United Therapeutics Corporation

Good morning and welcome to the United Therapeutics Corporation first quarter 2021 earnings call. My name is Phyllis and I will be your conference operator today. All participants will be in a listen-only mode until the question and answer portion of this earnings call. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press pound on your telephone keypad. I will now turn the conference call over to Mr. Dewey Steadman, Head of Investor Relations at United Therapeutics.

Good morning. It's my pleasure to welcome you to the United Therapeutics Corporation first quarter 2021 earnings call. Accompanying me on today's call are Dr. Martine Rothcott, our Chairperson and Chief Executive Officer, Mr. Michael Binkowitz, our President and Chief Operating Officer, Mr. James Edgeman, our Chief Financial Officer and Treasurer, and Dr. Lee Peterson, our Senior Vice President of Product Development. Remarks today will include forward-looking statements representing our expectations or beliefs regarding future events. These statements involve risks and uncertainties that may cause actual results to differ materially. Our latest SEC filings, including Forms 10-K and 10-Q, contain additional information on these risks and uncertainties. We assume no obligation to update forward-looking statements. Today's remarks may also include financial measures that were not prepared in accordance with U.S. generally accepted accounting principles. Reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures can be found on our earnings release available on our website at www.unithair.com. Today's remarks may discuss the progress and results of clinical trials or other developments with respect to our products. These remarks are intended solely to educate investors and are not intended to serve as the basis for medical decision-making or to suggest that any products are safe and effective for any unapproved or investigational uses. Full prescribing information for the products are available on our website. Now I'll turn the call over to Dr. Rothschild for an overview of our first quarter 2021 financial results and business activities of United Therapeutics. Dr. Rothschild.

Thank you, Dewey. Good morning, everybody. Thanks for joining us on our first quarter 2021 earnings call. I'm going to start off with a sort of 30,000 foot overview. And then after that, I'll open the line for any questions. If there are business questions, I'll refer them to our president, Michael Mankiewicz. If there are financial questions, I'll refer them to our chief financial officer, James Edgeman. And any scientific questions, I'll refer to our senior vice president, Dr. Lee Peterson. I may even pass the odd legal question to Dewey. Well, I think from a 30,000-foot viewpoint, the main quantitative goal at United Therapeutics is what we call 25 by 25. This means increasing the number of patients that we are helping with our main medicine from over 8,000 patients today to over 25,000 patients by 2025. This quantitative metric is an especially important one to call out today because today is World Pulmonary Hypertension Day. It's the one day in the whole calendar that countries throughout the world have agreed to focus their thoughts and tension and for many patients and families prayers on the hopes for getting better therapies and treatments for people with pulmonary hypertension. We expect about half of the roughly 18,000 patient growth that we will require to meet our 25 by 25 goal. will come from patients with what's called WHO or World Health Organization Group 1 pulmonary arterial hypertension. And about half of that 18,000 patient growth will come from patients with World Health Organization or WHO Group 3 pulmonary hypertension. Let me start by breaking down how I believe we'll get our 9,000 patient growth in the Group 1 category. Then I'll talk briefly about the second 9,000-station growth in the Group 3 category. So for the half of the growth we expect in WHO Group 1, we expect that to come in roughly equal thirds from our remodulin products, our Tyveso products, and our arenatran products. We think we'll be able to gain about 3,000 new patients on remodulin, particularly due to the convenience and patient-friendliness of our newly approved remunity pump. We think we'll be able to gain about 3,000 new Group 1 patients on Tyveso because of the convenience and patient-friendliness of our new Green Boat dry powder inhaler, which we have filed for approval and we hope to be approved in December of this year. This is a finger-sized device compared to the large liquid nebulizer that we use today. And then finally, we think we'll be able to gain about 3,000 new patients between now and 2025 on arenatrams. because of the constantly growing appreciation of the efficacy of Eremitram in reducing morbidity and mortality. Now, please keep in mind that far about in the U.S. alone, 45,000 patients in WHO Group 1 being treated with non-United Therapeutics drugs, and about 15% suppressed in their disease annually, per the Kaplan-Meier curve of their trials. So overall, there are some 50,000-plus patients being treated for pulmonary hypertension, about 8,000 of them currently being treated by our drugs, and the balance, somewhere between 40,000 and 45,000, probably closer to 45,000 being treated with non-united therapeutics drugs. So it is very... There is plenty of market space. There's plenty of health location space available for us to grow in WHO Group 1 from the current 8,000 patients we're treating to something like 16,000 patients that we expect to help by 2025. Now, I mentioned that our total goal is to help 25,000 patients with pulmonary hypertension by the year 2025. And the second half of that, achieving that 25 by 25 goal, comes from penetration of WHO Group 3 by Tyveso for our FDA approval that we received just last month. Now within WHO Group 3, There are something between 30 and 40,000 patients with pulmonary hypertension. We are told actually by prescribers that the actual number is quite a bit larger than even 40,000. It's somewhat similar to the situation with WHO Group 1. You'll see various accounts that there are 40,000 patients, 50,000 patients. We are told by prescribers that actually there are quite a much larger number of patients with WHO Group 1 pulmonary hypertension. And it is a difficult disease to really quantify and identify because it's a disease that is identified by excluding numerous other conditions whose symptoms mimic those of Group 1 pulmonary hypertension. Anyway, back to the Group 3 pulmonary hypertension, there, whether the number is 30,000, 40,000, or larger, we are the only drug now approved for this IPF market segment of IPF patients with pulmonary hypertension. And this portion of patients, also called ILD-PH patients, are actually the ones who have the most rapid declines. In other words, if you have interstitial lung disease and you have pulmonary hypertension, the statistics show that your decline to death is much more rapid than the patients with interstitial lung disease that do not have pulmonary hypertension. So given that there are well over 30,000 patients who need treatment and that our goal by 2025 is to capture at least 9,000 of those patients, I think it's a very achievable goal in terms of comparison to the captureable market size. So in addition to this 25 by 25 goal that we are hard at work at and is our number one quantitative priority, Let me also mention a few of what I would kind of call three options in our pipeline. And by three options, I mean we are doing these things. I believe they have a very high probability of success because they are in either late stage clinical trials, phase three clinical trials, where statistically the odds of success are quite high. Or they are... that we would call biocomparable therapeutics, meaning that they are comparable to things that are already approved by the FDA. So let's talk about some of these quote-unquote free options in our pipeline. First of all, there's a Phase III study of Tyveso in COPD-associated pulmonary hypertension. The name of this phase three trial was called our PERFECT study, and it should complete its enrollment by the end of next year. Second, we have a phase three trial of a drug called RELENOPET in group one pulmonary hypertension. This study is also doing very well, and I think it should probably complete its enrollment also by the end of next year. In fact, it's just under one-third enrolled at this point in time in the lead of the Winnipeg trials called the Outcomes, Advanced Outcomes Trial. Next up, we have yet another Phase III trial, this one of Tyveso in interstitial, I'm sorry, in idiopathic pulmonary fibrosis, IPF, that should be completed in its enrollments Oh, I would say in the first half of 23. This is very interesting for United Therapeutics because it is actually the first time that we have developed non-oncologic treatment outside of around having anything to do with pulmonary hypertension and yet using drugs, Tyveso, which has just been approved in an adjacent therapeutic class to the target of this trial. So let me unpack that for a moment. The approval that we just had in an adjacent therapeutic class is the approval the FDA granted us just this month. based on our increased trial, which was in patients with pulmonary fibrosis as well as pulmonary hypertension. So they had kind of a double strike, and that's what I mean by an adjacent therapeutic class to pulmonary fibrosis without pulmonary hypertension. And in that adjacent therapeutic class, we were able to show improvements in the key therapeutic clinical markers of pulmonary fibrosis. That key indication is called forced ventilator capacity, or just for short, FVC. And we were able to show improvement in that. That was shown and talked about also in our New England Journal of Medicine publication on the trial. And so now we're approved in the adjacent class. So we are now taking that same drug that's proven safe and effective in IPF with pulmonary hypertension and developing it in IPF without pulmonary hypertension. So again, I think the odds are very strong in our success, and it's a well-designed study. By the way, we call that study the TETON study. It's the head of our clinical and product development program for the pulmonary fibrosis activities. Dr. Lee Peterson hails from the Grand Teton State of Wyoming. Third, we have another phase three study, a pivotal study, registration study of our ENOS gene therapy treatment for pulmonary hypertension. And this one should also complete its enrollment by the end of next year. And then last, but not least at all, in fact, in many ways, close to first, is our biocomparable once-daily form of arenatram and our biocomparable less-painful form of remodulin, both of which should be launched by this key quantitative date of 2025. So to wrap up from this high-level overview, we've got an awful lot in the market. It's a market which is a very capturable bias and much larger than the number of patients who are currently helping, plus a lot of new products to bring to the market. So I think if I was a parent of a patient with pulmonary hypertension, as I am, and there are tens of thousands others, hundreds of thousands of others throughout the world, On this World PAH Day, I would be very thankful and very hopeful about a bright and optimistic future. With that sort of introductory remarks, operator, if you could be so kind to open the lines, and I'll be happy to field the questions.