Good morning, and welcome to the United Therapeutics Corporation First Quarter 2024 Earnings Webcast. My name is Danielle, and I will be your conference operator today. Please note, this call is being recorded. I will now turn the webcast over to Dewey Steadman, Head of Investor Relations at United Therapeutics.

Thank you, Danielle, and good morning. It's my pleasure to welcome you to the United Therapeutics Corporation First Quarter 2024 Earnings Webcast. Remarks today will include forward-looking statements representing our expectations or beliefs regarding future events. These statements will 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 forward-looking statements. Today's remarks may discuss the progress and results of clinical trials or other developments with respect to our products, and 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 the products is available on our website. 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; Dr. Leigh Peterson, our Executive Vice President of Product Development and Xenotransplantation; and Pat Poisson, our Executive Vice President of Technical Operations. Note that Pat Poisson and I will present in a fireside chat session and one-on-one meetings at the Goldman Sachs Global Healthcare Conference on June 12 in Miami. Also, our scientific, medical, and commercial teams will present at several upcoming conferences. Now I will turn the webcast over to James Edgemond, our CFO and Treasurer, for some brief comments on our recent accelerated share repurchase plan followed by Martine and Michael for an overview of our first quarter 2024 financial results and the business activities of United Therapeutics. James?

Thank you, Dewey, and good morning, everyone. In our meetings with shareholders over the last several years, we've noticed a common theme. Shareholders are excited about our potential, both the continued growth in our foundational core business and our innovative organ manufacturing opportunities, and they are also impressed by our P&L philosophy that results in outstanding cash flow generation to support our growth initiatives. We recognize that there has been a disconnect between our desire to preserve capital to support our ambitious long-term organ manufacturing goals and some shareholder perspectives around capital allocation. We continue to follow our three capital allocation priorities, which in order are: first, to invest in our commercial and R&D opportunities through P&L spend as well as capital outlays like our new North Carolina manufacturing facility. Our second priority is to pursue intelligent business and corporate development opportunities that enhance our rare disease focus and complement our organ manufacturing initiatives like bolt-on M&A and in-license opportunities. And our third priority is to return capital to shareholders like share repurchases, and we consider all three priorities when deploying our financial capital. Over the last year, we've learned a great deal about the size, staging, and timing for capital expenditures associated with the construction and commissioning of our designated pathogen-free facilities to support our Xenotransplantation efforts. With the commissioning of our Christiansburg, Virginia clinical scale facility last quarter, we now better understand the phasing of capital spending associated with the commercial-scale facility construction project for the commercial launch of our Xeno organs. With this improved awareness of our future cash outlays and taking into consideration our near-term cash flow generation potential, we saw an opportunity to return capital to you, our shareholders. To that end, on March 25, we announced a $1 billion accelerated share repurchase program. Through the ASR, we expect Citibank to repurchase $1 billion in UTHR shares through the end of the third quarter of this year. Under the ASR on March 27, Citibank delivered to us approximately 3.3 million UTHR shares, representing about 80% of the total shares that will be repurchased under the ASR, and we have placed these shares into treasury stock as reflected on our balance sheet. The final number of shares that we will ultimately repurchase pursuant to our ASR agreement with Citibank will be based upon the average of the daily volume weighted average price per share during the ASR agreement. Following the ASR, we believe that we will have ample financial capital to deploy for the commercial-scale facilities mentioned earlier. We also continue to believe in our core business and our cash flow generation potential, driven by our foundational products led by Tyvaso DPI and Nebulized Tyvaso and potentially accelerated by our innovative studies of Tyvaso in pulmonary fibrosis and ralinepag in pulmonary hypertension. We're excited about our current business and our growth potential, and we appreciate the feedback and support of our shareholders. I'll now turn the call over to Dr. Martine Rothblatt, our Chairperson and Chief Executive Officer, for insight into our development portfolio. Martine?

Thank you, James. Good morning, everyone. I'm going to let the next few slides speak for themselves and forego a script in favor of speaking directly from the perspective of being our CEO. We have had a fantastic quarter, coming on the heels of previous strong quarters, and we are confident that continued good news will flow in the quarters ahead. The main basis for our confidence is that we have multiple best-in-category products for growing indications: Remodulin for parenteral treatment of pulmonary arterial hypertension (PAH), Orenitram for oral prostacyclin in PAH, Tyvaso for inhaled treatment of both PAH Group I and PAH Group III in interstitial lung disease, and Unituxin for neuroblastoma. Other categories of good news in the years ahead are clinical trial outcomes. We have three Phase III trials in various types of pulmonary fibrosis known as the TETON trial and another Phase III trial of a best-in-class oral prostacyclin agonist called OUTCOMES. Upon approval and market launch, the products from these Phase III trials could help more than double the number of people we are helping today. Additionally, we have good news in the area of organ manufacturing. We have successfully enabled hundreds of additional lungs to be transplanted, built a Xenotransplantation facility with the potential for over 100 Xeno hearts and 200 Xeno kidneys a year to be transplanted, commenced a clinical trial of a Xeno liver assistance product, and helped save the life of a woman in New York with our manufactured ThymoKidney. Now let me comment on a few topics that I've heard questions about. First, the big buyback. James did a superb overview of every aspect of that. We initiated the recent $1 billion stock buyback because we believe the stock is undervalued. Because our future is bright, we believe this could be one of the best ROI investments for our shareholders. As James has long mentioned, there are other great ROI opportunities primarily within our pipeline and in our strategic business development decisions. Next, I'd like to address insider selling. I personally hold options for ten full years, and I only sell just before expiry. This is a passive, long-standing program. There is nothing more than that to read into these sales; they are use-it-or-lose-it sales. Third, our Group 1 business. Our expectation remains that the Group 1 PAH business will continue to grow and accelerate further if we gain FDA approval of ralinepag after the completion of our clinical trial. As a reminder, this is a best-in-class once-a-day oral treatment for PAH, and its Phase III trial endeavors to show long-term morbidity and mortality benefits on top of multiple conventional therapies. It is a worldwide study, and we intend to commercialize that product globally. Let's discuss Tyvaso Trans next. Tyvaso has been a dramatic grower since interstitial lung disease was approved, and it represents a roughly $1 billion indication to date. We have only scratched the surface in serving the large unmet need for this product with its unique delivery methods. In addition to our continued growth in PAH Group 3, which is supercharged by our two proprietary modes of inhaled drug delivery, we are also very excited about the enrollment of our Phase III trials in idiopathic pulmonary fibrosis (IPF) and pulmonary fibrosis (PPF), known as TETON 1, TETON 2, and TETON PPF. Once the results of these studies are approved, we will be able to assist multiples of the number of patients we are currently helping in PAH. Finally, let me touch upon our transformational strategy. As Mike mentioned over a year ago, the ramp for DPI toward our Tyvaso goals would not be linear, but it would bend upward after a period of provider familiarity with both treating Group 3 PAH patients and our unique products. We are now witnessing the upward trend that Mike predicted. I doubt any organization engages with as many PAH providers as we do, given our multiple PAH products and numerous pipeline activities, including our exciting ARTISAN trial, which demonstrates that patients can transition from a parenteral form of prostacyclin to oral Orenitram. It is from the great confidence in our products that so many providers share that we undertook the $1 billion buyback and continue to invest heavily in our Tyvaso pipeline. We have organically developed drugs that meet crucial unmet needs, established a magnificent business, built a fortress balance sheet, and developed pipeline programs that could be worth more than our entire current market cap. The transformation of United Therapeutics is well underway, and we welcome shareholder partners to join us in not only a great investment opportunity but in supporting a company that is a true biotech innovator. On that note, Mike, can you please take it from here?

Thanks, Martine. I will. Good morning, everybody. As Martine noted, today we report yet another quarter of record revenue at $678 million, reflecting a 34% growth from the first quarter of 2023. We saw meaningful growth for all of our key products, including Tyvaso, Orenitram, Remodulin, and Unituxin. Before I dive into the details for each product, I want to take a moment to thank all of our fellow employees for an outstanding quarter. First, I want to discuss Tyvaso, which, when combining the nebulizer and dry powder inhaler delivery systems, represents our largest product and remains the number one prescribed prostacyclin treatment in the U.S. Total Tyvaso revenue for the first quarter was $373 million, up 56% over last year, with growth driven by continued uptake of Tyvaso DPI, our regular annual price increase, and the increase in commercial utilization following the implementation of the Part D redesign provisions under the Inflation Reduction Act. Again, this quarter, there were no significant changes in inventories of Tyvaso DPI at our specialty pharmacy distributors. Both distributors have remained within their contracted inventory levels. After a relatively consistent monthly referral rate across 2023, we observed a positive shift in referral levels for both DPI and Nebulizer in the first quarter, with about a 10% to 15% total increase in monthly referrals. This trend has continued into the second quarter. Patient starts also increased, but at a slower rate during the first quarter, which is not surprising as there is often a lag between referrals and starts. However, it does appear that starts per month are increasing in line with the referral levels moving into the second quarter. During the first quarter, we were pleasantly surprised to see an increase in commercial utilization of Tyvaso due to the implementation of the Inflation Reduction Act. We expected to see this increase start in the second quarter as patients reach their out-of-pocket maximums. We anticipate that commercial utilization will continue to grow throughout the year. Lastly, regarding Tyvaso, we are well positioned for competition should it arise in the market this year. The sales force expansion that we initiated last year is now complete and fully deployed as of January 1. We expect to begin seeing the effects of this enhanced sales team starting in the second half of the year. We are also engaging regularly with healthcare providers on the key characteristics of our DPI device, specifically that Tyvaso DPI requires only one breath per cartridge. Our low flow design requires less patient breath than high-flow devices, which we believe will be beneficial for patients with compromised lung function. The low flow design also allows for more efficient delivery of treprostinil compared to the nebulizer and other treprostinil DPI devices. Lastly, the BREEZE study demonstrated a 98% patient satisfaction rate with Tyvaso DPI. As I mentioned in our previous call, these factors, combined with the experience that physicians have gained through the rapid uptake of Tyvaso DPI since its launch, lead us to believe that Tyvaso DPI will compete effectively with similar products in the inhaled market, bolstered by our strong presence in the PAH and PH-ILD communities and our commitment to patients across both nebulized and dry powder delivery options. Moving on to Orenitram, we are thrilled to report not only record revenue this quarter but that we surpassed $100 million for the first time, reaching $106 million in the first quarter, which is a 20% increase from the previous year. This growth was driven by a combination of increased commercial utilization, pricing adjustments, and what we consider to be a modest inventory buy-in during the quarter, contrary to the normal seasonality we experience with Orenitram patterns in the first quarter. Because Orenitram is a Medicare Part D drug, similar to Tyvaso DPI, we saw a significant uptick in commercial utilization due to the implementation of the Inflation Reduction Act. Our medical teams continue to engage in scientific discussions with healthcare providers around the EXPEDITE induction protocol, where PAH patients initiate therapy on Remodulin and then transition to Orenitram based on recent scientific publications as an option for suitable patients who may not want or need long-term parenteral therapy. Transitioning to Remodulin, we reported worldwide revenue of $128 million, an increase of 5% from last year, with solid performance across all our underlying demand metrics. This comes almost five years after the launch of the generic version of Remodulin, reflecting our ongoing commitment to our patients and the product. Both intravenous and subcutaneous Remodulin continue to be the most prescribed parenteral prostacyclin in the U.S. We expect this momentum to persist, as we observed a high level of referrals and starts in the first quarter. Our Remunity Pump remains the only option for new subcutaneous patient starts, and we have learned from the channel that specialty pharmacy distributors are beginning to proactively convert remaining subcutaneous treprostinil patients to our Remunity Pump due to the discontinuation of support for the CAD MS3 system by its manufacturer. Regarding the recent approval of the first active inhibitor, based on conversations with physicians before and after approval, we expect that many practices will approach its use cautiously at first and will mainly use it in combination with prostacyclin therapy. Lastly, with respect to Unituxin, we achieved worldwide revenue of $58 million, a record which is a 19% increase from the prior year's quarter, while U.S. Unituxin revenue reached $53 million, reflecting a 21% rise. U.S. growth was driven by both price and volume. To summarize, after this record quarter, we remain confident that we possess the product portfolio, marketing strength, support systems, clinical data, and commercial expertise to continue our growth in both PAH and PH-ILD. With that, I'll hand the call back over to Martine for the Q&A.

Thank you, Mike, for that excellent overview and thorough insight into so many key details of our diverse product offerings. It's truly a historic quarter; it's the best we've ever had. Operator, we're ready for the first question.

The first question comes from Terence Flynn from Morgan Stanley.

Maybe a two-part question from me. I was just wondering what you're seeing now with respect to the breadth of prescribing for Tyvaso and ILD. I know you expanded to a broader prescriber audience sometime last year, and you have the new sales force, but I’m just curious if you can comment at all there. And then can you provide the percentage of Remodulin patients that are now on the Remunity pump?

Thank you, Terence. And congratulations on transitioning over to Morgan Stanley now. Mike, given the questions, feel free to address as much of that inquiry as you believe time allows.

Yes, sure. Regarding the breadth of prescribing, overall, we're continuously seeing growth in both breadth and depth. This is largely due to the diligent work we've been doing over the past couple of years in gaining traction with new prescribers. As I stated in my opening remarks, we now have the expanded sales force fully deployed. It will take time for them to develop relationships, so we expect to genuinely recognize the impact of those efforts as we transition into the third quarter. The most interesting statistic I've observed is that historically, we saw a 50% increase in the breadth of ILD prescriptions, particularly among ILD physicians who previously had no experience in prescribing PAH products. On the depth side, we're measuring that with our 3-plus metric that I've mentioned on prior calls, which has also seen a roughly 30% increase in that cohort. We're genuinely pleased to notice this progress in the ILD community, both regarding referrals and actual prescriptions written. Briefly on Remunity, I can confirm that currently, most patients are on Remunity, with a few hundred left that need to transition. I believe specialty pharmacies are looking to complete this transition by the end of the year.

Thanks so much, Mike, for that comprehensive answer. Terence, I hope that addressed all your concerns. Next question.

The next question comes from Roanna Ruiz from Leerink.

So I was curious what your field reps are hearing on the ground from physicians regarding the sotatercept approval and launch, if you're able to comment. And in the bigger picture, what's your outlook on the future in terms of the combined use of Tyvaso with sotatercept and prescribers' consideration of both these products?

Great. That would also come within President Benkowitz's purview. So Mike, please take it away.

Sure. Thanks for the question. With regards to sotatercept, the launch has been relatively quiet. I think through the rumor mill, there are expectations that they will launch this week, but the situation remains somewhat subdued. Therefore, it’s best to direct those questions to Merck regarding their launch strategies. As for our outlook on the combined use of our products with sotatercept, we've previously stated, and I reiterated in my opening statements, that we view this as a complementary addition to the products already available in the market. It is not a cure nor a substitution for prostacyclin therapies. We don't expect that current patients will transition off of a prostacyclin treatment as a result of sotatercept. Almost 70% of the patients in the clinical trial had background prostacyclin therapy. Based on conversations, we believe that the majority of physicians will use sotatercept in conjunction with prostacyclin treatments. If it works effectively and results in patients living longer, that means they will remain on our products longer, positively affecting our financial outlook. So that has been the general feedback we've received over the last six to nine months.

Excellent, Michael. Thank you so much. Operator, we have time for about two more questions. Next question.

The next question comes from Ash Verma from UBS.

Congrats on all the progress. So I had a question regarding Xenotransplantation; could you comment on how you decide which and how many genes are modified? There's another player in this field utilizing a different approach. How confident are you that your level and selection of gene modifications is the most appropriate approach here? Also, I wanted to understand the pricing dynamics for 2025 across your portfolio. Clearly, there is a benefit to the co-pay normalization due to the IRA with an out-of-pocket maximum of $2,000, but then there is also the donut hole effect. Overall, does that shake out as a headwind or tailwind for pricing in 2025?

So Ash, thank you for your questions and for your exceptional analyst coverage. However, there's only time to address the first matter. Each of those questions would necessitate a detailed discussion. Fortunately, we have our Executive Vice President for Product Development and Xenotransplantation, Dr. Peterson, on the call. Leigh, could you respond to the Xenotransplantation question?

Yes, of course. Thank you for the question. At United Therapeutics, we believe in multiple shots on goal. In fact, we are developing our Tianjin pig, where we're working on two distinct organs; the Tianjin Xeno kidney and the Tianjin Xeno heart. Additionally, we're developing our ThymoKidney, sourced from a pig with a single genetic modification. This was the organ recently transplanted into the patient at NYU. We have solid scientific rationale as well as preclinical evidence that both products, the one with a single genetic modification and the Tianjin pig, are effective. There are advantages to both, at least from the scientific standpoint. However, to establish the scientific safety and efficacy of each, we need to conduct clinical studies, which we are planning to execute soon. Ideally, we will receive approval for multiple products, allowing different options for patients and enhancing the available supply. So your query about which is better is evident. Nevertheless, both have their advantages, and we will assess them through our clinical studies in the near future.

Thanks so much, Leigh. That was a fantastic answer. Operator, we can take one last question, please.

The next question comes from Joseph Thome from TD Cowen.

Congrats on the progress. Perhaps one more question regarding the Xenotransplantation side. Where do you see the significance of utilizing a CD40, CD154 product in Xenotransplantation? I believe preclinically, you've considered both with and without that approach. What factors will influence your decision to advance a CD40, 154 into human clinical studies or not?

Okay. Great. Dr. Peterson, would you like to also address that question?

Yes, absolutely. The primary distinction is that the CD40 mechanism of action has not seen any FDA-approved agents used for any indication. Historically, most preclinical studies in Xenotransplantation models incorporated CD40 blockade. However, for our study, we have two arms focusing on both CD40 blockade and conventional immunosuppression in our baboon IND-enabling studies, and we are obtaining favorable results with both approaches. There was a recent publication by Ivinson et al. in 2024 discussing a significant case where a baboon was transplanted with standard care regimens and survived for 9.5 months—a result that has never been documented before. We have reasons to believe this occurred based on the unique circumstances. Therefore, we prefer to enter clinical studies using approved agents to eliminate another variable from the analysis. Furthermore, our preclinical studies are yielding promising results with what we've observed in the model. That’s our direction for now.

Thank you very much, Dr. Peterson. That was a thorough explanation. Operator, you can now conclude the call.

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. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.