Good morning and welcome to the United Therapeutics Corporation Second Quarter 2019 Earnings Call. My name is Michelle and I will be your conference operator today. All participants will be in a listen-only mode until the question-and-answer portion of this earnings call. [Operator Instructions]I will now turn the conference over to Mr. James Edgemond, Chief Financial Officer of United Therapeutics.

Thank you, Michelle, and good morning. It is my pleasure to welcome you to the United Therapeutics Corporation second quarter 2019 earnings call. Accompanying me on today’s call are Dr. Martine Rothblatt, our Chairman and Chief Executive Officer; and Mr. Michael Benkowitz, our President and Chief Operating Officer.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 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 usage. 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 the second quarter 2019 financial results and business activities of United Therapeutics.

Thank you, James. Good morning, everybody.I’d like to start off with a few words about the current quarter and then spend a longer time talking about the growth prospects for the future. And then, we’ll open up the lines for questions directed to our President, Mike Benkowitz; CFO, James Edgemond or myself.Our prostacyclin product franchise, consisting of Remodulin, Tyvaso, and Orenitram, is being used by a larger number of pulmonary arterial hypertension patients than ever before. The momentum that this demonstrates underscores our belief that the product franchise is well-positioned to treat a large and growing number of pulmonary hypertension patients in need of a true prostacyclin analogue therapy. It also reinforces our commitment to advancing our innovative pipeline of next generation drug delivery systems and late stage clinical programs in cardiopulmonary diseases and in oncology, as well as our exciting work in regenerative medicine and organ manufacturing to ultimately achieve our mission of finding a cure for both pulmonary hypertension patients and those suffering from other end-stage organ diseases.Let me now talk a little bit about the exciting work that we have for the future and why we believe that our pipeline is very, very strong.Our feeling is quite confident that we’re going to triple our business over the next few years, thanks to over a dozen products in our pipeline and several FDA-approved product platforms. We can triple our business by gaining more Remodulin patients with our novel infusion product than we lose to older technologies. Indeed, half of our pulmonary arterial hypertension patients actually die before trying any Remodulin product due to the older technologies, many problems. Our new Remodulin products include the Implantable System for Remodulin or ISR and RemUnity and Trevyent, all three of which are pending FDA approval, as well as RemoPro and RemoLiv,…

Thank you. [Operator Instructions] Our first question comes from the line of Hartaj Singh from Oppenheimer & Company. Your line is now open. Please go ahead.

The main question is on Remodulin. I know that you’ve indicated today on the call and recently that you’re not really seeing any change in patient patterns in the United States. I think, you mentioned in the press release that there are some changes, ex-US. Could you just give us some more color on the domestic versus the international patterns now that they are generics? And then, how do you sort of foresee progression for Remodulin through the rest of the year? Is it sort of historical kind of getting stronger through the rest of the year? Thank you very much.

Hartaj, thank you so much for the question. Good to hear your voice this morning. I’d like to -- Mike Benkowitz, our President, he’s in charge of all commercialization activities at United Therapeutics. So, I’d like to ask Mike if he could please respond to your question. Mike?

Sure. Thanks, Martine. Thanks, Hartaj. So, we’re pleased to see that despite competing with generic in the U.S. and to a lesser extend in the EU for a full quarter now, the patient demand metrics for Remodulin remained consistently strong. This is certainly evidenced by looking at quarter-over-quarter revenues. In the U.S. for instance, U.S. Remodulin starts in Q2 were higher than in any quarter in almost 10 years. Our active patients in this quarter, compared to Q2 of last year are up. Our dispenses of branded Remodulin across both the high and low concentrations are higher in Q2 this year versus Q2 of last year. And on a more qualitative basis what we’re seeing through our conversations with PAH doctors is, they continue to express a preference for branded Remodulin because of many of the things that we’ve talked about on prior calls, including the established safety profile, the patient support programs and the development projects we have underway that Martine touched on, to continue to have Remodulin be a differentiated product and more convenient product for patients.So, we’re pleased to see how this is playing out. Similar story with a couple of differences in the EU. Demand remains quite strong for Remodulin. I think in terms of generic competition, it’s still limited at this point. Really the only country to launch Austria, to a lesser extent in Germany. That may or may not pick up as we move later into the second half of the year. As it stands right now, there is limited competition in -- limited generic competition in EU. So, we continue to remain very, very bullish and very confident in the benefits of branded Remodulin as move into the second half of the year and beyond for the reasons I just outlined.

Thanks so much, Mike. Thank you, Hartaj. Operator, could you offer us the next question?

Our next question comes from the line of Jessica Fye with JP Morgan. Your line is now open.

Good morning. Thanks for taking my question. Martine, I’m curious how you think about capital deployment these days? Is there any current priority around share repurchase of your stock at these levels, or are you focused more on business development to expand and diversify the long-term portfolio?

Thanks Jessica for the question. We’ve got on the line with us, James Edgemond, our Chief Financial Officer, who oversees all those capital deployment types of questions. So, James, could you respond to Jessica’s call?

Sure. Thanks. And Jess, good morning. Thanks for the question. Thinking about our capital allocation priorities, they remain fairly consistent and unchanged as to what we’ve outlined historically. They do include share repurchase, but it is still the third kind of leg for us. Our first priority is still investing in research and development opportunities that we want to support our business mission with; second is investing in value creating business development activities; and third is share repurchase. So, the capital allocation priorities remain consistent.And with respect to investing in our R&D budget, our first capital allocation priority, one thing to keep in mind, which is consistent with our prior discussions is around our annual expense budget algorithm, which we’ve consistently applied which will not allow us to exceed really 50% of our prior year revenue. And this methodology forces us to continuously evaluate each of our research and development opportunities on really on an ongoing basis.When you get into the second capital allocation priorities with respect to M&A, we continue to place an emphasis on the strategic impact of targets in terms of the attractiveness of the therapeutic area, opportunity for near-term revenues, and really the incremental value that could be added by UT among other filters. And these include therapeutic areas like cardiology, pulmonology and oncology. Although we are not limited to these areas. So again, I just wanted to give you in addition to share repurchase how we continue to think about capital allocation. So, thanks for the question.

James, thanks for excellent answer. Operator, next question, please?

Our next question comes from the line of Liana Moussatos with Wedbush Securities. Your line is now open. Please go ahead.

Thank you for taking my question. Could you give us a little more detail on the status of the transplant organs program? You mentioned the Xeno but also 3D and other approaches?

Yes. Liana, thank you for your question. So, we have several different approaches that we are doing in our organ manufacturing project, and they run the range from taking organs that are donated after a person’s suffering brain death but are deemed to be unusable for transplantationand would always be thrown away. And we have a technology that is able to restore these organs back to transplant ability and then send them on to the transplant center anywhere in the country to be transplanted.So, that technology generically is known as EVLP, and it’s routinely resulting in saving the lives of people. In fact, just last week, there was a widely reported news story of a young lady, cystic fibrosis sufferer who was the sickest person on the nationwide transplant list, meaning that she was basically in as bad shape as could be. Had the individual had to wait for like some ideal lungs, who knows what would’ve happened, but she had a very successful transplant of lungs that were otherwise would have been discarded that were sent to our Silver Spring, Maryland facility were restored to transplant ability and then were flown onto her hospital in Virginia with a successful outcome.In fact, just next month, we’ll be opening up our second such lung restoration center in partnership with the Mayo Clinic. So, that will be an exciting event toward the end of August. In addition to that, we have a active Xeno transplantation program that is the transplantation of genetically modified pig organs into people. Once the genetic modifications have been shown to reduce risks of rejection to such a level that they really are no different than an allograft transplant. In the Xeno program, we’re focusing, as I mentioned in my introductory remarks, on the Xeno kidney, which has…

Our next question comes from the line of Chris Shibutani with Cowen. Your line is open. Please go ahead.

Thank you. Good morning, Martine and team. I wanted to ask a question about ralinepag and that program. Can you confirm for us whether the plans and the timelines, as communicated by Arena prior to your acquisition of this program, are the same, and if those programs are on track? And in particular, for one of the studies, which involves transitioning patients over, can you talk about what you guys feel is the most important endpoint in order to compel clinicians to think that ralinepag is a drug for switching patients over to or to be competitive?

I’d say, it’s a very good and detailed question. Thanks for asking it. So, generally speaking, I can’t really remember, even though everything that Arena said, but the program is on schedule, it’s doing well, it’s enrolling patients. When we took over the patients from -- the program from Arena, there actually were no Phase 3 patients yet enrolled. So, now, we’re actively enrolling. It’s the top Phase 3 trial on which we are spending money. And so, the program is being enrolled as quickly as we can, consistent with, of course, good clinical practices and all that sort of stuff.In terms of whether or not the results will persuade physicians to prescribe ralinepag in lieu of say, Uptravi, I think, we have to wait until their results are out. Certainly, from the Phase 2 data, there were compelling indications that ralinepag was the best-in-class drug, compared to Uptravi. But, those were Phase 2 compelling indications and all of that has to be confirmed in a Phase 3 trial. So, I believe that the trials are sized appropriately to produce some compelling results. And we’re certainly hopeful to have those results, but we’ll just have to wait through the normal couple years of our Phase 3 enrollment to have those answers.Thanks for the question. Operator, next question, please?

[Operator Instructions] Our next question does come from the line of Martin Auster with Credit Suisse. Your line is open. Please go ahead.

Thanks for taking the question. I appreciate it. I have a question for you, Martin, about the litigation between you and Smiths, again Sandoz on RareGen. Just curious if you could provide us an update on when you expect an initial ruling or potential -- I believe you filed for a dismissal of that case. And maybe, also, if you could kind of outline what next steps would be after the initial rulings are made? Thanks.

Thanks, Marty. Good to hear your voice this morning. Yes. I’m really glad that I shifted into biotechnology rather than law, like some 20 plus years ago, because legal proceedings are, by their nature, long. So, even though we feel that the RareGen-Sandoz litigation is literally meritless, I cannot really predict the outcome in terms of judge’s rulings on particular motions as they’ll come up during the course of the proceeding. Litigation, generally speaking, once you’re in litigation, one thing that I have seen is that, it just drags on and on. And I can’t really predict how long this one is going to drag on. But, in terms of the merits of the case, we really feel that the complaint was meritless, and we will continue to defend vigorously and carry on with our business.But, thanks for the question, Marty, and good hearing your voice this morning. Next question, operator?

I am not showing any further questions at this time.

Excellent. Well, let me go ahead and give a couple of words of wrap-up here. James and I will be at the Wedbush Securities conference in New York in August to give a full review of everything that we’re doing and answer further questions.But in summary, the Company’s core business, Remodulin, Tyvaso, Orenitram, Unituxin which we didn’t have too much chance to talk about during this call, is very strong. We now have our first commercialized FDA-approved organ treatment technology, what I call as manufacturing technology, known as the XPS system due to our partnership with XVIVO. So, it’s really nice having these five independent commercialized lines of business.And as I mentioned in my opening remarks, certainly the top three of them, Remodulin, Tyvaso and Orenitram, I feel very confident each can triple our current level of revenues and business. So, we’ve got like three independent shots on tripling -- on a goal of tripling our business from its current level. Pending the outcome of the Unituxin lung cancer study, which we call DISTINCT, and we expect to accrue the necessary number of events sometime later this year. That could portend for a major expansion as the way we view ourselves at United Therapeutics into much more of an oncology company. And finally, on the organ manufacturing and regenerative medicine front, it’s very exciting to have a first technology that’s already approved for commercialization by the FDA as well as having industry-leading activities going on in all the different parts of organ manufacturing that I described, in response to Liana’s question.Thank you very much everybody for joining our conference call, and look forward to seeing as many of you as possible at Wedbush. Operator, you can now wrap up the call.

Thank you for participating in today’s United Therapeutics Corporation’s 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 3066089. Thank you, and have a great day.