UNITED THERAPEUTICS Corp Q4 FY2025 Earnings Call

Good morning, everyone, and welcome to the United Therapeutics Corporation Fourth Quarter 2025 Corporate Update Conference Call. My name is Jamie, and I will be your conference operator today. Please also note today's event is being recorded. At this time, I'd like to turn the webcast over to Harry Silvers, Investor Relations Manager at United Therapeutics.

Thank you, Jamie. Good morning. It is my pleasure to welcome you to the United Therapeutics Corporation Fourth Quarter 2025 Corporate Update Webcast. Remarks today will include forward-looking statements representing our expectations or beliefs regarding future events. These statements involve risks and uncertainties that may cause actual results to differ materially. Our latest SEC filings, including Forms 10-K and 10-Q, contain additional information on these risks and uncertainties. We assume no obligation to update forward-looking statements. Today's remarks may discuss 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 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 of Product Development and Xenotransplantation; and Pat Poisson, our Executive Vice President of Strategic Development. Note that Michael Benkowitz, James Edgemond, and I will participate in a fireside chat and one-on-one meetings at the TD Cowen 46th Annual Healthcare Conference in Boston on March 2. Additionally, Martine Rothblatt, James, and I will be at the Leerink Global Healthcare Conference in Miami on March 9 for a fireside chat and one-on-one meetings. Finally, James and I will also participate in one-on-one meetings at the UBS Biotech Summit in Miami on March 10. Our scientific, commercial, and medical affairs teams will be present at the 21st Annual John Vane Memorial Symposia in London, March 13 and 14, and at the International Society for Heart & Lung Transplantation in Toronto, April 22 to 25. Now I will turn the webcast over to Martine for an overview of our development pipeline and business activities.

Thank you, Harry. Good morning, everyone. Today, I'm going to share with you news that transforms the fields of pulmonary hypertension and IPF. This news is our unsheathing of a category killer product called Tresmi. This product is a revolutionary proprietary drug device formulation of treprostinil into a soft mist inhaler. It will reduce the number one side effect of dry powder inhalers, which is coughing, by up to 90% based on the human studies we've done so far. And we intend to file for its approval in PAH and ILD this year and commercially launch it next year. The days of people discontinuing their PAH or ILD therapy due to cough will be over. Anyone would rather have soft mist than dry powder. Also transformative for our markets will be the unblinding of our outcome study next week. We are optimistic that this unblinding will usher in a new era of once-a-day treatments for pulmonary hypertension. The reason we can promise once-a-day treatment is because the new medicine is a super prostacyclin. It is a super prostacyclin because it lasts much longer and binds molecules much more efficiently than all other approved forms of prostacyclin. Hence, between our super prostacyclin once-daily pill and our cough less soft mist inhaler, or SMI, we have solved the two biggest problems in our diseases, cough and dose frequency. Also very exciting is our unblinding next month of our second pivotal trial of Tyvaso for IPF. You'll recall from last quarter that our first pivotal trial showed Tyvaso to be much better than any other IPF drug the FDA has ever approved. With confirmation of those results next month, we'll quickly file for approval and commercially launch into IPF no later than June of 2027. In summary, for 2027, we should have three disease-transformative, paradigm-shattering commercial launches: one, a once-daily super prostacyclin for PAH; two, a category-crushing Tresmi coughless inhaler for ILD; and three, a better-than-everything new treatment for IPF. Hell, yes, we are pumped. Now let me review some of the other major management areas that I track as CEO. We are religious about revenue growth at UT. And Mike Benkowitz...

Good morning, everyone. 2025 marked another year of record-breaking revenue, driven by double-digit percent revenue growth from Tyvaso and Orenitram, leading to 11% total revenue growth over full year 2024 and surpassing $3 billion in total revenue for the first time in our history. For the fourth quarter, we recorded $790 million in total revenue, representing 7% growth from the fourth quarter of 2024. We have pointed out in the past and continue to remind investors of our historical seasonal revenue trends where the first quarter and fourth quarter tend to be lighter ordering quarters, while the second quarter and third quarter tend to be heavier ordering quarters. As such, sales in the short term can vary depending on the timing and magnitude of orders from our specialty pharmaceutical distributors and may not precisely reflect patient demand or changes in patient census. Turning to Tyvaso, total revenue for the fourth quarter was $464 million, a 12% increase over the previous year, underpinned by robust 24% year-over-year growth in Tyvaso DPI. This impressive trajectory reflects our strategic positioning in a large and growing addressable but uncaptured market in PAH and PH-ILD, where we are steadily increasing our share of voice and expect to continue delivering double-digit growth. Through mid-February of this year, our rate of referrals for total Tyvaso was at its highest level in two years. Notably, the referral rate in three of the last four months was at or above where we were heading into a competitive launch early summer of last year. This continued strength in the underlying fundamentals reflects the disciplined execution of our teams who continue to reinforce our message. And we expect this momentum to continue throughout the year as the many attributes of Tyvaso DPI position the device for sustainable long-term growth. We are constantly striving to enhance our Tyvaso DPI platform, which we believe will help us solidify and grow our position as the preferred inhaled prostacyclin therapy. We recently introduced 80-microgram cartridges, which enable delivery of the equivalent of 15 nebulized treprostinil breaths in a single DPI breath, as well as 96 and 112-microgram combination kits. This advancement strengthens Tyvaso DPI's differentiation in the pulmonary hypertension market by improving convenience and expanding dosing flexibility, which we believe can support broader adoption and longer-term growth while streamlining access and affordability for patients with more advanced dosing needs. Moreover, we believe the consistency of flow rate and delivery with our DPI device and its low inspiratory flow requirements further differentiate our platform. Turning to Orenitram and Remodulin, last month at the Pulmonary Vascular Research Institute Annual Congress in Dublin, our medical affairs teams presented data from the ongoing ARTISAN study, examining the effect of early and rapid treprostinil therapy on mean pulmonary arterial pressure, or mPAP, and the reduction to improve right ventricular function in PAH. Preliminary data suggests that early initiation of high-dose treprostinil therapy represents a feasible strategy for reducing mPAP and improving right ventricular structure and function. These data further reinforce the significant benefits that can be achieved from Orenitram and Remodulin, which remain backbones to treprostinil-based therapy in treating pulmonary hypertension and are strong foundational pieces to our commercial business. To close, we are proud of the exceptional drive and relentless focus of our teams who remain deeply committed to making a real difference for the patients we serve. Building on the strength of this past year, we expect this foundation will continue to support durable double-digit growth and ongoing success over the long term. With that, I'll turn things back to Martine to run the Q&A.

Michael, thanks so much for that great review of our religious dedication to strong revenue growth...

Operator, maybe we could go to the first question in the queue.

Our first question today comes from Ash Verma from UBS.

Regarding the upcoming TETON 1 data, I would like to know how confident you are about a positive outcome for IPF. I understand you have strong confidence for the TETON 2 study, but I’m interested in your perspective on this second study. Additionally, this question seems to arise often regarding the impact of Yutrepia. Previously, you mentioned a "give it a try" dynamic. Can you share your latest insights on patient additions for DPI or nebulizers and whether there has been any effect from competitors?

Yes. I'll go ahead. This is Leigh Peterson, and I will go ahead and answer the first question about expectations for TETON 1 and yes, just to reinforce that we are extremely encouraged by the TETON 2 results. And we're really optimistic that we can show a treatment effect in the TETON 1 study as well, particularly since we did see such a robust effect in TETON 2 and that the TETON 1 and TETON 2 study populations are relatively similar with regards to the baseline characteristics. So we're confident that the TETON 2 results will translate to a second successful study.

Operator, it seems like we lost Martine and Michael.

We have Martine rejoining. Martine, this is the conference operator. You joined into the live conference. Your line just dropped here recently. We rejoined you back in. Your line is live.

Okay. I'm sorry, everybody, the conference operator messed up the conference call. And I think, Mike, were you able to get your entire presentation through before you got dropped?

I think so. I'm not sure if anybody heard me.

Okay. Good. Well, I'll pick up from when I was dropped then. So everyone has just heard Mike's presentation. And I think it confirms what we've been saying to everybody is our commitment to double-digit revenue growth. I'm going to continue from the point that I got dropped by the call to say, in addition to all of the fantastic success that Mike and his team have delivered in terms of revenues that we at UT are also fanatical about new product development because we never like to rest on laurels. And Dr. Peterson, who is also on this call, is doing a superb job of product development, including the amazing new super prostacyclin and IPF medicines that I mentioned at the start. Before I dive into these new products, let me just take a moment due to the conference call error earlier, just to double check with Harry and Michael that my remarks are coming through. Are they coming through?

Yes, we got you, Martine.

Okay. Sorry for the interruption, but I wanted to clarify a point. In addition to new product development, I also focus on Investor Relations and business development. We are currently in productive discussions with three major pharmaceutical companies, driven by their strong interest in the proven predictive capabilities of our AI-enabled digital lung model. Our model can conduct hundreds of accurate in silico Phase III trials in significantly less time than a single in vivo trial. No one else possesses this advanced, lung-specific computational biology technology. It's encouraging to know that the results of a pulmonary trial can be determined before spending hundreds of millions of dollars to conduct it, not to mention the years saved. Transplantation is another key area of focus for me, and it is progressing well. Before I delve into transplantation, let me quickly check with Harry and Mike to ensure the line is still active.

Yes, we have you.

Okay. Great. The first thruster is Xeno, which has now two patients transplanted and doing well in our FDA-approved phase less clinical trial. We are on schedule to fully enroll the full six-patient cohort by this summer. Then we'll enroll the full balance of the trial needed for registration as decided by the FDA in 2027. At this rate, we should have a commercial Xeno product on the market in 2030. The second transplant thruster is Miromatrix. We've now fully enrolled and successfully completed the first manufactured liver clinical trial ever. We expect FDA guidance on how to take this liver failure recovery product and also our mirokidney implanted product to regulatory approval during the course of this year. Instead of me going through all of our multiple other transplant thrusters such as, for example, 3D bioprinting of kidneys and lungs, let me simply say that I felt honored to be chosen by Forbes team of experts and AIs as the eighth most innovative person in America. I feel an obligation to live up to that, and there is no company in the world manufacturing as many transplantable organs in as many different ways with as many or for that matter, any in human clinical trials as my teams at United Therapeutics. This is life-saving innovation with very, very large. A final area of major management focus for me is our strategic clinical development group, also known as our Skunkworks or Stealth division. It is in this group that the revolutionary new Tresmi product was birthed as described at the start of the call. This is the product that will totally transform our markets by all but eliminating treprostinil's number one reason for patient discontinuation, harsh coughing. We are unsheathing this product today because it will be filed this year for commercial launch next year. The immense power of this product is summarized in its name. Few will want to continue inhaling a dry powder when instead they can breathe a soft mist. Other products that you'll soon see emerging from our Skunkworks division include: one, a once-daily inhaler; two, PRN inhalers; three, even better pills than the once-daily ralinepag; and four, more IPF and PAH products than I can really discuss in a mass call like this because they are deeper in stealth mode. But all of these products have long IP. In summary, UT is committed to using relentless innovation and our AI-enabled digital lung model to keep producing the best, most convenient, most effective and safest products in the PAH and IPF space. Operator, you can now open up the line for additional questions.

Our first question once again will be from Ash Verma from UBS.

Great. Sorry about what happened earlier. Just on like the TETON 1 data coming up, I wanted to get an understanding of the level of confidence you have in the IPF study outcome versus how you're feeling about TETON 2. And secondly, just wanted to get the latest on the impact from Yutrepia if you're starting to see any type of patient add or competitive dynamic on the DPI or the nebulizer.

Okay. Thank you, Ash. Thanks for the question. So the first part of your question about TETON 1, we will have answered by Dr. Leigh Peterson. She is in charge of product development and in charge of the team that's running the TETON trials. And then after she finishes answering your question, then the second part of your question will be answered by Mike Benkowitz relating to marketplace dynamics between us and Yutrepia. Dr. Peterson, could you please start?

Yes, I want to reiterate our enthusiasm about the TETON 2 results and our confidence in their potential to translate into success for the TETON 1 study. The baseline characteristics of both studies are quite similar, which increases the likelihood of translating the findings. The strong outcomes we observed in TETON 2, including a significant positive result on the primary endpoint related to FVC, bolster our confidence. Specifically, we noted an improvement in absolute forced vital capacity of 95.6 milliliters, along with meaningful advancements in our secondary endpoints. Given these excellent results, we anticipate similar outcomes from TETON 1.

Perfect, Dr. Peterson. Thank you so much. Mike, I'm not sure how much they heard of the earlier discussion. So if you could just respond to Ash's question as you think.

Yes. So Ash, I think you were asking about just kind of the competitive dynamics between us and Liquidia. So what I'd say is Tyvaso remains the well-entrenched market leader for inhaled therapy in pulmonary hypertension. The healthcare providers consistently affirm UT's leadership position in this space. As we said, there was initial curiosity to evaluate a new market entrant, but the doctors are recognizing that the advantages of Tyvaso DPI is easy and importantly, consistent delivery in just one breath is important. Our primary market research insights and underlying demand trends support this. What we're hearing and seeing is that the belief in Liquidia's unsubstantiated claims of higher dosing, less cough, better lung deposition, lower effort is definitely weighing. Our referrals have been at pre-Liquidia launch levels in three of the last four months. Our prescriber breadth and depth and patient retention is at or better to where it was before Liquidia launched. Now what we have seen is the patient starts have lagged these trends a little bit. I think that's primarily due to the typical Q4 seasonality we see as well as just kind of the cross-country severe weather we experienced in January; however, that log jam really seems to have broken in February based on what we've seen in the last three to four weeks. And I would say if these trends continue, you'd expect to see us return to sequential revenue growth no later than Q2.

Our next question comes from Roanna Ruiz from Leerink Partners.

So I thought it was a really interesting update on the soft mist inhaler product. And I was curious if you could talk a bit more about the human-based studies you've done so far and what additional features you've been optimizing for this product? And how you think physicians will react in terms of prescribing it if it's fully available and commercialized?

Yes. Thank you for your question. I believe physicians will be very pleased with it. As indicated by its name, it's a soft mist rather than a dry powder. Physicians will appreciate this because patients will benefit as well. I think it will be equally effective, so why not have a product that performs just as well but is easier for patients to use? We have just revealed this today during the call, which is really exciting news. Many details will not be shared publicly, but I want everyone to know that we will file for approval this year and plan to launch next year. Given the timeline, it was important for us to introduce the product now, but the various competitive advantages will remain confidential until after we receive FDA approval.

Our next question comes from Roger Song from Jefferies.

Great job on the progress, and it's exciting to see those three launches. You confirmed double-digit growth for this year, and Martine, you mentioned a $4 billion run rate by the end of 2027. Can you also elaborate on the softer guidance? Additionally, considering the three new product launches next year, how much will those contribute to the long-term growth, including the $4 billion run rate?

It's a great question. We are strongly committed to achieving that $4 billion revenue run rate by the second half of next year. If you look at our current double-digit revenue growth and project it forward, we expect to reach $1 billion a quarter by the end of next year. This goal doesn't depend on the new product launches, which would be additional benefits. However, these three new products are likely to significantly enhance our revenue beyond the $4 billion annualized rate because we are already experiencing double-digit growth with our existing products, such as Tyvaso DPI, Orenitram, Remodulin, and Unituxin. The new products we have are not just similar to existing offerings; they are truly exceptional. For instance, we have an inhaler that dramatically reduces coughing, a once-daily super prostacyclin, and a groundbreaking treatment for IPF, which surpasses anything previously approved by the FDA for this condition. We're very excited about this, and I believe that the $4 billion revenue run rate represents a turning point for more significant revenue growth.

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

Congrats on the progress. Maybe given your excitement for ralinepag, what are the most important outcomes that we should be looking at when we see those data? Is it on PVR, 6-minute walk, time to worsening event? Kind of what do you think will resonate most with physicians in addition to the dosing benefit to drive adoption there?

Yes, we are very enthusiastic about these scientific inquiries. Dr. Peterson, who oversees Product Development, has been involved in this trial for seven years, since it began before COVID and continued through the pandemic. She has an exceptional understanding of the comprehensive therapeutic benefits of this super prostacyclin. Leigh, could you share your thoughts on what we can anticipate from this super prostacyclin and what aspects you believe physicians will find valuable?

Yes, absolutely. What Martine mentioned is crucial concerning the strength of this drug. It attaches to the IP receptor very securely and has a long half-life, which supports once-a-day dosing and possibly better tolerability. That's certainly a plus. Additionally, we are eager to observe the statistically significant and clinically relevant improvements regarding clinical worsening compared to placebo. As you are aware from our previous studies and this one, we define clinical worsening with specific criteria, and observing a decrease in hospitalizations and mortality would be an excellent outcome for this product. As Martine stated, we will be unblinding next week, and we are very excited to share those results.

Thank you so much, Leigh. Really appreciate it. Operator, I'm getting inputs that other people are being dropped on the call, so we can close the call at this time.

Ladies and gentlemen, at this time, we will close today's conference call. We 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. We thank you for joining. You may now disconnect your lines.