How To Be A CFO With Insmed's Sara Bonstein

Thanks so much, Ben. So glad to be here with you.

Yeah. No, it's a great question and it's something you know all young people, actually people of all ages, should reflect on. And I truly believe that you should be in an industry where you have passion for it. And so whatever drives you, whatever you have passion for, regardless of your functional area, that's where you should lead yourself. And so throughout sort of my younger years I dabbled in all different industries and I really learned that the pharmaceutical, healthcare, biotech space is what I was passionate about. I'm not a scientist. I don't pretend to be a medical professional or a scientist, but I love that in a small way, in my sort of DNA ability, I can give back to patients. I can hopefully in some aspect of the work that I do allow a patient to live a longer life, a higher quality of life. And as you think about one patient, I believe that touches a hundred lives as you think about sort of their circle, the patient, their family, their friends. And you can't have a more remarkable put your head on a pillow at night kind of feeling to be able to help people live a longer or a higher quality of life.

Yeah, so it's funny, I look back and I think about freshman year of college and I started going to the events that my first actual employer came to college and recruited pretty heavily. And so I started going to those recruiting events freshman year and there, you know, I would go up and introduce myself at the ends and they would be like, 'Oh, what grade are you?' And I'm like, 'Oh, I'm a freshman.' And they're like, 'Oh, these aren't for you.' And I said, 'Okay, well, I'll be at it until they are for me.' And it really helped me learn about the industry. But like I said previously, I also saw what else was out there. I worked in banking while I was in college and got a flavor of what that looked like. I've worked in, you know, sort of more like retail type industries as well. I really loved this industry. Like I said, I am not a scientist, but what's most important is you surround yourself with people that could teach you their trade, that could teach you their expertise, and you hope that your contributions can also pay it forward and help to teach them as well. And so, I very much appreciate the other areas that need to make this biopharma industry go around, right? I very much value my bankers and if I didn't have them, we wouldn't be able to raise the money and do what we do and all that good stuff. But for me, what drives me, what I'm most passionate about is to have that direct link to a certain indication, to a certain group of patients, to a certain product and be able to drive that forward.

Yeah, I'm so grateful that I had the opportunity to start my career at Big Pharma. So my first 10-ish years was at Big Pharma and it really taught me the business, the foundational drug development process. So from bench to commercialization and everything that goes along that journey and what it takes to develop a drug from FDA requirements, from manufacturing, from commercial organization, there's so many components. And my belief is you cannot be a good executive unless you understand the fundamentals of the business. And again, you're not going to be the expert, right? I don't pretend to be the regulatory expert, that's why we have regulatory people. I don't pretend to be the clinical development expert, that's why we have clinical development people. But in order to understand the business and have a very robust conversation and really be, I kind of always viewed my role as the voice of reason, voice of business in those conversations because you have those technical people in their roles for their technical capability. They might not think about it sort of at that higher strategic level. And that's where I was able to meld both of those with my financial backgrounds. And then understanding the core business and then being able to see the vision on how do you actually get impact to patient and as well as you appreciate we are a for-profit company and you need to drive the company towards success from a balance sheet perspective.

Yeah. So, a couple thoughts maybe on that. First is most pharma companies, biotech, big and small, have, you can call them anything you want, some global product teams. It's a cross-functional team globally that oversees the product or the indications. And so I still remember early in my career getting the opportunity to sit on my first global product team and I was so passionate about that product and then when that product did not succeed out of phase one, we went through phase one and it was, we got a no-go to move forward, it was, you know, it was kind of like your baby, right? You got really into the product. But it helped teach me young in my career that you have to give it your all. But this is a tough industry. And so, you know, we can probably quote better statistics than this, but it's well over a billion dollars to bring a drug from bench to commercialization. And most drugs fail, right? I think it's 20% of drugs, you know, get to even move on into the pivotal stage and then a lot of those don't make it and get out to patient. And we do that for a lot of good reason. We do that because we want to ensure that we're putting safe and effective drugs and that is what is ultimately being provided to patient but that takes 10 plus years from really from when you start in the clinic to commercialization let alone the bench time and it takes well over a billion dollars to do that. So that's really intensive and so to be able to kind of learn that and see some almost failures along the way actually really helped me understand the importance of the drug development process and making sure that the mechanism has to work at the end of the day. Right? But did you build it to allow the mechanism to work? Did you design the trial in a way to give it its best chance to work? Did you resource it enough? Did you ask the right questions? Did you build your phase two program to ask the tough questions then versus waiting through your phase three and that's when you ask the tough questions and you see the failure in phase three. Could you have anticipated that failure if you designed your phase two differently? So understanding those components and again I don't pretend I could sit here and go on a whiteboard and draw what the schema needs to be for a clinical trial design but I was able to learn enough of things that happened well and sometimes I think even more importantly throughout your career things that maybe didn't go that well and then take those learnings and apply them to sort of the next time and be like well how about we think about it this way could we do an extra arm or could we do a stratification or could we do a blinded look so we don't kind of compromise alpha from a statistical plan and get some answers. Can we ask what's the endpoint in pivotal? Should we study that in our phase two? Those types of things. So that's the part that I find really fun.

Yeah, it's such a great topic to bring up and I think it's a pitfall that you actually see more probably the smaller companies but even the larger companies fall into time and time again where you need to set what does good look like before you see the data, right? And so you have to say in every aspect of life, what do you want to achieve? Give yourself goals. What does good look like? However you want to phrase it. And stay true to that. Because there are limited resources and there are limited patients and we also don't want to be moving forward a drug candidate that maybe isn't the best drug candidate and expose more patients to those clinical trials. Right? So it's setting those parameters right up front and say out of this I want to see X is the endpoint. I want to see this amount of tumor shrinkage if it's oncology. I want to see this amount of reduction of whatever the symptom is. And so set those benchmarks and then when you get the data if it doesn't tell you that don't force the data to tell you something. Of course you need to analyze it if there's a subsection of patients, right? If you studied all comers and the study is large enough that you can then subset it and say okay it did not work for all comers but it worked for this subsection of patients and it did hit the parameters that I set up front, it's a different market opportunity than I had originally thought, right? I thought the market opportunity was this, now the market opportunity is this. Ask your first question does it work to the parameters that you set for the smaller indication yes or no. If the answer is yes then you need to put the commercial lens on and say the pathway to get this to patients what does that look like, what does the time look like, what does the investment look like, is that the best use of resources, is for my patients more broadly across my portfolio from a prioritization perspective as well as is that the right resources to use that my investors entrusted in me on. So you have to think about it in those lenses as well. So hopefully that helps.

Yeah, so there's a couple reasons. There's professional and personal. On the personal front, I honestly didn't want to relocate. I had two small children and we did not see our family living in a different state. And so from a personal perspective that was one of the driving forces and I was traveling a ton. It was before COVID where we didn't fully appreciate all the ability to be able to kind of work from different places. And so I wanted to have a certain sort of lifestyle and certain relationship with my children and certain amount of time with them. So that was kind of on the personal side. On the professional side again I love Big Pharma and I'm so grateful for the foundational learning that I have gotten from them. I was starting to lose because it was so large, I was starting to lose the connection to the patient. And so I was starting to lose the can I go in every day and at least see one action that I'm doing today have some sort of linkage on how it's going to be five steps removed, right? But how that was going to have an impact on patient life. And I was struggling with that a little bit. And so going back to sort of that passion on why do you go into industry? So between those components and obviously the personal piece was significant, I had said you know it's probably time to explore and I at that point talked to a lot of co-workers and colleagues around some of their experiences and you know I was grappling with do I stay in Big Pharma, there is a sense of quote unquote security with that, right? Or wrong, but there's at least a perception of security with that, or do I go to this thing called biotech, these small companies and what does that look like? And the coaching and feedback that I heard from some people that I trusted, I think it was very fair, was biotech is great, but you cannot hide. So biotech, it's small, there's not a lot of people, there's not a lot of resources. You'll get to wear a whole bunch of hats and do things that are not in your subject matter expertise and be challenged in ways that are very different. You won't know the exact box you're going to go into for what your next role is, all that kind of stuff. You're going to create that, but no one hides in biotech. So, some people love it and some people hate it. And that really resonated with me because I'm like, I didn't go into this industry to hide. I don't work to hide, right? And so then I had my first opportunity about 10 years ago now to take my first public CFO job. And so that was really my journey and how I got there.

Yeah, so my last role at Big Pharma was a Six Sigma Black Belt and Champion. So I got to run a whole bunch of projects around the globe and it was really my first professional experience where I stepped out of being subject matter expert, stepped out of knowing the ins and outs of the role that I do and really kind of what I went to school for and all that kind of stuff. And I was now in a role where I had to learn a new set of tools and skills that were a little uncomfortable. And I then needed to lead projects in things that I didn't really know anything about as well as lead teams that I did not have authority over. And so that was, you know, like check one, two, three, right? That was a fair amount. And I was still pretty young in my career. But I was so grateful for that experience because I think it really set me up for the transition into biotech. And so what has stuck with me and what I've learned from that experience was leading through others is so critical. And having people that are five times smarter than you is what you should be striving for and never feel threatened on if your direct reports or your co-workers or colleagues you feel like are smarter than you. Embrace that because that's absolutely amazing and that's how you're going to learn and grow. And learn to listen and be curious. And so when I was able to transition over to my first CFO role, as in many small companies, the CFO hat is not just the you're going to get your form 10-Qs and 10-Ks filed if you're public or do your financial statements and give them to your board if you're private. You are going to oversee most likely everything on the quote unquote G&A line on the P&L. So, all your back office. So, you're going to do all your finance, accounting, and treasury. You're going to do your investor relations, but then you're also going to do legal. You're a lawyer. All of a sudden, you're going to do human resources. All of a sudden, you have to know how to hire the right people and build the right culture. And so facilities, you have to build out the labs that your departments need now to get from bench to the human, right? So you have to oversee all these things that you're not a subject matter expert in. And so that Six Sigma role really taught me how to lead through others and not be a subject matter expert. So I'm forever indebted to that. And then as I think about how do I bring that forward into my teams today and in every day, there's still tips and tricks and kind of tools that I still use from that training. I don't get too hung up on is it called Black Belt or is it called a different sort of process improvement? What I challenge my guys with all the time is just challenge. Just ask like why do you do it that way? Why do we do that? In a curious way, not in an accusatory you're doing something wrong way, right? In a curious way on hey, why do we do that? Do we do that because we did that three years ago and that's just how we have to do it or do we do that because we don't really know why we do that and we need to evolve. And so some of just that curious thinking and that critical thinking I try and kind of weave into my everyday conversations with my direct reports.

Yeah, I think I've hopefully developed it in a positive way. I will say early in my career, I was at a company for five years and we went through five different CEOs. And so I learned a ton about leadership, good, bad, and ugly, right? I learned a ton about different leadership styles and different ways to lead a team. That I was able to, like I was saying earlier, you take the good and you also take the learnings, right? So I was able to take pieces of how do I want to be as a leader, what are things that I want to emulate and what are things that aren't going to work for me as a leader, might work for other people and their leadership style but not going to work for me as a leader. And so that has helped me sort of develop into my true authentic self and how I lead my teams and so I think that has been very helpful and has been part of the success.

Yeah. My goal, and hopefully this is what they would say, would be empowerment. That I empower my team, but that I'm very supportive of the team. That I'm approachable. But that I can be tough with if there's certain things that kind of are falling off the rail or if I give someone, you know, I empower you to make change and to run your team and all those good things. But, you can't fool me, right? Like I know if you're actually kind of doing it or not doing it. And I do lead with empathy. I think that's important. And that's again a stylistic thing. That's not always how everyone leads. But I do think empathy. I do think getting to know your team on a personal level is really, really helpful because it helps you get through tougher times. And I always try and be my authentic self. So bringing your authentic self to work is really critical. And in your leadership, you need to give people sort of the runway to be their authentic self. I don't want a whole bunch of little Saras reporting to me. That's not going to be helpful. I want them to be their authentic self. I want to be my authentic self. And that's going to help us really be true to the best outcomes.

Absolutely. If you're trying to hide, that's going to catch up to you eventually, right? And so if you could be your authentic self and bring all those differences together into the team setting, you're going to be a better team for it.

Yeah. So, you know, it's an interesting question because I actually think about my role and I think company executive first, functions second. So, yes, we all have at the C level, right? We all have our letter after the C, right? So what area do we need to focus on? Are you the medical person, the marketing person, the operator, the finance person? But first and foremost, you're quote unquote chief of the company. So you need to be thinking about sort of company strategy first. And that's how I sort of approach all different topics or areas financial related or not. As we think about sort of the CFO role specifically I think it's a couple things. One it really comes back to the team. So you need to make sure that you're building really strong technical people. The CFO role is there's obviously a lot of very technical components. I'm not a CPA. I'm not an accountant. So I learned again very early in my career to surround myself with really smart technical people. So I think that's absolutely important. We touched on the being authentic self. And then specifically on CFO for a biotech not profitable company is obviously a little different than for a larger profitable company. For a company that is still needing to worry very very much about their balance sheet versus their income statement, it's cash dilution. And how do you put all those pieces together? So, what I try and say to everybody here is do the right thing by the science. We're going to make sure we prioritize correctly and not overspend and all that kind of stuff, but do the right thing for the science. If you can do the right thing for the science, we can figure out the balance sheet side. We can figure out how do we make sure we have the funding for that. So I try and take that burden off the rest of the company and say we will make sure the cash is there when we need it as long as the science is still telling us that we should still invest, right? That it's an appropriate and good use of investment and appropriate good use to continue these drug candidates into patients. And so, financing it, it's an interesting piece. Usually when someone raises money, the stock price goes down, right? That's just sort of simple supply demand. I think the piece that's super important is don't think about it in that moment. Reflect back three months after you do the financing or 3 weeks or 6 months or whatever the right time frame is, right? But reflect on it afterwards and see where the company's health is at that point. And that will help determine did you do right by the company? And so we try and reflect on all of those financings. Obviously in the moment were we very cognizant of how we structured it, the amount of dilution. Do we bring the right amount of cash? You can never have too much cash in this industry. It always costs more than you think it's going to. But then also reflect on it six months after, three months after and say, did I structure that right? Did I anticipate the interest rate environment correctly? All those kind of things.

Yeah. So, I'm really grateful that I was able to have the opportunity to join this amazing team back in early 2020. I came here for a couple of reasons. One was I really wanted a commercial product again. So the first I guess now first half of my career was in large established Big Pharma companies that very much were income statement focused and had very significant revenue. And then my prior CFO roles were in pre-revenue companies. And so I wanted an opportunity to take some of my earlier learning and some of my more recent learning and kind of meld them into the next stage of a CFO. So that was obviously very attractive to me to have a commercial product. The other piece is I love the drug development space. I love the pipeline and the hope that that brings to patients and their families. And something unique about Insmed is I felt like they were building the puzzle pieces and they had a fair amount of them already to be a self-sustaining biotech company and to really be able to not just have this one little commercial product, right? To really be a self-sustaining biotech company and have an eye and a strategy to become profitable. So, I saw those pieces. And then, third is who is I going to work with, right? Who is my boss going to be? And which is obviously super important. And my boss and I work really well together. But also your colleagues, right? Like who are your peers going to be? And going back to sort of the earlier conversation is you want really smart people around you. So, do you feel like the colleagues that are going to be around you, you're going to be able to learn from them and are you going to be able to pay it forward and teach them? And so, I saw all of those here in Insmed, all grounded by an amazing culture. We spend a lot of our time either at work or thinking about work and you wanted to have the culture and sort of who you are as a person ethically and morally and just really fit all those bills.

Yeah. So, my experience was actually pretty interesting because I joined and then five weeks later this little thing called the global pandemic hit us. And so, it was an interesting time because I was in the office for three of those five weeks. I was traveling at different conferences the other two weeks, but I had teams around the globe. I had my trips planned to go meet them in person. And I hadn't met most of my research analysts in person. I hadn't met all my investors in person. And so I had to do a lot of that very differently than we've all sort of grown up and were used to. And I think that there was some significant benefit because it forced everyone to be as just as close as it didn't matter if you lived 5 minutes from the office or if you were a 5-hour plane ride from the office or 12-hour plane ride from the office. And so we all turned our cameras on and we all got to know each other and so it was you needed to be more thoughtful and purposeful with it. But it goes back to sort of leadership style on getting to know the people on your team, getting to know your partners if they're employees of Insmed or if they're other folks and building those relationships. And then I'm kind of known in the company for always, oh, Sara's going to say she has one more question and then she's going to have seven more questions, right? And so I'm that person where I'm very curious. And so, on the science side or on the product side is sitting with your chief development officer and them being like, why is she asking me so many questions? But like, that's how you're going to learn, right? And so, ask the questions and not be nervous to be like, oh, well, I'm the CFO. I'm not supposed to ask these questions. I'm supposed to know that already. And it's like, no, how are you supposed to know that already? You're not going to know that unless you question it and ask it and in a way your questions are probably going to help them. Because they're going to be like, 'Oh, that is kind of an interesting question.' Maybe only one out of 10 is going to help them, but it's going to potentially help them. So, that's a little bit about my style and how I got up to speed.

Yeah. So, it's a great question and it goes to this business costs a lot of money and how do you make sure that there are limited resources? How do you make sure you appropriately prioritize those resources across your portfolio? The benefit of Insmed is we have a portfolio, right? We get to be able to have those conversations about prioritization. And so I'll give you an example. Brensocatib, that's our product that we put out positive pivotal data last year. We filed the NDA with FDA in December of '24 and assuming priority review we would look to launch in third quarter of this year in the US and follow in ex-US next year. And so as we sort of went through the what do we invest at risk before the data and all those good things we had said well we are building this company to be a self-sustaining biotech company. We understand this piece of the science. We understand these would be our life cycle management. The additional indications that we would go after this one, we have chronic rhinosinusitis without nasal polyps. That's our second indication. This indication we have a high degree of conviction is going to work and strategically we think it's appropriate to have that value built into the company before we turn over the data card. We are going to allocate resources to start that phase two quote unquote at risk. So we started that phase two at risk before we had the Aspen data, our pivotal phase three data. And that has turned out to be the absolute right decision and now we will have that phase two data by the end of this year. And so that has really helped from validate, we validated the mechanism with the data and now we have the next indication sort of within arm's reach. We'll have significant phase two data. In that same light, our third indication, HS, we had said we need to balance not putting all our eggs in the brensocatib basket, right? We need to balance what happens. A lot of drugs are not successful. A lot of development is not successful. How do we balance that? And so we waited on the third indication to start. So we did sort of I call it blood, sweat and tears, right? So we had some like human time and energy spent on writing things and all that kind of stuff but we didn't write any checks. So we didn't write any checks to support that third indication until the data was in hands. But the team was ready because they spent sort of the internal intellect time and the internal mind time to build out what would that indication look like and we were able to start that program last year and that is in clinic now. So that's just an example of how we went through and we tried to prioritize. We did the same on the commercialization side. And we had said we are going to invest quote unquote at risk for certain functional areas. Medical education. So the medical science liaison, the medical outcome liaison, we need to go out first in disease, first in mechanism. We need to go out and educate the medical community. That investment we will do at risk. The commercial infrastructure investment, we would wait until sort of day two to start that journey on investment and that has bode very well for us and we will continue to do that as we think about our next indications and programs.

Yeah. So, we were super confident. So I believed in the mechanism and so much so that we started research work on just the mechanism of DPP1 after our positive phase two data to be able to have sort of life cycle management for the follow-on program not necessarily with brensocatib. But that said it's appropriate and good stewardship and I wouldn't be doing my job unless we did all the scenario planning. So we had done the scenario planning on both sort of what do we look like at Insmed as well as what is the balance sheet transformation and what is needed there for the scenarios of the data is out of the park positive which we're really fortunate was where we landed, if the data was mixed as well as if the data was negative. So, we were ready and had those conversations through the board. Ready to take whatever move we needed to. And that is again, I think where some companies fall short and they drink their own Kool-Aid and they get too into, well, of course, I'm going to cure this disease. And that's wonderful. We all have that intention and that's what we all want to do. But we have to also balance that investors have entrusted us with a significant amount of capital. They are intending to get a level of return on that capital. And how are we making sure that we're building the company and having the right scenarios to be able to do that. And it goes back to the pipeline that we built that we were not just a brensocatib story, right? We had a commercial infrastructure already in place. We had additional things in our pipeline. So we would have been able to be a different looking company than we are today, but we still would have been able to be I think a very successful company if Aspen wasn't positive. But I'm very grateful that it was.

Yeah. And it also goes back to did you design the program correctly, right? Like all the pieces are just so critical. Did you give the mechanism the best chance to be successful? Did you design the clinical program right? Do you have the tech ops piece all in place? So you have to give every element of the business the time and attention.

Yeah. So our sort of litmus test is how can we have impact on patients with serious diseases, right? And so our Arikayce, our current approved product with the current label is in the US about 12 to 17,000. We currently have a label expansion ongoing. That would increase that to about 100,000 addressable patients. Brensocatib in bronchiectasis assuming success in the US is about 500,000 diagnosed patients, well over a million in the three territories. So obviously a much more significant patient population. But our litmus test in all of our drugs is how can we have the biggest impact if it's first-in-class or best-in-class and have high impact on patients. So that is our litmus test on everything. And what really drives us to make sort of the strategic decisions from a how do you commercialize that successfully? There's a lot of amazing learnings we could take from Arikayce. We obviously need to do brensocatib a little bit differently, but there's a ton that we can take from a learning perspective and scale it and some we'll need to, we obviously didn't do something like DTC for Arikayce. That's something we would obviously think about for brensocatib, right?

Yeah, so our current approved product what we've said publicly is we believe that has the ability to be a billion dollar product assuming label expansion. Brensocatib in non-cystic fibrosis bronchiectasis alone we have said we believe is a $5 billion peak sales opportunity and TPIP we said again assuming success we believe will be a $2 billion. So $8 billion, big numbers, right? And we have follow-on indications for brensocatib that the next indication that I mentioned earlier, CRS without nasal polyps, we think could be potentially just as big as bronchiectasis. So very significant numbers. I obviously spend a lot of my time on sort of external and street and all the IR stuff. But for the organization similar to the balance sheet, it's you guys stay focused on what you do, right? That's how you're going to drive success. Let us manage external expectations appropriately. And I have a great, back to team, a great investor relations team that helps spearhead making sure expectations are appropriate externally.

Yeah. No, it's a great question. Specifically financially, it's always going to cost more money than you think. So, get a budget and double it. And still give yourself a cushion. It's going to cost longer and take longer. Research is not linear. It has a lot of sort of twists and turns and it needs to have those twists and turns. You can't force some of it because that's how you're going to get the best innovation. So I think you just try and plan for that as best as you can and make really great partners internally, building a great culture within your company. Putting really smart people around you and then the people that you partner with externally. If it's your banks, if it's your investigators, if it's your research advisory folks, your board members, just make sure that everyone around you is also not going to drink the Kool-Aid and give you the unfiltered kind of guidance and advice and ask questions to learn, not ask questions to just hear people talk and not accept it.

It's a tough market, right? And so you need to always be thinking about especially for those smaller companies as you're building that sort of financing strategy is if you're asking investors for money, you need to make sure that the money that they're giving you, they're going to get an answer from it. So, if they're giving you X amount in a raise, you're going to need, they know you're going to need to go back to them, that you're not funded through profitability, right? But they're going to want something for that money. They're going to want an answer on the phase one trial, the phase two trial. They're going to want something tangible. Having operational execution isn't going to be as interesting to the investment community as actual data. So as you're thinking about your financing plan and this is where your banks can be absolutely instrumental and you should use them as thought partners. Map out the clinical catalyst that you have or the scientific catalyst that you have knowing that these are the timelines you think they could slip. So take that into account and then you layer on your financial piece and how much you need to burn, how much you need to raise and ensure you have sort of those stage gates that is going to be really hard. You're going to lose credibility which is almost impossible to regain in the investment community if you ask for money, you don't give them any answers and you go back and ask for more. So I guess that would be my advice on that one.