Good morning, everyone and welcome to the United Therapeutics Corporation Second Quarter 2024 Earnings Webcast. My name is Cole and I will be your conference operator today. All participants on the call portion of this webcast will be in listen-only mode until the question-and-answer portion of the earnings call. Please note this call is being recorded. I would now like to turn the webcast over to Dewey Steadman, Head of Investor Relations at United Therapeutics. Please go ahead.

Yes. Thank you, Cole. Good morning. It's my pleasure to welcome you to the United Therapeutics Corporation's second quarter 2024 earnings webcast. Remarks we make 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 these forward-looking statements. Remarks today 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. 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, Product Development and Xenotransplantation, and Pat Poisson, our Executive Vice President of Technical Operations. Note that Michael Benkowitz and I will participate in a fireside chat and one-on-one meetings at the Morgan Stanley 22nd Annual and Global Healthcare Conference in New York on September 4, and James Edgemond and I will participate in a fireside chat and one-on-one meetings at the 2024 Wells Fargo Health Care Conference in Boston the next day, September 5. Our scientific, commercial and medical affairs team will be present at the Pulmonary Hypertension Association 2024 International PAH Conference and scientific sessions from August 15 to 18 in Indianapolis, the European Respiratory Society Congress in Vienna from September 7 to 11, and the American College of Chest Physicians CHEST 2024 Annual Meeting in Boston from October 6 through the 9. Now I will turn the webcast over to Dr. Rothblatt for an overview of our second quarter 2024 financial results and the business activities of United Therapeutics. Dr. Rothblatt?

Thank you very much, Dewey. We at UT are very pleased and proud to present the results of another record quarter. As described in the press release, PowerPoint and the financials, we are doing very well across the board. Double-digit revenue growth is the norm. In a moment, our President, Mike Benkowitz, will provide some deep insight into these numbers. So let me start with the strategic overview. We see our business as three waves of success. First, approved products that are market leaders for the mid-2020s. Second, next-generation products and new indications that can be market leaders in the late 2020s. Third, an organ manufacturing business that can transform the treatment of end-stage organ disease. Examples of the first wave are Remodulin, Tyvaso, Orenitram, and Unituxin. Examples of the second wave are Ralinepag as a once-daily pill for pulmonary hypertension and our TETON trial aiming to show improvement in pulmonary fibrosis. Examples of our third wave of success are our xenotransplantation products that offer tremendous potential for the thousands of patients on dialysis. Now I'm sometimes asked, with all of this success, Martine, what keeps you up at night? Well, let me start with what does not keep me up. What does not keep me up is our foundational business, because I do not see any threats to the vitality of our Remodulin, Tyvaso, or Orenitram products. For Remodulin and Tyvaso, my confidence is born of the uniqueness and clinical efficacy of our drug-device combination technology. For Remodulin, there is no other parenteral drug delivery device that is as small, accurate, and easy to use as our Remunity Pump. Its acoustic volume sensing technology is more than 10 times more accurate than legacy pumps and has fewer moving parts. For Tyvaso, there is no other dry powder inhaler so well matched to deep lung delivery of our drug as the Mankind DPI. The proof is really in the pudding; in record time, thousands of patients have begun using our patented device in both old and new pulmonary indications, such as pulmonary arterial hypertension and interstitial lung disease. Competition in our current foundational business doesn't really keep me up either, because they are mostly used in combination with our drugs or, if not used, drug delivery devices that are not as elegant as our DPI devices. Now let me jump ahead to the organ business. That also doesn't keep me up because in the last year, we have obtained multiple pieces of scientific proof that our Xeno kidney functions well in human bodies with no more immunosuppression than an allograft. Folks, that cannot happen by accident. Of course, there's much more work to do to get these Xeno kidneys FDA approved and even more work to do to get them into quantity production, but I see no showstoppers, and we have achieved proof of concept. It is only in our second wave of success, Tyvaso for pulmonary fibrosis and Ralinepag for PAH, that I find myself kept up at night. The reason is that the results of a clinical trial cannot be known until it is unblinded. And even a study that is 90% powered for success by definition still has a 10% chance of missing. Of course, we are doing everything we can to ensure the credibility and approvability of our IPF and Ralinepag clinical trials. But because these two products have the potential to more than double our current $3 billion revenue run rate, the stakes are extremely high. In conclusion, UT is a rock-solid bet on its current foundational business. UT is a very, very good bet and a highly rewarding one at that in its next stage generation products that are now in late-stage clinical trials. And UT is a once-in-a-lifetime biotechnology opportunity in manufactured organs. With that strategic overview, I'd like to now turn the call over to our President, Michael Benkowitz. Mike?

Thanks, Martine, and good morning, everyone. As Martine noted, today, we reported yet another quarter of record revenue at $715 million and 20% growth from the second quarter of 2023. We saw meaningful worldwide revenue growth for all of our key products, Tyvaso, Orenitram, Remodulin, and Unituxin. First, I want to touch on Tyvaso, which, when viewing the nebulizer and dry powder inhaler delivery systems together, remains the number one prescribed prostacyclin treatment in the U.S. Total Tyvaso revenue for the second quarter was $398 million, up 25% over last year, with growth led by continued uptake of Tyvaso DPI, an increase in pricing, and increased commercial utilization, following the implementation of the Part D redesign provisions under the Inflation Reduction Act, or IRA. For the franchise, we saw record referrals and starts during the quarter, leading us to have confidence in the durability of our growth profile, as Martine mentioned. The percentage of Tyvaso DPI patients using our patient access programs continues to tick down following the implementation of the first provisions of the IRA earlier this year, albeit not at the same rate we saw between the fourth quarter of 2023 and the first quarter of 2024. We could continue to see a modest decline in patient access program utilization through the remainder of the year, as new patients on therapy are less likely to need patient assistance, having met their copay obligations on another product before starting Tyvaso DPI. The benefit from this could be offset by modest rebates from our initial contracting efforts to ensure a period of access in the future for Tyvaso DPI. As an aside, we understand that CMS will soon publish the negotiated prices for the first 10 drugs selected under the IRA's drug price negotiation provision. I want to remind investors that our drugs are not on this list. In addition, based on our current understanding of the IRA statute and guidance issued by CMS thus far, we expect our treprostinil products will not be subject to price negotiation under the IRA because there is at least one marketed generic version of treprostinil. Moving to Orenitram, we reported another quarter of record revenue at $107 million, representing 13% growth from the second quarter of 2023. Like the first quarter, this was driven by a combination of increased commercial utilization, pricing, and a modest increase in average dose from prior quarter levels. Recall that Orenitram and Remodulin are priced on a per milligram basis. Like with Tyvaso DPI, we saw a modest decrease in patient access program usage for Orenitram in the second quarter, driven by the same dynamics. Likewise, we expect a modest decline in patient access program usage through the remainder of the year. Our medical teams continue to have scientific discussions based on recent scientific publications with healthcare providers on the EXPEDITE induction protocol, where PAH patients initiate on Remodulin and then transition to Orenitram as an option for appropriate patients who may not want or need to go on long-term parenteral therapy. Moving to Remodulin, worldwide revenue of $147 million was up 16% from last year with very strong performance across all of our underlying demand metrics. And this comes five years after the first launch of generic Remodulin, reflecting our continued commitment to our patients and Remodulin. Both intravenous and subcutaneous Remodulin remain the most prescribed parenteral prostacyclin in the U.S. Our Remunity pump remains the only option for new subcutaneous patient starts. Last quarter, we heard through the channel that specialty pharmacy distributors are going to start proactively converting all subcutaneous treprostinil use to Remodulin and our Remunity pump, given the discontinuation of support for the CAD MS3 system by its manufacturer. We've seen this trend continue through the second quarter. Finally, Unituxin. Worldwide revenue of $52 million was up 17% from the prior year quarter and U.S. Unituxin revenue of $47 million was up 18%. U.S. growth was driven by price and volume. To wrap up with our fifth quarter in a row of record revenue, our commercial products clearly have the innovation, interest, momentum, and muscle to continue to grow and serve our patients. With that, I'll turn the call back over to Martine to run the Q&A.

Michael, that was just such a perfect overview of everything. Thanks so much, and thanks for all of your leadership in those areas. Operator, you may now bring forward the first call.

Thank you. We will now begin the question-and-answer session. We will pause momentarily for the first question. Today, it will come from Roanna Ruiz with Leerink Partners. Please go ahead.

Hey, good morning, everyone. So I was curious, could you elaborate a bit on the different drivers you saw in the quarter for Tyvaso DPI versus nebulized Tyvaso? And were there any changes or reasons for greater confidence coming through, like I think you mentioned increased number of referrals and possibly ramping the new field force that we should keep in mind going into 3Q this year?

Thank you for that question, Roanna, that type of commercialization question would be best handled by Michael.

Sure. Thanks for the question. So I think the underlying demand metrics, we continue to just, I think, plug along or tug along like we have the past few quarters with the referrals and the starts and continues to come from both Group 1 PAH as well as Group 3 PAH ILD. The second part of your question about the sales force, I think we're starting to see some of the impact of that sales force expansion in the second quarter. As you recall, we started that ramp-up in the last fall, really fully deployed that team on January 1. And of course, it takes a little bit of time for the reps to get out in the field and get in front of those physicians and have the opportunity to educate them on the benefits of our products. But what's been really nice to see so far in the first six months is the increase in the number of ILD prescribers actually writing Tyvaso. So when we first launched in the PAH ILD a couple of years ago, our efforts were really focused on educating around the need to screen for pulmonary hypertension. And then once they started to do that – that the patients had pulmonary hypertension associated with ILD, then they can make the decision whether we refer that patient into the PH clinic or try to treat it themselves. I would say the vast majority of doctors at that time started referring to the PAH clinic. But we knew really for us to realize the full opportunity that we have in PAH-ILD, these physicians are going to have to start treating just because of the number of patients that are out there and the bandwidth constraints on the physicians in the PAH clinic. So it's been really nice to see that over the last six months, we really started to increase the breadth of ILD prescribers as well as the depth, and recall the depth metric we always look at is physicians with 30-plus patients. So we're seeing really positive momentum and growth on both of those key metrics.

Thank you so much, Mike, and thank you, Roanna, for your question. Operator, you could bring forward the next question.

And our next question will come from Jessica Fye with JPMorgan. Please go ahead.

Great. Good morning. Thanks for taking my question. Curious if you could talk a little bit about what you're seeing in the PAH marketplace as it relates to the initial winner of your launch. Do your observations line up with Merck's commentary yesterday? Have you noticed any changes in referrals or starts in PAH?

Thanks, Jess. Nice to hear your voice this morning. Again, I think it's a market dynamic question that Michael is the best person to answer.

Yeah, sure. Thanks for the question, Jess. Yeah, I mean, I'm not going to really comment too much on Merck's product. I mean, they're plenty capable of speaking to that themselves. I would say with respect to our business and specifically in the PAH, I think the business remains very solid, very strong, really strong referral growth, really, really strong start growth, patient shipments, all of the underlying demand metrics continue to be in line with what we expect and where we think we need to be, and that's obviously being reflected in the revenue line on our financial statement. So, yes, at this point, in the first quarter, no surprises there. I think as Martine said in her opening remarks, if you look at Merck’s clinical trial, most of those patients were using sotatercept in combination with prostacyclins, and that certainly at least seems to be how that's playing out so far.

Perfect. Thanks so much, Mike. Thank you, Jess. Operator, could you bring forward the next question, please?

And our next question will come from Ash Verma with UBS. Please go ahead.

Great. Thanks for that. So my question just wanted to understand. So look, I mean, I think the stock has reacted pretty favorably to the ASR. And I know from a cash outflow, you mentioned last quarter that you have now a more specific understanding of what's required for Xeno. So given where we are right now, like what's your appetite for another significant share buyback or another ASR?

Thank you for your question, Ash. That being basically a kind of a capital allocation question, I think the best person on the call to answer that would be our Chief Financial Officer, James Edgemond. James?

Great. Thanks, Martine. Ash, good to hear your voice. Thank you for the question. Two kinds of responses to your question; one is, our current ASR is still in process. The existing or the second tranche, as we've described in our disclosure, the $700 million still is in process through the end of September of this year. So we're going to first focus on executing the existing ASR and share repurchase program. A second kind of consideration is, we are still committed to allocating capital wisely in the best interest of stakeholders by first deploying it, as we've said historically, Ash, internally for our R&D initiatives, including manufacturing facilities, and included in those manufacturing facilities certainly is our consideration of future commercial DPF capital requirements. Second, we are going to still focus on corporate development to find those opportunities where we think can bring value to shareholders and value to patients. And third, kind of what we've said at the beginning, our current share repurchase program. So our capital allocation program will continue to be the same. We'll evaluate and get more knowledgeable about construction of the DPF facilities. But right now, we are just going to continue to focus on the ASR that's in place and then continue to use that capital allocation waterfall to evaluate any future opportunities, whether it's share repurchase or otherwise. But thank you for the question, Martine, back to you.

James, that was a comprehensive answer to Ash. So, greatly appreciated. Operator, next question, please.

And our next question will come from Joseph Thome with TD Cowen. Please go ahead.

Hi there. Good morning and thank you for taking my question. Maybe just one on the filing strategy for IPF, assuming success. I guess, do both of the ongoing IPF studies need to be successful in order to pursue a filing? Or do you think there is a P-value level or a level of benefit that you could see in one where you maybe would only need one of these studies to work? Any feedback from the FDA on that point would be helpful if you have it? Thank you.

Thank you, Joe, for that question. Fortunately, we have on our call the person who's in charge of that entire program, Dr. Leigh Peterson. So Dr. Peterson, could you kindly respond to Joe?

Yes, sure. We haven't recently discussed this with the FDA. I mean, this was really early, early discussions with the IND; they really just gave us the boilerplate language that they always do, which is typically we require two studies for two positive studies for registration. But of course, I mean, if we see, we'll likely see the TETON2 results coming out before TETON1, at least the top line results because, as you know, we completed the TETON2 enrollment period early. And so we'll see those, and we will certainly continue discussions with the FDA. I mean, assuming really significant, highly positive, clinically significant results, then we will certainly have a discussion with them about that.

Thank you, Dr. Peterson. I want to highlight that Dr. Peterson and Dr. Smith, who leads our clinical trials, are the same team responsible for the successful execution of our interstitial lung disease trial. This trial significantly contributed to the impressive growth in Group 3 PAH and the entry of DPI into that space. I can confidently say that this team works tirelessly on this trial. Our main priority is the success of the TETON trial and securing an indication for pulmonary fibrosis, which is a market likely three times larger than pulmonary hypertension. Our trial design allows for the combination with existing approved therapies, meaning we don't need to discontinue a patient's current medication to start them on inhaled treprostinil. Likewise, we can include both patient types in the trial without requiring additional medications. We hope to have all of this reflected in the label. Apologies for the lengthy response, Dr. Peterson, but you provided a great answer to Joe's question. Operator, due to the time, we only have room for one more question.

And that question will come from Andreas Argyrides with Oppenheimer. Please go ahead.

Good morning and thanks for taking our questions. And continuing on the topic of TETON. What kind of bridging study might the FDA require to approve evasive DPI in addition to the nebulized if TETON is successful? And then how are you thinking about presenting data? I mean, is there a chance for maybe like an interim readout of sorts or anything like that?

Okay. Yes. Thanks for those two questions. Again, I think Dr. Peterson would be the best person on the call to answer. Once again, just for your recollection, she and her team did the bridging study from the Tyvaso Nebulizer into the DPI for PAH. So she's very, very familiar with how to do that. She also was the lead author in a publication on those results in the New England Journal of Medicine. So very much on top of getting the word out in the most credible and respected way. So with that little toot of your horn, Dr. Peterson, can you answer the questions?

Thank you. Yes, sure. For the bridging study, I will answer the second question first regarding interim results. We will not conduct an interim analysis or interim look. For TETON 2, as I mentioned, we have completed enrollment and are now in the final follow-up period. We expect to have the actual final results within a year, shortly after the year follow-up concludes. We completed enrollment in July, so we will have a bit of time to clean the data for the top line results. That will be the next time we have actual results from one of these studies. Regarding bridging into DPI, as you know, for our BREEZE study, we transitioned PAH patients from nebulized Tyvaso to Tyvaso DPI, which was sufficient to obtain approval for both PAH patients and PH-ILD patients for Tyvaso DPI. For the IPF studies, we are still in discussions with the FDA. We will soon be discussing further, particularly when we advance further into the follow-up period or obtain top line results, as the pulmonary division for IPF and the cardiorenal division for PAH and PH-ILD involve different groups of people, and sometimes there are slightly different requirements. We need to clarify what is necessary for the bridging. It may involve a small sub-study in our TETON-OLE program, so we will work that out. However, this should not cause any delays. We will receive the results of the TETON studies and pursue the approval based on TETON 1 and TETON 2, while taking the necessary steps for bridging concurrently.

Excellent. Excellent answer. Thank you so much, Dr. Peterson. Thank you, everybody, for being on the call today. I'd like to just wrap up with drawing everybody's attention to the terrific PowerPoint that Dewey Steadman and his team released, I think it's not only aesthetically beautiful, which it is, it's just rich in content, graphs, charts, numbers, kind of strategic overview, and kind of things. So please study that PowerPoint at depth if you really want to understand the beauty of the United Therapeutics story. And then finally, I'd like to just do a shout-out to everybody that is part of our United Therapeutics family, what we call Unitherians. We're now bumping up on 1,500 people. And it's in line with the metric that Michael, James, and I have long adopted at UT to grow our headcount in accordance with a revenue per head metric of approximately $2 million per head, and that's on par with the absolute best, not only of biotech but of really American corporations in general. So now that we’re knocking on the door of a $3 billion revenue run rate, that's $2 million per head for our nearly 1,500 people. And it's just another tremendous testament to the success of United Therapeutics and to the fact that the leaders of this company, Michael, James, myself, Pat Poisson, Dr. Peterson, and others, our number one goal is to make sure that everybody working at our company is having the absolute best career development experience of their dreams. And so long as that is happening, then all of our goals pretty much happen automatically. And I think a great metric I can share with you that I got from our HR department is our percentage of employees who voluntarily terminate, we call the voluntary termination rate, is about 5%. That is far lower than I think any of our peers, but certainly far lower than the averages in the biotech sector and definitely outside biotech. So the numbers say we're doing things right, and the people say we're doing things right. And I hope all of you agree that we're doing the things you want to see us do. Have a great day. Operator, you can close 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 and Presentations section of the United Therapeutics Investor Relations website at ir.unither.com. Thank you again for your participation. You may now disconnect.