Good morning, and welcome to the United Therapeutics Corporation Fourth Quarter and Full Year 2021 Earnings Webcast. My name is Emma, 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 this earnings call.

I will now turn the webcast over to Dewey Steadman, Head of Investor Relations at United Therapeutics. .

Good morning, and thank you, Emma. It's my pleasure to welcome you to the United Therapeutics Corporation Fourth Quarter and Full Year 2021 Earnings Webcast. 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; Pat Poisson, our Executive Vice President of Technical Operations; and Dr. Leigh Peterson, Senior Vice President of Product Development.

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 these forward-looking statements. Today's remarks may also include financial measures that were not prepared in accordance with U.S. generally accounted -- generally accepted accounting principles.

A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in our earnings release available on our website at ir.unither.com. 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 these products are available on our website. Now I'll turn the call over to Dr.

Rothblatt for an overview of the fourth quarter and full year 2021 financial results and business activities of United Therapeutics. Dr.

Rothblatt?.

first, our once-daily treatment for PAH, ralinepag, is progressing nicely toward wrapping up its Phase III enrollment. Second, our Phase III PERFECT trial, which is testing a first-ever treatment for COPD-related pulmonary hypertension is steadily racking up more patient randomizations month-by-month toward completion of its Phase III trial.

Our revolutionary disease-modifying effort of idiopathic pulmonary fibrosis, or IPF, which we call the TETON trial is doing so well in its U.S. Phase III enrollment that we opened up a TETON 2 Phase III trial outside the U.S. so that we could hopefully offer this product worldwide.

Our super convenient Tyvaso DPI product remains well positioned for its summer 2022 launch. The FDA did just delay its approval decision from this month to May, but that 3-month detour is not important compared to the product's blockbuster revenue potential and patent life well into the 2030s.

Three-months delay to start on a billion-dollar revenue trajectory is no big deal. Mike will now brief you on our commercial progress. But in summary, for 2021, I can say we hit our patient growth and revenue growth targets. We validated three new xeno-organ product candidates. And in so doing, we've launched a whole new category of biotechnology.

We have 7 Phase III trials underway with multiple new product candidates. And most important of all, in this past year, I'd like to say we saved the life of Mr. Bennett with a 10 gene xenoheart. We saved the life -- the live, sorry, we saved the lives of at least 100 children stricken with neuroblastoma, thanks to our Unituxin medicine.

We have now saved over 200 lives of lung transplant patients by increasing the usable donor lung supply with our lung bioengineering technology. And we have saved or improved the lives of thousands of pulmonary hypertension patients in the past year with our Remodulin, Remunity, Tyvaso and Orenitram products.

From the headline saving of one life to the kind of like prayers granted saving of 100 children's lives to the now almost routine saving and improving of thousands of lives, I can most confidently report that UT's first year as a public benefit company has been super true to our public benefit purpose.

Mike, can you lead us off now with commercial operations?.

Sure. Thanks, Martine, and good morning, everybody. As Martine said, we're very pleased to have posted double-digit revenue and patient growth for the full year of 2021, ending the year with more than 10,000 patients on one of our treprostinil therapies.

This quarter, I'd like to dive into the underlying performance of our three treprostinil products, Tyvaso, Remodulin and Orenitram.

As usual, I'm going to focus more on our patient metrics, and I'll remind everyone that our quarterly treprostinil revenue does not always track exactly with quarterly underlying patient demand due to our specialty pharmacy partner ordering patterns. So I'll begin with Tyvaso.

As you may recall, in early 2021, we established a goal to double the number of patients on Tyvaso from approximately 3,000 when the PH-ILD indication was added to the label to 6,000 by the end of 2022.

This assumes no COVID-related impacts to physician access and patient initiation of therapy and importantly recognizes that our path to doubling may not be linear. The fourth quarter was our third quarter of the PH-ILD launch.

And in this quarter, we had the highest number of Tyvaso referrals, which is what we call prescriptions since launch, and we added close to 300 patients to our Tyvaso active patient census. Our new patient starts were less than Q3, which is common in the fourth quarter as many patients opt to wait until after the holidays to begin advanced therapies.

Our specialty pharmacy partners are working to clear this backlog and get these patients started on therapy during the current quarter. We continue to anticipate a CMS coverage decision regarding Medicare reimbursement for Tyvaso and PH-ILD any time between now and May of this year.

All the necessary steps have been completed, including the close of a public comment period last year.

We can't predict the timing of this coverage decision, but in the meantime, federal health care patients still have the opportunity to apply to our patient assistance program to access Tyvaso therapy prior to the coverage decision if they are eligible. We anticipate three core drivers for continued Tyvaso work over the next several quarters.

I think I mentioned these on the last call. First, we think the CMS coverage decision in PH-ILD will be a driver for Tyvaso growth through the middle of this year.

Even though federal health care patients may apply for our patient assistance program, we are hearing through the channel that many physicians are simply waiting for CMS coverage before prescribing Tyvaso in their PH-ILD patients.

Second, we continue to grow the Tyvaso prescriber base, particularly among ILD treaters, and expect to see continued growth in prescriptions from these physicians over the next two quarters and beyond as we continue our outreach and educational efforts in this space.

Up until now, the vast majority of Tyvaso prescribing has come from historical PAH trial. So there is a lot of as yet untapped potential in this area. And finally, we view the upcoming Tyvaso DPI approval as an additional catalyst to Tyvaso growth.

While we would have been thrilled with an FDA approval for Tyvaso DPI this week, as we said on our Q3 call, we've been assuming a launch by summer of this year. So nothing's really changed in that regard. In the meantime, we are completing our launch preparations, and we will be ready to launch immediately upon approval. Moving to Orenitram.

We saw yet another quarter of record patient accounts during the fourth quarter. As we've discussed before, we believe this uptick is driven by the FREEDOM-EV label expansion now that we're able to have more robust interactions with prescribers about the data.

And finally, we're pleased with the continued strong performance of Remodulin despite the launch of a generic form of subcutaneous treprostinil last year.

That generic launch has continued to play out closely with what we saw with the IV generic launch in 2019, with an initial bolus of patients, primarily those dual-eligible Medicare Medicaid patients transitioning to the generic treprostinil trickling down to an immaterial number of generic transitions in recent months.

The feedback we've received on our Remunity pump has been quite positive in our early launch efforts. As part of that feedback, we learned that the pump's alarms, can, in some cases, be overly sensitive. To be clear, the issues we're seeing with the alarms are not safety issues.

But to ensure that physicians and patients have an awesome experience with the pump, we recently paused the introduction of new patients Remunity, while we work with our partner, DEKA, to optimize the alarm profile. We just completed final testing of the new alarm system.

Everything is working as expected, and we will recommence our Remunity rollout next week. To wrap up, we're pleased with the progress with Tyvaso in PH-ILD. We look forward to a CMS coverage decision in May or earlier.

Likewise, we're on track to achieve our 6,000 patients on Tyvaso by the end of the year, and we're pleased with the continued momentum for Orenitram. Finally, we think that our Remodulin revenues will remain robust despite generic competition, especially once we recommence the introduction of new patients to the Remunity pump.

And with that, I'll turn the call back over to Martine..

Thanks so much, Mike. Super exciting about the Remunity breakout next week. Awesome. So operator, I understand that you probably have some people in queue and feel free to bring them on..

Your first question today comes from the line of Joseph Thome with Cowen and Co. Your line is now open..

Good morning and thank you for taking my question and congrats on the progress. Maybe just on the Tyvaso DPI request by the FDA.

Are you able to provide a little bit more information as to the type of information that you submitted? And then in terms of the safety profile you've seen with Tyvaso DPI to date, some high-level thoughts there, especially as it relates to potential for bronchospasm? Thank you..

Yes. Thanks Joe. We've really had some absolutely great experience with the Tyvaso DPI to date, and we have not experienced those bronchospasm side effects that you referred to. So we really don't believe that that's going to be an issue at all.

The -- there is some more information in the press release if you look down towards the second-or-so page of the press release. Be a little bit more information there about the submission and what was admitted and not submitted. So I think it's all really quite routine and the FDA doing their job as best that they can.

As I mentioned in my introductory remarks and as Mike emphasized in his remarks, three-months is really meaningless in the context of this product's life. This product has a very long patent life. It is an amazing product. I mean it's so convenient and easy for the patients to use. We have the great results of the BREEZE trial.

It's going to end up being used, I'm confident, by thousands and thousands. And over the course of its life, like, 10,000 more or more patients. It's just an amazing product. So it will get out there. Everybody just has to make sure that, like all the boxes are checked and the Is are dotted and the Ts are crossed.

And as Mike said, we feel confident with the launch by the time frames that we've previously guided everyone to..

Thanks for the question and operator you can bring up the next one..

Your next question today comes from the line of Eun Yang with Jefferies. Your line is now open..

Thank you. Another question on DPI.

Once it's approved, does it need to go through a CMS approval process similar to the PH-ILD indication for Medicare coverage?.

Thank you, Eun. So nice to hear your voice this morning. I think we have a lot of experts on our call, but I think Mike Benkowitz would be the best person to respond to your question.

Mike, if that's okay?.

Sure. Happy to take that question. So there is a seamless approval process that will need to happen or review process that will need to happen with Tyvaso DPI, but it's different than what we're experiencing with PH-ILD. So for PHI -- sorry, for PH-ILD.

So right now, PH-ILD is approved for use with our TD-300 nebulizer, and it's covered in the medical benefit or Part B side -- B as a boy side of Medicare. The DPI will be a pharmacy benefit product, so covered in Part D. So the process is a little different.

So while Medicare is reviewing the data, reviewing the product for coverage, patients can still access -- federal health care patients can still access DPI. The physician simply has to go through an appeal process, and they're accustomed to doing this.

They have to do this often with products that aren't on Medicare formulary, and it's just an extra step they have to go through it and then it gets approved. So we won't see this -- we won't see the same issue we're seeing with PH-ILD where we have this hold up with the DPI.

Those will continue to go through with doctors, like I said, doing this additional step of a dealing..

Perfect, thank you so much Mike. .

Your next question today comes from the line of Jessica Fye with JPMorgan. Your line is now open..

Good morning and thanks for taking my question.

Curious what proportion of Tyvaso patients are currently on free drug and what are the next clinical or manufacturing milestones we should look out for in the organ transplant business? And what results in your mind would justify ungating the potential investment in the first GMP or GMP-like manufacturing facilities for those products?.

Great, Jess. So happy to hear you on the call. We think of you as one of the KOLs of pharmaceutical analyst. So it's always exciting to hear your voice here. I think the first part of your question is probably best answered by Mike. And then, Mike, if you bounce it back over to me, I'll then talk about the xeno aspects of Jess question..

Sure. This question has come up, I think, a couple of times over the last year. So as a baseline, -- there's always a small percentage, I would say, kind of low to mid-single-digit percentage of patients that are in our patient assistance program at any point in time.

What's the -- we need to wait for the CMS coverage decision on PH-ILD, that has continued to increase. And so I think on the last call, I had reported that it was getting up into kind of the higher single digits about to cross over into double digits. We've now crossed over into double digits.

So it's in -- it's double-digit percentage of patients, but it's on the low end of double-digit percentage. .

Perfect. .

That's great, Mike. Jess, it's really interesting, the launch of these new xeno products. And we have in our call, in fact, Dr. Peterson. She is our Senior Vice President for Product Development, and she will be leading the effort now to take those products through their clinical development process.

We also have on the call, Pat Poisson, who is our Executive VP for Technical Operations; and then people underneath him, who right now are responsible for our manufacturing on biologic called -- our biologic products such as Unituxin.

They will be responsible for manufacturing this new type of biologic, the xenografts, be they the UHearts, the UKidneys or the UThymoKidneys. So all of that is very much moving into the clinical development phase.

And it's super exciting doing the things like identifying the clinical trial centers, identifying the clinical investigators, putting together the necessary protocol having the meetings with the FDA to get buy into the protocol, the clinical development, our biostatisticians are already computing the necessary clinical trial parameters.

So everybody is kind of rolling their oars in the same direction toward those clinical development and gating milestones for those products. So I think you're going to see all of that in the near term. And in between, you may hear of certain kind of expanded access opportunities that arise, such as with the case of Mr.

Bennett where there's a possibility for a leading surgeon at a leading hospital to uniquely save somebody's life through the unique advantages of these Xenografts. So I think you'll see some of that as well. In the case of Mr. Bennett, there were no other alternatives, and here he is almost two months out, no sign of rejection.

I just could not be more proud of all of the efforts of our group at Revivicor how they were able to carefully splice in all of these different 10 genes to make that heart -- in the words of Dr. Griffith, the transplant surgeon, he keeps telling me, Martine, this heart is a rock star. And this is the guy who's like did the second Jarvik heart.

I mean, he really knows his stuff. And in the words of, for example, Dr. Montgomery at NYU. He is just so impressed with the -- it's hard to get a little bit graphic here, but like the urine produced by the xeno kidney, super, super impressed with it. Dr. Locke, the Head of transplant down at UAB, she's placed her xeno kidneys into Mr.

Parson was one of the seeking donors, orthotopic positions for the kidneys. She's done another similar type of xeno kidney transplant, and in both cases, is just super, super pleased with the outcome. So this xenotransplantation train has definitely, definitely, definitely just left the station.

And I think you're going to see some really exciting ungating of the clinical development and production spending, capital expansion opportunities right up ahead. Operator it looks like we have one more question in line..

Your next question comes from the line of Andreas Argyrides with Wedbush Securities. Your line is open..

Hi, good morning and thanks for taking my question. Before I get into questions, just congrats on the quarter and all the life-saving progress that you've made. It's a true testament to your dedication to it. So we appreciate that, too.

So just continuing on the xenotransplantation, could you maybe give us a little bit more color around how you think? Or what the next kind of major milestone would be in these programs? Is it 6 months out? And then looking at DPI approval, how are you looking at that launch contributing to -- or the potential launch contributing to growth of patients on Tyvaso this year and next year as well.

Thank you..

Thank you so much, Andreas, for the questions. And thank you for the recognition of us doing our best with our public benefit purpose.

Mike, if I could call on you again to answer first the DPI-related question, and then I'll follow up with the xeno-related question?.

Sure. On the DPI launch, as I said in my opening remarks, we'll hear back from the FDA in May, assuming that's an approval and we're ready to go, ready to launch. We have everything in place and ready to go. We'll have inventory, plenty of inventory. We actually had our launch meeting with our sales team this week.

So they're prepped and ready to go, and so we'll be able to really press play on our launch once we hear back from the FDA. And we do think that there's opportunities in both PH-ILD, as I mentioned, to accelerate growth there as well as PAH. So there's really, I think, a lot of excitement and enthusiasm around the Tyvaso DPI.

And I think it really is going to create an opportunity for us to expand the number of patients that we're able to help with prostacyclin therapy and PAH as well as PH-ILD, as I said. So we look at that as being a significant contributor to our March to 25,000 patients by the end of 2025.

As Martine said, it should be a blockbuster drug, that's certainly how we view it, and how we're planning to approach it from a launch perspective..

Thanks so much, Mike. Andreas, with regard to the next thing that you might hear about, it's I think that there is a pretty good likelihood that there will be some sort of an announcement, and again, knock on wood and cross my fingers, Mr. David Bennett Sr. continues to do well at the 90-day and the 6-months mark.

And the reason I call those out is when the FDA looks at clinical transplantation milestones, they put a lot of emphasis on sort of like two weeks, 30 days, 60 days, 90 days and maybe one year.

And we know this because one of our Phase III trials, for example, which relates to the over 200 lives we've saved with our Lung Bioengineering technology relates to getting clinical FDA approval for our second Lung Bioengineering technology, which is in its wrapping up its last couple of patients of its Phase III trial.

And with this type of technology, which is kind of techno speak, it's called ex-vivo lung perfusion technology. The FDA wants to see that the patients who are on our Lung Bioengineering technology do as well at two weeks, four weeks, three months, six months, et cetera, as the patients who don't have the advantage of a Lung Bioengineering technology.

So that same kind of milestone metrics, I think, are going to apply in the xeno context. And our goal would be to show that our xenograft patients, of course, separately for kidneys and hearts, do as well at two weeks, four weeks, three months, six months and the year as would patients who are otherwise similarly matched but have allografts.

Now depending on the organ, the slope is pretty severe, even with something that has been done for decades, like allo heart transplants, you're looking at 80% to 90% survival at one year, which depending on -- if you are looking at the glass half full or half empty, it's like amazing, these lives were saved.

But oh my god, can't we do better and not lose 10% to 20% of the people. And for things like lungs, for example, unfortunately, the curve is worse; for kidneys, it's better. Another advantage with kidneys is you can always back up to have the patient on dialysis.

So that's an advantage, a huge advantage for xeno is that there's pretty much consensus agreement around the experts in the fields that people who are -- who have rejected a previous kidney transplant and have a lot of reactive antibodies in their blood that those do not cross-react with xeno antigens.

So a person who has already had a kidney transplant would have a much, much tougher climb to try to get another kidney transplant but would not likely have the same aggressive reaction to another allotransplant as -- I mean, to another xenotransplant as they would have had a very aggressive reaction to another allotransplant.

So that's kind of a favorable patient category. There's also about 80% of the people who are on dialysis in the U.S. who do not even qualify to be on the kidney transplant list. So that's another huge patient population.

Then there are patients who have been on dialysis for so long that they have actually pretty much run out of access ports in their body for dialysis, and that becomes increasingly problematic for those patients. So there are just many, many different opportunities to insert xenotransplantation into the transplant paradigm.

And we are going to do it, and we're going to follow the same clinical milestones that you've seen. The FDA previously required such as two weeks, 30 days, 60 days, 90 days, et cetera, as for allotransplantation. While I see that we're at the half-hour market -- half-hour mark here. So thank you, Andreas, very much for your questions. Thanks, everybody.

Operator -- or thank you, Dewey.

And do you want me to turn it back to you or to the operator?.

Turn it to the operator..

Okay. Operator, it's all yours..

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. You may now disconnect..