United Therapeutics Corporation (UTHR) Earnings Call Transcript & Summary

Thank you, David, for introducing us. And we were already having a pretty good conversation with Martine and I. We are really happy to again have Martine Rothblatt, Dr. Rothblatt, with us today on our OpCo Health Care Conference to provide us an update with United Therapeutics. We also have Dewey Steadman here, who will give us a quick intro, and then we can get the conversation started.

Yes. Good morning. Our remarks today may include forward-looking information about our business, and please see our SEC filings for risks and uncertainties that could cause actual results to differ. And thank you. So I'll turn it back over to you, Hartaj.

Thank you, Dewey. And you are very lucky, I didn't take my morning pot cookie with that background. I'm just kidding, I'm just kidding. That would definitely throw me off.

Yes. It's like which planet are you on.

You should have warned me, Dewey. You should have warned me. So Martine, thank you again for joining us.

And we've known each other now for a while. I really look forward to these conversations because we can kind of talk high level and also get into the nitty-gritty, and we have some nitty-gritty questions. But let's just talk high level, if you can kind of give us an update on the business as it sort of stands, the treprostinil business and then your focus on oncology. And then we can kind of go through your commercial business and then talk about the pipeline. And then also maybe spend a little bit of time in talking on the R&D projects that you're doing with the lung transplant -- the organ transplantation business.

Yes. Thanks, Hartaj. It's great being with you again. And it's not as good as being in person, but it's like the next best thing, and we're all getting pretty used to it these days. So the business of United Therapeutics is literally better than ever before. We -- as of now, we have more patients on treprostinil than we've ever had in our entire history, over 7,500 patients and definitely on target to get over 8,000 in not too far off here. So every quarter, you've probably noticed that we've been reporting more and more patients on treprostinil. And it's -- they're coming on to Remodulin, they're coming on to Tyvaso and they're coming on to Orenitram. There are kind of different factors leading to the growth in the overall treprostinil franchise. I think with regard to Remodulin, there have been more and more publications and studies coming out from other researchers not funded by United Therapeutics that shows that if you can get a patient's pulmonary artery pressures down below 40 millimeters of mercury, which is kind of in the number of the normal range, then those patients live much, much longer, and I'm talking like 10 to 20 years as far out as people have been measuring than the patients that you try to manage with pulmonary artery pressures up higher than 40 millimeters of mercury. And these researchers are finding out that the most effective way and perhaps the only known way to get their pressures rapidly below 40 millimeters of mercury is with Remodulin. And this has led, Hartaj, to what we call the Remunity protocol. And the Remunity protocol is to use Remodulin to quickly get newly diagnosed patients' pressures down below 40 millimeters of mercury and then at that relatively high dose of Remodulin, transition those patients over to Orenitram, so that they have an easy to take way to enjoy what should now be a kind of normal-ish lifespan. We don't really know for sure how long, but much longer than was previously anticipated. And it's -- you cannot achieve this with selexipag or with other oral agents. You have to have a titratable treprostinil to be able to get the pressures rapidly below. So that's providing continued strength to the Remodulin franchise, this Remunity protocol. It's also providing a growing strength to the Orenitram franchise. I believe Orenitram sales year-over-year are growing in the strong double digits, so that's helping both of those. In addition, on Orenitram, we have the growing understanding of the results from the event study, where we showed an absolute reduction in morbidity and mortality, and that's also giving people a lot more confidence in Orenitram. Then in Tyvaso, I think there has been a kind of a halo effect, Hartaj, from the excellent, out of the ballpark results that we had on the INCREASE trial where we hit all of the primary and all of the secondary endpoints for increase, so that has given renewed strength to prescribers' confidence in Tyvaso and led to us also having double-digit year-over-year growth in the Tyvaso franchise.

Yes. That's fantastic, Martine. And normally, I would start off with Orenitram, Tyvaso and Remodulin for just a quick update for those 3, but one thing I want to address upfront is Tyvaso. You've got IPR with Liquidia. I always smile because people used to say that Sandoz generics would crater the business for United Therapeutics, and that's never happened at all. People said that selexipag would basically do away with Orenitram. That does not happen at all. It's kind of like Regeneron with EYLEA. All these next big competitor comes on and then falls in the boxing ring pretty quickly. Same seems to happen with UT. But can we just get a -- in the same way, people are now focused on Liquidia. Can you just give us a quick update as to what are the expectations for the IPR and then what would be next steps, assuming it went one way or another?

Sure. So it seems to me the Liquidia story is just a mesh of litigation, which is going to -- like any hairball, I think it's going to take quite a while to tease out all the different litigation processes going on with them. There is -- with regard to the IPR, there's a date coming up when there'll be a ruling on the IPR. And then if the IPR is instigated, then there's over a year or something like a year process for the IPR to be resolved. In addition, the IPR deals with only some of the patents impacting Liquidia and Tyvaso. There is a new patent that was granted and is Orange Book listed just very recently. So I think all of these litigation type of things are going to drag on for quite a while. With regard to new areas, such as the Group 3 pulmonary hypertension, that is we -- assuming, knock on wood, that we get approval for that, which the PDUFA date is in April of '21, believe it or not, like scarcely more than 6 months and we'll be there, if we grant that, then we get -- if we get that, then we get an additional 3 years of data based on the data that we've developed in the PH Group 3 category of exclusivity in that whole arena. On top of that, we are in the final stages of putting everything together to make a filing. About the same time as the INCREASE approval we should be filing for the Dreamboat approval, which is quantitatively and qualitatively better than anything else that's been seen there. So everything is on target for that, and we think Dreamboat will provide yet further competitive strength in the inhaled area. So all of these factors, plus there's a tremendous confidence that prescribers, patients, families, payers have developed due to the supply chain reliability of United Therapeutics. They know in our public company filings that we maintain a multiyear inventory of all of the parts and pieces and not only the drug supply, but the consumables and the inhalers that you need for Tyvaso. So this supply chain reliability has also provided tremendous competitive strength. So we just are plowing right forward, and I expect to see continued increases in number of patients on Tyvaso for many years to come.

It's -- that's really good to hear, Martine. I mean one of the things I've gone to know about UT in the time I've covered you now for about almost now 5 years is that, while you're tackling specific issues, you and your team do a great job of sort of risk mitigating things that can come down the pipeline, for example -- 1 or 2 pumps, for example, that could have been challenging you, and then you basically brought them in-house. So I think that -- I think UT does a really good job of not just striving for new areas, but also risk mitigating, and it puzzles me that investors don't see that more clearly. In Tyvaso, one question I want to ask you is in doc calls that we've done in that area, Group 3 pulmonary hypertension, KOLs have already told us that they've tried to convert patients onto treprostinil because they're treating a lot of patients with PH. And they try to convert some of their patients onto some of their -- those Group 3 patients onto treprostinil, even though it's off-label, and they can get them through. And one point they made was that was very important, not just the approval, but to be on guidelines or to be in a published manuscript. Could either -- I don't think guidelines will happen until you're approved. But could a published manuscript also happen before April? And are you seeing some of that already happening with Tyvaso?

Yes. It's a great question, Hartaj. And a thing to keep in mind is that we visit only about 1 out of every 4 of the PH Group 3 prescribers because the -- so many of them are operating in other areas, not specifically PH. They have their PH secondary to -- pulmonary fibrosis would be, for example, a common situation, and the prescribers are just really focused on managing their pulmonary fibrosis. While you got me on like the pulmonary fibrosis line, let me mention one of the most extraordinary things that came out of the INCREASE trial is that in the pulmonary fibrosis subset, we were actually able to show an improvement in forced vital capacity and improvement in their ability to breathe, whereas the 2 already approved drugs from other companies in pulmonary fibrosis only reduced the rate of decline in their FVC. So we actually showed in the secondary endpoints a disease-modifying capability of Tyvaso in pulmonary fibrosis, which just, to me, is -- it's like manna from heaven. It's so absolutely beautiful. But -- so to -- further to your point there, I believe that there will be a peer-reviewed publication coming out. We had to kind of segue things that the ATS likes to have kind of like first bite at the apple. So we presented our data at ATS. That information is now what a lot of the prescribers are seeing. At the same time, though, we have done our submissions. I don't want to steal anybody's thunder from the particular name of the journal. They all like to be -- the journal likes to say what it is. But absolutely, I think the time line is consistent with that being well before April that there would be this peer-reviewed data coming out on the INCREASE trial, and that will be tremendously comforting to all of these physicians.

Yes. No, no. Absolutely. And I think that one of the things that we were a little bit actually surprised, I should have known this, but in the call we did with one KOL, how many PH patients he treated and his level of comfort with treprostinil in general over many decades now, and many thousands of patient years of experience then translating into these Group 3 patients. With Tyvaso and COPD, can you just give us a quick update, Martine, where that is? Because now that it's worked in this interstitial lung disease, KOLs also have seemed to be excited in COPD. So just a quick update there.

Sure. Let me, if I can, just tag on some -- to your last comment on the IPF patients, an amazing thing about that arena that I think a lot of people, they just don't appreciate. We have -- as I mentioned, we have north of 7,500 patients out of, let's say, like roughly 40,000 patients in Group 1 pulmonary hypertension. And we achieved that competing with -- I actually lost track, I think it's like 12 different drugs are available to treat Group 1 patients. In this Group 3 area, there are well-documented 30,000 patients, so almost the same number of patients as there are in Group 1, yet all the systemic drugs are contraindicated. There will be no other approved drug in that space, knock on wood, that we get good answer from the FDA in April than Tyvaso. So whether you go bottom up or top down, it seems entirely expectable that Tyvaso is going to garner a very substantial -- it's going to garner more patients in Group 3 pulmonary hypertension than all of the United Therapeutics therapies combined have gathered in Group 1 because we're competing with a dozen therapies here. We're competing with no therapies there. And a very similar situation will prevail, I think, in the COPD, but kind of like 10x larger just because the COPD market is so much larger than the interstitial lung disease market. And the same KOLs who propelled us to go into IPF with -- and who did the Phase II work that enabled us to size and power our Phase III study in IPF are the exact same KOLs who did the Phase II studies and did the work that allowed us to power the PERFECT study in COPD. So that PERFECT study is back in enrollment. The Phase II data was so strong in the phase -- in the COPD that the N for the study is around 120 patients, so it's not very many patients in PERFECT to be able to demonstrate. We very quickly enrolled about 20% of that study before COVID hit, and then COVID just immediately slammed the doors on everything. And we were not able to be able to get all of those 20% of patients through all the necessary endpoint measurements that were part of the protocol. So about -- we went to the FDA. We explained the situation. And in the meantime, like you said, we always try to look around the corner. I think if PR, the people and the lawyers would let me, I would make our tagline always looking around the corner because the next thing is coming. So what we were able to do was to get FDA and steering committee and DMSB (sic) [ DSMB ] Committee buy on -- buy in to certain endpoint measurements that could be done at the patient's home. So in case there is like a second wave of COVID or, God forbid, a third wave of COVID and patients are not able to go into the hospitals, we can do these endpoint measurements at the patient's home with an Internet-linked spirometry and exercise measurements that are well validated and FDA acceptable. So we are now opening back up. We had to file amendments to enable those home-based endpoint measurements to be accepted. Those amendments are all now getting approved by the IRB. And I would say that -- let's say, September, I would say next quarter, for sure -- positively for sure, we will begin enrolling patients again in PERFECT, the -- namely the COPD study. That study is very enrollable during calendar year '21. So a product that could certainly be launched in the, let's say, '23 would be a reasonable time frame for it to be launched. Then it would be great to launch that product with the Dreamboat device, which -- the COPD patient population. There's unique demographics to each of these different type of respiratory diseases, and the IPF population skews a little younger and a little bit not so troubled by dealing with the nebulizer. The COPD population skews a little bit older, and for them to have like a handheld single-time puffer would be awesome, which is what the Dreamboat device is. So Dreamboat will be filing for approval right after the start of the year in '21, and that would lead us to be able to launch Dreamboat in '22. And then we will endeavor to get FDA approval to launch Dreamboat not only in Group 1 PH patients, but also in Group 3 PH patients, which includes both the IPF population as well as the COPD population.

Yes, and that's really -- that was the question -- you actually read my mind, Martine. The question I was going to ask you was just on Dreamboat. Assuming you file it and you get approval sometime later next year with Dreamboat, how much additional work would you have to do? You'll get the approval of your PH, right, but how much additional work will you have to do in pulmonary hypertension? It seems like COPD, you can actually be doing that before COPD gets approved.

Yes. So first, I've -- you were very complimentary, and I appreciate it so much, Hartaj, about mentioning our ability to look around the corner. So that led us to say that the future of these drugs are not standalone molecules, but they are drug-device combination products. And that's what led us into the implantable system for Remodulin, ISR, which, by the way, we also expect to be approved in '21. That's what led us into our Remunity for subcu Remodulin. That's a drug-device combination product that's filled by us, and then that's what led us into Dreamboat, which is another drug-device combination product. So it's good having these drug-device combination products because you're not so much under the heel of the generic time table that you are with standalone molecules. But there's a price to pay, as there always is, and the price to pay is you have to get agreement from the FDA's drug section, like SEDAR in our part. But you also have to get approval from the FDA's device group, which is a completely different group of people, and they have their own different things that they want to see and the devices. So there is a kind of an error bar around approvals for drug devices that is wider than just for drugs alone, and I don't want to set an expectation of Dreamboat being approved in '21. I'd say like a fair expectation would be first half of '22 would be a good expectation in both. Now once it is approved, there is a question, which we don't know the answer to right now. Will it be approved for all indications of Tyvaso? Or will we have to get a separate indication by indication approval for Dreamboat? We don't know the answers to that. But looking around the corner, we've already queued up what we call BREEZE 2. BREEZE is the name of our trial to get Dreamboat approved for Group 1 pulmonary hypertension. And that's the one, as mentioned, we expect to have in first half '22. And so we've already queued up what we call a BREEZE 2 trial, which will be the Dreamboat device in the Group 3 population. And if the FDA says, for example, that, "Well, we want to see data of this Dreamboat device in the Group 3 population," we should actually have that data by the time that they will -- that they are ready to approve Dreamboat for the Group 1. And we'd say, "Oh, good. We didn't have this at the time we filed, but we've done the trial. Here is the data." And that should enable that to be approved for both Group 1 and Group 3.

Got it. Got it, Martine. Now that helps a lot. Just quick before -- because we've got about 17 minutes left. I do want to spend a little bit of time on your organ transplantation business towards the latter part of this, so I'll do a kind of a final jeopardy for the commercial biz, which is -- so do we expect any data releases for Dreamboat between now and the NDA filing sometime early next year?

Hartaj, it's a good question. We definitely will have data. I have to kind of leave it up to a combination of the lawyers and the FDA regulatory people to the extent that, that data would be released. Also maybe mankind themselves may have an oar in the water. So I don't know, but we'll definitely positively have data as, in fact, we already -- there's kind of -- there's 2 trials, and then there's some CMC and drug stability work. So we do have a certain amount of that data. We'll have it all in the early part of the first quarter. So I'm not sure whether or not it will be released.