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Edited Transcript of UTHR earnings conference call or presentation 29-Apr-20 1:00pm GMT

Q1 2020 United Therapeutics Corp Earnings Call

Silver Spring May 17, 2020 (Thomson StreetEvents) -- Edited Transcript of United Therapeutics Corp earnings conference call or presentation Wednesday, April 29, 2020 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Dewey Steadman

United Therapeutics Corporation - Head of IR

* James C. Edgemond

United Therapeutics Corporation - CFO & Treasurer

* Leigh Peterson

United Therapeutics Corporation - VP of Product Development

* Martine A. Rothblatt

United Therapeutics Corporation - Founder, Chairman & CEO

* Michael I. Benkowitz

United Therapeutics Corporation - President & COO

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Conference Call Participants

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* Chris Shibutani

Cowen and Company, LLC, Research Division - MD & Senior Research Analyst

* Eun Kyung Yang

Jefferies LLC, Research Division - MD & Senior Equity Research Analyst

* Hartaj Singh

Oppenheimer & Co. Inc., Research Division - Research Analyst

* Jessica Macomber Fye

JP Morgan Chase & Co, Research Division - Analyst

* Martin Douglas Auster

Crédit Suisse AG, Research Division - Research Analyst

* Vasiliana Vireen Moussatos

Wedbush Securities Inc., Research Division - MD of Equity Research

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Presentation

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Operator [1]

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Good morning, and welcome to the United Therapeutics Corporation First Quarter 2020 Earnings Call. My name is Mariama, and I will be your conference operator today. (Operator Instructions)

I will now turn the conference call over to Mr. Dewey Steadman, Head of Investor Relations of United Therapeutics.

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Dewey Steadman, United Therapeutics Corporation - Head of IR [2]

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Good morning. It's my pleasure to welcome you to the United Therapeutics Corporation First Quarter 2020 Earnings Call. Accompanying me on today's call are Dr. Martine Rothblatt, our Chairman and Chief Executive Officer; Mr. Michael Benkowitz, our President and Chief Operating Officer; Mr. James Edgemond, our Chief Financial Officer; and Dr. Leigh Peterson, our 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 Form 10-K and 10-Q, contain additional information on these risks and uncertainties, and 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 accepted accounting principles, or GAAP. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in our earnings release available on our website site at www.unither.com. Today's results -- or 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.

Now I'll turn the call over to Dr. Rothblatt for an overview of our first quarter 2020 financial results and business activities of United Therapeutics. Dr. Rothblatt?

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [3]

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Thank you, Dewey. Good morning, everybody. I'd like to start providing an overview of how we are at the beginning, more toward the end of the first month of the second quarter here, looking back on the past quarter. And then I'm going to turn the mic over to Michael Benkowitz, our President and Chief Operating Officer, and he will continue to review operating results of the company. Then we'll open up the call to questions, and they can be directed either to Mike or I or to our Chief Financial Officer, James Edgemond; or to our Vice President for Product Development, Dr. Leigh Peterson. So looking back on the past quarter, I think that there were really 3 key themes that summarize what's gone on in the past quarter. And those 3 themes, I would label as stable, stronger and sustainable. So let me delve into each of stable, stronger and sustainable for a moment and talk about what those words or concepts mean in the concept of -- in the context of United Therapeutics right in the middle of this COVID pandemic.

So with regard to stable, the first theme, I am really glad to share that our drug manufacturing, distribution and reimbursement have been very stable during this past quarter, notwithstanding the COVID pandemic. Every one of our United Therapeutics offices and laboratories from California to North Carolina, from Maryland to Florida, from Massachusetts to Virginia and New Hampshire, have all remained open as essential biomedical research and production facilities.

Our staff has continued to operate these facilities on a shift basis to reduce occupancy and to maintain fiscal distancing in all regards. As a result, our production numbers this past quarter have enabled us to still maintain more than 2 years of finished drug inventory even while shipping out a normal and customary amount of drug to our distributors. Indeed, I can report, and I'm very happy to report that doctors, pharmacies, patients, they've all reported considerable relief in knowing that United Therapeutics has more than 2 years of finished drug on inventory.

In addition to that, we also have, here in the U.S., at our sites, the chemical precursors on hand for making 3 additional years' worth of finished drug on top of the 2 years, all in our own laboratories here at United Therapeutics. So all told, we are stable in drug production, distribution, for 5 years, all based here in the U.S.A. And I think that the reason provides so much relief to everybody and the reason I start the review with the concept of stability is when you get right down to the core purpose of United Therapeutics, its core purpose is to provide medicines for life, to provide medicines to our patients, to provide medicines even to patients in the context of our clinical trials. So all of that we've done, including with the drug delivery devices that are part and parcel of them. So I'm happy to say that at the end of the first quarter, in the middle of the pandemic, UT is stable.

Second main theme I'd like to talk about is stronger. Here, I'm referring to our pipeline. Our pipeline was very strong before this past quarter and it's even stronger as of now. It was strong before because we had a great Phase III trials underway. One of them that I think most exciting is the ralinepag trial, a best-in-class prostacyclin agonist that is undergoing worldwide trials. And I should say, even during this pandemic, while we've not been able to enroll new patients in that trial, we have been able to keep the trial going and continue to provide clinical trial material to the patients. So that's very exciting. We had also -- we have also underway our Phase III trials of Tyvaso for COPD, a type of pulmonary hypertension. Same story, we're not able to enroll new patients, but we're able to keep it going. That will open up a very, very large COPD pulmonary hypertension market for us based on the results of that Phase III trial. Our Phase III trial of gene therapy, the SAPPHIRE study that could really modify and perhaps turn back the course of pulmonary hypertension. So we had a super-strong pipeline before this quarter, but one of the absolute, most exciting things that came out of this quarter was the data that came out of our INCREASE trial of Tyvaso in the context of interstitial lung disease.

Now as we'd reported, we hit all of our primary and secondary endpoints for that INCREASE trial. And notwithstanding the COVID pandemic, our team has worked full speed and we continue to be on schedule to file a supplemental NDA for the expansion of our label of Tyvaso into Group III pulmonary hypertension, specifically the interstitial lung disease variant. And just for some of you who may be new to the story here. This is a type of pulmonary hypertension that is larger than the Group I types of pulmonary hypertension for which all the current pulmonary hypertension drugs are approved for, but of -- as to which before our INCREASE trial, no drug was proven successful in addressing this Group III type of pulmonary hypertension, specifically the interstitial lung disease variant. And the reason for that is that the -- this is a disease involving restriction or obstruction of the airways and the pulmonary vasculature. And so it's not really possible to treat this disease successfully with systemic drugs without giving rise to a very bad side effect consequence, called ventilation perfusion mismatch. So there are only really 2 possibilities for treating this drug without triggering V/Q mismatch. There's the iloprost inhaled drug, which is not very practical, needing to be inhaled upwards of 9 times a day for 15 minutes a shot, or Tyvaso which is very practical, 4 times a day, just 2 minutes an inhalation. Well, we did that trial. And as reported, we had stellar results, and we'll file in early summer. And we expect approval of launch of that product in 2021. But what really made our pipelines stronger was one of the most spectacular results from that INCREASE trial. And that was about 1/4 of the patients had a type of interstitial lung disease called pulmonary fibrosis. And with this type of disease, the FDA has already, over the years, approved 2 drugs and these 2 drugs, by the way, were not really potent in reversing IPF. What they were able to do was to slow the degradation in the patient's forced vital capacity, better than the patients who are on placebo. So they didn't improve the patient's condition. They just slowed the rate at which the patients were degrading.

Now our team was prescient, I think, to have forced vital capacity as a secondary endpoint in the INCREASE trial, prescient I say because this endpoint is not necessary for approval of a drug treating pulmonary hypertension, but it is the endpoint looked at by the FDA for a drug that would be treating pulmonary fibrosis. And we were able to, in fact, improve the forced vital capacity, or the FVC of the patients with the pulmonary fibrosis type of interstitial lung disease by a greater amount than the other 2 approved drugs for pulmonary fibrosis, nicotinamide and pirfenidone had done in their registration trials. And on top of that, our improvement of the patient's FVC was on top of those already approved background drugs, because that's just standard of care for patients with pulmonary fibrosis.

So this is for a clinical drug developer. This is like a best-case situation for sizing up a registration trial, where you've already tested the hypothesis that you want to confirm in a registration trial and you see here, Tyvaso actually had a disease-modifying effect on these patients with pulmonary fibrosis by improving their FVC on top of the already approved background therapies, and those already approved background therapies had not even approved -- improved the patient's FVC, they just slowed the rate of degradation.

And then if there was like an icing on the cake, we were able to accomplish all of this in only 8 weeks so 8 weeks after the patients were randomized, we already saw this marked improvement in FVC and that improvement was maintained until the end of the clinical trial. This is a much faster onset of improvement than was demonstrated in the nicotinamide and pirfenidone studies, which in fact, as mentioned, didn't actually show much of an improvement at all.

So based on this, we have now been able to design and specify and begin the process of opening up a new Phase III trial that will be in pulmonary fibrosis. And it will be in the specific type of it known as chronic fibrosing interstitial lung disease. I just call that CFILD, for short C-F-I-L-D, because it's a mouthful. So we call this new Phase III trial the TETON trial and in parallel with our work in putting together the sNDA for INCREASE, we are also putting together the IND for CFILD and our plan is to get the IFD -- the IND for this Phase III trial and CFILD that goes by the name TETON, that we will get that in, in the latter half of the summer, really right on the tails of the sNDA for INCREASE and then achieve our IRB approvals during the third and fourth quarter of this year and begin enrolling patients in that registration trial in the first quarter of 2021.

Let me mention one other thing why I'm so excited about this. This is really the -- other than our activities in cancer, this is the first time that United Therapeutics has undertaken an expansion of its franchise beyond pulmonary hypertension. Just so I didn't like confuse anybody here, this CFILD indication, this fibrosis indication will be in patients who don't have pulmonary hypertension.

Now I mentioned about 1/4 of the patients in INCREASE had the pulmonary hypertension with the pulmonary fibrosis. But in fact, the number of patients who have the pulmonary fibrosis without the pulmonary hypertension is about 4x larger, well over 100,000 patients.

So this TETON study that will embark upon in the first quarter of 2021, will be United Therapeutics' first noncancer Phase III study outside of the field of pulmonary hypertension and in a patient population that is several times larger than the pulmonary hypertension population. And finally, with a mechanism of action that appears to us to actually be disease-modifying based on the positive improvement in the FVC shown in those patients. So all told by expanding beyond pulmonary hypertension and doing so with a solidly data-backed hypothesis and in a patient population several times larger than we're addressing in pulmonary hypertension, I think that there really is no doubt that we have emerged from the first quarter of 2020 with a stronger pipeline than we had even before.

The third theme that I want to talk about before turning things over to Michael is sustainable. It's very fortunate, and I'd say that our entire pulmonary hypertension community has been blessed that COVID has not disproportionately impacted the pulmonary hypertension population. There are very various hypotheses of why this is. I think the kind of the Occam's Razor answer, is it's due to the extraordinary care and caution of this population with respect to physical distancing. The patients realize that they have heart-lung condition. And so they are probably much more careful than other people in maintaining the distancing necessary. But in any event, there is already a published article showing that COVID has not adversely impacted the PH population statistically compared to any other populations. So I do believe that we will be able to sustainably continue to help our pulmonary hypertension population as we go through what remains of the COVID pandemic.

Another aspect of sustainability is that you'll see in our quarterly financials we released today, our revenues and profit margins are as good as they've been in the past. And for all that we can see, they are quite sustainable. As our Chief Financial Officer, I know has talked about many times, we maintain an algorithm to ensure our profitability by setting our maximum budget at 50% to the previous year revenues. And within this budget, we are able to continue to invest in all of the transformative technologies that mark our pipeline, transformative technologies for Remodulin, such as the RemUnity pump, which remains on schedule to launch in July. The manufacturing folks have continued manufacturing those pumps all during the pandemic, again, coming in, in shifts, spacing themselves out, everybody is doing the right and proper and safe thing. The implantable system for Remodulin, the ISR system, our RemoPro, painless analogs of treprostinil to completely get rid of the issue of site pain. All of this, we're able to do sustainably because of the maintenance of the profit margin against the constant level of revenues. We also continue to fund the market expanding products for pulmonary hypertension like ralinepag, as I mentioned at the beginning. We have this PERFECT Phase III study of COPD-related pulmonary hypertension, the gene therapy work, I mentioned previously. We have a once-daily form of Orenitram that will enable us to continue to build on the excellent revenue growth that you've seen in the past quarter. And then these sustainable cash flow margins that we're fortunate to have also enable us to take on new R&D challenges such as several efforts that we're now directing against COVID using an exosome product, which is an outcome of our region med research on lung manufacturing to treat the ARDS sequelae of worst-case COVID situations as well as our outright organ manufacturing to produce an unlimited supply of transplantable kidneys, for example, that would create literally a new paradigm of organ transplantation.

So stable, stronger, sustainable. I am absolutely full of pride and how well United Therapeutics has demonstrated its nimbleness and adaptiveness to a once-in-a-lifetime changed environment that we're all experiencing.

Well, with that overview, I'd like to now turn the mic over to Mike Benkowitz, our President and Chief Operating Officer. Michael?

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Michael I. Benkowitz, United Therapeutics Corporation - President & COO [4]

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Thanks, Martine. I wanted to spend a few minutes just talking about the commercial side of the business.

Overall, we're very pleased with our revenue performance in the first quarter. As we mentioned quite often, our revenues reflect sales of our treprostinil-based products to specialty pharmacy distributors who typically place monthly orders based on current patient utilization trends and contractual inventory requirements. Therefore, our sales do not always track the volumes our distributors are dispensing to patients in a given time period. So I'd like to provide some color around physician and patient demand for our products in the first quarter. And then in addition, I'll touch on some early Q2 data we're seeing as a result of COVID-19.

So in the first quarter, we did not experience a material impact to our commercial business as a result of COVID-19, either in terms of distributor ordering patterns, which are represented by our revenues, or as measured by active patients on our therapies, new patient starts and drug dispensed to patients. In fact, Q1 saw us build on the momentum from last year, as we, once again, reached an all-time high number of patients using one of our treprostinil medicines.

Our U.S. Remodulin business remains resilient in the face of generic competition. In Q1, new patient starts remain strong. Our active patients were at an all high -- all-time high once again, and Remodulin drug dispensed to patients grew year-over-year. Transitions from Remodulin to generic treprostinil remain negligible and are primarily limited to the dual-eligible Medicare and Medicaid patients we've mentioned on prior earnings calls. And to date, we estimate that 15% of those transitions have come back to Remodulin. In addition, we're continuing our RemUnity launch preparations and remain on track for a July launch.

Our Tyvaso business remained solid with year-over-year growth in Q1 in active patients, new patient starts and product distributed to patients and hospitals. We are especially pleased with Orenitram's 18% year-over-year revenue growth in Q1, which, in this case, correlates fairly well with what we're seeing at the patient level. We were very excited to issue the press release last week announcing additional results from our FREEDOM-EV substudy, specifically that Orenitram significantly improved key hemodynamic parameters and improved a patient's risk status, which are important indicators of long-term outcomes in PAH patients. Additionally, we recently published an analysis showing that PAH-related health care costs for patients taking selexipag were 67% higher than those taking Orenitram despite similar adherence, persistence and rate of PAH-related hospitalizations between the 2 groups. We believe the Orenitram value proposition is clear and distinct and that physicians are starting to recognize this. And we look forward to continuing to share these data with physicians, which should help Orenitram reach its market potential.

Finally, Unituxin continues to hum along through Q1. Year-over-year revenues grew 7% in Q1, but actual dispenses of Unituxin to hospitals increased in the 15% to 20% range. So we're pleased with how this product is performing and are looking forward to filing our supplement soon to expand the label to include relapsed/refractory neuroblastoma.

Now in terms of potential COVID-19 impact on the second quarter, it's a bit of a mixed bag thus far. On the one hand, one of our specialty pharmacy distributors placed a larger-than-normal order for our treprostinil-based products during April to increase its inventory beyond typical levels. And this was done for 3 reasons. The first, they wanted to account for potential increased investigational use of Tyvaso for acute respiratory distressed syndrome resulting from COVID-19, which is a major cause of patient morbidity and mortality. Second, they wanted to prepare for an anticipated increase in patient requests for 60- to 90-day refills as compared to their typical 30-day supply. And third, they wanted to increase their inventory levels across various locations to ensure uninterrupted business continuity during the pandemic.

On the other hand, we have seen some softening in new patient prescriptions throughout the month and also a softening in new patient starts in the last couple of weeks. We believe this is due to the inability of patients to visit their physician's office to determine whether our medicines may be appropriate. However, we are starting to hear that some institutions in various parts of the country are gearing up to start allowing patients to come back in for visits very soon, and we are aware of the increased use of telemedicine with PAH physicians. How this impacts revenues over the balance of the quarter or the year remains unclear. We don't know how long the reduction in new patient prescriptions and new patient starts will last, but we certainly expect some pent-up demand that should come through in later months once things start to normalize. It's also unclear whether these events will even materially impact orders from specialty pharmacy distributors since they place orders based on current utilization trends and contractual inventory requirements. And so I think just kind of coming back to Martine's theme around sustainability, we certainly think that the commercial side of the business remains sustainable. The patients are there, they will continue to meet our medicines. When they're able to access those is a little bit unclear, given the current dynamics of the pandemic, but we expect that once things start to normalize, as I said, there'll be a pent-up demand, and we'll get those patients started on our medicines appropriately. And so with that, I'll turn the call back over to Martine.

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [5]

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Thanks so much, Mike. Operator, if you could now open up the lines and have Dewey Steadman -- I think, Dewey, did you want to take the calls? Or you -- or you want me to?

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Dewey Steadman, United Therapeutics Corporation - Head of IR [6]

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Oh, no, you can probably go ahead and open the Q&A for us.

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [7]

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Okay, thanks. I always like to say hi to people I know on the line. Thanks, Dewey. Okay, operator, you can open up the calls.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from Chris Shibutani with Cowen.

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Chris Shibutani, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [2]

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You commented that you're seeing an estimated 15% of patients who had been on generic switched back to Remodulin. Can you help us understand better what's going on there? Is that somehow -- what are the dynamics that's related to supply, [pairs]? Just what is driving the switchbacks from generic?

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [3]

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Thanks, Chris. Interesting question. I'm going to ask Mike if he could please respond to you.

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Michael I. Benkowitz, United Therapeutics Corporation - President & COO [4]

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Yes. So we get some visibility into the reasons for the switchback. We don't get total visibility, but anecdotally what we hear from physicians and through the channel is that patients are experiencing either adverse events, worsening of the symptoms, in some cases, hospitalizations, when they make the switch over to generic treprostinil. I think we all know that while the FDA considers the generic version to be the same as the brand version, they do allow for some variances. And because these are very, very sick and very, very fragile patients, I think we can hypothesize that those differences become magnified in a very fragile patient population. And so as a result, we've seen the actually increase in the number of patients that have transitioned back to branded Remodulin.

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [5]

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Thanks, Mike.

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Operator [6]

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Your next question comes from Eun Yang with Jefferies.

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Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [7]

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So because of the COVID-19 impact, there are several studies. Have clinical trials ever been paused for new patient enrollment? So one of them is the dry powder inhaler, Treprostinil Technosphere. So with that, I guess we are not expanding -- expecting the data by mid of this year. Then question is by when the study has to resume in order for us to see the data this year?

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [8]

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Sure. Very interesting question. And I'm going to ask Dr. Peterson, who is in charge of that study to answer it. But just so -- I want to keep everything in perspective while she's compiling her answer. When the COVID pandemic began to fall down upon us, the first thing that we are concerned with, of course, was to make sure that all of the distribution channels and everybody were set and were solid. So everybody could get their medicine. And as I mentioned in my opening remarks, we have done that very, very well. Now our clinical trials, they presented an interesting situation in that the default situation would be that you might have to just like stop the clinical trial and then restart it all over again, which would be unfortunate. So we worked very, very hard, Eun, to make sure that our clinical trials were not stopped, but that just that the enrollment in them of new patients was suspended, so that as hospitals are opening up, and you heard Mike Benkowitz mentioned previously that some of these centers are now beginning to open up and see patients again, that we could, without really missing a beat, continue the enrollment of the patients. So even though we suspended new enrollment, the patients who are already in the BREEZE trial that you were referring to, the PERFECT trial that I mentioned of our COPD, the ralinepag trial, which involves patients all over the world that we have to get them their clinical trial material, we have been doing all of that throughout the entire COVID situation without missing a beat. So speaking of beat, Dr. Peterson, she's a drummer. Would you like to provide a little more insight on the time frames around BREEZE right now?

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Leigh Peterson, United Therapeutics Corporation - VP of Product Development [9]

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Yes, sure. Thank you. So this BREEZE study, as you may already know, is a study where patients who are on Tyvaso are transitioned over to our TreT formulation with the dry powder. And the device that we have with mankind. And so we had -- so this study was actually a 45-patient study. It's not very big. FDA has agreed to this. And we were -- we're about 1/3 of the way through enrollment. In fact, the study's primary endpoint is taken at 3 weeks after the patient starts. And so we were lucky enough to have had all of the patients who were currently enrolled to complete that period. So we won't have missing data on the ongoing patients. And as far as timing due to the pause, we have -- again, we have about 2/3 of the patients to enroll. And we had about -- not quite, but about 17 sites open for enrollment in this study. And so what we've done is we've taken the time to do the paperwork and to prep additional sites to conduct this study. So when we do open, we can -- the plan is to make up for lost time and finish that study actually close to the original time line. So we don't -- we hope not to have a big -- really a big delay there. We've already started the additional phase, the one -- the second phase study that FDA has agreed that we conduct for this product. We started that, that is about halfway finished. That's in healthy volunteers, a bioequivalence study. And again, those patients had completed, so we won't lose any data there, and we'll be able to finish that one up quickly as well. Again, it's easier to enroll, it's healthy volunteers. So overall, we're hoping to not expect a big delay in that due to the halting of enrollment in that study.

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [10]

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Thanks so much, Dr. Peterson.

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Operator [11]

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Your next question comes from Hartaj Singh with Oppenheimer & Co.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [12]

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Thank you for all the work the United Therapeutics is doing on behalf of its patients, Martine, and stay safe. I just had one question on Orenitram. You had, I think, a 20% growth in the fourth quarter, 18% this quarter. Can you just give us some color on where that's coming from? Is it new patients? Are you getting, maybe a little bit of market share from Uptravi? Any color there I would really appreciate it. And again, thank you for all work.

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [13]

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Thank you so much, Hartaj, and thank you for acknowledging our efforts on COVID. We have just very briefly before I segue over to Mike to address the question on where the Orenitram growth is coming from. We have a cell therapy product in patients with COVID. And 2 parallel ARDS initiative for patients who are suffering the worst consequences of COVID as well as an advanced form of our total artificial lung device to be an alternative to the intubation and sedition that's necessary with current ventilators. So we have quite a bit of activity going on directly in COVID and most importantly, taking care of everybody and making sure everybody is safe. So thanks for the recognition, Hartaj. Mike, can you talk about where the Orenitram growth is coming from?

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Michael I. Benkowitz, United Therapeutics Corporation - President & COO [14]

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Sure. Thanks, Hartaj. It's kind of -- well, let me just sort of step back and obviously point out the obvious, which is that we had the label expansion for Orenitram come through in October, reflecting the FREEDOM-EV data. And so we've had about, really about a quarter and a half now of being able to promote from a sales and marketing standpoint on the new data. So that has certainly, I think, helped because I think as we've said on these calls and as we talked about in the press release last week, I mean, the data really, when you look at it in its totality is pretty compelling. And so I think that message is getting through to physicians. And so when we look at where the growth is coming from, as I said, it's really 3 areas. It's hard for me to, I guess, at this point to say how much is attributed to each, but I would say, first, it's coming from patients staying on therapy, increasing their dose, so that's one piece of it. The second piece of it is just new patient growth generally. I mean, that's obviously a big part of it. We're continuing to see really nice trends in terms of patients on therapy and then underlying that is new prescribers. So prescribers that either had never used Orenitram or had used it early on after the FREEDOM-M trial and for whatever reason, stopped using that. I kind of define it as a new prescriber is somebody that has not used it at all or has not prescribed within, say, the 12 months prior to writing. So we certainly see some increases there. And particularly among, I think, the KOLs, the more experienced PAH physicians that maybe used it initially went away from it. I think the EV data has really, I think, compelled them to come back and take another look and they're giving it another try.

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [15]

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Thanks so much, Mike.

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Operator [16]

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Your next question comes from Jessica Fye with JPMorgan.

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Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [17]

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Can you please walk through the planned development program and regulatory strategy for your RemoPro candidate, the IND for which I believe cleared in the first quarter. Do you need to run efficacy trials there or just show slight pain and safety compared to Remodulin. And if I could just follow-up on Hartaj's question, I'm curious about the potential interplay between the new starts on Orenitram and the slight year-over-year decline in Tyvaso. Do you think any of the Orenitram growth came at the expense of new Tyvaso starts?

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [18]

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Sure. So why don't we have Mike, since we're already on the Orenitram theme, answer your second question. And then, Mike, if you could pass the call to Dr. Peterson, for her to talk a little bit about the anticipated time line on RemoPro?

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Michael I. Benkowitz, United Therapeutics Corporation - President & COO [19]

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Sure. Yes. So I don't really -- it's just -- at some level, it's hard to know exactly. But what I could tell you in terms of looking at just sort of in terms of whether a doctor is saying, "Okay, I want to use Orenitram instead of where I would have otherwise used Tyvaso." So that's a little harder to get insight to. But at a patient trend level, in terms of active patients, our active patients on Tyvaso are up about 10% year-over-year. So we are continuing to add to our Tyvaso active patient count as we're adding to our Orenitram account. So I don't -- I mean, so I'm sure those trade-offs are being made on the margins, but in general, the -- Remodulin, to the franchise as a whole continues to grow across the 3 products. So it's hard to say that one's cannibalizing the other. But again, I think at an individual physician level, that may be entering into their -- into the calculus. But at a macro level, we're seeing growth across the board.

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [20]

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Absolutely sustainable. I love it. Leigh?

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Leigh Peterson, United Therapeutics Corporation - VP of Product Development [21]

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Yes. Yes. So for RemoPro, I will say -- I'll give you the answer of what our statistician always tells me when I ask questions like this. It depends. It depends on the results. And as you probably already know, we are in Phase I, looking at these -- the RemoPro products, the prodrugs of treprostinil with regard to pain and also the pharmacokinetics. In the pharmacokinetics, we're looking at are not only of the prodrug itself, so in that case, it's the parent molecule, but also of treprostinil, which is really the metabolite, if you will, of the prodrugs. And so with -- as far as the development program goes, it depends on what we see in the PK results. And so -- but what we're shooting for, and we're looking for the compounds that best show this, is a prodrug that is injected and very quickly converts to treprostinil and has a high treprostinil level relative to the control, which would be basically injecting treprostinil, the parent compound as Remodulin.

So if we have good conversion of the prodrug and we reach treprostinil levels comparable to that with the parent drug, we can -- FDA has said that we don't need to do an efficacy study because we've already shown that treprostinil works. And so if we have good conversion to treprostinil, we're good. And then -- so what we do have to do is a safety study. And again that also depends on conversion.

If there's a lot of the prodrug in the patients, we will do a safety study. It -- we have asked for about a 45-patient safety study for this. And again, this would be to show that the prodrug that's in the system prior to conversion is safe. And so that's the plan that we don't have to do an efficacy study. We have feedback from FDA on that but again it's providing that we do get what we're expecting, which is a high conversion of the prodrug to treprostinil and showing comparable treprostinil blood levels from that project.

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [22]

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Excellent. Thank you so much, Dr. Peterson.

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Operator [23]

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Your next question comes from Liana Moussatos with Wedbush Securities.

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Vasiliana Vireen Moussatos, Wedbush Securities Inc., Research Division - MD of Equity Research [24]

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What percent of treprostinil prescriptions are new versus refills?

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [25]

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Thank you for the question. What percentage of treprostinil prescriptions are new versus refill? I think once again, Mike Benkowitz would be the best person on the call to answer that question.

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Michael I. Benkowitz, United Therapeutics Corporation - President & COO [26]

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Yes, Liana, that's a good question. I don't know if I have that off the top of my head. Let me -- well, actually, let me think about that for a second, it's...

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Vasiliana Vireen Moussatos, Wedbush Securities Inc., Research Division - MD of Equity Research [27]

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Is it half, more than half, less than half of new?

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Michael I. Benkowitz, United Therapeutics Corporation - President & COO [28]

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It's less than -- it has a new prescriptions each -- if I think about it each month, it's definitely less than half. It's probably on the order of about 5% to 10%.

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [29]

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Thanks, Mike. Next call, and this will have to be, I believe, the last one, operator.

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Operator [30]

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Your next question comes from the line of Marty Auster with Crédit Suisse.

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Martin Douglas Auster, Crédit Suisse AG, Research Division - Research Analyst [31]

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Really excited to hear the progress with Tyvaso and the TETON study you're planning. And so to that effect, I'm super pumped to see the INCREASE data. I know that you're working with ATS on a virtual presentation, but I guess from the website and ATS, it's not clear they're going to have that format available. If that is not available by mid-May, are you having to just make a separate kind of company-sponsored presentation of the data? And then the second one we'll do just a quick follow-up for Leigh on Jess' question on RemoPro. That -- is that Phase I currently enrolling volunteers? And when do you think we might get some data on the PK and the kind of tolerability profile of that product?

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [32]

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Yes. Thanks, Marty for both questions. I think both are pretty much in Leigh's daily work. So Leigh, can you talk about what your thinking is in terms of TETON and the ATS and the latest information that we have in terms of what kind of data presentation would be possible there?

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Leigh Peterson, United Therapeutics Corporation - VP of Product Development [33]

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Yes. So we are planning -- we've been accepted to ATS for our presentation. It will be a virtual presentation for the INCREASE results, the full results and -- but we do not know the timing on that. So I'm sorry, I can't give you a specific date. They haven't given us one. We assume this summer. And we've also submitted those results to a journal, and it's under review right now, and we expect to hear any time now of their comments and to publish that, full publication this summer as well. So one way or another, we'll have the results to you very soon. And we, too, are very, very excited. So thank you. Thank you for saying that. It's really a blessing to have those types of results come in, in our lifetime.

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [34]

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Thanks so much, Leigh. James, if you -- we have our Chief Financial Officer on the phone. And it's really important, I think, for everybody on the call to appreciate what an amazing job and difficult job it is in the midst of a pandemic to be able to go ahead and close out a year, complete your year-end audits, gather all the necessary financial information for a 10-Q, not to mention the processing of well over $1 million a day in account payables to go to all of the right places and none of the wrong places. And to do all of this remotely, it's a tremendous testament to the -- really the strength and stability of the United Therapeutics as a business organization to move so smoothly through this pandemic without missing a beat. So since nobody asked a question specifically for James, I would like to ask him to say a word or two on the topic of our quarterly earnings. James?

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [35]

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Yes. Martine, thank you very much for the opportunity. A couple of things come to mind, as you mentioned, kind of the processes, the whole organization has in place really to execute, whether it's year-end or the quarter as we all tend to work remotely. So it's certainly within all the groups that we've talked about from the R&D, the manufacturing, the financings and all the administrative functions that I think is a real testament. The other thing that's very important is the realization of the strength around the balance sheet. As we entered COVID-19 and as we continue during this pandemic, from a financial stability perspective, we are well capitalized to be able to continue to execute on our research and development programs, as we make sure we take care of our patients as well as our fellow Unitarians. And it's really important for people to realize that strength as we continue during this time that we are able to execute as an organization, which should be reassuring to many, both listeners on this call, and again, patients and people in the organization. So I just thought those were 2 things that I think are very important to mention, and I appreciate the opportunity to allow me to do that. So back to you.

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [36]

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Thanks so much, James. Well, operator, we've had a great chance to address most of the people in queue on the line, and thank you so much for organizing the call. Everybody on the phones, thank you for your continued support for United Therapeutics. Our hearts go out to those of you who have loved ones or friends that are suffering directly from the COVID pandemic health-wise, for sure, economic wise, otherwise. And for those of you who are related to frontline health care workers our complete admiration and respect for everybody who's out there fighting on the front lines. Operator, you can wrap up the call.

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Operator [37]

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Thank you for participating in today's United Therapeutics Corporation conference call.

A rebroadcast will be available for replay for 1 week by dialing 1-800-585-8367, with international callers dialing 1-416-621-4642 and using access code 1984097.