UTHR
#Good morning.
It is my pleasure to welcome you to the United Therapeutics Corporation First Quarter 2018 Earnings Call.
Accompanying me today on the call are Dr.
<UNK> <UNK>, our Chairman and Chief Executive Officer; and Mr.
<UNK> <UNK>, our President and Chief Operating Officer.
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 Form 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 also include financial measures that are not prepared in accordance with U.S. Generally Accepted Accounting Principles.
Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures can be found on our earnings release available on our website at www.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 to solely educate investors and are not intended to serve as the basis for medical decision making or to suggest that the products are safe and effective for any unapproved or investigational uses.
Full prescribing information for the products is available on our website.
Now I want to turn the call over to Dr.
<UNK> for an overview of the first quarter 2018 business activity of United Therapeutics.
Thank you, <UNK>.
Good morning, everyone.
As <UNK> mentioned, I'm glad to also be joined on this earnings call for the first time, Mike <UNK>, our President and Chief Operating Officer.
After my introductory remarks, we'll open up the call to any questions.
And if there are questions of a financial nature, I will ask that they be answered by <UNK>, our CFO.
If there are questions of a commercial nature, I'll ask that they be answered by Mike <UNK> as our President.
And if there are questions of a clinical development type of nature, then I will handle those myself.
Starting with our top line financial results.
For the first quarter of 2018, our quarterly revenues totaled $389 million, an increase of 5% year-over-year.
Orenitram posted a fourth consecutive quarter of greater than 20% revenue growth on a year-over-year basis.
In addition, we continue to treat an increasing number of pulmonary arterial hypertension patients with our prostacyclin product franchise, which consists of Orenitram, Remodulin and Tyvaso, confirming our belief in the organic growth opportunity for these proven therapies.
The sequential drop in our total revenues from the fourth quarter of 2017 reflects consistent historical patterns as our first quarter revenues tend to be either down or virtually flat when compared to the prior year fourth quarter.
This pattern reflects distributor purchases that are typically placed once a month based on current utilization trends and contractual minimum inventory requirements.
As a result, quarterly sales of Remodulin, Tyvaso and Orenitram can vary depending on the timing and magnitude of these orders and do not precisely reflect changes in underlying patient demand.
So let's now transition to our pipeline, which currently has over 20 investigational programs, including therapies for PH and other forms of pulmonary hypertension, drug delivery devices, gene therapy, oncology and technologies to ultimately create an unlimited supply of tolerable, transplantable manufactured organs for those who suffer from end-stage organ disease.
The first of our near-term and medium-term pipeline products is the Implantable System for Remodulin, or ISR.
Excitement and anticipation from both physicians and patients continues to build around potential FDA approval of the ISR.
This should be a game-changing technology for PH patients, and we continue to believe that thousands of patients will eventually use the ISR.
I am reminded through videos and e-mails directly from ISR clinical trial patients of the numerous ways that the ISR has impacted their lives, even for some of the most basic activities that many of us just take for granted.
Activities like sleeping, showering and swimming become more straightforward for patients using the ISR.
The ISR also has the potential to address complications currently associated with the use of external microinfusion pumps, including the serious risk of external catheter-related infections, like sepsis, while returning to patients the lost several hours of pump management and therapy preparation time each day to productive use.
From a regulatory perspective, the FDA approved Medtronic's PMA for the ISR in December 2017, which is 1/2 of the regulatory process.
We then resubmitted our NDA for use of Remodulin in the ISR, which has been accepted as a Class II resubmission for a 6-month review.
We anticipate FDA action on our NDA by July 30, 2018.
Although no FDA process is free from doubt, we remain confident that the FDA will approve the ISR in 2018.
We are approaching the ISR launch with our partner, Medtronic, with precision and care to ensure that implant surgeons, refill centers, reimbursement pathways and other healthcare service organizations are all in place and properly trained and ready for commercial launch by early 2019.
Our expectation that it will be ultimately used by thousands of patients is a longer-term goal as launching a surgically impacted device needs to be done carefully, thoughtfully and systematically.
Yet another next-generation drug delivery system we are advancing is RemUnity, a small, lightweight external subcutaneous pump we are developing under an exclusive agreement with DEKA Research & Development Corp.
The RemUnity system uses acoustic volume-sensing technology to deliver Remodulin with a high degree of precision, representing a significant advance in microinfusion technology.
In February 2018, DEKA filed RemUnity with the FDA under a 510(k) submission that was accepted for review by the FD<UNK>
Let me now provide you an update on 4 of our 7 ongoing Phase III clinical trials.
FREEDOM-EV.
FREEDOM-EV is a Phase III clinical trial using Orenitram in combination with a single ETRA or PDE-5 background therapy for PAH WHO Group I patients.
This trial has a primary endpoint of time to clinical worsening.
FREEDOM-EV enrolled nearly 700 patients.
And we have now accumulated enough events needed to meet the required 205 adjudicated clinical worsening events that's required to unblind the study, which are expecting to do later this year.
It is also worth noting that Orenitram is the only true oral prostacyclin analog which could be dosed to therapeutic benefit.
Based on patient and physician feedback, I believe that we will see continued Orenitram growth, further accelerated in the event that a possible FREEDOM-EV readout, providing the Orenitram label with a morbidity, mortality endpoint supported by good clinical trial data in use of combination therapy.
Another major and exciting event we anticipate by year end 2018 is the unblinding of our BEAT combination therapy clinical trial for PAH WHO Group I patients.
This is a unique clinical trial that has never been tried in PAH before combining Tyvaso, our inhaled treprostinil therapy to treat PAH where the alveoli meet the pulmonary arterials, with Tysuberprost, and orally administered therapy to treat PAH systemically, where the blood flows from the right side of the heart into the pulmonary arteries all the way down to the pulmonary arterials.
Our data demonstrates that attacking the disease in these 2 different ways may yield better results.
And similar to FREEDOM-EV, the BEAT clinical trial has a primary endpoint of time to clinical worsening.
To illustrate how we are endeavoring to create new Blue Ocean market opportunities in pulmonary hypertension WHO Group III, where we think we can have a significant and positive impact on patients with unmet medical needs, I would like to now discuss 2 additional Phase III clinical trials.
Our INCREASE trial is examining the effect of Tyvaso for WHO Group III PH associated with interstitial lung disease.
Currently, this Phase III study is about 50% enrolled.
There are no approved therapies for this indication.
And in fact, systemic drugs like our own tablets and parenteral therapies, as well as those of our competitors, are contraindicated for this condition.
Next, I would like to move to another subset of WHO Group III PH associated with chronic obstructive pulmonary disease, or COPD, in our PERFECT Phase III clinical trial.
No therapy has ever been approved by the FDA for pulmonary hypertension incident to so many of these COPD patients.
And I really want to salute Dr.
Waxman and his great team up at Boston who have brought this unmet medical need to our attention.
Finally, I would like to talk about UT's revenue growth strategy, particularly as we are facing increasing generic competition.
As previously discussed, we expect our 2018 revenues to decrease compared to 2017 primarily due to the impact of anticipated generic competition for Adcirca beginning in mid-2018 as well as generic Remodulin, which could be launched as early as June '18.
Our strategy to take advantage of the existing organic growth opportunity we have within the treated PAH patient with our existing prostacyclin product franchise including Remodulin, Tyvaso and Orenitram and to combine this with our new and improved formulations and delivery devices that I described earlier to enable us to resume revenue growth by the end of 2019.
Now I'd like to walk you through how we expect to drive this growth.
First, we believe that Remodulin will continue to be a steady performer, but it will look very different from the Remodulin you see today.
It will be delivered through multiple next-generation drug delivery systems intended to enhance safety, tolerability and convenience, including the ISR and RemUnity which I previously mentioned.
In addition, we are developing RemoPro, a prodrug version of treprostinil expected to reduce or eliminate site pain associated with the subcutaneous Remodulin.
We expect to file an IND for RemoPro later this year as we begin Phase I clinical studies.
On Monday, we also announced an agreement to acquire SteadyMed Limited.
Assuming that deal closes later this year, their pipeline product, Trevyent, will sit well within UT's next generation of innovative drug-delivery systems for PAH patients.
Second, we will continue to believe in the organic growth opportunity of the treated PAH population, which we believe currently underutilizes prostacyclin therapy.
Unlike other therapies on the market, UT's prostacyclin analogs can be titrated to therapeutic benefit as PAH progresses, therefore offering patients the opportunity to transition between Remodulin, Tyvaso and Orenitram as each contains the same proven active ingredient, treprostinil.
This is our continuum of care advantage.
Third, we expect to grow through the introduction of new products and new indications.
We currently have 6 Phase III studies in PH and 1 Phase III study in oncology.
Let me itemize what these are.
Two clinical trials, FREEDOM-EV and BEAT in PAH, are expected to unblinded in 2018.
Three clinical trials, INCREASE, PERFECT and SOUTHPAW in PH, are currently enrolling patients and remain on track to launch commercially within the timelines currently provided in our website.
These 3 clinical trials for PH are in indications which we do not have any approved therapies in place today.
Three, our SAPPHIRE gene therapy study for PAH.
And lastly, our DISTINCT study of dinutuximab in small cell lung cancer.
These and other R&D programs are designed to provide revenue growth in the near and medium term while additional R&D programs are underway to develop technologies in organ manufacturing over the longer term.
In closing, at United Therapeutics, we are focused on the development and commercialization of innovative products to address the unmet medical needs of patients to deliver long-term revenue growth to our stakeholders.
We continue to advance numerous pipeline priorities to help keep patients alive, and in effect, building bridges for them as we pursue new technologies to create an unlimited supply of tolerable, transplantable manufactured organs.
Thank you for joining us on the call today.
Operator, I would like now to open the call to questions.
Yes, <UNK>.
Good to actually hear you on the phone, so that\
Yes, thanks, Geoff.
Great question.
Because that's really a kind of a commercial operations question in terms of who would be the patients that would most likely form the growing number of Orenitram patients.
As you heard, we're doing quarter after quarter after quarter of strong revenue growth on that, over 20% up every time year-over-year.
But all that is great tribute to the med affairs and the reimbursement.
There's global supply chain management.
And last but not least, the sales and marketing force that is under Mike <UNK>.
So Mike, could you answer Geoff's question.
Sure.
Thanks, <UNK>.
Thanks for the question.
Yes, I think the ---+ what we're seeing in the marketplace right now is the typical Orenitram patient tend to be your earlier-diagnosed patients or patients that are earlier on in their disease state because they need the time to start on therapy, titrate up.
And what we have found is starting those patients earlier, when they have time to titrate up on therapy, they're able to manage the side effects better, and they just have, just generally, a better experience with the drug.
And I think even without the clinical worsening label, we feel like we're getting a good share of those patients in relation to what J&J is seeing with Uptravi.
I think the label ---+ the benefit of the clinical worsening label will put us on par with Uptravi, and I think, will allow us to capture even a greater portion of those patients because we'll now have the same clinical worsening benefit on our label in addition to being, really, a true prostacyclin.
And then having the ability to put patients on that prostacyclin earlier, titrate them up, and then as <UNK> talked about in her comments, as the disease progresses, easily transition them over to Tyvaso or Remodulin as they continue in their disease.
Excellent, Mike.
Excellent, excellent.
Thank you, <UNK>.
Great, great question.
So let\
Thanks, <UNK> ---+ I mean, thanks, Liana.
Sorry about that.
Yes.
So let me, like, back up.
Whatever I said in the last call, I still think is good.
So I'm not changing anything from the last call.
The pump is a really fascinating piece of machinery, Liana.
And the more I see it in operation, the more just kind of completely blown away I am by it.
It's got virtually no moving parts.
In fact, actually the pump itself has no moving parts.
And I think it's a kind of like a Tesla of pumps.
Like a regular car has something like thousands of moving parts, and a Tesla, I think they advertised it as 20 or 25 moving parts.
So of course, regular infusion pumps don't have thousands of parts, but they got a lot of parts.
And just ask the poor patients who have to put all the pieces together every day or 2 on their table, takes up like half a dining room table.
But with the DEKA unity pump, there are no moving parts due to the inventive geniuses of those folks.
So this is going to be a super cool device.
Of course, we will ship it to the patient with the drug already supplied to eliminate the need for the patients to have any errors in the process of drug fill.
And also to buy back for the patient a very, very valuable hours of their time, which is otherwise spent on refilling these pumps.
We also have the rights, Liana, to use this pump technology for additional drugs for other [orphan] diseases.
And we have now begun a program in Parkinson's disease based on using the same pump technology, the same pumps, actually.
So it's really a super exciting program.
Of course, and as I mentioned in my introductory remarks, nobody can predict the FDA exactly.
And the FDA is going to make the decision.
And I've been right sometimes, been wrong sometimes, I'm not going to ---+ like, I don't make any more bets on the these things.
But I will say this, that you were looking at a sponsor, DEKA, that has successfully obtained FDA approvals for every product that they have taken through the FDA, including some truly revolutionary products, such as bioelectronic prosthetic arms, Class III medical devices.
I mean, very, very challenging approval.
Dialysis machines for Baxter, multiple generations of those.
So this is an organization that definitely has, to my knowledge, 100% success record at the FD<UNK>
And I'm confident that they will take this through.
And wow, these are not ---+ United Therapeutics also has 100% success record at the FDA, because Remodulin, Tyvaso, Orenitram, Unituxin.
So I believe, between the 2 of us, I could not be more confident, Liana, that we will be able to successfully launch this RemUnity pump.
Exactly which month, who knows.
It's up to the FD<UNK>
But I stand by everything I've said before.
Thanks, Liana.
And operator, if you could please do your wrap up comments.
