Earnings Call: Q1 2021

May 5, 2021

Good morning, and welcome to the United Therapeutics Corporation First Quarter 2021 Earnings Call. My name is Phyllis, and I will be your conference operator today. All participants will be in a listen only mode until the question and answer portion of this earnings call. I will now turn the conference call over to Mr. Dewey Stedman, Head of Investor Relations at United Therapeutics. Good morning. It's my pleasure to welcome you to the United Therapeutics Corporation Q1 2021 earnings call. Accompanying me on today's call are Doctor. Martine Rocklatte, our Chairperson and Chief Executive Officer, Mr. Michael Binkowitz, our President and Chief Operating Officer Mr. James Edgemond, our Chief Financial Officer and Treasurer and Doctor. Lee Peterson, our Senior Vice President of Product Development. Remarks today will include forward looking statements representing our expectations or beliefs regarding future events. Key statements involve risks and uncertainties that may cause actual results to differ materially. Our latest SEC filings, including Forms 10 ks and 10 Q contain additional information on these risks and uncertainties. We assume no obligation to update forward looking statements. Call. Today's remarks may also include financial measures that were not prepared in accordance with U. S. Generally accounting generally accepted accounting principles. Reconciliations of our non GAAP financial measures to the most directly comparable GAAP financial measures can be found on our earnings release call. Today's remarks may discuss the progress and results of clinical trials or other developments with respect to our products. Time, these remarks are intended solely to educate investors and are not intended to serve as the basis for medical decision making, which should suggest that any products are safe and effective call for any unapproved or investigational uses. Full prescribing information for the products are available on our website. Now, I'll I'll turn the call over to Doctor. Rospot for an overview of our Q1 2021 financial results and business activities of United Therapeutics. Doctor. Rospot? Call. Thank you, Itui. Good morning, everybody. Thanks for joining us on our Q1 2021 earnings call. I'm going to start off with a sort of 30,000 foot overview. And then after that, I'll open the line for any questions. If there are business questions, I'll refer them to our President, Michael Benkowitz. If there are financial questions, I'll refer them to our Chief Financial Officer, James Edgemond. And any scientific questions, I'll refer to our Senior Vice President, question. I may even pass the odd legal question to Dewey. Well, I think from a 30,000 foot viewpoint, the main quantitative goal at United Therapeutics is what we call 25 by 25. This means increasing the number of patients that we are helping with our main medicine from over 8,000 patients today to over 25,000 patients by 2025. This quantitative metric is an especially important one to call out today because today is World Pulmonary Hypertension Day. It's the one day in the whole calendar that countries throughout the world have agreed to focus their thoughts, intention and for many patients and families prayers on the hopes for getting better therapies and treatments for people with pulmonary hypertension. We expect about half of the roughly 18,000 patient growth that we will require to meet our 25 by-twenty 5 goal will come from patients with what's called WHO or World Health Organization Group 1, pulmonary arterial hypertension and about half of that 18,000 patient growth will come from patients with World Health Organization or WHO Group 3 pulmonary hypertension. Let me start by breaking down how I believe we'll get our 9,000 patient growth in the Group 1 category and then I'll talk briefly about the second 9,000 patient growth in the Group 3 category. So for the half of the growth we expect in WHO Group 1, we expect that to to come in roughly equal thirds from our Remodulin product, our Tyvaso product and our Orenitrans product. We think we'll be able to gain about 3,000 new patients on Remodulin, particularly due to the convenience and patient friendliness of our newly approved Reimmunity pump. We think we'll be able to gain about 3,000 new Group 1 patients on Tyvaso because of the convenience and patient friendliness of our new green boat dry powder inhaler, This is a finger sized device compared to the large liquid nebulizer that we use today. And then finally, we think we'll be able to gain about 3,000 new patients between now and 2025 on Orenitram Tram because of the constantly growing appreciation of the efficacy of Oremitram in reducing morbidity and mortality. Now please keep in mind that far about in the U. S. Alone, 45,000 patients in WHO Group 1 being treated with non United Therapeutics drugs and about 15% of progress in their disease annually per the Kaplan Meier curve of their trials. So overall, there are some 50,000 plus patients being treated for pulmonary hypertension, about 8,000 of them currently being treated by our drug And the balance somewhere between 40,045,000, probably closer to 45,000 being treated with non United Therapeutics drugs. So it is very achievable. There is plenty of market space. There is plenty of health call for us to grow in WHO Group 1 from the current 8,000 patients we're treating to something like 16,000 patients that we expect to help by 2025. Now, I mentioned that our total goal is to help 25,000 patients with pulmonary hypertension by the year 2025. And the second half of that achieving that 25 by 25 goal comes from penetration of WHO Group 3 by Tyvaso for our FDA approval that we achieved just last month. Now within WHO Group 3, there are something between 30000, 40000 patients with pulmonary hypertension. We are told actually by subscribers that the actual number is quite a bit larger than even 40,000. It's almost similar to the situation with WHO Group 1. You'll see various accounts that there are 40,000 patients, 50,000 patients. We are told by prescribers that actually there are quite a much larger number of patients with WHO Group 1 pulmonary hypertension. Call. And it is a difficult disease to really quantify and identify because it's a disease that is identified by excluding numerous other conditions whose symptoms mimic those of Group 1 pulmonary hypertension. Anyway, back to the Group 3 pulmonary hypertension, there whether the number is 30000, 40000 or larger, We are the only drug now approved for this IPF market segment of IPF patients with pulmonary hypertension. And this portion of patients also called ILDTH patients are actually the ones who have the most rapid decline. In other words, if you have interstitial lung disease and you have pulmonary hypertension, the statistics show that your decline to death is much more rapid in the patients with interstitial lung disease that do not have pulmonary hypertension. So given that there are well over 30,000 patients who need treatment and that our goal by 2025 is to capture and that our goal by 2025 is to capture at least 9,000 of those patients. I think it's a very achievable goal in terms of comparison to the capturable market size. So in addition to the 25 by-twenty 5 goal that we are hard at work at and is our number one quantitative priority. Let me also mention a few of what I would kind of call pre options in our pipeline. And by pre options, I mean we are doing these things. I believe they have a very high probability of success because they are in either late stage clinical trials, Phase 3 clinical trials where statistically the odds of success are quite high or they are development that we would call biocomparable therapeutics, meaning that they are comparable to things that are already approved by the FDA. So let's talk about some of these 3 options in our slide. First of all, there is a Phase 3 study of Tyvaso in COPD associated pulmonary hypertension. The name of this Phase III trial is called our PERFECT study and it should complete its enrollment by the end of next year. 2nd, we have a Phase III trial of a drug called Ralinepag in Group 1 pulmonary hypertension. This study is also doing very well and I think it should probably complete its enrollment also by the end of next year. In fact, it's just under 1 third enrolled at this point in time in the lead of the lumetag trial called the ADVANCE OUTCOMES trial. Next up, we have yet another Phase III trial, this one of Tyvaso in idiopathic pulmonary fibrosis, IPF, that should be completed in its enrollment, I would say, in the first half of twenty twenty three. This is very interesting for United Therapeutics because it is actually the time that we have developed non oncologic treatment outside of around having anything to do with pulmonary hypertension and yet using drug Tyvaso, which has just been approved in an adjacent therapeutic class to the target of this trial. So, let me unpack that for a moment. The approval that we just had in an adjacent therapeutic class is the approval the FDA granted us just month based on our INCREASE trial, which was in patients with pulmonary fibrosis as well as Pulmonary Hypertension. So they had kind of a double strike and that's what I mean by an adjacent therapeutic class to pulmonary fibrosis without pulmonary hypertension. And in that adjacent therapeutic class, We were able to show improvement in the key therapeutic clinical markers of Pulmonary Fibrosis. That key indication is called forced ventilatory capacity or just for short, VC and we were able to show improvement in that. That was shown and talked about also in our New England Journal of Medicine publication on the trial. And so now we're approved in the adjacent class. So we are now taking that same drug that's proven safe and effective in IPF with Kyle with pulmonary hypertension and developing it in IPF without pulmonary hypertension. So again, I think the odds are very strong in our success and it's a well designed study. By the way, we call that study the TETON study since the head of our clinical and product development program 4 of the pulmonary fibrosis activity, Doctor. Lee Peterson, sales from the Grand Teton State of Wyoming. 3rd, we have another Phase 3 study, a pivotal study, registration study of our ENOS gene therapy treatment for pulmonary hypertension. And this one should also complete its enrollment by the end of next year. And then last but not least at all, in fact, in many ways, close to first is our bio comparable once daily form of Orenitram and our biocomparable less painful form of Remodulin, both of which should be launched by the key quantitative date of 2025. So to wrap up from this high level overview, we've got an awful lot in the market. It's a market which is very capturable by us and much larger than the number of patients we're currently helping, plus a lot of new products to bring to the market. So I think if I was a parent of a patient with pulmonary hypertension, as I am, and there are tens of thousands hundreds of thousands of others throughout the world. On this world PAH Day, I would be very thankful and very hopeful question about a bright and optimistic future. With that sort of introductory remarks, operator, if you could be so kind to open the lines and I'll be question. Your first question comes from the line of Eun Yang with Jefferies. Thank you. I have a couple of questions. One is on Group III, PHILV. So we heard from physicians that they see their patients every 3 to 6 months. And I know Martin just mentioned that GROU3 is more difficult disease to diagnose and quantify compared to PAH. But aside from targeting physicians, do you plan to target patients so that patients are actually seeking treatment with Tyvaso? And the second question is on subcutaneous remodulin. I understand that you may be limited 2, what you can say, but in 10 Q, the trial with Sandoz and Liquidia, you don't expect to begin before mid-twenty 22 at the early. Does that mean that Liquidia could not cannot launch the product until the trial is over? Thank you. Thank you for your questions, Eun. Nice to hear your voice morning, due to the shortage of time on the call, we're only going to be able to allow one question per inquisitor, if I could say that. So I'm going to just take the first question and refer it to Michael because it's really in the domain of a business question. Mike, can you help Ian with understanding what our strategy is with regard to ILDPH? Sure. Good morning, everybody. So let me before I get to the specific question around the patient, maybe give a little bit of color around the PHILB launch. So Martine, I think, gave a great overview sort of our 5 year vision of growing from roughly 8,000 total patients to 25,000 patients and roughly half of those Being Tyvaso patients for various indications. So with respect to the PHILD piece of that, I just want to reiterate what we've been saying since January and that with this launch, we expect the number of patients on Tyvaso to approximately double by the end of Into next year. And the other thing that we've been saying is that it's probably not going to be a straight line from here to that doubling. There'll be a little bit of a ramp and then Looks a little bit more hockey stickish as we get later into the year and certainly into next year. That's due to various things around the fact that and you touched on this, we have A new group of ILD treaters. So they're having to go through the process of getting their patients in, screen those patients, Diagnosis patients and then clear the get that cleared with payers. So that process is ongoing. I will say in the first 3 to 4 weeks of the launch. It's very early days. We're incredibly pleased with what we've seen in terms of referral activity, in terms of the number of referrals that have come in, we actually have patients that have started since the launch on Tyvaso. And I'd also say that in the last week I've been out meeting with 6 of the major ILD centers in the western half of the U. S. And I will say To a person, to a center, all of those physicians are extremely excited about having a treatment option For these very sick patients and again all have said that we have there is a meaningful unmet need here that we're going to be able to address with Tyvaso. So we have been since last summer. We're building relationships with these new treaters, educating them on the disease. Now we're able to talk more openly about Tyvaso, the benefits of Tyvaso, how you get a patient started now that we have the approval. And then the second prong to that coming back around to Ian's question is yes, of course we are we have multiple patient engagement and education efforts ongoing. Obviously with With FDA guidelines and other restrictions on being able to communicate with patients, we have to be a little bit more careful In those engagements for very good reasons, but we do have a, I would say, a very robust patient engagement and education effort ongoing. Awesome, Mike. Thanks so much. Operator, next question? Your next question comes from the line of Liana Moussatos with Wedbush Securities. Thank you for taking my question and congratulations on all the progress. How are you going to commercialize Tyvaso solution versus Tyvaso DPI at the end of the year presuming approval. Thanks so much, Liana. So great to hear your voice again as well. So I'll guess again squarely a business question thing for Mike, can you help describe the differential launch plan? Sure. So we're really excited about the prospect of bringing it being able to bring the VPI market. We think that it certainly provides a more convenient, easier way to deliver Tyvaso. But if you kind of step back and really kind of look at the history of United Therapeutics and what our objective and missions Has been or have been and that is to provide patient options, patients with options, different ways to take our medicines in a way that is It meets kind of where they are in their disease and that's most convenient to them. So we started with Remodulin and then we developed 2 versions of Remodulin. We developed which was an easier way to take treprostinil inhaled and then eventually got to Olaritram which is obviously the simplest version Of all of them. And so I look at DPI as really kind of fitting in it's fitting kind of into that strategy of providing patient options. And so I would spec with the DPI, you're going to have a significant member majority of patients that are going to want to transition to the dry powder inhaler and that's fantastic. You will have other patients that for various reasons may choose to stay on the nebulizer And that's great. We're going to continue to support that product. It's a great product. There is going to I do think that there is going to be a patient type that is Maybe better suited for that product over the DPI. Again, don't hold me to this. I think when the dust settles, you're probably looking at something around a seventythirty split between dry powder and nebulizer. So we're going to continue to provide both options, support both options and I think they're both great delivery devices for the right patient. Perfect. Thanks so much, Mike. Operator, next question please. Your next question comes from the line of Hartaj Singh with Oppenheimer and Company. Great. Thank you for the question. And again, great work. I've got a question on Ornatram. So since the approval of the Freedom EV, the addition to the label, the study, Freedom EV study, Martine, it has the trajectory growth trajectory of the product has definitely increased substantially in the last 2 years. Johnson and Johnson with the Pravi, the oleptelian drug indicates about 20% on average growth every quarter, some of that from market share, some of that from an increase of the overall market size. Can you give us color there and also help walk us through how you see Ornatrem adding those additional 3,000 patients as you had mentioned earlier in your prepared commentary? Thank you for the Great, Hartaj. So often to hear your voice this morning as well. Very interesting question, very much in the range of call business and market strategy. So Mike, if I can ask you to provide Hartaj with some more insight into the business ramp plans for Orenitram? Yes, happy to do that. Yes, I think with the Renner Term, I think you have to kind of again kind of step back and look at the timing of the launch and kind of where that kind of fit with COVID, right? So I will say at a high level, I think as a company we continue to be very pleased with the physician reaction To ED data. I think our underlying patient trends continue to be very solid. And I would say in particular, I think in late Q1 and even heading into Q2 if you look at referrals with stars, we've seen actually a nice uptick over the prior months. I will say in hindsight 2020 as I kind of look back over the last 18 months and think about when we received the label expansion which was October 2019 when the publication came out which was in March like literally 2 days I think before the world shutdown. To your point, Harte College, we did see a nice uptick in That kind of initial 4 to 6 month period and then that it did get sort of muted. So we had a nice ramp and then it just kind of Plateaued a little bit there for a little while. And I think honestly as I look at it, I think it's a function of It was kind of COVID shutting down, the lack of access that we had to physicians and just impacting our ability to really kind of get out and continue to communicate the UV data. I mean, we certainly had some access during COVID virtually, But nowhere near the access that we had pre COVID. So I think that we're starting to come out of this a little bit. We're getting that Again, we're able to get in and have really I think fruitful discussions with physicians and really kind of top it up the Orenifant value proposition. I think the doctors are seeing that and like I said, I think we're starting to see that uptick. And so I think as we look into the future, I Long term, as Martine said, I think we do have a long runway there with Orenitram as we continue to educate the physicians on the value proposition. I also think with some of the data that we've talked about in prior calls around this idea of treating patients to pressure. So putting starting the monomerodulin, really trying to drive down their pulmonary arterial pressure and then switching them over to Orenitram. I think that is continuing To get a little bit of certainly a lot of attention by physicians. And I think over the long term, that's going to give us I think another Yes, sort of another leverage point with Orenitram. And then I think the third one that we see in sort of the latter half of the 25 by 25 plan that marginally out is Orena Pro once daily. So that provides as we were talking about with Tadeso a more convenient way to take Orenitram and potentially with a better tolerability and ability to dose faster. So there may be some additional attributes Fair. So I think it's really sort of a combination of building on and restarted again, building on the momentum we've seen in the last quarter and the levers of ED data, leverage this treat the pressure idea that's getting some attention and then the once daily formulation that's kind of the back end of the 25 by 25 timeframe. Excellent, Mike. Thank you so much. Operator, I believe we have time for one last question. Your next question comes from the line of Joe Thome with Cowen and Company. Another call. Good morning and thank you for taking my question. Just a quick one on the TCOM program. As you start thinking about adding more trials here and expanding Tyvaso's opportunity, is it possible to study the DPI alone in some of these trials, Maybe the increased adherence or ease of use would maybe drive better treatment outcomes Or do you have to start with the nebulized version and maybe do a PK study to show equivalents there? Yes. Penny, since that is, I would say, I was close to a scientific question as we got so far this morning. I'd like to bounce that one over to Doctor. Peterson to discuss. Yes, hi. Thank you for the call or the question. So we have been told or Actually, we have in writing that once we receive approval for Tyvaso for new indications and once we receive approval for the Tyvaso DPI for PAH really, then the approval will automatically be granted for the additional indications for DPI as they come along. So given It really depends on what we decide at the time with regard to supply, ease of use, where patients are with wanting to be on a DPI versus the inhaler, the Tyvaso inhaler. We don't exactly know. I mean, we have studied the DPI, the Tyvaso DPI in for human sectors in all different indications, whether it's PAH or PHILD or even some ILDs without diagnosed PH. So as far as that goes, they're quite similar. But there is some question, and I can't say one way or the other, that some patients with different indications might actually prefer a nebulized form. It might be a little bit easier for them to take and get a good dose versus the dry powder inhaler because they have to have more they actually breathe in for the dry powder inhaler versus the nebulizer is a little bit more passive. So we're going to as soon as we continue to do additional studies, we'll investigate that. But right now, TETON-one is already in the work. The sites are open and we have a protocol. We should have the enrollment any day now and that's with Tyvaso. Thanks so much, Doctor. Peterson. We really appreciate it. Well, we really have been happy to have an opportunity to share our business, scientific financial progress with everybody during this Q1 earnings call. We've been happy to share with everybody on this World Pulmonary Hypertension Day step by the end of next year, we expect to be able to double the number of patients that we have on Tyvaso. And by 2025, we expect to be able to help roughly 3 times as many patients with our treprostinil suite of products that we're currently helping today. It is a fact that based on the Kaplan Meier curves of all of the main approved therapy that about 15% to 20% of the patients progress in their disease symptoms, signs and symptoms each year. And just to make the math easy at 50,000 patients, 15% a year progressing is 7,500 a year, 20% progressing is 10,000 a year. So whether the number of patients needing a new therapy is 1500 a year or I'm sorry, It's 7,500 a year or 10,000 a year. Both of those numbers are well above The growth that United Therapeutics requires to go from 8,000 patients that we're helping today to 25,000 patients that We'll be helping by 2025. So I believe that the goal is realistic. The need is wheel and our capabilities are strong, impressive and ever growing. Thank you so much everybody for joining us on this call and look forward to seeing you at least virtually at an upcoming healthcare conference. Operator, you can wrap it up. Thank you for participating in today's United Therapeutics Corporation conference call. A rebroad test will be available for replay for 1 week by dialing 1-eight hundred-five eighty five-eight thousand three hundred and sixty seven with international callers dialing 1-four 16six 21-four 1642 and using access code 3044,748.