Good morning, and welcome to the United Therapeutics Corporation Fourth Quarter 2023 Earnings Webcast. My name is David, and I will be your conference operator today. All participants on the call -- the webcast will be in a listen-only until the question-and-answer portion of the earnings call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Dewey Steadman, Head of Investor Relations at United Therapeutics.

Thank you, Dave, and good morning. It's my pleasure to welcome you to the United Therapeutics Corporation's Fourth Quarter 2023 Earnings Webcast. 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 those forward-looking statements. Today's remarks also 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 basis for medical decision-making or to suggest that any products are safe and effective for any unapproved or investigational uses. 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 James and I will be participating in one-on-one meetings at the 2023 UBS European Healthcare conference on February 27th in London. Michael, James and I'll participate in a fireside chat and one-on-one meetings at the TD Cowen Healthcare conference on March 5 in Boston and Pat Poisson and I will participate in a fireside chat and one-on-one meetings at the Leerink Partners Global Biopharma Conference on March 12 in Miami. Our scientific, commercial and medical affairs teams will present at the American College of Cardiology 73rd scientific sessions, April 6 through 8 in Atlanta; the International Society for Heart and Lung Transplantation, April 10 through 13 in Prague; and the American Thoracic Society International Conference on May 17 through 22 in San Diego. And now, I will turn the call or the webcast over to Dr. Rothblatt for an overview of our fourth quarter 2023 financial results and the business activities of United Therapeutics. Martine?

Thank you, Dewey. Good morning, everyone and a good day to those who are on the other side of the oceans. Congratulations to the 1,200 Unitherians who worked tirelessly every day to help us achieve our third straight quarter of record revenue and our second straight year of record revenue. We yet again achieved 20% plus quarterly and annual revenue growth for the fourth quarter and the full year 2023. On top of our record performance in the fourth quarter of 2023 earlier this year, we received important external validation of the value of our Tyvaso DPI business through a royalty transaction executed by our partners at MannKind Corporation. To put it simply, MannKind sold a-tenth of their 10% royalty payment stream from us, which equates to 1% of Tyvaso DPI sales and they sold it to Sagard Healthcare Partners for $150 million, plus other milestones. That implies an external valuation of the entirety of the Tyvaso DPI revenue stream of $15 billion before even factoring in the additional potential milestones. That's well above the current market cap for our entire business. And importantly, this transaction valuation is far above The Wall Street valuation of our entire company as a whole, and is for only one of our many products. At United Therapeutics, we talk about being positioned for three waves of growth and let's dive into the many reasons why we're so confident in our business. Our first wave of growth will come through our existing commercial business, led by Tyvaso in PH-ILD. We continue to post solid growth in our current business with our third consecutive quarter of record revenues for Tyvaso and revenue growth for our US Remodulin business, despite the presence of competition in the market for the past five years. Our growth in PH-ILD and…

Thank you, Martine, and good morning everyone. As Martine noted, today we reported our highest revenue quarter ever at $615 million, up 25% from the fourth quarter of 2022 and record annual revenues of more than $2.3 billion, up 20% over 2022. Importantly, we saw meaningful growth across our entire suite of products, like the Tyvaso franchise, Remodulin in the US, Orenitram and Unituxin. Starting with Orenitram, revenue of $84 million during the quarter was up 11% from the prior year. This growth reflects increases in volume, price and average dose. Following the publication of two peer-reviewed manuscripts in 2023, our medical affairs teams began providing education on data from the EXPEDITE study, which assessed the Orenitram dose achieved, after a rapid Remodulin titration and then transition to Orenitram. Worldwide Remodulin revenue of $115 million for the fourth quarter was down 6% from last year, primarily impacted by International order timing. However U.S. Remodulin revenue of $106 million was up 9%, from the fourth quarter of 2022. Remodulin both intravenous and subcutaneous remains the most prescribed Parenteral Prostacyclin in the U.S. We expect this momentum to continue in the U.S., as we had a near record number of referrals and starts during the fourth quarter, driven in part by interest in the EXPEDITE study results. Worldwide Unituxin revenue of $54 million in the fourth quarter was up 48% from the prior year quarter and U.S. Unituxin revenue of $49 million was up 34%. U.S. growth was driven by pricing volume and these volume gains were driven primarily through a modest inventory build at our distributor. International ordering driven by our partner in Japan, was strong over a comparably soft quarter in 2022. Finally, TYVASO, Worldwide TYVASO revenue was up 45% to $351 million, our highest quarter ever. U.S. revenue was…

Thanks, Mike. And congratulations again to you and your entire sales, commercialization, marketing, strategic operations and allied health teams that have achieved sequential record on quarters and years of growth in these products. It's just really beyond awesome. Thank you so much. Operator, you could now open up the lines for any questions.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Roanna Ruiz with Leerink Partners. Please go ahead.

Hey. Good morning, everyone. So, I was curious if you could talk a bit about the underlying patient demand in the quarter for Tyvaso, both the DPI and the nebulizer, and any other key drivers that you're seeing. And I was curious, in terms of big picture, are you seeing anything interesting in the inventory dynamics going into first quarter this year?

Thanks Roanna for your question. It seems Mike would be the best person on the call to answer those questions. He did touch upon those points in his introductory remarks, but Mike maybe if you can provide a little bit more color.

Sure. Yes. I think from a demand standpoint for the Tyvaso franchise, we were really happy with the demand metrics in the fourth quarter. Referrals came in at or above I can say a record fourth quarter. New patient start, which is unusual given we talk a lot about the cyclicality or the seasonality, particularly in the fourth quarter with the holidays and the fewer shipping days. So, it's really nice to see that we were able to really kind of buck that trend on the referral side. On the start side, we're pulling those through. One of the phenomenon that I had -- I've talked about in past years with respect to the fourth quarter is that, when referrals come in sometimes between -- particularly between that Thanksgiving and really end of year time period as people are settling into their holiday routines, patients are sometimes reluctant to start therapy. And so, they delay the start of the therapy until after the first of the year. And so, we did see a little bit of that on the start side, so record referrals but the percentage of those that converted to starts within the quarter as compared to prior quarters was maybe down a little bit, but we're starting to see those pull through in the first quarter. So again, that's not uncommon and we see that typically every year. So, from a demand standpoint just really, really happy with how the commercial teams are performing, the continued uptake of Tyvaso DPI, in both PAH and PH-ILD, and then generally the continued growth in the PH-ILD business. From an inventory standpoint, as Martine alluded to and as I said in my opening remarks, I think we feel really good about where we are from an inventory standpoint. MannKind is -- with the process and increased capacity improvements they made over the summer, they seem to be humming along. And so, we're able to ensure that specialty pharmacy is staying within those contractual orders. And so that's been true, I think for the last couple of quarters now. And with more capacity coming on later this year, as I said earlier, we don't really expect there to be any type of supply constraints or anomalies on the inventory side.

Perfect. Michael, thank you so much. Operator, next question.

The next question comes from Ash Verma with UBS. Please go ahead.

Hi. Congrats on the progress. Thanks for taking our questions. So, maybe just like starting off with the middle lever. Can you elaborate a little bit like what would the clinical study design look like? And then second, in terms of the DPI out-of-pocket cost with this year, with the IRA catastrophic limit implementation, would that normalize the out-of-pocket costs compared to the nebulizer? Or would we start to see more of that benefit in 2025? Thanks.

Okay. Ash, it sounds to me like you had one question on the clinical trial design for the Xeno program, and then flipped to a completely different topic on the IRA aspect. So, why don't we start with Dr. Peterson, sharing her thoughts on the clinical development way forward for Xeno. And then, Mike can share some more thoughts about reimbursement issues. Dr. Peterson?

Yes, sure. Yes, for the Xeno program, with regard to our 10-gene xenokidney and 10-gene xenoheart, we are continuing to conduct our IND-enabling studies with our partners at University of Maryland and John Hopkins. And we expect that these studies will finish and we will start having meetings with FDA to actually discuss the specific clinical protocols for those programs with the intent of starting the -- at least the 10-gene xenokidney study in 2025 and as well as possibility of 10-gene xenoheart.

Okay. Thanks Dr. Peterson. And Ash, I think maybe I misheard a little bit on your trial question was with regard to the ELAP study. And there I would refer you to what's posted at clinicaltrials.gov. It is the first time ever that the FDA has approved a bioengineered organ in clinical trials. That's a humongous achievement and great credit goes to Jeff Ross and his team at Miromatrix for getting us to this point. So the details that's a Phase 1 safety study you could read it on the FDA's website. But we're really excited too with so many pathways and platforms in our organ transplantation business to have the miroELAP to serve in some ways as a pathfinder, as we bring more and more types of manufactured organs into the clinic. Mike, do you want to chat on the IRA thing?

Sure, happy to. So Ash I think your question was with the changes to the IRA, the elimination of the catastrophic phase for patients and lowering of out-of-pocket costs, does that level the playing field from – at least from patient standpoint as – between DPI and nebulizer? And so there's still some differences between DPI and nebulizer – between Part D and Part B in terms of out-of-pocket, whether a patient has supplemental insurance in Part B, et cetera. But I think what we feel comfortable saying is that to the extent that reimbursement was a barrier to starting DPI that will largely go away with the changes to the patient out-of-pocket in Part D. And we're actually starting to see the benefit of that. And so just as a – maybe a little bit of a quick backgrounder for everybody, the 5% out-of-pocket in the catastrophic phase goes away starting this year for the patients. So the out-of-pocket for a patient right now is I think it's between around $3,000 to $3,500. And that covers all drugs. So that's not per drug, that's across all and any medications they are on. So that's their out-of-pocket for this year. That – they have to spend that before Medicare kicks in in 2024. The nice thing about 2025 is that the patients are able to spread that spend out over the 12 months and that $3500 drops to $2000. So lower amount and they can spread it out over 12 months. So because of all of those factors lower out-of-pocket, eventually able to spread it out over 12 months and covers all of the drugs, I think what we're going to see is a reduction in the utilization of our patient assistance program. And in fact we're already starting to see that. We had a surprising number of patients that were able to switch over from patient assistance to commercial drug in the first quarter. And I think once we get past the first quarter because many of our patients are on multiple therapies, I think the vast majority of these patients will have spent their out-of-pocket limit at moving into the second quarter. And so we would expect that as the year goes on fewer and fewer patients will need to come into our patient assistance program. And therefore, our PAP utilization will continue to decline over the balance of this year and then into 2025.

That's great, Mike. So again, we have been well prepared for the IRA years ahead of time and all that great groundwork and preparation is certainly paying off. Is there a next question from the operator?

Yes, the next question comes from Jessica Fye with JPMorgan. Please go ahead.

Hey, guys. Good morning. Thanks so much for taking my question. You mentioned sotatercept not coming to market in PH-ILD. And I know it's sort of tough to tell but just given the investor questions we get about the pending competition in PAH, can you give us your latest thinking on the mix of Tyvaso patients being treated for PAH versus PH-ILD and how that mix might evolve going forward as PH-ILD use continues to ramp? And then if that mix is not answerable, can you elaborate on which of your treprostinil products you see as perhaps least likely to see any disruption from sotatercept? And why? Thank you.

Yes. Thanks, Jess. Good to hear your voice this morning and Mike will take your question.

Sure. Yes. So I think in terms of mix of PAH and PH-ILD with Tyvaso, we talked at your conference earlier this quarter we had said that we believe it's around 50-50. And it's not a perfectly knowable answer just because of the way that the information comes in through the referral forms, but I think it's reasonable and we feel pretty confident it's in that 50-50 mix. And that should continue to -- it should continue to increase in favor of PH-ILD as we continue to just get out and talk to prescribers. We've talked about the fact that we expanded our sales force in the second half of last year. That process is complete. Those sales representatives are training they're out in the field. And so I think as we move into the rest of 2024, we'll start to realize the benefits of the greater share of voice in PH-ILD. Those subscribers becoming more I think diligent and comfortable in screening patients and either referring them to PAH clinics or starting to treat those patients themselves with Tyvaso nebulizer or DPI. So over time I think we continue to see PH-ILD as our big growth opportunity and that mix will trend in favor of PH-ILD as we move forward. I think in terms of the -- your question on the drugs -- on which drug in PAH is least likely to be impacted. Again, as I said, I have conviction that over the long-term really there's not going to be much impact at all because all patients will need a prostacyclin at some point. So really I think it's a question of sequencing and that's going to be kind of case dependent on the patient. But coming out of the gate so to speak I would say Remodulin is probably the least likely to be impacted because patients that are on Remodulin tend to be more advanced patients more severe patients. And if the patient is either presenting with severe pulmonary hypertension I think the vast, vast majority of physicians are going to reach for Remodulin first. And as I said in my opening remarks there's really no evidence to suggest that patients are going to be switched off of a prostacyclin first to sotatercept.

Thanks, Mike. Great, great answers in fact a lot of insight. Thank you. Operator next question please?

Yes. The next question comes from Joseph Thome with TD Cowen. Please go ahead.

Hi, there. Good morning. Thank you for taking my question and congrats on the quarter. Maybe if you could tell us a little bit about how you expect to disclose some of the pivotal preclinical nonhuman primate data from the 10-gene transplantation program? Can you maybe talk a little bit about the translatability from the experience in baboons in humans or [Technical Difficulty] performance could be a little bit better in humans or I guess [Technical Difficulty]. Thank you.

Yes. Thanks for the question. Looking forward to speaking with at our conference. Ordinarily we -- at UT we publish as much as we possibly can in the top journals in the field and as soon as we have new scientific data available to share. And for example there is going to be a review article covering all of our xenotransplantation activities in physiological reviews which is like a top five impact journal in the field coming out in just a month or two. And that will answer I think a great number of your questions in terms of the translatability of the data in the baboons, why the pig, why the 10-gene pig and how all of this will extend into human development. So you'll be seeing that publication very shortly. And like I said it's a comprehensive review that includes a number of the leading experts in the field as well as our top experts such as Dr. Peterson. Beyond that every time the FDA clears us to move to the next stage in clinical development -- we consider that as an important thing to share just like we shared in this call. The first time in the FDA's 100-or-so year history that they cleared a bioengineered organ to be into I assume in human clinical trial was our Miromatrix ELAP and we shared that at the very next call afterwards. So as the FDA shares guidance with us in terms of how to move our xenokidney and xenoheart into the clinical trials we'll positively share that with everybody in our SEC filings and on this call. And the exact protocols will as I mentioned earlier to Ash that will of course be listed on clinicaltrials.gov. Next question operator?

The next question comes from Hartaj Singh with Oppenheimer. Please go ahead.

Great. Thank you. Good morning everybody. Really nice quarter Martine and team, and just keep it going. I've got a question slightly differently. Martine you talked about enrolling the ralinepag studies by the end of this year, and a pretty comprehensive pipeline that seems to be filling out even more and more. Can you just talk a little bit about the cadence of events from ralinepag and the other programs through this year and next year? Not looking for any guidance, but can you just the cadence of events for enrollment potential readouts, et cetera, over the next essentially 12 to 24 months? Thank you.

Thank you for that great question, Hartaj good to hear your voice this morning. I really like the question, because a CEO probably shouldn't have favorites among their drugs anymore than among their kids. But I would say that ralinepag is unbeatable in my view, as an amazing medicine. For somebody who has a family member with pulmonary hypertension, it's pretty much of a dream drug, subject to the clinical trial outcomes, the regulatory approval, and whatever is supposed to be put on the label. But in terms of its -- the dream characteristics pills are best. I think everybody in the industry would agree with that. Secondly, once a day is better than two times a day or three times a day, I think, everybody would agree with that. Third, titratability is better than non-titratability. Everybody would agree with that. From a drug development standpoint, when you're following in on a pathway that's already been validated by the FDA that reduces risk tremendously. And then what we have is a more potent member of that same pathway. So I think everything is in favor of ralinepag. And in terms of the specifics of your question, Hartaj, of a time frame kind of expected events in terms of enrollment readout, et cetera, during 2024 and 2025, I'd like to turn the mic over to the head of the ralinepag program, our Executive Vice President for Product Development, Dr. Peterson. Leigh?

Yes, sure. Thanks for the question. We're expecting to complete enrollment where -- I mean, as you well know this study is based on the accumulation of outcome events with regard to clinical worsening. And so what how the study is designed is that we complete enrollment and then we follow the patients for a six-month period for a standard follow-up time frame as well as until the pre-specified number of events are accumulated, which gives the best statistical significance to determine the difference between the active group and the placebo. So, given all of that, we are targeting enrollment to be completed this year. And -- but really the driver for the study completion is accumulation of the required number of events. Now these patients are on dual back -- most of them are on dual background therapy. And so we're tracking that very, very carefully as to the accumulation of these events. And again, we're targeting that our events will be accumulated as well as completion of the six-month follow-up period during 2025.

Perfect. Thank you so much Dr. Peterson. Operator, are there any more questions?

Yes. One more question, Andreas Argyrides with Wedbush Securities. Please go ahead.

Good morning and thanks for squeezing our questions. And again, congrats on all the progress this quarter. Just two from us here. On the competitor front, how are you seeing safety playing a key role in adoption for new therapies? And then also as we get closer to TETON readouts, how are you thinking about the opportunity for Tyvaso in IPF and where it fits in the treatment landscape? And then just one more to squeeze in. You have quite a bit of cash. You were busy on the BD front last quarter. How are you thinking about business development opportunities and areas you pursue going forward? Thanks so much.

All right. Well, let's see last and also the most questions. Okay. So, we're going to have a kind of a roundtable talking about here. So we're going to go back to front. Our -- all capital allocation questions at United Therapeutics are under the management and guidance of our Chief Financial Officer, James Edgemond. So, I'm going to have him speak, first. And then with regard to, the competitive product positioning Mike, will have a few words to say. And finally, third and wrap up hitter here, Dr. Peterson, if you could share some thoughts about monitoring safety aspects in clinical trials. So that – maybe, you could share a little bit about the amazing job our clinical operations team does, in terms of ensuring safety and our stellar pharmaco vigilance and drug safety group. I think at United Therapeutics safety is I would say, our only priority. Nothing ever bumps safety. So James, can you speak about the capital allocation?

Yes. Thank you, Martine. Andreas, it's good to hear your voice this morning. I think you had two questions kind of weaved in, and I'll start with capital allocation, and then corporate development. But our capital allocation priorities Andreas, are still unchanged. We have three priorities in order, which are internal research and development, business and corporate development and then return of capital to shareholders. And we see ample opportunities to invest in ourselves in complementary businesses, at this time. And at the JPMorgan conference in January, Martine laid out the need to quickly access and deploy capital to support the potential commercial scale build-out of DPS facilities. And this could be several billions of dollars of CapEx over the next several years. And so, there was a good discussion at the conference, with respect to capital allocation and specifically looking at manufactured organs. Now with respect to business and corporate development, we are constantly looking for potential acquisitions and also in-license opportunities. We tend to be most interested in complementary products and platforms that focus on rare lung and other cardiovascular diseases. But as you've also seen recently, that we disclosed in the 10-K, we did a couple of acquisitions being IVIVA and Miromatrix. They were focused on organ manufacturing. So we're looking across the board, and things that really complement the strengths of Unitherians internally and add to the research and development we're doing. So thank you for the question. And Martine, back to you.

Yes. I'm going to bounce it over to Mike, to talk about the...

Yes. So I think Andreas, your first question was leading to sort of safety questions, with new therapies and how that's -- how we think about that and how that's typically handled. And really I think it's a question, as it relates to competitors, I think it's really a question for prescribers and for those manufacturers, to be honest. I think there is a safety profile that's presented as part of the clinical efficacy, and I think the physicians have to kind of look at that and the way the benefit/risk of that product, relative to the patient's disease other products that are available. And then as I said at the very beginning, it really kind of comes down to a case dependent decision. So, we'll just kind of see, how that plays out over time.

Great. All right. Well, Leigh I think you're off the hook, because I think Mike commented enough on the safety question. And operator, back to you.

Thank you for participating in today's United Therapeutics Corporation Earnings Webcast. A rebroadcast of this webcast will be available for replay for one week by visiting the Events and 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.