United Therapeutics Corp (UTHR) 2003 Q3 法說會逐字稿

Good morning and welcome ladies and gentlemen to the United Therapeutics Corporation third quarter earnings release conference call. At this time I'd like to inform you that this conference is being recorded and that all participants are in a listen-only mode. If you wish to access the replay after this call, you may do so by dialing 1-800-428-6051 or 973-709-2089 with an ID number of 311410. At the request of the company we will open up the conference for questions and answers after the presentation.

Remarks today concerning United Therapeutics will include forward-looking statements which represent United Therapeutics' expectations or beliefs regarding future events based on current assumptions. United Therapeutics caution that such statements involve risks and uncertainties that may cause actual results to differ materially from those in the forward-looking statements. Consequently, all such forward-looking statements are qualified by the cautionary language and risk factors set forth in United Therapeutics' periodic and other reports filed with the SEC.

There can be no assurance that the actual results, events or developments referenced in such forward-looking statements will occur or be realized. United Therapeutics assumes no obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in factors affecting such forward-looking statements. I would now like to turn the call over to Dr. Martine Rothblatt, Chairman and Chief Executive Officer. Please go ahead, Dr. Rothblatt.

Thank you. And good morning everybody. I'd like to welcome everyone to a quarter of good financial results from United Therapeutics. I am joined today by our President, Dr. Roger Jeffs, and our CFO, Mr. Fred Hadeed.

We gained here at United Therapeutics approximately 50 reimbursable patients during the third quarter, had an average revenue per patient of just about $97,000 per year. This brought our revenue run rate as of September 30th up to nearly $54 million per year based on 555 reimbursable patients, a record high for us.

We fell a bit short of our goal of 60 net gains during the quarter, due to the August vacation period for doctors, and a similar situation could reoccur in December.

Our quarterly revenues grew 200% from last year, this same quarter last year, and 8% from just the previous quarter. Meanwhile, our quarterly loss dropped to its lowest level ever, just 6 cents per share. These are indeed very good financial results.

Having had now over a year's experience selling Remodulin, we now are able to provide for the first time some general revenue and earnings guidance. For calendar year 2004, we expect to generate 70 to $80 million in total revenues, to breakeven in early 2004, and to be profitable for the first time for an entire calendar year during 2004.

Dr. Jeff's team in RTP meanwhile has made some awesome progress with our intravenous Remodulin program which is our next big booster to planned revenues and sales. Dr. Jeffs' team has also opened some interesting regulatory doors and pathways for regulatory approval in Europe.

So that you may direct your questions directly to Dr. Jeffs or any financial marketing-related to Mr. Hadeed, both Roger and Jeff are on the phone with me, and I'd now like to open up the phones to any questions.

Thank you, Dr. The question and answer session will begin at this time. If you are using a speaker-phone please pick up the handset before pressing any numbers. Should you have a question please press star one on your push button telephone. If you wish to withdraw your question, please press star two. Your questions will be taken in the order that they are received. Please stand by for your first question. Our first question comes from Martin Auster of Wachovia Securities. Please state your question.

Hi guys, how you doing?

Great.

Just had a question, and get back in queue. If you could possibly maybe update us on some of the feedback that's going on in the off label investigator-led trials for IV Remodulin, that would be useful, as well as maybe outlining timeframes for when we might see data published or maybe shown up as an abstract in a medical conference? Thanks.

Roger?

Good morning all, Martine. I think that probably the trial that you're most interested in the investigator IND of IV Remodulin. That trial's going very, very well. Let me describe sort of the current status of that trial and when the completion and reporting dates of that will now be.

There are six patients in the trial, there are four on the immediate horizon, and then I think that the investigators have committed to putting their 20 patients in by January, is what they're telling us. Of the patients that have been in to date, the first three were what are termed de novo patients, so their first time to PH therapy and they started intravenous Remodulin. So they were fairly sick individuals, late Class III, early Class IV and they got Remodulin intravenously.

Those three patients, two of them have completed their week, [VICTOR-WEEK] 12- walk assessment and I can tell you that the average improvement over six to 12 weeks for, actually for the three patients has been around 100 meters in walk, and they're also reporting significant improvements in their shortness of breath scales and other quality of life assessments.

There has been one patient that they've transitioned from 50 nanograms per kilogram per minute of Flolan, they did that rapidly in about a 10-hour timeframe, which charged them on to 50 nanograms per kilogram per minute of IV Remodulin. That patient has not quite reached the 6-week time point but from all reports systematically, that patient is doing very, very well.

The excitement that we hear in the community, there's more than 125 prescribers of Remodulin now, we've gotten calls from almost every one of them asking how they can participate in the intravenous development program.

And what we've said to them is that currently we certainly don't promote the intravenous use of the drug, we're happy that the investigator IND study is happening and that we have access to the data, but until we confirm our bioequivalents, we won't sort of open that up. I think that's going to happen shortly given the good results we're seeing on bioequivalents.

Now, I did say about reporting as well, the intravenous IND study that these investigators are doing, the three of them, will be reported at ATS in May, an abstract was submitted just recently for that conference.

What will be included, just the first few patients that were dosed that had 12 weeks of data, then?

Sort of. That was what was in the abstract but certainly Dr. Vick Tabson at Duke University who's going to present that abstract will update it with the fuller information at the time. We're actually hoping that it will get selected for an oral presentation so he'll have a little bit more liberty to discuss the full patient portfolio.

Progress sounds excellent. I'll jump back in queue and let someone else ask a question. Thanks.

Thank you. Our next question is from Navdiv Jakara from Rodman and Renshaw. Please state your question.

Good morning, everyone. I had a couple of questions. Fred, can you tell us exactly what were the revenues of Remodulin sales for the quarter? And number two is, can you give us an update on the pharmakinetic IV Remodulin study? Have you completed dosing the patients and are you in line to release the results before the end of the year?

Good morning, Navdiv. I'll take the first question then turn back to Roger. The revenues on the sales of Remodulin in third quarter were $12.9 million.

Just so you have the complete picture, I'll also let you know that the pumps and supplies were $500,000, Telemedicine sales were $1.1 million and Arginine sales were $600,000, giving you a total of $15 million of revenue for the quarter.

This is Roger, I'll take the bioequivalents trial. Let me just give a little bit of a background so that everybody on the call knows what we intended to do and what we've done.

The plan was to dose 54 normal volunteers, and three cohorts of 18. And the 18 cohorts was just really it was an issue of being able to handle that many volunteers at the clinical research unit. So there's nothing to it other than a convenience factor.

We've completed dosing all three cohorts, and we have sent off all of the plasma samples from the volunteers to the analytical lab. So all 54 patients have completed the IV in Sub-Q 3-day dosing arms and we do have results back from the first cohort of patients.

And I won't give you exact data but I will tell you that the first cohort of patients was wonderfully bioequivalent, and that the confidence intervals around the point estimate is well within the boundaries that we need to have to establish bioequivalents. So those boundaries are between 80 and 125%.

So whatever your point estimate of bioequivalents is, the confidence intervals around that must be between 80 and 125% and we're comfortably within that. And our expectation is that the other two cohorts will also match that result, that we're well on our way to showing bioequivalents.

That is very good, congratulations. So I think I'll probably get back in the queue with Martine but I do have some follow-up questions on that. So does it mean that you're on track to file supplemental NDA early next quarter?

Yes, Navdiv. We'll have the full bioequivalents results in mid December, and our supplemental filing right now we intend to file that in the early to mid first quarter of 2004.

Thank you so much.

Thank you. Our next question comes from Matt Kaplan of Punk Siegel. Please state your question.

Hi, good morning. Some of my questions have been answered but I wanted if you could give us an update please if you could with respect to the pain and management of pain with the Sub-Q formulation? And then also could you also break down, give us a break down of new patient adds, in terms of where they're coming from? And then I guess the third question is just an update on the pipeline with respect to what's behind Remodulin?

Roger, if you could do maybe the first and third questions?

Okay. With regard to the Sub-Q site pain, we continue to see some success with the PLO gel or the Wisconsin protocol as we've also referred to it. It is not a universal cure certainly, but it does seem to moderate the intensity of the pain in many of the individuals that get it but not all.

We are continuing to seek new remedies and I think the most recent one is Eladil which is a psoriasis topical nonseroidal treatment that people have said anecdotally at least seems provides some relief as well. So, as we hear of things we explore them in a broader sense with other investigators. But in general, certainly we haven't found the answer to the pain, but we have been able to moderate it with the different approaches we've taken.

As to the pipeline, specifically with Remodulin, there's a tremendous amount of exciting activity. Certainly there's the intravenous bioequivalents trial that's completed, that will then lead to things in 2004 like compassionate use of the drug, it will open up that in a preapproval basis for physicians to use in their patients and get a broader experience with IV Remodulin.

We have an oral Remodulin program that's going to be in Phase I next month. We're very, very excited about that because it gives us a much broader indication platform for the drug. For example, we could go back into [CLAUDICATION], we could look at ischemic heart disease and a number of other things.

So oral Remodulin is something we've been somewhat quiet about but it's a tremendously exciting program. In addition, we've also, having some pilot work done with inhaled formulations of Remodulin. Really looking at all conceivable routes for a proven therapy. And looking at those to direct us into new indications and broader uses of Remodulin with broader market opportunities.

Roger, I think he'd also like to have a briefing on the ovarian cancer and hep C programs.

Certainly. The ovarian cancer program is in Phase III. We're running two parallel Phase III trials. The enrollments in the trials are picking up significantly and we're approaching 100 patients total enrolled of the 350 that we need.

They will accrue over the next year and a half and then there's a follow-up observation period where we're trying to prevent time to disease recurrence that's probably another 18 months as well. So that's accruing very, very nicely but it's a little bit away in terms of time line for a result.

The other program that Martine just mentioned was our iminosugar program. It's an oral agent for hepatitis C. That program is in it's in Phase II proof of concept study and we need to enroll about 72 patients and we've enrolled about 15 of the patients so far.

And we're starting to accumulate some HCV tighter data and safety data and in that study we anticipate completing by mid next year and reporting that result in the early third quarter of next year.

So all of our clinical programs are doing have very, very nicely in terms of the ramping patient enrollment and will provide us with hopefully some very exciting data in the future.

Actually, Roger could you also talk a little bit about the enrollment in the CLI trial that's ongoing? And then turn the phone over to Fred to talk about the spread of new patient accruals.

With critical ischemia we've had some moderate success, not as much as we'd like. In particular, where we've been successful is in patients that are not candidates for surgery. So patients who have a pending amputation. We've enrolled 13 patients of the 30 that we need.

We were also looking at an adjunct to surgery trial and that trial, we've really had to shift some resources because we wanted to prioritize our IV Remodulin program. So we've shifted that, the resources from the adjunctive trials to the intravenous bioequivalents approach and we just think it's a current better use of our R&D spend.

Having said that however, there are a number of investigative trials that our group has initiated and there will be data progressing in the future in Raynauds D, Berger's Disease, there'll be some data in dialysis patients, and also some data in patients with stents as adjunctive use in patients that are undergoing stent procedures. So we continue to explore the critical ischemia arena and we're really trying to target exactly where Sub-Q Remodulin will fit.

But one thing we're excited about, is IV Remodulin perhaps gives us a broader opportunity in critical ischemia as well and we're going to initiate some intravenous trials in patients with critical ischemia in 2004.

Great, Roger. I think that shows we have a very robust pipeline and now Fred?

Yeah, Matt, our patient growth in the third quarter was very comparable to prior quarters in that the majority of the patients we picked up were U.S.-based. The minority were gained outside the United States. And we haven't seen a real shift in any proportions, it's been comparable quarter-to-quarter.

And with respect to the patients in terms of, where they transitions, were they [inaudible] carriers, were they new, just de novo patients, can you give a breakdown that way?

Approximately a third each of our new patients have come from newly diagnosed patients that are prostacyclin naive, a third have been oral treatment failures, and a third have been transitions from Flolan and those ratios are still holding steady.

Great, thanks. I'll jump back in the queue.

Our next question is from Steve Saba of Kilkenny Capital. Please state your question.

Hi, thanks for taking my question. I have a question about the average dose per patient which seems, you know, should we expect that to remain high or to get higher or to actually drop down as perhaps less severely ill patients come on to therapy, how should we look at that, sort of in generally? And I know that's somewhat speculative. And the other question has to do with the, I know you hired some consultants to work with physicians, I'm just wondering if you can give us some idea how that's panning out, and whether you plan to add any more individuals? Thanks.

Sure. I can answer both questions.

On first one, we think that the doses are probably going to continue to creep up because physicians are realizing now that if there is some pain, at least give the patients the gain. And that's sort of the term that's going around.

And by giving the patients more Remodulin they feel a lot better. And that proportion of the patients that feel pain feel much less pain because they have much more activity and health. So I think that will continue to creep up as it has crept up every single quarter actually.

With regard to the consultants, they've been doing a good job. We have an advanced degree detailing force, we are face-to-face with every one of the prescribers, at least every two months, and as Roger mentioned we're now well over 130 people prescribing Remodulin. Many of them with a substantial number of patients on Remodulin. So I think the advanced degree detailing force has worked out well and we'll continue to expand in that direction.

Okay, thanks. And also in Europe, what's sort of the plan at this point?

Europe, we've got a good set of distributors. And maybe I should turn it to Roger because he's done a great job of opening up some doors there that seemed shut just even a month ago, and preparing some additional new avenues.

Thanks, Martine.

Just briefly we have a meeting with a French agency on November 25th and it's a meeting to discuss the issues they presented in their earlier outcome letter and recommendation of non-approval from the general commission which was their questions about the effect size of Remodulin and its benefit vis-a-vis other PH therapies.

In instances in the past at least when we've been able to explain the complexity of the filing, we've been very successful. And I'll point to the U.S. advisory panel meeting as well as an approval in Canada and Israel. So every time we've had an opportunity to present the merits of the application, we've been able to succeed.

So we're going to go to France with the same approach, to talk about the dose relationship of the drug, the robust effect in the more sicker patients, and show them quite conclusively in my opinion that Remodulin is just as effective, if not more effective with regard to symptoms vis-a-vis the other therapies. So that meeting will occur on the 25th and we'll hopefully succeed.

We do have a planning program in place now that in case that effort does not succeed, we will be able to rapidly refile in other territories, and we're establishing meetings with other agencies in other countries so that we could refile immediately if we prove unsuccessful in France. While we're hopeful it will do well in France if we don't we have a plan in place to rapidly resubmit.

Okay. Thanks a lot. Congratulations on your results, and also, thanks for keeping us informed and answering our questions in a detailed way.

Thank you. Our next question is from Matt Duffy of Black Diamond Research. Please state your question.

Good morning, everybody, thanks for taking my call. I just wanted to ask you to give us a little more detail on the revenue guidance. How much of that is Remodulin, and are you assuming any IV usage in 2004 on the revenue side? And also, if you could give us a little more detail on the regulatory strategy and sort of the next several steps on the IV route of administration?

Good morning, Matt. It's Fred. Sure. I'll be happy to repeat the revenue numbers for third quarter. Remodulin sales were $12.9 million, and the balance of the revenues related to resales of pumps and supplies and revenues from our Telemedicine and Arginine divisions.

With respect to your question on the forecast for 2004, of 70 to $80 million in total revenues for the company, we did not consider either off label or even approved intravenous sales in that estimate.

Is there also, is there any other pumps and supplies in that number as well?

It's insignificant.

Matt, this is Roger, I can speak to the regulatory strategy about the IV supplement. We've opened a dialog with the agency regarding our intent to file, and they're well aware that we are going to seek label expansion for the IV administration of Remodulin based on a successful bioequivalents result and we've also discussed some of the other components that we will include in that filing.

Those other components include chemical compatibility and stability studies with the CAD legacy infusion system, that's the system that's used currently to infuse Flolan. We've looked at that system and our compatibility with it, have demonstrated and published that the drug is compatible and stable in that system.

And in addition we'll have some 13-week toxicology studies in Tuesday's sheets of rats and dogs, looking at the intravenous toxicology of IV Remodulin, that's precede by what's called a dose-ranging trial, a 14-day trial. Those results look exactly similar to subcutaneous Remodulin. The ongoing 13-week toxicology studies will complete sometime in January.

All I can say on those ongoing studies is we haven't seen anything different than what we saw in subcutaneously. So for all intents and purposes it looks like the toxicology will also be quote unquote bioequivalent.

We've alerted them. Those are the components of the filing, and we'll also, we need to then do a revised label and that will be it. So that dialog is ongoing with the agency at this point.

And -- you're okay with the bioequivalents trial, as your sense is that that will be acceptable for filing?

Well, that dialog's ongoing. I think we've told them of our intention and then they're trying to get their experts to review it and that principally is going to be their biopharm people are now looking at what our intention is and we're trying to establish either a teleconference or a meeting with them in the very near future.

Great. Very good. Thank you.

Our next question comes from Martin Auster of Wachovia. Please state your question.

Hey, Roger, I just want to follow-up on that last question. So at this point you would characterize your feedback from FDA in terms of your strategies inconclusive?

Uhm --

And I guess, when do you think you'll be in a position to kind of update us on kind of a level of confidence that the current strategy is going to result in a timely approval for IV Remodulin?

Yes, I think the thing to look for would be -- it's our intention to file in the first quarter of 2004.

Okay.

I think probably the next communication you'll have from us is that we have filed the application. And that would obviously would be preceded by discussions with them about their willingness to accept it.

It's a little bit difficult question to answer, Martin, until we actually get an acceptance to file. So all I would say is we have alerted them to what we intend to do.

Let me ask it a different way. When you think about kind of time frame for IV Remodulin approval, what's kind of the range we should expect, anywhere from Q3, 2004?

Yeah, we would hope to get it late Q3, 2004. Technically we should be under as a supplement it should be under six-month review from the time that we file.

Okay. On the next conference call will you be able to update us on kind of further guidance you've received from FDA on your strategy or do you think that will come later than that?

The next conference call hopefully we'll be able to say we filed it. Hopefully we'll be able to conclusively say the strategy was accepted and what the timing issues will be.

The thing that gives me a lot confidence and I should say I'm confident about it, is the first cohort, how good the data was from the first cohort. I mean, in essence, we've proven bioequivalents in the first cohort, we just need now to run the other cohorts of patients.

And could you just refresh everybody real quick, too, on how the strategy for filing kind of came about?

The strategy for filing came about because Remodulin subcutaneously is handled so well by the body, and that is that it's 100 bioavailable when given subcutaneously. So, therefore, showing that it is quote unquote bioequivalent Sub-Q by an IV route, that's a fairly easy task.

So that's really how it came about and we're going to use bioequivalents for the route change. That's a little bit novel, but it's well within the bounds of bioequivalents. So that, in essence, is how it came about. But we're fortunate that the drug is so bioavailable subcutaneously.

All right. I'm excited to hear more about it. Thanks.

Thank you. Our last question comes from Navdiv Jakara of Rodman and Renshaw. Please state your question.

Thank you. Actually Martin bet me to it. Congratulations again, and we look forward to the next call.

Thank you very much. To summarize here, we're really pleased to bring you this quarter of record financial results. We look forward to continued growth in our Sub-Q reimbursable patients continuing at the average of 20 per month that we've tracked for the past year.

We also look forward to continued rapid progress in our intravenous program as Roger just laid out and in our pivotal ovarian cancer study which is now 25% enrolled. Most of all we appreciate your recognition of our performance and we look forward to making all of our shareholders proud of their investment in United Therapeutics.

Thank you very much for your participation this morning.

Thank you, Dr. Rothblatt. Ladies and gentlemen, if you wish to access the replay for this call you may do so by dialing 1-800-428-6051 or 973-709-2089 with an ID number of 311410. This concludes our conference call for today. Thank you all for participating and have a great day. All participants may now disconnect.