Good morning. My name is Ashley, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the United Therapeutics Corporation Second Quarter 2014 Financial Results Conference Call [Operator Instructions] Remarks today concerning United Therapeutics Corporation will include forward-looking statements, representing the company's expectations or beliefs regarding future events. The company cautions that such statements involve risks and uncertainties that may cause actual results to differ materially from those projected in the forward-looking statements. Please see the company's latest forms 10-K and 10-Q and subsequent filings with the SEC for additional information on these risks and uncertainties. There can be no assurance that the actual results, events or developments referenced in these statements will occur or be realized. The company assumes no obligation to update forward-looking statements to reflect actual results, new information or changes in underlying assumptions. Today's remarks are intended to educate investors about the company. This may include reporting on the progress and results of clinical trials or other developments with respect to the company's products. Today's remarks are not intended to promote the company's products, to suggest that they are safe or effective for use other than that consistent with the FDA-approved labeling, or to provide all available information regarding the products, their risks or related clinical trial results. Anyone seeking information regarding the use of one of the company's products should consult with the full prescribing information for the products available on the company's website at www.unither.com. Thank you. Dr. Rothblatt, you may begin.

Thank you very much, operator. Good morning, everybody. I'm pleased to welcome everybody to our Second Quarter 2014 Financial Results Conference Call, and I am joined on this call by our Chief Financial Officer, John Ferrari; our President and Chief Operating Officer, Roger Jeffs; and our Chief Strategy Officer and individual who oversees all of intellectual property at the company, Mr. Andrew Fisher. So let me start off by highlighting the numbers for you. Total revenues for the quarter were -- just shy of $323 million, earnings per share were $2.35 per basic share and non-GAAP earnings were $2.57 per basic share. Our continued growth shows that our medicines are reaching increasing numbers of patients suffering from pulmonary arterial hypertension. Notably, the commercial launch this quarter of our extended-release tablet called Orenitram harkens an opportunity to bring prostacyclin-based medicine to more patients in the U.S. than ever before, patients with pulmonary arterial hypertension, by providing them with a less invasive route of administration than a prostacyclin-infusion therapy called Remodulin. So with these introductory remarks, I would now like to open the lines to any questions. And I'll field the question if I'm the right person, or otherwise, I'll direct the question to either Roger, John or Andy as appropriate. Operator, could you please begin the questions?

[Operator Instructions] Our first question comes from Mark Schoenebaum of ISI Group.

This is Salim in for Mark. So just on Orenitram, Martine, we heard there is some data out there on the TID. Can you just describe it and tell us what you think about it and maybe perhaps relative to the BID data?

Sure, that's a very good clinical question, Salim, and I'm going to ask Roger to address it. Roger, are you online and able to talk about some of the clinical differences between TID and BID?

Sure, thanks. Good morning, Salim. Good morning, Mark. So we have recently published or presented a pharmacokinetics study in patients where we looked at TID kinetics versus BID kinetics, and it does what one would expect and one would not, in that it "flattens out" the kinetic profile and the plasma exposure that patients see with treprostinil delivered orally via Orenitram. What that has imparted, it seems, in some early data, and we're still sort of evolving this, is that by diminishing the peak-to-trough ratio that the tolerability profile is improved. So what we're seeing now both in the -- our open-label extension study that we have -- that we are closing and in the initial commercial experiences, that physicians are tending toward a TID regimen as an initial therapeutic regimen for their patients: one, to improve tolerability; and then secondarily, to improve the ability to dose escalate and get to a therapeutic dosing level. So again, anecdotes, we're collecting information on this and certainly want to prove that the safety profile is improved. And we want to look and explore the dose escalation profile over time with TID, but the early initial commercial experience, at least, is that the TID regimen is better tolerated, if you will. Again, I don't have data to support the word better, but that seems to be the preferred regimen to start new patients on both as a new [indiscernible].

Roger, just to follow up. Is the dose achieved in patients higher or lower with TID versus BID overall?

Yes, that's a great question, Mark. And again, that's something we're trying to explore. We're not sure. So I think the total daily dose -- what seems to be happening in the initial experience is that the amount of drug given is the same, it's just given TID instead of BID. So what that then imparts is a 50% increase in the total daily dose. It basically just fills that inter-day gap that would -- or trough that would occur if we gave it BID. So what that's going to impart from a revenue standpoint, obviously, is a 50% bump in the revenue that each patient would bring. We don't have any -- we don't have enough data yet to say that, over time, that results in a higher total daily dose if administered TID, other than the fact that it's going to give you a 50% bump because you're filling that sort of midday trough. It's a good question, something we're keen to explore. At the end of the day, there are 3 things we want with Orenitram: we want as many patients as possible to benefit from the drug that are appropriate for that therapy; we want the dose to be tolerated because the more patients on therapy drive revenue, as does the duration of that therapy; and then the depth of prescription is at the center, so the better experience that physicians have with starting patients and the tolerability, then the more patient starts will occur. So really, it's really dose and duration and numbers that are going to drive the performance of Orenitram. Early data suggest that TID is what physicians are preferring, but there are also patients on BID regimen that are very happy with that regimen. So we're not certainly forcing that TID regimen upon anybody, but it seems to be what at least physicians in the know are tending towards at this point. And it's something that patients seem to be very compliant with as well, which is the other important aspect of a TID regimen, can it be complied with. And it seems to be that, that is the case, given these patients are experienced with multiple regimens of therapy already.

Our next question comes from Phil Nadeau of Cowen and Company.

I wanted to ask about the IP situation. Could you give us maybe an update on the Sandoz trial, when you expect to hear a verdict in that trial? And I guess, in particular, how are the Orange Book-listed patents that aren't being litigated by Sandoz could be handled in the case -- should you lose the current [ph] trial? And also we saw on your 10-Q this morning that Teva filed an ANDA. Could you give us some understanding of the time lines in that patent challenge?

Sure, Phil. We have, fortunately, Andy Fisher on the phone. And Andy passed through every day of that trial and handles all these issues, so there's no better responder to your question. Andy?

Thanks, Martine. So with respect to the Sandoz trial, so the trial itself concluded in mid-June and the judge indicated that he planned to issue a decision sometime in the near future. The 30-months stay in the case expires next week. That has less relevance now that Sandoz, as you know, dropped one patent from the case, the 222 patent expiring in October. So that patent has less relevance -- or that 30-month stay has less relevance given the existence of that patent being unchallenged. That said, we do expect a decision in the near future. So stay tuned on that front. As far as what happens after that decision, obviously that would require a lot of speculation [indiscernible] as a whole. There are 3 additional Orange Book-listed patents for Remodulin, 2 of which relate to the use of the Flolan diluent, much like the 007 patent that was litigated in the case. And the third of the unchallenged Orange Book patents is what we call that 393 patent, which is a product-by-process patent similar to the 117 patent that was litigated in the current case. Last week, we received a Paragraph IV certification from Sandoz on the 393 patent, which expires in December of 2028 and we're currently evaluating that notification. But otherwise, with respect to next steps, obviously everything is driven by what the court's decision is in the case that's already been litigated. You also pointed out that Teva has filed an ANDA for Remodulin. We received Paragraph IV notification associated with that ANDA filing last week. The notification indicated that Teva intends to launch the product covered by their ANDA prior to the expiration of both the 117 patent, which is the product-by-process patent expiring in November of 2017; as well as the 393 patent, which I just was discussing with respect to Sandoz that expires in December of 2028. The certification did not address the other Orange Book-listed patents. So again, we're studying that notification and determining what our next steps will be with respect to Teva.

Thanks, Andy. Great answer. Phil, if I could just give a strategic overview to complement Andy's excellent patent-by-patent analysis there. Our company's position continues to be that the experience of any generic entry into the Remodulin space will not be any different than the generic entry into the Flolan space. There's no logical difference between Flolan, which is our main competitor for Remodulin, and Remodulin. They're both parenterally delivered prostacyclin through an ex vivo pump. Teva has had a generic in the Flolan space for at least 3 years now, and in each of those 3 years, Teva has not been able to -- to the best of the information we've seen, been able to capture more than 3% a year of Flolan's business with their generic epoprostenol version of Flolan. And by the way, that's with Glaxo fielding no sales force on behalf of Flolan at all. So we really fail to see why there's going to be any difference in the situation between Flolan and Remodulin. And whatever the outcome of the patent lawsuit is, we think that Teva would not be able to capture any more than the 2% to 3% of Remodulin revenues that they had been able to -- annually that they had been able to capture with regard to Flolan. Now on top of that, you've got a very dynamic market situation going on, where we, ourselves, as the innovator continue to innovate. And in this case, we're innovating Remodulin, first of all, in the direction of implantable Remodulin, where we have an exclusive arrangement with Medtronic. So truthfully, I have not yet heard of a Remodulin patient who would not prefer to be on implantable Remodulin, and that's the market I do not believe that Teva would be able to address even at…

[Operator Instructions] Our next question comes from Terence Flynn of Goldman Sachs.

Hi, this is Uya in for Terence. Just to follow up on Orenitram launch, can you provide little bit more details maybe on how many patients are on the drug so far and where are the patients coming from and also an impact of inventory? And then could you also split the reported sales, the percentage of it that are coming from transition from Remo and Tyvaso?

Thank you for the question, but we're not going to be able provide answers on any of those questions. One, it's too new in the launch. Two, we never provide that kind of patient breakdown information. And I think if you really ask that question again about 12 months from now, we'll have more of a baseline to provide more information.

Our next question comes from Robyn Karnauskas of Deutsche Bank.

This is Mohit for Robyn. I have a question regarding on your SG&A expenses. It seems like your SG&A expenses increased substantially in the second quarter. Could you please help us understand the drivers there? And how should we think about it for the rest of the year? And I have a follow-up as well.

Thank you. Unfortunately, there are so many people in the queue, we will not be able to take the follow-up question, but we will give you a first-class answer on the first question direct from our Chief Financial Officer, John Ferrari. John?

Thank you, Martine. SG&A expenses did increase during the quarter. And actually, if you look quarter -- year-over-year, half of that increase is related to our legal and consulting expenses with the -- for the Sandoz litigation and, I guess, responding to the subpoena for the OIG investigation also. And then, as the company grows, I mean, we're -- our headcount has grown over the year, so there's some increase. A small portion of that is related to salary and benefits and related expenses to that. We're also provide each -- quarterly or at various times during the year, grants to a nonprofit, nonaffiliated organization that helps patients meet their out-of-pocket expenses for prescriptions. And as the number of patients on our therapy has increased, we've also increased our donations to that organization. So that's, at a high level, kind of why the expenses have gone up year-over-year. We also have all our marketing expenses related to the Orenitram launch during the Q2, which made -- almost say it's a onetime thing, but the big bulk of that hit in the second quarter and then will kind of continue at a slower pace for the rest of the year. But it's hard to give guidance on some of the items because, for example, professional fees, the legal fees related to the Sandoz litigation and the OIG investigation, until we hear from those -- what happens with the outcome of trial and we -- it's hard to give any guidance on what the levels of expenses will be in the future.

Thanks, John. That definitely was a great first-class answer. And the only thing I may add to that is to say, again, from a strategic perspective, our company is very cognizant of the overall importance of shareholder value. And in that regard, we try to run as lean and efficient a shop as possible. One area on the P&L forecast going forward that is definitely going to look much brighter is the 10% royalty that we have paid to Glaxo on treprostinil since our very first revenue ends this year. So we no longer have to pay 10%, which is, of course, a huge chunk of money. Probably one of the best outlicensed deals that Glaxo ever did. I mean, last year alone, upwards of $100 million straight to their bottom line. But we don't have to do that anymore after this year. And that's going to translate directly to an improvement in profits and operating margin. I think the timing is also really fortuitous. It did, frankly, as a CEO, pain me a bit to be writing these humongous checks to Glaxo year-after-year when they weren't doing anything. What I'm happy about is that now that the revenue potential for treprostinil is greater than ever with the approval of Orenitram, those will not be hurt by the 10% Glaxo royalty. And as I've mentioned on previous calls, I believe that Orenitram is going to be one of the major factors pulling us to $2 billion in revenues by the end of this decade. And it's really nice to see that, that additional $1 billion dollars from Orenitram will not be burdened by the royalty, nor will be Remodulin or Tyvaso revenues going forward be burdened by the royalty. So I think that factor alone far outstrips the increase in legal expenses and headcount expenses and donation expenses that John referred to.

Our next question comes from Michael Yee of RBC Capital Markets.

My question is on your cash, $760 million, and I know you've been buying back some stock. Where in your priority list is building out the pipeline in licensing? Remodulin's been fantastic, but maybe considering building out more stuff outside of Remodulin that are synergistic. How do you think about doing more business development?

Yes, great question. Nice to hear you on the line as well. So the way we approach these questions strategically is, very broad brushed, is that we allocate about half of our budget -- half of our cash to growing shareholder value operationally through products which we already have and are in our pipeline. We've got 2 Phase III studies that we're moving forward in that direction. We have 2 products that are post Phase III that we're moving through the regulatory phase right now, that's our pediatric oncology product, the monoclonal antibody for neuroblastoma; and the implantable Remodulin pump product, the joint deal with Medtronic. And then we have the early-stage products in Phase I. The one that I think is perhaps most transformative is our cell therapy product. As I know you know from being a keen observer of the industry, I think most people would kind of feel that cell therapy is the mAbs of like the last decade. Like 10, 15 years ago, there really were scarcely any approved monoclonal antibodies. Now they are becoming a mature product class. Cell therapy is there today where mAbs were 10 years ago, and we are pouring significant resources into advancing our cell therapies forward for pulmonary hypertension. The one which I think you probably maybe most familiar with is our license of Pluristem's cell therapy product for pulmonary hypertension. And I'm not completely sure if we've previously announced that, that's now dosing patients in Phase I. Another Phase I program that is moving forward and frankly entered into patient dosing since the last conference call is our antiviral product. This product is called the UV-4, uniform victor 4. It is a broad-spectrum antiviral immune sugar that should be effective against any glycosylated virus. We've chosen to develop it…

Our next question comes from Liana Moussatos of Wedbush.

You haven't mentioned TransCon Treprostinil. Can you talk about the status of that?

Yes, Liana, thanks. TransCon Treprostinil, for the other people on the line, this was a preclinical program that we in-licensed that promised the ability to provide a once-daily injection of Remodulin that would provide the same level of pharmacokinetics as a continuous infusion of Remodulin. But recently, we decided to terminate that program before going into Phase I clinical trial for business reasons. And the main thrust of those business reasons are that with the advent of the implantable pump from Medtronic and the attractiveness, and certainly, the approval with the specific mention of Remodulin transition with regard to Orenitram, the business space for the TransCon product was just about -- the amount of light there was just about blinking out. So harkening the previous couple of questions, with our normal eye on the bottom line, as well as building shareholder value, for business reasons we had to terminate that program.

Our next question comes from Eun Yang of Jefferies. Our final question is coming from Geoff Meacham of JPMorgan. Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division: Martine, you mentioned Orenitram and the adoption. Just wanted to get a sense for what inning you guys are in with respect to the launch from an expense perspective, from a commercial investment perspective. And then just real quick to get your perspective on selexipag and kind of what that means to either new starts or switches from United product.

Thanks. Two very insightful questions. I think the best person on the call to address both those questions would be Dr. Jeffs. As you know, he led the Orenitram development. Going to just make him blush here a little bit. But for 15 years, all of the gurus in field thought that a sustained-release prostacyclin analog delivered orally was impossible, treprostinil, in particular with its 45-minute half-life. And Dr. Jeffs proved them wrong. He deserves enormous credit. I think it's -- with no hyperbole, it is really a modern miracle that a pill that Glaxo, Pfizer and every other big company thought was actually impossible is now not only possible, approved and prescribed by leading physicians. It is a modern miracle in our biotech space. And so there's nobody better to speak about it and the comparisons with selexipag than with Dr. Jeffs. Roger?

Thanks, Martine. With regard to Orenitram launch, we're in the very early stages of that launch. We just launched officially in June. And certainly, we've tried to keep an initial focus on key experts for high-volume prostacyclin users, so we want to really focus on those experts in the field of prostacyclin use. And one of those reasons is they're going to be early adopters, which they've shown to be. And they are able to use Orenitram effectively, some of whom who have had clinical trial experience so they're very comfortable with the therapy already, and some are new to the use even though they are experts in the field. Given the fact that, that experience has gone so positively, we are actually going to quickly expand our targeting to a much broader audience of what we'll call community prescribers, and these are physicians that have a lot of oral therapy use, but don't have a lot of prostacyclin history in their prescribing patterns. So there's a large target market that really is the opportunity that Orenitram presents in terms of a growth opportunity for United Therapeutics. So that's kind of where we are, and we're going to start that second phase of our launch in mid-August and we're excited about that. I think we have a period of time of upwards of a 1.5 years or so to have that market to ourselves before Actelion has the opportunity to file and possibly get selexipag approved. So that's a period where we can gain traction in the market broadly. We're also offering a lot of unique programs around payer assistance, both copay cards to help with copay costs, we have an assist hub center that we have been managing internally that's a centralized referral team to help patients explore coverage…

Great, Roger. Thank you very much for that answer. To wrap up the conference call, we had another excellent quarter here at United Therapeutics. The future continues to look very good and strong. The launch of Orenitram exceeded our initial expectations. As Roger said, we're going to be rapidly expanding it. Roger pointed out that the 6-Minute Walk distance for Orenitram was 25 meters. By the way, that is significantly better than the 6-Minute Walk distance that was reported from the clinical trial of Tyvaso and significantly better than the 6-Minute Walk distance reported for the clinical trial of Remodulin. Tyvaso and Remodulin, in the 3 years after their launch, went on to become the most prescribed drugs in the inhaled and parenteral parts of the pulmonary hypertension market, respectively, and I definitely expect the same outcome to occur with regard to Orenitram in the oral prostacyclin category. The market overall for pulmonary hypertension is actually growing now, and that's a result of the fact that mean survival has now significantly exceeded 5 years. It's being reported variously at 7 to 10 years. And at that level of average survival plus the new incidence of pulmonary hypertension patients, the total overall market begins to grow at about 10% year. It's now crossing over 30,000 diagnosed and treated patients. And I expect during the course of Orenitram's prescribed life, the number of pulmonary hypertension patients will actually double to exceed 60,000. So we're well placed to take advantage of this with the launch of Orenitram; our 2 Phase III studies of additional oral prostanoid treatment modalities and then; the diversity of our portfolio can be seen with the hopeful launch not later than next year of our first pediatric oncology drug, Chimeric Monoclonal Antibody 14.18; and with the recent commencement of Phase I dosing of our antiviral drug on dengue disease. Thank you, everybody, for your attention this morning and look forward to seeing you at upcoming health care conferences. Operator, you can wrap up the call.

Thank you for participating in today's United Therapeutics Corporation conference call. This call will be available for replay beginning today at 12:00 p.m. Eastern through 11:59 p.m. Eastern on Tuesday, August 5. The conference ID number for the replay is 67533397. The number to dial in for the replay is (855) 859-2056 or (404) 537-3406. Thank you, and you may disconnect.