Good morning and welcome to the United Therapeutics Corporation Third Quarter 2018 Earnings call. My name is Shelby, and I will be your conference operator today. All participants are in a listen-only mode until the question-and-answer session portion of this earnings call. I will now turn the conference call over to James Edgemond, Chief Financial Officer of United Therapeutics. Sir, you may begin.

Hi. Good morning. It is my pleasure to welcome you to the United Therapeutics Third Quarter 2018 Earnings Call. Accompanying me today on the earnings call are Dr. Martine Rothblatt, our Chairman and Chief Executive Officer; Mr. Michael Benkowitz, our President and Chief Operating Officer, and Mr. Andy Fisher, our Executive Vice President. Remarks today will include forward-looking statements representing our expectations or beliefs regarding future events. These statements involve risks and uncertainties that may cause actual results to differ materially. Our latest SEC filings, including Form 10-K and 10-Q contain additional information on these risks and uncertainties. We assume no obligation to update forward-looking statements. Today's remarks may also include financial measures that were not prepared in accordance with U.S. Generally Accepted Accounting Principles. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in our earnings release available on our website at www.unither.com. Today's remarks may discuss the progress and results of clinical trials or other developments with respect to our products. These remarks are intended 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 will turn the call over to Dr. Rothblatt for an overview of our third quarter 2018 financial results and the business activities of United Therapeutics.

Thank you, James, and good morning, everybody dialing in to the United Therapeutics Third Quarter 2018 Earnings Call. My name is Martine Rothblatt. I'm the Chairman and CEO. And in addition to Mr. Edgemond, our Chief Financial Officer, I'm also joined on the call today by Michael Benkowitz, our President and Chief Operating Officer and Mr. Andrew Fisher, who is joining us for his last earnings call before his retirement after 20 years at United Therapeutics. Thank you, Andy, for all those years of service. Well I've got a lot of good things to share on this call. First and foremost, I'm super excited that during the past quarter, we hit the second highest number of patients on our treprostinil franchise that we've ever had. That's over 7,000 patients across our Remodulin, Tyvaso, and Orenitram and it's very consistent with our expectations that we see our treprostinil franchise continuing to grow in terms of number of patient's health year-after-year through the 2019, 2020 and into the 2020s. And the reason for this notwithstanding the launch of generic Remodulin are the number of unique and differentiable factors that pertain to our various treprostinil products, Remodulin, Tyvaso and Orenitram. Before I go into those differentiable aspects, let me mention the most important thing from a scientific standpoint is that our research has shown that treprostinil uniquely activates the EP2 receptor in the pulmonary vascular bed. And this is something which is not matched by other prostacyclin analogs or prodrugs of prostacyclin and it seems to have a significant pharmacodynamic impacts that are particularly relevant to the progress of pulmonary hypertension and the natural history of the disease. So we feel very fortunate that the treprostinil franchise, our home franchise, is one that uniquely activates this EP2 receptor in the pulmonary vasculature. But…

And our first question comes from Chris Shibutani from Cowen. Your line is now open. Chris Shibutani - Cowen & Co. LLC: Good morning. Thank you very much. Two questions, number one, Martine you're highlighting this patient number, which is something that we would really benefit from the ability to get a better sense of perspective on how to interpret that. Can you give us a little bit more background in terms of this, obviously there's been probably growth in the use of treatments at earlier stages, which might support a growing number of patients, but can you put some perspective, is there anything in terms of revenue per patient, or what do we do with this 7,000 number in terms of, I'm trying to figure out how to translate over to our view of how to think about the future? And then I have a follow-up question on expenses for James, but for you on the patient number, Martine.

Okay. So the drug industry has been critiqued for price increases, and I think that it's a dodgy but necessary statistic in terms of looking at how well a company is doing in terms of revenue, because a lot of companies they just keep increasing prices. Now fortunately that has been moderated in recent months, quarters, to the industry is trying to keep the price increases in the single-digits percentages. Just for the record, and not saying that we're better than anybody else, I just wanted to say what the fact is. United Therapeutics has never taken a double-digit price increase ever in our entire history. And so, we got to $1.5 billion a year in revenue the hard way, by doing good clinical trials, good clinical science, and explaining the results to doctors, and then doctors took the appropriate decision. So if I was in your shoes, I would say, wow total number of patients on treprostinil, that is a really good metric for me to use to understand how well this company is doing, like if generics were eating their lunch, then by definition the total number of patients on treprostinil would be less, as you could see that's not happening here. Now we don't like to go into the minutia of how many patients are on this, that and the other version of our drug, and as you could tell from my introductory remarks we are in the process of kind of cloning three versions of our drugs into like 12 versions of our drugs. There will be four different flavors of Remodulin. There already are three different flavors. There will be four different flavors of Tyvaso, and I didn't have time to talk about what we're doing in terms of our Orenitram combo pill and our…

Yeah. Hey Chris?

(00:28:52)

Yeah.

(00:28:54) know the expense question?

No, he was going to circle back on the expense question.

All right. Chris, do you have the expense questions ready? Operator, next call.

And our next question comes from Geoff Meacham from Barclay. Your line is now open.

Hey guys. Thanks so much for taking my call. This is Jason (00:29:11) on for Geoff. I was hoping if you could talk a little bit more broadly about – in thinking about the lifecycle management strategy, what the conversion rates would be like in moving patients over to all these various devices, especially given kind of the payer headwinds? What do you foresee the conversion rates being like? How do you anticipate managing them? And what do you ultimately expect those rates to be? Thanks so much.

Yeah. Thanks, Jason (00:29:45). I don't really think it's a lifecycle management question at all. I think it's a question of all of our existing products that patients are locked and loaded on those products. Very, very rare, as I mentioned in my introductory remarks for payers to rip a patient off a product that they are depending upon for sustaining their life. In the disease state, the patients just have a handful of expected years of life. Instead, I think it's a matter of a pipeline that's actually pouring forth a number of new products. The implantable system for Remodulin was the first such new product. The RemUnity is another new product. The Trevyent is another new product. And RemoPro is another is another new product. The RemoLife (00:30:34) with Smiths Medical is another new product. The esuberaprost is another new product and MannKind and so on and so forth. So all of these products are not products that are swapping in and out of our existing patient base. All of the growth we are seeing is organic growth. We are eating into the Uptravi space. We are eating into the Opsumit space. We're eating into the newly diagnosed patient space. There are, every year, literally thousands of new patients diagnosed with pulmonary hypertension. I didn't have a chance in my introductory remarks to talk about the WHO Group 3 space, where we're conducting our Phase III trials in COPD and ILD forms of pulmonary hypertension; tens of thousands of patients which have gone untreated completely. I didn't have a chance in my introductory remarks to talk about the WHO Group 2 space for patients with left heart failure, but with preserved ejection fraction, best estimates are well over 100,000 of those patients have been completely untreated. And so, it's the movement into these spaces with new products coming out of our pipeline. That's where the organic growth is coming from. Next question, please.

Thank you. And our next question comes from Terence Flynn from Goldman Sachs. Your line is now open. Terence Flynn - Goldman Sachs & Co. LLC: Hi. Thanks for taking the question. I was just wondering, Martine, if you can comment on latest thoughts on capital allocation, specifically how you're thinking about repurchases versus business development and maybe expanding the pipeline beyond PAH. Thanks a lot.

Thanks, Terence, for that question. I'm going to pass it over to James as he's our Chief Financial Officer. I will just mention though, at the tail of the question, that we are expanding beyond pulmonary hypertension. And just to make sure everybody on the phone is aware during the past quarter we acquired the exclusive rights to a very, very exciting product for idiopathic pulmonary fibrosis, which is not associated with pulmonary hypertension. There is another subset of pulmonary fibrosis which is associated with pulmonary hypertension. We have a Phase III trial now enrolling patients called the PERFECT trial, and it's enrolling quite well. That's a growth opportunity for Tyvaso (00:33:05) thousands of new patients I mentioned before. But we also have this tremendous regenerative medicine type of product based on the Wnt pathway from Samumed in pulmonary fibrosis. Off in Phase I results, we're going to be taking it into Phase II and Phase III. But James, let me pass the baton over to you on the capital allocation question.

Good morning, Terence. Thanks for the question. And so Terence, our capital allocation priorities, I would say remain unchanged and consistent with what we've talked about previously. And so, we're first going to invest in R&D opportunities that support our business mission. And second, investing in value-creating business development activities. Martine mentioned some of those briefly just a moment ago. And third, historically we have done share repurchase, but that will be a third priority. So again, I think the framework that we've applied is been consistent. And I think if you go back to the third quarter, we've executed against that framework as we've discussed before.

Excellent, James. I'd like to add one last point, Terence, and that is we have not had a chance on our quarterly calls to talk very much about our oncology franchise. And it's probably something that I really take responsibility for. I should have provided the shareholders with more visibility into our oncology franchise. It's a really beautiful drug because – and I'm talking here about Unituxin, in that based on the label it has reduced the death rate in the patients who end up dying from neuroblastoma by just about 50% in the subset of neuroblastoma patients to which it applies. That means that there are literally hundreds of kids that – thanks to Unituxin – are going to be able to grow up and live a normal life without a fear of cancer haunting them, without needing to take any continued drugs to keep their cancer in check. I wish it worked 100% of the time, but I'm grateful that it works 50% of the time. And we have a number of physicians that are beginning to test Unituxin in other GD2-responsive cancers, of which there are several dozen. So we teamed up with a company called Precision Oncology to analyze all the different GD2 cancers and go through a comprehensive, precision medicine based set of assays to determine, which was our best shot for dinutuximab, and that's the proper chemical name of Unituxin. And anyway, the best shot turned out to be small cell lung cancer, followed by certain forms of glioma, followed by certain forms of melanoma. And so we embarked on first a Phase II, then the Phase III study of dinutuximab in small cell lung cancer. And we've now completed enrollment just this past quarter of over 450 patients, in that DISTINCT is the…

And our next question comes from Liana Moussatos from Wedbush Securities. Your line is now open.

Thank you. What are the next steps and timing to get RemoPro approved? And do you plan to replace all subcutaneous products with RemoPro?

Thanks, Liana, so nice to hear your voice this morning. And (00:39:11) probably be the case, I would find it hard to understand why anybody would do a non-RemoPro version of treprostinil, when there was the RemoPro version available. You can see on the label that it's for regular treprostinil. I don't have the exact number, but something like 90% of the patients suffer subcutaneous site pain and erythema. So it's a very high proportion. Some of those patients get used to it, some never do. I will tell you, I have tried it on myself and it hurts like hell. So I really – if you don't need to have it, I recommend you not do it. But if you have a pain-free way, that's the kind of thing that you get these hockey stick curves in terms of patient take up that if something causes pain, the doctor says, oh good news, I've got a painless version of your product, of your drug. It's like, okay, let's change yesterday. And in fact, it doesn't even have to be completely pain free. If you said to any normal human being I'll give you something that causes half the pain (00:40:40) half the pain. So I do believe, Liana, that the RemoPro product delivered through our RemUnity system and delivered through our Trevyent system, SteadyMed system, and delivered through the Smiths SmartPump, our RemoLife (00:40:59) system will be the overwhelming, almost exclusive way that people would take treprostinil subcutaneously. Next question?

And our last question comes from Jessica Fye from JPMorgan. Your line is now open.

Hi. This is (00:41:16) for Jessica. Thank you for taking our questions. Could you provide any color to when we expect Sandoz will begin launch of generic Remodulin? And what do you think maybe delaying the launch here? And then what about Teva, Par and Dr. Reddy's and is there a reason to think their product won't be approved to launch?

Well thank you for your question, and I'm joined today by our President and Chief Operating Officer, Mike Benkowitz. Among his many other responsibilities, Mike also oversees all commercial operations at Untied Therapeutics, all relationships with payers, many other key responsibilities. So, Mike, can you please help the JPMorgan analyst?

I'll try. At this point or at this date in time, we're not aware that Sandoz is launched. In fact we've heard they've not launched. And we really don't have additional information as to why they haven't launched or when they will launch. But we know that they could have launched back in June, (00:42:24). So as for the other companies, we're not aware that they received their approval either. So you probably have to talk to them to understand what the status is with their filings.

Super, Mike. Thank you so much, everybody, for joining our call. The bottom line here is the same as the top line. Second best number of patients on our treprostinil franchise ever, and the forecast is for continued growth in total patients on treprostinil through Remodulin, Tyvaso, Orenitram, and the ever-growing number of new forms of both molecules that will provide advantages to physicians and providing patient care, as well as growth outside of pulmonary hypertension now into pulmonary fibrosis and into small cell lunch cancer. Thank you very much.

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 dialing 1-404-537-3406 and using access code 4179147.