United Therapeutics Corporation (UTHR) Earnings Call Transcript & Summary

Hi. Good afternoon, everyone. Welcome to Day 1 of our Cancer Healthcare Conference. Hopefully, you guys can hear me okay. My name is Olivia Brayer. I'm one of the senior biotech analysts here at Cantor and really excited for this fireside chat. We have Martine Rothblatt, Founder and CEO of United Therapeutics. And of course, James Edgemond, who is CFO. Thank you both for joining us.

Thank you, Olivia. And I'm also happy to mention that Harry Silvers, our Head of Investor Relations is right there in the front row and available a few questions afterwards.

Harry, we'll make sure he keeps us all in check up here on stage. Well, it has been quite a year for United Therapeutics. Big year clinically. I think people are really excited about the momentum and what 2027 has to bring. So I mean maybe just set the stage for where the company is today and how you think about what could be a very big inflection and transformation for the company from here?

Olivia, you are so right that we are in the absolute best position we have ever been in the company. It's very rare in a company's life that you get to see present when it kind of inflects from, say, like a kid to an adult type of company, that sort of thing. And that's where we are with United Therapeutics. We started off as a pulmonary hypertension company. And now because of the amazing results that we had from the TETON 1 and TETON 2 trials in pulmonary fibrosis, it's very, very clear that we have now inflected over to become a pulmonary fibrosis company. And those not like within a half year after we fully enroll those studies and reported the results by far, the best results ever reported for any drug, from any company in 30 years in pulmonary fibrosis, I mean, really making a difference. Then we very rapidly almost overnight, enroll another study, TETON 3, in progressive pulmonary fibrosis which is something like a 3x larger indication. So this amazing indication of pulmonary fibrosis where we had the best results. Now we rapidly enrolled the other one. And we're looking at now a capturable market that is in the neighborhood of north of 0.25 million U.S. patients compared to the maximum capturable market that we ever had in pulmonary hypertension of 25,000 patients. So a 10x jump based on solid data, NDA is now in the hopper, accepted by the FDA, PDUFA date issued [ April 26 ]. So it's super awesome.

Okay. I'm going to come back to that in a minute. [ April 26 ] is the PDUFA date?

Yes. That's the PDUFA date. [ April 26 ].

So I mean, would you ever -- I know you just put some numbers around epidemiology, but would you ever put some numbers and kind of characterize the opportunity set that you think that you have across the pipeline and some of the newer launches that you have coming up. Obviously, IPF, you eventually will hopefully have PPF when that data comes out next year. You have ralinepag in PAH. So I think a lot of investors are trying to put the pieces together. So I don't know if there's anything that you can say to maybe help contextualize it for us.

Sure, Olivia. Fortunately, in these types of indications, it's possible to do that because the prices of the therapies for treating patients in these indications are well established and have been reimbursed by both public and private payers for many years. All of these therapies are, by their nature, chronic therapies that patients take to extend their lives. So it makes sort of like sizing the opportunity a little bit easier because you don't have to make a lot of assumptions about how many new patients are going to be captured to replace patients that have already been successfully fully treated by your therapy. And in our case, if you take a look at the combination of the pulmonary fibrosis and progressive pulmonary fibrosis markets by most conservative estimates, you're looking at 400,000 patients. And then another indication, which we've announced that we will now be commencing enrollment in our clinical trials next year, therefore, is the indication called COPD with pulmonary hypertension that is dominant in the COPD patients. That's an indication of 400,000 to 800,000 U.S. patients, so on average about 600,000 in the middle. So now having nothing to do with pulmonary hypertension at all where we started as our youth going up, now as adults, we find ourselves in a 1 million patient population and that's the addressable market. Our drugs fortunately have shown that they are best in class for pulmonary fibrosis, best-in-class for pulmonary hypertension. So you're looking at -- even if it is a 50% capture against these numbers, time something like $200,000 per patient per year for the normal reimbursed amount, you're looking at United Therapeutics now as a $100 billion pharma revenue company compared to just last year when we were only pulmonary hypertension, maybe the maximum potential would be around $10 billion. So again, a 10x transformation during the past year. We are -- everybody in this company were just like going full speed out for it.

Good for you guys. And that first kind of proof point will be your IPF launch coming up next year, like you said, you do have an official PDUFA date. Maybe just to start, I mean, what are you all doing as a company to get ready for that launch from a sales force perspective, from an awareness perspective, I'm sure some of your team was just at ERS this past weekend? What has been kind of the feedback from the community? And what are you all doing to make sure that you do end up having a successful launch come next year?

It's so great that you asked that question, Olivia, because speaking about the ERS, I kept getting text messages from my team of the slides that we showed where you see the improvement in forced vital capacity on Tyvaso compared to like the baseline background therapies like pirfenidone and nintedanib and like we're -- you don't usually see curves like separate and keep separating like this, but we saw them, they say Dr. [indiscernible], everybody is just totally amazed that there is a drug which is now going to be hopefully shortly available for the patients with pulmonary fibrosis. And so we have rapidly doubled our sales force, including many people who are highly experienced in interacting with doctors for pulmonary fibrotic conditions. And the doubled sales force are beginning to learn our medicines in the context of our approved indications of PH-ILD. So that's given them good practice, good understanding of treprostinil, how it's different from pirfenidone and nintedanib and other medicines in this area. We are preparing for the combination of our medicine also with Jascayd, which is a very nice new development from BI. So we've opened up an open-label extension arm of our TETON studies, where we can now enroll patients who are going to be on nebulized Tyvaso as well as Jascayd. So when we launch, we can present safety information to the prescribers, showing whether your patient is on no background therapy. Any of the legacy background therapies for IPF, or even on the brand-new Jascayd, you can expect to have a safe and improved response as a result of adding on nebulized Tyvaso. We're also very hard at work at UT. We are just like relentlessly improvers. In fact, our mantra for all 2,000 of us is approve and then improve, approve and then improve. We never stopped. So right away on the heels of nebulized Tyvaso, hopefully being launched in the middle of '27, we're going to be rolling out the clinical program, which I think will be a very simple PK bioequivalent sort of thing for what we call, DPI Tyvaso. So now DPI Tyvaso is already approved in PH and PH-ILD. So it's got a stellar safety record. So we expect that that's going to be warmly receptive by the regulatory agencies, patients in IPF. Now you're going to go from having, okay, you've got a nebulizer, that's great. Now you also have a DPI that you just stick in your pocket. We're also going to be filing at the end of this year, our next-generation product, which is called a coughless Tresmi. And this is a product which Tresmi acronym for treprostinil soft mist inhaler. The studies we've been doing in human volunteers already have shown like no cough from these patients. So that's like an amazing new thing in this indication as well as in yet another new study will start next year that I just mentioned before, the COPD study. So we've gone from having, let's say, 1 or 2 pivotal registration studies a year. That's for like the past few years. We now have 14 new product launches, all going on simultaneously for 2027, '28 and '29. And this is why based upon 14 product launches, we can feel confident that UT will be a $50 billion to $100 billion pharma revenue company at the beginning of the 2030s.

Yes. And you brought up the DPI and the SMI formulations. I know maybe you guys aren't ready to share today exactly what the time lines are and next steps there. But is the hope that you could have DPI and SMI launch shortly after a nebulized product? Or is that maybe a little bit more of a forward thinking come 2028 or 2029? I'm not exactly sure what you guys have put in the public domain at this point.

Sure, Olivia. I think it is shortly after. And the reason for that is that our treprostinil product has such a good track record for safety. And that we have such an amazing core competency in United Therapeutics and drug formulation and a drug device combination product. The one that might take a little bit longer is this yet another new product that's in that 14 product portfolio that we call once-daily RAL-DPI. This is an inhalation therapy where you just take 1 cough a day, and that will be your treatment for pulmonary hypertension and ILD. And we'll have to show, but I believe it will be a treatment for pulmonary fibrosis as well as progressive pulmonary fibrosis. So this population of 100,000 IPF patients, 300,000 PPF patients. We plan to just introduce wave after wave of products, Tyvaso nebulized, Tyvaso DPI, coughless SMI and then once-daily RAL-DPI. And every patient will find therapies that work both for them, best for them. Our goal is just to leave no patient behind.

Yes, a lot going on and a lot of different life cycle management strategies. So good for you all for staying in front of that. You brought up Jascayd, obviously, having an incredibly successful launch. I'm sure you all are tracking that very closely. Maybe to start, I mean, what have been some of the learnings from that launch? Have you been surprised by how quickly Jascayd has by just the commercial trajectory and the uptake of that product? And are there any commercial learnings from that launch that you can hopefully apply to your launch coming next year?

That's an amazing question, Olivia. I think that I second everything that you said that it was an amazing launch for Jascayd. And BI serves like enormous credit for developing that drug and bringing it to the patient. When we saw the significant improvement that Jascayd offered over the legacy treatment, we were not surprised to see a rapid launch. This patient population it's just horrible how they have suffered. And frankly, I know people even in our own company who have pulmonary fibrosis. It is a terrible indication. So for literally decades, the patient population has suffered with a couple of drugs that have, for most people, intolerable GI side effects. And so only a small fraction of the diagnosed patient population are actually treated with like on-label approved products. So it wouldn't surprise me in the least for when patients come in for their doctor visits or even being called in by the physician saying we have something new for you that could make a difference. So we were really, really heartened by that. I do think that our study in TETON 1 and TETON 2 showed that a polypharmacy approach is the way of the future in pulmonary fibrosis as well as pulmonary hypertension. So I think that we're going to see many patients on both Jascayd as well as nebulized and DPI Tyvaso. I do think that our uptake will be certainly, I can't say patient to patient, but will be as rapid, a rapid explosive type of launch. We are planning for 10,000 patients in our first year on nebulized Tyvaso. And given the difference between an inhaler and a pill, 10,000 for 1 year in inhaler is likely a much larger number for a pill.

Okay. And you mentioned earlier that a very small proportion of patients with IPF are actually receiving medication. Why do you think that is?

I think it's because the only medication that's been available has been intolerable. And the one thing that we've learned with a lot of orphan diseases is if you want the patient to stay compliant, to stay on the drug, you got to make the patients feel better. And it's not just common sense, like why -- if you're already sick, why do you want to just stay on a medicine that's only making you sicker? I mean you could deal with like, okay, I got to wait a couple of weeks for it to get better. But after 2 months, you're not any better and you're actually feeling a lot worse. You're going to drop the drug. And I would -- from the research I've done, Olivia, it seems to me that more than 3x as many people have tried pirfenidone and nintedanib have dropped off it and have remained on it.

Yes. And you actually brought up a really interesting point, which I didn't realize until just now is that you are enrolling patients on Jascayd in an open-label extension study. Can you talk about the decision to do that? And then data collection perspective, will you actually have some data to present or send to the FDA as part of your review application cycle?

So first of all, there is no real intention on our part to modify the label for the open-label extension inclusion of the Jascayd patients. The reason for that is like crafting an NDA is like crafting like a MonaLisa painting. I mean you want it to be picture perfect. And the last thing you want to be doing is like, oh, I just want to like change something at the last minute that could introduce any basis for delay. If that was essential for a product launch, yes, you have to do it, but it's the opposite of that for us. There's no possible way that Jascayd by its own can cover this whole pulmonary fibrosis market. So it's not essential. There's plenty of time to amend the label in the future. So we don't see a need to rush any of that data into the FDA. The reason that we decided to do it is that we have become highly convinced through the TETON 1 and TETON 2 studies that polypharmacy is the way of the future in this indication. We did see synergistic benefits between the antifibrotic activity of treprostinil and that of differentially nintedanib and pirfenidone in the TETON 2 study -- in the TETON 1 and TETON 2 studies. While it's a different indication, we've seen amazing synergy of the polypharmacy in pulmonary hypertension with, for example, sotatercept being an amazing drug introduced by Merck, it turns out like it works even better combined with treprostinil as well. And that's the same thing for things like ETRA receptor antagonists and PDE-5 inhibitors. So we are very, very comfortable with polypharmacies. We're actively engaged in creating compounded new products that would, in fact, put the whole polypharmacy in one dosing. So you don't have to like grab from here and grab from there. So Jascayd lifted the bar from where it was with pirfenidone and nintedanib up to a higher level. That's awesome. However, the objective fact is that the improvement in the patients' forced vital capacity from Jascayd came nowhere near what was demonstrated independently twice to insane p-value levels in both TETON 1 and TETON 2. So it is -- I mean, we'll wait until the FDA approves it. But based on the scientific data right now, nebulized Tyvaso is a best-in-class drug for treating patients with pulmonary fibrosis.

Yes. And to that point, what do you make of the agency's decision to give you all a standard review rather than a potential priority review?

I think it's really just a consequence of the FDA managing their resources. We did a calculation, and we saw that if we did receive a priority review, it would have occurred about Christmas Eve. And I can imagine, like with all of the drug applications pouring into the FDA with the difficulty, with headcount and everything these days that they just felt the best way to manage their resources was to provide us a standard review. It really doesn't matter. It's 4 months later. And [ April 26 ] will be here before any of us know it. We have a ton of things to do to get ready for that launch, and we're doing them.

And then you mentioned pricing earlier. How should we be thinking about pricing for Tyvaso? I mean we obviously know the price in PAH and PH-ILD. Anything different as we think about IPF and the consideration?