INSMED Inc

Previous wording

•our inability to obtain full approval of ARIKAYCE from the FDA, including the risk that we will not successfully or in a timely manner validate a patient reported outcome (PRO) tool and complete the confirmatory post-marketing clinical trial required for full approval of ARIKAYCE;

Current wording

•our inability to obtain full approval of ARIKAYCE from the FDA, including the risk that we will not successfully or in a timely manner complete the confirmatory post-marketing clinical trial required for full approval of ARIKAYCE, or our failure to obtain regulatory approval to expand ARIKAYCE’s indication to a broader patient population;

Previous wording

•failure to obtain, or delays in obtaining, regulatory approvals for ARIKAYCE outside the US, Europe or Japan, or for our product candidates in the US, Europe, Japan or other markets, including separate regulatory approval for Lamira in each market and for each usage;

Current wording

•failure to obtain, or delays in obtaining, regulatory approvals for brensocatib, TPIP or our other product candidates in the US, Europe or Japan or for ARIKAYCE outside the US, Europe or Japan, including separate regulatory approval for Lamira in each market and for each usage;

Previous wording

•uncertainties or changes in the degree of market acceptance of ARIKAYCE by physicians, patients, third-party payors and others in the healthcare community;

Current wording

•uncertainties or changes in the degree of market acceptance of ARIKAYCE or, if approved, brensocatib or TPIP by physicians, patients, third-party payors and others in the healthcare community;

Previous wording

•our inability to obtain and maintain adequate reimbursement from government or third-party payors for ARIKAYCE or acceptable prices for ARIKAYCE;

Current wording

•our inability to obtain and maintain adequate reimbursement from government or third-party payors for ARIKAYCE or, if approved, brensocatib or TPIP, or acceptable prices for ARIKAYCE or, if approved, brensocatib or TPIP;

Previous wording

•failure of third parties on which we are dependent to manufacture sufficient quantities of ARIKAYCE or our product candidates for commercial or clinical needs, to conduct our clinical trials, or to comply with our agreements or laws and regulations that impact our business or agreements with us;

Current wording

•failure of third parties on which the Company is dependent to manufacture sufficient quantities of ARIKAYCE, brensocatib, or TPIP for commercial or clinical needs, to conduct the Company's clinical trials, or to comply with the Company's agreements or laws and regulations that impact the Company's business;

Previous wording

•inability to adequately protect our intellectual property rights or prevent disclosure of our trade secrets and other proprietary information and costs associated with litigation or other proceedings related to such matters;

Current wording

•the risk that we could become involved in costly intellectual property disputes, be unable to adequately protect our intellectual property rights or prevent disclosure of our trade secrets and other proprietary information, and incur costs associated with litigation or other proceedings related to such matters;

Previous wording

•restrictions or other obligations imposed on us by agreements related to ARIKAYCE or our product candidates, including our license agreements with PARI and AstraZeneca AB (AstraZeneca), and failure to comply with our obligations under such agreements;

Current wording

•restrictions or other obligations imposed on us by agreements related to ARIKAYCE, brensocatib or our other product candidates, including our license agreements with PARI and AstraZeneca AB (AstraZeneca), and failure to comply with our obligations under such agreements;

Previous wording

We are a global biopharmaceutical company on a mission to transform the lives of patients with serious and rare diseases. Our first commercial product, ARIKAYCE, is approved in the US as ARIKAYCE® (amikacin liposome inhalation suspension), in Europe as ARIKAYCE Liposomal 590 mg Nebuliser Dispersion and in Japan as ARIKAYCE inhalation 590 mg (amikacin sulfate inhalation drug product). ARIKAYCE received accelerated approval in the US in September 2018 for the treatment of MAC lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options in a refractory setting. In October 2020, the EC approved ARIKAYCE for the treatment of NTM lung infections caused by MAC in adults with limited treatment options who do not have CF. In March 2021, Japan's MHLW approved ARIKAYCE for the treatment of patients with NTM lung disease caused by MAC who did not sufficiently respond to prior treatment with a multidrug regimen. NTM lung disease caused by MAC (which we refer to as MAC lung disease) is a rare and often chronic infection that can cause irreversible lung damage and can be fatal.

Current wording

We are a people-first global biopharmaceutical company striving to deliver first- and best-in-class therapies to transform the lives of patients facing serious diseases. Our first commercial product, ARIKAYCE, is approved in the US as ARIKAYCE® (amikacin liposome inhalation suspension), in Europe as ARIKAYCE Liposomal 590 mg Nebuliser Dispersion and in Japan as ARIKAYCE inhalation 590 mg (amikacin sulfate inhalation drug product). ARIKAYCE received accelerated approval in the US in September 2018 for the treatment of MAC lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options in a refractory setting. In October 2020, the EC approved ARIKAYCE for the treatment of NTM lung infections caused by MAC in adults with limited treatment options who do not have CF. In March 2021, Japan's MHLW approved ARIKAYCE for the treatment of patients with NTM lung disease caused by MAC who did not sufficiently respond to prior treatment with a multidrug regimen. NTM lung disease caused by MAC (which we refer to as MAC lung disease) is a rare and often chronic infection that can cause irreversible lung damage and can be fatal.

Previous wording

Our pipeline includes clinical-stage programs, brensocatib and TPIP, as well as other early-stage research programs. Brensocatib is a small molecule, oral, reversible inhibitor of DPP1, which we are developing for the treatment of patients with bronchiectasis, and other neutrophil-mediated diseases, including CRSsNP. TPIP is an inhaled formulation of the treprostinil prodrug treprostinil palmitil which may offer a differentiated product profile for PH-ILD and PAH. Our early-stage research programs encompass a wide range of technologies and modalities, including gene therapy, AI-driven protein engineering, protein manufacturing, RNA-end joining, and synthetic rescue.

Current wording

Our pipeline includes clinical-stage programs brensocatib and TPIP, as well as other early-stage research programs. Brensocatib is a small molecule, oral, reversible inhibitor of DPP1, which we are developing for the treatment of patients with bronchiectasis and other neutrophil-mediated diseases, including CRSsNP and HS. TPIP is an inhaled formulation of the treprostinil prodrug treprostinil palmitil which may offer a differentiated product profile for PH-ILD and PAH. Our early-stage research programs encompass a wide range of technologies and modalities, including gene therapy, AI-driven protein engineering, protein manufacturing, RNA end-joining, and synthetic rescue.

Previous wording

•We announced positive topline results from the ARISE trial in the third quarter of 2023. Based on these results, we have proposed to the FDA that the change of the respiratory score derived from the Quality of Life – Bronchiectasis (QOL-B) respiratory domain PRO be the primary endpoint for the ENCORE study, the second trial in our post-marketing confirmatory clinical trial program for ARIKAYCE.

Current wording

•We announced positive topline results from the ARISE trial in the third quarter of 2023.

Previous wording

•In January 2024, we announced that we met our original enrollment target of 250 patients in the ENCORE trial. Enrollment in the study remains ongoing as we await feedback from the FDA on the finalization of our statistical plan. We anticipate reporting topline data from ENCORE in 2025.

Current wording

•Weanticipate reporting topline data from ENCORE in the first quarter of 2026.

Previous wording

•We plan to explore the potential of brensocatib in additional neutrophil-mediated diseases. The Phase 2b BiRCh trial of brensocatib in patients with CRSsNP is underway.

Current wording

•We are exploring the potential of brensocatib in additional neutrophil-mediated diseases. The Phase 2b BiRCh trial of brensocatib in patients with CRSsNP is underway and we expect to initiate a Phase 2 study of brensocatib in patients with HS in the second half of 2024.

Previous wording

Our strategy focuses on the needs of patients with serious and rare diseases. Our first product, ARIKAYCE, is approved in the US as ARIKAYCE®(amikacin liposome inhalation suspension), in Europe as ARIKAYCE Liposomal 590 mg Nebuliser Dispersion and in Japan as ARIKAYCE inhalation 590 mg (amikacin sulfate inhalation drug product). We are not aware of any other approved inhaled therapies specifically indicated to treat MAC lung disease in North America, Europe or Japan. We believe that ARIKAYCE has the potential to prove beneficial in other patients with refractory MAC. Our product candidates are brensocatib, our Phase 3 product candidate that we are developing for patients with bronchiectasis and other neutrophil-mediated diseases, and TPIP, our Phase 2 product candidate that may offer a differentiated product profile for patients with PH-ILD and PAH. We are also advancing our early-stage research programs encompassing a wide range of technologies and modalities, including gene therapy, AI-driven protein engineering, protein manufacturing, RNA-end joining, and synthetic rescue.

Current wording

We strive to develop and commercialize first- and best-in-class therapies that serve patient communities where the need is greatest. Our first product, ARIKAYCE, is approved in the US as ARIKAYCE®(amikacin liposome inhalation suspension), in Europe as ARIKAYCE Liposomal 590 mg Nebuliser Dispersion and in Japan as ARIKAYCE inhalation 590 mg (amikacin sulfate inhalation drug product). We are not aware of any other approved inhaled therapies specifically indicated to treat MAC lung disease in North America, Europe or Japan. We believe that ARIKAYCE has the potential to prove beneficial in other patients with refractory MAC. Our product candidates are brensocatib, our Phase 3 product candidate that we are developing for patients with bronchiectasis and other neutrophil-mediated diseases, and TPIP, our Phase 2 product candidate that may offer a differentiated product profile for patients with PH-ILD and PAH. We announced positive topline results from our Phase 3 ASPEN trial in brensocatib in May 2024 and plan to file an NDA with the FDA for brensocatib in patients with bronchiectasis in the fourth quarter of 2024, followed by filings with the European and Japanese regulatory authorities. We are also advancing our early-stage research programs encompassing a wide range of technologies and modalities, including gene therapy, AI-driven protein engineering, protein manufacturing, RNA end-joining, and synthetic rescue.

Previous wording

•Advance commercial readiness activities to serve significantly more patients with serious and rare diseases; and

Current wording

•Advance commercial readiness activities to serve significantly more patients facing serious diseases; and

Previous wording

In March 2018, we submitted a new drug application (NDA) for ARIKAYCE to the FDA to request accelerated approval. Accelerated approval allows drugs that (i) are being developed to treat a serious or life-threatening disease or condition and (ii) provide a meaningful therapeutic benefit over existing treatments to be approved substantially based on an intermediate endpoint or a surrogate endpoint that is reasonably likely to predict clinical benefit, rather than a clinical endpoint such as survival or irreversible morbidity. In September 2018, the FDA granted accelerated approval for ARIKAYCE under the Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) for the treatment of refractory MAC lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options. LPAD, which was enacted as part of the 21st Century Cures Act, serves to advance the development of new antibacterial drugs to treat serious or life-threatening infections in limited populations of patients with unmet needs. As required for drugs approved under the LPAD pathway, labeling for ARIKAYCE includes certain statements to convey that the drug has been shown to be safe and effective only for use in a limited population.

Current wording

In March 2018, we submitted an NDA for ARIKAYCE to the FDA to request accelerated approval. Accelerated approval allows drugs that (i) are being developed to treat a serious or life-threatening disease or condition and (ii) provide a meaningful therapeutic benefit over existing treatments to be approved substantially based on an intermediate endpoint or a surrogate endpoint that is reasonably likely to predict clinical benefit, rather than a clinical endpoint such as survival or irreversible morbidity. In September 2018, the FDA granted accelerated approval for ARIKAYCE under the Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) for the treatment of refractory MAC lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options. LPAD, which was enacted as part of the 21st Century Cures Act, serves to advance the development of new antibacterial drugs to treat serious or life-threatening infections in limited populations of patients with unmet needs. As required for drugs approved under the LPAD pathway, labeling for ARIKAYCE includes certain statements to convey that the drug has been shown to be safe and effective only for use in a limited population.

Previous wording

As a condition of accelerated approval, we must conduct a post-marketing confirmatory clinical trial. In December 2020, we commenced the post-marketing confirmatory clinical trial program for ARIKAYCE in patients with MAC lung disease consisting of the ARISE trial, an interventional study designed to validate cross-sectional and longitudinal characteristics of a PRO tool in MAC lung disease, and the ENCORE trial, designed to establish the clinical benefits and evaluate the safety of ARIKAYCE in patients with newly diagnosed or recurrent MAC lung infection who have not started antibiotics using the PRO tool validated in the ARISE trial. In September 2023, we announced positive topline results from the ARISE trial. The study met its primary objective of demonstrating that the QOL-B respiratory domain works effectively as a PRO tool in patients with MAC lung disease. Based on these results, we have proposed to the FDA that the change of the respiratory score derived from the QOL-B respiratory domain PRO be the primary endpoint for the ENCORE study. In January 2024, we reached our original target enrollment of 250 patients in the ENCORE trial in patients with newly diagnosed or recurrent nontuberculous mycobacterial lung infection caused by MAC who had not started antibiotics. Enrollment in the study remains ongoing. We received written feedback from the FDA on the patient-reported outcome data produced in the Phase 3 ARISE study in December 2023. We are scheduled to meet with the FDA in late June to gain additional insights and guidance, from which we will finalize our statistical plans for the Phase 3 ENCORE study, including an updated enrollment target for the study.

Current wording

As a condition of accelerated approval, we must conduct a post-marketing confirmatory clinical trial. In December 2020, we commenced the post-marketing confirmatory clinical trial program for ARIKAYCE in patients with MAC lung disease consisting of the ARISE trial, an interventional study designed to validate cross-sectional and longitudinal characteristics of a PRO tool in MAC lung disease, and the ENCORE trial, designed to establish the clinical benefits and evaluate the safety of ARIKAYCE in patients with newly diagnosed or recurrent MAC lung infection who have not started antibiotics using the PRO tool validated in the ARISE trial. In September 2023, we announced positive topline results from the ARISE trial. The study met its primary objective of demonstrating that the QOL-B respiratory domain works effectively as a PRO tool in patients with MAC lung disease. Based on these results, we have proposed to the FDA that the change of the respiratory score derived from the QOL-B respiratory domain PRO be the primary endpoint for the ENCORE study. In June 2024, we met and aligned with the FDA on the primary endpoint for the ENCORE study. If the data are positive, ENCORE may support a label expansion to include all MAC lung patients as well as support full approval for the current refractory indication. Based on feedback and in alignment with the FDA, we have determined that the primary endpoint for the ENCORE study will include 8 questions from the QOL-B respiratory domain PRO. We are targeting enrollment of 400 patients in the ENCORE study and expect to report topline data in the first quarter of 2026.

Previous wording

The ARISE trial was a global, randomized, double-blind, placebo-controlled Phase 3b study in adult patients with newly diagnosed or recurrent MAC infections that aimed to generate evidence demonstrating the domain specification, reliability, validity, and responsiveness of PRO-based scores, including a respiratory symptom score. The ARISE study met its primary objective of demonstrating that the QOL-B respiratory domain works effectively as a PRO tool in patients with MAC lung disease. Based on these results, we have proposed to the FDA that the change of the respiratory score derived from the QOL-B respiratory domain PRO be the primary endpoint for the ENCORE study.

Current wording

The ARISE trial was a global, randomized, double-blind, placebo-controlled Phase 3b study in adult patients with newly diagnosed or recurrent MAC infections that aimed to generate evidence demonstrating the domain specification, reliability, validity, and responsiveness of PRO-based scores, including a respiratory symptom score. The ARISE study met its primary objective of demonstrating that the QOL-B respiratory domain works effectively as a PRO tool in patients with MAC lung disease.

Previous wording

Based on the results of ARISE, we plan to explore accelerating the filing for approval of ARIKAYCE in newly infected patients with MAC lung disease with the FDA. Consistent with our expectations, the PMDA in Japan recently confirmed that it would not consider a label expansion for ARIKAYCE based on data from the ARISE study alone.

Current wording

Based on the results of ARISE, we plan to explore accelerating the filing for approval of ARIKAYCE in newly infected patients with MAC lung disease with the FDA. Consistent with our expectations, the PMDA in Japan confirmed that it would not consider a label expansion for ARIKAYCE based on data from the ARISE study alone.

Previous wording

The ENCORE trial is a randomized, double-blind, placebo-controlled Phase 3b study to evaluate the efficacy and safety of an ARIKAYCE-based regimen in patients with newly diagnosed or recurrent MAC infection who have not started antibiotics. Patients are randomized 1:1 to receive ARIKAYCE plus background regimen or placebo plus background regimen once daily for 12 months. Patients will then discontinue all study treatments and remain in the trial for three months for the assessment of durability of culture conversion. The primary endpoint is change from baseline to Month 13 in respiratory symptom score. The key secondary endpoint is the proportion of subjects achieving durable culture conversion at Month 15. In January 2024, we completed our original target enrollment of 250 patients in the ENCORE trial. Enrollment is ongoing, and we anticipate reporting topline data from ENCORE in 2025.

Current wording

The ENCORE trial is a randomized, double-blind, placebo-controlled Phase 3b study to evaluate the efficacy and safety of an ARIKAYCE-based regimen in patients with newly diagnosed or recurrent MAC infection who have not started antibiotics. Patients are randomized 1:1 to receive ARIKAYCE plus background regimen or placebo plus background regimen once daily for 12 months. Patients will then discontinue all study treatments and remain in the trial for three months for the assessment of durability of culture conversion. The primary endpoint is change from baseline to Month 13 in respiratory symptom score. The key secondary endpoint is the proportion of subjects achieving durable culture conversion at Month 15. In June 2024, we met and aligned with the FDA on the primary endpoint for the ENCORE study. If the data are positive, ENCORE may support a label expansion to include all MAC lung patients as well as support full approval for the current refractory indication. Based on feedback and in alignment with the FDA, we have determined that the primary endpoint for the ENCORE study will include 8 questions from the QOL-B respiratory domain PRO. We are targeting enrollment of 400 patients in the ENCORE study and expect to report topline data in the first quarter of 2026.

Previous wording

Brensocatib is a small molecule, oral, reversible inhibitor of DPP1, which we licensed from AstraZeneca in October 2016. DPP1 is an enzyme responsible for activating neutrophil serine proteases (NSPs) in neutrophils when they are formed in the bone marrow. Neutrophils are the most common type of white blood cell and play an essential role in pathogen destruction and inflammatory mediation. Neutrophils contain the NSPs (including neutrophil elastase, proteinase 3, and cathepsin G) that have been implicated in a variety of inflammatory diseases. In chronic inflammatory lung diseases, neutrophils accumulate in the airways and result in excessive active NSPs that cause lung destruction and inflammation. Brensocatib may decrease the damaging effects of inflammatory diseases such as bronchiectasis by inhibiting DPP1 and its activation of NSPs.

Current wording

Brensocatib is a small molecule, oral, reversible inhibitor of DPP1, which we licensed from AstraZeneca in October 2016. DPP1 is an enzyme responsible for activating neutrophil serine proteases (NSPs) in neutrophils when they are formed in the bone marrow. Neutrophils are the most common type of white blood cell and play an essential role in pathogen destruction and inflammatory mediation. Neutrophils contain the NSPs (including neutrophil elastase, proteinase 3, and cathepsin G) that have been implicated in a variety of inflammatory diseases. In chronic inflammatory lung diseases, neutrophils accumulate in the airways and result in excessive active NSPs that cause lung destruction and inflammation. Brensocatib may decrease thedamaging effects of inflammatory diseases such as bronchiectasis by inhibiting DPP1 and its activation of NSPs.

Previous wording

In March 2020, AstraZeneca exercised its first option pursuant to our October 2016 license agreement under which AstraZeneca can advance clinical development of brensocatib in the indications of chronic obstructive pulmonary disease (COPD) or asthma. Under the terms of the agreement, upon exercise of this option, AstraZeneca is solely responsible for all aspects of the development of brensocatib up to and including Phase 2b clinical trials in COPD or asthma. In March 2024, AstraZeneca exercised its second and final option, under the agreement, to further develop brensocatib beyond Phase 2b clinical trials and, if approved, commercialize brensocatib in the indications of COPD or asthma, upon reaching agreement after good faith negotiations resulting in terms, including financial terms, satisfactory to us and to AstraZeneca for such further development and commercialization. We and AstraZeneca each retain all discretion to determine, among other things, whether any proposed terms are acceptable to such party. We retain full development and commercialization rights for brensocatib in all other indications and in all geographies.

Current wording

In March 2020, AstraZeneca exercised its first option pursuant to our October 2016 license agreement under which AstraZeneca can advance clinical development of brensocatib in the indications of chronic obstructive pulmonary disease (COPD) or asthma. Under the terms of the agreement, upon exercise of this option, AstraZeneca is solely responsible for all aspects of the development of brensocatib up to and including Phase 2b clinical trials in COPD or asthma. In March 2024, AstraZeneca exercised its second and final option under the agreement, to further develop brensocatib beyond Phase 2b clinical trials and, if approved, commercialize brensocatib in the indications of COPD or asthma, upon reaching agreement after good faith negotiations resulting in terms, including financial terms, satisfactory to us and to AstraZeneca for such further development and commercialization. In June 2024, the negotiation period following such exercise of the final option expired. No agreement was reached between us and AstraZeneca to permit AstraZeneca to further develop and, if approved, commercialize brensocatib in the indications of COPD or asthma. We retain full worldwide development and commercialization rights for brensocatib in all indications other than COPD or asthma and AstraZeneca has no further development or commercialization rights for brensocatib in COPD, asthma or any other indication.

Previous wording

Based on the positive results of the WILLOW study discussed below, in December 2020 we commenced our Phase 3 trial, ASPEN, which will investigate brensocatib in bronchiectasis. ASPEN is a global, randomized, double-blind, placebo-controlled Phase 3 study to assess the efficacy, safety, and tolerability of brensocatib in adult patients with bronchiectasis. Patients with bronchiectasis due to CF were not enrolled in the study. Patients will be randomized to receive brensocatib 10 mg, brensocatib 25 mg, or placebo once daily for 52 weeks. The primary endpoint is the rate of pulmonary exacerbations over the 52-week treatment period. Secondary endpoints include time to first pulmonary exacerbation, percentage of subjects who remain pulmonary exacerbation-free, change from baseline in post-bronchodilator FEV1, rate of severe pulmonary exacerbations, change from baseline in the Bronchiectasis QOL-B Respiratory Symptoms Domain Score, and incidence and severity of TEAEs. This study completed enrollment of adult patients in the first quarter of 2023. The study included approximately 460 sites in nearly 40 countries and enrolled 1,682 evaluable adult patients. We anticipate sharing topline data in the latter half of the second quarter of 2024.

Current wording

Based on the positive results of the WILLOW study, in December 2020 we commenced the ASPEN study, a global, randomized, double-blind, placebo-controlled Phase 3 study to assess the efficacy, safety, and tolerability of brensocatib in adult patients with bronchiectasis. Patients with bronchiectasis due to CF were not enrolled in the study. The primary endpoint was the rate of adjudicated PEs over the 52-week treatment period. Secondary endpoints included the time to first adjudicated PE, the proportion of subjects free of adjudicated PE by 52 weeks, the absolute change from baseline in post-bronchodilator FEV1, the reduction in annualized rate of severe adjudicated PE, and the change from baseline in the Bronchiectasis QOL-B Respiratory Symptoms Domain Score.

Previous wording

We also plan to explore the potential of brensocatib in additional neutrophil-mediated diseases, including CRSsNP. CRSsNP currently has one approved pharmacological therapy (corticosteriod nasal spray); however, many patients do not respond to corticosteroids or endoscopic sinus surgery. The Phase 2b BiRCh trial of brensocatib in patients with CRSsNP is underway.

Current wording

We also plan to explore the potential of brensocatib in additional neutrophil-mediated diseases, including CRSsNP and HS. CRSsNP currently has one approved pharmacological therapy (corticosteriod nasal spray); however, many patients do not respond to corticosteroids or endoscopic sinus surgery. The Phase 2b BiRCh trial of brensocatib in patients with CRSsNP is underway and we expect to initiate a Phase 2 study of brensocatib in patients with HS in the second half of 2024.

Previous wording

Cost of product revenues (excluding amortization of intangible assets) consist primarily of direct and indirect costs related to the manufacturing of ARIKAYCE sold, including third-party manufacturing costs, packaging services, freight, and allocation of overhead costs, in addition to royalty expenses. We began capitalizing inventory upon FDA approval of ARIKAYCE in September 2018.

Current wording

Cost of product revenues (excluding amortization of intangible assets) consist primarily of direct and indirect costs related to the manufacturing of ARIKAYCE sold, including third-party manufacturing costs, packaging services, freight, and allocation of overhead costs, in addition to royalty expenses. We began capitalizing ARIKAYCE related inventory upon FDA approval of ARIKAYCE in September 2018.

Previous wording

In connection with the Business Acquisition, we recorded deferred and contingent consideration liabilities related to potential future milestone payments. Adjustments to the fair value are due to changes in: the probability of achieving milestones; our stock price; or certain other estimated assumptions. The change in fair value of deferred and contingent consideration liabilities is calculated quarterly with gains and losses recorded in the consolidated statements of comprehensive loss.

Current wording

In connection with the Business Acquisition, we recorded deferred and contingent consideration liabilities related to potential future milestone payments. Adjustments to the fair value are due to changes in: our stock price; the probability of achieving milestones; or certain other estimated assumptions. The change in fair value of deferred and contingent consideration liabilities is calculated quarterly with gains and losses recorded in the consolidated statements of comprehensive loss.

Previous wording

Investment income consists of interest and dividend income earned on our cash and cash equivalents and marketable securities. Interest expense consists primarily of contractual interest costs, Royalty Financing Agreement non-cash interest expense and the amortization of debt issuance costs related to our debt. Debt issuance costs are amortized to interest expense using the effective interest rate method over the term of the debt. Our balance sheet reflects debt, net of the debt discount, debt issuance costs paid to the lender, and other third-party costs. Unamortized debt issuance costs associated with extinguished debt are expensed in the period of the extinguishment.

Current wording

Investment income consists of interest and dividend income earned on our cash and cash equivalents and marketable securities. Interest expense consists primarily of contractual interest costs, Royalty Financing Agreement non-cash interest expense and the amortization of debt issuance costs related to our debt. Debt issuance costs are amortized to interest expense using the effective interest rate method over the term of the debt. Our balance sheet reflects debt, net of the debt issuance costs paid to the lender, and other third-party costs. Unamortized debt issuance costs associated with extinguished debt are expensed in the period of the extinguishment.

Previous wording

•Product revenues, net, increased$10.3 million, or 15.8%, as compared to the same period in the prior year as a result of the growth in ARIKAYCE sales;

Current wording

•Product revenues, net, increased$13.1 million, or 17.0%, as compared to the same period in the prior year as a result of the growth in ARIKAYCE sales;

Previous wording

•Cost of product revenues (excluding amortization of intangible assets) increased$3.6 million as compared to the same period in the prior year as a result of the increase in sales volumes of ARIKAYCE;

Current wording

•Cost of product revenues (excluding amortization of intangible assets) increased$4.4 million as compared to the same period in the prior year as a result of the increase in sales volumes of ARIKAYCE;

Previous wording

•SG&A expenses increased $13.2 million as compared to the same period in the prior year primarily as a result of increases in compensation and benefit-related expensesand stock-based compensation cost;

Current wording

•SG&A expenses increased $22.1 million as compared to the same period in the prior year primarily as a result of increases in compensation and benefit-related expensesand stock-based compensation costs;

Previous wording

•Change in fair value of deferred and contingent consideration liabilities increased$2.4 million, primarily as a result of the change in our share price; and

Current wording

•Change in fair value of deferred and contingent consideration liabilities increased $90.2 million, primarily as a result of the change in our share price; and

Previous wording

•Interest expense increased $1.0 million as compared to the same period in the prior year due to the Term Loan.

Current wording

•Interest expense increased $0.6 million as compared to the same period in the prior year due to the Term Loan.

Previous wording

Product revenues, net, for the three months ended March 31, 2024 increased to $75.5 million as compared to $65.2 million in the same period in 2023, an increase of 15.8%, as a result of growth in ARIKAYCE sales in the US, Japan and Europe and the rest of the world.

Current wording

Product revenues, net, for the three months ended June 30, 2024 increased to $90.3 million as compared to $77.2 million in the same period in 2023, an increase of 17.0%, as a result of growth in ARIKAYCE sales in the US, Japan and Europe and the rest of the world.

Previous wording

Cost of product revenues (excluding amortization of intangible assets) increased by $3.6 million, or 26.2%, to $17.5 million for the three months ended March 31, 2024 as compared to$13.8 million in the same period in 2023. The increase in cost of product revenues (excluding amortization of intangibles) for thethree months ended March 31, 2024 was primarily attributable to the increase in product revenues discussed above.

Current wording

Cost of product revenues (excluding amortization of intangible assets) increased by $4.4 million, or 26.3%, to $21.0 million for the three months ended June 30, 2024 as compared to$16.6 million in the same period in 2023. The increase in cost of product revenues (excluding amortization of intangibles) for thethree months ended June 30, 2024 was primarily attributable to the increase in product revenues discussed above.

Previous wording

SG&A expenses increased to $93.1 million during the three months ended March 31, 2024 from $79.9 million in the same period in 2023. The $13.2 million increase resulted primarily from an $6.8 million increase in compensation and benefit-related expenses and stock-based compensation costs due to an increase in headcount and a$4.7 million increase in professional fees and other external expenses driven by commercial readiness activities for brensocatib.

Current wording

SG&A expenses increased to $106.6 million during the three months ended June 30, 2024 from $84.4 million in the same period in 2023. The $22.1 million increase resulted primarily from an $9.7 million increase in compensation and benefit-related expenses and stock-based compensation costs due to an increase in headcount and an$8.8 million increase in professional fees and other external expenses driven by commercial readiness activities for brensocatib.

Previous wording

The change in fair value of deferred and contingent consideration for the three months ended March 31, 2024 was $(11.9) million. The change is related to the fair value of the potential future consideration to be paid to former equityholders of the businesses we acquired. Adjustments to the fair value are due to changes in: the probability of achieving milestones; our stock price; or certain other estimated assumptions.

Current wording

The change in fair value of deferred and contingent consideration for the three months ended June 30, 2024 was $103.7 million. The change is related to the fair value of the potential future consideration to be paid to former equityholders of the businesses we acquired. The change in fair value of deferred and contingent consideration for the three months ended June 30, 2024 was primarily due to the increase in our share price.

Previous wording

Investment income decreased to $8.8 million for the three months ended March 31, 2024 as compared to $10.5 million in the same period in 2023 due to a decrease in our average cash and cash equivalents and marketable securities balances in 2024 relative to 2023.

Current wording

Investment income decreased to $10.3 million for the three months ended June 30, 2024 as compared to $11.2 million in the same period in 2023 primarily due to a decrease in our average cash and cash equivalents and marketable securities balances in 2024 relative to 2023.

Previous wording

Interest expense increased to $21.0 million for the three months ended March 31, 2024 as compared to $20.0 million in the same period in 2023 primarily due to interest related to the Term Loan. See Note 10 - Debtand Note 11 - Royalty Financing Agreement in this Quarterly Report on Form 10-Q for further details.

Current wording

Interest expense increased to $21.3 million for the three months ended June 30, 2024 as compared to $20.6 million in the same period in 2023 primarily due to interest related to the Term Loan. See Note 10 - Debtand Note 11 - Royalty Financing Agreement in this Quarterly Report on Form 10-Q for further details.

Previous wording

The change in fair value of interest rate swap for the three months ended March 31, 2024 was $2.4 million. Adjustments to the fair value are due to changes in interest rates as of March 31, 2024 relative to the fair value of interest rate swap as of December 31, 2023.

Current wording

The change in fair value of interest rate swap for the three months ended June 30, 2024 was $0.4 million. Adjustments to the fair value are due to changes in interest rates as of June 30, 2024 relative to the fair value of interest rate swap as of December 31, 2023.

Previous wording

R&D expenses decreased to $121.1 million during the three months ended March 31, 2024 from $127.9 million in the same period in 2023. The $6.8 million decrease in R&D expenses was primarily due to the$10.3 million non-cash asset acquisition cost of Vertuis in the first quarter of 2023 and a $5.0 million decrease in regulatory, quality assurance and medical affairs, partially offset by an increase of $10.7 million in compensation and benefit-related expenses and stock-based compensation costs due to an increase in headcount.

Current wording

R&D expenses decreased to $267.8 million during the six months ended June 30, 2024 from $324.8 million in the same period in 2023. The$57.0 million decrease in R&D expenses was primarily due to the$86.7 million non-cash asset acquisition cost of Adrestia and Vertuis in the first half of 2023, partially offset by an increase of$24.7 million in compensation and benefit-related expenses and stock-based compensation costs due to an increase in headcount and a $12.5 million milestone payment due to AstraZeneca upon our release of an official public statement that we intend to file an NDA for brensocatib.

Previous wording

In the first quarter of 2024, the Company entered into a new sales agreement with Leerink to sell shares of the Company's common stock, with aggregate gross sales proceeds of up to $500.0 million, from time to time, through the new ATM program, under which Leerink acts as sales agent. No shares were sold through the new ATM program during the three months ended March 31, 2024.

Current wording

In the first quarter of 2024, the Company entered into a new sales agreement with Leerink to sell shares of the Company's common stock, with aggregate gross sales proceeds of up to $500.0 million, from time to time, through the new ATM program, under which Leerink acts as sales agent. No shares were sold through the new ATM program during the six months ended June 30, 2024.