Participants

Martine Rothblatt; Founder, Chairperson, and Chief Executive Officer; United Therapeutics Corp

James Edgemond; Chief Financial Officer and Treasurer; United Therapeutics Corp

Michael Benkowitz; President and Chief Operating Officer; United Therapeutics Corp

Leigh Peterson; , Product Development and Xenotransplantation; United Therapeutics Corp

Joseph Thome; Analyst; United Therapeutics Corp

Roanna Ruiz; Analyst; Leerink Partners

Andreas Argyrides; Analyst; Oppenheimer & Co., Inc

Jessica Fye; Analyst; JPMorgan

Ash Verma; Analyst; UBS Equities

Presentation

Martine Rothblatt

In 2025 we expect FDI action on our recently submitted pre market approval application for our centralized long evaluation systems or see less ex-vivo lung perfusion technology.
Beyond our record-setting commercial performance, we expect a steady stream of clinical data readouts and regulatory actions through the next 36 months, setting our company up well for continued growth through the balance of the decade.
Our revolution wave is also making tangible progress toward reality. With our Phase one study for Mirel, liver E lap now underway the first clinical study of a bioengineered organ alternative.
We expect data from this initial safety study in 2025. Also within our revolution way, we recently received feedback from the FDA regarding our IND for new kidney 10 gene, added xeno kidney and we expect to track to file our IND shortly for what will be the first clinical study of xeno organ.
We look forward to sharing more details on our clinical trial design and commercial opportunity in the future.
Following acceptance of our IND. To close, I want to reiterate that our momentum is strong and growing. We have double digit revenue growth from our thriving commercial business.
We have several important data reads and potential regulatory decisions over the next 36 months, and we're moving into the clinic with revolutionary organ alternative technology. In short, there is no other biotech with the vision, grit and determination as United Therapeutics.
I'll now turn the call over to Chief Financial Officer and Treasurer, James Edgemond. To give a summary of our recently completed an accelerated share repurchase program and our capital allocation priorities.
James.

James Edgemond

Thank you, Martine.
I'd like to provide an update on our capital allocation strategy, specifically regarding our accelerated share repurchase program or ASR that was announced in late March 2024, earlier this year.
As you recall, we entered into an ASR agreement with City to repurchase $1 billion of UTH common stock. During the third quarter city successfully completed the overall ASR program, having repurchased a total of approximately $3.5 million shares at an average repurchase price of approximately $282, which repurchase shares we are currently holding as treasury stock on our balance sheet, the approximately $3.5 million repurchased shares represent approximately 7% of our outstanding shares as of the program initiation to date.
Despite this overall reduction in new team's outstanding share count, liquidity in our stock has increased as reflected by our average daily trading volume being at its highest level ever through the end of September.
Since the program's announcement in late March 2024 for our stock appreciated 47% through September 30th.
The completion of this ASR program demonstrates our commitment over the last 12 months to all of our capital allocation priorities.
First through our innovative clinical development pipeline as well as CapEx to support our DPI manufacturing facility in North Carolina.
And our clinical scales, you know, transplantation, DPF facilities in Virginia and Minnesota. Second, through the acquisition of iveeva and Merrell matrix, as well as a licensing agreement to support our small molecule business.
And finally, through successful completion of this ASR. Looking ahead, we remain committed to all three capital allocation priorities, which in order are first to invest in our commercial and R&D opportunities to P and L spend, as well as capital outlays for our commercial and clinical facilities.
Our second priority is to pursue intelligent business and corporate development opportunities that enhance our rare disease focus and complement our work in alternative initiatives like bolt-on M&A and in-licensing opportunities. In our third priority to return capital to shareholders like share repurchases. And we'll continue to consider all three priorities when deploying our financial capital.
Our healthy balance sheet and robust cash flow generation driven by our growing commercial portfolio enabled us to continue to pursue these capital allocation priorities in a thoughtful manner.
Moreover, we remain in a strong position to meet our mid and long term goals that set ourselves up for future growth across our innovative pipeline with time-based so in pulmonary fibrosis and relented, PEG and pulmonary hypertension and our revolutionary organ alternative program.
On a separate note, in the third quarter, we recorded under selling, general and administrative expenses, a litigation accrual of $65.1 million in connection with a potential judgment in the Sandoz case.
While this liability could be adjusted up or down in the future. As this litigation progresses, it should not be considered a recurring expense.
I'll now turn the call over to our President, Michael Benkowitz, who will give an overview of our commercial performance.
Michael.

Michael Benkowitz

Thank you, James, and good morning, everyone.
Today, We are excited and pleased to report another quarter of record-breaking revenue, achieving a remarkable $749 million, which represents a 23% growth from the third quarter of 2023, achieving this $3 billion revenue run rate just to eight quarters after surpassing the $2 billion run rate mark, a significant milestone for our company, something we have been really focused on hitting since the beginning of the year.
Before I provide the usual product performance overview, I want to express my thanks and congratulations to my fellow unitary ends for their incredible efforts and success. Total revenue for the third quarter was $434 million, marking a 33% increase over the previous year.
This gross growth was driven by continued uptake of today, so DPI growth and utilization by PH-ILD patients, an increase in pricing and enhanced commercial utilization following the implementation of the Part D redesign provisions under the inflation Reduction Act today, so has solidified its position as the number one prescribed process cycle treatment in the US across both nebulizer and dry powder inhaler delivery systems referral and start patterns remain very robust and the franchise side, record commercial and total patients reinforcing our confidence in the durability of our growth profile.
We're also seeing the benefit as a sales force expansion and realignment that went into effect at the beginning of this year. Through the third quarter, we have grown our prescriber base by almost 15%, while still maintaining prescribing depth measured as those physicians with three or more database of patients.
40% of these new personal prescribers, RILD. physicians, which is important to grow the PHILD market and eventually the IPF and PPF markets if our clinical trials and those indications are successful.
We also reported record revenue for Orenitram at $113 million for the third quarter, representing a 23% growth from the same period last year. This increase was driven by increased demand, higher commercial utilization and pricing adjustments. As what today referral and start patterns remain strong and we ended the quarter with a record number of commercial and total patients.
We are seeing increased utilization of the expedite conduction protocol or PA 8 patients initiate Treprostinil therapy on Remodulin and then transition to Orenitram. Overtime, we could see the average Orenitram dose per patient increase as patients are able to reach a therapeutic dose more quickly with this approach. Worldwide revenue for Remodulin was $128 million, a slight decline of 2% from last year due to international order timing.
However, US revenue grew by 3% year over year, setting a new record for total U.S. patients on therapy. And for the first nine months of the year, U.S. Remodulin revenue was up about 12% from the same period in 2023, reflecting the continued strength of the brand despite competition on multiple fronts. Looking deeper US Remodulin patterns remained very strong.
Remodulin remains the most prescribed parenteral prostacyclin in the U.S. with sustained demand for both intravenous and subcutaneous administration.
And this comes five years after the first launch of a generic version of Remodulin. Finally, Unituxin also achieved record revenue of $61 million for the third quarter of 19% from the prior year quarter. U.s. revenue for Unituxin was $58 million, driven by both price and volume increase increases. This growth demonstrates the product, strong market presence presence and the effectiveness of our commercial strategies.
To wrap up, we are extremely proud of our achievements this quarter, driven by strong performance from each of our commercial products.
We are well-positioned to continue providing these important medicines to our patients and delivering value to our shareholders.
Martine, I'll turn things back to you to run the Q&A.
Martine just audible.
We have lost connection with Martine.
Okay.
Yes, on the Q&A.
Operator, can we have our first question, please?

Question and Answer Session

Operator

(Operator Instruction)
Our first question comes from Joseph Thome with TD Cowen.
Please go ahead.

Joseph Thome

Hi there.
Good morning and congrats on the progress and thank you for taking my question.
Maybe a little bit of a follow-up to the expedite question. We have heard since winner Barron's launch that some patients are able to deescalate from Remodulin onto oral Orenitram.
I guess is this something that you are seeing? Obviously your interim was strong in the quarter and patients that do kind of trade-off of Remodulin onto the Orenitram.
Are they going to higher doses like what we are seeing in an expedited?
Maybe how would you expect this to impact the revenue line maybe going forward? Thank you.

Martine Rothblatt

Okay.

Michael Benkowitz

So yes, I'll go ahead,

Martine Rothblatt

Mike on yes, Michael, go ahead.
Michael, can you take that might change your backlog, I guess?

Michael Benkowitz

Yes, I think key parts of that question, Joe, thanks for the question.
I think on the first part in terms of the touch, but I guess the down titration offer module into Orenitram, I wouldn't say this is a trend yet, or I guess a widely used practice.
I mean, we have heard about it, the margins that there's some some patients are able to do that.
But I think the jury's still out on whether that's going to become like a widespread track.
I would point back to kind of how to Remodulin performance during during the quarter, which is certainly showing that of that program is continuing to grow.
And there's certainly still place for Remodulin and process and parenteral prostacyclin therapy and PH regarding expedited and the transition from a module into Orenitram.
And the short answer to that is, yes, we do expect higher doses with Orenitram as a result of the expedite protocol.
We're seeing it's a higher average dose, right? You will because the ideas that you start a patient on Remodulin, you titrate them up to, you know, a range of one dose and then are able to transition them over to Orenitram and you're able to get them up to a therapeutic dose in some cases as soon as a month.
But I would say I'm kind of a one to two month range, which would normally take if you're starting to Novo, could take up to six months.
And then from there, depending on the patients to how the patients doing, you can continue to titrate up.
So as a result of that, as we see some more patients coming to Orenitram from Remodulin, we're going to we're going to see that average dose for I read it at a rate trend to continue to tick up over time.

Joseph Thome

Thank you, Michael. Great answer.

Martine Rothblatt

Next question, please.

Operator

And the next question comes from Roanna Ruiz with Leerink Partners Inc.
Please go ahead.

Roanna Ruiz

Morning, everyone. So I noticed that the nebulized heavy, so had pretty robust growth in the quarter along with DPI.
I was just curious if you could elaborate on that some of the drivers behind that? Did that included some new patient starts? And with a piece of that, where at if you're observing, are there more patients transitioning from nebulizer to deep guy eventually.

Martine Rothblatt

Thanks Roanna. Michael, you definitely have almost knowledge of us on that.
So, if you could answer.

Michael Benkowitz

Sure. I think some of the growth of some of the year over year growth in the nebulized today.
So as a function of some of the destocking that we saw last year and so that maybe explain some of the delta.
But I would say generally from a training standpoint, I think we've reached kind of a really nice kind of steady state in terms of the mix of DPI. and nebulizer.
It's roughly two-thirds one-thirds in favor of DPI. and we're starting to see some really both of those growing, I would say, transitions back and forth between the product nebulizer, DPI. nebulizer, it's pretty marginal at this point.
And we are seeing some of that, but not a lot. I mean, I think we saw when we launch into DPI, we did see obviously a significant number of nebulizer patients transition over to the DPI but that's largely played out.
So it's really, I think, more case by case how is the patient doing on one delivery system versus the other than the nice thing about our portfolio is the doctors can toggle back and forth as two depending on how the patient is doing.

Martine Rothblatt

Perfect.
Again, thank you so much Michael.
Operator, next question

Operator

From the next question comes from Andreas Argyrides with Oppenheimer & Co., Inc
Please go ahead.

Andreas Argyrides

Good morning and thanks for taking your questions and congrats on another solid quarter on.
We have some couple of capital allocation questions.
Just one or two parts here, but can you talk about COVID? So integrates with EPR manufacturing capacity needs to support IPF, we'll additional investment into new to take place.
And then along the share repurchase program, how are you thinking about potential compared to any other program are especially given the lead up into the IPF things?

Martine Rothblatt

Okay.
Thanks for those questions.
And by the way of thanks to Oppenheimer as well for convening a Rare Disease Day that will be very proud to present at our whole community appreciates that those two questions are best addressed by James.
So James, can you take it from here?

James Edgemond

Yes. Thanks, Martine.
So Andreas, it's good to hear your voice this morning.
On your first question, which I think was on capital allocation, but really related to production of DPI relative to an approval in IPF.
And we do not expect them to have a limited differently.
We expect to be able to support an approval of IPF with DPI.
So our production facility in North Carolina, which we talked about previously, a $500 million investment in a new manufacturing facility for DPI. And the thinking of expanding that on manufacturing capacity was not only to continue serving the existing patient population, but the in a strong position to support new indications, they would use DPI going forward. So we don't expect to report that don't expect any shortages or anything like that going forward at all.
The second question with respect to the share repurchase, as I mentioned in my opening remarks, we did do the $1 billion ASR in 2024, which was completed in September.
And as I also mentioned, over the last 12 months, we've actually demonstrated our commitment to all three capital allocation priorities on to various opportunities.
And going forward, we're going to continue to thoughtfully evaluate the deployment of capital in all our capital allocation priorities going forward.
So investing in ourselves in our facilities, thoughtful corporate development, but also through potentially as ours.
But again, at this point, more not calling specifically out and enhance our going forward.
But it's going to be in our catalyst going forward as we look at all our capital deployment. Smart Team, back to you.

Martine Rothblatt

Okay.
Thank you, James. And so I love how you covered all 360 degrees that question.
Excellent.
Operator, next question.

Operator

And the next question comes from Roger with Jefferies.
Please go ahead.

Congrats for the quarter and thank you for taking our question.
Maybe my question relates to the margin and your heels and putting reaching at the finished goods kind of steady state with a slight goes that grows.
Just curious about the nuance between IV versus subcu against the generic. And then should we see some of the growth from here?
Thank you.

Martine Rothblatt

Okay, Roger, thank you for your question in the compliment on the log border and Jeff thank you also recognizing the growth in the Remodulin patients.
I think Mike would have all of the answers for There just seems as his fingers to the questions you asked, Michael.

Michael Benkowitz

Sure.

Martine Rothblatt

Thanks.

Michael Benkowitz

Thanks, Martine.
Thanks for the question, Roger.
So with respect to Remodulin, I mean, I think we have some Eversense.
We are on the cusp of generic launch, been very confident about the durability and resilience of the brand through generic competition and then even through the introduction of other our medicines and NPH, I think if you said you talk to doctors today, they still think that one of the best drugs that we have at our disposal to treat pulmonary hypertension patients.
I think the limitation of it being more widely used as one is patients are a little bit reluctant to go on a pump before they have to and are there options available.
So naturally that it was I want to tie in experiment or uses less invasive options before moving to some leading moving to a logic. But PAH is a progressive disease. There is no cure. And so we believe that really almost all patients at some point are going to need parenteral prostacyclin.
So that's really why over time, we've been very, I think, content and the durability of the Remodulin product, and we continue to feel that that will be the case going forward.
And so as we as we look out into the future, we continue to believe that it will continue to perform at current levels.
As we talked about what I think Joe's question, I mean, I could see some toggling back and forth between Remodulin on Orenitram, starting out Remodulin, go into a Renterghem living up to any trend.
But even even those patients at some point, they need may need to go on on our module.
And so you may, you mentioned, may see some variability there over the next few years as the expedite approach continues to take hold.
We have another We have another trial that is about to complete called called the hardest and study where it's similar to expedite that we're starting a patient on Remodulin.
We're actually keeping them on for a longer period of time and the ideas that we're able to return the hemodynamics to a normal level and then transition this point patients over to Orenitram as a maintenance drugs.
So, we continue to feel very strongly that there will be a place for Remodulin, the PH armamentarium now and in the future.

Excellent Mike, I love when you use the word armamentarium, should that describes this product is one of my new sales efforts?

Michael Benkowitz

Yes.
Well, you know by but the bulk side.
Perfect.

Martine Rothblatt

Operator, your next question?
Yes, the next question comes from Jessica Fye with JPMorgan.
Please go ahead.

Jessica Fye

Great. Good morning guys, and thanks for taking my question and congrats on the it sounds like some favorable pre-NDA feedback for the 10G at 18 a kidney.
Can you elaborate on some of that free I and the feedback you got from FDA and we talked about how we should think about the design and goals for initial clinical trial?

Martine Rothblatt

Sure, Jessica.
And so nice to hear your voice this morning as well, how we have on our call, Dr. Leigh Peterson, she's in charge of Volcano transplantation.
So Lee, could you address Jessica's question?

Leigh Peterson

Yes, Thanks for the question.
You're right, we did receive them PIND feedback from the FDA on kidney, which is that changing at an in-person Zeno kidney and where we're working very hard to submit that IND shortly, and we did propose them. They you know the clinical study design we had. We had a few proposals there.
But unfortunately, we haven't I mean, we really don't like to share offset all of the details until it efficiently cleared by FDA in which is in OI. and declare.
So we're really looking forward to sharing that design with you later, but we need to get that I and declared first.

Martine Rothblatt

Thank you so much.
The great answer.
Operator, next question, please.

Operator

The next question comes from Ash Verma with UBS.
Please go ahead.

Ash Verma

Okay, Thanks for taking my question.
So I just good to see you get to the $3 billion annualized revenue run rate.
I know you had previously outlined this goal of reaching $4 billion run rate again, 2025.
Are you still on track to get there?
And then secondly, in the last quarter you made a mention and of potentially bidding contracting.
I know the competitor launch has since then been pushed out to me next year, but have you already rebate Symbol copier business preemptively?
Thanks

Martine Rothblatt

Okay. So, maybe best on would be to have Mike talk about the competitor environment. And with regard to the revenue run rate of it is actually quite amazing that than we have doubled from $1.5 billion to $3 billion revenue run rate.
So rapidly, as we've mentioned throughout the call and the earnings release and actually as we've been forecasting for the past several quarters, we feel very comfortable continuing our double-digit annual revenue growth based on all of the products that we have in our portfolio and already approved and then in the pipeline and then with the off three waves that we talked about.
So if you just do the math, you know you've taken three bill revenue run rate that we keep growing at double digit rate down very quickly.
You will be able to get to a four, five, six and beyond our revenue run rates and that's what we're targeting.
Mike, can you talk about the competitor environment question

Michael Benkowitz

Sure your question was specifically around some of the payer contracts we've entered into or in the process of that area and to so we did have some that just started.
This is mainly on the Part D side where we have with the Part D payers where we had would tip historically have not contracted. So, we had a couple of that went effective July first.
We have a couple I think that kick at October first and then I think one or two one that kicks in January first.
So by January, first of all they will all be there already in place. So, we did we did see a little bit higher gross-to-net, Optika, DPIQ. three.
But as you can see, we are clearly have a kind of go through that.
We think entering into these contracts now positions us very fleet favorably for when a competitor comes on the market because we will, at that point, have of rebate dollars already flowing through the payers and we have parity and not disadvantage language.
I think they're going to be reluctant to just turn those off overnight. And so, we thought it was important to kind of get those get those contracts in place. And I will I just have to give us a really big shout out to our market access team. They did a phenomenal job negotiating these contracts are really, I think, negotiate them negotiating them on terms that are very favorable to United Therapeutics.

Martine Rothblatt

Perfect.
Thanks, Michael.
Operator, we have time for one last question.

Operator

We are note not showing any further questions at this time.

Martine Rothblatt

I think similar, we blow them away fantastic as well.
Just to wrap up here on, as we mentioned at the beginning, United Therapeutics is a very strong momentum story as a bit of science.
Nerd like to point out that momentum is a massive times velocity and our mass is truly formidable. We have a huge fault of intellectual property. We've got over 1,000 on top of their game science, marketing and allied health professionals among our employee base and others have pointed out that we have a fortress balance sheet.
So, all of that is a on is really, as Michael would say, an armamentarium of masks.
And then in terms of velocity duty really prides itself is moving at an entrepreneurial speed and the speed that we're moving in is in the direction of ever greater innovation and then ultimately a revolutionary, a revolution and our manufactured, Oregon and organ alternative products.
Thank you so much for participating in the call today, and I'll turn it back to the operator to wrap it up.

Operator

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.