Good morning, and welcome to the United Therapeutics Corporation First Quarter 2024 Earnings Webcast. My name is Danielle, and I will be your conference operator today. [Operator Instructions] Please note, this call is being recorded. [Operator Instructions]. I will now turn the webcast over to Dewey Steadman, Head of Investor Relations at United Therapeutics.

Thank you, Danielle, and good morning. It's my pleasure to welcome you to the United Therapeutics Corporation First Quarter 2024 Earnings Webcast. Remarks today will include forward-looking statements representing our expectations or beliefs regarding future events. These statements will 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, and we assume no obligation to update forward-looking statements. Today's remarks may discuss the progress and results of clinical trials or other developments with respect to our products, and these remarks are intended solely to educate investors and are not intended to serve as the basics 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 the products are available on our website. 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; Dr. Leigh Peterson, our Executive Vice President of Product Development and Xenotransplantation; and Pat Poisson, our Executive Vice President of Technical Operations. Note that Pat Poisson and I will present in a fireside chat session and one-on-one meetings at the Goldman Sachs Global Healthcare Conference on June 12 in Miami. Also, our scientific medical and commercial teams will present at the American Thoracic Society International Conference, May 17 through the 22nd in San Diego, the Seventh World Symposium on Pulmonary hypertension, June 29 to July 1 in Barcelona and the Pulmonary Hypertension Association's 2024 International PH Conference and Scientific Sessions, August 15 to 18 in Indianapolis. Now I will turn the webcast over to James Edgemond, our CFO and Treasurer, for some brief comments on our recent accelerated share repurchase plan followed by Martine and Michael for an overview of our first quarter 2024 financial results and the business activities of United Therapeutics. James?

Thank you, Dewey, and good morning, everyone. In our meetings with shareholders over the last several years, we've noticed a common theme. Shareholders are excited about our potential, both the continued growth in our foundational core business and our innovative organ manufacturing opportunities, and they are also impressed by our P&L philosophy that results in outstanding cash flow generation to support our ways of growth. So we recognize that there has been a disconnect between our desire to preserve capital to support our ambitious long-term organ manufacturing goals and some shareholder perspectives around capital allocation. We continue to follow our 3 capital allocation priorities, which in order are: first, to invest in our commercial and R&D opportunities through P&L spend as well as capital outlays like our new North Carolina manufacturing facility. Our second priority to pursue intelligent business and corporate development opportunities that enhance our rare disease focus and complement our organ manufacturing initiatives like bolt-on M&A and in-license opportunities. And our third priority to return capital to shareholders like share repurchases and we consider all 3 priorities when deploying our financial capital. Over the last year, we've learned a great deal about the size, the staging and the timing for capital expenditures associated with the construction and commissioning of our designated pathogen-free facilities or DPFs, to support our Xenotransplantation efforts. With the commissioning of our Christiansburg, Virginia clinical scale DPF last quarter, we now better understand the phasing of capital spending associated with the commercial scale DPF construction project for the commercial launch of our Xeno organs. With this improved awareness of our future cash outlays and taking into consideration our near-term cash flow generation potential. We saw an opportunity to return capital to you, our shareholders. To deploy the UT fit and announced on March 25, a…

Thank you, James. Good morning, everyone. I'm going to let the next few slides speak for themselves and forego a script in favor of speaking directly from the perspective of being our CEO. We have had a fantastic quarter, coming on the heels of previous great quarters and we are confident continued good news will flow in the quarters ahead. The main basis for our confidence is that we have multiple best-in-category products for growing indications Remodulin for parenteral or PAH, Orenitram for oral prostacyclin in PAH, Tyvaso for inhaled treatment of both PAH Group I and PAH Group III in interstitial lung disease and Unituxin for neuroblastoma. Other categories of good news in the years ahead are clinical trial outcomes. We have 3 Phase III trials in varieties of pulmonary fibrosis known as the TETON trial and another Phase III trial of a best-in-class oral prostacyclin agonist called OUTCOMES. Upon approval and market launch the products from these Phase III trials could help more than twice the number of people that we are helping today. And there's even more good news in the area of organ manufacturing. We have now successfully enabled hundreds of additional lungs to be transplanted. We have now built a Xenotransplantation facility with the potential for over 100 Xeno Hearts and 200 Xeno kidneys a year to be transplanted. We have now commenced a clinical trial of a Xeno liver assistance product. And we have now helped to save the life of a woman in New York with our manufactured ThymoKidney. Now let me comment on a few topics that I've heard some questions about. First, the big buyback. James did a superb overview of every aspect of that. We did the recent $1 billion stock buyback because the stock is too cheap, full stop.…

Thanks, Martine. I will. Good morning, everybody. As Martine noted, today, we report yet another quarter of record revenue at $678 million and 34% growth from the first quarter of 2023. We saw meaningful growth for all of our key products, Tyvaso Orenitram, Remodulin and Unituxin. Before I get into the details on each of the products, I just want to take a moment to thank all of our fellow Unitarians for an amazing quarter. First, I want to talk about Tyvaso, which when viewing the nebulizer and dry powder inhaler delivery systems together represents our largest product and remains the #1 prescribed prostacyclin treatment in the U.S. Total Tyvaso revenue for the first quarter was $373 million, up 56% over last year, with growth led by continued uptake of Tyvaso DPI, our regular annual price increase and the increased commercial utilization following the implementation of the Part D redesign provisions under the Inflation Reduction Act, or IRA. Again, this quarter, there were no material changes in inventories of Tyvaso DPI at our specialty pharmacy distributors. During the first quarter, and both distributors remain within their contracted inventory levels. After a relatively consistent monthly referral rate over the course of 2023, referrals are what we call prescriptions, we saw a nice positive trend break in referral levels for both DPI and Nebulizer in the first quarter with about a 10% to 15% total increase in monthly referrals. This is continuing at least so far into the second quarter. Patient starts also increased, but at a lesser rate during the first quarter, but this is not surprising as there is often a many week lag between referrals and starts. But it does appear that starts per month are increasing in line with the first quarter referral level into the second quarter.…

Thank you, Mike, for that superb overview and deep dive into so many key and important details of all of our different products. It's literally a historic quarter. It's the best we've ever had. Operator, we're ready for the first question.

[Operator Instructions] The first question comes from Terence Flynn from Morgan Stanley.

Maybe a 2 part from me. I was just wondering what you're seeing now with respect to breadth of prescribing for Tyvaso and ILD. I know you went to a broader prescriber audience sometime last year, and you have the new sales force, but just wondering if you can comment at all there. And then can you provide the percentage of Remodulin patients that are now on the Remunity pump?

Thank you, Terence. And congratulations on being over at Morgan Stanley now. Mike, given the queue, feel free to answer as much of that question as you feel time permits.

Yes, sure. So on the breadth of prescribing, I mean, overall, we're continuing to see growth in both breadth and depth. But I think a lot of that is attributable to, again, just the work and pounding the pavement that we've been doing over the last couple of years and gaining traction with new prescribers. As I said in my opening remarks, we now have the expanded sales force fully deployed. It's going to take time for them to build relationships. And so I think we'll really start to see the impact of that effort as we move into the third quarter, really. So that could be -- we're expecting continued breadth as we move on. One answer is interesting statistic I was looking at, is if you look at ILD, historically ILD physicians that didn't have experience writing for PAH products. Over the last 15 months, we've seen a 50%, so 5-0 percent increase in breadth. And then the depth is which we measure by that 3-plus metric that I've mentioned on prior calls, has increased by -- and that group has increased by about 30%. So we are really starting to get traction in any ILD community, not only on a referral basis that we've had, but also on an actual writing basis. So really happy to see that. Just quickly on Remunity. Right now, we've got the vast majority of patients are on Remunity. I think there's maybe a few hundreds left that need to be transitioned. And as I said, I think specialty pharmacies are looking to probably get those transitioned over to Remunity by the end of the year.

Thanks so much, Mike, for the fully comprehensive answer. Terence, hopefully, that addressed all your concerns. Next question.

The next question comes from Roanna Ruiz from Leerink.

So I was curious, what are your field reps hearing on the ground from physicians around the sotatercept approval and launch, if you're able to say? And bigger picture, what's your outlook on the future in terms of combined use of Tyvaso with sotatercept and prescribers consideration of both these products?

Great. That would also be within President, Benkowitz's purview. So Mike, take it away.

Sure. Thanks for the question. So with sotatercept, it's been -- in terms of the launch, it's effectively been relatively quiet. I mean I think what we've heard through the Rumour mill as they're supposed to launch this week, but it's been a little bit quiet. So I mean it's probably a question best direct to Merck on what their launch plans are. The second point on what's our outlook for the use of our products with sotatercept, I think as we've said in prior quarters and as I mentioned in my opening remarks, we really look at this as being a complementary product to the existing products that are on the market. It's not a cure. It's not a replacement for prostacyclin. We don't expect that existing patients are going to be transitioned off of a prostacyclin as a result of sotatercept. We -- almost 70% of the patients in the clinical trial broad background prostacyclin therapy. So certainly, we think and based on conversations, we think largely sotatercept is going to be used in combination with the prostacyclin therapy. And if it works well and patients are able to live longer then that means that they're staying on our products longer, which helps us from a financial standpoint. So that's kind of what we've been hearing for the last, I would say, 6 to 9 months and what we hear in the fourth quarter.

Excellent, Michael. Thank you so much. Operator, we have time for about 2 more questions. Next question.

The next question comes from Ash Verma from UBS.

Congrats on all the progress. So I had to -- like for Xenotransplantation, can you comment on, how do you decide which and how many genes are modified? There's another player in this field, which is using a slightly different approach. How confident are you that your level and selection of gene modification is the most appropriate approach here? And then secondly, I wanted to understand the -- some of the pricing pushes and pulls for 2025 across your portfolio. I mean clearly, there is a benefit that you get from the co-pay normalization with IRA out of pocket going to 2,000, but then also the donut hole impact. Net-net, does that shake out as a headwind or tailwind on 2025 pricing?

So Ash, thank you for your questions and great analyst coverage, but there's only going to be time to answer the first question. Each of those questions would take an hour to like fully delve into. Fortunately, we have on the call our Executive Vice President for Product Development and Xenotransplantation, Dr. Peterson. And Leigh, can you answer the Xeno question?

Yes, of course. Thanks for this question. And so as you know, at United Therapeutics, we believe on multiple shots on goal. So in fact, we are developing -- we have our Tianjin pig that we have where we're developing 2 different organs or Tianjin Xeno kidney as well as our Tianjin Xeno heart. And then we also are developing our ThymoKidney, which is from a pig with a single genetic modification. And this was the organ that was transplanted into the recent NYU patients. And we actually have good scientific rationale as well as preclinical evidence that both of these products, again, with a single genetic modification as well as the Tianjin pig are effective. And again, there's advantages to both, at least from the scientific rationale. So but really to establish the scientific safety and efficacy of each. We need to conduct clinical studies and we're planning on doing those for both of these products. And ideally, we will receive approval for multiple products. And which will allow different options for patients and enhanced available supply. So again, your question is, is the obvious question, which is better. Well, we again, advantages to both, and we'll be testing those in our clinical studies in the near future.

Thanks so much, Leigh. Fantastic answer. Operator, last question, please.

The next question comes from Joseph Thome from TD Cowen.

Congrats on the progress. Maybe one more on the Xenotransplantation side. Maybe where do you see the importance of using a CD40, CD154, product in Xenotransplantation? I know preclinically, I think you looked at both with and without maybe what will impact your decision to take a CD40, 154 into the human clinical study or not?

Okay. Very good. Dr. Peterson, would you like to also address that question?

Yes. well, the main difference is that the CD40, there are no agents that -- with the CD40 blockade mechanism of action approved by FDA for use in any indication, actually. And so what we chose to do is if you look at the background in the history, most Xenotransplantation, at least with the clinical -- preclinical models, those studies were done with the CD40 blockade. But our study that we're doing, we actually have 2 arms, CD40 blockade as well as with conventional immunosuppression in our baboon IND-enabling studies, and we're getting good results with both. And in fact, there was a publication that recently came out by Ivinson at all 2024, that discusses a case the -- a really significant case where an a baboon was transplanted with standard of care regimens and survived for 9.5 months, which has never -- absolutely never been seen, and we have some reasons why that happens. So we prefer to go into a clinical study with approved medicines to not introduce another variable into the study. And again, we're backing it up with our pre-clinical studies, and we're seeing good results in the model. So that's where we're going first.

Thank you so much, Dr. Peterson, very comprehensive answer. Operator, you can now conclude the call.

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. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.