Excellent. So, like, over the next 35 minutes, I think there's just, like, some questions that I had that I wanted to bring in in our conversation for the audience that is listening in. If you have any questions, feel free to send them through our app, and I have this iPad, which is supposed to provide me any questions that I will get from the audience. I'll try to weave that in. I mean, look, I think just the maybe to start off, I think the business is doing really well. You recently started, you know, provided, like, your third-quarter earnings update and reaching like a $3 billion in annualized run rate on revenue. Tyvaso doing really well. Just walk us through, like, where are we in terms of the growth dynamic?
I think there was a point in the call that Martine mentioned that we're really convinced that we can demonstrate, like, double-digit revenue growth. Just wanted to understand, like, from your perspective, what is the bottom-up build of that growth outline?
Yeah, absolutely. So before we dive into that, I need to get my gold star from our legal team and state that I may have some forward-looking statements during our discussion today. So I would tell anyone to refer to our SEC filings for any risks and uncertainties with our business. So diving into that, certainly hitting a $3 billion run rate was a great achievement. And it's really an indication that our hard work's paying off. We believe that that growth will continue and that we'll hit a $4 billion run rate by mid-decade. That will be driven really by Tyvaso and our current product portfolio. As we've discussed in the past, our expanded sales force now is fully deployed and is making great progress in bringing in ILD prescribers. So we're going to rely on our current products, which we call the foundation of our business.
And of course, that's Tyvaso, Orenitram, Remodulin, and Unituxin. And that's going to continue to have, we believe, double-digit growth. And then we have the next phase, which will be Tyvaso in IPF and ralinepag and PAH. And we think that'll also continue double-digit growth through the balance of the decade. So we're very pleased with where we stand, and we think the future's very bright.
Yeah, it definitely seems like, I think in the past, the focus has been very, like, sort of commercial and numbers-driven. I think you're starting to see a bunch of different pipeline catalysts on the horizon, which can really transform the story. So I want to talk about that, you know, just like through the fireside chat session today. Maybe just on, like, Tyvaso. So yeah, like this sales force expansion complete. Like, what are you seeing in terms of PH-ILD? I know your commentary, like, to begin the year was very, very solid, that you were very positive on PH-ILD. I think some of the physicians that we've been talking to are more seeing that that growth is happening, but in certain pockets. Just where are you in the process? I think, like, previously you talked about, like, a mid-teens type penetration in this market.
Just eventually, where can it grow? And what's the cadence of the growth that we can expect from that?
Yeah, so since the beginning of this year, we've grown the prescriber base 15%. And of course, that's been driven a lot by ILD. Today, that 15% growth, approximately 40% of that 15% is ILD prescribers. So ILD itself, you know, understanding where we sit with penetration, I think we feel comfortable with, say, the mid-teens. But it's a pretty nebulous market, right? So the diagnosis of PH-ILD is, you know, likely underdiagnosed. So exactly what the market size is, I'd say, you know, it's a range right now. But we feel pretty confident that we've kind of reached that low, you know, mid- to low-teens in terms of penetration. Now, what's really encouraging for us is that with the growth in the 15%, that we're still seeing growth in PAH as well.
So originally when we started in this business, there was really only several thousand people diagnosed with PAH, say, 20 years ago. And maybe even five years ago, we said that's grown to 40,000. Today, we think it sits at 50,000. And really, the diagnosis techniques have gotten much better, and doctors are much more educated for what to look for. We're kind of believing that's the case with PH-ILD. So we think there's a lot left out there. And, you know, the sales force has got a lot of great momentum right now. And we anticipate that trend is going to continue for some time.
Great. That's interesting that you say that. And just like in terms of the, you know, the penetration in different physician audience, like, have academic physicians been sort of like the early adopters? What are you seeing in the community setting? Just in those two buckets, like, what's the growth dynamic of PH-ILD in those two settings?
Yeah, I think initially out of the gate, we had really good success with the academic centers, and mainly because they're co-located with cardiopulmonary physicians who are familiar with treating PAH. So there was a lot of good dynamics there. We're now hitting, you know, outreach into the communities and communicating with those physicians. The challenge is many of them are unfamiliar with prostacyclin therapy. So there's an education that goes along with that. And the diagnostic tool, the gold standard for that, is the right heart cath. And as pulmonologists, they're not really familiar with that. So there's a lot of education that goes into getting these doctors comfortable to prescribe a prostacyclin and diagnose PH-ILD. So there's a lot of effort happening there. We have multiple touch points with these ILD physicians to get them up to speed.
So I think, you know, we feel there'll be another wave here coming soon of ILD prescribers coming on board. And as they get comfortable, it'll really just create a lot of momentum.
In terms of the, you know, like, the DPI versus nebulizer split, I know you've talked about that, you know, like, as the Tyvaso growth has been realized. What's the latest on that? Like, how should we think about which format works best in which indication? Anything that you would, like, try to elaborate on, like, where to anchor the expectations around how much of the use in these two different PH and PH-ILD indications comes from the DPI or the nebulizer?
Yeah, I mean, the current split of patients, if you take the totality of the patients that are on Tyvaso and Tyvaso DPI, about 60% of them today are PAH patients, and about 40% are PH-ILD patients. And then if you look at the total patients and what delivery device they're on, it's about 60% on DPI and 40% on the nebulized product. What's really unique, I think, for us is the ability to have two options for a physician to use. The nebulizer itself has a lot of flexibility with how it works. And you can really tune the drug delivery to the needs of the patient with that. DPI is an extremely convenient way to deliver treprostinil. So they each bring something to the table. And we're pleased to be able to have those options available, really to meet the patient's needs.
Oftentimes we see ILD patients start on the nebulizer and then transition to DPI once they've stabilized on the dose.
Eventually, like, where do you think this, like, stabilizes, like, is it more like a 50/50 mark on PH-ILD and PH, that rough split of, like, the formulations? Or can it be a little bit more skewed higher towards the DPI in either one of them?
I think DPI will be prevalent, but the nebulized product is always going to have a place. Ultimately, the ILD patient population will continue to grow and will exceed that of PAH that's on Tyvaso. Again, we think there's a lot of growth potential in ILD, especially sitting at, say, mid-teens in penetration. Again, as we get out into the community physicians and start to get momentum there, we think that'll build. This is really going back to the double-digit growth that we talked about and how sustainable that is.
That platform approach where we have the nebulizer plus the DPI and giving patients and physicians the choice to use what's best for them at various points in the therapeutic cycle is an incredible competitive advantage that we'll have should other entrants come into the marketplace that don't have that platform available to them.
That's a fair point. Yeah, I mean, that's interesting that you say that. So I guess, like, is it, you know, some of these, like, I know Liquidia has been talked about as one of the competitors. I think, like, they only have the option to come up with, like, a DPI, but not having a nebulizer would be a certain disadvantage. Is it more of a disadvantage in, like, PAH versus PH-ILD or sort of roughly the same split?
I mean, I think it's roughly the same for both. I think I believe physicians like to have that both options are available. Certain patients prefer certain products. And we've seen that, that some would rather have the nebulizer than DPI. And again, we're fortunate that we can offer both of these for patient convenience and need.
Right. I've seen this in other therapy areas that once you have sort of like an expanded sales force and they are out in the field and start to drum up the interest more, like, a couple of quarters after that is when you start to see, like, a real inflection. Do you think that, like, your, like, if you can just, like, provide me some specifics on, like, when was the sales force deployed? Are they fully trained? Like, everything smooth, you know, operations-wise? And, like, in the past, when you've done, like, sales force expansion like this, when does it start to really hit the revenue line?
I mean, as far as when they were fully deployed, I believe it was sometime beginning second quarter.
It was really kind of at the first quarter of 2024. So they were all hired by the end of 2023, and then we had our national sales meeting in January of 2024, at which point they went out into the field.
Yeah. All right. So let's talk about, like, just pricing on what you're seeing. I mean, there are a few different elements to this. Just if you can comment on, like, for Tyvaso, the Medicare Part D redesign, which I know that you have, like, a phase-in for that next year. And for the PBM utilization, like, what are your assumptions for, like, 2025? How does that shake out? Is there any difference that we should see compared to what has been seen for 2024?
Yeah, so in 2024, we saw a decrease in PAH patients. And that was really driven by the reduction in out-of-pocket costs for Part D, which affects Tyvaso DPI and Orenitram. And as we move into 2025, there's going to be further provisions that kick in that should reduce out-of-pocket costs even further. So we're expecting to see another step down in 2025 of patients that need assistance. So that's very, very helpful. Counter to that, of course, there's the manufacturer cost sharing of that program with the pharmacy benefit managers. And as part of that, we've been classified as a small manufacturer by CMS, which means our contribution to that starts at 1% and not the 20% for a large manufacturer. So as part of that, though, however, that has to be made up by the benefit managers.
What we've done is negotiated some contracts with them to get ahead of that pain because we do expect that they'll want their pound of flesh as a result of the additional contribution that they'll have to make on our behalf as a small manufacturer.
Yeah. I know, like, another dynamic that you guys, like, talked about on the third quarter conference call is just, like, this PBM contracting, right? Overall, can you remind us, like, what percentage of your book of business is Medicare Part D? Like, that's where I think some of the, like, the contracting has taken place. And then the contracts that you are getting into, like, do you believe that provide sufficient rebating to grow through the competitive impact in 2025?
Yeah, so as far as Medicare is concerned, we have previously stated and still state this today that about half of our business is Medicare. With PH-ILD, it's maybe skewed a little bit higher on the Medicare side. And what we've done to get ahead of that is done some contracting, really, for twofold reason. One is to bring clarity to the pricing and the potential impact of the IRA provisions kicking in in 2025. And then as well as to put us so that we're not disadvantaged to some of our branded competitors that are present today and potentially in the future. So we'll be on par with them, and we won't be disadvantaged as far as prescribing those. So that was proactive on our behalf. And again, it was really to avoid any lack of clarity around what the business was going to look like going forward.
Great. Maybe, and then, like, in terms of the manufacturing capacity, I haven't heard that a lot. Like, more recently, I would say, like, it was, like, a big topic in 2023 when you talked about, like, some specific numbers around through your partner, just, like, trying to get to, like, this 25,000 patients per year in DPI supply. Can you remind us, like, where we are? I know this is a topic that must be very close to your heart, Patrick.
Yeah, so certainly in 2023, we began efforts to expand capacity at our partner's facility, MannKind, up in Danbury, Connecticut, and of course, capacity expansion doesn't happen quickly. It's a long-term project. A lot of the things that we've done have largely been completed, so that involved some process changes to boost yield and higher capacity equipment. So what we've done in 2024 as a result of that, and really, you know, I would emphasize this is a true partnership with MannKind, and it was great that we were able to work together to do this very quickly. Throughout 2024, we were able to build inventory to a place where we're much more comfortable, and in 2025, we'll continue to do that. So I would say that we're pretty much there at the 25,000 patient output capacity.
Now, in addition to that, we're building our own facility on our North Carolina campus, which is designed to add an additional 50,000 patients of capacity for DPI, and that'll come online sometime in late 2027, so we think we're really well positioned for the current business as well as the future business, potentially with IPF and PPF.
Excellent. So let's talk about this expansion. I mean, like, clearly, like, IPF is a big part of the focus for the story for next year. Lots of excitement around it amongst investors. Like, can you help us understand, like, how do you see the data backing it up from, like, a clinical standpoint or mechanistically? Why do you think, like, IPF, like, Tyvaso would work in, like, IPF setting?
Yeah, so when we ran the INCREASE study for PH-ILD, there was a subset of patients with IPF. And with that subset, we saw an increase in FVC. So really, that was very encouraging to see that data. And that really gave us the confidence to move forward with a full-blown study examining IPF. What's interesting about treprostinil is it activates a number of receptors. And certainly, some of those are, you know, impact vasodilation. And however, they also have some antifibrotic impact as well. And so really, what we say today is treprostinil is much more than a vasodilator. And again, the outcome of the study will hopefully show that. Do you want to throw some more info in there?
Yeah, so there's three pathways that are commonly known that treprostinil does that vasodilate, and that's EP2, IP, and DP1. But there's really EP2 and DP1 also play a role in antifibrotic properties as well as PPAR-beta. So EP2 inhibits, when it's activated, it inhibits fibroblast to myofibroblast differentiation. And then when you activate DP1, it reduces inflammatory cell recruitment, and it reduces the extracellular matrix synthesis involved in fibrosis. And then really interesting is PPAR-beta. When it's activated, it suppresses fibroblast proliferation. So we've known that treprostinil is antifibrotic proliferative in nature. But this is evidence that it's actually working on one of the specific pathways that's been of a concern.
So as you look at, like, TETON 1 and 2 studies, like, do you think that we would get the data for both of these studies by the end of 2025? Or just, like, we can put a fine point on that.
TETON 2 is fully enrolled. And so we expect to see top-line data from that sometime, say, around end of Q3, start of Q4 of 2025.
We've been saying second half of 2025.
Yeah, somewhere in that second half.
Yeah. I'll take the late Q3 or late Q4.
Yeah, so TETON 1 is not fully enrolled, and again, we expect to see that enrolled sometime by the end of the year, beginning of next year, and that readout will take, say, a year or a little over a year, so right now, sometime in 2026, first half of 2026. We need TETON 1 to file in the U.S. We need both studies to file outside of the U.S. and Europe, so if all goes well, filings hopefully in 2026.
Yeah, big part of the focus for the story for 2025. So really looking forward to that. I guess the other thing also just starting to get from investors is, you know, the Merck's Winrevair. This used to be a big focus on the story, but now it's sort of, like, gone on the back burner a little bit. And now there is some set of investors that have been getting questions on that. Are we going to see some, like, tail impact of Winrevair on Tyvaso or some of your other products in second half of 2025? So the theory, and I've heard this from some physicians as well, that let's say these patients who were started on Winrevair, they were on background treprostinil therapy.
When these patients, like, do well for a period of time, do physicians start to think about, like, simplifying the treatment algorithm? So just curious to, you know, know your thoughts on what do you think can happen. Or this is another, like, five-year-old situation, and we don't necessarily see any meaningful impact on numbers.
So we haven't seen any evidence thus far of Winrevair reducing use of prostacyclins. I think with the treatment paradigm of PAH, it involves multiple products because there's multiple mechanisms at play. And what we see is that physicians are additive and not subtractive. So we call it the four corners approach, where taking maybe a page out of Dean Smith's playbook here, but where they use multiple products to treat the multiple mechanisms of PAH. Prostacyclin has got a role there. And certainly, Winrevair is good for the PAH community. And any product that allows people to live longer and better lives certainly allows them to also be on prostacyclin longer. So we view it as a positive for our business. Now, there might be what we call de-escalation, where a patient might move from a parenteral product like Remodulin down to Tyvaso or Orenitram.
However, that's still just fine for us. But again, I think Winrevair is going to have a positive impact on our business simply because prostacyclin is always going to have a role in the treatment paradigm.
Right. So I think I wanted to switch gears and talk about, like, xenotransplantation. So I know you had the IND plan. Earlier, it was that you were guiding to, like, first half 2025, but, like, on third quarter call, you said that it can happen shortly. Anything on, like, what's happening behind the scenes on what helped you accelerate that timeline? And when we do get to that, like, IND acceptance, like, what information would you communicate to the street? Either about, like, trial design, what was the conversation with the FDA, anything of that nature?
Yeah, so of course, we've been working with FDA very closely for quite some time. And what's happened recently is we've had some exchange of information with FDA around the IND. So we have full clarity from them on what they expect to see in the IND. And that's going to allow us now to go forward and file an IND in what we'll call a shortly. And then once the IND is filed, it'll be a 30-day clearance. And really, at that time, we'll be able to share some of the details around study design and things of that nature. So we're very excited. It's real, and it's progressing rapidly. So all of that should happen, again, in a short amount of time. And we expect to then move quickly into the first transplant from there. And this would be for the 10-gene kidney.
Yeah, yeah. And then I think for this, yeah, anything that you would, you know, like, be willing to share on, like, what was the interaction with the FDA to the extent that you can comment on, like, does that give you really comfort that, okay, you're heading in the right direction for the IND?
Yeah, certainly the information that FDA gave us was encouraging and very positive. And really, it was around understanding what their expectations were around study design and some of the preclinical data that they needed to see. So again, that's been worked out. And we feel very comfortable now that we can file an IND, and it will be cleared within 30 days.
Yeah. I think I've asked this before, like, there's another company, you know, it's a private company that is pursuing, like, a similar path, but their approach and technology is very different versus you, and sort of, like, coming to the FDA around the same timeline, coming with an IND. Is there any, like, collective thinking from the FDA when they look across the two programs or any sort of contingency from one program to the other? Or is it just, like, totality of, like, one program that really drives the thinking in terms of giving an acceptance on the go-ahead?
I think FDA, ourselves, and other companies in this business realize that one company can't solve it on its own. When you look at the market opportunity, it's pretty vast, especially with kidney disease. There's 500,000 people on dialysis today that are not eligible for kidney transplant. One company cannot solve that. We need other companies to participate. FDA recognizes also this is a dire need. The impact on lives and really the impact on Medicare is gigantic. I think there's a very collaborative approach happening. We'll need everyone to be successful in order to solve these issues.
Yeah. And in terms of how you think about this opportunity, right, like, on the kidney side, is it more of, like, one organ transplanted that can last with the patient for a foreseeable future? Or is there, excuse me, more of, like, a finite time period during which the organ is used, and then you might need another organ to surpass that?
It's our wish that it lasts a long time. And the availability of human organs for transplant is limited and really dependent on donors and, in some cases, for other people to pass away in order to access those organs. So if it ends up being finite, again, having the organs available is going to help, obviously. But our goal is for it to last a long time. And hopefully, the clinical trial proves that out.
And these are patients that are generally going on dialysis. And dialysis is a lifeline for patients for eight to 10 years. And that's a rapidly declining quality of life for those patients. And so if we're able to give a patient a xenotransplant and free them from the shackles of dialysis with a better quality of life and get them longer than eight to 10 years, then that's a win. And allotransplant, if you think about the age of the organ, it's probably the same age as you. So if you're 35 or 45, you're probably getting it from someone who's 35 or 45 years old. You're not getting a brand new kidney. With xenotransplantation, one of the key benefits of xenotransplantation is you're getting an organ that's a year old, maybe. And the pigs have lifespans of 20 to 30 years.
And so theoretically, and obviously, it will take us 20 or 30 years to prove this out, you can get an organ that can last just as long as an allotransplant.
So when you think about, like, I don't want to jump the gun and start to ask questions about clinical trial design, but just in terms of, like, when you're thinking about the market opportunity, right, like, is it more that it's, like, on top of dialysis that these patients might be provided like a xeno kidney, or is it in place of?
It's in place of dialysis. The idea is to free them from dialysis. There'd be no advantage to xenotransplantation, the immunosuppression associated with that, and being on dialysis. That would not be beneficial for the patient.
Got it. Okay. And then I know that you've talked about the commercial DPF buildout as well. So once you start to get clarity from the IND, anything that you would want to share on, like, what sort of the contours of how much of an investment that would be, how much time it would take, like, just how you're thinking about that?
Yeah, I mean, it's going to be a big capital outlay for us. And really, as Martine's mentioned on the calls, it'll be a multi-billion-dollar outlay. I think what's good about it is certainly when we make the decision to proceed with that construction, that's not all going to be spent in one day. It's going to be spent over multiple years. And there'll be opportunities to control the timeline based on the data we're seeing. So if the clinical trial is taking longer than we anticipated, we can slow that work or stop it and restart at another time. So I think the other piece to make sure people understand is we do have our clinical scale DPF, and that's in operation right now in Western Virginia. That facility, although we call it the clinical scale DPF, that facility is perfectly capable of producing commercial organs as well.
We've committed to building another facility and have started construction in Minnesota, in the Rochester, Minnesota area. That will be of similar size to the facility in Virginia. Will bring us some redundancy and some added capacity as we progress through the trial. And then at some point, post-IND clearance, we'll begin construction of a commercial scale facility at some point. And again, that'll take some time to do and some time to populate. But as we move forward, it'll be designed to align with anticipated commercial approval.
Yeah. I would say, like, from a capital allocation perspective, yes, like, xeno is definitely more important, but, like, the amount of cash that the business is generating, even with, let's say, like, a commitment to a commercial DPF, you still have surplus cash. Whereas in the past, like, several years, I haven't seen any significant business development from United Therapeutics. I think the last time when we saw was this ralinepag, which has been several years. Just what makes you take that approach toward business development? Like, why not be more aggressive and go out and buy asset, like, try to get more growth? Any thoughts on that?
Yeah. So I mean, just last year, we did buy Miromatrix and IVIVA, and we made a pretty significant investment in our small molecule business in a licensing deal. So we are doing things, maybe not at the scale of ralinepag. However, activity is happening. We get calls every day. And I think we're in a really strong position to be very selective about who we choose to do business with and how we make decisions around acquisitions. Our business is performing at a very high level, as you know. We're focused on xeno. But as we look at things, we're going to look for good fits with what we do well. So orphan drugs, cardiopulmonary, oncology products that would potentially complement Unituxin. And then leverage our skill sets where we have significant manufacturing capabilities, clinical trial management, and design.
So all these things are considerations when we look at opportunities. But as we sit today, again, we're very confident in our business, and that really allows us to be very disciplined and selective when we look at.