Good morning. It's my pleasure to welcome you to the United Therapeutics Corporation Second 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 Treasurer; 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 our 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 these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in our earnings release available on our website at ir.unither.com. Today's remarks may discuss the progress and results of our 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. All prescribing information for the products is available on our website. Now, I'd like to turn the call over to Dr. Rothblatt for an overview of our second quarter financial results and business activities of United Therapeutics.

Thank you, Dewey, and welcome everyone to our second quarter earnings call. I will start with a brief overview before handing it over to our President and Chief Operating Officer, Mike Benkowitz, who will give a more detailed insight. After that, we'll open the line for questions, which I will direct as needed—finance questions to our CFO James, science or clinical inquiries to our Head of Product Development, Leigh Peterson, and commercial or operational questions to Mike Benkowitz. I am very pleased with this quarter as we've seen significant progress with our key products—U.S. sales of Remodulin, Tyvaso, Orenitram, and Unituxin—which indicates we are on track for revenue growth, as patient numbers are returning to pre-pandemic levels. We have indicated previously that we believe these products will more than double our current revenues for several reasons. First, we anticipate net gains from Remodulin patients each year after we launch our highly differentiated products, Remunity and the implantable system for Remodulin. These launches have faced delays due to pandemic-related supply chain issues for Remunity and regulatory coordination for the implantable system, but we expect those delays to be resolved soon. Additionally, we expect net gains from the pending approval of Trevyent, a subcutaneous Remodulin, and advances in our collaboration with Smiths Medical on a smart pump device for Remodulin, which we believe will enhance convenience and certainty for patients, families, physicians, and payers. As a result, we expect Remodulin's patient base to grow year after year. We also predict net gains in Tyvaso patients from our new Dreamboat product, which is nearing the end of its clinical development phase, and from the anticipated new market approval for Tyvaso in WHO Group 3 PAH patients, currently under FDA review. Furthermore, we have promising pipeline extensions for Tyvaso targeting COPD through our current study and for interstitial lung disease with our new Phase 3 TETON study. Thirdly, we expect an increase in Orenitram patients due to growing familiarity with its updated label and increasing confidence among doctors regarding its unique titratability compared to other oral treatments for pulmonary hypertension. Meanwhile, our pipeline remains robust with new opportunities, including Phase 3 programs such as Ralinepag for pulmonary hypertension, Tyvaso for interstitial lung disease and COPD, and gene therapy for pulmonary hypertension. In addition to these Phase 3 programs, we have promising projects in development, such as a less painful or painless form of Remodulin and regenerative medicine Exosomes, which could offer significant benefits for various pulmonary and respiratory conditions. Our existing products are being revitalized with unique drug delivery systems and label expansions like Orenitram, which has proven potential to lower morbidity and mortality. The prospect of Tyvaso entering the untapped market of Group 3 pulmonary hypertension, affecting around 30,000 patients currently unable to access prostacyclin therapy, presents a substantial opportunity. This is just the beginning as we have multiple clinical developments nearing completion. Our exciting transformative opportunities, such as gene therapy aimed at significantly reducing the need for treatment for pulmonary hypertension and advancements in organ manufacturing to address the urgent need of patients on dialysis waiting for kidney transplants, are also progressing. This month and next, we will be entering the pivotal phase of our preclinical development for our xeno-kidneys, conducting multiple transplants of our 10-gene xeno-kidney, which we hope will lead to the first clinical transplants in 2021. These truly are exciting times at United Therapeutics, and we are well-positioned for growth for many years ahead. Now, I'll turn the line over to Mike Benkowitz for further insights on our current status.

Thanks, Martine. I’d like to share some insights regarding physician and patient demand in the second quarter as well as our commercial strategies for PH ILD. As Martine mentioned earlier, we are very pleased with our revenue performance during the second quarter, particularly following a record high number of U.S. patients receiving our treprostinil therapy over the last three quarters. We are happy to have maintained a relatively stable number of active patients quarter-over-quarter despite the challenges posed by the COVID pandemic. In our first quarter earnings call, we noted that there was some impact on treprostinil prescriptions and new starts in April due to the pandemic. However, as the quarter continued, we saw an increase in new patient prescriptions that approached pre-pandemic levels by the end of the quarter. We are especially pleased with the 40% year-over-year growth of Orenitram in the second quarter, which we attribute to greater acceptance of the FREEDOM-EV label among physicians and patients. We continue to see an increase in Orenitram prescribers, including key opinion leaders at major PAH centers who have historically not prescribed much Orenitram. We also noticed a decrease in discontinuations and an increase in average dosage per patient during the second quarter. Additionally, we have improved formulary access to Orenitram since the beginning of the year, benefitting plans that cover nearly 11 million more lives. Based on our payer tracking data, Orenitram is now covered for about 76% of lives in the U.S., with either preferred or non-preferred formulary status. This is in contrast to under 72% coverage for some competitors in the U.S. Overall, we believe that physicians, payers, and patients are recognizing and valuing the benefits that Orenitram offers. We initially expected COVID to have the most significant effect on the Remodulin business, particularly with progression from oral therapies like PDE-5 and ERA to Remodulin, which usually requires in-hospital procedures. This led to a shortage of new patient prescriptions and starts to compensate for the Remodulin patient discontinuations that occurred during the quarter. However, as we ended the quarter and clinics reopened, with physicians becoming more comfortable starting therapy at home, new prescriptions nearly returned to normal levels. Regarding generic competition in the U.S., the situation remains unchanged from previous quarters, with minimal interest from physicians to prescribe generic Remodulin and very little pressure from payers. In fact, we have seen no transitions from Remodulin to generic in July so far. The Tyvaso situation during the quarter mirrored that of Orenitram, as we experienced a decrease in prescriptions early on but saw a strong rebound in June and continuing into July. Similar to Orenitram, we noticed new Tyvaso discontinuations during the quarter and an increase in new prescribers. As we mentioned in our last call, PAH is a progressive disease that doesn't pause for COVID. There is a backlog of patients who need or will soon need advanced PAH therapies like Orenitram, Tyvaso, or Remodulin. We are confident that we will recover any ground lost in Q2 regarding new patient additions as hospitals and clinics continue to reopen and physicians become more adept at prescribing through telemedicine. Finally, I want to touch on our commercial launch plans for Tyvaso and PH ILD. With the additional data presented recently at the American Thoracic Society virtual session, we anticipate a potential publication in a major medical journal soon. We are very pleased with the positive reception of this important data from physicians who attended the ATS presentation, which aligns with the feedback we’ve gathered from more investigators and physicians in our advisory boards and market research. The new data is widely regarded as overwhelmingly positive, and the ILD treating community is eager to have Tyvaso as a treatment option for these seriously ill patients. Following our supplemental NDA submission earlier this year, our launch preparations are progressing well. As part of this initiative, we are expanding our sales, marketing, and medical affairs team by approximately 30 to 35 individuals by the end of the year. Many of these new hires will focus on building relationships within the pulmonology community and starting to disseminate the new data more broadly, adhering to pharma compliance guidelines. With that, I will turn the call back over to Martine.

Thank you, Mike, for providing great insights into our various activities. It's wonderful to see how we are supporting over 7,000 patients. I appreciate your efforts and the work of the entire team of medical and pharmaceutical professionals. Operator, we are now ready to take questions directed to myself, James, Leigh, or Michael.

Your first question comes from Hartaj Singh from Oppenheimer. Your line is open.

It was a really good quarter. Martine, my main question is that nearly every other biopharma company reported revenue declines of 5% to 10% in the second quarter. However, I believe you experienced a slight increase compared to the first quarter. Could you discuss the dynamics for the rest of the year as we move into the third and fourth quarters, particularly regarding the seasonality that United Therapeutics has historically seen with COVID-19? Also, please share your expectations for near-term growth moving forward.

Thanks so much, Hartaj. Great to hear your voice this morning and looking forward to the upcoming conference of your bank. Mike, I think you would be the best placed person on the call to respond to Hartaj's question.

Sure. Thanks for the question, Hartaj. I believe we haven't seen any signs of the usual seasonality in the second half of the year that would differ from previous years. The main variable is the impact of COVID. If cases increase and centers need to shut down, we might see fluctuations in new prescriptions like we experienced in the second quarter. However, we're all adapting to this new environment, including physicians, who are getting more comfortable with telemedicine. Many institutions are also allowing patients to return for necessary treatments. Additionally, there's a warehousing effect at play. Unless we face another complete shutdown, we expect to maintain an upward trend as we progress into the second half of the year.

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

A question on Remodulin. So you mentioned that the reduction in the new patient starts seems to have a more negative impact on Remodulin versus Tyvaso or Orenitram. So question to you that during the pandemic, do you think that Tyvaso may have had more impact? So why do you think there is a greater impact on Remodulin versus the others? And then, x-U.S. sales decreased dramatically. So do you think that x-U.S. sales will be stabilized from here? Thank you.

Thanks, Eun. I'm going to again ask Mike to respond to that question since he's responsible for all those areas.

Sure. In the case of Tyvaso compared to Remodulin, the main issue is that Remodulin is often initiated in a hospital setting, which was challenging during the pandemic as patients couldn't attend appointments in the first half of the second quarter. This led to a significant drop in new prescriptions. However, toward the end of the second quarter, we saw a rebound with Tyvaso, which, while ideally started in a clinic, can more easily be initiated at home. Our specialty pharmacy nurses are well-trained in using nebulizers and starting patients on Tyvaso, making home initiation more common for this therapy. This familiarity and historical precedent for starting Tyvaso at home differs from Remodulin. We’re also starting to observe a shift in this dynamic as people adapt to the current circumstances. Regarding x-U.S. sales, there's often variability in ordering patterns, making it difficult to project future quarters based on one. The impact of generic competition and differing payer landscapes outside the U.S. plays a significant role. In many countries where Remodulin is available, generics enter the market, establishing lower prices, which necessitates price adjustments for our distributor, Sorrento, allowing them to compete. We’ve also seen successful competitors gain traction in markets previously strong for Remodulin. Conversely, partner firms are working to expand and promote the value of the brand over generics, similar to our efforts in the U.S. Therefore, I wouldn't suggest that the revenue from the second quarter is indicative of future quarters due to the irregularity of ordering patterns, but it's worth noting that as discussed earlier, the growth of Orenitram compared to Tyvaso, along with other developments in our pipeline, indicates that Remodulin's revenues outside the U.S. will become a less significant aspect of our overall revenue narrative.

Next question comes from the line of Martin Auster from Credit Suisse. Your line is open.

I'm going to do a no, no and try to sneak in two questions but let…

You know what they say for every 10 years somebody has in the field, they're entitled at least one question. So you're good for two and soon for three.

So the first probably for Mike, you mentioned 30 to 35, kind of new sales and marketing liaison reps that support the PH ILD opportunity. I was curious if you could kind of add a little more color to what sort of percent increases as at about 20%, 30% increase to the effort? And can we read into that that you expect to see kind of at least a commensurate type of revenue growth with that? The second question, Martine was for you. There's a competitor in transportation that's out there that I noticed has been kind of hiring up senior staff this year and had a successful financing last year. I was curious if you could comment on kind of competitive positioning for where you see versus the competition in Dino? And any kind of other competitive advantages, you see you guys having? And then secondly, is that company progressive as United giving any thought to potentially seeking to kind of capture value for that program through a spin out or some other kind of effort just because they think it's something that gets overlooked within the other franchises that are commercial. Thanks.

Great questions. There's a lot of thought behind each of them. Let me address the second question first, as the first involves more metrics, and I'll give Mike a moment to gather those. In the xeno space, there are a few competitors emerging, likely inspired by the successful funding of eGenesis, the company you might be referring to. If that's not the case, please let me know later. eGenesis has completed a financing round and is a great company founded by George Church, a brilliant figure in biology, with significant contributions from Luhan Yang, an exceptional molecular biologist who is now leading a part of that company in China. They have a lot going for them and strong investors. We're pleased to see eGenesis making progress because, for some time, we felt somewhat isolated in the xeno field, wondering why others weren't recognizing this opportunity. There are over 100,000 individuals on kidney dialysis, and very few can survive beyond a decade, yet thousands are living to that stage. For those who cannot receive an allograft, xeno transplantation may be the only solution. We believe this represents a substantial market with the potential to do significant good. As mentioned earlier, we are currently in a pivotal phase of our preclinical development, completing the final non-human studies required by the FDA before transitioning to human studies. We've finished building a pathogen-free breeding facility for xeno kidneys, which aligns with Good Manufacturing Practices as guided by the FDA. We're collaborating extensively with the University of Alabama, Birmingham, where much of this work is happening under Dr. Jayme Locke's leadership. Dr. Locke is renowned for her remarkable work in creating extensive kidney transplant chains. We're proud to have her as our principal investigator. We believe we are in an excellent position. At one point, we considered spinning this out due to a lack of attention, but we realized it wasn't getting noticed because it was premature. Once we file for clinical xenograft, which we aim to do in 2021, I anticipate interest will increase significantly. This organ manufacturing activity will be a cornerstone of United Therapeutics. For now, we aren't considering spinning it out; we are excited to have it as a core part of our company. We aim to achieve enough with our xeno-kidney project and our 10-Gene gig to enter the clinic and enhance UT's valuation. Mike, can you share the metrics that Dr. Auster requested?

Sure. Yes, Martin, I believe your first question was about the addition of 30 to 35 employees in sales, marketing, and medical, and how that percentage relates to our current staffing. Considering the current group working on PAH, this increase represents about a 25% to 30% rise in headcount. It's challenging to make direct correlations between this headcount boost and revenue expectations due to numerous variables at play. For PAH, we need to consider factors like patient distribution, concentration at various physicians or centers, and the total number of physicians and centers available. Comparing PAH to ILD highlights that they are quite different. There's also the matter of overlap between the ILD market and those treating PAH, which is minimal. Therefore, the expansion of the sales and medical teams will specifically focus on ILD, representing a dedicated effort to engage with ILD physicians. Furthermore, since there is little competition in ILD, these representatives will concentrate on one indication, unlike those in PAH who handle multiple products. This makes it difficult to draw a direct link between headcount increases and revenue potential. We believe that based on the size of the patient population and the unmet needs, the revenue opportunity is much larger than just a 25% increase. With the new data and particularly the results from the TETON study, we anticipate even greater opportunities ahead.

The next question comes from the line of Liana Moussatos from Wedbush Securities. Your line is open.

Congratulations on the strong quarter. Of these two programs, which one is going to provide a cure first, gene therapy or organ manufacturing?

Wow! That is a very tough and challenging question. I'm not smart enough to know the answer to that question because both of them are very promising and both of them have kind of come to their time. Gene therapy has been something people have talked about for 20 years. Organ manufacturing, especially xenotransplantation, something people have talked about for 20 years. And it's just both of them are finally coming into their own. In all likelihood, there will be different solutions for different patients. I find that the thing that most people gloss over with disease generally and certainly with pulmonary disease is a tremendous heterogeneity of the patient population. And what works for some patients doesn't work for other patients. As you may know, Liana, we've been conducting pharmacogenomics screening of patients coming into our studies. And we've recently seen that there are significant pharmacogenomic differences among patients who respond to two different types of medications for pulmonary hypertension. Those differences we've seen are now correlative. So there are hypotheses that we'll test in future studies, but it indicates the heterogeneity of the patient population. I think for a patient who pretty much looks like they still have time on their lungs, if one could reverse the remodeling process, gene therapy would be a little bit more promising. Although I'd like to note that there is increasing data out there, Liana, showing that aggressive upfront treatment with Remodulin with the goal of reducing pulmonary artery pressure below 40 millimeters of mercury is also appears to be associated with a much better long-term horizon. And more and more researchers are publishing articles, where they dose to reducing pulmonary artery pressure rather than dosing to some symptomatic endpoints such as six-minute walk. Dr. Matsubara of Japan is one of the leaders of this area. But UT Southwestern, University of Texas up against therapeutics and other researchers around the world are also beginning to see that you can effect from remodeling. In other words, you can affect a disease modification, pulmonary hypertension by aggressive upfront treatments with Remodulin. That's very exciting because pressure is a kind of thing that you get into a well. And if you get into a well, of very high pressures, it's hard to get out of that well, but if you can get out of that high pressure well and drop down to below 40 millimeters of mercury, you get back to a stabilized situation and the patient can have a much better long-term outlook. Now, there will be many patients who've been at super high pressures north of 60, 70, 80 millimeters of mercury for a couple of years or more and they began to experience serious fibrotic issues with their pulmonary vasculature. And unfortunately for these patients, the lungs are kind of shot and that's the reason why unfortunately, mean survival is reported as anywhere from five to 10 years after diagnosis, depending on whether the person's diagnosis, functional class three, four, and what their condition is. So if a patient has already experienced, essentially irreversible fibrotic processes in their pulmonary arteries and their pressures are super normal, I think for them, the cure is going to be a lung transplant. And I would like to conclude on this question by pointing out that one thing I always hated about lung transplants was that they were trading one disease for another. They were trading the disease whether it's pulmonary fibrosis, cystic fibrosis, whatever, that gave rise to the need for a lung transplant for chronic rejection, ultimately resulting in something like bronchiolitis obliterans that destroyed their graft. So whenever you get a transplant, you are kind of trading your previous condition for long-term rejection. But we at United Therapeutics could face some enormous strides in the field of autologous manufactured organs. In other words, we start with a cyber blast of the intended patient and turn it into an IPSC cell and then read differentiate down into endothelial epithelial stroma basal cells and then expand those cells to the five to 10 billion that are needed to pulverize the lungs. So the patients that receive our autologous manufactured lungs will not have to take immunosuppressants and it truly will be a cure for those patients rather than just a bridge to another disease. Thanks so much for those testing questions Liana. And operator last question.

Your last question comes from the line of Christopher Zopf from Cowen and Company. Your line is open.

This is CJ on for Chris Shibutani. Given your interactions with the FDA on the Tyvaso SNDA, what sort of timeline are you expecting for being able to add the PH ILD indication label? And can you give us a sense of what fraction of Q2 and maybe current Tyvaso groups might be seeing some off-label use there? Are we seeing some transition from their modeling setting or is this purely kind of new patient group?

Yes. I'm going to focus on the second part of your question and ask Dr. Peterson, our Head of Product Development, who led the team that confirmed the efficacy of Tyvaso for chronic fibrosing interstitial lung disease. However, before we proceed, I want to clarify that we do not endorse or promote off-label use of Tyvaso for this condition. We operate strictly within our approved indications. With that, Leigh, could you share your thoughts on the timeframe for the TETON study?

Yes. I believe it was for the increase FDA submission timeline.

The timeline for the FDA submission. Okay, sure.

Thank you, I'm excited to discuss the increase. We submitted the SNDA in June, and we will soon find out from the FDA whether it receives priority review, which would mean a six-month turnaround. If it doesn't get priority review, it will be a 10-month process. That's the timeline for us to learn about the approval regarding the increase in the ability to add it to the label, assuming we receive a positive response.

That's great. That's fantastic. And while we have you on the line, would you give a sketch of when you think that we would likely begin enrolling patients in the TETON study? And about how long do you think that study will take?

Yes, the TETON study focuses on using Tyvaso in patients who have not yet been diagnosed but do have pulmonary hypertension. We have submitted some questions along with the protocol to the FDA and are currently finalizing the study design with them and our steering committee. Once that is completed, we will start the study. We anticipate needing to enroll approximately 250 to 300 patients, which could take about two years, depending on the follow-up period of either six months or one year. After that, we would finalize everything and prepare to submit the NDA, aiming for priority review, which would have a six-month turnaround, or otherwise a 10-month timeline for approval.

Thanks so much, Leigh. So much exciting group activity going on in our product development group and really glad to share that with all of the shareholders on the call. Well, operator, thank you so much for doing such a great job of coordinating all the questions today. And I will now turn the line back to you for your wrap-up statement.

Thank you for participating in today's United Therapeutics Corporation Conference Call. A rebroadcast will be available for replay for one week by calling 1-800-585-8367 with international. Thank you. This concludes today's conference call. You may now disconnect.