United Therapeutics Corporation (UTHR) Earnings Call Transcript & Summary

Good day, everybody. Welcome to UBS Healthcare Conference. Next company and the podium here with me, United Therapeutics. And I'm really, really excited. We have Patrick Poisson, who is the EVP of Strategic Development; and Harry Silvers, who is with IR. I think thank you so much for joining us.

Yes. Thanks for having us. It's good to be back. I just wanted to remind everybody that during our discussion today, I may be making some forward-looking statements. And I would refer you to our SEC filings for any risk and uncertainties associated with our business.

With that out of the way. So maybe if you can just give us a little bit of a high level sense on where we are in the story. I mean you just reported third quarter earnings. So if you can hit a couple of high we can go in to that.

Yes, for sure. So we were very pleased with our third quarter earnings. We showed double-digit year-over-year growth again in our [ Tyvaso ] franchise. So we were very excited about that. Of course, we had the big announcement with our TRITON2 clinical trial with IPF, which ended up being the best IPF study ever conducted as far as data goes, we announced that in September. And of course, just recently, last week, we announced the first transplant of our U kidney under our clinical trial. So a lot of exciting news coming from UT. We're excited about our pipeline. The first half of next year, we're looking at 2 big trial outcomes in the outcomes study with ralinepag and, of course, TRITON1 with IPF.

Yes. I think 1 thing that people got surprised by was just this call for partnerships on your third quarter earnings call with the potential pharma companies. Is that something that -- like what sort of drove that? And have you heard back from any of them? Like what shape can this take in the future?

Yes. I should clarify that, that was a general comment made by Martine that right now, there's no active partnership discussions. However, with the outcome of the TRITON2 trial, we're really looking at global markets and the infrastructure required to support those markets with those patient populations really has ignited our interest in considering potential partnerships. So I think she was just commenting on that the dynamic has changed a little bit for us and that we're still a small company. And as we look at supporting a global market, it's a big leap for us. So I think she was just really commenting on that the interest is there. And if we could find the right partnership, we'd certainly have those discussions.

Great. And then there was a comment also just around like the $4 billion revenue by 2027. And I do think that there is a lot of potential that you have to get there. But what I wanted to understand is this kind of like a formal guidance? Because I know this is something that has been talked about before as well.

I mean I wouldn't call it a formal guidance. We now have clarity into what the IPF with TRITON2, we have clarity in IPF now. And I think that's given us the confidence that we can hit that $4 billion run rate by the end of 2027 with that market size.

Great. Okay. Perfect. So yes, I think just in terms of where the third quarter and some of the recent prints that we've seen from Tyvaso can you talk to us about like what is driving the volumes trend for DPI and nebulizer? Like is it PAH, PH-ILD sort of what are the different dynamics at play for?

Yes, sure. So as I said earlier, again, double-digit growth year-over-year. we're continuing really to make inroads in that space really with PH-ILD. So that market is still growing, and there's still a pretty big run rate in our opinion. As far as the breakdowns between nebulizer and DPI, we tend to look at it as a total franchise, and we're pleased to offer 2 ways to dose treprostinil either through dry powder or through nebulizer, certainly, the DPI has a real convenience play for the patients. But we believe the nebulizer still has its place. It's a very flexible platform. It allows, really, dosing down to the breadth, a lot of convenience without having to get a different SKU. And so we believe it's always going to have a place in that market. Some physicians like to use it for titration and then transfer over to DPI. So there's some techniques there that make it attractive. But really, we -- there's -- again, a lot of running room with PH-ILD, and we're confident we're going to continue to see the same results for years to come.

Great. I know this is the first time like on the third quarter earnings that you also started to talk about some of these higher dose cartridges, right, the 80-microgram in the 96 and 112. Yes, I know in the past, dosing higher with Tyvaso, like the challenge there has been that kind of the side effect profile that came in the way with these like new formats that you've talked about, is that -- like how do you sort of overcome that challenge?

Yes. So I mean with the AEs, cough is the most dominant and it's very subjective to the patient. So there are some people that tolerate higher doses better than others. But we do have a significant amount of people on the highest DPI dose that we have available right now. And there's been a lot of interest in having a higher dose cartridge, which has driven the 80-microgram cartridge. Now none of these things can happen in -- very quickly, okay? We have to interact with the FDA. We have to do a lot of work to build a higher dose. That's all been done, and we're very close to launching the 80 microgram. We know there's some excitement from the HCPs and the patients to have that convenience of being able to dose in a single cartridge, 15 breast equivalent to the nebulizer. And then we're going to offer some higher dose packaging SKUs that will have 2 cartridges in them, so the patient does not have to buy 2 separate kits. So that will go up to 96 micrograms in 112. So those are going to get introduced over the next couple of months. And really, it's about patient convenience. And I think we'll see a lot of people go to the 80, honestly.

But these would primarily be focused for patients who might be at a high dose to begin with to transition to an even higher dose?

That's correct. That's correct. So like I said earlier, we have a significant population of patients that are taking 64 micrograms or even more. And this will, again, allow them the convenience of a single cartridge so we expect a lot of people to move to the 80 once it's available.

Does that make a difference between the indication like PAH or PH-ILD or is it sort of the same from either direction?

I think it's probably when you get to those higher doses. These are people who have built up tolerance to treprostinil. So it probably is somewhat agnostic at that point as whether it's PAH or PH-ILD.

Yes. Okay. All right. And then there is a competitor update that we've seen from Liquidia that have recently launched. And I know you guys have said that there's no material impact that you're seeing on Tyvaso. I'm just trying to understand like as their launch progresses more.. [Audio Gap]

And then secondary to that, there were some conversions from oral therapies. I think what's happening is that by having another sales force out there, they're really expanding the PAH and PH-ILD markets. The data suggests that. We've seen that happen before in with prior products that -- and we've always said throughout the years that PAH is underdiagnosed. And so in a way, this is more products, it helps expand the market. And with -- especially with PH-ILD, we think there's certainly space for more than 1 product to be successful. So I think the data really kind of supports what our intuition was earlier.

Yes, yes. I remember like WINREVAIR launch was the same type of dynamic that yes, allows investors to kind of worry that WINREVAIR is going to have a meaningful impact on Tyvaso, but didn't necessarily pan out that way. So is it sort of a similar dynamic that you think that because of just how underpenetrated these markets are particularly PH-ILD, that it doesn't necessarily impact Tyvaso growth but more sort of expands the market opportunity for the patients.

Yes. I think with WINREVAIR, their most really compelling clinical data was with treprostinil as a background therapy. So in a way, we're hoping WINREVAIR actually increases usage of treprostinil. But we've been through this before. And it's kind of the same old story where we hear headwinds and a launch happens. And then we see the continued growth. So treprostinil, in our view, is the gold standard, and we're the innovators of Treprostinil. We've been on the market for 23-plus years. So we know this market very well, better than really anybody. And we continue to be successful and as this plays out, we do believe that PAH will get better diagnosed. It's tough to diagnose. You have to do a right heart cath. And that is somewhat a big deal for a patient to go through. But as more products come out there, somehow the patient population just keeps expanding. Right?

Yes. And then there is a pretty imminent update on a legal case and to the extent that you can comment on this, like either way I would understand, but just what are you assuming on -- like what is your base case assumption basically on the PH-ILD patent outcome?

Well, as a policy, we don't comment on, ongoing litigation. All we can say right now, it's in the judge's hands, and we expect to hear an outcome any day.

Right. Got it. Okay. So let's talk about IPF. So very impressive data like you mentioned, and ready, think it's hard to find any -- poke any holes in it. It was just pretty remarkable, like the efficacy and on the safety side as well. So what I wanted to ask on that is that there is a little bit of a focus on like the discontinuation rate for Tyvaso in like the data that you showed from TRITON2. So one of the things was the 74 patients that discontinued in the Tyvaso arm is that like the core discontinuation for that clinical trial? Or there were also some like immaturely discontinued patients. So does that get factored into the overall discontinuation rate when you think about that?

Yes. I mean, we have to accept that there's going to be continuations. And I think our kind of conclusion from that is that the discontinuations from our trial really weren't that much different than the discontinuations from previous IPF trials. There was also discontinuations with people taking placebo. So I wouldn't overemphasize that. I would say that it was within expectations. The -- really what we want to emphasize is the [indiscernible] in preventing this client in FVC. And really, that was a great outcome along with the secondary end points, really, like I said earlier, the best IPF trial that's ever been conducted. So we're excited to see the TRITON1 results sometime in the first half of 2026 and really to get this product to market so that it can start helping some of these IPF patients.

Yes, that's great. I think on the forced vital capacity, so the endpoint that you're studying, I mean, you have pretty remarkable effect size, like you said, I think the way that the trend of post writing capacity sort of panned out in TRITON2, there was more of an efficacy accumulation, I want to say, from like week 24 onwards. So yes, can you talk about that a little bit? Like what might be driving that? Is it that like persistently providing to faster to the patient is what sort of accumulates the benefit over time? Did it sort of -- is it happening faster or slower versus what you had originally assumed?

Yes. I mean let's keep in mind, it's a progressive disease, okay? The other piece is that it takes some time to titrate up to a clinically effective dose. So there's going to be a bit of a lag as a result of that. So when you look at that data, you need to understand as people titrate up, they'll start to see greater benefits from the product. So we believe that's an explanation for that. But really, at the end of the trial, the FVC data is extremely compelling. So we're very pleased with that. And really, I think any doubters of it, well, with that data, it's hard to argue how good this product will be for IPO.

Right. Yes. Yes. I mean just like the competitor -- looking at the competitive profile, we don't really have good therapeutic agents available. So just looking at how good the data has come out to be, it can have a pretty differentiated launch from that standpoint. Is that sort of aligned with your...

Yes. I think one of the great things about it is that it's not going to require a change in background therapy, and it doesn't require a right heart cath. So patients can start very quickly on it. And unlike PAH and PH-ILD, where there's some hoops that patients have to jump through to get on the product with IPF, those hurdles really aren't there. So should be able to start very quickly once it's approved.

Got it. Okay. And then there was a fair bit of focus on the secondary endpoint of the study as well, which I think you had pretty good data across the board there. One of the things that was like the exacerbations and the survival end point, which -- I know like the survival endpoint kind of narrowly missed in this trial. As you think about TRITON1 and any reason to believe that it can potentially meet the survival end-point in that study?

I mean only -- we'll only find out when the study is done, but the demographics are very similar, and the patient population is very similar. So we're expecting to see very similar results from that. Now we'll analyze those individually when they come out and then we'll also analyze TRITON1 and TRITON2 together as a whole. But if you look at that patient population and you look at demographics, there's some slight differences in background therapy approaches in North America versus rest of world. So -- but really, I think we're anticipating a very, very similar result.

Right. Yes. And can you remind us just the time line of what you've talked about publicly on when are you expecting that data?

Yes, it will be certainly in the first half of 2026. So it depends on a lot of things. But I would say on or before June 30, 2026.

Yes. I think it was enrolled in like January of '25, right? So like if we tracked from that perspective, I think...

Yes. I mean you could use that as kind of a marker, is there a guarantee there? No. But that certainly is an indicator of what it will take to get that data unblind.

Yes. There isn't necessarily much of a difference in the baseline characteristics amongst the patients. But yes, just like the U.S. versus ex U.S. dynamic, does that make any difference in your mind on like a potential trial outcome?

I mean there's certainly going to be some slight differences. Will they be enough to really affect the trial outcome. I really can't speculate. Like I said though, there's enough similarities that gives us the confidence that we're going to see a very similar outcome.

Got it. Okay. Let's talk about ralinepag. So yes, so this is another data readout that you're expecting in the first half of '26 just with the advanced outcome. So how should we think about that. And there's a lot of investors that focus on the -- whether it can show sort of a similar outcome compared to Uptravi, that the -- J&J drug. So I wanted to understand from your standpoint, what are the [ potential outcomes ] of that?

Yes. I mean I think the Phase II data gave us the confidence to go forward and design the advanced outcomes trial so there's, I think, a couple of compelling things with ralinepag first. It's versus Uptravi. It's a once-daily dose. It's also titratable, which Uptravi is not. And if we can show an improvement in 6-minute walk distance, that's improved over what Uptravi has shown, we think that it's going to end up being a great product for us.

Right. And just going back to the Phase II data, it's smaller sample size, obviously. So there was a 20% PVR improvement, which is pretty impressive, but like when you think about the 6-minute walk distance, it wasn't able to show a benefit over the placebo -- so that -- yes, like is it a function of like smaller end that drove that? Or do...

Yes. I mean, that study wasn't really powered for that endpoint. So I would be careful to draw too many conclusions from that. The design of the advanced outcomes is powered for that. So again, we're hopeful that we can show a much improved 6-minute walk distance when that study ends. And if you combine that with some of the conveniences of dosing ralinepag, we think, again, it's a very powerful product for the PAH community.

Right. But your objective would be try to show differentiation both on PVR and 6-minute walk distance?

Yes.

Both of those are critical for physicians and patients.

Yes. I mean, certainly, 6-minute walk distance is the one that everyone looks at. But certainly yes.

Got it. Okay. And then, yes, on the xeno transplantation, so good to see the progress on that front when you got the first patient transplanted you said last week, I think. So talk to us about just what is the overall plan for this study? And when do we start to see the follow-ups from this?

Yes, certainly. So I think anybody who's followed our xeno program is aware of the compassionate use transplants that we've done in the past with both heart and kidney. We've now progressed, late last year, we filed an IND -- our own IND for the 10 gene kidney, and that was approved by the agency. A week and a half ago, we did our first transplant under the IND. So that was a big milestone for us. And then so the first clinical IND for a xeno, Oregon was done. Now the agreement with the agency, and this has been publicly shared is that really, the focus is going to be on a 2-cohort program with the first cohort being 6 patients. When those 6 patients are done, there will be a review with the agency on that data. And a decision will be made to go forth with the second cohort, which will consist of 44 million or more patients that will get transplanted. Now as far as how -- what's the -- how quickly that's going to get done, I really can't say. This is a very complicated study to conduct. There's not a great playbook for this. So we're kind of plowing our own path. The logistics are daunting. And the -- you're doing an organ transplant. So it's a big procedure and coordinating with NYU, who is doing the first 6 cohorts. So there's a lot that goes into preparing for this. And now that we've done the first one, we believe we have some momentum. But how quick it's going to get done we really can't say. I think unlike traditional drug studies, the disclosures are going to be not routine. I think probably the next public statement we'll make is when the first cohort is done. There's patient privacy that we have to respect and things like that. So -- but I would expect that we'll make some sort of announcement when we're complete with Cohort 1. When that will be, I can't tell you right now.

All right. Okay. So like the first cohort, you mean like the 6 patients, when they are like the follow-up is completed is when we will publicly hear it the first time about this.

Likely.

Got it. Okay. I think the -- for the compassionate use, I saw that some of these patients that have been sort of followed for like 3 to 4 months' time frame, right? But it can be in a trial setting, obviously, is that is like can the time line be very different compared to like the compassionate use?

Well, yes, you have to keep in mind that with the compassionate use, it's really a one-off IND that was filed by the hospital. We -- our role in that was to supply the organ and the hospital took the lead with communicating with the agency. And there was a lot more public disclosure over that. So I don't expect to have the same from us. And those patients, the criteria that was used to allow those patients is different than what we're using for our IND. So I wouldn't use that as a baseline -- it's more of a reference point, if anything. But again, this is all new, and it's exciting, and we're excited about it, and we're excited we got our first transplant done. And we're excited to do more. But how quickly that will happen, it's tough to estimate.

Yes. Got it. Okay. Just quickly, as a reminder for the audience who are in the room, if you want to submit any questions through the QR code, please do that, and we can take them over. But just -- yes, I think just on the xeno transplantation, and you guys are pretty far ahead of competition, but I see there are some developments starting to happen in this, and so the way that you're approaching it with the 10 gene editing effectively versus the -- there are a few other companies that are pursuing like sort of the totally different approach. So can you talk to us about like what is the differentiation that the -- that your platform has that might increase the chances of success here?

Yes. I mean the philosophies are similar. They've the one competitor that's out there that has done some work eGenesis is focused on many of their gene edits on eliminating PERV, which is a virus. We also have some edits for that, just not as many. And the reality is, if you look at this market, where there's 0.5 million people in the U.S. on dialysis. There's no one company that will be able to serve that whole market with a xeno-organ. So there's plenty of room for companies to operate in that market in a profitable manner. And so the capital investment we've talked about this is big to do this. And so we almost kind of need more companies to do this. Now we're paving the way and we've made a lot of progress. If you look at the history of our involvement in this, it goes back many, many years. So the investment we've made has been significant to do the R&D work to get to the point we are. And -- but there's -- again, the market is large. And -- so I think it's our belief that multiple companies can be successful serving that market. And there's certainly a need. The cost to the Medicare system alone is massive for dialysis. So the opportunity to give people a better life and to reduce costs to the citizens of our country is really a great outcome.

Yes. Great, great. Awesome. With that, we are out of time. So thank you so much for this, and looking forward to learning more about United.

Right. Thanks, Ash.

Yes. Thanks, everybody.