Q2 2022 United Therapeutics Corp Earnings Call
Second generation of revenue kicks in above $4 billion, so going from the $2 billion revenue run rates that we are right now for the $4 billion is accomplished overwhelmingly with just our launch products.
The second generation of revenue kitchen above and beyond that $4 billion threshold, which we should achieve around 2025 with approval of our <unk> studies as the basis of a disease modifying treatments and the first disease modifying treatment for IPF.
Here, we forecast an additional $4 billion in revenue coming from about 40000 patients at roughly speaking $100 per year.
Those kind of numbers, we should be able to close out the 2020 with about $8 billion in revenue annually roughly half from pulmonary hypertension and half from pulmonary fibrosis.
By that time, we will be ready to monetize our organ manufacturing business with thousands of kidneys hearts and lungs, bringing us well over $10 billion in revenue in the 2000 Thirty's. So that organ manufacturing business is the third peak that we would achieve in the years ahead.
In summary at the 30000 foot level, we expect greater than fivefold growth in <unk>.
Now as I've shared where we are and where we're going and where after that let me now turn the podium over to Michael <unk>, our president for more of a deep dive Mike.
Okay.
Our team and good morning, everyone.
Very pleased to have achieved double digit year over year revenue growth in our proportional business and not only that but we reached all time high quarterly revenues for both <unk> and the total <unk> business.
As usual I'll provide some additional commercial color for each of our four main products focusing primarily on our patient metrics I'll remind everyone that our quarterly <unk> revenue does not always track exactly with quarterly underlying patient demand due to specialty pharmacy ordering patterns, which can be seasonal.
I'll start with high Bay, So which saw three similar events in the second quarter.
First we were thrilled to receive FDA approval for <unk> in May.
This is the culmination of years of work by teams at United Therapeutics, and our partners at Mannkind.
We were able to make our first shipments to specialty pharmacies in June and the first patients started on therapy. Shortly thereafter.
<unk> engagement and enthusiasm around this new product is extremely high which has translated into strong referrals, where prescriptions and starts in the third quarter.
Secondly, the CMS coverage update to include <unk>. So for ph ILD that went into effect in early June had a positive impact on new referrals late in the quarter, which leg <unk> DPI continues into the third quarter.
As a reminder, CMS patients who started in our patient access programs before the coverage decision took effect will remain in those programs through the close of the calendar year, and then will convert to commercial patients next year. However.
However, we have been aware that many physicians waiting for CMS.
Waiting for a CMS coverage decisions before referring their Medicare patients for <unk> therapy. So it has been nice to see an uptick here.
Finally, after two quarters of.
Modest patient growth relative to Q2, and Q3 of last year. We added approximately 500 patients to archive ACO total active patient census in the second quarter and I should note. We accomplished this without the benefit of the CMS coverage decision or the Taipei. So DPI approval because these events occurred so late in the quarter. Consequently, we think the moment.
And patient adds we saw in the second quarter, coupled with <unk> approval and the CMS coverage decision and continued growth in new prescribers leave us well positioned for a strong second half of the year and to achieve our goal of 6000 <unk> patients by the end of the year.
Moving to <unk>, we saw yet another quarter of record patient counts as of the end of the second 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 this data.
Over the long term <unk> will continue to be an important part of the ph treatment armamentarium in patients at either prefer oral medications have failed on type of ASO or Warner transition from remodeling after their RV function has normalized.
Turning to our module in the second quarter, we saw the second highest level of our module and referrals ever and relative resilience and stability in the business. Despite the availability of generic competitors. The relaunch of the <unk> pump is proceeding well and we expect for immunity starts in total patients on our immunity to grow over the balance of the year and into 2023.
Finally, unitek and demand remains strong as quarterly shipments from our distributors to hospitals remained consistent with the past few quarters. Our second quarter revenue was impacted by a decline in international ordering as well as order timing and patterns in the U S market.
Overall, we're very pleased with each of our products performance in the second quarter and we look forward to a strong second half of the year, particularly for today. So <unk>.
Martina I will turn it back to you.
Thanks, Mike those are superb results.
So nicely reviewed Bayou operator could you. Please open the line than any questions that come in and I'll be happy to refer them.
The executive on the call.
Area that fits with.
At this time I would like to remind everyone in order to ask a question simply press Star then the number one on your telephone keypad will pause for a moment to compile the Q&A roster.
And your first question is from the line of <unk> <unk> with Oppenheimer <unk> Company. Please go ahead.
Great. Thank you for the question.
Really nice results everyone.
So congratulations.
Now the DPI is approved just a question on generally to get accurate predicts sort of IP portfolio could you key generate more IP over from <unk> that we would hope to see over the next few months and then maybe just talk a little bit about just your IP that you're generating through innovation.
With drug delivery like the immunity and potentially future role in a pack.
Et cetera really appreciate the question.
Yeah. Thanks, so much <unk>, so nice to hear your voice this morning.
So really great question, we have a robust IP program at Ut.
We are very very.
And fortunate to have in house.
E Council who's an expert in the field and he works directly for our General Counsel Paul Mountain.
His name is Sean neither.
Fortunately.
<unk>.
Yes.
Extremely knowledgeable and proficient in the area of biotechnology.
Biochemistry oncology as well.
Doug the bite technology. So he constantly engages in kind of like a round robin set of discussions with members of our product development team drug device.
<unk>.
Chemistry team, Oregon manufacturing team and ends up with a continuous stream of new.
Patent filings.
Especially here in the U S, but also overseas.
So I feel very confident that we will have a major new IP that we will be able to benefit from.
Coming out throughout the balance of this decade.
In every area of our.
Of our business, whether it is pulmonary hypertension pulmonary fibrosis.
COPD organ manufacturing.
Ever we are able to demonstrate something that is unique and.
Innovative and meets all of the criteria for patenting.
<unk> is going to be on that and I think going forward.
<unk> core competency ultimately of EEP is going to be its intellectual property portfolio.
Yeah.
Thanks, So much for the question and operator next question. Please.
Your next question is from the line of <unk> with Jefferies. Please go ahead.
Thank you.
Great quarter I have a question on phases three perfect trial in COPD patients.
Do you modify the trial with the increasing number of patients.
Charter or anything containment period of 12 weeks. So can you give us kind.
Can you elaborate on.
The reason why you changed the.
The study protocol and we did this when we might expect the data. Thank you.
Yes.
Thank you Yang for your question this morning and.
Thanks for joining the call.
So we modified the trial.
Actually just.
Triggered a part of the trial as filed which we had a pre planned opportunities to switch from the crossover design to a parallel design and we were able to make that decision. According to the.
Preapproved protocol defined with the FDA and as preapproved by the IRB at two.
Two or three different points during the trial.
So at each of those points, we would ask ourselves.
Switching from a crossover to a parallel design increase our probability even higher of having a successful outcome and of course always what we are.
With <unk>.
Having the highest possible probability of a successful outcome and when this opportunity arose I guess it looks like two months ago now.
We decided collectively that we switched from the crossover to the parallel design, we will be able to increase our odds of having a successful outcome, even though we probably would've been successful with the crossover, but why why restaurant, probably when you can do it.
Even higher level of assurance, we're all about success here at Ut.
So we went ahead and triggered the preapproved switch from the from the crossover over to the parallel in terms of Gwen.
We're continuing to enroll that study quite aggressively all of the patients from the crossover they flip over into the and for the parallel design.
I think that the study will readout in time to produce the additional patients.
Like I said in my introductory remarks from these pipeline patients our bps.
BPI product pipeline patients are not necessary for us doubling our revenues in the next few years, but they are gravy on top of that so over the next.
It's in the middle of the phase three so within the normal and customary timeframe for completing these phase III studies, we'll be able to complete that study has a parallel design study.
Next question operator.
Your next question is from the line of Joe <unk> with Cowen. Please go ahead.
Hi, there good morning. Thank you for taking my question and congrats on the excellent progress this quarter, maybe just in terms of Thai visa can you comment on the penetration that you're seeing into more traditional ILD physicians.
In that ph ILD launch the <unk> zone should this new CMS Medicare coverage decision in the bps are launched.
Fuel uptake at these physician centers.
Yes, Thank you Jo Super insightful questions and getting really right to the bureau of what's going on in there.
And the very exciting growth figures that we have the high base, though and im going to.
Refer that question over to Mike <unk> to do a deep dive on the answer.
Sure. Thanks, Mark Thanks, Joe for the question.
Yes in terms of penetration with the ph ILD prescriber base, we have seen an uptick there.
In the second quarter, and I think I think the inflection point or the tipping point.
For us with respect to those physicians was really towards the end of the first quarter. This year.
It just seemed that access to our sales reps opened up coupled with the return to in person health care conferences. So we have the <unk>.
<unk> conference in Boston, We had the Ats conference in San Francisco.
Both conference as well attended really gave us an opportunity.
Our teams are a big opportunity to get back out in front of physicians and continuing to talk about.
Ph ILD anti VSO in that indication both on a one on one basis, but also in terms of publications presentations poster presentations.
And I think it really since then.
We're starting to see like I said, a nice uptick.
I think I'd have to go back to confirm this but I believe we added somewhere will increased our prescriber base by about 15% to 20% just in the second quarter alone.
And a lot of that coming from the typical ILD treaters. So.
We definitely see some momentum there and then the second part of your question, we absolutely believe the CMS coverage decision and a DPI will help us continue to penetrate.
And that prescriber base.
As we've said for multiple quarters.
Have heard.
Totally that physicians have been waiting for the coverage decision just to make it easier to get the patients through the reimbursement process and then.
Obviously, what <unk> epi.
A more convenient delivery mechanism. So we think both of those things we'll continue to add and then allow us to continue to grow our prescriber base as we move through the second half of the year.
Okay.
Awesome. Thank you so much operator next question please.
Your next question is from the line of Jessica Fye with Jpmorgan. Please go ahead.
Hey, good morning, Thanks for taking my questions.
Was hoping you could elaborate on where you see near term DTI start coming from <unk>.
How much use over the coming months do you think will come from new starts versus switches from Nebulize tie VSO and also has there been any evolution to youre thinking about the potential eventual mix between Nebulize <unk> DPI <unk> commented on that last quarter.
Can you just remind us of your thinking there. Thank you.
Thank you.
And.
Really interesting questions back to like kind of the heart of the business here. So so cool I'm going to maybe comment on your second question and then I'm going to bounce it over to Mike on your first question. Our view is that there is going to be a kind of leveling out at about 50% 50%.
Between <unk> and.
And tie based so DPI.
<unk>.
It's really very comparable to what we've seen over the years between sub Q and IV.
In terms of parenteral I mean of course, most people would think hello.
Yes.
Of course, most people would think that Q was so much more convenient than IV that everybody would go on sub Q, but that doesn't really work that way and the fact of the matter is depending on People's particular medical conditions.
Ivy is a better solution for them down sub Q and while we are super excited about DPI and confident that.
It is.
Most convenient way imaginable to take Thai base, So I think because of people, particularly medical conditions long term, you're going to see about a 50 50 mix between the net your light DPI form of Thai base, though.
Those comments on your second question I think really the much much more exciting information will come from Mike on your first question Mike.
Sure.
Jeff I think in terms of the mix between transitions and starts.
There is not really we're not really preferring or going after one versus the other.
When we launched in June .
When you get an approval the other some logistical things that have to happen you have to print the wafer at the final label you have to get packaging and you have to get Kevin et cetera, et cetera, and so.
This is just I guess more for your information, we we started off by printing and the maintenance kits for those patients that are already on the nebulizer.
So those were sort of a kit that kind of came off the line first.
A couple of weeks behind that we have the titration packs for patients. So at this point, whether you're on the TV on the nebulizer with CVT 301, our transition you.
You were able to do that.
Either you're a de novo patient and I want to start and you can start on the prostacyclin.
We're able to do that as well so I think as we move through.
The balance of the year I think we're going to see.
I would just expect a rough roughly equal mix of both transitions and new patients.
Thanks, Mike Operator next question please.
Our next question is from the line of Andreas <unk> with Wedbush Securities. Please go ahead.
Yes, good morning, and thanks for taking our question I'm going to piggyback off just as last week.
We recently conducted a farewell call.
Jay expert and he noted that.
And there's a big opportunity for DPI in ph ILD. So if you can provide that mix that you mentioned about 50 50 offered.
For GTS, specifically that would be great and then I'm going to be the focus.
On the pipeline a bit what can we expect next from the organ transplantation programs. Thanks.
Sure.
So yes that.
That 50, 50 split approximately obviously thought exactly.
Across the board for ph, whether group, one or group III.
And with regard to your Oregon.
<unk>, we have two executives on the call.
<unk>.
Our executive Vice President for technical operations, which includes the construction of our <unk>.
Pathogen free facility and we have Dr. Leigh Peterson, who is in charge of our product development with boots are.
Kidney heart programs.
So maybe first if you could say a word or two about the.
The manufacturing aspects of the business and then you can say a word or two.
About the product development aspects.
Sure. Thanks, Marty So we've made really great progress over the last three months or so.
The <unk> facility.
Q2, we completed design of that facility.
At the very end of the quarter.
Okay.
We are anticipating.
Substantial completion of the facility by the end of 'twenty three.
And being prepared to support any Zeno trials.
That will start in 'twenty four.
Thanks, Pat Dr Peterson.
Yeah. So thanks for the question, we're continuing to dialogue with the FDA about our clinical path forward.
And in the meantime, we are working with our academic partners and.
Continuing to conduct non human primate study and when appropriate.
Nic partners will also be conducting that the donor studies like those previously conducted and reported at NYU and UAV.
And it's also up to the academic partners, but we expect that there might be additional living on.
On a compassionate use basis.
A recipient before we actually start the formal clinical trial.
Thanks, Dr Peterson.
<unk>.
It was really a great set of questions that we have this morning, and it's amazing really because they kind of align very well with the 30000 foot overview that we gave at the beginning.
Our policy is a huge question emphasize the ability of our current business to growth from our $2 billion revenue run rate to $4 billion revenue run rate based on continued expense expansion of Thai base, though in particular, but also modular.
In.
<unk> in the existing approved indications, which our PHB WH group partner group III.
Then building on that I think that Joe and Justice question.
Caf III.
Really.
Nice spotlight on DPI and ultimately GPI is going to be so important as we move into pulmonary fibrosis, which is our <unk> study and <unk>.
That study is now enrolling very strongly and I just could not be more excited about the fact that I really believe we're going to prove our hypothesis that we have a disease modifying treatment for pulmonary fibrosis.
Alone 100000 patients already being treated or diagnosed with pulmonary fibrosis.
Patients are easy to touch and identify via their current prescriptions. We are testing our drug could come on top of their current medications. So no need for physicians to do switch decision or anything like that just layer it on top.
And I believe that business will double up.
Again from a 4 billion up to $8 billion, even with just a 40% penetration of that market.
Standing at being a disease modifying treatment.
Based on the results of the study and then finally, we had.
Excuse me we have the really good question from Andreas about the organ manufacturing activity and.
Path and we pointed out we are doing all of the strong platform work for that.
With our belief that we'll be able to monetize all of that IP again, a very good question raised by our pause about the IP will be able to monetize all about IP by the end of this decade and providing a super strong.
Hum.
We <unk> a large a large building upon which we can build and build and build as we go from kidney heart to lung liver and other organs with our.
With our really portfolio of organ manufacturing.
The Zeno transplantation capability the D cell resell activity and then the <unk> bio printing.
Could not be more happy about United Therapeutics, and we really appreciate everybody joining us on this second quarter earnings call have a great day, everyone. Operator, you can wrap it up.
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 Dot <unk> Dot com.
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Yeah.