Good morning and welcome to the United Therapeutics Corporation's Third Quarter 2020 Earnings Call. My name is Kenzie and I will be your conference operator today. I will now turn the conference over to Mr. Dewey Steadman, Head of Investor Relations at United Therapeutics.

Good morning. It is my pleasure to welcome you to the United Therapeutics Corporation Third 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 these forward-looking statements. Today's remarks may also include financial measures that were not prepared in accordance with US generally accepted accounting principles or GAAP. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures can be found on our earnings release available on our website at ir.unither.com. Today's remarks may discuss the progress and results of 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. Full prescribing information for these products is available on our website. Now, I'll turn the call over to Dr. Rothblatt for an overview of the third quarter 2020 financial results and business activities of United Therapeutics.

Thank you, Dewey. Good morning, everybody, and welcome to our third-quarter earnings call for 2020. I'm going to be joined on the call today by our President, Michael Benkowitz; our Chief Financial Officer, James Edgemond; and our Head of Product Development, Dr. Leigh Peterson. We really have all good news to report today. So it's going to be a very fun earnings call. Let me divide the good news into two categories: pulmonary hypertension and pulmonary fibrosis. Let's start with pulmonary hypertension. We had, over the past quarter, the highest number of patients on our treprostinil medicines ever. In addition to that, we've seen double-digit growth in the number of our patients on Orenitram and the number of patients on Tyvaso; that's double-digit growth year-over-year, quarter-to-quarter. On top of that, we've also had solid Remodulin performance. And we expect this solid Remodulin performance to be even further enhanced with two planned launches for 2021. First, the Remunity launch for the patient on subcutaneous forms of Remodulin; and secondly, the ISR or Implantable System for Remodulin launch for patients on the intravenous form of Remodulin. These new product launches are important, because most pulmonary hypertension patients decline Remodulin due to its grave difficulty of delivery. Indeed, most pulmonary hypertension patients die without ever having access to Remodulin therapy. Speaking of our pipeline for pulmonary hypertension, also of great significance is our accelerating progress on ralinepag. We expect both the ralinepag outcomes and the ralinepag capacity Phase 3 trials to be half enrolled in 2021 and fully enrolled by the end of 2022. Let me then address some of the good news related to pulmonary fibrosis. We remain on schedule to launch our Tyvaso product for IPF-associated pulmonary hypertension in April '21, subject to FDA approval on its PDUFA date. We expect to further penetrate that 30,000 patients market for patients with pulmonary fibrosis associated pulmonary hypertension with the launch of our Dreamboat TreT product by the end of 2021, or possibly early 2022. I'd like to remind everyone that systemic drugs for treating this type of pulmonary hypertension, specifically pulmonary fibrosis associated pulmonary hypertension, are contraindicated, leaving Tyvaso as probably the only medicine approved by the FDA to treat this 30,000-patient population. We then expect to greatly expand our pulmonary fibrosis footprint with our TETON study in pure pulmonary fibrosis patients starting in the first quarter of '21. Indeed, we will be filing the IND for this TETON study next quarter. That 400-patient study should be completely enrolled by '22. So there are a lot of things that are happening in both our core historical franchise of pulmonary hypertension and in our steady adjacent market expansion into the field of pulmonary fibrosis, first by having one leg in two camps with the Group 3 pulmonary hypertension associated with pulmonary fibrosis and then, with the other leg completely in the pulmonary fibrosis side of the fence with the TETON study. While I've been talking about our pipeline, let me also talk about things that are going on at the Phase 1 and what I would call the Phase 0.9 level of our pipeline. So with regard to Phase 1, in early 2021, we will begin clinical development of our once-daily form of Orenitram based on an IND that will be going in shortly. This will be much more convenient for patients than the three-times daily form of Orenitram and I think will be instrumental in continuing the double-digit growth that we're currently seeing year-over-year in Orenitram. Another exciting activity that I would say is that at the Phase 0.9 level is RemoPro. This is the painless form of subcutaneous Remodulin, designed ultimately to go into the Remunity Pump. We plan to file our IND in the fourth quarter of '21 and then move into Phase 1 right after that in '22. Speaking of filing INDs in '21, another IND we plan to file in '21 is for our xenokidney project. This is a 10-gene modified porcine kidney designed specifically to avoid the types of rejection that are common in xenografting and instead to appear to the recipient as no different than another allograft. We expect to file the IND for the xenokidney program in '21. And then, due to the unique nature of that type of product, move directly into a Phase 2/3 study in '22. With that overview of our clinical development and pipeline activities, I'd like to next turn the microphone to our President, Michael Benkowitz, to give a review of other aspects of our operations, including commercialization.

Great. Thanks, Martine. Good morning, everyone. As Martine said, overall, we're extremely pleased with our reported revenue performance in the third quarter, highlighted by strong double-digit year-over-year growth at Orenitram, Tyvaso, and Unituxin. And when you adjust our revenue growth to account for the Excess Order that occurred by one of our distributors in the third quarter of 2019, that growth is even stronger. On this adjusted basis, US Remodulin revenues grew year-over-year and 5% sequentially, and Tyvaso and Orenitram revenues grew by approximately 30% each year-over-year. We periodically caution that our revenues represent sales to our distributors and may not reflect underlying demand for our products. Happily, we can report that revenue growth we saw in Q3 is supported by growing demand in the US as reflected by the following highlights during the quarter. First, after experiencing some COVID-related softness in new patient starts earlier during the pandemic, total treprostinil starts returned to pre-pandemic levels during the quarter. Second, as Martine noted, the number of patients utilizing one of our treprostinil products reached another all-time high. This is the fourth quarter in a row that we've achieved an active patient census record for our treprostinil products. We have a record number of patients benefiting from Orenitram, reflecting continuing and increasing adoption of this therapy by physicians following the FREEDOM-EV label expansion last year. We have more patients benefiting from Tyvaso than we have had in approximately five years prior to the commercial availability of oral prostacyclin class medicines. And finally, we are just shy of a record number of patients utilizing Remodulin. In addition to those highlights, we're seeing increases in average dose levels and a length of time our patients stay on our medicines, both of which positively impact our revenues. So we're very pleased all the way around with the momentum and trending of our commercial products. Meanwhile, we are making very good progress towards our near-term new product launches. We are building out our field-based medical sales and nursing teams to support the expected Tyvaso label expansion in April 2021 to include patients with pulmonary hypertension associated with interstitial lung disease following our INCREASE trial. We have started engaging with physicians that treat these patients, which by and large represent a new prescriber base compared to those currently prescribing our products for PAH, and appropriate forums such as investigator meetings, scientific presentations at healthcare conferences, advisory boards, market research, and one-on-one interactions. The INCREASE data is roundly considered overwhelmingly positive, and the ILD treating community is looking for Tyvaso in their treatment armamentarium for these very sick patients upon FDA approval. Between the momentum we're seeing with Tyvaso and its approved WHO Group 1 indication and the excitement around the upcoming launch into WHO Group 3, we're well on our way to solidifying Tyvaso as our largest product in the very near-term. Our two upcoming Remodulin pump launches are also progressing. In the case of Remunity, our new subcutaneous pump that was approved by the FDA earlier this year, we believe, we have overcome the COVID-related delays that impacted the July launch timing. Our partner, DEKA Research, is building commercial inventory. And once we have sufficient safety stock, which we expect soon, we'll make the Remunity Pumps commercially available again. And finally, our partner, Medtronic, continues their discussions with the FDA to clear the outstanding conditions of approval for the ISR, which is our new IV pump. We believe we remain on track for a launch next year, and we are already working with key PAH centers to get them ready for this launch. So, with that, I'll turn the call back over to Martine.

Thanks so much, Mike. Operator, I'm now happy to field the calls, and I'll direct them amongst Dr. Peterson, James Edgemond, and Mike Benkowitz as appropriate.

Thank you. Our first question comes from the line of Hartaj Singh from Oppenheimer. Please go ahead. Your line is open.

Great. Thank you. And a really, really good quarter, Martine and team. So, thank you. Just a quick question on Tyvaso. We're seeing a definite uptick in the trend growth over the last few quarters, Martine, as you mentioned, year-on-year double-digit growth. In key opinion leader calls, we've noticed that there is a lot of overlap between the physicians treating PAH using Tyvaso there and physicians treating PAH ILD. Do you expect a lot of this enthusiasm to be occurring in those patients and then also Tyvaso uptick in that Group 3 patients occurring there? Thank you.

Thanks, Hartaj. Excellent question and good to hear your voice this morning. I think the best person on this call to field the question would be Mike because he is right in the middle of all the details right now of actually assigning different regional sales managers and their teams amongst the different types of physicians—those who treat patients with ILD that have never seen really pulmonary hypertension patient treatment options and those who are normal PAH treatment physicians that additionally treat patients with PAH associated with their ILD. So Mike would really have the best answers for that. And Mike, if you could provide some color on Hartaj's question.

Sure. Thanks, Hartaj, for the question. I think the short answer to the question is, it's hard to tell when physicians are writing or submitting referrals or prescriptions for Tyvaso; they're not indicating whether it's a PH-ILD patient or a PAH patient. So, it's a little hard to tell if there's some off-label use in that group. What I can tell you though about the treating community is, and as I said in my opening remarks, we do see some differences in that group. By our account in terms of those physicians that are treating PAH and those that are treating ILD, there is maybe only about a 20% to 25% overlap. There’s sort of an inverse relationship between the number of PAH patients those doctors see and the number of ILD patients those doctors see. In other words, if you've got a doctor that sees a lot of PAH patients, they’re seeing very few ILD patients and vice versa. So, what we can see on the referral form are the doctors that are writing the prescriptions. And so what we haven't seen is a lot of new prescribers, which tells us that the vast, vast majority of these Tyvaso prescriptions are being submitted by your typical PAH doctors. And given the data that we see would lead me to believe that the vast majority are for PAH patients, but again, we don't have the visibility to know exactly whether they are PAH or PH-ILD.

Thanks so much, Mike. That's a great response. Hartaj, one little footnote I'd add is, it's very interesting to me just having studied this field for quite a bit that there are this very substantial quantity of patients in the Group 3, WHO Group 3 pulmonary hypertension, over 30,000 patients that systemic drugs are contraindicated. So here in the field of Group 1 WHO, we have upwards of 12 different medicines available to treat pulmonary hypertension. There are just about as many Group 3 patients as Group 1 patients, but there are zero approved medicines to treat those Group 3 patients. So it's a screaming unmet medical need. And we are just crossing every finger we could cross that on the PDUFA date in April, the FDA will give us clearance to translate the INCREASE clinical trial results into an approved treatment for those 30,000 patients that would be the only approved treatment for those patients. It was a great trial, the INCREASE trial, and we met all of our primary and secondary endpoints. So I think there is going to be a tremendous amount of excitement amongst the physicians that finally they have something to treat those 30,000 patients with. Thanks so much again. Operator, next question please.

Our next question comes from the line of Eun Yang with Jefferies. Please go ahead. Your line is open.

Thank you. For Tyvaso in the new indication PH-ILD, can you comment on your regulatory filing ex-US? And for TreT, do you expect you would need to run another switching study similar to Phase 3 BREEZE? Thank you.

Yes. Thank you, Eun, for those very interesting questions and exploring some areas that a lot of people overlook. So I'm glad you've asked those questions. At this point in time, we haven't made a firm decision with regard to the European filing schedule, mostly because we're just laser-focused on gaining FDA approval to deal with this huge unmet medical need that I just talked about—the 30,000 patients here. So we are kind of like a step-by-step strategy here, and first we want to be able to successfully get approval in the US, and then we'll consider what is the best approach to go as to Europe. The second part of your question is also quite insightful because the Dreamboat TreT device is a much easier to use device than the Opti-Neb nebulizer that we used in the INCREASE study and that we submitted for FDA approval on. Most people feel that whatever the captured market would be for this nebulizer, that dry powder Dreamboat device could provide two to maybe three times larger market because of its greater convenience. We do plan to file for approval of the Dreamboat device based on the current BREEZE study in the April 2021 timeframe and then that would take its normal FDA approval period. Hopefully, we can get that approved by the end of '21 or at the very beginning of '22. Whether that Dreamboat TreT device is approved for just WHO Group 1 pulmonary hypertension, which is the population in which we did our BREEZE study, or is also going to be approved for the WHO Group 3 population will be a decision that is up to the FDA. What we will do to support that decision and provide guidance is as soon as we wrap up the filing based on the BREEZE 1 study in the WHO Group 1 population, we will immediately begin a BREEZE 2 study in the ILD population or the WHO Group 3 population. That way, we will at least have that data available for the FDA. If they feel that they are not comfortable approving the Dreamboat in Group 3 without some data, we should have that data by the time they reach their PDUFA date for approving the BREEZE device in the Group 1 population. If for any reason things take a little longer, we'll have that data immediately available. I don't think it's really going to be of much consequence because the desperation in the WHO Group 3 population for treatment is so large that the Opti-Neb-based nebulizer form of Tyvaso would be very rapidly adopted. But you always want to keep building on your momentum and making it easier for larger patient populations to avail themselves of Tyvaso. So we will be right on with BREEZE 2 data for the ILD population immediately after completing the BREEZE 1 filing. Thanks for your question, Eun. Next question, operator.

Our next question comes from the line of Martin Auster with Credit Suisse. Please go ahead. Your line is open.

Hey, everybody. Thanks for taking the question. Martine, will you indulge my two-decade tenure to let me ask two questions again?

Yes, Dr. Auster. One for being Marty and one for being doctor.

Thank you kindly. A couple of things I want to follow up on. First on TreT; you reported that the healthy volunteer kind of part of that study was done. Can you comment at all on what that data looks like in comparison to what you've seen with Tyvaso? And can you also talk about TreT regarding what the supply means that you're anticipating would be and if you think you'll be able to meet the potential demand for that new device and that new system if you were approved on a first pass approval? The second question was on the xeno-organ side. I think there are something like 20,000 to 25,000 kidneys transplanted in the US each year. You probably know the number more specifically. But if you could, comment maybe on what the overall big picture opportunity? I know there is a very long wait list, and I know there are a lot of people that don't get served. What is the kind of addressable big picture market opportunity there and when do you need to think about pulling the trigger to make decisions on expanding and building out your DPF capabilities to start thinking about how to meet some of that long-term demand? Thanks.

Okay. Thanks, Marty. Fascinating questions. It's the kind of thing we could talk in a coffee house for hours over if we could talk in a coffee house. But with regard to the first question on BREEZE, the PK data, the buildup of TreT devices, Dr. Peterson, if you could, at least, talk about the PK side. And if you feel comfortable discussing the inventory side, roll into that. If not, I'll talk about that at the front end of the xeno stuff.

Yes. Sure. Hi, everyone. Thank you all for calling in. Great to speak with you. So, you all know that the TreT study in healthy volunteers had a primary objective of showing comparable PK between Tyvaso and TreT. That has been completed, and we're undergoing the data analysis right now. I don't have the final output package to discuss with you. But I will tell you that this was an open-label study, and we're seeing consistent results between the two medications. We're actually seeing—it appears, at least early on—that the TreT device seems to penetrate the lung a little bit better than Tyvaso with Opti-Neb, but that also might be because, as you might know, TreT requires your entire dose from one to two breaths. You need a tiny cartridge, and if you breathe it in, you get the full dose, whereas with Tyvaso, it can take multiple breaths to get the full dose. That can explain the lung penetration. But again, the final data are being analyzed literally as I'm speaking, and we will be able to get that up to you very shortly, but we definitely do not expect any surprises there.

Thanks, Dr. Peterson. Thank you very much. So with regard to the inventory, Marty, I think we're going to be in good shape. In fact, just this week, at the request of our Head of Manufacturing, Pat Poisson, we allocated $5 million for inventory buildup for the TreT launch during 2021. He regularly visits the MannKind plant in Connecticut, where we do the manufacturing of everything. I feel confident that we'll have adequate supply to meet our needs. As you probably recall from reviewing our proxy, one of our companywide objectives upon which everybody's bonus is based in the entire company is that we have to have a two-year inventory of all commercially launched products at the rate of product take-up. So Mike Benkowitz and his commercial team would provide a forecast to manufacturing in terms of how many Dreamboat TreT patients we expect to garner in the first 12 months after launch, which would be mostly a 2022 thing. Therefore, already in 2021, Pat Poisson and our manufacturing team are ensuring that we have twice that amount of inventory built up for at the time of launch, so that we can achieve that manufacturing and inventory milestone as we always have every year for as far back as I can remember. Regarding the xeno question, I think your numbers are quite accurate, Marty. There are over 20,000 kidney transplants done. If you include living related kidney transplants, you get up to the 35,000 category. The next number that comes up often is 100,000 people are waiting for kidney transplants and are currently on dialysis. The next number is approximately 300,000 people in need of a kidney transplant, but for various reasons, they cannot access dialysis. It’s probably one of the largest unmet medical needs in the United States, not unrelated to the high levels of diabetes in the country, but that's not the only reason for end-stage renal disease. Hence, kidney transplantation is a cure for end-stage renal disease. We have been working many years to ensure an unlimited supply of transplantable kidneys that would be well tolerated by recipients. We expect to file an IND in 2021 based on kidneys coming out of that DPF. In terms of when we would trigger the building of a commercial scale DPF, we are about to get the first clinical xenokidney transplant results, based on the IND going in '21. Therefore, we will know in '22 whether we have a successful xenokidney product. That would be the time to pull the trigger. We have already designed the facility using our design architects at EwingCole, who specialize in bio-agro type manufacturing designs. So, we have a well-vetted design that's been reviewed by experts in controlling viruses and microbes in animal populations. We will be ready to sign a contract quickly and proceed with construction, which could be operational in 2024. Thanks for the question, Marty. Operator, we have time for one last question.

Our last question comes from the line of Joseph Thome with Cowen & Co. Please go ahead. Your line is open.

Hi there. Thank you for taking my question and congrats on the great quarter. Just a little bit on Tyvaso in ILD, can you comment on how well these patients are identified currently given that, as you mentioned, there really aren't great treatment options for patients? Do you anticipate that the potential approval of Tyvaso in the indication will change this paradigm, and is it your expectation that there are some PH-ILD patients sort of built up and waiting for launch? Thanks.

Sure. Let me suggest we give you a two-part answer to that question, with the first part being given by Dr. Peterson because she was in charge of the INCREASE study that produced the clinical result in the ILD patients. She can speak most expertly about those results and which were reported at the abstract level at the ATS conference and imminently will appear in a peer-reviewed publication. Therefore, she can discuss the medical details of how well it worked in those patients. Then Mike Benkowitz, our President, who has spent a lot of time considering the market segmentation and the approach to the market, can speak more about the second part of your question. Dr. Peterson?

Yes, sure. Tyvaso works quite well in the 2/3 patient population. The INCREASE study represented ILD plus pulmonary hypertension. In this population, the patients had data from right heart catheterizations, meaning they had documented pulmonary hypertension. Up until now, since there was no medication for this group, doctors didn't necessarily perform right heart caths if they suspected ILD or pulmonary hypertension, because even if they discovered PAH, there was nothing to treat them. Since we now have a treatment, they will be performing those right heart catheterizations to ascertain the degree of pulmonary hypertension. We have heard that many physicians suspect that significant percentages of their patient population have pulmonary hypertension and will start to screen and diagnose those patients appropriately. We're well positioned to enhance this identification process and hope to see increased awareness and action among physicians as the INCREASE results are published.

Thanks, Dr. Peterson. That was an excellent answer. Mike, would you like to add some color based on feedback from our medical sales teams?

Sure. I agree with everything Leigh said. There is a lot of pent-up demand. There’s been an under-diagnosis of PH-ILD for the reasons Dr. Peterson stated. Physicians suspect pulmonary hypertension typically as symptoms become severe. However, without treatment options available, the doctors have avoided invasive procedures like right heart caths. All our interactions with physicians—whether in advisory boards, scientific presentations, or through our medical team—suggest that now that a treatment is available, physicians will screen for pulmonary hypertension and diagnose these patients effectively. That’s a considerable part of our current outreach effort to educate physicians about how to appropriately suspect PH-ILD and how to arrange right heart caths for confirmation.

Great. Thanks, Mike. Operator, there's time for one bonus question here. Do you have another person lined up?

I do. Our next question comes from the line of Liana Moussatos with Wedbush Securities. Please go ahead. Your line is open.

Good morning. Thank you. Since COVID continues to be a problem and infection rates are going up and it's affecting our industry, clinical trials, and commercialization, can you just give us a brief overview of what has to happen, and when do you think the timing of this could be resolved between now and maybe the end of '21?

Yes. It's a 30,000-foot question that covers everything. In our Company, Liana, we have a risk management group that reports to our Chief Financial Officer, James Edgemond. This group has meetings with as many as 50, 60, or 70 people at United Therapeutics, and they issue weekly reports regarding COVID-19 and its impacts on different parts of the Company. James, could you provide color regarding Liana’s question about the overall impact of COVID-19 on United Therapeutics and when we see those effects potentially ameliorating?

Yes. Thank you, Martine, and Liana, good to hear your voice. So, as Martine mentioned, we organized a leadership team at the beginning of the year to ensure effective communication across the organization regarding risk management and COVID-19 impacts on all areas of the business—from human capital to manufacturing, to clinical trials, product development, and specialty pharmaceutical distributors. This coordination has been effective in understanding risks and impacts on the organization as a whole. Broadly speaking, all Unitarians, as we call ourselves, have stepped up to ensure we understand risks and impacts not only internally but also for our patients and those in clinical trials. We're reopening some trials based on opportunities and hotspots around the country or globe. We continue to hope for the best in the near term but will need to remain vigilant to ensure the business progresses.

Thanks so much, James. To wrap up, everybody on the earnings call, we've had a great quarter. I think this quarter and perhaps more generally this half of the year will be looked at in retrospect as a key pivot point for United Therapeutics. This will be the time when we pivoted from being solely a pulmonary hypertension company to becoming both a pulmonary hypertension company and a pulmonary fibrosis and other forms of interstitial lung disease company. You can see this pivot in us moving into a group of pulmonary hypertension patients, WHO Group 3, where pulmonary hypertension is not their primary problem; overall, their primary problem is interstitial lung disease, gravely worsened by the pulmonary hypertension. For the first time, we're advancing in a Phase 3 study with patients who do not have pulmonary hypertension, only pulmonary fibrosis. The outcome of our INCREASE trial showed we were able to not only slow disease decline but actually improve forced vital capacity for pulmonary fibrosis patients. This is an exciting time here at United Therapeutics. We always hope to be strong at our home base and then expand from there. With this adjacency of interstitial lung disease and pulmonary hypertension, we have a solid basis from which to expand our footprint in providing more and better healthcare to even larger groups of people. Thank you so much for your time and attention this morning. I look forward to seeing you at upcoming healthcare conferences.

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 8782637.