Good morning, and welcome to the United Therapeutics Corporation Second Quarter 2022 Earnings Webcast. My name is Dennis, and I will be your conference operator today. I will now turn the webcast over to Dewey Steadman, Head of Investor Relations at United Therapeutics.

Good morning. Thank you, Dennis. It's my pleasure to welcome you to the United Therapeutics Corporation Second Quarter 2022 Earnings Webcast. Accompanying me on today's call are Dr. Martine Rothblatt, our Chairperson and Chief Executive Officer; Michael Benkowitz, our President and Chief Operating Officer; James Edgemond, our Chief Financial Officer and Treasurer; Pat Poisson, our Executive Vice President of Technical Operations; and Dr. Leigh Peterson, our Senior Vice President of Product Development. Remarks today will include forward-looking statements representing our expectations or beliefs regarding future events. These statements involve risks and uncertainties that may cause actual results to differ materially. Our latest SEC filings, including Forms 10-K and 10-Q, contain additional information on these risks and uncertainties. We assume no obligation to update forward-looking statements. Today's remarks may discuss progress and details of clinical trials or other developments with respect to our products. These remarks are intended solely to educate investors and are not intended to serve as the basis for medical decision-making or to suggest that any products are safe and effective for any unapproved or investigational uses, and full prescribing information for these products are available on our website. Now I'll turn the webcast over to Dr. Rothblatt for an overview of the second quarter 2022 financial results and business activities of United Therapeutics. Martine?

Thanks, Dewey. Good morning, everyone, and welcome to our second quarter 2022 earnings call. We've hammered all of our numbers this past quarter, and the 31% growth reported in our Tyvaso sales is truly impressive, actually for me even eye-popping, and very comforting because we continue at this 30-plus percent growth rate. Year-over-year, we will have achieved our stated goal of 25,000 patients while we double our numbers every 2.5 years at that percentage growth rate, so we will be able to achieve our 25,000 patient goal on target. Rather than have me read the entire release, why don't we take a kind of 30,000-foot strategic overview of where we are and where we are going. We are now at nearly a $2 billion per year revenue run rate. And that really puts us on the cusp of 3 new generations of revenue at United Therapeutics. So I'm going to expand at this, where we are right now at a $2 billion revenue run rate and look out and see where are we going to go from here. And I think that there are 3 peaks coming in the years ahead. The first generation or the first next peak of revenue will be to double our $2 billion of revenue to around 2025 by expansion of our oral, inhaled, incredible products in pulmonary hypertension. These products include our launched products such as Orenitram, Tyvaso, Tyvaso DPI and Remunity, as well as our late-stage pipeline products such as ralinepag and Tyvaso for COPD. The launched products alone get us to a revenue doubling, as I just described in the beginning of my presentation, largely just by penetration of WHO Group 3 pulmonary hypertension by Tyvaso, the type of results that you see so outstandingly presented in this quarter's numbers. All of…

Thanks, Martine, and good morning, everyone. We're very pleased to have achieved double-digit year-over-year revenue growth in our treprostinil business. And not only that, but we reached all-time high quarterly revenues for both Tyvaso and the total treprostinil business. As usual, I'll provide some additional commercial color for each of our 4 main products, focusing primarily on our patient metrics. I remind everyone that our quarterly treprostinil revenue does not always track exactly with quarterly underlying patient demand due to specialty pharmacy ordering patterns, which can be seasonal. I'll start with Tyvaso, which saw 3 similar events in the second quarter. First, we were thrilled to receive FDA approval for Tyvaso DPI in May. This is the culmination of years of work by teams at United Therapeutics and our partners at MannKind. We were able to make our first shipments to specialty pharmacies in June, and the first patient started on therapy shortly thereafter. Physician engagement and enthusiasm around this new product is extremely high, which has translated into strong referrals or prescriptions and starts in the third quarter. Secondly, the CMS coverage update to include Tyvaso for PH-ILD that went into effect in early June had a positive impact on new referrals late in the quarter, which like Tyvaso DPI continues into the third quarter. As a reminder, CMS patients who started in our patient access programs before the coverage decision took effect will remain in those programs through the close of the calendar year and then will convert to commercial patients next year. However, we have been aware that many physicians waiting for a CMS -- were waiting for a CMS coverage decision before referring their Medicare patients for Tyvaso therapy, so it has been nice to see an uptick here. Finally, after two quarters of modest patient…

Thanks, Mike. Those are superb results so nicely reviewed by you. Operator, can you please open the lines? And any questions that come in, I'll be happy to refer them to the executive on the call whose area best fits with.

And your first question is from the line of Hartaj Singh with Oppenheimer & Co.

Really nice results, everyone, so congratulations. Just now that DPI is approved, just a question on generally United Therapeutics' sort of IP portfolio. I mean could you, Martine, generate more IP over from DPI that we would -- we could hope to see over the next few months? And then maybe just talk a little bit about just your -- the IP that you're generating through innovation with drug delivery like Remunity and potentially future ralinepag, et cetera. I really appreciate the questions.

Yes. Thanks so much, Hartaj, and so nice to hear your voice this morning. It's a really great question. We have a robust IP program at UT. We are very, very fortunate to have in-house IP Counsel, who is an expert in the field and who works directly for our General Counsel, Paul Mahon. His name is Shaun Snader. And fortunately, he is extremely knowledgeable and proficient in the area of biotechnology, biochemistry, pharmacology as well as drug device technology. So he constantly engages in kind of like a round-robin set of discussions with members of our product development team, drug device team, chemistry team, organ manufacturing team and ends up with a continuous stream of new patent filings, especially here in the U.S., but also overseas. So I feel we're very confident that we will have a major new IP that we will be able to benefit from coming out throughout the balance of this decade in every area of our business, whether it is pulmonary hypertension, pulmonary fibrosis, COPD, organ manufacturing. Wherever we are able to demonstrate something that is unique and innovative and meets all of the criteria for patenting, Sean is going to be on that. And I think going forward, the core competency ultimately of UT is going to be its intellectual property portfolio. Thanks so much, Hartaj, for the question.

Your next question is from the line of Eun Yang with Jefferies.

Great quarter. I have a question on Phase III PERFECT trial in COPD patients. So you modified the trial with the increased number of patients and shouldered single-treatment period over 12 weeks. So can you give us -- kind of elaborate on the reason why you changed the study protocol and with this, when we might expect the data?

Yes. Thank you, Eun, for your question this morning, and thanks for joining the call. So we modified the trial from -- we actually just triggered a part of the trial as filed, which we had a preplanned opportunity to switch from the crossover design to a parallel design. And we were able to make that decision according to the preapproved protocol design with the FDA and as preapproved by all the IRBs at 2 or 3 different points during the trial. So at each of those points, we would ask ourselves, would switching from a crossover to a parallel design increase our probability even higher of having a successful outcome? And of course, always what we are obsessed with is having the highest possible probability of a successful outcome. And when this opportunity arose, I guess, it was like 2 months ago now, we decided collectively that if we switched from the crossover to the parallel design, we would be able to increase our odds of having a successful outcome. Even though we probably would have been successful with the crossover, but why rest on probably when you can do it even higher level of assurance? We're all about success here at UT. So we went ahead and triggered the preapproved switch from the crossover over to the parallel. In terms of when, it's -- we're continuing to enroll that study quite aggressively. All of the patients from the crossover, they flip over into the N for the parallel design. So I think that the study will read out in time to produce the additional patients. Like I said in my introductory remarks, these pipeline patients are -- I mean, the product pipeline patients are not necessary for us doubling our revenues in the next few years, but they're gravy on top of that. So over the next -- it's in the middle of the Phase III. So within the normal and customary time frame, we're completing these Phase III studies -- we'll be able to complete that study as a parallel side study.

Your next question is from the line of Joe Thome with Cowen.

Congrats on the excellent progress this quarter. Maybe just in terms of Tyvaso, can you comment on the penetration that you're seeing into more traditional ILD physicians in that PH-ILD launch for Tyvaso? And should this new CMS Medicare coverage decision and the DPI launch fuel uptake at these physician centers?

Yes. Thank you, Joe. Super like the question, getting really right to the marrow of what's going on in the very exciting growth figures that we have for Tyvaso. And I'm going to refer that question over to Mike Benkowitz to do a deep dive on the answer.

Sure. Thanks, Martine. Thanks, Joe, for the question. Yes, in terms of penetration with the PH-ILD prescriber base, we have seen an uptick there in the second quarter. And I think the inflection point or the tipping point for us with respect to those physicians was really towards the end of the first quarter of this year when it just seemed that access to our sales reps opened up, coupled with the return to in-person health care conferences. So we have the ISHLT conference in Boston. We had the ATS conference in San Francisco. Both conferences well attended, really gave us an opportunity, our teams -- a big opportunity to get back out in front of physicians and continue to talk about PH-ILD and Tyvaso in that indication, both on a one-on-one basis but also in terms of publications, presentations, poster presentations, what have you. And I think really since then, we're starting to see, like I said, a nice uptick. I think I'd have to go back to confirm this. But I believe we added somewhere -- we increased our prescriber base by about 15% to 20% just in the second quarter alone, and a lot of that coming from the typical ILD treaters. So we definitely see some momentum there. And then the second part of your question, we absolutely believe the CMS coverage decision and a DPI will help us continue to penetrate in that prescriber base. I think as we've said for multiple quarters, we have heard anecdotally that physicians have been waiting for the coverage decision just to make it easier to get the patients through the reimbursement process. And then obviously, with Tyvaso DPI, you have a more convenient delivery mechanism. So we think both of those things will continue to add and allow us to continue to grow our prescriber base as we move through the second half of the year.

Your next question is from the line of Jessica Fye with JPMorgan.

I was hoping you could elaborate on where you see near-term DPI starts coming from. Like how much use over the coming months do you think will come from new starts versus switches from nebulized Tyvaso? And also, has there been any evolution to your thinking about the potential eventual mix between nebulized Tyvaso and Tyvaso DPI since you commented on that last quarter? And can you just remind us of your thinking there?

Thank you, Jess, and really interesting questions, back to like kind of the heart of the business here. So, so cool. I'm going to maybe comment on your second question, and then I'm going to bounce it over to Mike on your first question. Our view is that there's going to be a, kind of, a leveling out at about 50-50 between nebulized and Tyvaso DPI. And you -- it's really very comparable to what we've seen over the years between subcu and IV in terms of parenteral. I mean, of course, most people would think -- hello? Yes. Of course, most people would think that subcu was so much more convenient than IV that everybody would go on subcu, but it doesn't really work that way. And the fact of the matter is, depending on people's particular medical conditions, IV is a better solution for them than subcu. And while we are super excited about DPI and confident that it is the most convenient way imaginable to take Tyvaso, I think because of people's particular medical conditions, long term, you're going to see about a 50-50 mix between the nebulized and DPI form of Tyvaso. But with those comments on your second question, I think really the much more exciting information will come from Mike on your first question. Mike?

Sure. Thanks, Martine. Jess, yes, I think in terms of the mix between transitions and starts, it's -- there's not really -- we're not really preferring or going after one versus the other. When we launched in June -- when you get an approval, there's some logistical things that have to happen. You have to print the -- print the final label, you have to get packaging, you have to get kitting, et cetera, et cetera. And so -- this is just, I guess, more for your information, we started off by printing the maintenance kits for those patients that were already on the nebulizer. So those were sort of the kits that kind of came off the line first. And then a couple of weeks behind that, we have the titration packs for new patients. So at this point, whether you're on the nebulizer with the TD-300 and want to transition, you're able to do that. Whether you're a de novo patient and want to start -- need to start on the prostacyclin, we're able to do that as well. So I think as we move through the balance of the year, I think we're going to see -- I would expect a roughly equal mix of both transitions and new patients.

Your next question is from the line of Andreas Argyrides with Wedbush Securities.

I'm going to piggyback off Jessica's last one. And we recently conducted a care well call with a PHA expert. And he noted that there's a big opportunity for DPI and PH-ILD. So if you can provide that mix that you mentioned about 50-50 for DPI specifically, that would be great. And then maybe to focus on the pipeline a bit, what can we expect next from the organ transplantation programs?

Sure. So yes, that 50-50 split, approximately, obviously, it's not exactly, is across the board for PAH, whether Group 1 or Group 3. And with regard to your organ question, we have 2 executives on the call. We have Pat Poisson, who is our Executive Vice President for Technical Operations, which includes the construction of our pathogen-free facility. And we have Dr. Leigh Peterson, who is in charge of product development, which includes our xeno-kidney and xenoheart programs. So maybe Pat first, if you could say a word or 2 about the manufacturing aspects of the organ business. And then, Leigh, if you could say a word or 2 about the product development aspects.

Yes, sure. Thanks, Martine. So we've made really great progress over the last 3 months or so with the DPI facility. In Q2, we completed design of that facility. At the very end of the quarter, at least, we're anticipating substantial completion of the facility by the end of '23 and being prepared to support any xeno trials that will start in '24.

Thanks, Pat. Dr. Peterson?

Yes. So thanks for the question. We're continuing to dialogue with the FDA about a clinical path forward. And in the meantime, we're working with our academic partners and continuing to conduct nonhuman primate studies. And when appropriate, the academic partners will also be conducting the xeno donor studies, like those previously conducted and reported at NYU and UAB. And it's also up to the academic partners, but we expect that there might be additional living on a compassionate use basis recipients before we actually start the formal clinical trial.

Thanks, Dr. Peterson. So it was really a great set of questions that we had this morning, and it's amazing, really because they kind of align very well with the 30,000-foot overview that I gave at the beginning. Hartaj's and Eun's question emphasize the ability of our current business to grow from our $2 billion revenue run rate to a $4 billion revenue run rate based on continued expansion of Tyvaso in particular, but also Remodulin and Orenitram in the existing approved indications, which are PAH, be it WHO Group 1 or Group 3. Then building on that, I think that Joe and Jess' questions cast really -- a really nice spotlight on DPI. And ultimately, DPI is going to be so important as we move into pulmonary fibrosis, which is our TETON study. And that study is now enrolling very strongly. And I just could not be more excited about the fact that I really believe we are going to prove our hypothesis that we have a disease-modifying treatment for pulmonary fibrosis. U.S. alone, 100,000 patients already being treated or diagnosed with pulmonary fibrosis. So those patients are easy to touch and identify. The other current prescriptions -- we are testing our drug to come on top of their current medications. So no need for physicians to do a switch decision or anything like that, just layer it on top. And I believe that business will double up again, some $4 billion up to $8 billion, even with just a 40% penetration of that market, notwithstanding it being a disease-modifying treatment based on the results of the study. And then finally, we have the really good question from Andreas about the organ manufacturing activity. And as Pat and Leigh pointed out, we are doing all of the strong platform work for that with our belief that we'll be able to monetize all of that IP. Again, a very good question raised by Hartaj about the IP. We'll be able to monetize all of that IP by the end of this decade and providing a super strong, large building, upon which we can build and build and build as we go from kidneys to heart to lungs, livers and other organs with our, really, portfolio of organ manufacturing activities, the xenotransplantation capability, the decell/recell activity and then the 3D bioprinting. So could not be more happy about United Therapeutics, and we really appreciate everybody joining us on this second quarter earnings call. Have a great day, everyone. Operator, you can wrap it up.

Thank you for participating in today's United Therapeutics Corporation earnings webcast. A rebroadcast of this webcast will be available for replay for 1 week by visiting the Events & Presentations section of the United Therapeutics Investor Relations website at ir.unither.com.