Good morning, and welcome to the United Therapeutics Corporation Second Quarter 2022 Earnings Webcast. My name is Dennis, and I will be your conference operator today. I will now turn the webcast over to Dewey Steadman, Head of Investor Relations at United Therapeutics.

Good morning. Thank you, Dennis. It's my pleasure to welcome you to the United Therapeutics Corporation Second Quarter 2022 Earnings Webcast. 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; Pat Poisson, our Executive Vice President of Technical Operations; and Dr. Leigh Peterson, our Senior 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 Forms 10-K and 10-Q, contain additional information on these risks and uncertainties. We assume no obligation to update forward-looking statements. Today's remarks may discuss progress and details 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, and full prescribing information for these products are available on our website. Now I'll turn the webcast over to Dr. Rothblatt for an overview of the second quarter 2022 financial results and business activities of United Therapeutics.

Thanks, Dewey. Good morning, everyone, and welcome to our second quarter 2022 earnings call. We've achieved all of our numbers this past quarter, and the 31% growth reported in our Tyvaso sales is truly impressive, actually for me even eye-popping, and very comforting because we continue at this 30-plus percent growth rate. Year-over-year, we will have achieved our stated goal of 25,000 patients while we double our numbers every 2.5 years at that percentage growth rate, so we will be able to achieve our 25,000 patient goal on target. Rather than have me read the entire release, why don't we take a kind of 30,000-foot strategic overview of where we are and where we are going? We are now at nearly a $2 billion per year revenue run rate. And that really puts us on the cusp of three new generations of revenue at United Therapeutics. The first generation or the first next peak of revenue will be to double our $2 billion of revenue around 2025 by expansion of our oral, inhaled, incredible products in pulmonary hypertension. These products include our launched products such as Orenitram, Tyvaso, Tyvaso DPI, and Remunity, as well as our late-stage pipeline products such as ralinepag and Tyvaso for COPD. The launched products alone can get us to a revenue doubling, as I just described in the beginning of my presentation, largely just by penetration of WHO Group 3 pulmonary hypertension by Tyvaso, as shown in this quarter's outstanding numbers. All of the pipeline products are actually just additional bonuses to getting us to that goal. At that point, the second generation of revenue kicks in above $4 billion. So going from the $2 billion revenue run rate that we are currently at to the $4 billion is accomplished overwhelmingly with just our launched products. The second generation of revenue kicks in above and beyond that $4 billion threshold, which we should achieve around 2025 with approval of our TETON study as the basis of a disease-modifying treatment and the first disease-modifying treatment for idiopathic pulmonary fibrosis (IPF). Here, we forecast an additional $4 billion in revenue coming from about 40,000 patients at approximately $100,000 per year. With those numbers, we should be able to close out the 2020s with about $8 billion in revenue annually, roughly half from pulmonary hypertension and half from pulmonary fibrosis. By that time, we will be ready to monetize our organ manufacturing business with thousands of kidneys, hearts, and lungs, bringing us well over $10 billion in revenue in the 2030s. So that organ manufacturing business is the third peak that we would achieve in the years ahead. In summary, at the 30,000-foot level, we expect greater than fivefold growth in around eight years. Now as I've shared where we are and where we are going and where we go from there, let me now turn the podium over to Michael Benkowitz, our President, for a deeper dive. Mike?

Thanks, Martine, and good morning, everyone. We're very pleased to have achieved double-digit year-over-year revenue growth in our treprostinil business. Not only that, but we reached all-time high quarterly revenues for both Tyvaso and the total treprostinil business. As usual, I'll provide some additional commercial color for each of our four main products, focusing primarily on our patient metrics. I remind everyone that our quarterly treprostinil revenue does not always track exactly with quarterly underlying patient demand due to specialty pharmacy ordering patterns, which can be seasonal. I'll start with Tyvaso, which saw three similar events in the second quarter. First, we were thrilled to receive FDA approval for Tyvaso DPI in May. This is the culmination of years of work by teams at United Therapeutics and our partners at MannKind. We were able to make our first shipments to specialty pharmacies in June, and the first patient started on therapy shortly thereafter. Physician engagement and enthusiasm around this new product is extremely high, which has translated into strong referrals or prescriptions and starts in the third quarter. Secondly, the CMS coverage update to include Tyvaso for PH-ILD that went into effect in early June had a positive impact on new referrals late in the quarter, which, like Tyvaso DPI, continues into the third quarter. As a reminder, CMS patients who started in our patient access programs before the coverage decision took effect will remain in those programs through the close of the calendar year and then will convert to commercial patients next year. However, we have been aware that many physicians were waiting for a CMS coverage decision before referring their Medicare patients for Tyvaso therapy, so it has been nice to see an uptick here. Finally, after two quarters of modest patient growth relative to Q2 and Q3 of last year, we added approximately 500 patients to our Tyvaso total active patient census in the second quarter. I should note that we accomplished this without the benefit of the CMS coverage decision or the Tyvaso DPI approval, because these events occurred so late in the quarter. Consequently, we believe the momentum in patient additions we saw in the second quarter, coupled with Tyvaso DPI approval and the CMS coverage decision, along with continued growth in new prescribers, leaves us well positioned for a strong second half of the year and to achieve our goal of 6,000 Tyvaso patients by the end of the year. Moving to Orenitram, we saw yet another quarter of record patient counts as of the end of the second quarter. As we've discussed before, we believe this uptick is driven by the FREEDOM-EV label expansion, now that we're able to have more robust interactions with prescribers about this data. Over the long term, Orenitram will continue to be an important part of the PAH treatment options in patients that either prefer oral medications, have failed on Tyvaso, or want to transition from Remodulin after their RV function has normalized. Turning to Remodulin. In the second quarter, we saw the second highest level of Remodulin referrals ever and relative resilience and stability in the business despite the availability of generic competitors. The relaunch of the Remunity pump is proceeding well, and we expect Remunity starts and total patients on Remunity to grow over the balance of the year and into 2023. Finally, Unituxin demand remains strong as quarterly shipments from our distributors to hospitals remain consistent with the past few quarters. Our second quarter revenue was impacted by a decline in international ordering, as well as order timing and patterns in the U.S. market. Overall, we're very pleased with each of our products' performance in the second quarter, and we look forward to a strong second half of the year, particularly for Tyvaso. So, Martine, I'll turn it back to you.

Thanks, Mike. Those are superb results that you nicely reviewed. Operator, can you please open the lines? Any questions that come in, I'll be happy to refer them to the executive on the call whose area best fits with.

And your first question is from the line of Hartaj Singh with Oppenheimer & Co.

Great results, everyone, and congratulations. Now that DPI is approved, I have a question regarding United Therapeutics' intellectual property portfolio. Martine, will you be able to generate more intellectual property from DPI that we might expect to see in the coming months? Can you also discuss the intellectual property you are developing through innovations like Remunity and possibly future ralinepag? I appreciate your insights.

Yes. Thanks so much, Hartaj, it’s so nice to hear your voice this morning. It's a really great question. We have a robust IP program at United Therapeutics. We are very, very fortunate to have in-house IP Counsel, who is an expert in the field and who works directly for our General Counsel, Paul Mahon. His name is Shaun Snader. Fortunately, he is extremely knowledgeable and proficient in the area of biotechnology, biochemistry, pharmacology, as well as drug device technology. So he constantly engages in kind of like a round-robin set of discussions with members of our product development team, drug device team, chemistry team, organ manufacturing team, and ends up with a continuous stream of new patent filings, especially here in the U.S., but also overseas. So I feel confident that we will have a major new IP that we will be able to benefit from coming throughout the balance of this decade in every area of our business, whether it is pulmonary hypertension, pulmonary fibrosis, COPD, or organ manufacturing. Wherever we can demonstrate something that is unique and innovative and meets all of the criteria for patenting, Shaun is going to be on that. I think going forward, the core competency ultimately of United Therapeutics is going to be its intellectual property portfolio. Thanks so much, Hartaj, for the question.

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

Great quarter. I have a question about the Phase III PERFECT trial in COPD patients. You modified the trial by increasing the number of patients and extending the single-treatment period to 12 weeks. Can you elaborate on the reason for changing the study protocol and when we might expect the data?

Thank you, Eun, for your question and for joining the call. We modified the trial as we had the opportunity to switch from a crossover design to a parallel design, which was part of our preapproved protocol with the FDA and had been approved by various IRBs. At multiple points during the trial, we considered whether this switch would improve our chances of a successful outcome. Our focus is on maximizing the probability of success. About two months ago, we collectively decided that changing to the parallel design would enhance our chances for a successful result. While we likely would have succeeded with the crossover design, we opted for the approach that offers greater assurance. We are committed to achieving success at United Therapeutics, so we implemented the approved transition to parallel design. We are actively enrolling participants for the study, and all patients from the crossover group will be included in the parallel design. As I mentioned earlier, while these pipeline patients are not critical for doubling our revenues in the coming years, they represent additional opportunities. We anticipate completing the study within the typical timeframe for Phase III studies.

Your next question is from the line of Joe Thome with Cowen.

Congrats on the excellent progress this quarter. Maybe just in terms of Tyvaso, can you comment on the penetration that you're seeing into more traditional ILD physicians in that PH-ILD launch for Tyvaso? Should this new CMS Medicare coverage decision and the DPI launch fuel uptake at these physician centers?

Yes. Thank you, Joe. It's a super question, getting right to the marrow of what's going on in the very exciting growth figures that we have for Tyvaso. I'm going to refer that question over to Mike Benkowitz for a detailed response.

Sure. Thanks, Martine. Thanks, Joe, for the question. Yes, in terms of penetration with the PH-ILD prescriber base, we have seen an uptick there in the second quarter. I think the inflection point or tipping point for us with respect to those physicians was really toward the end of the first quarter of this year when access to our sales reps opened up, coupled with the return to in-person healthcare conferences. We had the ISHLT conference in Boston and the ATS conference in San Francisco, both well attended, providing us a significant opportunity to get back in front of physicians and discuss PH-ILD and Tyvaso in that indication, both one-on-one and through publications and presentations. Since then, we’re starting to see a nice uptick. I'd have to confirm this, but I believe we increased our prescriber base by about 15% to 20% just in the second quarter alone, with a lot of that coming from typical ILD treaters. We absolutely believe the CMS coverage decision and the DPI will help us continue to penetrate that prescriber base. We've heard anecdotally that physicians had been waiting for the coverage decision to ease the reimbursement process for patients. Additionally, the Tyvaso DPI provides a more convenient delivery mechanism, which we think will facilitate our growth in the prescriber base as we progress through the second half of the year.

Your next question is from the line of Jessica Fye with JPMorgan.

I was hoping you could elaborate on where you see near-term DPI starts coming from. How much use over the coming months do you think will come from new starts versus switches from nebulized Tyvaso? Also, has there been any evolution to your thinking about the potential eventual mix between nebulized Tyvaso and Tyvaso DPI since your last quarter? Can you remind us of your thoughts there?

Thank you, Jess, for your really interesting questions. I will comment on your second question, and then I will pass your first question over to Mike. Our view is that there's going to be a leveling out at about a 50-50 split between nebulized Tyvaso and Tyvaso DPI. It’s comparable to what we've seen over the years between subcutaneous and intravenous forms. While we are very excited about DPI and confident about its convenience, different medical conditions will often dictate the best solution, which may still require nebulization. Nonetheless, looking long term, we anticipate a roughly equal split between the two forms of Tyvaso. I'll hand the first part of your question off to Mike.

Sure. Jess, regarding the mix between transitions and new starts with DPI, there's no particular preference between the two. When we launched in June, there were several logistical steps that had to occur, including printing the final label and preparing packaging. We started by producing the maintenance kits for patients already on the nebulizer. A bit later, we began printing titration packs for new patients. At this point, whether patients are on the nebulizer and wish to transition or are new patients needing to start on prostacyclins, we can accommodate both. Therefore, I anticipate that as we progress through this year, we will see an even mix of both transitions and new patients.

Your next question is from the line of Andreas Argyrides with Wedbush Securities.

I'm going to piggyback off Jessica's last one. We recently conducted a call with a PHA expert, who noted that there’s a significant opportunity for DPI and PH-ILD. If you can provide that mix that you mentioned about 50-50 for DPI specifically, that would be great. Additionally, could you focus a bit more on the pipeline and what we can expect next from the organ transplantation programs?

Sure. Yes, that 50-50 split, approximately, applies across the board for PAH, whether Group 1 or Group 3. Regarding your question about organ transplantation, we have two executives on the call. We have Pat Poisson, our Executive Vice President for Technical Operations, which includes the construction of our pathogen-free facility, and Dr. Leigh Peterson, who is in charge of product development, which includes our xeno-kidney and xeno-heart programs. Pat, would you like to say a word about the manufacturing aspects of the organ business? Then I'll ask Leigh to comment on product development.

Yes, sure. Thanks, Martine. We've made significant progress over the last three months with the DPI facility. In Q2, we completed the design of that facility. By the end of the quarter, we're anticipating substantial completion of the facility by the end of '23, which will prepare us to support any xenotransplantation trials that will start in '24.

Thanks, Pat. Dr. Peterson?

Yes. Thanks for the question. We're continuing our dialogue with the FDA about a clinical path forward. Meanwhile, we're working with our academic partners and conducting nonhuman primate studies. When appropriate, our academic partners will also conduct xeno donor studies, similar to those previously reported at NYU and UAB. It is also up to the academic partners, but we expect there may be additional living recipients on a compassionate use basis before we begin the formal clinical trial.

Thanks, Dr. Peterson. It was a great set of questions we had this morning, aligning nicely with the overview I provided at the beginning. Hartaj's and Eun's questions emphasized the potential for continued growth from our $2 billion revenue run rate to $4 billion, primarily driven by the expansion of Tyvaso, but also Remodulin and Orenitram in our existing approved indications. Questions from Joe and Jess pointed out the significant potential of DPI, especially as we move into pulmonary fibrosis with our TETON study, which is now enrolling strongly. I believe we're poised to demonstrate that we have a disease-modifying treatment for pulmonary fibrosis. In the U.S. alone, there are currently 100,000 patients being diagnosed, and our strategy allows us to treat them without requiring a switch from their current medications. This could lead us from $4 billion up to $8 billion, even with a modest market penetration expectation. Finally, Andreas's question about our organ manufacturing activity was clarified by Pat and Leigh, demonstrating our robust plans for future growth and monetizing our intellectual property portfolio. I couldn't be more excited about United Therapeutics, and I appreciate everyone for joining us on this second quarter earnings call. Have a great day, everyone. Operator, you may wrap it up.

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 & Presentations section of the United Therapeutics Investor Relations website.