Good morning, and welcome to the United Therapeutics Corporation First Quarter 2020 Earnings Call. My name is Mariana, and I will be your conference operator today.

Good morning. It's my pleasure to welcome you to the United Therapeutics Corporation First Quarter 2020 Earnings Call. Accompanying me on today's call are Dr. Martine Rothblatt, our Chairman and Chief Executive Officer; Mr. Michael Benkowitz, our President and Chief Operating Officer; Mr. James Edgemond, our Chief Financial Officer; and Dr. Leigh Peterson, our 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 Form 10-K and 10-Q, contain additional information on these risks and uncertainties. We assume no obligation to update these forward-looking statements. Today's remarks may also include financial measures that were not prepared in accordance with U.S. Generally Accepted Accounting Principles or GAAP. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in our earnings release available on our website. Today's results or today's remarks may discuss the progress and results, potential 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. All prescribing information for the products is available on our website. Now, I will turn the call over to Dr. Rothblatt for an overview of our first quarter 2020 financial results and business activities of United Therapeutics.

Thank you, Dewey. Good morning, everybody. I'd like to start by providing an overview of how we are at the beginning or toward the end of the first month of the second quarter here looking back on the past quarter. And then I'm going to turn the microphone over to Michael Benkowitz, our President and Chief Operating Officer, and he will continue to offer you the operating results of the company. Then we'll open up the call to questions, and they can be directed either to Mike or me, or to our Chief Financial Officer, James Edgemond, or to our Vice President for Product Development, Dr. Leigh Peterson. So looking back on the past quarter, I think that there were really three key themes that I want to summarize what's gone on in the past quarter. And those three themes I would label as stable, stronger, and sustainable. So let me delve into each of stable, stronger, and sustainable for a moment and talk about what those words or concepts mean in the context of United Therapeutics right in the middle of this COVID pandemic. So what we call stable, the first theme, I am really glad to share that our drug manufacturing, distribution, and reimbursement have been very stable during this past quarter, notwithstanding the COVID pandemic. Every one of United Therapeutics' offices and laboratories from California to North Carolina, from Maryland to Florida, from Massachusetts to Virginia, and New Hampshire have all remained open as essential biomedical research and production facilities. Our staff has continued to operate these facilities on a shift basis to reduce occupancy and to maintain physical distancing in all regards. As a result, our production numbers this past quarter have enabled us to still maintain more than two years of finished drug inventory even while shipping out the normal and customary amount of drug to our distributors. Indeed, I can report, and I'm very happy to report that doctors, pharmacies, and patients have all reported considerable relief in knowing that United Therapeutics has more than two years of finished drug in inventory. In addition to that, we also have here in the U.S. at our site the chemical precursors on hand for making three additional years' worth of finished drug on top of the two years all in our own laboratories here at United Therapeutics. So all told, we are stable in drug production and distribution for five years, all based here in the U.S.A. And I think that the reason provides so much relief to everybody, and the reason I start the review with the concept of stability is when you get right down to the core purpose of United Therapeutics, its core purpose is to provide medicines for life, to provide medicines to our patients, to provide medicines even to patients in the context of our clinical trials. So all of that we've done, including with the drug delivery devices that are part and parcel of that. So I'm happy to say that at the end of the first quarter in the middle of the pandemic, UT is stable. The second main theme I'd like to talk about is stronger. Here I'm referring to our pipeline. Our pipeline was very strong before this past quarter, and it's even stronger as of now. It was strong before because we had great Phase III trials underway. One of them that I think you know is most exciting is the Ralinepag trial, a best-in-class prostacyclin agonist that is undergoing worldwide trials. I should say even during this pandemic, while we've not been able to enroll new patients in that trial, we have been able to keep the trial going, and we continue to provide clinical trial material to the patients. So that's very exciting. We also have underway our Phase III trials of TYVASO for COPD-type pulmonary hypertension. Same story; we're not able to enroll new patients, but we're able to keep it going. That will open up a very, very large COPD pulmonary hypertension market for us based on the results of that Phase III trial. Our Phase III trial of gene therapy, the SAPPHIRE study, that could really modify and perhaps turn back the course of pulmonary hypertension. So we had a super strong pipeline before this quarter, but one of the absolute most exciting things that came out of this quarter was the data from our INCREASE trial of TYVASO in the context of interstitial lung disease. Now, as we reported, we hit all of our primary and secondary endpoints for that INCREASE trial. And notwithstanding the COVID pandemic, our team, as they work at full speed, we continue to be on schedule to file a supplemental NDA for the expansion of our label of TYVASO into Group 3 pulmonary hypertension, specifically the interstitial lung disease variant. And just for some of you who may be new to the story here, this market is larger than the Group 1 types of pulmonary hypertension for which all the current pulmonary hypertension drugs are approved but for which, before our INCREASE trial, no new drug was proven successful in addressing this Group 3 type of pulmonary hypertension, specifically the interstitial lung disease variant. The reason for that is that this is a disease involving restriction or obstruction of the airways and the pulmonary vasculature, and so it's not really possible to treat this disease successfully with systemic drugs without giving rise to a very bad side effect consequence called ventilation perfusion mismatch. So there are only really two possibilities for treating this disease without triggering V/Q mismatch: there's the iloprost inhaled drug, which is not very practical needing to be inhaled upwards of nine times a day for 15 minutes each time, or TYVASO, which is very practical, needing just four times a day for two minutes each inhalation. Well, we did that trial and as reported, we had stellar results, and we're filing early summer and expect approval and launch of that product in 2021. But what really made our pipeline stronger was one of the most spectacular results from that INCREASE trial. And that was about a quarter of the patients had a type of interstitial lung disease called pulmonary fibrosis. With this type of disease, the FDA has approved two drugs over the years. And these two drugs were not really potent in reversing idiopathic pulmonary fibrosis (IPF); what they were able to do was to slow the degradation in the patients' forced vital capacity better than the patients who were on placebo. So they didn't improve the patients' condition; they just slowed the rate at which the patients were degrading. Now, our team was clever to have forced vital capacity as the secondary endpoint in the INCREASE trial, as this endpoint is looked at by the FDA for a drug that would be treating pulmonary fibrosis. We were able to improve the forced vital capacity or the FVC of the patients with the pulmonary fibrosis by a greater amount than the other two approved drugs for pulmonary fibrosis, nintedanib, and pirfenidone, had done in their registration trials. And on top of that, our improvement in the patients' FVC was on top of those already approved background drugs since that's just standard of care for patients who have pulmonary fibrosis. So this is for a clinical drug developer, a best-case scenario for sizing up a registration trial where you've already tested the hypothesis that you want to confirm. And you see here TYVASO actually had a disease-modifying effect on these patients with pulmonary fibrosis by improving their FVC on top of the already approved background therapies. Those already approved background therapies had not improved the patients' FVC; they merely slowed the rate of degradation. Also, it was like icing on the cake; we were able to accomplish all of this in just eight weeks. So eight weeks after the patients were randomized, we already saw this marked improvement in FVC, and that improvement was maintained until the end of the clinical trial. Let me mention one other thing why I'm so excited about this. This is really the first time other than our activities in cancer that United Therapeutics has undertaken an expansion of its franchise beyond pulmonary hypertension. Just so I didn’t confuse anybody here, this CFILD indication, this fibrosis indication will be in patients who don't have pulmonary hypertension. I mentioned that a quarter of the patients in INCREASE had pulmonary hypertension with pulmonary fibrosis. In fact, the number of patients who have pulmonary fibrosis without the pulmonary hypertension is about four times larger—well over 100,000 patients. The TRITON study that will embark upon in the first quarter of 2021 will be United Therapeutics' first non-cancer Phase III study outside of pulmonary hypertension and in a patient population that is several times larger than the pulmonary hypertension population, and finally, with a mechanism of action that appears to be disease-modifying based on the positive improvement in the FVC shown in those patients. All told, by expanding beyond pulmonary hypertension and doing so with a solidly data-backed hypothesis, and then the patient population several times larger than we're addressing in pulmonary hypertension, I think that there really is no doubt that we have emerged from the first quarter of 2020 with a stronger pipeline than we had even before. The third theme that I want to talk about before turning things over to Michael is sustainable. It's very fortunate, and I would say that our entire pulmonary hypertension community has been blessed that COVID has not disproportionately impacted the pulmonary hypertension population. There are various hypotheses regarding why this is. The Occam's Razor for cancer suggests it's due to the extraordinary care and caution of this population with respect to physical distancing. The patients realize they have heart-lung conditions and so they are probably much more careful than other people in maintaining necessary distancing. In any event, there are some already published articles suggesting that COVID has not adversely impacted the PH population statistically compared to other populations. So I believe we will be able to sustainably continue to help our pulmonary hypertension population as we go through the remaining period of the COVID pandemic. Another aspect of sustainability is that you'll see in our quarterly financials released today, our revenues and profit margins are as good as they've been in the past and, for all that we can see, they are quite sustainable. As our Chief Financial Officer has talked about many times, we maintain an algorithm to ensure our profitability by setting our maximum budget at 50% of the previous year’s revenues. Within this budget, we are able to continue to invest in all of the transformative technologies that mark our pipeline. Transformative technologies for Remodulin, such as the Remunity Pump, which remains on schedule to launch in July. The manufacturing team has continued manufacturing those pumps all during the pandemic, adhering to safe practices. The implantable system for Remodulin, the ISR system, RemoPro, and painless analogs of treprostinil will completely eliminate the issue of site pain. All of this has been made possible due to the stability of our profit margins against a constant level of revenues. We also continue to fund the market-expanding products for pulmonary hypertension, like Ralinepag as I mentioned at the beginning. We have a perfect Phase III study of COPD-related pulmonary hypertension. The gene therapy work I mentioned previously. We are developing a once-daily form of Orenitram that will enable us to continue to build on the excellent revenue growth seen in the past quarter. These sustainable cash flow margins that we are fortunate to have also enable us to take on new R&D challenges such as several efforts currently directed against COVID using Exosome products, which stem from our regenerative medicine research to treat the sequelae of severe COVID situations, as well as organ manufacturing to produce an unlimited supply of transplantable kidneys, for example, creating literally a new paradigm of organ transplantation. So stable, stronger, sustainable. I am absolutely full of pride in how well United Therapeutics has demonstrated its nimbleness and adaptiveness to this once-in-a-lifetime change in environment that we're all experiencing. With that overview, I’d like to now turn the microphone over to Mike Benkowitz, our President and Chief Operating Officer. Michael?

Thanks, Martine. I wanted to spend a few minutes just talking about the commercial side of the business. Overall, we were very pleased with our revenue performance in the first quarter. As we have mentioned often, our revenues reflect sales of our treprostinil-based products to specialty pharmacy distributors who typically place monthly orders based on current patient utilization trends and contractual inventory requirements. Therefore, our sales do not always track the volumes our distributors are dispensing to patients in a given time period. So I'd like to provide some color around physician and patient demand for our products in the first quarter. Additionally, I'll touch on some early Q2 data we're seeing due to COVID-19. In the first quarter, our commercial business has built on the momentum from last year, as we once again reached an all-time high number of patients using one of our treprostinil medicines. In terms of COVID-19's impact in the second quarter, it's a mixed bag thus far. One one hand, one of our specialty pharmacy distributors placed a larger-than-normal order for our treprostinil-based products during April to increase inventory beyond typical levels. This was done for three reasons: first, they wanted to account for potential increased investigational use for TYVASO for acute respiratory distress syndrome resulting from COVID-19, which is a major cause of patient morbidity and mortality; second, they wanted to prepare for an anticipated increase in patient requests for 60 to 90-day refills, compared to their typical 30-day supply; and third, they wanted to increase inventory levels across various locations to ensure uninterrupted business continuity during the pandemic. On the other hand, we have seen some softening in new patient prescriptions throughout the month and also a softening in new patient starts in the last couple of weeks. We believe this is due to the inability of patients to visit their physician’s office to determine whether our medicines may be appropriate. However, we are starting to hear that some institutions in various parts of the country are gearing up to start allowing patients to come back in for visits soon. We are aware of the increased use of telemedicine with PAH physicians, but how this impacts revenues over the balance of the quarter and the year remains unclear. We don't know how long the reduction in new patient prescriptions and new patient starts will last, but we certainly expect some pent-up demand that should come through in the coming months once things start to normalize.

Thanks so much, Mike. Operator, if you could now open up the lines for questions.

Thank you. So we get some visibility into the reasons for the switchback. We don't get total visibility, but anecdotally what we hear from physicians and through the channel is that patients are experiencing either adverse events or worsening of symptoms, and in some cases hospitalizations when they switch over to generic treprostinil. I think we all know that while the FDA considers the generic version to be the same as the brand version, they allow for some variances. Because these are very sick and fragile patients, I think we can hypothesize that those differences become magnified in this patient population, and as a result, we've seen an increase in the number of patients transitioning back to branded Remodulin.

Thanks, Mike.

Thank you. Due to the COVID-19 impact, there have been several studies where clinical trials have positive results for new patient enrollment. So one of them is the dry powder inhaler Treprostinil Technosphere. Given that we aren't expecting the data by mid this year, when does the study need to resume in order for us to see the data this year?

Sure. Very interesting question. I'm going to ask Dr. Peterson, who is in charge of that study, to answer it. But just to keep everything in perspective while she's compiling her answer. When the COVID pandemic began to unfold, our first concern was ensuring that all distribution channels and everyone were set and solid so that everybody could get their medicine. As I mentioned in my opening remarks, we have done that very well. Now, our clinical trials presented an interesting situation in that the default would have been to stop the trials entirely and restart them again, which would be unfortunate. So we've worked tirelessly to ensure that our trials were not stopped but that enrollment of new patients was suspended. As hospitals are opening up and you heard Mike mention previously that some of these centers are beginning to see patients again, we could continue the enrollment of the patients. So even though we've suspended new enrollment, the patients who are already in the BREEZE trial and the other relevant trials have been receiving their clinical trial materials without interruption throughout the entire COVID situation. Dr. Peterson, would you like to provide a little more insight on the timeframe around BREEZE right now?

Yes, sure, thank you. So this BREEZE study, as you may already know, is a study where patients on TYVASO are transitioned over to our Treprostinil Technosphere, which is the dry powder and device we have with MannKind. This study consists of 45 patients and it's not very big. The FDA has agreed to this. We are about a third of the way through enrollment. In fact, the study's primary endpoint is assessed three weeks after the patient starts. We were lucky enough to have had all of the patients who are currently enrolled complete that period, so we won't have any missing data on the ongoing patients.

Thank you, Eun. Operator, next call, please.

Great, thank you. And thank you for all the work United Therapeutics is doing on behalf of Martine and stay safe. I just had one question on Orenitram. You had I think a 20% growth in the fourth quarter, 18% this quarter. Can you just give us some color on where that's coming from? Is that from new patients possibly getting some market share from Uptravi? Any color there would be really appreciated.

Thank you so much, Hartaj, and thank you for acknowledging our efforts on COVID. We have heard briefly before we segue over to Mike to address the question on where the Orenitram growth is coming from. We have a cell therapy product for patients with COVID and two parallel arts initiatives to help address patients suffering from the worst consequences of COVID, as well as an advanced form of our total artificial heart device to be an alternative to the intubation and sedation needed with current ventilators. So we have quite a bit of activity related to COVID while ensuring everyone's safety. Mike, can you talk about where the Orenitram growth is coming from?

Sure. Thanks. Orenitram's growth stems from a few areas, though it's hard for me to estimate how much each contributes. First, it's coming from patients staying on therapy and increasing their doses. That’s one piece of it. The second piece is new patient growth generally, which is obviously a big part of it. We continue to witness really nice trends in terms of patients on therapy, and underlying that is the contribution from new prescribers. Prescribers who either had never used Orenitram or had used it early on after the FREEDOM-M trial and for various reasons stopped using it before are now returning. I define a new prescriber as someone who has not used it at all or hasn't prescribed it in the last 12 months, and we see notable increases among experienced PAH physicians who might have initially dismissed it but are now reconsidering it given the compelling ED data.

Thank you so much, Mike. Operator, next call, please.

Thank you for taking my question. Can you please walk through the development program and regulatory strategy for your RemoPro candidate, the IND for which I believe cleared in the first quarter? Do you need to run efficacy trials there or just show pain and safety compared to Remodulin? If I could just follow up on Hartaj's question, I'm concerned about the potential interplay between the new starts on Orenitram and the slightly year-over-year decline in Tyvaso. Do you think any of the Orenitram growth came at the expense of new Tyvaso starts?

Sure. So while staying on the Orenitram theme, Mike, since we're already on the Orenitram team. Can you address Jessica's concern about where the growth is coming from? And then Mike, if you could pass the call to Dr. Peterson regarding anticipated timelines on RemoPro.

Sure. Yes, so I don't have specific numbers on the extent of the interaction. But I can tell you that our active patients on Tyvaso are up about 10% year-over-year. So while new starts on Tyvaso are softer than we had hoped, we continue to add to our active patient count overall, so I don't think one is cannibalizing the other. However, it’s possible that cannibalization may occur within individual practices. But on a macro level, we're seeing growth across all products.

For RemoPro, I will say, I’ll give you the answer that our statistician always tells me when I ask these questions—it depends. It depends on the result. As you probably already know, we are in Phase 1, looking at the RemoPro products—the pro-drugs of treprostinil—with regard to pain and pharmacokinetics. In pharmacokinetics, we're looking at not only the pro-drug itself but also treprostinil, which is the metabolite of the pro-drug. So as far as the development program goes, it depends on what we see in the PK results. What we're aiming for is identifying compounds that show that this is a pro-drug which converts quickly to treprostinil and achieves high treprostinil levels compared to the control, which is injecting treprostinil as Remodulin. If we have good conversion of the pro-drug and we reach treprostinil levels comparable to that of the parent drug, the FDA has indicated that we wouldn’t need to do an efficacy study since we’ve already established that treprostinil is effective. Therefore, we would need to conduct a safety study, which does require valid conversion. If a lot of pro-drug remains in the system, we would indeed conduct a safety study as we've asked for about 45 patients in this cohort. Again, we don't need to perform an efficacy study by FDA standards, but it does depend on successful conversion of the pro-drug to treprostinil.

Excellent. Thank you so much, Dr. Peterson. Operator, next question.

Thank you. What percentage of treprostinil prescriptions are new versus refill?

Good morning, Liana. Thank you for the question. What percentage of treprostinil prescriptions are new versus refill? I think once again, Mike Benkowitz should be the best person on the call to answer that question.

Yes, Liana, that's a great question. I don't have that off the top of my head, but I would estimate it's less than half. Probably around 5% to 10% in terms of daily prescriptions tend to be new.

Thanks, Mike. Thanks, Liana. Next call, and this will have to be the last one, operator.

Hey Martine, how are you? I'm very excited to hear the progress with Tyvaso and the TRITON study that you're planning, and so to that effect, I'm thrilled about the increased data. I know you're working with ATS on a virtual presentation, but from the website, it's unclear whether they'll make it available in that format. If this isn't ready by mid-May, are you planning to just hold a separate company-sponsored presentation of the data? Secondly, a quick follow-up for Leigh on Jessica's question regarding RemoPro: is that Phase I currently enrolling volunteers, and when do you think we might get some data on its PK and tolerability profile?

Thanks, Marty, for both questions. I think both of these sound like they land in Leigh's daily work. Leigh, can you update Marty on the current status on both the TRITON study and RemoPro?

Yes. We're planning to present at ATS virtually; this will be for the INCREASE results, but we haven't received information on timing yet. We expect to publish these results in a journal this year following peer review, which would provide full publication of the study results. We'll ensure results are made available to you very soon.

Thanks so much, Leigh. James is on the line, and I think it’s very important for everyone on the call to appreciate what an incredible and challenging job it is amid a pandemic to successfully close out the year and complete the year-end audit remotely while gathering any required financial information for the 10-Q as well as processing over a million dollars daily in accounts payable—all while ensuring it goes to the correct locations. It’s a tremendous testament to the stability of United Therapeutics in navigating this pandemic without missing a beat. I think this should be reassuring to everyone on the line, both listeners and patients and staff alike. James, would you like to say a few words on these topics?

Martine, thank you for the opportunity. A couple of things come to mind. The organization has solid processes to execute whether it's year-end or quarter-end as we operationally shift to remote work. It’s certainly evident across all groups from R&D to manufacturing and all administrative functions. This is a genuine compliment to the strength of our balance sheet going into COVID-19, and as we continue to operate during this pandemic, we are well-capitalized to execute on our research and development programs and take care of our patients. This strength, as we move forward, should be reassuring to everyone participating on this call, which I appreciate the chance to address.

Thank you so much, James. Operator, we've had a great chance to address most of the people in queue. Thank you for organizing this call. To everyone on the phones, thank you for your continued support for United Therapeutics. Our hearts go out to those of you who have loved ones or friends affected by the COVID pandemic—health-wise, economically, and otherwise—and to those related to frontline healthcare workers, our complete admiration and respect for everyone out there fighting this battle. Operator, you may wrap up the call.

Thank you for participating in today's United Therapeutics Corporation conference call. A rebroadcast will be available for replay for one week by dialing 1 (800) 585-8367, with international callers dialing 1 (416) 621-4642 and using access code 1984097.