Good day, ladies and gentlemen, and welcome to the Insmed First Quarter 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mr. Blaine Davis, Head of Investor Relations. You may begin.
Thank you, Bruce. Good morning, and welcome to today's conference to discuss our first quarter 2018 financial results. Joining me on today's call are members of the Insmed executive management team, including Will Lewis, President and CEO, Paolo Tombesi, Chief Financial Officer, and Roger Adsett, Chief Commercial Officer. For today's call, Will will start with a general corporate update, followed by Roger, who will discuss the continued progression of our commercial activities. Paolo will then briefly review the first quarter financials. Followed by our prepared remarks, we'll open the call for 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 now turn the call over to Will.
Thank you, Blaine. Good morning, everyone. Thank you for joining us. We kicked off 2018 with the momentum, drive, and ambition which are key characteristics of the team here. We're excited about our prospects for the year. Our efforts throughout the first quarter are moving us closer to our goal of building a sustainable biopharmaceutical company. We remain optimistic that we will secure approval and launch our lead drug, amikacin liposome inhalation suspension, or ALIS, for adult patients with treatment-refractory nontuberculous mycobacteria, or NTM, lung disease caused by Mycobacterium avium complex, or MAC. ALIS has the potential to be the first ever approved inhaled therapy to treat this disease. We accomplished an important milestone in this process with the filing of our NDA with the U.S. Food and Drug Administration at the end of the first quarter.
I'll dive further into the impact this will have on timing for a potential approval and launch shortly. I would like to take a moment to acknowledge the team for their efforts in accomplishing this goal on time with the highest quality. To remind you, the disease we are fighting is a rare and progressive pulmonary infection associated with irreversible lung damage and declining lung function. We estimate that as many as 30% of NTM MAC patients fail treatment when using the off-label antibiotic regimen that is the current standard of care, and we are aiming to offer an important treatment to address these circumstances. The filing of our NDA was based on the full six-month data from our INS-212 study. Recall that this study evaluated ALIS plus guideline-based therapy, or GBT, versus GBT alone, with the primary endpoint of culture conversion by month six.
We achieved that primary endpoint unequivocally with a P value of less than 0.0001. Results show that the addition of ALIS to GBT led to culture conversion by a 20% margin over GBT alone, with 29% of patients on ALIS plus GBT converting within six months of treatment. Our robust clinical program was designed to gather additional information on the potential long-term clinical advantages of ALIS. To remind you, patients who culture converted in 212 are continuing in the trial for an additional 12 months of treatment. Patients who did not culture convert had the option to enroll in our INS-312 study, in which all patients receiving ALIS plus GBT. The solid top-line results seen in the 212 study were corroborated by the additional positive data from these two studies that we shared earlier this year.
First, the interim culture conversion data from the 312 study echoed what we saw in 212, with 28% of patients previously on GBT alone achieving culture conversion by month six in the study. This rate of conversion was similar to what we observed in 212 at month six, demonstrating consistency, reinforcing our confidence in the strength of the clinical data set we used in our NDA submission. Second, we observed a benefit in 212 in patients on ALIS plus GBT from longer-term treatment beyond six months, with 12% of prior non-converters achieving culture conversion by month six in 312. These data further support the treatment of patients for at least a year results in more patients achieving culture conversion, which we believe is an important aspect of the value proposition of ALIS.
As a reminder, current guidelines indicate that once a patient culture converts, they remain on therapy for an additional 12 months. We also know through market research that many patients remain on guideline-based therapy for much longer periods of time. In fact, the median time on GBT for patients entering into the 212 study was more than four years. Third, the 212 extension study has also shown durability of culture conversion is substantially higher for patients receiving ALIS plus GBT versus those patients treated with GBT alone. Durability of culture conversion is of particular importance as this is a focal point for full regulatory approval. The 212 interim data showed that durability of culture conversion three months off of all treatment was substantially higher in the ALIS plus GBT arm, at 61%, compared to GBT alone at 0%.
We believe an important aspect of the full approval of ALIS will be the FDA's examination of durability of culture conversion three months off all treatment. While these data were not included in our NDA submission, they are public, and we are prepared to discuss these findings with FDA if requested during the regulatory review process. Finally, we believe these studies demonstrate a consistent and acceptable safety profile across both studies. As we've previously shared, serious treatment emergent adverse events observed in INS-312 are similar to those in INS-212. The safety profile remains consistent with that seen with the use of other inhaled antibiotics. Let me remind you that both the INS-212 and INS-312 studies remain ongoing. We anticipate the INS-312 study to be completed with top-line data available sometime in late 2018.
Let me spend a few minutes on an exciting event for us coming up in a few weeks, the American Thoracic Society International Conference, or ATS, taking place May 18th through May 23rd in San Diego. Awareness of NTM continues to grow across the treating community of healthcare providers, and ATS will provide another opportunity for us to further educate the treating community about our disease awareness efforts and our clinical results. First, we'll have an oral presentation outlining the results of our phase III study of ALIS for the treatment of NTM-MAC. These results will be discussed on Tuesday, May 22nd by one of the principal investigators of the CONVERT study. Second, we will have poster presentations detailing results on the six-minute walk test, patient-reported health outcomes, open-label study results, and predictive identification of individuals at risk for NTM lung disease.
We look forward to sharing these additional data with you, and importantly, to unveil this data at a forum which has increasingly focused on NTM and how to address the challenges associated with this disease. Third, there will be an oral presentation of an investigator-initiated open-label trial of ALIS in M. abscessus lung disease. Finally, while at ATS, we will continue to interact with thought leaders to gather insights and further enhance our understanding of the disease and share learnings from all of our work in the field to date. These conversations continue to be important in building disease awareness and guiding us in our development of this important potential new treatment option. As I mentioned earlier, we've made great progress on the regulatory front for ALIS with the end of March U.S. NDA filing under Subpart H with the Division of Anti-Infectives.
We should know by the end of May or early June when to expect a PDUFA decision, but we anticipate a six-month priority review by the agency. This should result in a PDUFA date at the end of the third quarter. As Roger will discuss in a moment, we are currently planning for a potential commercial launch at the start of the fourth quarter. We are also expecting and preparing for an Advisory Committee meeting prior to the PDUFA goal date, consistent with the FDA's practice of convening Advisory Committee meetings in connection with the agency's review of novel products in therapeutic areas with unmet need. We will continue to prepare for an AdCom and look forward to the dialogue. Let me spend a moment on the progress of our geographic expansion.
In line with our focus on Japan as the next priority market, efforts on this front have also advanced very well over the past few months. I have just returned with the team from a fruitful trip to Japan, where we met with over a dozen key opinion leaders in connection with the Japanese Respiratory Society meeting. This is part of our ongoing effort to further build awareness around the disease to support our geographic expansion strategy. We also gained further understanding of the local perspective on the treatment of NTM in Japan. The prevalence of refractory NTM lung disease is higher in Japan than elsewhere in the world, with approximately 15,000-18,000 refractory NTM-MAC patients receiving treatment, more than are currently identified in the U.S. Our process to advance the data package and filing strategy with the PMDA, including pursuit of orphan drug status, is ongoing.
We look forward to providing further updates on our progress in Japan throughout the year. Turning to Europe, compassionate use programs in several European countries have given a number of patients access to ALIS. Following a successful U.S. approval, we intend to establish a named patient program in Europe to allow access to the drug. While this program will be limited, nonetheless, these patients are fully reimbursed, and our ability to treat them broadens our relationships with the treating community across Europe. As you can see, we are rapidly moving ahead with the preparation for the regulatory review process, the build-out of our pre-commercial organization, and geographic expansion. These efforts will help to support a potential U.S. approval, a successful U.S. launch later this year, and the global expansion of our organization.
The Insmed team is also working to advance a number of other programs in rare disorders, with INS-1007 our next area of focus. As we have noted previously, the program's initial focus in non-CF bronchiectasis has been of particular interest to the NTM and CF treating community due to the significant amount of overlap in these patients. Development activities for INS-1007 continue to advance, and we expect to accelerate these activities in the second half of this year. We look forward to sharing more details as these programs advance. Let me pause here and turn it over to Roger now for an update on our commercial activities, followed by Paolo, who will cover our first quarter financials. Roger?
Thanks, Will, and good morning, everyone. Let me spend just a few minutes providing you with an update on our pre-commercial efforts to date. We deployed our therapeutic specialist team at the end of March and have already made solid progress in expanding our care professionals' awareness of the disease. In the first five weeks, our therapeutic specialists were in the field conducting disease education. We have engaged with about half of our tier 1 targets. As a reminder, we are targeting just under 6,000 physicians. We are pleased that the experience validates the targeting work we conducted using the Symphony databases. While it's early, our engagements with our targeted physicians have been well-received, and they welcome the discussion to learn more about NTM lung disease.
We continue to gather insights from our engagements with the healthcare professionals. We will use that information to further enhance our preparation for the commercial launch. We are also actively engaging with payers through our key account director team to gather further insights about their view on NTM. Thus far, those discussions have been productive. To date, we believe that payers are supportive of our efforts in the disease state and recognize the importance of access to a potential new product in the disease state with no currently approved therapies. We've also been hard at work in the build-out of our patient support services that will allow for an efficient process by which a script is generated and a patient receives that product.
In addition, we have onboarded our Era Cares team of 10 patient support specialists who will play a critical role in ensuring the entire patient experience is as positive as it can be. We have an excellent set of partners who will work with us through this process. We are well on our way to making the necessary investments to support patient access to ALIS. One final area of focus is the build of our commercial inventory for launch. Thus far, that process has gone smoothly. We continue to invest in the production of commercial batch quantities, which we will continue to build through the second quarter and beyond. We can have a solid inventory of drug and device supply at the time of launch. With an expected three-year dating, we expect to build sufficient safety stock in preparation for our U.S. launch.
Collectively, having each of these critical elements onboarded and operational this early will go a long way towards ensuring we have a great launch when we're able to secure approval. I'm excited about where we are as a commercial organization. This is a first-rate team. We are looking forward to the activities over the coming months that will bring us closer to the potential commercial launch of ALIS later this year. With that, let me turn the call over to Paolo to review the financials for the quarter.
Thanks, Roger. Good morning, everyone. Thank you for joining us today. I will spend the next few minutes reviewing the first quarter 2018 financial results. This morning, we reported a net loss of $68.5 million, or $0.89 per share, compared with a net loss of $37.4 million or $0.60 per share for the first quarter of 2017. Research and development expenses were at $30.1 million for the first quarter of 2018, compared to $22.3 million in the first quarter of 2017. The increase was mainly due to an increase in external manufacturer expenses from an increase in ALIS production-related activities and higher compensation and related expenses to an increase in headcount as compared to the first quarter of 2017. First quarter, G&A expenses were at $32.7 million versus $13.7 million for the first quarter of 2017.
The increase was due primarily to a higher investment related to our pre-commercial planning activities for ARIKAYCE, many of which Roger highlighted in his remarks, and higher compensation and related expenses due to an increase in headcount as compared to prior-year period. Cash-based operating expenses for the quarter were at $56.3 million. A reconciliation of our GAAP operating expenses to our cash-based operating expenses is included in our press release, which is available in the investor relations section of our website. As you would expect, we anticipate our expenses will continue to rise as our efforts remain on the building of our commercial and corporate infrastructure, as well as inventory and other activities in support of a potential product launch at the end of this year.
Capital expenditures in the first quarter of 2018 were $5.4 million, primarily related to the build-out of long-term ARIKAYCE production capacity at one of our third-party manufacturing facilities. As a result, our total cash-based operating expenses and capital expenditures were approximately $62 million in the first quarter of 2018. We ended this quarter with $686.6 million in cash and cash equivalents. This cash position reflects the net proceeds of $436 million received through the successful public offering of the 1.75% senior convertible notes we completed in January of 2018. As a reminder, at the end of February, we paid our debt to Hercules Capital. The total payment to Hercules, including the back-end fee and early prepayment penalty, was approximately $58 million. This debt repayment resulted in an overall improved cost of capital. Currently, the return on our cash offsets the interest expense of the convert.
Turning now to our guidance. We continue to expect that cash-based operating expenses and capital and other cash investment will be within the range of $145 million to $165 million for the first half of 2018. This range mainly reflects spending for the ongoing INS-212 study, the follow-on INS-312 study, as well as continued regulatory and commercial investment to support ARIKAYCE. The estimates also include expenses related to INS-1007, including ongoing clinical activities. As we focus on and are guided by our upcoming milestones this year, we will continue to budget appropriately and utilize our financial resources responsibly. With that, I will turn it back to Will.
Thanks, Paolo.
Clearly, we've carried the strong momentum of 2017 into the first quarter of this year. We continue to make impressive progress in advancing an important new treatment option with the potential to address a serious unmet medical need. We are excited about the many milestones ahead of us, and we at Insmed remain confident in our ability to execute as a team. I'd like to thank everyone for their continued hard work and dedication. I also want to thank the patients and the physicians for their continued involvement in our clinical program. We've been excited to see a positive response from physicians who are looking to make a meaningful difference in the lives of patients. Let's open the line and take your questions. Operator, can we take the first question, please?
Ladies and gentlemen, if you have a question at this time, please press star then one on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question comes from the line of Matthew Harrison from Morgan Stanley. Your line is now open.
Hey, this is Ismael on for Matthew. Thank you for taking our questions. We have a couple on expenses in Japan. First, can you talk about how you think about commercial expenses in the second half of 2018, and if it should peak by the second quarter of 2018? Also, how should we think about manufacturing expenses and inventory build on Japan? What remaining steps need to be completed for filing, and how much commercial spend/activities are going on there? Thank you.
I'll just start and then turn it over to Paolo. We're not going to go into detailed breakouts beyond the guidance that we've already provided for our cash consumption. I think the way to characterize Japan is to say that we are going to be looking to put the ball control for that in the hands of the general manager, who we hope to announce very shortly. We've had a number of very impressive candidates that we've been looking at, and I think we're close to being able to announce that in the not-too-distant future. Given the importance of that part of the world being owned by a team of local knowledge, we really want that person on board before we're starting to set up guidelines and direction on what's going to happen.
What I will tell you is, having just come from Japan, it is an extremely interesting opportunity for us. I was excited about it before I went. Having just come back from JRS, Japanese Respiratory Society meeting, I am even more so. It is very clear that disease awareness about NTM in Japan is extremely high, and that our ability to provide a potential product for that disease is going to be very well received by the community over there. As I mentioned during the remarks, there are more patients in Japan with refractory NTM MAC than there are in the U.S. This is a very significant opportunity for us, and we're going to resource it appropriately. I don't think we have any other details on guidance. Do we, Paolo?
No.
No. Okay. I think that unfortunately, I can't be more specific in response to your detailed questions with regard to Japan spend. You did ask about inventory build. As Roger mentioned, we are resourcing that very substantially as well. That investment is expensed because we're still in the developmental stage, so that's an important aspect of three-year dating, or at least we anticipate having that. Anything we build now will be a nice safety stock at the time of launch, and anything beyond that we'll be able to use over the course of the coming years during the launch timeframe. Hopefully that's helpful.
That was helpful. Thank you.
Our next question comes from the line of Martin Auster from Credit Suisse. Your line is now open.
Hi, this is Tiago on for Marty. Thanks for taking the question. Perhaps if you could just talk a little bit about some of the key learnings that you have had from physicians' interactions thus far, especially as it relates to disease awareness. Perhaps what are some of the key focus points for your physicians' interactions that you expect to have at ATS? Thanks.
Yeah. I'm going to actually turn that one over to Roger.
Yeah, great. Thanks for the question. As a reminder, we've had about five weeks of our therapeutic specialists out in the field, and they've engaged with about half of our tier 1 targets. We've taken some encouragement from those early interactions. We're calling on about 6,000 physicians in total. Maybe the most encouraging thing for me is that the physicians we're calling on have these NTM lung patients, right? One of the things in a successful rare disease launch is to be able to find these patients and make sure that they're available for treatment. That's something that we've validated with these efforts. The physicians we're calling on have a strong interest in NTM lung disease and have the patients in their practice that they're actively treating.
They self-report the number of patients, and that's very consistent with what we're seeing from the epidemiological data that we've shared with you previously. That's encouraging validation of what we think the size of the patient opportunity is. They also report a substantial portion of those patients that are not responding very well to the guideline-based therapy. All of those things are particularly encouraging for us. The educational resources are very well received. Our therapeutic specialists have access to the physicians. They're welcome to come into the office, talk about the disease awareness that really validates our decision to make the investment to educate the healthcare professional community about the disease. They're particularly welcome because they now finally have some materials that they can provide to the patients about the disease where they really didn't have anything before.
I think that we'll continue to learn from the experience we have with our therapeutic specialists. We're all very encouraged by the early experience. We continue to invest in our digital disease awareness capabilities. We've seen strong performance across our digital channels, we continue to see active engagement, both from the healthcare professional side of things, also from the patient side interacting with our digital efforts.
Just to add on the ATS front, I think we're seeing a lot of enthusiasm from physicians in regard to NTM. One of my favorite recent anecdotes is when I started at this company a little over five and a half years ago, I went to the European Respiratory Society meeting, there was an NTM session being held. There were about 20 people in the room. At last year's session, it was standing room only with 1,000 people, physicians, waiting to hear the oral presentation on NTM. I think it's a harbinger of what's to come. Oftentimes, when you see whether it's PAH or IPF, a disease that has a drug that may soon be arriving that is going to have an impact on the disease state, it becomes the topic of discussion.
Into this circumstance, we have found our very strong phase III results set against the unfortunate failures in the non-CF bronchiectasis arena, where the phase III trials for both Bayer Nektar and Aradigm Grifols did not meet their statistical significance endpoints and were not approved. This is the hot topic, I think it's fair to say, that means ATS is going to be talking an awful lot about it. From the physicians we've interacted with, there is just a lot of enthusiasm for the potential approval of this product and its impact on this disease.
Great. Thanks.
Great.
I think good question.
Our next question comes from the line of Adam Walsh from Stifel. Your line is now open.
Hey, good morning, guys, and thanks for taking my questions. I've got a couple here. Given the possibility that FDA could grant ARIKAYCE either a narrow label in the refractory patient population or in theory, perhaps a broader label that would include frontline treatment or naive patients, how are you planning internally for those potential two scenarios from a manufacturing and commercial standpoint? Just a quick follow-up here. Some clients have mentioned that prior filings for drug device combos have had a lower rate of first-pass approval than simple drug filings. Given that ARIKAYCE is a drug device combo, what are your thoughts there? Thanks.
Sure. I'll take a quick stab. The preparation on the CMC side is pretty simple. Just make as much as we can so that we're ready for whatever the circumstance may be. The reason for that is simple. One, we want to get into the habit of having that full commercial production running constantly, and there are always adventures along that journey. Having said that, we're doing very well in that regard. I think we're going to have plenty of supply at the time of launch and with what we anticipate to be three-year labeling. It really is not linked in any way to whatever label we may or may not get in our discussion. I will just mention, because you brought it, this label concept and what's going to happen. I think you've put your finger on what AdCom is going to be all about.
It's difficult and a little premature to be speculating on content or discussion, but I view AdCom as a discussion of the label, not so much a debate about the approvability. I think that's an important distinction from perhaps some more recent AdComs in other contexts, because our phase III primary endpoint was so definitively surpassed. I think also, I'll just remind you, we're filing under Subpart H, where if you hit your primary endpoint and that's agreed upon, that's what you need to do to secure Subpart H approval. I think this is going to be a discussion of label, not of approval. Drug device combos, we've heard this as they can be more challenging in some regards.
I think here where we have an advantage is that this is a device that has already been approved by the FDA, and most recently at the end of last year. This is not some device that they will want to take another fresh look at. They just took a fresh look at it in the fall with the approval of a drug from Chiesi. From that point of view, I think we are belt and suspenders prepared, and that'll continue to be the case. We're going to continue to invest in preparation, et cetera. I don't know, Roger, if you want to talk a little bit about the commercial preparation for whatever the outcome may be.
Yeah, absolutely. As you might expect, we are contemplating both outcomes and in the case that we do get that broader label. I know we've done some specific research with physicians, and the value of ARIKAYCE, I think the physicians see a very high value to the product. The highest value initially that they see and the place for therapy initially is overwhelmingly within that refractory population that we studied. Nonetheless, I think that given the profile and given the unmet need in the disease state, if there was a broader label, I think you would see physicians' intent to prescribe to a broader population would come through, although not nearly as strong as a refractory population. To consider that and to prepare for that, as Will said, we are making as much ARIKAYCE as we can.
We're also engaging on our pricing research, thinking about the different label scenarios and what that would mean for appropriate pricing of the product and the value that the product would convey in both scenarios. We're also engaging with payers. As we talk to them about the value of the product and the unmet need in the disease state, we contemplate to them what a prior authorization, for example, might look like under a narrower label versus a more broad label. We are preparing for both scenarios. I think the good news from my perspective is we feel very confident in both scenarios that we'll have a strong opportunity given the value that ARIKAYCE provides to the patients and the receptiveness of the physicians to the therapy.
I'll just add one other thought on the interaction with the regulatory authorities. Of course, our enthusiasm as we approach AdCom is supported by the fact that we have every regulatory designation the FDA offers. Breakthrough therapy designation, QIDP, orphan. As we mentioned, we expect priority review, Subpart H accelerated approval. We've got them all. We enter into this AdCom with the discussions with that wind in our sails.
Hey, thanks for the color and see you at ATS.
Look forward to it.
Our next question comes from the line of Joseph Schwartz from Leerink Partners. Your line is now open.
Thanks very much. You mentioned that payers appear supportive and recognize the importance of patient access to ARIKAYCE. Does this differ according to whether a payer is focused on a Medicare plan versus a commercial plan? I know you've mentioned the significance of launching off-cycle for Medicare previously. How does the feedback so far jibe with some of that early thinking? Thanks.
Yeah. Great. Hi, it's Roger. Let me just say that we recently conducted an advisory board with the payers. We did this with a number of large plans, pharmacy directors, medical directors from several key accounts. I was really encouraged with the feedback from the advisors. I think that they recognize the unmet need in this disease state. They recognize the need to educate around NTM, not just the accounts, and actually their membership and their management, but also the physicians. They're very supportive of the efforts we're currently conducting in educating the physician community around NTM. I think overall, we see the recognition that this is a fairly small population in the grand scheme of things. These patients are already in their systems, and we've previously shared data where they know that these patients are expensive.
They're consuming a lot of resources and the available therapies are not particularly effective for these patients. My conclusion is that payers really see a clear place for ARIKAYCE in that right patient population. We talked about the Medicare off-cycle phenomenon, and I think that that's something that still exists. However, I do believe that in engaging with the Medicare payers, they see this as a very strong option. It will be very difficult for them to deny access to the appropriate patient in a medical appeals process that we think we're going to be deploying, we'll be putting into place and supporting with our patient support system over the first few months of launch. However, I do think that there's a possibility that we will see some off-cycle ads in Medicare plans.
I do think that that's something that is maybe a little more encouraging than I'd initially contemplated when we were laying out our plans. From a commercial perspective, we'll see some, I think, possibility of some early ads in the commercial plans as well. They also recognize the value. I think the difference there will be just the kinds of plans that the commercial are selling through to their customers. There may be some issues where they won't add new therapies or cover new therapies for a period of time. Overall, I would say very consistent feedback on the need for ARIKAYCE, the recognition of the clinical trial results, the validation of the endpoint as the appropriate endpoint. As long as the appropriate patient population is identified for the product, eventually those patients will get access.
It's a matter of when, not if.
Great. Thanks for the added information.
Once again, ladies and gentlemen, if you have a question at this time, please press star then one. Our next question comes from the line of Tubero from Cowen. Your line is now open.
Hi, guys. Thanks for taking the question. Maybe back to the AdCom. Beyond the label, the broad label, Will, what are some of the other things that you guys are preparing for? I know there's been some discussion in the investment community about how FDA may perceive the functional data, the six-minute walk, and any sort of tells from recent applications on how they might look at aminoglycoside safety.
Sure. I think Look, it is difficult, and I'll just caveat that as we get closer and closer to this event, we're going to be more and more reticent to be speculating because we don't want to be seen as provoking the agency or directing the dialogue. It's their AdCom, not ours. We're there to be responsive, and we respect that process. Having said that, I think this is not a complex submission. There's not a lot of debate about the data that is being presented. It's why I turn to the idea that this is probably not an intense debate about approval. It's more an intense debate about labeling. I think in that context, we go in with a great deal of confidence, having done well on our primary endpoint and having all those regulatory designations.
The topics for discussion are always safety first and then efficacy. On the safety front, again, as we characterized during our remarks, we continue to be very encouraged by the safety profile of this drug. It's consistent with other inhaled antibiotics. We don't see anything distinct as relates to aminoglycosides, to your particular point. I think, remind everyone that we had released the data on hearing loss. We didn't see that in this study, so the consequential concern of using aminoglycosides for a sustained period of time was not in evidence here. That alone is an encouraging improvement in terms of safety profile. Didn't see nephrotoxicity. That also is encouraging from an aminoglycoside point of view. I think we enter into this with a pretty solid feeling on the safety side. On the efficacy side, there's the primary endpoint, which is unequivocally achieved.
I think we've got the other secondary endpoints, six-minute walk test, which everyone I know is well aware of, where we were able to show an improvement in six-minute walk for those patients who culture converted. I think that's an important aspect because it does link the culture conversion primary endpoint to the functional benefit in a way that is demonstrated clearly in the study in a blinded fashion. Then beyond that are time to culture conversion and patient-reported outcomes. In that last category, we weren't expecting to see a lot in the first six months of treatment. I think overall, these will all be discussed, I'm sure. There'll be questions about them to understand it more fully from the point of view of folks in the treating community.
Folks on the panel are going to be ID and pulmonologists, and into that group, the data set that we have, I think will be very well-received as the appropriate kind of characterization of the drug as a safe and effective use for the treatment of refractory NTM. I hope that addresses the question.
Yeah. Very helpful. Well, thank you. On your most recent trip to Japan, did you have any regulatory interactions or regulatory consultant interactions? I'm wondering about what you're thinking of the regulatory timeline in Japan.
Yeah. We aren't putting more refinement on that until our GM is on board. I will tell you that we are talking to regulatory consultants. We have been for a long time. Just to place Japan into context for those who may not remember, before we went through our phase III study, we actually visited with the PMDA, and we got their endorsement of the design of the phase III trial. We received from them a specific number of Japanese subjects that they wanted to see in the trial, and we significantly exceeded that. They wanted 25, I think we had 43. We have also said publicly that the sub-analysis of those Japanese patients was statistically significant on the primary endpoint. In fact, there was a zero response rate in the guideline-based therapy arm, and I think in the mid-20% on the treatment arm with ALIS.
Very strong data in the Japanese subpopulation into a community where treatment of NTM is widely understood and pursued. From here, we will file for orphan status. We will file for approval as soon as we can translate the NDA into a JNDA. That process takes some time, and obviously, quality first, timing second. Having said all that, what we have seen from Japan thematically is an embrace of the rare disease products and diseases. It seems to be something that you've probably seen with some other companies, but we think this is a very favorable environment to be entering. That's why, given the enormity of it, we're so excited and encouraged by this most recent trip.
Got it. Last quick question. Can you just briefly go over the status of the inspection status or GMP certification status of your manufacturing sites? Were they relatively recently inspected, and are you expecting other inspections closer to the approval date?
Yeah. It is a part of the review process for the FDA to engage in potential inspection of facilities and the same with sites that are involved in the clinical trial. We don't have any specific comments on if and when that's going to take place. I will tell you that we have certainly resourced the heck out of being ready for such an eventuality, which is always anticipated widely by companies. I feel very good about where we are in that regard for all of our different facilities that may be the subject of their attention.
Got it. Thanks for taking all the questions.
Sure.
Our next question comes from the line of Liisa Bayko from JMP Securities. Your line is now open.
Hi. Good morning. I wanted to ask about, just follow up on some discussion. You said the main, you think, kind of conversation now will relate to the label. Can you maybe run through sort of base case, worst case, best case scenarios in terms of how you think the label could play out? Thank you.
Sure. Well, I don't know that there's a best, worst, and mid case. The way we think about this is the study was designed to look at refractory NTM MAC patients. That's what the data clearly demonstrates. Under Subpart H, we feel we have a clear path to approval there, and that is what we are assuming we will end up with following our discussion with FDA. There has been some precedent recently in other divisions where FDA has gone beyond the refractory population and expanded the label slightly. Here, I'm thinking of Soliris for myasthenia gravis, where they asked for refractory and were given a broader label. I think it's prudent to contemplate that there could be a broader label, but it is not my expectation going in that that's where we would end up.
Having said that, there's a logic to it because we're talking about the treatment of bacteria, and a bacterial infection in a refractory patient don't differ from a bacterial infection in a non-refractory patient. They just are less responsive to the guideline-based therapy regimen. There is a logic to granting a broader label, and that certainly seems to be some of the spirit in certain divisions of the FDA that has been in evidence recently. I think it's prudent to be prepared for it, but just to be crystal clear, our assumption as we come out of AdCom and our approval PDUFA date with a label to treat refractory NTM MAC patients.
Thank you.
Of course.
At this time, I'm showing no further questions. I would like to turn the call back to Will for any closing remarks.
Thanks, everyone for joining us this morning. Look forward to giving you updates on the next quarterly call and seeing many of you hopefully at ATS.
Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.