United Therapeutics Corporation (UTHR) Earnings Call Transcript

Everyone, good morning, and thank you for joining us on day 2 of Cowen's 42nd Annual Healthcare Conference. I'm Joe Thome, one of the senior biotech analyst here on the team at Cowen. And it is my pleasure to have with me today President and COO, Michael Benkowitz, of United Therapeutics. And I'm going to kick it over to Head of IR, Dewey Steadman, to read some forward-looking statements.

Hi. Good morning. Today's remarks will likely include forward-looking statements. And we encourage you to see our most recent SEC filings, including Form 10-K and Forms 10-Q available on the SEC EDGAR website. And with that, I'll turn it back over to you, Joe.

Thanks, Dewey. Mike, so maybe to just kick things off, obviously, been an exciting year for United over the past 12 months. Maybe if you could just hit the highlights and what are your key goals for 2022?

Sure, Joe. And good to see you and good to be with everybody today. Thanks for having us. I'm looking forward to our conversation this morning. Yes. So 2021 was a very exciting year for us: 2 product launches, our immunity launch, our launch of the PH-ILD, achieving double-digit revenue growth and patient growth during the year, very exciting. And really just -- as well as all the progress we made on our pipeline, which I think we're going to get into over the course of the next half hour or so. So it's -- really a very exciting year for us in '21. Turning to 2022, I think we're poised to have an even stronger year, more exciting year. So you may recall and investors may recall that last year, at the beginning of the year, we set a goal to double the number of Tyvaso patients from 3,000 to 6,000 by the end of 2022. So that's -- that continues to be a goal for us and we're tracking towards doing that. We were hoping to have an approval for our Tyvaso DPI product last fall. We've run into a couple of delays there. But we still feel good about where we are in that process and that we'll be able to secure approval for that product in the May time frame and be able to launch that into the second half of the year. And then like I said, we continue to make progress on enrolling in our 7 registration phase studies. So we have our TETON 1 study, which is looking at Tyvaso and IPF patients. TETON 2, which is a mere study of that in Europe. We have our PERFECT study, which is looking at Tyvaso patients with -- COPD patients with pulmonary hypertension. And we have our 2 ralinepag studies, our OUTCOME study and our CAPACITY study. And then our ex-vivo lung perfusion study, which we're hoping to wrap up this year and submit for registration. And then finally, our SAPPHIRE gene therapy study. So a busy year ahead of us, a lot of exciting things, and we're really looking forward to it.

Perfect. And I know the company has unveiled its 25x25 plan. Can you touch on this goal a little bit? How many patients are on United therapy right now? And what are kind of the key drivers for that growth? Is it all the indications that are approved right now? Or does some of those additional patient subsets play into that plan?

Sure. So our 25x25 goal is to have 25,000 patients on one of our therapies by the end of 2025. We ended 2021 -- I think we announced we're over 10,000 patients, so more than 40% of the way there. The growth is -- it's not just limited to our existing indications, existing products, although we still believe that we have a lot of growth potential with those existing indications and products. But with Tyvaso, like I said, we launched into PH-ILD last year with the INCREASE study. We think we have a lot of runway ahead of us there. I think the PERFECT study, the TETON studies, which we think will read out and launch towards the back end of the 2025 period will provide some additional patient growth, as well as DPI and its opportunity and potential to grow in WHO Group 1 as well as the other indications. On Orenitram, we're certainly continuing to leverage the FREEDOM-EV label, and some of that substudy data. We're very happy with the traction we made in the PAH community despite the fact that we launched this in the middle of a pandemic. But I think we still have an opportunity to continue to see some really strong growth there. And then even with Remodulin, which is our oldest product, we continue to make advances in both the delivery and the formulation of the drug, and particularly I'm talking about our RemoPro formulation, which is a pain-free version of Remodulin to be delivered via the Remunity Pump, which, again, we think we'll be able to launch that towards the back end of this 2025 -- between now and 2025. And then the Ralinepag studies I talked about and the ex-vivo lung perfusion service and being able to service these lungs and make more lungs available for transplant. So it's a combination of things that we currently have in our bag right now and some of these near-term studies that we expect to enroll and get approval for.

Perfect. Maybe we'll start with Tyvaso because the therapy has had such a great -- honestly, last couple of years since you released the PH-ILD data. But since maybe the expanded indication last April, how many patients with PH-ILD have been placed on Tyvaso? What's sort of the initial reception been? And what are the key kind of triggers for adoption over the next 12 months? Is it the CMS coverage decision? Is it the launch of DPI? Is there anything else that we're not thinking about?

Yes. I think the -- I would say the reception has been very good. I mean as -- I think you know and everybody knows up until we had Tyvaso approved last year through the INCREASE study, there really was no approved therapy for these very sick ILD patients that also develop pulmonary hypertension. So I think the fact that we now have an approved therapy for these patients is really exciting to physicians, and we continue to see that. In terms of the number of ILD patients, it's still a little messy in terms of really being able to understand which patients are WHO Group 1, which patients are WHO Group 3. I think that we'll get better clarity on that certainly after we get the Medicare approval and we get into kind of next year and I think doctors are a little bit clearer about designating the patient as a WHO Group 1 or WHO Group 3. So it's hard for me to know exactly how many truly have PH-ILD versus Group 1 PAH. But that being said, we've added -- we're about half -- at the end of the year, about halfway towards our goal of doubling the number of patients. And as I mentioned on our earnings call a couple of weeks ago, we actually -- despite the seasonality that we typically see in the fourth quarter, we actually had our strongest referral quarter for Tyvaso since we launched into PH-ILD. So really excited with the promise we're making there, and I think we will continue to progress over the course of the year. You touched on some of the things that I think could be accelerants for our growth, not only this year, but into the future, certainly getting CMS approval, which we expect between now and May will help. I think the DPI approval, when that comes will be another accelerator. And I think we still get to 6,000 even if that gets delayed for some reason. We don't expect it. But certainly, it's an accelerator. And then I think the third thing, which is just kind of the blocking and tackling that we've been doing since we launched, which is bringing these new ILD treaters online. We're still seeing a lot of the -- lot of the referrals or most of the referrals or prescriptions are coming in through the PAH clinics. But we do continue to make really good progress in terms of engagement and activating these ILD treaters and have really increased our prescriber base over the last 9 to 10 months.

Perfect. I know previously you mentioned that those ILD docs, there's just a lot more of them maybe than specialty PAH centers. I guess what sort of the thing that you can do, I guess, to better penetrate those ILD physicians? Is it do they not want to send to the right heart cath? Do they need to get used to identifying disease? Kind of where is the holdup, if there is a specific one?

Yes. I wouldn't -- I mean I wouldn't say that there's a hold up. Like I said, we're continuing to make traction there. I think the thing that I have to continue to remind myself is that things never move as fast as I want in this-- it's changed, it's different. So it takes a little bit of time. So -- I mean, just to give you a little bit of perspective. We've increased our prescriber base by about 25% since launch. So that's, I think, pretty good progress. And we're continuing to add to that every week. I think the things that we have to continue to educate and remind the physician is to screen early, go through -- if you suspect that you have pulmonary hypertension -- if the patient has pulmonary hypertension, do an echo. If the echo confirms that, then we need to refer it out and find somebody to do the right heart cath. And so there are physicians that have figured that out and found the resource for right heart cath. I think there are still physicians that are still trying to figure that out. And we're doing what we can do in a compliant way to help them find those resources so they can perform the right heart cath. So it's continuing to build. And again, over -- we're in this for the long haul. So it's kind of like what we saw when we got into PAH 25 years ago. It builds. And now we're -- now we have more than 10,000 patients. So I think we're going to see the same thing over time with PH-ILD.

And in terms of the patient numbers of those out there in the U.S. with PH-ILD, I know the company has recently said maybe 30,000 addressable patients. We do some consultant work along with this conference. That number came out to about 46,000 based on our surveys of physicians with kind of 20% of them saying it could be 90,000. Do we not know how many patients there are yet in the U.S.? Maybe back to some of your early diagnoses comments. And how big do you think this population truly could be?

Yes. It's -- I don't think we know for sure. If you look at the [ EPI ] data, it says it's anywhere from 15% to 85% of ILD patients. So it's a pretty broad range, which I think supports the range of numbers that you just mentioned. So with about 230,000 patients, 250,000 patients with ILD. If you take the low end of that, that's where you -- the 15%, that's where you get the 30,000. And that's really kind of what we've been working off of. The way you confirm a diagnosis of pulmonary hypertension is with the right heart cath. And as we were just talking about, most patients with ILD, even if the doctor suspects they have pulmonary hypertension, have not had a right heart cath because up until now there was no treatment. So there's really no point of doing the procedure because there's no treatment. So again, that will change. That is starting to change. We're continuing to see that change over the course of this year and into the next couple of years. And I think we'll probably get a better sense of what the true patient population is over that time.

Perfect. And maybe we'll jump over to the DPI specifically. As you mentioned, the approval for this has been slightly delayed a couple of times. First, with the open issue with one of the CMOs. I guess, first, has that been signed off on after you made the change in the resubmission? And then second, in regards to citizens petition, are you able to say kind of what additional information specifically the agency requested to address that and what you submitted?

Sure. So on the first part, on the analytical testing issue that was the -- I guess, behind the CRL that we received in October. As you know, we resubmitted at the end of the year. We believe addressing that issue. There's not been a sign off per se, but we've not had any questions from the agency on that. So we believe that's taken care of. But until we know for sure, I guess there's always some risk. But we've not had any questions come back on that one. As it relates to the citizens petition, there's not a whole lot more I think we want to say around that. We typically don't get into kind of our detailed interactions with the FDA. As we said on our earnings call, as the FDA was going through their review process, they asked for some information. It was clearly related to some of the issues in the citizens petition. And it looks like they're trying to kind of align their response to the citizens petition with our application. So we provided responses to their questions. They deemed our response to be a major amendment. They have a lot of, I think, discretion or latitude to deem something as a major amendment or not. And they gave us a -- said we're going to kick your PDUFA date out 3 months. So that's where we're at.

Perfect. And maybe just one more on that because I know you waited to submit the DPI until after the PH-ILD indication was approved for the nebulized version. Is the FDA essentially looking at this as we'll improve it as the same label for the nebulized version? Or are they looking at the 2 different patient populations differently in your perspective at all?

It's hard to tell. I don't have a clear sense of that.

Perfect. And then, hopefully, we do get approved and launched here. Kind of what are your expectations for the proportion of patients that would flip to a dry powder inhaler versus the nebulizer versus -- based on what you've heard from physicians and patients on the convenience factor?

Yes. So -- I mean this is another one where -- another product where there seems to be a lot of buzz, a lot of excitement around it because of -- because you said the convenience of having a device that you can fit in your pocket. It's 1 breath 4 times a day instead of 9 to 12 breaths 4 times a day. So I think when physicians and patients see it, they immediately fall in love with it. So I think that the uptake is going to be very strong. I mean, it will play out over a period of time. And we're obviously going to be pretty aggressive in promoting it. And for any patient that wants to flip over, they'll be able to do that. I think at the end of the day -- I said before that I think you're looking at somewhere around -- on the PAH side, somewhere around 60% to 70% of patients end up on DPI. I think that's right. I think there's going to be some that prefer the nebulizer for various reasons. On the PH-ILD side, I guess I'm not as sure where those percentages are going to play out. I think we're still trying to learn about the patient population there. There's some thinking that because these patients are so sick that the nebulizer may be easier for them to take Tyvaso than a DPI. But I'm sure that physicians are going to try it. And so we'll just see how that unfolds.

And we've heard from some of our docs that because of the titratability issues with -- sometimes with the oral prostacyclin agents, they may consider using a DPI ahead of an oral. Is there a perfect spot to use a prostacyclin in DPI? Do you think it could be kind of right after a PDE5 and ERA?

I think it could be. I think it's going to vary quite a bit. It's interesting. When we talk to pulmonologists, they're very familiar with DPIs. They love DPIs. They tend to be more in the camp of, "Yes, this is really convenient. The psychotropic profile is actually a little bit better than some of the orals. I would really think about starting my patient on this before going to an oral." Cardiologists, I think, are on the other side of the spectrum and they're probably on average going to lean more towards doing the orals first. So we'll see how it plays out. I think -- I do think at the end of the day, it allows us to grow the patient population in PAH. I know we talk often about the percentage of patients that refuse parenteral therapy or worse yet, die without even trying parenteral therapy. We do have a refusenik camp with inhaled therapy too. So about 20% to 30% of patients when presented with the current version of Tyvaso, just refuse because they don't want to deal with the perceived burdens of having to carry the nebulizer around. And so for those patients, this is going to be, I think -- I call this a no-brainer because it's so simple to use and in a much smaller profile.

Perfect. And you did mention the PERFECT study with PH COPD patients. Maybe what's sort of the data that got you excited about starting a trial in this patient population? And when might we be in a position to see data from that study?