approval of ARIKAYCE. Turning to our GAAP operating expenses.
For the full year 2020, research and development expenses were $181,200,000 compared to $131,700,000 for the full year 2019. We anticipate R and D expenses to continue to grow year over year as we support our growing development pipeline. SG and A expenses were $203,600,000 in 20.20 compared to 210 $800,000 in 20.19 demonstrating our focus on prudent spending. Total operating expenses for the full year 2020 were $429,600,000 compared to $371,700,000 in 20 19. Looking ahead, in 2021, we will continue to invest in our core operating business, including the commercialization and clinical support of ARIKAYCE globally, the ongoing and planned development of brenzocastin and the continued advancement of TPIP.
We remain laser focused on prioritizing appropriate development investment with responsible cost control. With that, let me turn the call over to Martina for an update on our pipeline. Martina?
Thank you, Sarah, and good morning, everyone. As Will mentioned, 2020 was a year of remarkable achievement for Insmed, underscored by advancements across our pipeline. Let me now address our progress and next steps for each of our programs. First, TPIP is a novel dry powder formulation of treprostinilpalmitil, which is a prodrug of treprostinil. We believe CPIP represents an opportunity to harness the full potential of treprostinoid pathway.
Let me start by drawing your attention to the top line data we shared just last week from our Phase 1 single and multiple ascending closed dose trial in healthy volunteers. TPIP was generally safe and well tolerated and showed substantially lower Cmax and longer half life than currently available inhaled treprostinil therapy. These findings support the continued development of TPIP with once daily dosing in patients with PAH. For an in-depth review of these results, I encourage you to visit our website for the detailed press release and conference call webcast. Regarding next steps, we remain on track to advance to the next stage of clinical development, which will follow 2 paths in parallel.
1st, we will gather information on the impact of TPIP on pulmonary vascular resistance, or PVR, and over a 24 hour period in a handful of patients with PAH or Group 1 in an open label study. As planned, we anticipate sharing top line patient data from this study in the second half of this year. The second half will investigate the effect of TPIP on PVR and 6 minute walk distance in patients with PAH over a 16 week treatment period. We plan to initiate this trial in the 4th quarter. In addition to those two studies in PAH, we are planning to initiate a separate study for Group 3 PAH ILD patients in addition to our work exploring a development pathway for TPIP in idiopathic pulmonary fibrosis, or IPF.
We plan to use an up titration dosing schedule saturation dosing schedule to the maximum individually tolerated dose exceeding 600 microgram once daily. Let's now turn to brancocapid, a novel oral reversible inhibitor of tucapital peptidase 1 or TPD-one. We view brancocapacib as the cornerstone of our efforts to build a program around the TPD-one pathway with enormous potential across a range of therapeutic areas. We saw several key achievements over the course of 2020, including the publication of our final results from our Phase II WILLA study in the New England Journal of Medicine in September. As Will mentioned, we were also pleased to report that parentercapid was granted breakthrough therapy designation by the FDA as well as priority medicines or prior designation by the EMA for MCSP.
Underscoring the strength of our Phase II WILLIAM data. We were pleased to announce late last year the initiation of our Phase III ASPEN study of brancelcapin in patients with bronchiectasis. As you may recall, the ASPEN study is designed to confirm the positive results we saw in our Phase II WILLOW study. And as such, Aspen retains many key elements of WILLOW. For a detailed overview of the trial design, I encourage you to review our R and D day presentation, which remains available on our website.
We look forward to sharing updates with you as the trial progresses. In parallel, STOP COVID-nineteen, an investigator initiated study of brancercatib in approximately 400 hospitalized patients with COVID-nineteen is now fully enrolled. As a reminder, this study is being conducted under the direction of Professor James Traumas at the University of Dundee and across a number of hospitals in Scotland. Recall that Professor Traumas was also the principal investigator of our Phase II WILDL study. It is our expectation that Professor Traumas will share data from the STOP COVID-nineteen study early in Q2 of this year, and we hope it will provide further validation of the CPP1 inhibition pathway as well as important data regarding neutrophil functioning that could provide future clinical utility.
As ASPEN and stop COVID-nineteen advance, we're working to expand our focus for brancetochase to additional potential indications as we continue to build our program based on the TPD-one pathway. Beyond bronchiectasis, we remain on track to initiate in mid-twenty 21 a Phase II pharmacokinetics, pharmacodynamics multiple dose study to explore the appropriate benzocathe dosing for cystic fibrosis patients. At the same time, we continue to advance our research efforts to support expansion to other neutrophil mediated indications across a range of therapeutic areas. I would like to take a moment to touch upon another exciting development opportunity for brincerceptin. In January, the publication Cancer Cell highlighted the role of branstocastat in inhibiting lung metastases of breast cancer in
a mouse
model. CancerCell is internationally regarded as one of the top cancer research and oncology journals and publishes articles on all aspects of cancer cell biology. The paper builds upon earlier suggestion that neutrophil extracellular traps, or NETs, may be important in cancer metastases. NETs are highly damaging web structures, studded with DNA and proteases that track microbes, but are also involved in autoimmune disease and cancer. Activated neutrophils can release nets into their surroundings.
Previous preclinical studies have shown that cataxin C and NETs play an important role in metastases. For ensocatib directly inhibits catapacin C or DBB1 and interferes with NET production. In this cancer cell paper, the authors showed that the administration of our drug, branseltastid, was able to suppress lung metastases in a mouse model. We believe this represents an exciting potential opportunity for presrocassib in oncology, which is just one area where we think our compound can have potential clinical benefits. We are encouraged by these early results that suggest validation of the importance of the TPV1 pathway, and we will continue to advance our research efforts for brancocatheb in oncology.
Let's now move on to our post marketing frontline clinical trial program for ARIKAYCE. This program is designed to both support the full approval of ARIKAYCE in the U. S. As well as potential expansion into the larger front plan opportunity in MAC lung disease in the U. S, Europe and Japan.
These efforts support our overarching goal of shifting the treatment paradigm for patients suffering from NKM lung disease. The program involves 2 separate but interrelated clinical trials, ARRISE and ENCORE. Earlier this year, we were excited to announce that the ARRISE and ENCORE trials were initiated and began dosing patients in December of 2020. As a reminder, a more detailed look into the study and designs can be found in the investor presentation available on our website. As sites open worldwide, we expect to provide an update on this program later this year.
In summary, we made important advancements across our clinical programs in 20 20. We remain excited and optimistic about the potential underlying our pipeline and look forward to sharing developments with you in the future. Let me now turn the call over to Roger to discuss some key operational update. Roger?
Thanks, Martina, and good morning, everyone. I'm pleased to report a strong Q4 and full year from an operational perspective. Let me begin with ARIKAYCE in the U. S, where our commercial business remained steady despite the challenges presented by COVID-nineteen. Once the pandemic subsides, we anticipate a return to growth.
This will be driven in part by our leveraging important tools, including the strong recommendation for use of ARIKAYCE and the international treatment guidelines for NTM Lung Disease, which includes the recommendation for ARIKAYCE as part of a multi drug regimen for certain patients. This is in addition to the FDA approval of our supplementary new drug While we have seen the impact COVID-nineteen has had on reducing the volume of the ARIKAYCE label, While we have seen the impact COVID-nineteen has had on reducing the volume of patient visits to physicians' offices and therefore new patient diagnoses, our team remains confident in the long term potential of ARIKAYCE. We continue to believe that the pandemic has increased attention on the importance of respiratory health, further supporting the long term opportunity for ARIKAYCE once patients are comfortable returning to visiting their physicians. I will focus the balance of my comments on our international commercial expansion that is currently underway and that we anticipate will accelerate in 2021, further supported by important learnings from our successful U. S.
Commercial launch. Let's start with Europe, where ARIKAYCE was granted marketing authorization last October for the treatment of MAC lung infection in adults with limited treatment options who do not have cystic fibrosis. We launched in Germany first with initial sales occurring in Q4 2020 and full launch commencing in January with a list price that is in line with the U. S. List price for ARIKAYCE.
We are launching at a time of COVID-nineteen lockdowns in parts of the country, which like the U. S. Has an impact on in person access for Intermed sales representatives as well as in person patient visits to the clinic. The German team has adapted with virtual interactions and events that have been well received. Initial feedback from physicians is very positive, both on ARIKAYCE as a product as well as the patient support program that is available to patients initiating treatment with ARIKAYCE.
We were also very pleased to secure early reimbursement in the Netherlands, also at a price that is in line with the U. S. Price. ARIKAYCE is only the 2nd drug selected to undergo a process piloted by the Dutch government that aims to speed up access to innovative new medicines for Dutch patients. ARIKAYCE was selected to participate in this program and as a result, reimbursement for ARIKAYCE was accelerated by approximately 3 months compared to our expectations.
This allowed Insmed to launch in the Netherlands as of February 1. As previously communicated, we expect reimbursement decisions across Europe to continue throughout 2021 and into 2022. In the UK, we have a list price for ARIKAYCE that is in line with the US price and we expect a decision on central reimbursement in England later this year with the other countries within the UK initiating their own review processes as early as next month. As we've shared previously, the rollout of our European launch is supported by a solid infrastructure. Our model combines building our own commercial entities and field force in major markets, while utilizing distributor models where appropriate.
As we secure reimbursement in additional countries, we anticipate having approximately 40 field based customer facing personnel across Europe by the end of this year. Looking further ahead, we anticipate growing to a team of 50 by 2022. We are pleased with the feedback and progress made so far and look forward to providing further updates on our European launch efforts. We are equally excited about the opportunity we have in Japan. As a reminder, Intimate decided to register and commercialize ARIKAYCE, if approved, in Japan by ourselves.
We have assembled an extremely strong, experienced and talented team in Japan. They submitted our applications to Japan's Ministry of Health, Labor and Welfare in March of 2020 and remain on track for a 12 month review. If ARIKAYCE is approved, pricing discussions will commence and we anticipate these discussions could take up to 3 months. We are therefore planning for a reimbursed launch midyear if ARIKAYCE is approved. Japanese key opinion leader interest in ARIKAYCE remains very strong and we are gratified from the early support they have offered to INSMED in bringing ARIKAYCE to Japanese patients.
We've already had appropriate medical engagement with major medical associations in Japan, including the Japanese Association For Infectious Diseases, the Japanese Respiratory Society and the Japanese Society of Tuberculosis and NTM. It's perhaps noteworthy that the Japanese Society of Tuberculosis added NTM to the society's name in January of 2020 and beginning strong interest in NTM Lung Disease. In preparation for the launch of ARIKAYCE in Japan, if approved, we have deployed a team of 15 therapeutic specialists in Japan as well as a small team of medical scientific liaisons, who have been in place since the Q4 of 2020. As part of a co promotion agreement, we have been promoting a generic macrolide to Japanese physicians and educating on the appropriate NTM which includes the use of a macrolide. This has allowed us to engage with physicians and understand where the NTM MAC patients are being treated.
While COVID has limited some interactions, we are pleased with the response of targeted physicians. Based on the opportunity we see in Japan, we plan on adding an additional 5 therapeutic specialists this year, bringing the total to 20. We anticipate this team will call on over 5 50 physicians across more than 200 hospitals across Japan. We estimate this covers approximately 80% of the refractory patient population. In closing, we're extremely excited about the opportunities ahead as we expand the global footprint of ARIKAYCE and pursue the long term potential of the franchise in the U.
S, Europe and Japan. I'd like to thank the Intimate team for their continued commitment to the NTM community as we work to achieve these milestones. With that, let me turn the call back to Will.
Thank you, Roger. I'd like to close our prepared remarks by reiterating how proud I am of the Insomit team for achieving this remarkable progress in such a challenging year. By virtue of our evolution over the past 12 months, we now enjoy the opportunity to pursue 3 major clinical programs, both on a strong foundation of research. 2020 was by far the most transformational year in our company's history. And I would draw your attention in particular to the strength and performance of our executive team, which is an indication of the broad array of talent that makes up the global team at Insmed.
Looking ahead, I truly believe we are well positioned for an even more exciting year in 2021. We are focused on delivering exciting new data as it emerges from our pipeline in support of our ambitious vision. This vision is built upon a deep and sincere commitment to help patients and I am extremely proud of the portfolio we have developed in its pursuit. I would like to thank the entire Insulate team for its commitment to deliver as we add even more ambitious goals. With that, I'd like to open the call to questions.
Operator, can we take the first question please?
Certainly. Your first question comes from the line of Marti Oster from Credit Suisse. Your line is now open.
Will or Martina, I was curious if you could kind of expand more. I thought Martina made some really interesting comments about the potential for Brensokay going forward and just the diversity of indications that might be available to you. How are you thinking about realistically how many Phase 2 proof of concepts you can really kick off over the next year or 2? And then kind of what's the constraint there? Is it just wanting to be really careful on the science before you launch programs?
Is it personnel workforce? Is it capital? And then finally, Will, sorry for such a long multi partner, if you could maybe update us on where the discussions are with AstraZeneca around their kind of potential to opt in to conduct work in COPD and or asthma and whether or not that option they have, is there any sort of time kind of constraints around that for them to make a decision? Thanks.
Sure. So let me start really quickly with the second one first. On AZ, obviously we remain in contact with them and there's nothing really to update there. They're clearly interested in the drug and its potential. And I think each day as we discover more and more about the validity of not just this particular compound, but the pathway itself, it makes this area all the more attractive.
So we'll see where that takes us. I think right now we feel very well positioned and capitalized and resourced to be able to pursue all of the opportunities that this drug may provide to us. And I'll use that to segue to your first question. I think the first thing I would frame out for everyone's understanding is that from the moment we saw the WILLOW data, we have been at work on the DPP-one pathway. So this is not something we're turning our attention to now.
It's something we're sharing more and more as we move forward with the community. There have been a number of preclinical disease models that we've looked at. We've shared some of that data and I encourage folks to revisit our research and development day. We were very deliberate in what we called out on that day in terms of disease models where we had already seen progress. I think when we look at something like this cancer cell paper, it wasn't particularly surprising to us.
We indicated at the research day last year that oncology was an area where we thought this could have applicability. This data obviously validates that to a much greater degree. And I think it's exciting that it is coming from a third party because that provides I think an extra layer of validation and support for the mechanism. Where do we go from here? I think what we have on hand is a very high probability of success for non CF bronchiectasis.
And that alone creates an enormous opportunity for this company that I would describe as disruptively positive. As we think about where to go from there, cystic fibrosis, we have validated internally with our own reflection and examination as worthy of additional investment in clinical development. Beyond that, oncology is clearly one area we are looking at, but it is not alone. There are several others. I guess what I would say is we do see constraints on how much can be done all at once.
But having said that, I don't think that's the rate limiter right now. It's a thorough examination of the science. It's an exploration of the prudent use of capital to create high probability and impactful outcomes. And as we go through the year, it is our intention to be able to reveal other areas where we think development is warranted with this compound. I hope that's responsive.
Yes. Thank you, Will. Appreciate it.
Your next question comes from the line of Matthew Harrison from Morgan Stanley. Your line is now open.
Hi, all. Thanks for taking the question. This is Connor on for Matthew. So a couple from us. So you mentioned the work going on in the UK, but we were just wondering if you could comment more broadly on how you see the ramp going, I guess, in terms of what countries you're targeting next and then how quickly you expect updates given the digital efforts and COVID?
And Sarah might have mentioned this as well, but can you also just comment on your expectations for the growth profile in the U. S. Given COVID and do you see that being as inversely related with the vaccine rate? And then just quickly, can you just speak to 2021 expenses? Sorry, that was kind of a lot.
Thanks.
Yes. So I just want to make sure I'm responsive to that. The first question that referenced COVID in the UK, you mean in regards to the launch? Yes. So for the launch, I'll ask Roger to address how that's going generally on the and then we'll take your question on the impact on the U.
S. And the vaccines. I think obviously just to put a finer point on this because it's really a global comment. Our patients are at the frontline of receiving vaccinations and we think that that's obviously going to afford a lot of opportunity for us in 2021, both with the existing efforts that are being made across the U. S.
And in the countries where we're approved and reimbursed in Europe, but also those that will be added and perhaps most interestingly the timing of the Japanese launch if approved once again should fall on the far side just on the far side of the anticipated government guidance for when the vaccination program will be completed. So we're hopeful that all of that is positive, but perhaps for more color, I'll ask Roger to comment.
Yes. Thanks, Will. So I think that as we look at the European launch, certainly as we mentioned, that the lockdown in parts of Germany have hindered some access for our sales reps and for patients actually visiting the clinic. Having said that, I think we're pleased with the progress that we've made so far. The team has been working for several years with KOLs and we know that they've been eagerly anticipating the launch of ARIKAYCE.
And we believe that as we get on the other side, as you mentioned, the vaccinations that we will be able to see that launch ramp. I think in general in Europe, you see more of a center of excellence model than you do in the U. S. Where we met where we called quite heavily on community physicians, both IVs and pulmonologists. So there's a natural rate limiter there, but we still expect that Europe will be will have a meaningful launch for us.
Within the UK, as we mentioned, the central reimbursement, we're anticipating that England will review that and will be the first to provide central reimbursement with the other countries within the UK following thereafter. And we expect reimbursement to continue throughout 2021 into 2022 with those European markets. So we're pleased with the progress we've made so far. Certainly, COVID is an issue as it has been in the U. S.
But we believe that the long term opportunity within Europe is fundamentally intact and we look forward to getting on the other side of this and seeing that growth.
And just in response to your question on expenses, I'll ask Sherry to address that.
Sure. Thanks Connor for the question. So on expenses, while we're not providing specific guidance, what I can share is for research and development, we do expect expenses to increase year over year and that's primarily to support our Aspen program ARISE ENCORE as well as CPIP. So what I can say is we're laser focused on resourcing these programs to be successful and we have done just that.
Understood. Thank you.
Your next question comes from the line of Stephen Willey from Stifel. Your line is now open.
Yes, good morning. Thanks for taking the questions. I guess with respect to some of this interest around brancicatabine oncology, have you guys contemplated, I guess, any earlier stage work to look at novel DPP-one inhibitors maybe in an effort to try to establish some level of differential pricing, which presumably is fairly wide between something like bronchiectasis and where most oncology drugs are priced?
Yes. So I appreciate the question. I think we're while we're at the early days of our exploration in the oncology arena, it certainly is something that we're going to be the issue you raised will be mindful of. I think first we want to follow the science and see where it can be most impactful. And I have to say, this is one of those compounds that as someone recently observed, if you're really lucky, you come across them once in a lifetime.
This pathway is really the discovery of the WILLOW study. It's not simply that it is potentially effective in bronchiectasis. It's that we think we have unearthed a subjective study of Professor Chalmers and many other key opinion leaders and that this DPP1 inhibition may have an impactful clinical consequence in many different disease areas. Oncology is one we obviously are drawn to because there's a clear unmet medical need. The science was theoretically pretty strong and now we have validation.
So it sort of demands our attention. And with that in mind, I think we're going to be looking at a lot of different directions we may travel, including some of the ones you suggest.
Okay. And then just a quick question on TPIP. I know you're going to be initiating the Phase II later this year. I know that the functional class of patients that have been enrolled into prior prostinoid studies have been a little bit different. I think the registrational study was functional Class III, I think, of the prostenoids of DUG, kind of 2 through 4.
And now there's some literature suggesting that the variability of a 6 minute walk test is correlated to functional class. So is that something that you care about at all in terms of how you're going to set your eligibility criteria for the Phase 2a?
So I'll ask in regard to the development plan, Martina to address that question.
Yes. So functional classes, if you look at the this is the class where you really judge patients based on the severity of the disease and like class 1 where they don't have a lot of symptoms yet, but in class 2 and 3 where the most impact, but there is also the opportunity to really improve for these patients and that will be the class that we will be looking at from an eligibility criteria, but also to improve. When you go on to like Class IV, for example, those are patients who from a 6 minute walk distance perspective would not be able to do that much anymore because most of the patients actually are probably not mobile. So this is the area of severity in class, for example, 2 and the 3 that we will be looking at. One of the
most interesting things about this compound is its potential not only in PAH, but also its potential in PAH ILD and even possibly in idiopathic pulmonary fibrosis patients. It's quite extraordinary to be joining this group of programs pursuing these diseases this late in the game, right? There are a lot of approved drugs in this therapeutic area. However, it's really the dawn of the birth of the full utilization of the prostenoid class. And this compound is specifically designed over the last half a decade to extract the full value of the prostenoid class.
And so I think people should understand that TPIP is purpose designed to really make a clinical impact that is very different from what has been seen with regular weight reprostinil and its various forms of delivery.
Great. Thanks for taking the questions and congrats on the execution in what was obviously a pretty difficult year.
Thank you.
Your next question comes from the line of Craig Sisonovich from Goldman Sachs. Your line is now open.
Hi, everyone. This is Jack on for Greg. Congrats on the quarter. Maybe first off, if you could talk a little bit more about sort of the quarterly cadence of how you see both ARIKAYCE sales recovering in the U. S, could you comment and then maybe as countries come online in Europe, what kind of a contribution that could be?
Then as we think about the international opportunity kind of maybe 5 years out or sort of at peak, how do you envision kind of the breakdown in potential peak revenues between U. S, Europe, Japan or U. S, ex U. S, just kind of for our longer term modeling considerations?
Yes. So I'll just it's going to be a little disappointing. I'm not going to give you a 5 year forecast right now, but I will give you some color on where I think we're going. The first is that the last year saw really steady performance in the face of incredibly challenging circumstances. And I mentioned that only as a way to share the learnings from that experience.
And the point of insight that I think is the most profound is that when COVID subsides, we saw a very rapid return of patients in the physicians' offices and consequently a return to growth. So we think that is the harbinger of what's to come in 2021. And obviously, as we mentioned before, the vaccination is hitting our patients first in all likelihood in all areas around the world. And so that should be helpful. I think when we think about the international launch in the immediate term, it's very exciting to be adding Europe and if approved also Japan.
And to remind everyone, there's a higher diagnosed prevalence of refractory MAC patients in Japan than there is in the U. S. So these are really exciting market opportunities for us and things that we've been working on for several years up to this moment. As we think about the future beyond this 1st year of launch, we're also focused on the frontline approval of the drug the full approval in the United States. And that's what ARISE and ENCORE will enable.
So that study starting at the end of last year really puts us in a position to not only create the momentum this year, build upon it next year in these different areas, but then add to it the possibility of label expansion. And just to remind everybody, frontline NTM MAC is about 5 times the size of refractory MAC. So this is a really interesting franchise in its own right. It's been very steady through an incredibly challenging circumstance and we think we're returning to growth in 2021 both in the U. S.
And with our international launches and expansion.
And if I can maybe get a quick follow-up to that. How do you think about the extent to which ARIKAYCE can kind of offset some of your cash burn in the near term as you pursue all these clinical programs? And how do you kind of look at your funding requirements on like maybe a 2 year forward?
Yes. So I'll ask Sarah to address that.
Sure. Thanks, Jack. So ARIKAYCE has been and will continue to be a great contribution as we think about our burn and sort of the offsetting of our burn. We haven't provided specific guidance on runway and those types of things. We can view error cases that are one of the tools we have to help fund our ongoing business.
And just to reiterate, we ended the year with very strong cash position, $533,000,000 in cash, so very strong cash position.
Okay. Thank you.
Your next question comes from Ritu Baral from Cowen. Your line is now open.
Hi. This is Laila on for Ritu. Thank you for taking the question and congrats on the update. Maybe just really quickly on the Phase 2 trial you're planning in cystic fibrosis. Can you speak a little bit into how you're thinking about the program and where it might fit at least initially into that treatment landscape?
And then also how you're considering potential eligible cystic fibrosis patients for that trial? Any reason to think it would be more refractory or in combination use? Thank you.
Yes. So when we think about cystic fibrosis, one of the things that drew our attention to this category initially is the notion that if you look at sort of levels of neutrophil elastase in these patients, cystic fibrosis sits above bronchiectasis in terms of your average patient profile. And we think this mechanism speaks directly to that opportunity. If you think about the impact of the Pertex drugs in this population, it's been a major advance. However, these patients still suffer from pulmonary exacerbations.
And as you recall from the WILLOW study, we saw roughly a 40% reduction in pulmonary exacerbation. And as a consequence, we think this drug is sort of purpose built to cover that last mile of need in the cystic fibrosis patient population. So we are moving forward expeditiously to try to bring this drug to those patients because effectively once you have eradicated the baseline cause of cystic fibrosis in these patients, for those that have had it for a time, the damage is really already done. And so they're going to be effectively bronchiectatic patients. So the logic is very strong there.
I think as you know the metabolism in these patients is a little bit different and so the PKPD study is necessary to understand do we need to go up in dose to treat them. But it would be our expectation and hope that if this is proven out and validated that these patients who are taking those Vertex drugs would also get our drug as a way of addressing this last unmet medical need, which is the reduction of pulmonary exacerbations.
Got you. That's very helpful. Thank
Your next question comes from the line of Joseph Schwartz from SVB Leerink. Your line is now open.
Yes. Hi. I'm Julie Dally in for Gerald. Thanks for taking our questions. I was just wondering, as far as the launch, pressur goes for Japan, you mentioned that you added 5 additional sales reps.
And I was just wondering what the motivation was what the motivation was that was for? Are you detecting stronger demand from patients than initially anticipated or is there like more launch prep work than you thought? Could you just second color on that?
Sure. I appreciate the question. I'll actually ask Roger to address that.
Yes, sure. Thanks Will and thanks for the question. So as we mentioned, we've actually had our 15 sales reps out in the Japanese market since the Q4. And that was an effort, intentional effort as we promoted our Macrilide to understand where these patients were being treated and understand their dynamic. I think the response that we've seen so far has been very strong from the KOLs.
And so as we get a greater understanding of where the patients lie in the landscape, we felt that adding an additional 5 reps to make sure we have adequate coverage there was the prudent thing to do. So we anticipate adding those 5 reps in the Q4 excuse me, in the Q1 of this year and to support the launch assuming approval.
Okay, great. Thanks. And then could you just remind us the number of patients that you plan to study in ORILIES and what the enrollment cadence is? I know that you said to expect for an update later this year, but I was just wondering how that was going?
So for the specifics of the study, I'll ask Mark Haney to address it in a second. But as far as case goes, I think for ARISE, ENCORE, for Aspen, what we're trying to do is really focus on opening the different sites, getting them able to enroll patients. That process is well underway. We'd like to see that play out. All of these studies are getting fully resourced from the company.
We're investing a lot of money and human effort into making sure that we can move these studies forward expeditiously. And so once we have a better understanding of what the pace is like in the current environment, right now we don't really see any impact, but we'd like that to play out over several months before we sort of give forecasts and predictions on timing. So I just want to address the timing question first and then ask Martina to talk about the design of the study.
Yes.
And for us, so in ARISE, we're looking at newly diagnosed MAC lung disease patients. We're looking for 100 patients in the ARISE study and 250 patients in the ENCORE study. And yes, we started dosing these patients and these are global studies, again, across the U. S, Europe, Asia and Latin America. So we've started initiating
sites there across the globe.
Okay, great. Thanks so much.
Your next question comes from the line of Liisa Bayko from Evercore Core ISI. Your line is now open. Hi, thanks for taking the question. Could you tell us what U. S.
Sales were versus rest of world?
So Sarah, do you want to address that?
Sure. Thanks Lisa for the question. So we will be providing global sales. We are not going to be providing a breakdown of regional sales and sort of some of the rationale behind that is related to we just kicked off the launch in Europe. The sales are not material amounts.
So we will not look to break out that for this year.
Okay. And then can you maybe just talk about a little bit more in detail about the kind of work you've done to understand sort of what the patient dynamics were this year? Were patients, I guess, you said fewer office visits. So was it mainly driven by new patient adds? Was there any change in kind of like duration of therapy or any of those other factors?
Just curious on kind of the flow of patients this year. And then I guess the key things are like when do you expect that to lift this year as we kind of come out of the pandemic and what are the key levers there?
Yes, I mean, really simply, I think we look at a broad range of metrics, obviously, as we're tracking ARIKAYCE performance, And they have been remarkably steady on almost every front. The one thing we've been very clear about is that the new patient starts is the one metric that has been hit the hardest in those areas in particular where COVID has surged. And we've seen that consistently throughout the year as the regional variability has played out. As I mentioned earlier though, I think the most important point from this and the learning is that number 1, the franchise is very resilient and the steady performance along a lot of the metrics speaks to that. I think as we look at new patient starts, we have seen that return rapidly in those areas where COVID restrictions and surges have abated.
So our writ large for the U. S. Market and indeed Europe's launch as each country secures reimbursement. As to specific timing, it's hard to say. I do think the key drivers here are number 1, the vaccinations.
Once those are completed, people obviously feel a lot more comfortable going to their physician. Many of them have a strong desire to do so. And importantly, many of the physicians are very keen to reach out proactively to their patients and bring them into their practices. I think there's both a need there because of the challenges over the last year, but also an opportunity, as Roger mentioned earlier, as awareness about respiratory health has grown substantially. So we don't know exactly when it's going to take place, but I do see us returning to growth as soon as that patient returns to the office visit.
Your next question comes from Anita Desjardins from Berenberg Capital. Your line is now open.
Hi, good morning. Congrats on the quarter and thank you for taking my questions. Bill, I know you had sort of addressed this early on, but I just wanted to get some more clarity on it. Considering the launch in Europe and the different regions, well, it's not known that Europe's before launch. And you'd also mentioned that, you know, there was a study in Netherlands that kind of helped accelerate getting reimbursement in place by almost 3 months.
So my question is, I mean, do you expect like majority of the regions in Europe to sort of come on board for the launch by end of this year? Or are there any specific regions that you think might generally take more time or sort of conduct these studies to establish the reimbursement for that? And then I have one more.
Yes. Roger, do you want to address that?
Yes, sure. Happy to. So as we think about the European launch sequence, as you said, these countries, some countries may take longer. So actually at R and D Day, we had a presentation that we put up and we mapped out what we think might be the sequence of the launches. So we do think in our markets where we're focused on our core markets, we'll have the majority we're anticipating reimbursement in 2021.
As you pointed out, I think France could take a little bit longer than the meantime, we do have the ATU program in France, which allows access to those patients in need and it's also reimbursed. So we're very pleased by, as you've mentioned, the Netherlands, the pilot program we participated in and that did allow us to accelerate the reimbursement. And so we're hopeful that as we move forward, we'll have successful interactions with markets. But as I said, most of the markets that we're targeting will come on in 2021, but France is likely to take longer. But this is all our best estimates based on precedent.
Yes, that's helpful. And thank you. And then just maybe some color on the expenses. I know Sarah talked about the R and D going up year over year based on all the development progressing with the candidates. But as far as spend on SG and A for the year, I know you said you have plans for setting up commercialization of ARIKAYCE in the U.
S. So are we sort of supposed to expect that being increasing over the quarters or sort of maybe back ended to the year considering vaccines might be more availability of vaccines might be there towards the second half of the year?
So I'll ask Sarah to address that.
Sure. Thanks Anita. So while we're not providing specific guidance, what I can share on SG and A, what I can share is we've had the infrastructure in place in both Europe and Japan throughout 2020 as Rob is in both Europe and Japan to help drive these launches.
Ladies and gentlemen, that concludes our call for today. I will hand it back over to Will Lewis for any closing remarks.
Thank you all for joining us today.