United Therapeutics Corporation (UTHR) Earnings Call Transcript & Summary

[Audio Gap] get started. So thank you, everyone, for joining us in the room and online at TD Cowen's 46th Annual Healthcare Conference. I'm Joe Thome, one of the senior biotech analysts here on the team at TD Cowen. And it is my pleasure to have with me today a couple of members of the United Therapeutics team. We have President and COO, Mike Benkowitz; and CFO, James Edgemond. So thank you very much for being here today.

We usually kick these off with just sort of an overall state of the business, what's been sort of the highlights of recent progress and what should investors be looking for, for the rest of 2026. And then obviously, we'll dive into specific programs and your exciting new data.

Thanks, Joe. Thanks for inviting us to attend the conference this year. Yes, I think as we look at really over the next 18 months, I think the key takeaways are we have a growing existing commercial business, reported double-digit annual growth last year, expect that to continue as we move into -- moving forward. And then if you think about where we are or will be over the next 18 months, we released our ralinepag data today, which I know we're going to talk about, but we're poised to launch the best drug in PAH. We're poised to launch the best drug, which is Tyvaso in IPF. And then as we announced on our earnings call last week, we think we'll have the best and most well-tolerated drug delivery device for inhaled therapies across multiple indications. And so that just really, I think, positions us really nice for significant growth as we move out to the rest of the decade.

Great. And maybe we'll start with the ralinepag data that you announced this morning. Obviously, we saw the 55% reduction in headline. Maybe if you could just kind of recap the data. What are the highlights of the release this morning? And obviously, Uptravi was always used as sort of a comparison, but how should we think about these 2 trials?

Yes. So we were, frankly, pleasantly surprised with how robust the data was. I think one of the things that came through, if you happen to listen to our call this morning, came through multiple times was the idea of how contemporary this patient population was. We had over 80% or around 80% of the patients on dual background therapy, which was what we see in clinical practice. You mentioned the 55% reduction in risk of clinical worsening, which we think is very significant. You had patients that were on ralinepag had a delay of disease progression 3x better than what you saw on placebo with the dual therapy. You had about a 50% chance of actually seeing clinical improvement, which is something we haven't really seen in pulmonary hypertension. The other thing that I thought was really important was the durability, the benefit we saw going out to at least 4 years, which is something that's, I think, pretty impressive and great for patients. And then lastly, seems to be well tolerated. So just from our standpoint, we think it's a home run, and we're looking forward to working with the FDA to get it approved and then out into the market to help patients.

And maybe how do you expect this to be incorporated into the treatment paradigm? Obviously, it does have the more convenient dosing than both Uptravi and Orenitram with the differences in the activity that we just saw. I guess, is this going to be sort of the first prostacyclin oral, the first branded oral? How do we think about how this is going to fold in?

Yes. So we had Dr. [indiscernible], who was our top enroller in the U.S. on our call this morning. And I think he summarized it really well, which is it's going to be a frontline -- first-line prostacyclin after AMBITION and very soon after AMBITION. So he talked about the idea that he would start patients in AMBITION or if we had patients on AMBITION really as quickly as within a month at ralinepag. And so we think this has the potential and will be the new standard of care for pulmonary arterial hypertension.

And when you think about what that value is, and we'll see if you answer it. But I guess, how big of a drug do you think this could be? Obviously, Uptravi has done very well. Orenitram has done very well. It's around $500 million-ish, I guess, a year expected. Kind of where do you think this will fall?

We think this has an opportunity to be a blockbuster and our biggest product in pulmonary hypertension. If you think about the landscape right now, you've got about 30,000 patients not currently on a prostacyclin therapy, right? So just right there, and again, as Dr. [indiscernible] said, those patients should all -- really all be on ralinepag. So you've got a pretty big addressable capturable market. And so as we kind of look at what the opportunities are launching hopefully middle of next year, we think by 2030, we could be upwards of around $2 billion with just ralinepag.

Great. And maybe to talk a little bit about the PAH market in general and how that's been changing over the past couple of years. I guess, first, anything else that we left off on ralinepag that you wanted to emphasize given the newness?

Just the last point, I guess, I should have -- when we think about pricing because that question has come up a lot, I think we think about pricing to be pretty comparable to existing prostacyclin therapies.

Great. And maybe on the PAH business, how have you seen this change? We've obviously had the introduction of sotatercept. We've had the introduction of Liquidia's Yutrepia. I guess how has the Tyvaso and the prostacyclin market for you or branded drugs changed since the launch of either of these? And then maybe we'll get into your unveiling from last week as well.

Sure. I think if you kind of go back over the last couple of years, I think we've had nice double-digit growth. That's continued. As we said on the call last week, we expect that to continue going forward. Haven't really seen much of an impact, I think, from sotatercept in terms of utilization of our therapies. In fact, when you dig into their trial data, you actually see there appears to be some sort of synergistic effect between prostacyclin and sotatercept. The patients that were on both of those drugs had really favorable results in their trial data. And so largely, we're seeing sotatercept used as it was in the trial and no real impact to any of our prostacyclin products. Liquidia launched their product last year, we talked at the time and have over the last couple of quarters. I think given some of the statements and claims they were making, it's not surprising that physicians wanted to try a new agent or try a new product. So we did go through this trialing period. I think over -- really over the last couple of months, I think what we've seen is that the physicians are starting to figure out what's real and what's not with respect to their product. I would say while we saw an initial dip in referrals after their launch, really by the end of the summer, that started to trend back up. As we reported on the call last week, our referrals or our prescriptions for the last 3 of the last 4 months for DPI are at prelaunch, pre-Liquidia launch levels. Nebulizer referrals for the last month are now back up at pre-Liquidia launch levels. And then really in the last 4 to 5 weeks, we've seen the starts pull through. I described last week that we do typically see some seasonality in the fourth quarter with respect to starts, and we saw that. And so while the referrals were coming in at a healthy clip, the starts were a little bit slow to follow. But in the last 3 to 4 weeks, we've seen that log jam break and the starts are now really over the last few weeks back where we were last spring.

Great. And then obviously, on the call last week, unveiled the soft mist inhaler. Maybe before we get into how that's going to fold into the treatment paradigm, what sort of data do you have in-house to support the competitive profile or differentiation versus maybe your dry powder inhalers? And when will we see some of that data?

Sure. So we started working on this about 2 years ago. We conducted our first healthy volunteer study cohort second half of last year. And that data looked really good. And I think Martin reported last week that we saw a 90% reduction in cough, which is the #1 side effect with dry powder inhalers. And so very encouraged by that data. And we still have to do some more studies in healthy volunteers to prove out PK bioequivalence. So that work is ongoing right now, and we expect to file for FDA for approval by the end of the year.

Great. And those bioequivalence and stability studies that you need for approval, I guess, does anything need to be done in PAH patients? Or can you get that done with healthy volunteers?

The FDA has told us thus far that all we need is healthy volunteers.

Great. And if this is approved, how do you expect the Tyvaso-based business to be impacted? Would everyone kind of flip to the softness inhaler? And I guess same for Liquidia when you think about just the overall impact to DPIs, what proportion do you think is going to be on nebulized Tyvaso, Tyvaso DPI and the TresMi?

Yes. So what I would expect is that nebulized Tyvaso probably goes somewhere close to 0. Nothing ever really goes to 0. But I think the difference -- the softness inhaler and the nebulizer are very close in terms of drug delivery. And I think patients -- and doctors are certainly going to prefer 1 breath 4 times a day than doing anywhere from 9 to 15 breaths 4 times a day, not to mention the fact that the SMI is a much smaller device. So not quite as small as the DPI, but certainly smaller than the nebulizer. So I think SMI trumps a nebulizer. I do think it's probably going to be preferred over the DPI as well. I think there will still be a market for DPI, but I think it is going to be the preferred option for inhaled delivery.

And maybe...

Just MannKind put up the chart in their presentation about I guess the only approved softness type inhaler was Spiriva. And I guess that was basically 50% penetration over it's time. What's different, the same? How you think about that as an analogy, both the technology and/or the market of [indiscernible].

Yes. I think it's -- we'll prove this out when we do the healthy volunteer study is going to be -- I think it's going to be the side effect profile, right? So I think when we do this next trial, we look at the data, and we do see a striking difference in cough. I think that's really going to be what turns things.

And then the next thing to fold in is, obviously, with Insmed, the potential once-daily administration therapies, Martine has indicated that UT themselves are also advancing a once-daily inhaled therapy. How do you think that will compare to TresMi? And kind of when can we expect an update from your once-daily drug?

Yes. So we'll have more to say on the once-daily drug later this year. I think what we've said pretty consistently is we want to get through these filings for IPF and for ralinepag and then we'll start to talk about the once-daily inhaled therapy. Assuming that works, and we're very confident that it will work, I think that once daily will trump 4 times a day. I mean just pretty simple.

And maybe if we go to IPF now because that's the next data set to read out. Obviously, you saw really strong data from TETON 2, TETON 1 is coming out now. I guess when we look at the background and baseline characteristics between TETON 2 and TETON outside of the geographical differences, I guess, any reason why this study wouldn't replicate? And kind of what are your expectations for the top line release?

We don't think so. I mean, as you mentioned, the baseline characteristics between the 2 studies are very similar. The trial design is the same. So we -- I guess there's always a wildcard in there, but we remain, I think, very, very confident that we will have a positive readout along the lines of what we saw for TETON 2.

And what do you anticipate sharing in the top line release? Because obviously, with the 2 studies, there's also the opportunity to maybe show some additional data on subsets or mortality or things like that. What would make sense for the top line? And maybe what would be you save for ATS or something else like that?

Yes. I think the baseline assumption is what we did for TETON 2, right? So you'll probably see that level of data in the top line. And then we'll follow on later at a medical conference with additional data.

And then how long after the data could you file the sNDA? I know the company was anticipating meeting with the FDA for potential accelerated filing paths or review paths. I guess when could we hear the outcomes of those discussions? And how fast do you think this could get on the market?

So our internal plan is to file by the middle of the summer with the FDA. We continue to have discussions and explore options for an accelerated approval, but I don't have any updates for you at this point.

And I guess, how large of an opportunity do you think IPF is for Tyvaso? And where do you see it fitting in? Obviously, it showed that 50-milliliter decline no matter if you were on no background, OFEV, Esbriet. I guess where do you think physicians are going to use it based on your discussions? And how big of a growth opportunity is this?

Sure. So I think if you look at the IPF market in the U.S., it's roughly 100,000 patients, maybe a little bit more than that actually. So you're talking about a patient population that's twice the size of PAH. So really, I think -- and still an area of unmet need despite the fact that there's, I guess, 3 drugs in the market. So I think in terms of utilization, we just hosted an advisory board with 15 of the top KOLs in the country a few weeks ago. And I think their general sense of things is that, one, this becomes a polypharmacy market. And they think that the dominant drugs will be neurendomalast and Tyvaso. And so you'll see patients on a combination therapy of those 2 drugs. Sequencing of that, I think, is going to be a little bit patient dependent, but I think the other point they made is it probably doesn't matter because if I start on one, I'm going to add the second pretty quickly thereafter.

And would the softness inhaler also benefit from an approval in IPF? Or how would you potentially incorporate that to this label?

So we've not had discussions with the FDA yet on SMI and IPF. We'll start those conversations again after we get the filings in, in the summertime.

And are you seeing any off-label benefit from the data you presented so far, either in patients with PH IPF? Or do you think this is something once we have the U.S. data in hand could happen? Or do we really kind of need a label for IPF to see that?

Yes. So just to be clear, PH IPF really is PH-ILD. So that's on label. I would say we -- I think the academicians are familiar with the data. Those that like maybe are not yet because we've been pretty much embargoed until we issue -- get a publication out, which is hopefully coming here before not too long. And then at least our medical affairs teams will be able to go out and start talking about the data in greater detail. What I think we could see in the U.S. is more aggressive screening of patients with PH-ILD because in some ways, you're going to treat the PH-ILD, you're also going to get a benefit from the IPF by doing that. So I do think that we could start to see some more aggressive screening for PH-ILD between now and approval. I think getting off-label -- seeing a material off-label use in IPF is going to be really difficult because right now, in order for the payers to approve the drug, you have to have a right heart cath to confirm pulmonary hypertension.

And if you do get an eventual label, hopefully, in IPF, would that also be a tailwind to PH-ILD because maybe you wouldn't need a right heart cath to confirm disease, maybe you could do an echo. How would that -- do you think that's going to be a tailwind to the PH-ILD opportunity for that reason?

I think it will be -- I think we'll see a tailwind for PH-ILD. It's going to depend on the subset because ILD is a really broad patient population. So our initial indication in IPF is going to be a subset of that. So I think clearly, if the patients have IPF, you'll be able to start them on Tyvaso without a right heart cath. If they aren't diagnosed with IPF as a subset, you probably will still need to do a right heart cath in order to get it approved.

Okay. Great. And obviously, since the TETON 2 study was run in Europe, I guess, what are your discussions and plans kind of ex U.S. for Tyvaso? And I know Martine has kind of alluded to potential global partnerships on the last 2 calls. How do we think about that?

So we designed the trials to support approval in Europe. That's part of one of the reasons we ran 2 trials. So we're continuing to -- right now, we're focused on the U.S. approval, getting that filing in and getting it approved. I think after that, we'll start to take a look at opportunities in Europe. I think one of the things that we're obviously mindful of is some of the most favored nation policies that are coming out of the Trump administration and how that could potentially impact pricing in the U.S. So we're very interested in exploring approval outside the U.S., but still some work to be done there.

And maybe can you give us an update on the progress of the PPF study? I think the company has indicated this could be an additional 60,000 patient opportunity in the U.S. Is that still the case? And when can we see data from that trial?

Sure. So we started that trial, I think it was last year. We're about 50% enrolled. And so that's been enrolling -- that trial has been enrolling at a really nice clip. So we're really enthusiastic and optimistic about the success of that trial. The patient population, I think 60,000 is conservative, to be honest. I think depending on who you talk to, say it could be as much as 200,000, but somewhere in that range. But again, just another really kind of virgin market for us with no great therapies. I mean there's 1 or 2 that are out there, but I think it's still an area of unmet need. And so we're excited about the potential that Tyvaso can bring to those patients.

And maybe rounding out the Tyvaso conversation, maybe how penetrated are you right now, you think, into the PH-ILD market? And obviously, we indicated some of the issues with the right heart catheterization. I guess, how much of that can be the team just really educating and pushing sites to do more right heart caths? Or what sort of peak penetration do you think you can get to?

Yes. I think we're probably at around 15% to 20% right now. And I think coming back to your question about the tailwind potentially from IPF, that's where I think this can really help us out in PH-ILD because I still think the majority of patients are being referred to PAH clinics. The PH-ILD patients are being referred to PAH clinics. I mean we are increasing the number of treaters in ILD. I think as those physicians start to get more experience using Tyvaso with their IPF patients, they're going to be more inclined to start, again, more aggressively screening and treating the PH-ILD patients that don't -- that aren't a subset -- in the IPF subset.

Okay. Great. And maybe before we get to xenotransplantation, we'll circle back maybe on some -- obviously, with ralinepag, you brought that into -- through business development, a lot of the opportunities we're touching on for the first 20-plus minutes here, you're going to have some pretty good cash flows generated over the coming years. I guess, are you interested in BD? Kind of how are you thinking about how to use maybe some of these funds?

Sure. I'm going to let my colleague here, James...

Thank you. Yes. So BD is something that is always on our radar screen. But we -- as we've talked about, what we try and be as good financial stewards of investors' money. But the areas where we tend to focus on are pulmonary, cardiopulmonary, even oncology, we've talked about. So as part of, Joe, our capital allocation priorities that I know we talked about, just as a quick review for those listening. We first focus on internal research and development and also our facilities. It's kind of our first priority. We always want to make sure we have enough capital to make sure we can execute against the programs and R&D programs we've talked about, including things like ralinepag today. The second thing is corporate development. So as I talked about, we do look at opportunities often. We also don't feel we have the need to rush out to bring in an asset. And we've talked about AVA Outcomes in ralinepag today. the TETON trials in IPF. And so we have a lot of conviction in our internal programs and to bring something in and displace what's on our plate is something that we evaluate very carefully. So we do evaluate opportunities often. We don't feel the need to rush out. And then the third item is return of capital to investors. As we put in our 10-K that we just filed last week, we did wrap up the most recent $1 billion share repurchase that we felt went very well. And I think going forward, what people can expect is us to continue to evaluate this waterfall of capital allocation priorities, including, I think, where you started with corporate development. And the last thing I would say on corporate development is we have a tremendous amount of resources internally from Michael's commercial teams to clinical development teams to manufacturing. and regulatory. So when we look at opportunities, we want to make sure, first, there's scientific validity to an opportunity, and then we kind of match it up against our internal resources that we do have a lot of confidence in. And again, you're seeing some of that play out in the recent clinical trial unblindings. So overall, we just want to be good stewards of capital. And I think people can expect going forward the same capital allocation priorities.

Great. And maybe we'll move over to xenotransplantation. If you could just kind of hit on the first study that's entering the clinic now in the kidneys. What's the current status of the program? How many transplanted patients would you like to have data on before maybe releasing that to publicly?

Sure. So we started our 10-gene xeno kidney trial in the fall of last year. We've now enrolled 2 patients. And the way the FDA has asked us to do the trial is enroll -- transplant the first patient, wait 12 weeks, do the second patient, wait 12 weeks, and then we can do patients 3 through 6. And then after we have data on 6 patients, we'll go back to the FDA, share that information with them. And then per the trial, they said that the full trial is up to 50 patients. But I think after looking at the data for the first 6, they'll tell us what that number is. So it could be something less than 50. So because it's a clinical trial, privacy concerns with the patients, we're not going to provide regular updates on the patients and how they're doing. I think the next update you can expect from us is after we get those 6 patients enrolled and have that discussion with the FDA.

Great. And what is derisking for these patients? Obviously, you can get immediate rejection, which obviously you've shown these patients can be followed for quite some time. And then maybe there's this sort of next acute stage and then there's kind of chronic acceptance of the tissue. I guess how long is long enough to know that this organ is making a difference for these patients?

Yes. I think 6 months for the trial.

Okay. Great. And how large of an opportunity do you think this could be when you look at the number of patients this could address? And maybe what's your current footprint on the xeno side of things?

Sure. So the -- I mean, the opportunity is massive. You have about 0.5 million patients with end-stage renal disease that aren't even eligible for -- to be on the transplant list. So massive opportunity. Just as a reminder, the eligibility criteria for our trial are patients that aren't eligible to be on the transplant list or are expected -- or on the list aren't expected to get a transplant within -- or have been on for 5 years, right? They've been on for 5 years or not on the transplant list. So I think the opportunity is there. In terms of our footprint, we have one, what we call a designated pathogen-free facility that we opened last year in Virginia. And that's what we're using to source the organs for a clinical trial. Once we're commercial, we'll also be able to source organs for commercialization. And then we will open 2 more designated pathogen-free facilities this year. And then as we see how the trial goes, our strategy is continue to open up more facilities across -- strategically across the country to get the facilities near the transplant centers that we think are going to be performing these surgeries.

And maybe on that last point, can you talk a little bit about the reception that you've seen so far to sites wanting to participate in the study? And are they seeing this as sort of a bridge to allo transplant or more of a hopefully permanent cure for some patients?

Yes. I think the receptivity has been really good. Now so far, we're just doing transplants at one site, but we will -- I think once we get past the first 6, we'll open it up. And so I think there's certainly a lot of interest in participating in the trial. So that's not an issue. And I think based on our early conversations and ongoing conversations with the transplant surgeons, I think they see it as a potential cure. So not just a bridge, but a potential cure.

Great. And maybe we'll circle back to some announcements that you made last week as well. You indicated that you're going to take Tyvaso into PH COPD again. I guess, can you just remind us what happened the first time with PH COPD? It was kind of during COVID, I feel like there were some issues. I guess, what got you reinterested in pursuing PH COPD?

Yes. The issue -- this is called the PERFENT trial that we ran. As you said, a lot of the trial occurred during COVID. I think there are a number of issues with the trial in terms of patient selection, endpoints, dealing with COVID because a lot of the measurements were being -- of benefit were being done at home. So it was just -- it was really a challenging trial for us. And I think we learned a lot from that trial. I think we also believe that the drug works in the right subset of PH COPD patients. And so just by virtue of getting smarter about from what we learned from the prior trial, we think we've got a path to get an approval -- to have a positive study and get an approval.

Great. And maybe in the last minute here, we'll talk about Remodulin. It's held in really well kind of over the years, and the company has done well at kind of innovating new devices to kind of stay competitive there. I guess how should we think about Remodulin moving forward? Is this a stable kind of part of a PAH regimen? Or are some of these newer agents going to disrupt that? How do we watch that?

I think there's always going to be a role for parenteral, right? I think particularly as you start to look at the functional Class IV patients, the really late-stage severe patients, I think that Remodulin is going to continue to be the go-to drug for doctors in that group of patients. Now I think what you may see is there's opportunities to -- if you can stabilize patients on Remodulin, transition them over to, say, Orenitram, we've got a couple of studies that have shown that you're able to do that. I imagine we'll be doing a Remodulin to ralinepag study now to show that you can take a stable patient on Remodulin or a severe patient on Remodulin and then transition them over to ralinepag. But I think there's always going to be some role for Remodulin in PAH.

Awesome. And with that, I think we're just about out of time. So thank you very much for the time.