Good morning and welcome to the United Therapeutics Corporation Fourth Quarter and Full Year 2022 Earnings Webcast. My name is Devin, 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.

Thanks, Devin, and good morning. It is my pleasure to welcome you to the United Therapeutics Corporation Fourth Quarter and Full Year 2022 Earnings Webcast. Accompanying on today's webcast 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. Today's remarks may also 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 use. Full prescribing information for the products is available on our website. And United Therapeutics executives will participate in 3 investor conferences in March. Now I will turn the call over to Dr. Rothblatt for an overview of the fourth quarter and full year 2022 financial results and business activities of United Therapeutics. Dr. Rothblatt?

Thank you, Dewey, and good morning, everyone. I feel very excited to lead this call because we have so much positive news to report about 2022. In fact, reflecting back on the past few years, this is actually the best year United Therapeutics has ever had. And it augurs even more positively to what we're going to see coming up in 2023, 2024 and 2025. Let me hit a few highlights. First, 2022 was our highest revenue year ever. Second, 2022 was our most profitable year ever. Third, 2022 was our highest operational cash flow year ever. And fourth, we ended 2022 with more patients on our treprostinil medicines than ever before. I think you have to agree with me that these are fantastic results. And now I'd like to give a few indications of why I think that as great as these results are, they are not laurels for us to rest upon but instead a launching pad for yet greater results in 2023, 2024 and 2025. In fact, the patient uptake of our new Tyvaso DPI medicine has been so rapid that we can project a doubling of our revenues by 2025. This doubling of revenues is helped by the unique nature of each of our medicines including Tyvaso DPI. For example, Tyvaso DPI is the only inhaled treprostinil product that enables deep lung penetration via a high-resistance low-flow device. Another example, our Remodulin product is the only parenteral prostacyclin delivered by the small, easy, super accurate Remunity device. The differentiated aspects of Remodulin have allowed our revenues to remain steady at about $0.5 billion a year through the past 3 years running. Our Orenitram product is also very unique because it is the only titratable oral prostacyclin product. We currently expect its revenue of 1/3 of $1 billion a year to continue growing as physicians become aware of the results of our recently released EXPEDITE study. That study showed Remodulin patients can be switched directly to Orenitram. And Orenitram will soon be joined by new products from our pipeline. In the field of pulmonary arterial hypertension, we expect to complete our Phase III trials of ralinepag by 2025. That will enable the first once-daily dosing of a prostacyclin pill in the pulmonary hypertension field. In the field of pulmonary fibrosis, we expect to complete our Phase III trials of Tyvaso by 2025 as well. That will, we hope, create the first disease-modifying treatment for pulmonary fibrosis, a true landmark in the field. And in the area of transplantation, we hope to commence clinical trials of manufactured organs within the next few years. That would be a major contribution to ending so many deaths on the organ transplant list and, unfortunately, even more deaths from end-stage organ disease off the transplant list. In summary, our business, our patient count, our pipeline is growing longer and faster than ever before. 2022 marked the continuation of that growth factor into 2023. We have achieved a very nice balance of growth and strength. We intend to continue building on this platform in the years to come. To provide now some additional, extremely exciting details of how we are continuing to build on this platform, I'd like to introduce our President and Chief Operating Officer, Michael Benkowitz. Mike?

Thanks, Martine, and good morning, everyone. From a commercial standpoint, as Martine said, 2022 was a phenomenal year for us. We're extremely pleased with the progress of the Tyvaso DPI launch as referrals and active patients for both Tyvaso and Tyvaso DPI are among the best that we've seen to date. We were also very excited to achieve our goal of doubling the number of Tyvaso patients following the PH-ILD approval in early 2021. This was a goal that individuals across the organization rallied around and supported. So we're really proud and appreciative of everyone's hard work over the last couple of years to help us reach this milestone. Importantly, reaching this goal reinforces to us the impact that Tyvaso and Tyvaso DPI are having not only in helping patients with PH-ILD treat this serious progressive disease for which there are no other available options, but also the impact Tyvaso DPI will have in PAH. With the simple convenience of a small inhaler that fits in the palm of the patient's hand and the elegant ease of use following the simple mantra of open, load, inhale. We believe Tyvaso DPI will meaningfully expand the use of inhaled treprostinil in both indications. The Tyvaso DPI inhaler device developed by our partner, MannKind, is able to efficiently deliver treprostinil deep into the lung in one breath per cartridge using less active ingredient than the nebulizer reference. The convenience and efficacy of our DPI device, coupled with Tyvaso's known tolerability profile, has us well positioned to expand our reach in PH-ILD and to move the use of treprostinil therapies like Tyvaso DPI and PAH even earlier than IP receptor agonists like selexipag. We're seeing this play out with our prescribers as evidenced by several positive trends. Since the PH-ILD launch, we've increased the total number of Tyvaso prescribers by about 70%, an increase of almost 60% in the number of prescribers with 3 or more patients in their practice. This last point is an indicator we look at to gauge product support. We have found that once a physician has at least 3 patients on one of our products, they tend to become what we call supporters and start using the product much more frequently and regularly. We're also making headway with traditionally loyal selexipag prescribers. Of the top 100 selexipag prescribers, 70% have now written Tyvaso DPI, and 50% of those have written 5 or more prescriptions. From a revenue standpoint, we're very pleased with how the quarter and the year wrapped up for Tyvaso, but there are a few key points I want to highlight. First and most relevant to the fourth quarter of 2022 is that we're still in a launch mode for Tyvaso DPI and even for the PH-ILD indication, for that matter. As such, our specialty pharmacy distributors are still rightsizing product orders based on estimated underlying patient demand, both in total and between Tyvaso nebulized and Tyvaso DPI. Therefore, our distributors are placing orders more frequently than their once or twice a month historical cadence. And these new ordering patterns did impact the timing and size of product orders and thus our product revenues during the quarter. Second, we’re also building Tyvaso DPI inventory as we're launching a product. So our distributors are not yet able to order a sufficient product to reach contractual inventory levels per their usual practice. We expect over the next several quarters, these two factors will normalize, and our specialty pharmacy distributors will shift back to a more historical type cadence of product orders. For these reasons and the usual historical seasonality to our business that we have discussed on prior calls, we think annual revenue trends are a better lens through which to view and evaluate our business. The last thing I want to touch on with Tyvaso is our patient assistance program or PAP. Patient utilization of our PAP program for Tyvaso DPI, which is covered under Medicare Part D and has high patient co-pays, has been higher than anticipated, including by many PH-ILD patients who were on the nebulizer and nPAP last year and have since transitioned to DPI. We anticipate that this will be a short-term phenomenon and that many of these patients will be covered under their Medicare Part D plan starting in 2024 and continuing into 2025, once changes to the Part D provisions of the Inflation Reduction Act begin to go into effect. Turning to Orenitram, we see continued momentum for Orenitram as we ended the fourth quarter with the highest number of patients on therapy since its launch. We're also excited about the recent top line EXPEDITE data we press released in October of last year, which demonstrated that prostacyclin induction with Remodulin can lead to double the average Orenitram dose when patients shift to oral therapy compared to patients who do not have a Remodulin induction. Following up on this top line data, we plan to present additional details on EXPEDITE at scientific meetings this year, along with a peer-reviewed manuscript detailing the study in the second quarter. And finally, we continue to be pleased with the performance of Remodulin in the U.S. as the fourth quarter was one of our highest referral quarters ever. The Remunity pump for Remodulin is gaining momentum with approximately 1/3 of subcutaneous patients now on Remunity, especially as Remunity is the only subcutaneous pump widely available for any patients on treprostinil therapy. So to wrap up, after reaching our goal of doubling the number of Tyvaso patients, we're confident in our ability to double our annual revenue run rate from approximately $2 billion today to $4 billion by the end of 2025. We expect continued Tyvaso and Tyvaso DPI uptake in both PAH and PH-ILD to drive most of our near-term revenue growth, supplemented by Orenitram growth through the EXPEDITE protocol and other research and supported by continued Remodulin resilience. With that, I'll turn the call back over to Martine.

Michael, thank you so much for providing that wealth of detailed information supporting this great growth vector we have going here from 2022 into 2023, 2024, and 2025. Operator, feel free to open up the lines to any questions now.

Our first question comes from Jessica Fye with JPMorgan.

I have two, if that's okay. First, can you provide some of the assumptions, specifically around Tyvaso and Tyvaso DPI, to help underpin your target to roughly double your revenue run rate for the overall company by the end of 2025? And then second, just following up on Michael's comments in prepared remarks, I was hoping if you could elaborate a little bit more on that comment about the utilization of the PAP program for DPI being higher than anticipated among PH-ILD patients who transitioned to DPI. Is that to say that because of the higher out-of-pocket in Part D in the short term that they're receiving free drug? And how should we reconcile that with, I think, what was anticipated to be a bit of a tailwind in 2023 from PAP patients transitioning on to reimbursed product this year?

Yes. Thank you, Jess, and good morning. Good to hear your voice this morning. Generally, we try to limit to one question for the questioner because there are so many people in queue. But because your two questions are in a sense kind of like a tag team question, Mike, I'll kind of ask if you can handle both questions.

Yes. I believe the assumptions behind our confidence in the growth of Tyvaso in both PAH and PH-ILD involve both a mathematical approach and the excitement surrounding DPI. In the PAH or WHO Group 1 market, there are around 50,000 diagnosed patients in the U.S., and unfortunately, only about 30% to 35% of these patients are currently on a prostacyclin. This is largely due to the inconvenient delivery mechanisms associated with prostacyclin, but we believe this will improve with Tyvaso DPI. We are confident that the convenience of the DPI inhaler will help to significantly increase the use of prostacyclins in the PAH market. Despite the competition, we see substantial growth potential within the WHO Group 1 market for Tyvaso. On the PH-ILD side, the situation is similar but potentially easier, with a market of conservatively 30,000 patients and no approved therapies. We have reached about 10% of this market in recent years and believe there is still 90% available for growth with Tyvaso. The convenience of DPI will make it simpler for doctors to prescribe it for PH-ILD patients. Regarding your second point on the PAP, we had anticipated that patients in the PH-ILD Medicare program would transition to our PAP program starting in 2023, and many have begun to do so. However, the rollover numbers haven't met our expectations for a few reasons. At the end of the third quarter, we reported approximately 700 patients in the PAP program; some discontinued as expected, while others remained in PAP even after qualifying for CMS coverage. Additionally, many transitioned to DPI between the end of the third quarter and the beginning of the first quarter. With higher co-pays under Part D, they remained eligible for PAP. We estimate that just over half of those patients converted, and while they are still being processed through the system, the numbers are somewhat lower than we initially expected.

Those are great answers. Jess, I would like to add some additional context to Mike's comments regarding the parameters that can provide greater assurance about the doubling of revenues by the end of 2025. The rate of uptake for Tyvaso DPI has been significant. Mike shared some metrics, such as the high number of selexipag prescribers now prescribing Tyvaso DPI, even though they had not prescribed Tyvaso before. Achieving a doubling of our patients on Tyvaso in just 18 months is an important metric that cannot be overstated. For context, Tyvaso was approved 10 years ago, and it took that long to reach a certain level of patient penetration. Now we have doubled that number in under two years, which clearly shows that this product is penetrating rapidly. In an area like PH Group III, where no pulmonary hypertension medicines have been available, one might assume that patients would quickly adopt this new treatment. However, managing pulmonary hypertension requires a methodical approach, working directly with physicians and payers to ensure understanding of the procedures, diagnostics, and approval processes involved. Although we established special teams focused on PH Group III prior to launching the indication, one year of preparation is minimal compared to the considerable effort needed to build a patient base. Now that we have more than two years of experience, including a year of actual prescribing practice, we are positioned well. As Mike mentioned, payer matters, especially concerning Medicare, have been recently resolved in our favor. It’s crucial to understand that we did not have a backlog of patients in Group III waiting for this launch; we have actively developed this market over several years. We have gained valuable experience in the clinics, and we believe that among the 30,000 PH Group III patients, who have not yet received pulmonary hypertension treatments, we can continue to grow our patient numbers at the same pace we have experienced thus far. Doubling the number of patients on Tyvaso would position us to reach around 20,000 total treprostinil patients, which would translate into $4 billion in annual revenue based on reimbursement per patient. Moreover, it's important to maintain revenue from products like Remodulin and Orenitram. Not only are we not losing revenue from these products, but we are also strengthening our revenue from Remodulin, thanks to the rapid adoption of the Remunity pump, and increasing our revenue from Orenitram due to the EXPEDITE study. Therefore, we believe that doubling our revenues in three years is entirely achievable.

Our next question comes from Terence Flynn with Morgan Stanley.

This is Justin Phillips on for Terence. Just one question for me. I was wondering if you could provide any details today on the Tyvaso trends for January and February.

Sure. Mike, would you like to take that?

Sure. I'm not going to go into too much detail about the quarter. However, I can share that we have about a month of data, and the trends for referrals, which we refer to as prescriptions for Tyvaso in January, are very strong, reaching record levels for that month. From what I see, there's a lag in the February data, but it appears that February is continuing the trend. Overall, we are very pleased with the uptake, especially with DPI, as Martine mentioned.

Thank you, Mike. That's so nice to hear. Record January referrals after a record year, fantastic. Next question, please.

Our next question comes from Hartaj Singh with Oppenheimer & Company.

I have a quick question on a different topic regarding your plan to potentially double revenues by 2025. The Tyvaso IPF Phase III trial results will be out around that time, which is promising. Martine, can you also touch on the data supporting this and your confidence in the project? Additionally, could you provide some basic insights into the market size?

Sure, Dr. Singh, so happy to hear your voice this morning, and thank you for asking a science question. We love those questions best of all. We have on our call, Dr. Leigh Peterson, and she is our Chief Scientist for the program, and she's also running the TETON clinical trials. People often wonder why they are named TETON, and it's because Dr. Peterson is from Wyoming. So it makes perfect sense. And Leigh, if you could provide Hartaj with some of the scientific reasons why we feel very confident that the Phase III trials of Tyvaso in IPF are rightly sized and that the endpoints are rightly chosen.

Thank you for the question. As you know from the results of our INCREASE study, we had an exploratory endpoint focused on forced vital capacity. While this was primarily a safety assessment for the PH-ILD population, we unexpectedly observed an improvement in this endpoint for patients on Tyvaso compared to placebo. Given the results from this study, the increase seen in PH-ILD patients, and substantial evidence from both in vitro and nonclinical studies indicating that Tyvaso or treprostinil impacts fibrosis, it is reasonable to anticipate a positive effect in an IPF population. Utilizing the statistics and treatment effects observed, particularly in IPF patients, we conducted sample size calculations to ensure a successful study with an adequate p-value for approval. We are currently conducting two studies: TETON 1 in the U.S. and Canada, and TETON 2 outside these regions, each involving nearly 400 patients. Enrollment is proceeding as expected, and as Martine noted, we anticipate results around 2025 for both studies. Both studies are utilizing FVC as an endpoint, similar to the positive findings in INCREASE, and include a year-long follow-up period. We've also gathered long-term FVC data through an open-label extension of the INCREASE study, which looks promising and increases our confidence in the upcoming TETON studies, with outcomes to be determined in 2025.

Well, thank you so much, Leigh. And I just want to and toot your horn just for a moment to the hundreds of people on the call that there was similar skepticism as to whether or not Tyvaso could work in Group III patients, and you proved that it could. And I believe your results were published in the New England Journal of Medicine. So congratulations again. Next caller, please.

Our next question comes from Ash Verma with UBS.

I have one. So for Tyvaso, was there any inventory buildup in 3Q that bound you down mostly in 4Q, or do you think inventory is still at an elevated level during 4Q? I think you mentioned that specialty distributors are still rightsizing the orders.

Thank you, Ash. Thank you for that question. Fortunately, we have our Chief Financial Officer, on the phone, James Edgemond. And James, if you could perhaps help Ash with the inventory question.

Yes. Thank you, Martine. Thank you for your question. I think there's kind of two ways to answer. One is Michael addressed and talked about the Tyvaso and Tyvaso DPI ordering patterns in his prepared remarks. And I think if you look at the other products, there was no unusual ordering or inventory activity and our specialty pharmaceutical distributors were in line with their contractual requirements on inventory. So hopefully, that provides you insight in terms of your question this morning. So thank you, and back to you, Martine.

Thank you, James. Operator, next question please.

Our next question comes from Joseph Thome with Cowen and Company.

We're going to be seeing the full mark of sotatercept Phase III data at ACC in about 11 days. And I was just curious how you see a potential future sotatercept launch impacting the PAH market broadly and maybe how this is reflected in that 2025 revenue run rate guidance that you announced.

Thank you for the question. It's quite speculative to provide a definitive answer because we cannot predict the regulatory timeline for sotatercept. Therefore, it's nearly impossible to give an accurate outlook. However, our revenue forecast remains independent of whether sotatercept is approved. We are confident in our goal to double our revenues by 2025, regardless of its launch. The patient population we serve is large and diverse, and changes in treatment patterns tend to be slow and cautious, particularly for frontline treatments like ETRAs or PD5s. I would be very skeptical about any significant impact on United Therapeutics' revenue or product uptake across the board, including Remodulin, Tyvaso, Tyvaso DPI, or Orenitram. Historically, when new agents have entered the market, they have tended to expand the overall market for existing patients. For example, when we launched Remodulin and when J&J's Actelion released bosentan, the revenues for treprostinil grew instead of shrinking. Similarly, when PD5s were introduced, the market for ETRAs and treprostinil continued to grow. This pattern shows a consistent trend, and a key figure to remember is 50,000, which refers to the number of patients diagnosed with pulmonary hypertension. Current treatments have only just begun to address the needs of these patients to help them reach a New York Heart Association Functional Class I or II level. There is substantial potential for growth and improvement in treating pulmonary hypertension. At United Therapeutics, we welcome any new drug that can benefit the pulmonary hypertension patient population. This discussion pertains specifically to WHO Group I pulmonary hypertension. Additionally, there’s a significant number identified by Dr. Peterson in her New England Journal article related to WHO Group III, which counts 30,000 patients, with Tyvaso being the only approved treatment currently. I would appreciate seeing another effective drug for those with pulmonary hypertension, but I do not anticipate it affecting our revenue growth.

Our final question comes from Andreas Argyrides with Wedbush Securities.

Congrats on a great year. Just a quick one here on Tyvaso DPI. Are you still seeing more rapid uptake in new patients versus transition? And what is the split between new and transition patients?

A very good question. Mike, can you give us our final answer on the call?

Sure. I need to check, as I haven't reviewed it in a couple of weeks, but I believe the focus is still on new patients regarding DPI. The transitions are happening. As I mentioned in the last call, physicians seem to be waiting until patients come in for their regular checkups. They are coming in at a healthier rate than what we previously observed, and I expect that trend to continue throughout the year. By the end of the year, I anticipate that patients who are interested in transitioning to DPI will do so. This remains a key focus for our sales team, and I believe physicians are conscious of this. As patients arrive and are deemed eligible for the transition, they will be moved over.

Thank you, Mike. Well, to wrap up the call, we are tremendously excited about 2022. This is the year that we hit our $2 billion revenue run rate that has been our goal for really much of the past several years. And we are even more energized and encouraged by the fact that the $2 billion level makes it very clear to us that $4 billion is achievable with all of the products that we are currently marketing and explaining to physicians the scientific and medical benefits of. And then beyond that, as Hartaj indicated in his question, we have a whole another slew of products coming out of our Phase III pipeline, particularly a whole new disease indication, pulmonary fibrosis, and then on top of that, a best-in-class treatment for pulmonary hypertension, which would be Ralinepag. So 2022 was amazing, a huge kudos to everybody on the team for achieving it. 2023 is looking even better. And with that, operator, you can close out the call.

Thank you for participating in today's United Therapeutics Corporation Earnings Webcast. A rebroadcast of this webcast will be available for one week by visiting the Events and Presentations section of the United Therapeutics Investor Relations website. Have a good day.