Good morning and welcome to the Insmed Second Quarter Conference Call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Stacey Jurchison. Please go ahead.
Thank you, Debbie. Good morning and welcome to today's conference call to discuss our second quarter 2020 financial results 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 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. We plan to reference a non-GAAP financial measure during today's call. For reconciliation of that measure to our GAAP results, please refer to the earnings release we issued earlier today.
Additionally, this 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, Sara Bonstein, Chief Financial Officer, Roger Adsett, Chief Operating Officer, and Dr. Martina Flammer, Chief Medical Officer. Let me now turn the call over to Will Lewis for prepared remarks. Upon completion of those remarks, we will open up the call for your questions. Will?
Thank you, Stacey. 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, in the midst of unprecedented challenges, I am pleased to report a strong second quarter. Starting with the ARIKAYCE franchise, there were several noteworthy accomplishments. First, we were included in the updated international treatment guidelines with a strong recommendation for use. Second, we received a positive opinion from the Committee for Medicinal Products for Human Use, or CHMP. We therefore anticipate approval by the European Commission by the end of September. This will enable us to add Europe as a commercial territory before the end of 2020, right on schedule. Third, we were able to increase revenue quarter-over-quarter despite the presence of COVID-19 and establish a stable base from which to try to return to growth.
Fourth, we made final preparations for our confirmatory study evaluating the potential of ARIKAYCE to become the new standard of care in the frontline treatment setting around the world. For brensocatib, our novel potential first-in-class DPP1 inhibitor, we made significant strides advancing our understanding of this unique molecule's potential. As a first in kind neutrophil immunomodulator, we believe this has potential in a wide range of diseases. Initially, our focus will be on the longstanding unmet need for patients suffering from bronchiectasis. Driven by both the strength of the WILLOW data and synergies with our existing ARIKAYCE franchise, Insmed is in a unique position to bring this compound to market if it secures approval. At the same time, we continue to explore additional potential disease indications for this unique and promising mechanism of action.
Lastly, we are excited to advance the next candidate in our pipeline, treprostinil palmitate, given the early results seen to date. We will explore all of these programs in detail during a virtual research and development day on September 30th. Please stay tuned for more information. As we look toward the second half of 2020, we believe we are well-positioned to continue our momentum. I want to commend the entire Insmed team for their efforts and for their ability to excel in this challenging environment. This quarter, more than ever before, we have delivered for our patients around the world, and that is something I know the whole team is proud of. With that context, let me now turn the call over to Sara to run through this quarter's financial results. Sara?
Thanks, Will. Good morning, everyone. As Will mentioned, we had a strong second quarter where we made significant progress across our programs. In my capacity as Chief Financial Officer, I've tried to bring a keen focus on managing our operating expenses while fully supporting our key strategic priorities. I believe this approach leaves us well-positioned for continued success. With the proceeds of our recent financing, we are currently very well capitalized, and our capital resources are appropriately aligned to advance our key strategic priorities. Global ARIKAYCE commercialization and label expansion, brensocatib phase III advancement in bronchiectasis, and advancement of treprostinil palmitate into clinical development. Earlier today, we issued our detailed second quarter financial results in a press release. Let me highlight just a few of those results for you now.
Notably, despite the ongoing impact of COVID-19 throughout the second quarter, ARIKAYCE sales for the quarter showed strong sequential growth over the first quarter. We reported total net revenue for the second quarter of $42.5 million.
When looking year-over-year, total net revenue increased 42% as compared to the second quarter. Our gross to nets for the second quarter were approximately 13%. Given this result, we reiterate our previous guidance of our gross to nets for the full year to be in the mid-teens. Cost of product revenues for the quarter was $10 million, and the gross margin was approximately 77%. Turning to expenses. For the second quarter of 2020, research and development expenses were $35.7 million, and SG&A expenses were $49.7 million. Our GAAP operating expenses for the second quarter were $86.7 million compared to $87.2 million for the second quarter of 2019. Please note that we do expect expenses to increase upon initiation of our phase III program for brensocatib and our confirmatory study of ARIKAYCE in the frontline treatment setting.
In the second quarter of 2020, our adjusted operating expense, as defined in our earnings release, was $73.7 million compared to $74.4 million in the second quarter of 2019, highlighting our continued focus and efforts on cash discipline and preservation. Finally, we ended the quarter with a strong cash position of $641.9 million, which includes proceeds from our recent financing, further strengthening our ability to execute on our core strategic priorities. With that, let me turn the call over to Martina for an update on our pipeline. Martina?
Thank you, Sara, and good morning, everyone. As Chief Medical Officer for Insmed, I'm focused the company on three primary programs. Let me start with brensocatib, a novel oral reversible inhibitor of dipeptidyl peptidase 1 or DPP1. As was indicated previously, we believe brensocatib holds significant promise for patients as a potential first-in-class disease-modifying immunomodulator for the treatment of a multitude of diseases characterized by uncontrolled neutrophilic inflammation, importantly, represents an opportunity for us to build a pipeline around the product. Earlier this quarter, we were pleased to share final positive results from our phase II WILLOW study of brensocatib in patients with non-cystic fibrosis bronchiectasis as part of a virtual American Thoracic Society session, followed by an investor call with Professor James Chalmers, the primary investigator for our study.
A recording of this event is available on our website and provides an excellent overview of the compound, its performance to date, and its future potential. Recall that the WILLOW study met its primary endpoint with both the 10 mg and 25 mg doses of brensocatib significantly prolonging time to first pulmonary exacerbation over the 24-week treatment period versus placebo. We also saw a very clear dose response reduction in the levels of neutrophil elastase, or NE, in sputum, with a larger reduction in concentration of active NE in sputum from baseline in both brensocatib doses versus placebo. This finding supports the mechanism of action of brensocatib to reduce neutrophil serine protease activation. One striking aspect of the WILLOW study results is the consistency of the data for both the primary endpoint and a key secondary endpoint, frequency of pulmonary exacerbations across a variety of subgroups.
For both the 10 mg and 25 mg doses, the point estimates of the hazard ratios favored brensocatib for nearly every subgroup. We view the consistency of this data across the various subgroups as quite compelling. At the recent ATS session, Professor Chalmers presented new data from a pooled analysis of patients, showing that patients treated with brensocatib who achieved levels of sputum NE post baseline that were below the limit of quantification had a lower incidence of pulmonary exacerbations compared to patients who had a quantifiable level of sputum NE post baseline. Importantly, the risk of having an exacerbation was 72% lower in these patients, highlighting the impact that neutrophil elastase plays in driving exacerbations in bronchiectasis. We believe that these results demonstrate that by reducing neutrophil serine proteases, brensocatib has the potential to suppress inflammation and reduce the likelihood of exacerbations.
It's important to keep in mind that by reducing the damaging effects of neutrophil serine proteases without affecting neutrophil populations and the ability to fight infection, we have the unique opportunity to introduce a more selective, targeted therapy that doesn't carry the risk of broader systemic effects or the potential for antibiotic resistance that accompanies current standard of care therapies for bronchiectasis. Potentially a true game changer if successful. The strength of these detailed results gives us confidence as we advance brensocatib into phase III development for bronchiectasis, one of the more significant pulmonary diseases with no approved therapy. We were pleased that the FDA acknowledged the strength of the WILLOW data as well as the serious nature of this disease. By granting brensocatib breakthrough therapy designation, we expect to initiate our phase III program of brensocatib in patients with bronchiectasis before the end of 2020.
Additionally, an investigator-initiated study of brensocatib remains ongoing in hospitalized patients with COVID-19 in the U.K. As it becomes increasingly clear that COVID-19 will be with us for an extended period of time, treatment options for infected patients will be needed, and we are hopeful our drug will be a useful therapy. Beyond bronchiectasis, we believe that brensocatib has broader potential application as a novel neutrophil immunomodulator. Given the mechanism of action, we believe that brensocatib represents an entirely new way to address a broad range of diseases where high neutrophil activity is a component of the disease process. These include a range of rare diseases like cystic fibrosis, granulomatosis with polyangiitis, and alpha-1 antitrypsin deficiency, as well as more common diseases like inflammatory bowel disease, lupus, rheumatoid arthritis, COPD, and asthma. We have already completed some preclinical work that has generated positive results in several potential therapeutic areas.
Our evaluation of what other diseases we will potentially pursue with this compound is well underway. An important principle for us is that we will focus our attention on diseases that are relatively rare and for which there is high unmet need, either because there are no existing therapies or because standard of care is insufficient. Moving on, our pipeline also includes treprostinil palmitate, a dry powder inhaled treprostinil pro-drug formulation that we are advancing for the potential treatment of pulmonary arterial hypertension, or PAH. You may recall that animal model data has suggested the potential for a disease-modifying impact of this drug. These results will provide important insights on the potential for this candidate and would demonstrate yet another differentiating feature over other products.
We remain on track to initiate a phase I study of treprostinil palmitate later this year and expect to move into a phase IIa study early next year. In summary, we are very excited about the multiple opportunities in our pipeline and the progress we have continued to make in advancing this promising drug candidate. We look forward to sharing important program updates at our R&D Day in September, including more details around the confirmatory study for ARIKAYCE, the design of our phase III study of brensocatib in bronchiectasis, and next steps for potential additional indications, as well as more data for treprostinil palmitate, including a drug-to-drug comparison of treprostinil palmitate with various drugs approved to treat PAH in a relevant animal model of PAH. Let me now turn the call over to Roger to discuss some key operational updates. Roger?
Thanks, Martina. Good morning, everyone. I'm pleased to report that from an operational perspective, we had a solid second quarter across the organization. Performance was marked by the commercial team's success in growing the ARIKAYCE franchise, as well as the company's ability to advance our programs through the build-out of a global infrastructure. Turning specifically to ARIKAYCE performance this quarter, as Sara mentioned, we had revenue of $42.5 million for the second quarter, which results from our continued success engaging both healthcare providers and patients in this virtual setting. We are still seeing significant regional variability, which we expected, as some states have seen COVID-19 infection rates decline, while other states are only now reaching their peak levels. In short, the landscape remains unpredictable.
However, should we see recovery timelines in the South and the West similar to those which we saw in the Northeast during the second quarter, we believe we have clear potential for growth in the second half of the year. I continue to be proud of the company's ability to adapt so effectively to these unusual circumstances. Despite these challenging times, we remain confident in the long-term strength of the ARIKAYCE franchise and will continue our efforts to innovate and adapt going forward. Within the second quarter, we saw new patient adds starting to tick up again month-over-month, thanks in part to the seamless remote support our ARIKARES team provides to patients and physicians. We believe ARIKAYCE may also benefit from two other potential catalysts for growth in the back half of the year.
First, we were pleased to report that ARIKAYCE was included in the new international treatment guidelines for NTM lung disease. The clinical practice guidelines are issued collectively by four major medical societies: ATS, the European Respiratory Society, the European Society of Clinical Microbiology and Infectious Diseases, and the Infectious Diseases Society of America. Specifically, the newly issued treatment guidelines strongly recommend the addition of ARIKAYCE to the new standard treatment regimen for patients with MAC lung disease who have failed to convert to a negative sputum culture after at least six months of treatment. The guidelines also recommend that treatment should be continued for 12 months after culture conversion. The guidelines are the globally recognized standard for the prevention, diagnosis, and treatment of NTM lung disease, with the goal of providing the latest evidence-based guidance to improve patient care and outcomes.
This is the first update to the guidelines in more than a decade, marking a significant milestone in the management of NTM lung disease. The inclusion of ARIKAYCE in these clinical treatment guidelines underscores the critical role ARIKAYCE can play in the management of patients with refractory MAC lung disease. We expect that these new guidelines will further expand the use of ARIKAYCE for appropriate patients, especially amongst community pulmonologists and infectious disease specialists. We view this as an important opportunity to reinforce the optimal treatment approach for refractory MAC patients, including the recommended duration of therapy and look forward to working with NTM experts on educational efforts. We are also making exciting progress internationally.
As Will mentioned, we were pleased to announce that the CHMP has adopted a positive opinion recommending ARIKAYCE for the treatment of MAC lung infection as part of a combination antibacterial drug regimen in adults with limited treatment options who do not have cystic fibrosis. The EC will review the CHMP opinion with a final decision anticipated in September. Efforts to complete the build-out of our infrastructure in Europe are well underway. We have country managers in place in key EU markets, Germany, France, U.K., Italy, and Benelux. Pre-launch activities are progressing in anticipation of a positive opinion from the EC, including the development of educational materials and pricing strategy. If the EC approves ARIKAYCE in September, we anticipate being able to launch ARIKAYCE in Germany by the end of the year, followed shortly thereafter by a launch in the U.K.
Accordingly, in Germany, we have a 10-person field team in place, split evenly between commercial and field medical roles. We expect to add one more commercial head and one more field medical head in 2021 to support the launch. In the U.K., we currently have a three-person field commercial team growing to seven in 2021, and two field medical roles growing to three in 2021 in support of our launch. In addition to our recent success with European regulators, we are also excited about our progress with regulators and our commercialization plans in Japan. As you may recall, in the first quarter, we submitted a new drug application to the Ministry of Health, Labour and Welfare, or MHLW, in Japan for ARIKAYCE for the treatment of patients with NTM lung disease caused by MAC who did not sufficiently respond to prior treatment.
In the second quarter, we filed a Japanese medical device notification, which was recently approved by the MHLW for LAMIRA, the designated device for administration of ARIKAYCE. The regulatory process for ARIKAYCE is well underway, and we are looking forward to continued productive interactions with the Japanese regulatory authorities. As we previously disclosed, in collaboration with a top generic manufacturer, we plan to deploy an Insmed sales force dedicated to educating Japanese physicians on MAC lung disease and promoting the appropriate standard of care regimen, including the use of a macrolide to treat patients. Once deemed safe to return to the field, we intend to allow our sales force, in compliance with Japanese law, to establish and build relationships with physicians who are seeing and treating MAC lung disease patients.
Our Insmed field force in Japan will consist of 15 therapeutic specialists, which we anticipate having in the field in the fourth quarter to support our disease awareness efforts, and we are also planning to deploy five medical science liaisons. Other key operational roles in Japan have been filled in anticipation of launch and pre-launch activities are underway, including outreach to Key Opinion Leaders and selection of distribution partners. Finally, let me turn to our efforts around label expansion for ARIKAYCE and the planned confirmatory frontline study for patients in the U.S. diagnosed with NTM MAC lung disease. We anticipate that this study will also address frontline approval requirements for Japan and Europe using durable culture conversion for the primary endpoint in those regions.
The primary endpoint of this study in the U.S. will be a composite patient-reported outcome, or PRO, in order to demonstrate clinical benefit as required by the FDA. We expect that the PRO validation and the confirmatory study will advance in parallel, and we remain on track to initiate these trials before the end of 2020. Our diligent efforts to advance the ARIKAYCE brand and pursue the long-term potential of the franchise in the U.S., Japan, and Europe are a testament to the strength of the Insmed team. I'm very excited about what lies ahead, and I want to thank the team for their continued commitment to the NTM community. From a supply perspective, we continue to maintain satisfactory inventory of ARIKAYCE and have observed no supply chain disruptions to date.
As we prepare for the potential forthcoming international launches, we have on hand sufficient API for ARIKAYCE to meet anticipated global demand through the end of 2022. In addition, for brensocatib, we have ample supply to meet the clinical trial requirements of our global phase III program. From a strategic perspective, it's important to emphasize that we see an impressive potential commercial overlap among our pipeline programs, particularly the synergies between NTM and bronchiectasis. We are also excited about advancing treprostinil palmitate, a promising candidate for PAH. We remain committed to advancing these programs and look forward to sharing our progress with you. With that, let me turn the call back to Will.
Thanks, Roger. Let me close out our prepared remarks by reiterating that we are extremely proud of the continued execution by the Insmed team. We managed to grow revenue and advance all our clinical programs this quarter during one of the most challenging environments the company has ever faced. We remain as committed as ever to our mission of serving patients as well as the healthcare providers who care for them. We are pursuing this mission from a position of strength. We have an impressive team with a demonstrated ability to successfully adapt to these challenging circumstances. Finally, we have a strong balance sheet that will enable us to stay the course as we build towards our promising future. With that, I'd like to open the call to questions. Operator, can we take the first question, please?
Yes, we will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Our first question comes from Martin Auster with Credit Suisse. Please go ahead.
Hey guys, thanks for taking the question and congrats on the execution of the quarter. I just had a couple of questions, I guess one for Roger, as you're thinking about launch in Europe, I'm curious if you could just update us on kind of your thoughts around pricing across the different regions there, and also kind of, I don't know if it's for Roger or Will, but maybe a little bit about how you're thinking about how wide of a global pricing band you're amenable to. A second question for Martina.
On INS1009, treprostinil palmitate, I'm curious if going to the dry powder from the nebulized formulation that you had previously developed, beyond usability and administrative advantage, I'm curious if you are expecting the tolerability profile to improve with that change and whether you think you might be able to achieve higher doses with the dry powder inhaler. Thanks.
Roger, why don't you take the pricing questions?
Yeah, sure. Thanks, Will. Thanks for the question, Martin. As you may recall, when we priced ARIKAYCE in the U.S., we actually had quite a large scope to price quite high on the scale, given the value that we provide and the rare nature of the disease. We chose to price it towards that lower end. I think that what that sets us up for is a fairly narrow band as we think about pricing in Europe and Japan. We're not at this point disclosing that price, I think that my comments sort of give you an idea as to how we're thinking about that. Just to reiterate, the first pricing will be in those free pricing markets, Germany and the U.K., followed by negotiations with markets over the coming 12 to 24 months in Europe.
Just a reminder that the list prices in the U.K. and Germany will be used as a basis for foreign price adjustment in Japan. We believe we'll be eligible for the cost-plus pricing model in Japan, where they take a look at the cost going into the product, and then take a look at foreign prices to make a final adjustment before agreeing on that final price in Japan.
Martina, maybe you can take the question on INS1009.
Yes, Martin. Yes, we do expect that we would have a better safety profile, especially in the area of the elevated heart rate and more consistency also in blood pressure. Also less frequency with what are the more troublesome side effects with current therapies, which is tachyphylaxis, which is also called NTI effects.
Martina, in the phase I then, is the target to kind of achieve a comparable area under the curve to current comparable therapies, or do you think it's possible to even exceed that?
Well, we'll have to do the study, but I think what we'll plan to see is that we have greater consistency in pulmonary arterial pressure over time. That is also less frequent dosing. As you know right now, we're up to nine times in dosing in current therapies, which is high burden of disease for patients and for physicians. We'll be looking forward to potentially once-a-day dosing.
Okay, thanks. Appreciate your answers.
The next question comes from Ritu Baral with Cowen. Please go ahead.
Hi, this is Lyla in for Ritu. Congrats on the quarter, and thank you for taking the question. Do you think that the impressive revenue for the quarter reflects a backlog in new prescriptions delayed at the start of COVID? Have your conversations with physicians indicated that they still have a backlog of patients that they'd like to have NTM testing but haven't been able to interact with in person? Thank you.
Yeah, thanks very much for the question. Actually, I'll ask Roger to address those two points.
Yeah, sure. Thanks, Will. Thank you for the question. What we did see as we mentioned in the prepared remarks, is that we did see the new patient starts were ticking up month-over-month within that second quarter. I do think that reflects some return to normalcy that was beginning to occur. Now, having said that, as we all know, the COVID-19 cases spiked in different states and abated in others, so it's very hard to predict. I think what we had seen, and as we mentioned previously, was patients putting off those visits, and that of course makes it a challenge. As we talked about in the first quarter, and as we continue to see as we refresh our market research, physicians do intend to proactively call patients back into their office to discuss NTM treatment options.
Their index of suspicion around NTM has been raised. We see increased attention to the patients who are actually on therapy already, and also this intent to prescribe and this index of suspicion increasing. We do believe that once COVID-19 abates and allows patients to go back into those physicians' offices, that we could certainly see, if they follow through on what they say their intentions, that we could certainly see increased patient adds on ARIKAYCE. I would also say from a growth perspective, we talked about some of those catalysts. We're really excited about the guideline add, and I think that that really helps us in talking particularly with community pulmonologists and community IDs around the appropriate use of ARIKAYCE, those refractory patients reinforcing the standard of care, and also the duration of therapy. Treat to culture conversion plus another 12 months.
All of those things I think are lining up. We believe the ARIKAYCE opportunity is firmly intact and really excited about the growth opportunities going forward.
Got you. Thank you. That's very helpful.
The next question comes from Joseph Schwartz with SVB Leerink. Please go ahead.
Thanks very much. Congrats on this very strong quarter. I was wondering if you could talk a little bit about how the geographic distribution of new patient adds has been trending during the pandemic period relative to before when I believe you said that it was fairly evenly distributed. How have new patient adds been trending in hot spots versus colder spots?
Yeah. Thanks for the question, Joe. I think we're all well aware from watching the news of the significant variability across the country. Maybe Roger, I don't know if we can provide any more detailed insight. I don't think we've given that out to date, but any qualitative comments?
Yeah. I don't have any specific quantitative numbers for you, Joe. I do think that what we had seen initially was sort of that rebound, as you might imagine, in states that were still open. We saw that start to abate a little bit. In the Northeast, for example, we're starting to get more access. Importantly, these pulmonologists have been pulled in to treat the COVID patients, and their hospital duties have been taking them away. Now we're starting to see that as I think doctors become better at treating these patients, as the hospital burden doesn't seem to be so heavy in certain regions, that allows them to then return and focus on their practice and including the NTM patients. It's very variable.
As you might imagine, I think as the spikes and the trends in the U.S., the ability for physicians to treat NTM, start NTM patients, and really turn their attention away from the hospital back to their own practices, that follows those kinds of spikes and outbreaks. I hope that answers your question.
Joe, the only thing I would add to that is, look, when this started in March, April, we were in a completely unknown situation. Everybody was sort of experimenting with how to respond. There's a lot of dialogue that is happening among and between infectious disease and pulmonologists across the country and indeed around the world. I think as these new spikes arrive, there is a much better understanding of how to respond. Consequently, I think the ability to spring back from the response to COVID-19 surges is understood. The importance of doing so for patients who are suffering from conditions outside of COVID-19 is also much more appreciated. It's a different circumstance, but I wouldn't skate over the important impact of that variability on a regional basis.
We're going to be watching very carefully for the rebound in those areas that are hardest hit now, like Arizona, Texas, and Florida.
Okay. That's a really helpful color. Thanks. I wanted to ask about Europe and get your latest views on the size of that market, perhaps relative to the U.S., in places like Germany and the U.K., for example. Do you have estimates for how many patients could be addressable? Are there any reasons beyond the obvious differences presented by the country-by-country reimbursement process that a launch there will look much different from the strong launch you've had here in the U.S.?
Yeah. I think we are excited about the total international program that we're going to be kicking off at the end of this year and into next year, assuming approval in Japan. Those two are very interrelated. On Europe specifically, I'll ask Roger to talk about what we understand now.
Yeah. Thanks, Will. Joe, I think as we previously discussed, the medical literature will tell you that there's approximately 1,400 refractory MAC patients in Europe, which I think seems probably on the low side. We'll see. If you think about the overall population within Europe, you think about the underlying lung disease, and smoking rates, for example, the elderly population, it seems that that's probably underdiagnosed. I think that that probably reflects the maturity of the market and the work that we will need to do to drive the identification of these patients. I think Europe always launches slower than the U.S. in my experience. I think we'll see that here. The center of excellence model that Europe largely uses for these rare diseases also puts somewhat of a break on uptake. I think that the long-term opportunity is robust, and perhaps underestimated right now.
I think the initial uptake that we saw in the U.S., where we saw community physicians and pulmonologists and IDs really jump on ARIKAYCE early on. That opportunity just doesn't exist so robustly in Europe as we mostly go through that center of excellence model. I would say the uptake probably not going to look like the U.S. in the near term, but long term, we think this is certainly a robust opportunity.
That makes sense. Thanks. Maybe a quick one on Japan, since you alluded to that, and I appreciate the color about the things that you're doing to prepare for a successful launch there now. How did you get to the field force size that you're deploying there, and do you think that's sufficient to make your case a success in Japan?
Yeah. Again, I'll turn that one over to Roger.
Thanks, Will. Again, this is the work that our Japanese team, as we have been building out, have been doing. Looking at the, again, the Japanese centers of excellence, and then working with the KOLs, and then evaluating where these patients are being treated. It is looking at the data, the domestic data for patients, and certainly there are patients, as you know, in Japan, the prevalence of NTM is quite high. It is larger, more diagnosed patients in Japan than in the U.S. There is some pretty good information out there as to where these patients currently are. The Japanese team under the capable leadership of Yuji Ohara has mapped out the resource needs. We certainly think for the refractory population, this 15 sales team, sales reps, and the five MSLs that we are looking to deploy will be sufficient to support a successful launch there.
Thanks again.
Our next question comes from Matthew Harrison of Morgan Stanley. Please go ahead.
Great. Good morning. Thanks for taking the questions. I guess two from me. Can you talk just a little bit, I know people focused on the patient demand side, but can you talk a little bit about what you're seeing from the physician side? I know a lot of pulmonologists were having to treat COVID patients, so I'm wondering how that impact has shifted over the course of the quarter and going into the second half of the year. I just have a follow-up on Europe after that.
Sure. On the doctor side, the good news is we are doing constant market research to stay close to the trends in the U.S. commercial launch. Roger, maybe you can comment on some of that feedback.
Yeah, sure. Again, as we mentioned before, we repeated the research that we had talked about in that first quarter and the index of suspicion amongst pulmonologists and thinking about the index of suspicion for NTM. In July, we had about almost two-thirds of healthcare professionals anticipating an increase in that index of suspicion for pulmonary infections, including NTM post COVID-19. That's actually increased from the last time we shared the results in the market research in April. This is approximately 75 physicians that we did this market research with. We still see the healthcare professionals, about two-thirds of them will proactively bring in NTM patients who have previously missed their appointments as COVID-19 subsides. The difficulty, of course, is trying to predict the course of this disease and the ebbs and flows of these infections.
Certainly, as we return to some sense of normalcy, we expect that physicians will be able to reach out to these patients and bring them back into their offices. That's going to be particularly helpful for diagnosing those new patients. If you put together that index of suspicion and proactive outreach to bring patients into the office, we think that bodes well for us once we have a better handle on COVID-19. We do see the pulmonologist, and again, this is regional variability. We do see that pulmonologists are now being able to turn their attention away from sort of hospital duties and taking care of these patients, and more towards their own practice. Hopefully that's going to continue.
Hopefully as we better understand how to treat the disease, the burden on these pulmonologists will lessen, and they'll be able to continue to treat patients who obviously do need therapy beyond COVID-19. We do see that as part of this research, that physicians are much more attuned, I would say, to respiratory health and maintaining outreach and connection with the patients who are currently being treated for NTM. We think that that's a positive trend and is likely to continue.
Okay, thanks. That's helpful. Then on Europe, I guess what I wanted to ask is, outside of Germany, obviously, where you can set a price and launch pretty rapidly. We all know that the reimbursement discussions can take a while in some of the other countries. So I guess what I was trying to ask about is, can you give us any sense for what you think the pace of launch could be in other countries? Then maybe more specifically, any analog products that you look at in terms of the amount of reimbursement that, say, a France or U.K. or Italy has given to similar products? Thanks.
Yeah, I appreciate that question. I think the good news is that we will fall outside of NICE in the U.K. That is also a free pricing market for us. Both Germany and U.K. will be free pricing markets. We have obviously extensive experience in France already through the ATU program in terms of securing an attractive reimbursement price prior to approval. There, we were getting reimbursed fully by the government for well in excess of 100 patients. That was around $100,000 a year. That's not, in any sense, an indication of where we will price in Europe, but it is just an indication of the recognition of the severity of the disease and the need for this product to be used and its efficacy. Roger, do you want to add any comments about the rollout and pace?
Yeah, it's a great question. Of course, this is always the trick with Europe. As you mentioned, we'll price it in Germany and launch by the end of the year. We'll follow that by the U.K. There are some procedures in the U.K. where there has to be a process to approve sort of the NHS reimbursement. As Will suggested, we don't have to work through NICE, which is a credit to the U.K. team, who've been working proactively with NICE throughout, over the past few years. That will potentially mean that the meaningful uptake in reimbursement will be delayed by a couple of months. The pace throughout the rest of the markets, I think France is probably the longest, and we could probably expect that to take over a year to get a reimbursed launch.
Other markets, we expect to be able to roll out over the, probably by the second half of 2021 for those markets, including Italy, Belgium, Austria, those kinds of markets.
Great. Thanks very much.
Operator, are there any other questions?
Yes. The next question is from Graig Suvannavejh with Goldman Sachs. He's on the podium, so please go ahead.
Hi, everyone. This is Jack on for Graig. Congrats on the quarter, and thanks for taking the questions. If we could talk a little bit about the frontline study and the PRO tool that you plan to use there, what is left for you to align on with the FDA to kind of get that underway and get their blessing? Thanks.
Yeah, appreciate the question. I think I would say we are very excited about where we are in our dialogue on the frontline study with the FDA. We've had a very collaborative relationship with them. We remain very much on track to start that study by the end of this year. We will reveal a great deal of detail about that study at our research day that will be on September 30, alongside a great deal of detail on the design of our phase III program for brensocatib and where we are with INS1009. We're not going to be providing any more detail today. I would just characterize that as all but locked and loaded. We're going to be super excited to explore the details of those studies with you on September 30.
Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Will Lewis for any closing remarks.
Thank you all very much for joining us today. Stay safe and healthy.
The conference has now concluded. Thank you for attending today's presentation. You may now dis-