United Therapeutics Corporation (UTHR) Earnings Call Transcript & Summary

Hi, everyone. This is Eun Yang, a biotech analyst at Jefferies. This is my pleasure to host a fireside chat with James Edgemond, Chief Financial Officer, United Therapeutics. As a reminder, if you -- James will be taking questions from the audience later. So feel free to type any questions you might have in the box on the [indiscernible]. So before we start Q&A, James, would you like to give us a short overview.

I would, Eun. Thank you, and thank you for inviting Gil and I to this year's Jefferies Virtual Health Care Conference. We always appreciate the introduction. So thanks for having us. And what I would like to begin with a quick overview, 2021 has really already been an exciting year for UT. We've had 2 major product launches already and an NDA at the FDA. So it's only the beginning of June, but we've had launches with Remunity, which is our new subcutaneous pump, and we received approval for Tyvaso in PH-ILD, which is a new indication. And then assuming acceptance at the FDA of our NDA, we could have a potential approval of Tyvaso DPI in December later this year. I'd also like to touch on real briefly our 2025/25 plan is we think with our currently approved products and our 2021 accomplishments so far, Eun, including our late-stage robust R&D pipeline that we can expand the number of patients we treat with our therapies from approximately 8,000 patients at the beginning of this year, 2021 to 25,000 patients on our therapies at the end of 2025. And let me touch on briefly a key growth driver for UT, which is Tyvaso, before we jump into your questions. But as I just mentioned, we received approval for the use of Tyvaso, Eun, in patients with PH-ILD and began our launch activities in early April. And just as a reminder, PH-ILD is a disease affecting more than 30,000 patients in the U.S. with no approved therapies, which we believe has the potential to double the number of Tyvaso patients by the end of 2022. And further with Tyvaso, we're continuing to investigate the use of Tyvaso in other underserved conditions like PH-COPD to our perfect clinical study as well as IPF, idiopathic pulmonary fibrosis, in our TETON clinical study. So it already is a busy 2021 and will continue to be so for the balance of this year. So thank you.

Great. So let's start with your 25/25 goal starting with the PAH, currently, about 8,000 patients on PAH drugs from UTHR. And basically, you are projecting to double that number by 2025. So James, can you kind of talk about what needs to happen in order to double the numbers from Remodulin side, Tyvaso as well as Orenitram in the PAH area? Then we move on to PH-ILD.

Yes, you bet. So let's actually, Eun, just keep it really at a high level because we're really excited to expand from the 8,000 patients at the beginning of 2020, as I mentioned -- 2021, as I mentioned, to 25,000 patients at the end of 2025. And Martine outlined earlier this year a plan to do so. And supporting this plan, including our diverse basket of products, we can launch into what we think is an underserved market in WHO Group 1, but really WHO Group 3, where we see multiple ways to achieve this goal through, again, our currently approved products and products that are recently approved and in the pipeline. So broadly stated, a way to think about this is the patient growth between now and 2025 should be about half from WHO Group 3 and about half from WHO Group 1 patients. And as I mentioned, there's multiple ways to get there. But I think keeping it at a top broad level, simplifies the approach as we are very excited, again, as I mentioned, to strive to that 25,000 patients in 2025.

Okay. So in terms of Remodulin patient growth, Remunity, we can briefly talk about how the launch is going. And then you have ISR on the way as well as RemoPro. So RemoPro is going to be probably towards the middle of 2024, 2025. So is RemoPro approval important to reach 25/25 goal or it is going to be kind of like an addition to your present goal?

Yes. Well, I think it will be a contributing factor, Eun. But as you mentioned, probably later in this stretch of the 25/25 goal. So let me kind of back up. You had a couple of questions kind of weaved in there. And we do think a combination of Remunity, ISR and RemoPro will continue to drive our Remodulin business going forward. And let me touch on each of those briefly, if that's okay. But I just want to remind you and others listening that 30% to 40% of PAH patients right now refuse parenteral therapy. So anything that we can do right now to make therapy administration easier for these patients and encourage the use of prostacyclin early in the treatment paradigm could help with outcomes. So let me kind of dive down into Remunity, and then I'll talk about ISR and RemoPro as well. But we did launch the Remunity subcu pump earlier this year. And while it's still early in this launch cycle, we've received really positive feedback. And it is interesting that it's early and also just anecdotally at best. A story that kind of resonated with me was that there was a primary and IV prescribing physician group that indicated that they're considering increasing their subcu use because of the Remunity pump within their patients. And if you recall from prior discussions, Remunity is much smaller, it is controlled by a remote control device. And really, it becomes -- it comes prefilled. So there is no need to fill the cartridges. You simply replace the cartridge every 2 to 3 days with a new cassette. Another characteristic, I understand that patients like is that it is water-resistant. It allows for showering and other wet activities and provides a wider array of microinfusion technology that is not currently present in the current microinfusion pumps. So again, we're really excited with this launch and really for the balance of the year to roll it out to patients. With respect to your point about the ISR earlier, and we did announce a delay in the ISR launch in our last earnings report, and we're working with Medtronic, our partner here, to bring the ISR to market, and we feel the ISR could yet be another way, another opportunity to bring patients on to prostacyclin therapy earlier, including Remodulin. And lastly, RemoPro, and this is where you ended your questions, it is a prodrug that we're developing to be less painful in terms of administration through the skin for subcutaneous delivery. Candidates for RemoPro, Eun, have been in Phase I studies, and we're working to optimize the molecular structure. And as such, we expect to move back into the clinic with a candidate in 2022. So again, we do have avenues and opportunities to continue to grow the Remodulin franchise, and we're excited about each of them and the opportunities they bring to patients to use more prostacyclin therapy.

Okay. And then Tyvaso, and obviously Tyvaso has 2 different indications, one in PAH, and the other is recently approved PH-ILD. So you -- as you mentioned, James, you submitted DPI NDA and potentially clear approval in December. So can I ask you how important DPI is in order to drive 25/25 goal for Tyvaso both in PAH and PH-ILD?

Thanks, Eun. It's a good question. So Tyvaso DPI for both PAH and PH-ILD is an important, and we think it's really an exciting development to bring the market. As you mentioned and as I alluded to earlier, waiting acceptance for the FDA that we submitted in early April. And we did this with a priority review voucher. And so assuming acceptance, we still anticipate a December PDUFA date approval. And real quickly on the DPI before I get back to part of your question, I just want to remind folks that it is a small device. It's about the size of an athletic whistle. It only takes 1 breath really to actuate and deliver a dose of treprostinil, and it could launch using a Bluetooth technology with like a training device that could teach patients how to use the device properly and later iterations will incorporate patient-focused Bluetooth device used with each dose. Now as for the importance of DPI, we think it is extremely important, not only for UT and for 25/25, but we think it's an important opportunity for patients. But keep in mind, and Michael mentioned this previously, we do think about 70% of PAH and PH-ILD patients will migrate to DPI over time. But we do think there's going to be a portion, maybe that remaining 30%, whether it's 70-30, whether it's 80-20, we'll continue to prefer to use the TD-300, the current nebulizer for Tyvaso. And we're going to continue to support whatever the patients choose to use. Now from a DPI perspective, we do, as I mentioned, it has some qualities that are very important, but this will be a much easier, more convenient device that we anticipate a bulk of the patients actually moving over to and onto. And with working with our partner, Mankind, another important attribute to highlight is that the IP, the intellectual property around DPI goes into the mid 2030s. So we think it will be a good product for patients. We do think there's long IP life, and we're really excited, again, to hear from the FDA and with it's acceptance and approval to launch this to patients later this year or beginning into early next year.

Is it DPI, Tyvaso DPI, really important for driving adoption in PH-ILD and your goal of doubling number of patients on Tyvaso by end of 2022?

Well, we do think this -- on this current launch plan, that they will be using their current nebulizer. And so we think acceptance by the physicians and the patient community will be strong. And I'm sure we're going to touch on in your questions later to come a little bit about the launch of PH-ILD. So I do think it's going to be -- we will continue to be able to use the current clinical trial protocol into the launch activities using the current Tyvaso nebulizer. But we do think over time that patients will migrate and prefer this much smaller device in terms of a dry powder inhaler for a variety of the reasons we've talked about, but also from patient feedback that I've heard about in terms of their likeness of the product, again, much smaller, very efficient way to deliver prostacyclin. And we do think there will be a migration. But that's important once we get through the approval and the longevity in terms of the 25/25 plan. But I do think, and I just want to be clear, that the current launch profile that we're looking at for PH-ILD, as we'll talk about soon, I'm sure, has been very strong in terms of the referral. So we don't think it's going to be something that patients will wait for long term.

I see. I see. So PH-ILD, you got approval early April. Can you talk about -- I mean, I know it's very early, but can you talk about what do you see in terms of your longevity and feasibility you are getting?

Yes. Well, as you mentioned, Eun, thank you, it's still very early in the launch process. And it's really the first approval in PH-ILD indication. And to compare, and I can give you some -- as we know, some data on PAH, but the contrasting in terms of patient profiles is very different, and we're learning. But I think 3 things are really relevant that I can bring up is competition. Right now, as you know, there's no competition in the PH-ILD space or WHO Group 3 as compared to what we see a significant competition in PAH WHO Group 1, where patients can really switch between multiple therapies as their disease progresses. The second thing I would mention in terms of learnings, from where we are early in this launch, are that PH-ILD patient profiles, right? What the prescribing positions have told us is that they're seeing PH-ILD patients that have profiles that closely match what we saw in the clinical trial, the increased clinical trial in terms of patient populations. And I think third, patient survival rates. The survival rate of patients with PH-ILD is 50% lower than those with just ILD after 2 years. And why that's important is that it should raise awareness that it's important to treat these ILD patients now, now that we have an approved therapy, and it gives them something to talk to their physicians about in terms of a treatment. So it is very early. As I mentioned, the referrals are strong. But as we learn more, we'll certainly share more. But I think those were 3 points that I just wanted to highlight when I think about PAH as compared to the PH-ILD community.

Okay. And then you mentioned in the past that both the PAH and PH-ILD patients, commercial versus Medicare, is about 50-50. So I'm assuming that current uptake in PH-ILD would more likely to be on the commercial side because CMS approval could take somewhere between 3 to 6 months. That said, there's still 50% of PH-ILD patients are on commercial insurance. So do you think the CMS approval isn't necessary, at least in the near medium term drive sales? It seems to be the commercial side would be sufficient enough to drive significant growth in the near term.

Yes. Thanks, Eun, for the question. And insurance is one area that we've gotten questions on. In fact, today and other investor meetings, in terms of -- and let me kind of maybe reframe it a little bit, so folks understand the question. So when we launch the product, there's private insurers or commercially insured, depending on you describe it in CMS approval. We are seeing private or commercially insured patients getting reimbursed. So that is happening. To your point, CMS approval takes 3 to 6 months, and we've been working on those -- working in those meetings and working with CMS to get it approved for PH-ILD. Obviously, it's approved for PAH. So to -- part of the question is we are seeing strong referrals early in this indication. And then porting it over to your question around commercially insured, we are seeing reimbursement. So that is important. In terms of revenue being recognized for commercially insured patients, we do think CMS approval for Medicare patients is important in the long term. But I think these activities are not unusual for our launch. They're normal. When you get a product approved, you need to think about these things, and that's what we're doing in terms of insurance reimbursement, and then training in terms of getting patients on to use Tyvaso. So it is important, and we're doing what we can to move that process along. But you are starting to see or we are starting to see PH-ILD patients on the commercial side getting approved and onto therapy.

I see. And then because although pandemic scares have been kind of diminished still this is a pandemic environment. So how does that -- how has it been impacting your launch in PH-ILD?

Yes. Thank you, Eun. So I haven't been aware of it affecting launch because of COVID. But also think about what we've talked about historically, Eun. This is a new indication. And Michael Benkowitz, who's the President, actually allocated sales -- new sales teams to go to this new call point. Historically, with a PAH prescriber, the overlap to PH-ILD in terms of subscribers is only about 25%. So Michael Benkowitz with the sales teams increased the number of sales teams and has a dedicated sales team to reach out to these new call points. And so they are establishing new relationships in this area. But I haven't heard that the pandemic is actually negatively influencing their ability to have these conversations with new prescribers. I think they've been doing it pretty well over the last, say, year to 1.5 years in terms of being able to do virtual visits and talk with prescribing physicians. I do think people are looking forward to having more in personal -- in-person conversations going forward. But I haven't heard that it's really a detriment right now to the launch for these new call points, but it is something they're working through.