Good morning. My name is Nichole. I will be your conference operator today. At this time, I would like to welcome everyone to the United Therapeutics Corporation Fourth Quarter and Annual 2017 Financial Results. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question and answer session. [Operator Instructions] Remarks today concerning United Therapeutics will include forward-looking statements representing the Company's expectations or beliefs regarding future events. The Company cautions that these statements involve risks and uncertainties that may cause actual results to differ materially. Please see the Company's latest SEC filings, including Form 10-K and 10-Q for additional information on these risks and uncertainties. The Company assumes no obligation to update forward-looking statements. Today's remarks may also include financial measures that were not prepared in accordance with the U.S. Generally Accepted Accounting Principles. Reconciliations of non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures can be found in our earnings release available on our website at www.unither.com. Finally, please note that today's remarks may include reporting on the progress and results of clinical trials or other developments with respect to the Company's products. These remarks are intended solely to educate investors about the Company, and are not intended to promote the Company's products, to suggest that they are safe and effective for any use other than what is consistent with their 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 the full prescribing information for the product available on the Company's website at www.unither.com. Thank you. Dr. Rothblatt, you may begin your conference.

Thank you, operator. Good morning, everyone. Welcome to the United Therapeutics' 2017 Fourth Quarter and Annual Financial Results Conference Call. Our fourth quarter net revenues reached $465 million and our annual net revenues reached $1.7 billion, our highest quarterly and annual net revenues ever. Orenitram's fourth quarter net revenues grew by 25%, as compared to the same period in the prior year, representing our third consecutive quarter of greater than 20% net revenue growth for this therapy and confirming our belief in the organic growth opportunity for Orenitram, which is still the only true oral prostacyclin analogue therapy for the large and increasing number of pulmonary arterial hypertension patients. These financial results strengthen our ability to develop and advance our growing product pipeline, which currently includes seven phase III programs and multiple next-generation treprostinil drug delivery systems, as well as investigative regenerative medicine and organ manufacturing programs, which UTHR provide a cure for pulmonary hypertension and many other end-stage organ diseases. Let me provide a little bit more color on these introductory remarks by delving into the seven phase III programs and multiple next-generation treprostinil drug delivery systems, as well as the investigative regenerative medicine and organ manufacturing programs. I think by reviewing these multiple projects in our pipeline, we’ll be able to see that’s a good kind of mantra for United Therapeutics going into 2018 is growth and goals. We have a lot of exciting things that will continue to grow our Treprostinil franchise and as we grow this Treprostinil franchise, we will become ever more able to achieve our ultimate goal of a cure for pulmonary arterial hypertension, as well as other end-stage lung diseases. The first of these seven phase III trials I’d like to talk about is the FREEDOM-EV trial. This study was scheduled to enroll…

Thank you [Operator Instructions] Our first question comes from the line of Liana Moussato of Wedbush Securities. Your line is now open.

Thank you for taking my question. Before you cure pulmonary hypertension with gene therapy, can you tell us what are the next steps to the launch of RemoPro and are you waiting on Medtronic or the FDA to do anything?

Sure. Well, the good news is when you always keep the FDA busy with submissions, then you are always going to be waiting on the FDA. And it’s not a bad waiting, it’s a good waiting. So, we definitely are waiting on the FDA and as well, when you work with great partners as we do Medtronic and Deca and other companies, then there is always a research and development involved to certain amount of waiting. But again it’s good waiting. It’s the kind of waiting like when you are baking a pie and you are waiting for the pie to be ready. So let me go through some of those waitings, It’s an excellent question. So, start with the Implantable System for Remodulin, the acronym ISR, just like the Israeli acronym for the ISR, the ISR system is now before the FDA. We submitted the drug portion of the ISR at the end of January and we expect to learn by the end of February whether or not it will be a one or two submission. And depending on that is whether it’s a shorter or a little bit of a longer review, but in either event, the review period would be consistent with our being able to get approved for and launch the product in the next calendar year. So, everything is on schedule. Everything is consistent with what we previously cite that 2017 – 2018 is the year that we expect the ISR to be approved and we continue to be very optimistic and boast without doubt. I have to leave it to our legal experts as to exactly when to provide advice as to the type of approval process, review process that the FDA will go through one or two for ISR. But certainly, I know…

Our next question comes from the line of Jessica Fye of JPMorgan. Your line is now open.

Great. Thanks for taking my question. Martine, just wanted to clarify on the RemUnity 510(K) filing coming up. Is this version of the RemUnity pump, the kind with the semi-disposable cartridges or is this a patient filled pump? Thank you.

Yes, no, this is not going to be patient-filled. These are all pre-filled.

Thank you.

Next question please?

Thank you. Our next question comes from the line of Chris Shibutani of Cowen. Your line is now open.

Yes, hi, Martine. Could you help us a little bit understand the pattern of the operating expense components? There seem to step-up both from the COGS, R&D, SG&A, your scripted remarks highlighted your multiple ongoing clinical trials. Can you give us a little bit of a sense for whether the fourth quarter that you just reported reflects some sort of a trend that we should be pulling forward as we think about operating expenses this year and next? Thank you.

Well, thank you for the question. I am fortunate to have our Chief Financial Officer sitting right next to me here in Silver Spring. And James, could you kind of field that question?

Sure, great, thanks for the question. So there was two. There was one about COGS and there was a step-up in COGS this quarter reflective of the increased royalty that we paid to Lilly associated with the new contract. So there was probably about a $20 million increase in COGS there. With respect to the general spend levels, specifically to R&D as you ask, there was about $100 million increase year-over-year and if you recall back to the start of this year, our expectation that we communicated was that there will be an increase of R&D to advance our expanding product pipeline that we talked about in our opening remarks. The increase that we anticipate going forward will be at these levels, but again we don’t want to get into a quarterly discussion because of the starting and stopping of studies, the starting and stopping of research projects just within a calendar year. So it’s best to look at it overall and we don’t want to get into a quarterly discussion as you brought up. But I would expect going forward the R&D expenses to continue at an elevated level just with the large amount of pipeline products that Martine talked about and that are reflected in the pipeline chart on our website.

Thanks, James. Operator, could you please queue up the next question?

Our next question comes from the line of Geoff Meacham of Barclays. Your line is now open.

Hi, thanks so much for taking our questions. This is Jason on for Geoff. Yes, in terms of looking at the FREEDOM EV study, I mean, what do you see as a kind of a reasonable bar for commercial viability versus the competition? Does it matter for patients to one or more therapies? Just kind of want to understand your sense of combination therapies moving forward? Thank you.

Thanks, Jason for your questions. I think the bar for the competition is actually pretty low. According to the label UPTRAVI, which would be the closest comparable drug to Orenitram, about half of the patients fail the UPTRAVI therapy within three years. So that’s a lot of patients. We are looking at here 30,000, 40,000 patients with pulmonary arterial hypertension. If only the half that failed within three years ended up on Orenitram which would be the logical thing to do once you failed one oral therapy, go to another oral therapy before you take on more invasive therapies, it would be well north of 10,000 patients coming on to Orenitram. So, that bar for therapy – for competition right there is pretty low. It’s actually lower than that because in the real world one never sees results as good as – I won’t say never, but rarely see results that could helping controls, clinical trial where you have a lot of forces kind of making people fit for the therapy that they are on instead of switching to another therapy that benefits the patient that’s not doing as well. And in fact as highlighted in my introductory remarks, we see Orenitram growing quarter-after-quarter, third consecutive growth - quarter growth of greater than 20% and this is reflective of the fact that ever more patients are failing Ambition therapy, are failing UPTRAVI therapy and are coming on to Orenitram therapy. Now Orenitram has a beautiful characteristic that neither Ambition nor UPTRAVI can match and that is it’s titratable, it’s titratable as titratable really as is a primal therapy such as Remodulin. So, this is a fantastic skill set that is resident within Orenitram that allows us to hold on to its patients for a much longer period of time, because you can continue to titrate the therapy. I think is on top of all of that, which has led us to have approximately a one-third versus two-thirds market share UPTRAVI as of right now without the readout of the EV therapy, without any data in combination therapy, without a label showing equivalent morbidity and mortality, which got like a third market share right now without any events up. I think that once we report out data showing a improvement in morbidity and mortality from Orenitram that there will be no competitive difference in terms of anything that advantages UPTRAVI and in fact significant competitive advantage towards Orenitram which is its titratability and which is the also the efficacy inherent and be the only true prostacyclin oral analogue. Operator, can you please queue up the next – this I guess would be the last question.

Yes. Our last question comes from the line of Terence Flynn of Goldman Sachs. Your line is now open.

Hi, thank you for the question. This is Holly on for Terrance. Just one from us is, has U.S. corporate tax reform changed your thoughts on capital allocation priorities? And can you write those priorities in order of importance? Thanks.

Yes, thank you very much for the question. Again, I’m honored to be accompanied by our great CFO, James Edgemond. So, James, if you could perhaps talk a little bit about what tax reform had done for United Therapeutics effective tax rate?

Sure.

I think that’s something that people are very, very interested in.

Sure. Thank you for the question. U.S. tax reform offers many benefits to UT, but by far the biggest benefit from tax reform in 2018 will be the lowering – we will recognize the benefit of the lowering of the federal rate to 21% from 35%, which will result in improved after-tax cash flows going forward. Keep in mind, we as well as others in the biotech and pharma industry will lose some benefits with respect to the domestic manufacturing deduction as well as some other research credit. But like many other companies, one thing you will note in our financial statements for 2017 is that we did need to recognize the benefit of these lower rates and we value our existing deferred tax assets and liabilities, which represented to us the non-cash charge of about $71 million. But these benefits that we will recognize going forward as I just talked about will be at these lower rates. With respect to capital allocation priorities, which was the second part of your question, our priorities really remain unchanged. We will continue to invest in R&D products and research activities that Dr. Rothblatt talked about at the opening part of the call and then the next we will evaluate and continue to look at value-creating M&A opportunities. Our third priority will be share repurchases from time-to-time if appropriate, but if only mission-critical R&D and M&A opportunities do not avail themselves to us. So thank you for the question.

Thank you very much. Operator, you can now wrap up the call.

Thank you for participating in today's United Therapeutics Corporation Conference Call. A rebroadcast will be available for replay for one week by dialing 1 855-859-2056 with international callers please dial 1 404-537-3406, and using access code 2296917. Thank you and everyone have a great day.