United Therapeutics Corporation (UTHR) Earnings Call Transcript & Summary

Welcome, everyone, to Jefferies London Healthcare Conference 2025. My name is Roger Song, one of the senior analysts cover SMid-cap biotech in the U.S. It is my pleasure to have the fireside chat with our next company, United Therapeutics, James and Harry. Welcome, gentlemen.

Thank you.

Thank you for having us and hosting United Therapeutics. And Harry and I have had some really good meetings this morning. So we look for some more this afternoon.

Excellent to hear. Awesome.

So we have a lot to cover and United Therapeutics have a very exciting news recently as well on top of the very solid business. So maybe we start with this current commercial business. So James, can you give us some overview on all your kind of projection in terms of the growth trajectory, what we have been seeing and then what we're about to see in the coming months and years for the current commercial?

Yes. Thank you very much, Roger. It's a good question. So just coming off our Q3 report where we posted total overall revenue growth, but continue to have significant growth in total Tyvaso and Tyvaso DPI. And these are going to be the growth drivers going forward with us. And a lot of the uptake in Tyvaso in the quarter and going forward is going to continue to be around PH-ILD, so the uptake in that indication as well as overall Tyvaso DPI. And these would be the major growth drivers for us going forward. We continue to believe we're going to have this growth because of the product profile of Tyvaso and really our understanding in longevity in the pulmonary space. So we continue to believe we're going to have growth there. And one of the aspects when you think about growth on Tyvaso DPI, and we're going to talk about this, I think, a little bit more in some of your questions, but we feel really good about the product profile. So for Tyvaso DPI, there's no dosing limitation with Tyvaso DPI for us going forward. From a prescriber perspective and a patient perspective, we've had a couple of good years of positive feedback and uptake. From a payer incentive perspective, we don't feel we're disadvantaged in terms of -- in the payers -- or from the payers in the market. And then from a product profile perspective, we feel we have a superior product that has ease of use. And for example, 4 times a day 1 breath and talking about -- or considering some of the new cartridge strengths that we have, we think this is an advantage for us going forward. So overall, Roger, on a going-forward basis, we think we've delivered strong revenue growth, and we expect to have revenue growth...

Excellent. Yes, we know recently, you have a couple of new approvals in the PH-ILD space. I know investor has been a little bit kind of cautious on the growth trajectory or the durability of the business, but so far, it seems looking pretty solid. So can you just give us any anecdotes? The number is good, right? So -- but we always one looking for some lead indicator. So have you -- can you give us some anecdotes in terms of the feedback from the field, physician, how they think about the new patient or the existing patient, how they prioritize Tyvaso versus the other mechanism or the other drugs?

And Roger, I'm going to have Harry take this one. We're going to go back and forth today.

Sounds good.

Yes, Roger. So I'm assuming you're talking about Yutrepia here. Leading into their launch, they were trying to differentiate themselves, albeit using treprostinil is the same active ingredient, slightly different device, but they try to differentiate themselves on things like dosing and tolerability and many of these things we reputed as recently as our first quarter earnings call, but James just talked about no max dose. Tyvaso is convenient. Tyvaso tolerability is well understood. So as they try to do these things, we think real-world experience kind of catches up and these things will kind of play out in the real world. And look, we talked about on our third earnings call -- our most recent earnings call, sure, when a new product comes to market, physicians are going to want to give it a try. It's something that you typically see in almost any new drug launch in any category, and that's historically been the case for PAH as more therapies have come to market, patients are going to -- or doctors are going to want to give them a try. But despite this dynamic, what we've seen as we ramped up throughout the third quarter and into October that the referrals and start trends are kind of trending back towards us in our favor basically to where they were prelaunch of Yutrepia. So while it's out there and while physicians have given it a try, I think in the real-world experience, the sort of factors that make us believe that we have the best positioned device play out. And you're starting to see that come back in the underlying dynamics.

Yes. And then it's interesting because since Yutrepia launch, it's trending towards a pretty positive way as well, but your business is also pretty durable. And then WINREVAIR, so the Merck drug, also they are doing pretty okay. So to me, it seems it's not zero-sum game and then rather maybe with more education, with more attention and then you will have more patients on those novel drug and nephrotoxicity. Is that the sentiment you're also getting?

It is, Roger. Thank you. What you see just as an analogy and going back to just the PAH space. So when Martine started the company years ago, there was only a few therapies on the market, and there was roughly 3,000 to 5,000 patients. But now you look at the PAH market, and there's some estimates, 50,000 treated patients, but there's something like over 15 therapies in the market. So what you've seen over time is you've seen new therapies come to market more voice in the market, better diagnosis, and you've seen that addressable patient population expand. I think it's no different here. You're going to have another voice around Yutrepia in the market, which could expand the market, Merck's product WINREVAIR. And so when you have more voice in the market, better diagnosis, you can expand the available patient population. And that could be the case that's going on right now with our products. So you've seen us have a very good quarter in light of having a competitor come to market in the May time frame. And we expect that trend in terms of the growth of the addressable patient population to continue. And so that's part of our continued growth story going forward.

Excellent. Okay. And then we also want to state the elephant in the room in terms of the ongoing litigation with the Yutrepia. So obviously, you don't need to comment any legal kind of consequence here. But just internally or externally facing investor, what's your scenario analysis for this outcome out of this litigation? And then what will be potential impact, if at all, to your commercial? We just talk about the growth trajectory.

I think it's been well forecasted all these potential outcomes. And at this point, it's in the judge's hands. We're not going to sit here and try and speculate or figure out what he's going to say. We're waiting on the decision just like everybody else. And whatever the outcome is, it's in his hands for him to decide. But nonetheless, if it's an adverse ruling against us, we're going to continue to operate. They've been on the market for a full quarter, and we continue to grow 22%, 23% growth for Tyvaso DPI in the third quarter of this year. So look, we've shown that we can continue to grow even with them being on the market. And if that's the outcome of the ruling, we're still confident in our ability to grow.

Okay. Great. So regardless of the outcome of the litigation, just assuming they have another inhaled treprostinil in the market. So you're confident about the Tyvaso continued growth trajectory?

We are, Roger. I think in light of the Judge Andrew's ruling is we feel very confident in our commercial portfolio, we feel very confident in some of the early clinical trials that are currently ongoing with TETON as well as ADVANCE OUTCOMES. So from a commercial perspective, there's a lot of conviction in what we're doing and a lot of belief, and that's what we're going to continue to do to keep our heads down and focus. And then further, and we'll probably get into this a little bit later, there's a longer-term opportunity here with respect to some of the organ manufacturing act. So from an enterprise perspective, from a current commercial perspective, near-term pipeline and long-term pipeline, we feel very comfortable on the trajectory of the business.

Absolutely. Yes. We're definitely going to talk about IPF, Tan and then also the transplant a little bit. But let's just wrapping up the commercial business for now. I think in recent quarter, I think that's the first time I've ever seen -- ever heard is you talk about the $4 billion run rate by 2027. Can you just elaborate on what's the component of the business? You have a multiple product on the market. And also you are about to get approval potentially for IPF. Is that part of the projection or that's mostly coming from the base business?

Sure. It's a good question, one we've gotten this morning as well. So what we talked about on the most recent earnings call is that we would have a quarterly revenue run rate by the end of 2027 of $1 billion. And a couple of points related to the majority of that growth is going to come from the existing commercial business because that's what is approved and is currently being marketed by our sales and marketing teams. If you follow along the kind of estimated time lines when you think about the TETON trials for idiopathic pulmonary fibrosis and the advanced outcomes trial for ralinepag, approval for those would roughly be in the 2027 time frame. And so any revenue contribution that would come from those 2 products would be certainly additive, but they would be later towards that calendar year 2027. So it would certainly be additive, but the bulk of the $1 billion run rate is going to come from the expansion and growth of the current business, current commercial products on a going-forward basis. So that's kind of our target and our goal is to have $0.25 billion run rate by the end of 2027?

Got it. Just -- and I'll set the stage for the investors as well. I think it's above the -- at least the sell side consensus when I look at the projection for 2027. So that probably if you can achieve that or people start to believe or building the expectation, you can achieve that, this is upside for the current business.

It is. And that's what we are focused on, as Martine clearly outlined on the last earnings call.

Awesome. All righty. Okay. So we should talk about very big upside driver from the IPF with the recent very impressive GLO 2 data. And I think with the more detailed data, you will start to believe this is a real drug and then either as a monotherapy or the combination with the standard of care. So how users thinking about this opportunity? And then -- and maybe just let us know what's the next step for the IPF.

Yes, sure. So just to quickly recap for those in the room, 96-milliliter benefit, placebo-adjusted difference on FVC. We hit statistical significance on most secondary endpoints in the study and well-known safety and tolerability profile of Tyvaso. So we were really happy with the outcome from TETON 2, and we do recognize that it's a very large opportunity. What we are hearing from physicians is mirroring our own excitement for the opportunity and the availability of another therapy to add to the treatment armamentarium for IPF. And look, I think your last question was the commercial opportunity. 100,000 patients in the U.S. And just based on the existing therapies in the market, it's a multibillion-dollar opportunity that we're looking at here. Whether it shakes out based on the end label when we combine the 2 studies or when we have the 2 studies, I think that will really determine what the overall market opportunity is, but you're looking at a very sizable market no matter how you slice the pie.

Got it. And then one of the key discussion points for the -- after the TETON 2 top line detailed data is how this will translate into TETON 1 data. That's TETON 2 is ex U.S., Canada and then TETON 1 is the U.S. and Canada. So we did some deep analysis as well, so looking at the baseline, looking at the different kind of baseline treatment and then the practice. So what is your conviction this will translate into TETON 1? And then honestly, when I see the TETON 2 data, the effects are so big, I believe you still have a chance to pull those together to enhance the filing package. So just tell us about the TETON 1 translation and also the filing strategy with those 2 trials.

Sure. So I'll take part of it and then Harry can add some, too, because there's a lot to the question. So I think overall, the results of the TETON 2 clinical study in IPF were really successful even from all the way down to a P value perspective. So we do have a lot of conviction as that translates over to TETON 1, which is your clinical trial for IPF in the United States and Canada. When you look at the baseline characteristics of the patient populations, they're very similar, and we have a poster, I think a poster out on that. So we wanted to share that with investors to see. So overall, there's a lot of conviction, Roger, that this would really translate from TETON 2 over to TETON 1. And then there's also the opportunity to pool the data as well overall. And what am I missing in your question? Was there another?

Yes, I think that's the translation. And then the filing, you say you can pull the study. So what -- under what condition you think you will pull the study -- to study or is it necessary for the filing package?

Yes. So I'm not as smart unless you have any background on pulling the data.

I think if it provides us an opportunity to maybe hit statistical significance on some of those secondaries that we didn't hit on in the TETON 2 trial that could potentially help the overall label, it's a possibility. And like you said, if perhaps the data aren't as strong in TETON 1 versus TETON 2, you can pull it together and potentially get a statistically significant benefit. But again, based on everything that we can see, we're highly optimistic.

Yes. I was going to say, Roger, the conviction level that we have just on each individual trial is pretty high. So we feel really good about kind of the overall results. And TETON 1, which we will -- and we do still expect to unblind in the first half of 2026. And I think you had a question on there about regulatory strategy and filing, and I'm sorry, I missed it earlier. One of the aspects that we've talked about is we are going to meet with the FDA by the end of calendar year 2025. One is we want to start the dialogue or really continue the dialogue with them regarding these 2 trials. We do need both trials at this point for approval of Tyvaso in use in IPF. And that was the agreement that we did have with the FDA early on. So that's why we're continuing to do these trials, one international, one domestic because we also want to explore opportunities for Tyvaso ex U.S. So that's one of the reasons why we did the ex-U.S. trial. So we are meeting with the FDA or the regulatory teams are meeting with the FDA prior to the end of the year, and they're looking for any opportunity to continue the dialogue and to see if there are opportunities to accelerate any of the aspects around getting Tyvaso to market sooner for these patients because at the end of the day, the real motivating factor for us is there's a patient population that we believe we have a really beneficial therapy for them, and we want to make sure we can take it to the market as quickly as possible. But we also want to make sure we do it in a way that gives us the best opportunity for approval and the best label possible. And so that's why we're trying to be very methodical. And we say at UT, we always have time to do it right, and we're going to do it right, but we're going to try and accelerate it as well for the benefit of the patients.

Absolutely. Okay. Great. I think IPF is, as Harry mentioned, is 100-plus thousand patients. So no matter how you look at the pipeline, look at the market size and it can be multibillion at least. And then we know we have a 2 standard of care. So it's not best drug and they're still getting towards like a $4 billion market.

We agree with all the above. It's a very large opportunity for us. And I think what will be interesting is -- and I talked about this earlier, is what the ultimate label would be because if you think about the clinical trial, there were certain aspects, and Dr. Nathan talked about this at the unblinding in terms of quality of life attributes. No study has had a benefit that we have seen in terms of patient quality of life. So there's many attributes in the study in terms of how we want to take advantage of that, whether it's through the FDA approval process and from a marketing perspective.

Excellent. I know we have a lot to cover. We already talked about the base business. We talk about IPF as a major next kind of leg for the growth. But we still have a couple more, right? So first, maybe on the PPF side, so I think that's still the Tyvaso TETON PPF. So with this IPF data, so what's the level of conviction you now in terms of like success for PPF translate from IPF, if any?

Yes. Thanks, Roger. Look, we're equally as excited about PPF. When you think about the disease progression and the underlying fibrosis relative to IPF, it's more or less the same. So based on what we've seen thus far in the TETON trials, we're confident that -- confident and optimistic that we can see a similar outcome in PPF.

I think just to add on to Harry's, I think -- and we've talked about this, I think the addressable patient or the patient opportunity is about 60,000 patients. So another sizable opportunity for UT if that is successful as well.

Yes. Okay. Great. And then you have an oral once-daily ralinepag. This is also data going to read out next year. So what is the winning profile you are looking at for this drug? And I believe last quarter, you talked about the oral combination that a lot of interest there. So what's the strategy for fits into your PH portfolio?

Yes. And so just a quick summary. We're doing a time to clinical worsening study with ralinepag, which should read out in the first half of 2026, so on a similar time line to TETON 1. And the -- a win for us, this is going to be a once-a-day oral prostacyclin that we think will have more potency and higher efficacy than selexipag. So this would be a once a day that we could move up into the treatment paradigm. And we've talked about combination strategies historically as well. But we think this would be something that would be really beneficial for patients from an upfront diagnosis perspective. To reference your point, what we did or Martine did talk about on the last earnings call is if this is successful, this could be a pretty significant opportunity, and interesting opportunity to partner a once-a-day oral with other therapies that are currently on the market. So you have a once-a-day form of therapy, which is great from a compliance perspective. We've had some history with other therapies, one called Adcirca, where it was once a day, and you could see the benefit from a compliance standpoint to patients. So we are very high on this clinical trial. On the last earnings call, Martine outlined why she was very enthusiastic about it. And again, we're excited about kind of unblinding this in the first half of 2026.

Excellent. Great. And then another -- you have -- you are starting to developing a once-daily inhaled treprostinil or the prostacyclin. We know we have another company also in this conference, and then they have this once-daily inhaled version of the treprostinil. So how do you think about the development time line look like? And then what is your potential profile to -- for the future the market?

Yes. Thanks, Roger. So we are developing a QD NCE for PAH and PH-ILD. We'll share more with you guys probably next year once we get through advanced Outcomes in TETON 1. The product development teams are really focused on those right now. But once we get through those, we're happy to share more.

Yes, sure. Okay. We can talk about transplant, right? So the organ transplant, that's a huge upside. I think -- I don't think any buy-side or sell-side model is including that and then in terms of the value and the credit. But also, it's a massive unmet need. And then you are in the clinic. So you just dosed -- you did the first transplant. So tell us a little bit about this rationale of the strategy and then when we're going to start to see the data for potential approval.

You bet. Thank you for asking. So it's a strategy that has been in the works for years, and we're pretty excited about it. And in our PBC charter, one of the aspects of our public benefit corporation is to invest in technologies that expand the number of transplantable organs. And so what we recently have done under what we're calling xeno transplantation is we did a first transplant in the expand clinical trial of the kidney into a human. From the standpoint of going forward, you're right, Roger, the opportunity and really the need in this space is significant because there's a huge and incredible shortage of transplantable organs. We are first focusing on the kidney, but we're also planning to do other aspects or other products in the lung and the heart as well. And we recently had another IND approved for the UTHYMOKIDNEY. So it's an aspect of the organization that we're pretty positive on. There's a lot of research and development going on, and we're pretty excited about this most recent transplant. The one thing that we've talked about this morning is the communication protocol around this clinical trial will be somewhat different than some of the expanded use cases that you may have read about because those were patients that were part of the hospital's network system, and we supplied the organ, but these are approved FDA clinical trials. So the cadence may be a little bit less. But rest assured, the first one has happened as we talked about, and we're progressing on other products as well in the space.

Excellent. Great. Maybe just lastly, I think UT has been a very successful stand-alone biotech company. But what is your overall partnering strategy as a biotech company? And then also maybe touch on a little bit on your financial position.

So from a strategy perspective, and we've had this conversation this morning, we're very comfortable both on the commercial side of where we are on our near-term clinical pipeline, which we've talked about, but also this longer-term view of the manufactured organ pipeline. So from a corporate perspective, from a strategy perspective, I think we've clearly communicated where we're going. And I think everything is lining up and progressing extremely well internally on a going-forward basis.

Okay. Awesome. I think we have this time, and then I really appreciate spending this with us this morning. And then thank you.

Thank you, Roger.

Thanks, Roger. Thank you very much.

Thank you, everyone.