United Therapeutics Corporation ($UTHR)

All right. Welcome, everyone, to Jefferies 2026 Global Healthcare Conference. My name is Roger Song, Senior Analyst SMID-Cap biotech. It's my great pressure to have the fireside chat with our next company, United Therapeutics. We have Jim's CFO and then Harry from IR. Good to see you, gentlemen.

Great, Roger. Thank you. Thanks for inviting Harry and I, and we appreciate the time. We've had great meetings this morning.

Yes. Excellent to hear. And I'm very happy to have you here as well. So Maybe, James, if you want to do a quick state of art for user because you just gave us a fantastic data at the ATS and from [indiscernible]. I think you started taking a very good position to -- for the next stage of the growth. And then, yes, give us some high level and then we can have a conversation.

You've had Roger, thanks. Harry is going to do real quickly our forward-looking statements as always. I'll do an overview.

Yes. Thanks for having us, Roger. Thanks for everybody in the room and online listening in as well. Today, we may make some forward-looking statements and for any risks and uncertainties associated with those statements. I would encourage you to look at our latest SEC filings on Forms 10-K and 10-Q.

Great. Thanks, Harry. And thanks again, Roger. And for a quick overview, it's hard to imagine really another mid-cap biotech that has as many growth prospects kind of in its quiver as we do. And as an example, just right as Roger alluded to, 2 clinical trials that were incredibly successful with 2 therapeutics. So in two different diseases that have significant growth prospects. And both of those trials had clinical results that were outstanding. We had p-values of 0.0003 of less than 0.0003. And those 2 trials, one was nebulized Tyvaso in idiopathic pulmonary fibrosis. And it was a second of two trials in red out that had great clinical results. I'm sure we're going to get into some of those discussions soon. The other clinical trial was called advanced outcomes, and it was therapy called Ralinepag. So an oral once a day, very efficacious therapeutic in pulmonary arterial hypertension. So these are 2 different therapeutic areas we believe significant growth prospects. And as we'll talk about, we're on track to file both of those with the FDA by the end of the summer. So with Ralinepag, it will be an NDA, so a new drug application, new chemical entity. And for Tyvaso nebulize an idiopathic pulmonary fibrosis, that will be an sNDA but we are beyond excited the product development teams, the site management teams and everybody that supports these clinical trials did an outstanding job and it yielded great results that we're incredibly excited about.

Excellent. All right. I think, James, you said it well, at the mid-cap company, you do have your very solid foundation commercial business and then you have a level growth from those pipeline products. So maybe we focus on the commercial for a minute. So maybe you've been soft guidance in terms of the growth for the year and then towards the end of next year, 2027, $4 billion run rate, double-digit growth and then when I look at our model and then also the other consensus from the sales side model, it seems lower than that. Maybe it's a good thing because people want to be conservative and can surprise people in a positive way. So how confident is the user management team and about those guidance and then why you think the Street is missing and then you can give us the positive.

Yes. Thanks, Roger. So as we've talked about recently on our last quarterly earnings calls, we still have the expectation, broadly speaking, to exit 2027 with a quarterly $1 billion run rate. And we've made this assertion previously, and we still expect coming out of 2027. So next year, and that's the growth of our commercial business when we made this assertion. So it's currently commercial products. Now as we just talked, Roger, we had 2 clinical trials we're going to file with the FDA later or by the end of the summer. So we could have some contribution from that next year, but our assertions were really based upon our expectation of growing the commercial business. And where that growth is going to come from is in the Tyvaso franchise, specifically in Tyvaso DPI and looking at growth within the PH-ILD disease state. So we feel very confident with the investments that we've made, the investments we're making so that when we end 2027, we will be on that run rate going forward.

Great. And then interesting thing is it's -- Tyvaso has been entrenched as a great product and a franchise for PH and PH-ILD. You'd have other product in a similar class and they're also launching pretty well. So in that dynamic, how you think about your scenario -- base case scenario can continue to support the growth projection that you are making?

Yes. Thanks, Roger. So from a -- I think it's a Tyvaso DPI kind of perspective you're thinking about. So as an organization, we continue to feel very comfortable about the gross prospects in Tyvaso DPI and specifically in PH-ILD going forward. If you think about the product, the partnership that we have with MannKind, the success we've had, the product profile, the delivery of the drug deep into the lungs, we've continued to feel very confident about our own growth products as we look forward. We've had many successful in thousands of patients, combined with prescribers, and we're very confident in continuing that success going forward in Tyvaso DPI and frankly, when we look across the commercial business. So we're pretty excited. We have conviction. And the other thing that we're doing and this may come into play, Roger, when we talk about IPF, we're actually investing in the sales force and Michael Benkowitz, who runs -- he's the President and Chief Operating Officer, runs sales and marketing. We've accelerated hiring of sales teams for IPF and Ralinepag, but those are not approved products. So we're going to deploy those sales teams within the PAH and PH-ILD franchises. So we're going to have more individuals, so feet on the street, talking about our commercial business as we onboard those new sales teams members who will pivot going forward into the new disease states.

Excellent. Okay. Great. I like the confidence and the conviction there. And then Street want to be our [indiscernible] want to be a little bit conservative. But on the other side is we look forward to the growth, as you mentioned, in amongst all the competition. And then let's -- let's move on to the IPF because this is very exciting for everybody. So I think you also mentioned on the last earnings call, is thinking about with the new product, new indication across different formulation and the presentation, you can double for the $4 billion run rate by 2027 in the coming years. So how much we should think about the contribution from IP for many -- maybe for other new product like a soft mist and then some new patients?

Yes, Roger, we're pretty excited one about the results of the clinical trial, really for the patients that are dealing with idiopathic pulmonary fibrosis. And so there, from the standpoint of currently approved therapies, we feel that the clinical trial results, and it was pretty clear actually that will be a superior product and an inhaled product, which is different than the current orals that are approved on the market. But we think based upon the clinical results, and ultimately, the FDA will determine the label, but we have a lot of conviction that this will be a pretty big revenue opportunity for us and run ramp. We haven't actually talked about Roger, what the run ramp will be. So in time, we'll actually give more information on that. But based upon the currently approved therapies, and where we currently price Tyvaso and just the opportunity of having a therapy on the market that has a different profile from the current adverse events profile or what patients are dealing with that we think this is going to be very successful. We haven't outlined what that growth ramp looks like, but we feel very confident that we will be able to at least double the revenue size from where we're currently at going forward. So exiting '27, as I talked about earlier, which would be the $1 billion run rate, we've actually talked about doubling that revenue size going forward based upon the contributions primarily of nebulized Tyvaso in idiopathic pulmonary fibrosis, but there will also be contribution, and we'll talk about ralinepag too a little bit later going forward.

Excellent. Okay. And then maybe quickly circle up to the ATS data for the IP of TETON-1 and TETON-2. I think the top line efficacy looks fantastic, right? So 100 plus and pool analysis and across different subgroups, everything seems very impressive. If you -- I have to say, investor ask about it and then it's you driven the discontinuation, a little bit higher? And then how do you think about that? And then also, I think in the comment from the paper and then talk about the nebulized fatigue -- times today. So how you will respond to that? And how this will feed into the real adoption for Tyvaso nebulizer?

Yes. Sure, Roger. It's a good question. Look, when you think about prostacyclin-related adverse events, cough is a known AE there. But I think what's important to note when you look at the trial, the amount of discontinuations due to cough overall, especially severe cough, were quite low. Severe cough was a single-digit percentage or maybe even a single-digit end. But as doctors have -- as doctors and patients have experience with using the nebulizer and doctors help coach patients through using the nebulizer. You kind of tend to see that improve over time. So you have the dosing schedule. And you can see in the graphs, the separation of the FEC up to about 8 to 16-ish weeks, patients are titrating and once you kind of get past that and you can tolerate the cough and get to the higher effective dose, you really see that separation in the benefit of the therapy. . And again, in the real-world setting, these things really can improve over time when doctors have experience using the products, you have patient support programs like our own. And that's even evident in the trial itself at ATS. Dr. Nathan spoke to his own practice and his experience with the drug and the trial and he actually had a much lower overall discontinuation rate relative to the overall trial because he's somebody that knows which patients they're using the nebulizer due to his familiarity with the product.

Yes, some education is needed. But just like a PH-ILD. I think in the way you launched Tyvaso, you also see earlier on discontinuation due to different reasons, but with more education, and those patients will be able to stay on treatment a little bit longer and then with education with -- from the physician. Okay. Got it. And then in terms of the pricing, I know [indiscernible] epidemiology or the prevalence is little bit lower than the IPF and then you price a little premium. And then the current standard of care for IPF is not considered generic, but the brand of the drug at about $100,000 per year. So how do you think about the pricing for Tyvaso in this population by IPF...

Thanks, Roger. So Tyvaso, as we know now is an approved therapy, and we don't anticipate modifying the current price by adding IPF to the label for nebulized Tyvaso just in summary. And as I mentioned earlier, we'll -- at some point, we'll be talking from our perspective, more about the market size. Obviously, that would play into the pricing aspect. But at this point, we don't anticipate changing by adding Tyvaso to the label. .

Yes. And honestly, when I look at the data, you presented for the TETON-1, TETON-2, you definitely see the differentiation, even some -- a lot of the advantage compared to the standard of care. I understand you probably will justify the price either the current price or slightly closer to the standard of care but we'll stay tuned.

Stay tuned.

Yes. Okay. Good. And then I think, James, you alluded earlier, you are hiring new sales rep and then maybe expanding the current indication, PH, PH-ILD and then IPF is some synergy with the current -- the market, but also you probably want to increase further the sales force and given you want to double in the market size? And how should we think about the cadence of the sales expansion.

Yes. Thanks, Roger. So the cadence of expanding the sales team. Some of that is actually underway and has been completed. So when we think about the opportunity in the IPF market is pretty significant as we talked about. And so there's a lot of activities going on in the background all across United Therapeutics to make sure once it's approved, we can really hit the ground running. And as Roger mentioned, one of the items that was the sales teams that I talked about previously. So Roger, so that hiring is actually ongoing right now. We expect them to be in place, trained and up and running, specifically the PAH right now and the PH-ILD market so this summer. So you'll see that kind of cost increase on a going-forward basis. Now whether Michael looks at opportunities and resizes things and shift things based upon actually how that pans out over time. That will be a decision later on, and that will be kind of what Michael sees as investment opportunities, et cetera. But that cadence and those hirings are happening right now have been happening. Folks internally have been pretty busy. And then beyond that, what we're doing is looking at what are the things that we can do now to prepare for the launch. So we've had questions around nebulizers, inventory bills, things of that nature. And across United Therapeutics because we want to make sure we can serve and support those patients right out of the gate, we're doing anything and everything we can to get things in place.

Great. All right. Maybe we'll stay on Tyvaso before we move on to the ralinepag considering the pipeline. So you have another pivotal program for PPF for Tyvaso is ongoing? And then where is the status right now? And how do you think about the TETON-1 translation to PPF. I understand it's a different disease, but they have some synergy and the underlying pathology. And then particularly for the magnitude of the treatment in fact you see for the IPF TETON-1, TETON-2 and then how confident you are regarding the PPF at this point?

Yes. So we're certainly not going to speculate on what the magnitude of the FPC delta might be in that trial. But you're right, we are highly confident. As you said, the sort of underlying fibrosis and progression of disease are pretty similar between IPF and PPF. So when you think about the success of what we saw in the TETON trials, combined with what you already see in this space where [indiscernible] and nintetinib are approved for both indications, we're pretty confident that we can also see a similar treatment effect in PPF with inhaled...

And can I add on one thing -- so Harry nailed it. I think just a couple of other things. I mean the PPF trial is another clinical trial that the product development team is actually working on and we have seen a little bit of halo effect, where with the positive results of nebulized Tyvaso in idiopathic pulmonary fibrosis. We've seen enrollment in a PPF trial going very well. As Harry has mentioned in some prior discussions, it was 75% enrolled at this point. And so there's a lot of great attention on it. Folks are working very hard. And the opportunity size -- as we provided you some of the disclosures in the 10-Q that we filed, it's twice as big as the IPF market. When you look at the PPF market, so we just think there's tremendous opportunity. The team is focused on the clinical trial and to get things done right. And we just think going forward, that's just another one to add to the quiver, Roger, of prospects for us for continued growth on a going-forward basis. .

Excellent. Okay. Great. Maybe another question related to the Tyvaso pipeline is the -- so you announced the soft mist 2 quarters ago. And then that's very interesting because you see some dramatic reduction on the cost, which is maybe the only kind of drawback for the current kind of formulation and then where are you in terms of the clinical and the regulatory status? I believe you say something like you complete a pivotal study and then you're fighting later this year and how much you can tell us about the result.

Yes, that's right. So we'll be filed for the indications for which Tyvaso is currently approved, that's PAH and PH-ILD filing later this year. And again, that's based on some healthy volunteer PK work that we've done. As for branching out into the other diseases, IPF and PPF, we're still working on what that clinical development path looks like.

Got it. And then have you completed the study and then ready for the filing or you're continuing to do that trial and then waiting for data before you can file?

We completed a first cohort of healthy volunteers in the second half of last year. And the second cohort is either nearly complete or still going on right now? But we're still on track for later this year filing.

Yes. I think that's -- I think the important part, Roger, is that we're still committing to filing by the end of the year, which I think these underlying activities that we're doing to continue we're just focused on meeting that deadline that we've committed to.

Got it. Okay. Ralinepag. So that's a super prospect, as Martine said. So -- how should we think about the data will support -- and then even take over the current drug. We know we have some drug going generic pretty soon. I think how you're going to position this once daily, overall and then in the PH PH-ILD first?

Yes. Look, we're really excited about the potential for ralinepag, the advanced outcomes data was a clear home run really what this company has been working to from its beginning in terms of a highly convenient, really efficacious product. The data clear that ralinepag, it's QD and really has a high potent receptor affinity. So that's what led to what you saw in the trial with a really strong ability to delay the progression of the disease. And we think these factors position it really strongly in the process cycling class. And could potentially shift it to earlier usage in terms of time since diagnosis still following an ERA and PDE-5 but potentially capturing earlier usage from prostacyclin-naive PAH patients.

Yes, Roger, it's -- and you've seen in clinical results. There was really a home run as Harry talked about. And this is something that Martine is really focused on when she started the company, which is a once-a-day therapy, and it's hard to imagine why a patient wouldn't be prescribed ralinepag after frontline therapy because of the once-a-day, very efficacious formulations. So we just think, in addition to what we've talked about in the IPF, which is a tremendous opportunity, we also think in the PAH opportunity that this is going to be a new chemical entity that will have far-reaching benefits to patients that are dealing with PAH, and we think a huge opportunity from a revenue standpoint as well.

Yes. Got it. And then in terms of the indication expansion, I think you want to make this super proscycline across broader than the PH. So what's the biology or mechanistic rationale to support that because so far, the receptor seems to be more focused on the PAH versus [indiscernible] broader into the other indications. .

Yes. So it's very clear from the advanced outcomes trial that ralinepag is a highly potent member of the class of drugs at treprostilizin. And it's clear from the TETON trials that treprostinil is very effective in managing the progression of IPF. So thereby, we expect that ralinepag could also see the same effect. And to your point, we're planning on developing it in DPI formulation.

Yes. Okay. And then for DPI, it's interesting you choose DPI as the inhaled formulation for ralinepag rather than other formulation? And what's the rationale behind that?

Yes, it's kind of the ralinepag at least resistance in terms of the formulation work as well as the DPI may support -- may better support once daily dosing. .

Got it. Okay. One new indication you raised the last earnings call is COPD. So it is a massive population, but on the side, you may not address the entire COPD, like more kind of enriched population. How much do we know about that. And I know last time I asked the question is stay tuned, and you will give us more updates and any later thoughts about this?

Yes. We've disclosed that we're seeking a PH COD indication expansion for treprostinil. And in this trial, we actually using the SMI relative to the last time that we pursued this indication. And we really learned a lot in the first time that we ran a full trial to pursue this indication. And it's -- we have a lot of learnings that we're applying to terms design and patient selection. And then of course, you layer in the SMI, we're confident that we can hopefully see a successful outcome this time.

Got it. Okay. Very good. So this is in the treprostinil and then prostacyclin kind of franchise for PH, PH-ILD and then related disease. I think you have another transformative angle of the story, it's the transplant -- so it is in clinical right now. You're transplant people, patient now. How should we know the strategy disclosing data and then how we're going to win and we're going to see the data?

Yes. Thanks, Roger. So this is kind of another one from a longer term with opportunity for United Therapeutics, where we're actually doing clinical trials for those new to the story, in kidney using xeno organs so genetically modified organs. And we have 3 clinical trials right now going on. One is in kidney, which is a 10 gene modified genetically -- kidney, that we've kicked off. We've had transplant in. The second one is outhimo-kidney, which is using the thymus of a 1 gene edited kidney or a pig with using the kidney. And we announced a couple of Fridays ago that the FDA released Express, which is using a heart, so genetically modified heart. So those clinical trials, as you mentioned, Roger, are ongoing. And we think ultimately, this will be an opportunity to really put a huge dent in the enormous shortage transplantable organs that are currently -- that exist today. It is -- if you think about it, we're sitting here and there's 500,000 people that are currently on dialysis in end-organ and so we're pursuing these opportunities supply kidneys and hearts through these clinical trials if they are successful. From a disclosure standpoint, Roger, the approach we're probably going to take is in some other protocols for the trials where we are -- to finish 6 transplant to provide data back to the FDA if I'm talking about the U kidney. And so we'll have to see what kind of disclosure comes from that, but we can't today commit to a disclosure plan, but we think once we talk with the FDA and we potentially resize the trial. So right now, it's up to 50 patients that we will be able to communicate more about those clinical trials that are currently ongoing.

Excellent. Okay. All right. With time is up, and then thank you so much for being here, and I thank you everyone for listening and watching.

Thanks, Roger.

Thanks, Roger.