Good morning, and welcome to the United Therapeutics Corporation Third Quarter 2023 Earnings Webcast. My name is Rocco, and I will be your conference operator today. All participants on the call portion of this webcast will be in a listen-only mode until the question-and-answer portion of this earnings call. Please note, this call is being recorded. I will now turn the webcast over to Dewey Steadman, Head of Investor Relations at United Therapeutics. Please go ahead.

Thank you, Rocco, and good morning, everyone. It’s my pleasure to welcome you to the United Therapeutics third quarter 2023 earnings webcast. Accompanying me today 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 Executive Vice President of Product Development & Xenotransplantation. 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, and we assume no obligation to update these forward-looking statements. Also 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 during any unapproved or investigational uses. Full prescribing information for our products is available on our website. Note that, Pat Poisson and I will be presenting in a fireside chat session in one-on-one meetings at the 2023 UBS Biopharma Conference on November 8. And Martine Rothblatt will participate in a fireside chat and one-on-one meetings at the JPMorgan Healthcare Conference in early January. Now I’ll turn the call over to Dr. Rothblatt for an overview of our third quarter 2023 financial results and the business activities of United Therapeutics.

Thank you, Dewey. First off, I’d like to congratulate our team as we had an amazing third quarter for the second quarter in a row. I’m thrilled to report our highest quarterly revenue ever along with double-digit revenue growth as compared to the third quarter of 2022. On top of that, our operational efficiency in the third quarter resulted in one of our highest quarterly net incomes and earnings per share ever. At United Therapeutics, we’re uniquely positioned for three waves of growth with a profile that’s unique in biotechs. Our first wave of growth will come through our existing commercial business led by Tyvaso and pulmonary hypertension associated with interstitial lung disease or PH-ILD. We continue to post solid growth in our current business with record quarterly revenue and patients on therapy for treprostinil products as a whole. Our growth in PH-ILD and continued leadership in pulmonary arterial hypertension or PAH has led to nebulized Tyvaso and Tyvaso DPI products combining to become the most prescribed prostacyclin therapy in the U.S. Michael will go into detail on our commercial business later in this call. We believe this growth will continue in the near term and we expect at least a $4 billion annual revenue run rate by mid-decade, doubling our revenue from 2022 and implying a double-digit compound annual growth rate. Our second wave of growth will come from our near-term pipeline led by the TETON program in pulmonary fibrosis and ralinepag in PAH. These two products, if approved, could lead our revenue to double again to $8 billion by the end of the decade. I will provide updates on the TETON and ralinepag program shortly. Of course, both of our first and second waves of growth are subject to clinical trial outcomes, regulatory approvals, new competitive entrants, and the potential impacts of the Inflation Reduction Act. But we feel good about our prospects for meeting these revenue aspirations. Our third wave of sustainable growth will come through the development, manufacturing, and widespread use of manufactured organs and organ technologies to provide a solution to patients experiencing end-stage kidney, lung, heart, and liver disease. Moving to our near-term pipeline and second wave of growth, we have two key registration programs underway, TETON for pulmonary fibrosis, and ralinepag, an oral therapy for Group 1 PAH. TETON now consists of three registration studies, TETON 1 and TETON 2 for idiopathic pulmonary fibrosis or IPF, and now TETON PPF for progressive pulmonary fibrosis. We believe IPF represents a 100,000 patient opportunity in the United States with only two approved therapies that just slow lung function decline. Both TETON 1 and TETON 2 are enrolling patients. And at this time, we are aiming for full enrollment in both studies with 576 patients each by the end of 2024. Likewise, we believe PPF represents up to a 60,000 patient opportunity in the U.S., which is distinct from IPF. One of the two FDA approved IPF therapies is also approved for PPF and, like IPF, it only slows the decline of lung function in these fragile patients. As we reported earlier this week, the TETON PPF study has dosed its first patient. We expect this trial to enroll 698 patients. We believe there is a relatively high probability of success in the three TETON studies based on an IPF subset of the increased study of nebulized Tyvaso in PH-ILD patients. Unlike the two IPF therapies on the market, nebulized Tyvaso in a safety endpoint showed an improvement of lung function in the subset of patients that had IPF along with pulmonary hypertension. We’re also encouraged by a recent review by the Data Safety Monitoring Committee of data from 550 patients in the TETON 1 and TETON 2 studies. The committee completed a routine unblinded safety review of data from these patients and unanimously recommended continuation of both trials without modification. Our advanced outcome study of ralinepag in Group 1 PAH continues to enroll patients. And at this time we are targeting completion of the study in 2025. Ralinepag is a next generation selective and potent prostacyclin receptor agonist, and we are developing it as a once-daily oral therapy for PAH. We believe ralinepag, in once-daily dosing, sustained release profile, and titratability could position it favorably against the other oral prostacyclin receptor agonists as well as other therapies currently available for PAH patients. Ralinepag provides 24-hour coverage with 6.5x to 10x the potency of the other oral prostacyclin receptor agonists on the market, and ralinepag demonstrated more than 20% improvement in pulmonary vascular resistance in Phase 2 studies. That’s close to the improvement observed in intravenous epoprostenol. Long-term Phase 2 open-label studies of ralinepag also showed sustained improvement in six-minute walk distance. We are pleased to announce that the Data Safety Monitoring Committee for the advanced outcome study met for the fourth time last month and unanimously recommended the continuation of the trial without modification after evaluating unblinded data from 510 patients enrolled in the study. We are targeting 700 to 1,000 patients in the study, depending on the pace of accruing clinical worsening events. Moving to our organ programs, we have been developing several investigational approaches using different technologies with different organs. The first is our ex-vivo lung perfusion service or EVLP, which has led to over 350 lives saved with lungs that have undergone EVLP. We’re also developing xenotransplantation products consisting of hearts and kidneys. Finally, we’ve been working on 3-D printing and regenerative medicine technologies to develop manufactured lungs and kidneys. At United Therapeutics, we always want multiple shots on goal. To that end, we recently acquired privately held IVIVA Medical based out of Woburn, Massachusetts. IVIVA’s core technology is an engineered kidney implant that mimics native kidney elements with a simple architecture to achieve implantable, durable blood purification much like a native kidney. IVIVA’s kidney is seeded with a patient’s own cells, eliminating the need for immunosuppression. Also, earlier this week we announced an agreement to acquire publicly traded Miromatrix Medical, a company focused on ending the waiting list for organ transplantation. Miromatrix utilizes an organ manufacturing platform that consists of decellularized porcine organs that are then cellularized with cells derived from non-transplantable donor human organs. These organ constructs are intended to replace some of the functionality of human organs using standard organ transplantation techniques and immunosuppression regimens. Miromatrix has three key programs that would broaden our existing manufactured organ pipeline. MiroliverELAP, which is ex-vivo or outside the body and intended to provide temporary external liver dialysis for acute liver failure. Mirokidney, a fully-implanted kidney, and Miroliver, a fully-implantable liver. Moving to Xenotransplantation, we continue to work with the FDA on a clinical path forward. We're underway with what we call pivotal preclinical studies in baboons at the request of the FDA. Specifically, for our 10-gene program, we expect the last preclinical xenokidney transplant to occur in early 2024. After collecting the data, we'll meet with the FDA to discuss the IND and clinical protocol for human studies for our 10-gene xeno organs. In parallel with the pivotal preclinical studies, we're wrapping up construction of our clinical stage designated pathogen-free facility or DPF, in Virginia. We expect the facility to begin receiving pigs in early 2024 and for the facility to grow its population through the balance of 2024 in preparation for clinical studies in humans for both xenokidneys and xenohearts. Behind our Xenotransplantation programs, our manufactured lungs are now in large mammal testing by our North Carolina-based regenerative medicine team, and behind that, our 3D printed autologous lungs by our New Hampshire-based organ manufacturing group using technologies from our partner, 3D Systems. We look forward to sharing more detail on these programs as they progress towards clinical studies. I'm thrilled that we're in such a great position at United Therapeutics. We have a solid commercial business posting record results with continued strong growth ahead, a pipeline of novel therapies that could again double our revenues by the end of the decade. And on top of all of that, we have a long-term plan to address one of the largest critical unmet medical needs while helping our patients, employers, the employees and shareholders all succeed. I'll now turn the call over to our President, Michael Benkowitz, who will give an overview of our commercial performance and progress for our near-term goal of a $4 billion annual revenue run rate by mid-decade.

Thanks, Martine, and good morning, everyone. As Martine noted, today we reported our highest revenue quarter ever at $609 million, up 18% from the third quarter of 2022. We saw meaningful growth for each of the Tyvaso franchise, Remodulin, Orenitram, and Unituxin. With respect to Orenitram, we saw revenue of $92 million during the quarter, which was up 5% from the prior year. This growth reflects increases to both patient growth and average dose. In the third quarter, following the publication of two peer-reviewed manuscripts, we are also able to commence education efforts by our field-based teams on the EXPEDITE protocol, which is based on our rapid Remodulin titration and transition to Orenitram study, allowing patients to get to higher doses of Orenitram quicker and with less side effects than starting Orenitram de novo. Remodulin revenue of $131 million was up 15% from last year, reflecting both U.S. patient growth from the third quarter of 2022 as well as an increase in international sales from the same period last year. Patients who use our Remunity Pump now make up more than 50% of subcutaneous Remodulin patients in the U.S. compared to under 10% at the same period just last year. Remodulin continues to be the Number 1 prescribed parenteral therapy for PAH in the U.S. Moving to Unituxin, we saw revenue of $51 million, which was up 11% from the prior year quarter. This growth was driven by an increase in U.S. sales and includes a modest inventory build at our U.S. distributor. Finally, Tyvaso saw revenue of $326 million for Tyvaso DPI and nebulized Tyvaso combined, which was up 26% from the prior year quarter and was the highest Tyvaso revenue quarter ever. This growth was principally driven by new patients on therapy. This performance reflects the rapid uptake of Tyvaso DPI among physicians and patients, as well as continued expansion into the PH-ILD market. We saw the highest number of referrals and patient starts for the combined Tyvaso business during the quarter. I'm proud to report that Tyvaso is now the Number 1 prescribed prostacyclin treatment in the U.S. and remains the only approved therapy for PH-ILD. Regarding Tyvaso DPI inventory, the first phase of process improvements and new equipment at our partner MannKind that went online in June has meaningfully helped to expand the supply of Tyvaso DPI. These enhancements, coupled with further expansion that will come online next year, have us well positioned to provide ample supply of Tyvaso DPI moving forward. We're now working to drive growth in PH-ILD, where Tyvaso remains the only approved product, as I mentioned before. We have been increasing the size of our field-based teams over the last 12 months, adding medical science liaisons, regional nurse specialists, and more recently sales representatives and reimbursement specialists to our team. With this expansion, we're able to both reach more prescribers and importantly focus on driving depth within these prescribers. And we've already made great progress. On the last earnings call, I mentioned that we've more than doubled the number of Tyvaso prescribers since the PH-ILD approval in 2021, and maintain depth, defined as three or more patients per prescriber, at about 40% of these prescribers. Peeling that back a little bit, about 50% of the growth in those total prescribers are true ILD prescribers, which means we're now starting to see these physicians begin to treat the disease rather than refer these patients into the PAH clinics. Depth within our true ILD treaters is also coming along nicely, with about 20% of those prescribers having three or more patients on Tyvaso. Our recent sales force expansion will allow us to continue to lean into the ILD physicians, particularly in the community setting. While Tyvaso DPI has been a tremendous source of growth since we launched it last year, we continue to appreciate the value of nebulized Tyvaso in our portfolio. Some physicians and patients continue to prefer the nebulizer because of its profile or for reimbursement reasons. In addition, we're aware that some pulmonologists prefer to start and titrate their PH-ILD patients using the nebulizer before switching to Tyvaso DPI. This allows more precise titration in one-breath increments compared to the three-breath equivalent increments of Tyvaso DPI. We expect this platform strategy to become a competitive advantage over other potential DPI products should they reach the market. Before we move to the Q&A, I want to take a moment to address some questions we've received around potential competition and reiterate our confidence that we're well-positioned for growth in the near term with our current commercial portfolio. Questions have centered primarily around sotatercept and a potential inhaled treprostinil competitor. First, with respect to sotatercept; it's important to note that it will not be indicated for PH-ILD if approved next year, and therefore will not be a factor in the source of our most recent growth and expected near-term growth. In Group 1 PAH, where it will be indicated if approved, it appears this drug will be a nice addition to the PAH armamentarium. But based on the clinical data and our experience with new agents entering the space, it will be an addition, not a replacement, for existing therapies. And therefore, we remain extremely confident in the durability of our PAH business. Targeting multiple pathogenic pathways is considered the current standard of care for PAH. This mirrors therapy for other serious conditions that result from multiple pathways of pathogenesis like cancers, heart failure, and some viral infections. In fact, sotatercept was studied only in combination with other PAH products, including 70% of patients on concomitant prostacyclins or prostacyclin analogs including our treprostinil products. We believe the convenience of Tyvaso DPI allows physicians to easily, relatively speaking, cover the prostacyclin pathway for those patients not already on a prostacyclin. And if the addition of sotatercept helps patients live longer, that's phenomenal for the patients, of course, and likewise benefits us from a revenue standpoint because patients will be on our medicines longer. Moving to the other inhaled treprostinil that could reach the market, we believe we have a preferred product with Tyvaso DPI. Tyvaso DPI demonstrated 98% patient satisfaction in the pre-study and has now been prescribed to more than 4,000 patients, a clear demonstration of patient and physician interest in our DPI format. Tyvaso DPI is differentiated from its potential competitor because of its simple, easy-to-use inhaler that patients just open load and inhale with only one breath per cartridge four times a day. Tyvaso DPI's low-flow profile also facilitates treprostinil delivery deep and consistently into the lungs with generally only tidal breathing required to actuate a dose. On top of that, the Tyvaso DPI inhalation device requires no cleaning and patients can hold the inhaler in an optimal position when using the device. So to wrap up, we're extremely proud of our record performance this quarter, and we think we're in the early stages of sustainable growth for our current commercial portfolio as we continue to make inroads with PH-ILD prescribers and our base business in PAH will continue to be appreciated by prescribers and patients alike. So with that, Martine, I'll turn it back over to you for the Q&A.

Thanks, Mike. I hope everyone can tell that United Therapeutics is a truly compelling investment with a strong cash-generating commercial business supporting novel R&D efforts in rare lung disease, coupled with the revolutionary potential for our organ manufacturing programs. Operator, let's start the Q&A session.

Thank you. Today's first question comes from Terence Flynn with Morgan Stanley. Please go ahead.

Great. Congrats on all the progress. Thanks for taking the question. I was just wondering, maybe it's a question for Mike, if you can offer any perspective on Tyvaso net adds, in the quarter if that's been pretty consistent at that 500 patient level. And then are you able to tell us where inventory levels shook out for the quarter? Like was – did the quarter include a significant build? Or was this all demand driven? Thank you, on Tyvaso specifically.

Thank you, Terence. Mike?

Sure. Yes. So the net adds continue to kind of clip along at roughly that 500, sometimes a little higher, sometimes a little lower, but kind of in that range per quarter. So we're really happy with that continued progress. And as I said in the third quarter, we saw a record number of prescriptions and starts. And so just continue to kind of pull that through and keep those patients on therapy. So we're pleased with the progress on that front. From an inventory standpoint and the revenue numbers, not – I think what you can infer from the revenue numbers is that the revenue number reflects underlying patient demand. So there wasn't really a significant inventory build in the quarter. And as I said, with the enhancements that we've seen at MannKind since June, we think we're really well positioned from an inventory standpoint going forward.

Thank you very much, Mike. Operator, next question please?

Absolutely. Our next question comes from Hartaj Singh with Oppenheimer. Please go ahead.

Great. Thank you for the question, and really nice quarter. Just maybe a little bit of a different tack, which is that you had really nice revenues across the board, especially Tyvaso, but you're really holding your OpEx pretty firm and staying to that algorithm that James has talked about previously. Your operating margin just seems to keep on getting better. Can you just talk a little bit about that progression? And do you expect that to keep getting better as your PAH franchise becomes even more profitable? Thank you for the question.

Thank you very much, Hartaj. James Edgemond is our Chief Financial Officer. So James, could you please answer that question?

Yes. Thanks, Martine. Good morning, Hartaj and thank you for the question. As a reminder, and you alluded to this in your question, we still and will apply that budget algorithm where we will spend no more on cash in the operating budget in 2023, for example, that exceeds 50% of prior year revenue. So our budget algorithm this year and continuing forward, we expect to apply. With respect to your question on the operating margin, specifically, in an environment of continued revenue growth, which we've demonstrated, you will have improving operating margins over time. But remember, that can bounce around quarter-to-quarter because we typically look at our budgets and our budget spend on an annual basis. And those expenses could be impacted by clinical trial enrollment and the timing around that, for example. But from a fiduciary perspective, we do want to continue and will expect to continue to apply the budget algorithm, being good financial stewards of the expenses. And as you heard Michael talk about in a very successfull quarter and growing revenue when you think about some of the investments that Michael has made as well. So thank you very much, and Martine, back to you.

Thank you, James. Thank you, Hartaj. Operator, next question please.

Our next question comes from Joseph Thome with TD Cowen. Please go ahead.

Hi there. Good morning and thank you for taking my questions. Obviously, a lot of progress on the organ side of the business this quarter. When we think about the xenokidney, the mirokidney and the IVIVA kidney implant. Should we think of these largely as sort of three shots on goal in kidney transplant? Or are there discrete populations that could benefit from each of these products? How do you view that? Thanks.

Thank you, Joe. I think the answer is all of the above, both of the above to be specific. Definitely, positively, there are multiple shots on goal, but there is a large diversity of different types of manifestation of end-stage organ disease generally and specifically within kidney disease. So I could very much see products from one of the other groups, whether it's a xenokidney or autologous IVIVA kidney or an allogeneically cellularized with primary cells mirokidney going to different end-stage kidney disease patient populations. As you know, Joe, there are more than 0.5 million people just in the United States on dialysis. So the level of demand is really off the charts, and we're confident that each of these kidney technologies and our other organ technologies will find very, very receptive physicians and patient populations for their use. Thanks for the question, Joe. Operator, next question please.

Absolutely. Our next question comes from Eun Yang with Jefferies. Please go ahead.

Thank you. So you recently started another Phase 3 TETON study for progressive pulmonary fibrosis. I'm just wondering why you are not using the DPI formulation in the trial. And once it's approved, do you think you may not need a bridging study to DPI from the nebulizer similar to PH-ILD? Thank you.

Thank you, Eun. Very good question; I'd like to ask the clinical trial executive responsible for that study, Dr. Leigh Peterson, if she could please answer your question.

Yes, sure. Thanks for the question. Regarding why we're not using the DPI, we want to use the nebulizer to remove as many variables as possible between the studies. So between the INCREASE study and TETON 1, TETON 2 and TETON PPF, so we're sticking with the same delivery device for those. And yes, we'll definitely seek approval for the DPI once we see the results of these studies with a nebulizer. It's – we're still having ongoing conversations with the FDA to determine what will be required for that approval.

Thank you very much, Dr. Peterson. Thank you very much, Eun, for your question. Operator, next question please.

Our next question today comes from Jessica Fye with JPMorgan. Please go ahead.

Hey guys. Good morning. Thanks for taking my question. Question on Tyvaso. So recognizing that titration dynamic you mentioned, which could suggest that the mix of new starts between DPI and nebulized Tyvaso understates the longer-term proportion who might end up on DPI. Can you talk about what you’re seeing as a mix among new starts as well as your latest expectations for the longer-term mix of Tyvaso DPI and nebulized Tyvaso within the franchise? Thanks.

Thank you very much, Jess. Mike, would you be able to give some color on that question please?

Sure. Happy to. So Jess, with respect to referral, sorry, with respect to the mix between the nebulizer and the DPI, I think we’ve said for the last couple of quarters that it’s been kind of in the neighborhood of two-thirds DPI, one-third nebulizer that continues to hold true. That’s what we saw in the third quarter and actually was a couple of points higher on the nebulizer in the third quarter than the prior quarters. But it’s generally kind of in that range, kind of 65% to 70% DPI, 30% to 35% nebulizer. I kind of expect that it’s going to stay there. It could tip up a little bit towards DPI after the first of the year when some of the new Medicare Part D redesign elements are kicking in under the IRA and patient out-of-pocket goes down. So to the extent that reimbursement challenges are a reason for using the nebulizer, that might tilt things a little bit more towards DPI. But as I said in my opening comments, I continue to think that there’s going to be a role for nebulizer. I think what we have learned over the 25 years to 30 years that we’ve been in this space is that patients are very different and some react better to one delivery device over another and vice versa. And so, we’re just really happy that we have multiple options to offer patients. And at the end of the day, we’re really, we’re kind of agnostic as to which device it is because either way they’re running United – the patients are benefiting from a United Therapeutics product.

Thank you so much, Mike. And Jess, thank you for the question. We’re at the end of the call. But we have time for just one last question. Operator, last question, please.

Thank you. Our final question today comes from Ash Verma with UBS. Please go ahead.

Great. Congrats on the quarter. Thanks for taking our question. So I have two. On the manufacturing expansion for Tyvaso at your partner MannKind for the DPI that was up 2.5x in June. Is that now allowing you to fulfill the minimum contractual levels at your distributors, or would that level of supply only be fully enabled by the second production line that MannKind is building? That’s first. And I mean, there’s a lot of pipeline for Tyvaso, very excited about PPF, IPF, but just curious the timelines for the enrolling these studies are a little bit protracted. Is that primarily because of the heterogeneity of the disease or just curious if there is any other factor playing in that? Thanks.

Okay. Ash, thanks for that question or that compound question. So let’s have the first part of your question relating to manufacturing be answered by our Executive Vice President for Technical Operations, Pat Poisson. And when he’s done answering the first part of your question, the second part of your question relating to the timelines for enrollment in the pulmonary fibrosis studies will be answered by Dr. Leigh Peterson. Pat, can you go first?

Sure. Thanks, Martine. And thanks for the question. So the process improvements we implemented earlier this year will fulfill demand both near and midterm for Tyvaso DPI. Longer term, as we see growth in ILD will certainly need the new equipment that is coming online in the first half of 2024. So as of right now, we’re able to fulfill demand and maintain inventory levels at the SPs, and we’ll be able to do so until the new equipment comes online. And then we’ll be well prepared for the future.

Thank you, Pat. Dr. Peterson?

Yes. So thanks for the question on our TETON program. We actually haven’t increased our timeline. I mean, we’re still on target to finish enrollment of the TETON studies at the end of 2024. But you’re right, we have increased the sample size and we’re now targeting the enrollment of the 576 patients in each study. And the reason for that is you’re exactly right. You mentioned the variability of the disease, and we do routine blinded data looks, and that is what we saw there was some basically standard deviations of the FEC and the completers prompted us to just out of caution to increase the sample size to increase the chance of success. But again just because of the pace of enrollment into these studies, which is fairly rapid, we haven’t increased our overall timeline to enroll those additional patients.

Thank you so much, Dr. Peterson. Ash, thank you so much for the question. In conclusion, as mentioned earlier, we’re really happy to be in such a great position here at United Therapeutics. We have a solid commercial business posting record results with continued strong growth ahead. We have a pipeline of novel therapies that could again double our revenue by the end of the decade. And we have a long-term plan to address one of the largest critical unmet medical needs. All of the above, while helping our patients, employees, and shareholders succeed. Operator, you may now terminate the call.

Thank you for participating in today’s United Therapeutics Corporation earnings webcast. A re-broadcast of this webcast will be available for replay for one week by visiting the events and presentation section of the United Therapeutics Investor Relations website. You may now disconnect your lines and have a wonderful day.