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Edited Transcript of UTHR earnings conference call or presentation 27-Feb-19 2:00pm GMT

Q4 2018 United Therapeutics Corp Earnings Call

Silver Spring Mar 2, 2019 (Thomson StreetEvents) -- Edited Transcript of United Therapeutics Corp earnings conference call or presentation Wednesday, February 27, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* James C. Edgemond

United Therapeutics Corporation - CFO & Treasurer

* Martine A. Rothblatt

United Therapeutics Corporation - Founder, Chairman & CEO

* Michael I. Benkowitz

United Therapeutics Corporation - President & COO

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Conference Call Participants

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* Christopher John Zopf

Cowen and Company, LLC, Research Division - Associate

* Daniel G. Wolle

JP Morgan Chase & Co, Research Division - Analyst

* Hartaj Singh

Oppenheimer & Co. Inc., Research Division - Research Analyst

* Jason Jakoby

Goldman Sachs Group Inc., Research Division - Business Analyst

* Martin Douglas Auster

Crédit Suisse AG, Research Division - Research Analyst

* Vasiliana Vireen Moussatos

Wedbush Securities Inc., Research Division - MD of Equity Research

* R. James White

University of Rochester Medical Center - Professor of Medicine, Pediatrics, Pharmacology & Physiology

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Presentation

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Operator [1]

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Good morning, and welcome to United Therapeutics Corporation Fourth Quarter and Full Year 2018 Earnings Call. My name is Nicole, I will be your conference operator today. (Operator Instructions) I'd now like to turn the conference over to James Edgemond, Chief Financial Officer of United Therapeutics.

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [2]

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Thank you. Good morning. It is my pleasure to welcome you to the United Therapeutics Corporation Fourth Quarter and Full Year 2018 Earnings Call. Accompanying me on today's call are Dr. Roth -- Dr. Martine Rothblatt, our Chairman and Chief Executive Officer; Mr. Michael Benkowitz, our President and Chief Operating Officer. And in addition, we are pleased to welcome to this earnings call, Dr. Jim White, Professor of Medicine, Pharmacology and Physiology in the Division of Pulmonary and Critical Care Medicine at the University of Rochester Medical Center, and a steering committee member for the FREEDOM-EV study of Orenitram. Dr. White will be available during the question-and-answer portion of the earnings call to answer questions regarding data from the FREEDOM-EV study.

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 will 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 and other developments with respect to our products. These remarks are intended solely to educate investors and are not intended to serve as a 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.

Our earnings call this morning will be divided into 2 sections. During the first section of this earnings call, Dr. Rothblatt will provide an overview of the fourth quarter and full year 2018 financial results and business activities of United Therapeutics. And then we will transition to the question-and-answer portion of the teleconference for Dr. Rothblatt, Mr. Benkowitz and myself on our fourth quarter and full year 2018 financial results and business activity. We will then transition to the second section of this earnings call, and I will introduce Dr. White to discuss the FREEDOM-EV clinical study and then transition to the question-and-answer portion of the teleconference for Dr. White, Mr. Benkowitz and myself.

Now I will turn the call over to Dr. Rothblatt for an overview of the fourth quarter and full year 2018 financial results and business activities of United Therapeutics.

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [3]

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Thank you, James, and good morning, everybody. Welcome to our 2018 fourth quarter and annual results conference call. As James just indicated, the agenda for this call will be from 9:00 to 9:30 I'll review the financial results and our business activities. And joining me for that review will be Mike Benkowitz, our President; and James Edgemond, our Chief Financial Officer. During this first half hour, after I complete a few introductory remarks, we'll have questions and answers that can be directed to either myself, Michael or James. At 9:30, I'm going to turn the chairmanship of the call over to James Edgemond, who will introduce Dr. Jim White. And Jim White -- led by Jim White and supported by Mike Benkowitz and James Edgemond will review the FREEDOM-EV study and its implications for United Therapeutics. We're very honored to have Dr. White with us on this call. He is one of the top tier key opinion leaders in the field of pulmonary arterial hypertension and has been a member of the steering committee for the FREEDOM-EV study.

2018 was a truly transformative year for United Therapeutics. We signed 4 major agreements to acquire new product candidates, including an in-licensing agreement for ralinepag, representing our largest deal to date. At the same time, we continue to execute against our existing commercial and clinical goals, including successful readout of our FREEDOM-EV clinical trial, significant progress towards near-term Phase III readouts for our BEAT and DISTINCT studies and an increase to a record number of patients being treated with our treprostinil therapy. Let me now go to the numbers.

Our revenues declined to $381 million in fourth quarter 2018 from $465 million in fourth quarter '17, reflecting a loss of Adcirca exclusivity. But our profits grew to $65 million in fourth quarter '18 from $19 million in fourth quarter '17. We ended the calendar year 2018 with net income of $13.39 per diluted share compared with only $9.31 per diluted share at the end of 2017.

Let me now review our late-stage clinical pipeline. As mentioned earlier, we expect to unblind our BEAT and DISTINCT studies this year. BEAT is the Phase III study of the potent oral prostacyclin analogue called esuberaprost, taken in combination with our Tyvaso product. It is a morbidity/mortality study, and if successful, would significantly lengthen the period of time our patients are able to use Tyvaso. We expect that this could grow our Tyvaso patients to between 5,000 and 10,000 patients.

DISTINCT is a Phase III study of our monoclonal antibody, dinutuximab, for small cell lung cancer. Of note, with regard to dinutuximab is that we in-licensed a humanized form of it from St. Jude's and should have that drug product ready for some testing next year. Now in addition to these 2 near-term readouts, we also have 4 other Phase III trials, in which we advance enrollment to the point that we expect that they too will fully enroll within the next 24 months. Each of them would open up many thousands of new patients for United Therapeutics. The first of these is called INCREASE, which is a path of pulmonary hypertension in the context of interstitial lung disease. And this is a form of pulmonary hypertension called Group III pulmonary hypertension, for which it will be the very first approved therapy.

The second study, which is also Phase III, nicely enrolling, is called the PERFECT study, and that study is occurring in COPD, specifically testing COPD patients with pulmonary hypertension. It too occurs in this large Group III segment of pulmonary hypertension. Several tens of thousands of patients suffering from this. And this too would be the very first therapy available for Group III pulmonary hypertension patients with COPD.

The third Phase III trial, which we're undertaking right now, is called SOUTHPAW. And this is the trial of our oral agent, Orenitram, in heart failure with preserved ejection fraction. Again, a wide open area of pulmonary hypertension for which there is not a single approved therapy. This is called by the World Health Organization Group II pulmonary hypertension.

And the fourth Phase III trial going on right now is called SAPPHIRE, which is for drug-resistant pulmonary hypertension as it is natologist gene therapy treatment that these patients would be able to take. Basically, once every 3 months and perhaps even a little bit longer, patients would go into the doctor's office for an infusion of their own cells that have been transfected with a gene that improves those cells' functionality in a biochemical pathway that pace the natural history in progression of pulmonary hypertension. Return the patient's own cells into a microscopic medicine factory to help them combat pulmonary hypertension. Truly, an awesome study design.

So before I turn it over to questions and answers, I'd like to also mention several developments relating to our drug delivery systems. First, we signed a commercial agreement with Medtronic for the Implantable System for Remodulin that will augment by many hundreds, the number of patients, that can benefit from intravenous Remodulin. Second, we are preparing to submit regulatory approvals of Trevyent and RemUnity to provide 2 expanded options for patients on subcutaneous Remodulin. Taken together, these 3 devices should propel (technical difficulty) to also the range of 5,000 to 10,000 similar to the range mentioned and in addition to the range mentioned for Tyvaso previously.

Next, we are also advancing 2 brand-new forms of Tyvaso drug delivery, a dry powder system from MannKind and a liquid MDI called SPIRESTA from MedSpray. As you can see from all of these results, it's been a transformative year for United Therapeutics. We have never had a more activity, both in the clinic with patients going on to our treprostinil therapies and in terms of clinical trials with all of these different Phase III trials, imminent unblinding and new technologies for the delivery of our drug to make the life and hopefully the efficacy and the duration of activity for all of our agents longer and more beneficial to our patients.

With this introductory remark -- and with these introductory remarks behind us, I'd like to ask the operator to kindly now open up the phone for any questions related to all of the areas I covered for myself, Mike Benkowitz or James Edgemond. If you have questions relating to the FREEDOM-EV study, please hold those until 9:30, you can get freshly back in the queue at that time, and you'll have the benefit of hearing Dr. White's expert review of the FREEDOM-EV readout.

Operator, you can open up the lines for any questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Carter Gould from UBS.

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Unidentified Analyst, [2]

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(inaudible) for Carter. Could you talk about the evolving payer attitude in PAH and how that might impact how you're thinking about your pipeline assets? Maybe put another way, should we expect payer purchase in PAH to evolve with the new launches and what do you anticipate payer [purchasing] space will look like in the next 3 to 5 years?

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [3]

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Yes, it's a really interesting question. Thanks for asking it. I think the person probably most qualified to answer that question would be Mike Benkowitz, our President. He oversees all of the individuals -- very talented individuals in our company, who interface on a regular basis with the payers who called out our strategic operations group. And Mike, if you could perhaps provide your perspective on the evolving payer landscape?

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Michael I. Benkowitz, United Therapeutics Corporation - President & COO [4]

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Sure. Thanks, Martine. Yes, I think it is an interesting question and one that we know we're certainly keep an eye on. There certainly seems to be a lot of energy and a lot of attention at the federal government level about reigning in the cost of prescription drug prices and a lot of different proposals being, I guess, bandied about and considered. And so I think our approach right now is certainly to keep an eye on those things, see what eventually evolves. I think it's hard to predict at this point exactly what's going to happen because there are so many different proposals and approaches that are, as I said, being [bandied] about. I think as it relates to our medicines and to PAH, I think, we have certainly expensive therapies, but I think, we also have a responsibility to make sure that we're being mindful of the cost of those therapies. And so historically, we've been really modest in our approach as it relates to price increases. Last year, we took a price increase to Remodulin, that was the first time we've done that in 8 years. Our price increases with respect to our other drugs are typically mid- to low-single digits. And we think we just -- we have a responsibility to make sure that we keep our drug prices affordable. We also do a number of other things to assist patients that can't afford our drugs. We have a, I think, a very competitive and generous patient assistance program. We offer co-pay cards for patients to help them with their financial obligation. And so while the government is certainly paying a lot of attention to this and we'll keep an eye on that and respond accordingly, once there's a proposal or a bill to react to. We're continuing to do the things that we think are right appropriate for the PAH community.

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [5]

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Thanks so much, Mike, and thank you for the question from UBS. Operator, could you please bring on the next question from the queue?

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Operator [6]

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Our next question comes from Hartaj Singh from Oppenheimer & Co.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [7]

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I just had a question on dinutuximab. I know that you're going to have the readout later this year. There was a study recruited close to 500 patients in the disease you're looking at, small cell lung cancer. I guess, my question is, it took about 1.5 year to recruit the patients. That's a pretty big study. Could you just give us some color around recruitment and the tough to treat disease? And then what could the readouts sort of look like, just the primary and the secondary endpoints? How would you -- how do we sort of expect to see a press release to look like?

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [8]

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Yes, thanks so much for the questions. Actually, none of the 3 of us are really specifically a medical or scientific expert on small cell lung cancer. So we'll be kind of at the 30,000-foot level but I'll provide an answer to the question. The study was enrolled with our CRL partner called Precision Oncology. And they have a tremendous worldwide network of oncology centers. So the study, although, it was a large study for us, we felt it enrolled relatively quickly and we've been very pleased with Precision Oncology's work on that. Before we went into small cell, Precision Oncology did an exhaustive analysis based on a number of in vitro and analytic markers that they have in terms of what would be the most promising next target for dinutuximab after its existing approval for neuroblastoma. And basically the dashboard was very strongly green for go in terms of small cell lung cancer. So we felt optimistic and strong about doing that. The heat map was in its favor. So we launched into the study. I think the fact that it enrolled relatively rapidly is a positive sign. I do believe we passed all of the DMFC type of gateway. So the only thing that we're waiting for now is unblinding. And I believe the current timing for that would be in the second half of this year, hopefully, the earlier part of that second half. And we feel optimistic enough that, as I mentioned in my introductory remarks, we went ahead and in-licensed a humanized form of dinutuximab, which the agent we're testing is a chimeric mAb. So I'm really hopeful that this humanized form can reduce the side effect profile associated with the chimeric [form] and both expand the neuroblastoma market for us. Also, of course, we'll have to do a comparability study from the humanized to the chimeric, but also allow it to be as proven effective, an even more attractive option in the small cell lung cancer market. And we're also working with Precision now to line up a third target for this GD2 targeting antibody. And the third target, which is currently looking most attractive is glioblastoma multi-form. So we're investing a lot in this platform for trials. And as I mentioned, we've built up a manufacturing facility. It should -- for the humanized form, it should go into operation by the end of this year. And hopefully before the end of next year, we'll have drug product that we can move into at minimum a new trial for neuroblastoma. Hopefully, also an additional trial for, or at least a comparability study for small cell and super exciting would be if we could go into GBM as well. Thanks so much for the focus on dinutuximab. And operator, you can queue up the next question.

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Operator [9]

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Our next question comes from Terence Flynn from Goldman Sachs.

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Jason Jakoby, Goldman Sachs Group Inc., Research Division - Business Analyst [10]

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This is Jason on for Terence. Had a quick FREEDOM-EV question, but it's less on the clinical side, more from the company side. Have you guys seen any initial impact on prescribing trends or patient mix following the FREEDOM-EV readout?

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [11]

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Yes, Jason, I'm going to ask you to get back in the queue because that question, you'll have a much more intelligent answer to that question after you hear Dr. White's expert review of how Orenitram intersects with the disease. And he was a presenter at the top tier Pulmonary Vascular Research Institute Conference just last month. So if you would just kindly get back in queue, I'm confident we'll be able to pick up your question in the next half-hour. Operator, next question?

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Operator [12]

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And our next question comes from Liana Moussatos from Wedbush Securities.

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Vasiliana Vireen Moussatos, Wedbush Securities Inc., Research Division - MD of Equity Research [13]

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After BEAT readouts and assuming it's positive because esuberaprost isn't approved and it's being tested in combination with Tyvaso, are there any extra regulatory or clinical steps you need before you would submit an NDA?

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [14]

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Now it's a great question, Liana, and the answer is no. Because we have a really awesome clinical team that's been working on this in terms of the CMC portion of the filings and the clinical portion, the material we're already rewriting, like the medical portion. So everything possible has been done so that we could get that filing submitted in actually record time for our company after a Phase III study. For example, like in the industry, 6 months is like a kind of a typical time period to submit an NDA after the study is unblinded. We're aiming for 3 months on the BEAT trial. And there are no additional studies, no additional -- anything other than putting together the NDA during that 3-month period. And as mentioned just a moment ago, we're already beginning to put together parts of that NDA. The exciting thing about esuberaprost is that we are manufacturing it ourselves. And as you may know, it is a very complex drug to manufacture because it's strictly a single isomer, the single effective isomer of an otherwise racemic molecule, beraprost. And even our great partners in Japan, Toray, one of the greatest chemical companies in the world was not able to manufacture the single isomer esuberaprost form of the drug, which then had a very -- but we were able to do that and that's the drug that we're using. That's the drug we'll have on stability and that's the drug that we would get approved. So our hope is that we would unblind, let's say, in the second quarter of this year, Liana. And then let's say that we could get this NDA filed before the fourth quarter of this year. And all of that crossing fingers and toes that there's no holdup at the FDA that would lead us to have a commercial launch of that drug in 2020. Now it's actually for me one of the most exciting drugs that we will ever launch because I am always like -- we're always thinking about the patients at United Therapeutics. And unfortunately, taking care of a patient with a generally fatal condition is tricky as it can be. And the saints in our industry are the Dr. Whites, who undergo the complex algorithm of figuring out exactly which agent to give which patient, at what time, with what dose, et cetera, et cetera. But the interesting thing about BEAT and esuberaprost, is it's being tested on top of Tyvaso, which is, as you mentioned, already approved and there's already lots and lots of patients using Tyvaso. So I believe that this could be the first drug that has what I'd like to call a kind of hockey-stick take up. Because if you are on Tyvaso and if we can prove that adding their esuberaprost to Tyvaso reduces your morbidity and mortality, then it's like an immediate no-brainers. Like if your patient is on Tyvaso, you got to add on esuberaprost, you get like a hockey-stick uptake and that's what I'm hoping for. Operator, next question please.

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Operator [15]

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Our next question comes from Martin Auster from Crédit Suisse.

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Martin Douglas Auster, Crédit Suisse AG, Research Division - Research Analyst [16]

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Martine, prior to your licensing of ralinepag, Arena Pharma had talked about, including in addition to the 3 pivotal studies, head-to-head study of ralinepag versus selexipag to look at PVR and the hemodynamic changes. Just curious if that's a clinical trial path you're still think about evaluating. And if so when those data might be available?

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Martine A. Rothblatt, United Therapeutics Corporation - Founder, Chairman & CEO [17]

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Hey, Martin, good to hear your voice. And yes, that's a really insightful question. So the individual who is in charge of our clinical development on that, Dr. Leigh Peterson. She will analyze all of those different possibilities of like the head-to-head trial. And she together with her team and our Chief Medical Officer, Dr. Gil Golden, they'll all come to a consensus as to when or whether that would be a good study to do. In the meantime, what we found very attractive about ralinepag is that the Arena team had successfully reached agreement with the FDA on 7 different ways to get ralinepag approved by the FDA out of just 3 clinical trials and 3 Phase III trials. And by the way, from the time we licensed to now, we've began enrolling, so the actual patients enrolled and so on. So I think the path that's clear, and that I can say our company is definitely committed to is to executing on Arena's very good accomplishment with the FDA based on the previous Phase II data of doing these 3 study a -- an outcome study and morbidity/mortality that's an outcome study and 2, if you will, secondary factor studies and exercise study and a heat path-based study, which are much smaller. And out of these 3 different studies, depending on whether you get a highly statistical, highly statistically significant result or just a statistically significant results having all told 7 different ways to get approval. And we only need 1 of those 7 ways to get approval. So being really focused on approval and getting the drug out to patients, that's our number 1 priority. However, the ability to position ralinepag compared to selexipag is also very important in the market dynamic. Right of the bat, of course, ralinepag, you take just once daily instead of the twice daily dosing of selexipag. And there were some very enticing data in the Phase II studies that shows uniquely attractive features of ralinepag. But we will leave it to Dr. Peterson and Dr. Golden and their team in terms of what additional studies beyond the Arena 3 to undertake and then let you and the market know as soon as we decide to undertake any additional head-to-head trial.

All righty, operator, that will conclude the first half of the call. And as I prepare to hand the time over to James to share the second half of the call with Dr. White. I just want to reiterate that it's an extremely exciting time for all of us at United Therapeutics. We've never had more drugs in our pipeline. We've never had more prescriptions for treprostinil product. So it's just a super awesome time. And our drugs and the novelty and uniqueness of our drug delivery technologies, I believe, augur a kind of renaissance of treatment opportunities for the patients with pulmonary hypertension.

Operator, you can now turn the chairmanship of the call over to Dr. Edgemond and he'll introduce Dr. White. I mean, James Edgemond is going to introduce Dr. White.

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Presentation

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [1]

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Thank you, Martine. Let's transition to the second section of this morning's earnings teleconference. And we are pleased to have Dr. White join our teleconference this morning to provide some initial thoughts and insights on the FREEDOM-EV clinical study. And after Dr. White completes his opening remarks, we will take questions for Dr. White, Mr. Benkowitz and myself on the FREEDOM-EV clinical study. Dr. White?

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R. James White, University of Rochester Medical Center - Professor of Medicine, Pediatrics, Pharmacology & Physiology [2]

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Good morning, everybody. It's really my privilege to get to share, what I think is an extremely exciting data set that was a long time in the making and I trust that some people have already gotten to take a look at the presentation we made in Barcelona. As the FREEDOM-EV study demonstrated, Orenitram versus placebo decreased the overall risk of clinical worsening by 26%, and this was driven by a 61% reduction in our disease progression. It also, and I think really importantly, improved clinical status across key measures that physicians taking care of patients like to see, including WHO function class, NT-proBNP, Borg score after walk. And I think that the clinical improvements part of the data package is probably the most impressive.

Our vital status assessment at the closure of this study indicated that those who were initially randomized to Orenitram are more likely to be alive than those assigned placebo, with a 37% reduction in mortality at study close. And I think this is also a very intriguing part of the data package. Orenitram's safety and tolerability profile is very similar to Remodulin, the drug that clinicians know and are very comfortable using, side effects that they are very comfortable managing.

I want to just address the disease progression endpoint for a second, that the FREEDOM-EV study design involved not only in-person visits at week 4, 8 and 12, so frequent and attentive in-person visits with the investigative team but there were mandatory weekly phone calls. And because of the adverse effect profile of these mandatory weekly phone calls, the contact on the phone was likely extensive. So the participants could be encouraged to do drug up titration and be helped managing the adverse effect profile. I think this high degree of contact probably brought disease progression symptoms to the forefront before a more serious event like hospitalization or death. I think in everyday clinical practice, hospitalizations would be much more likely as the disease progression event is the clinical worsening event. Because in routine clinical practice, there is simply less attention to detail and less frequent contact. So patients of mine would very likely end up calling or coming to clinic at a time when hospitalization would be the only intervention that was sensible.

All right. Some background on the FREEDOM-EV study design. And I just want to remind people that this study was launched in 2013, a very different time in pulmonary hypertension. At the time, prescribers followed the paradigm of sequential combination therapy exclusively. And in fact what we were trying to pursue in the FREEDOM-EV study was an earliest possible combination strategy. So instead of a physician reevaluating someone after 3 months on a monotherapy or 6 months on a monotherapy, the FREEDOM-EV study design was to push the envelope, so that Orenitram would be added to a first therapy without reevaluation at a very early time point. In fact, our first protocol indicated a 30-day time point to add the drug. So this was early combination therapy, and really, at the time was pushing the envelope for the clinical standard.

The EV demographics ended up being a very early disease group, 6 months since the time of diagnosis and first therapy, a young group with a median age of 45, they had predominantly functional class II symptoms and actually, a remarkable exercise tolerance of almost 400 meters median. The data package that I've already top lined was that clinical worsening was significantly reduced by 26% in the unadjusted analysis, the log rank positivity for that is at 0.039. The clinical trial participants' separation occurred very early at a median of about 18 weeks and that's similar to other event-driven studies.

What is not similar to other event-driven studies was the tremendous clinical improvements, clinically relevant, statistically significant improvements in a NT-proBNP levels, a marker of right heart strain that is increasingly well recognized as both treatment responses and prognostically important. There were 2 parts of this BNP data that made us very excited. The first is actually people's NT-proBNP levels were quite high at baseline. This was a little surprising because the participants were mostly less symptomatic and functional class II and mostly with longer walks. So the fact that this critical risk factor of BNP was markedly elevated in both the placebo and the treprostinil groups at baseline highlighted for us the emerging importance of a multimodal risk assessment, looking at risk from multiple angles and not just functional class and not just walk. We're really excited also about the large reductions we observed, which presumably reflect less strain on the right heart. The curves for NT-proBNP separated at week 12 and continue to separate out to week 36, suggesting that reduction in the NT-proBNP was quite durable. And I just want to reemphasize most experts agree that NT-proBNP, especially in the nonobese population is a very important reflector of right heart function, and the fact that we saw these very nice reductions with oral treprostinil is probably going to be very important for treating clinicians like me.

Oral treprostinil facilitated improvements in the Borg score. The Borg score is the degree of breathlessness after walking, and it improved WHO functional class. It's a really important patient reported outcome that the FDA cares about. It's a really important predictor of survival, and it's certainly something that patients want to see, which is an improvement in their symptoms.

I want to point out that not since the approval of Adempas as a drug improved both Borg dyspnea score and WHO functional class. And frankly, they weren't too many drugs that were able to achieve that mark, even [the fear of deaths].

The biggest curveball of the study when we unblinded the data is that a simplified and prognostically important noninvasive risk score advocated by the French, we pre-specified that in the statistical analysis plan. And what we did not expect was that the oral treprostinil participants started substantially underwater in comparison to placebo. That is to say that the oral treprostinil assigned participants were much higher risk at baseline than the placebo patients. And this occurred at the extremes, that is that the Orenitram patients were least likely to have a favorable risk factors and most likely to have unfavorable risk factors. This definitely impacted the results. When we adjusted the clinical worsening primary endpoint for the fact that the oral treprostinil participants started worse, you can think of this as sort of a propensity adjusted score. The 2 groups separate substantially more. The risk-adjusted hazard ratio drops to 0.61, so a 39% reduction in risk, and the p value goes to 0.0006. And these numbers are much more in line with other recently reported events of these studies. So this was very much unexpected. And in fact, I've done a similar analysis of the AMBITION data at baseline and AMBITION groups using the exact same analysis were identical at baseline. So the fact that we achieved -- I'm sorry, that we were so underwater at the time of randomization and yet achieved the results we saw is quite significant.

The same risk assessment score improved markedly over time with oral treprostinil as compared to placebo. We saw highly significant differences in the number of participants improving versus those declining in risk. And those differences became apparent at week 12 and continued on to week 60. Unfortunately, this is a highly effective prostacyclin and that means it's not going to be for everyone. Adverse event dropouts were 19% for oral treprostinil overall and the study as compared to 4% for placebo, majority of the dropouts due to drug intolerance had occurred within the first 24 weeks.

Finally, deaths and hospitalizations were balanced during the randomized portion of the 310 study, that is to say a portion when patients were on their initially assigned treatment. But most participants who did not suffer adverse events stayed in the open label study. And overall, most volunteered to provide vital status every 6 months, even after they left the study altogether.

In the end, in October 2018, we had long-term vital status follow upon 89% of all of the participants initially randomized. Being initially assigned to oral treprostinil was associated with a substantial survival benefit, a 37% decrease in the risk of mortality, highly significant, 0.03. The size of the effect once we adjust for that risk difference that I thought -- discussed in the -- just a second ago, the size of the effect is even greater, a 42% reduction in mortality and a p of 0.01 by a log rank test.

So I hope that this discussion of the data was helpful. And I turn the call back over to James Edgemond.

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [3]

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Great. Dr. White, thank you, again, for offering your insight on the FREEDOM-EV clinical study. Nicole, can you please proceed to open up the teleconference for questions for Dr. White regarding the FREEDOM-EV clinical study?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Jessica Fye from JP Morgan.

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Daniel G. Wolle, JP Morgan Chase & Co, Research Division - Analyst [2]

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This is Daniel for Jess. What were the open label medications that patients went on to in the follow-up period? And how do you think about that playing into the mortality finding?

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R. James White, University of Rochester Medical Center - Professor of Medicine, Pediatrics, Pharmacology & Physiology [3]

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James, can I answer that?

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [4]

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Dr. White, yes. Thank you very much for the question. Yes, please, Dr. White, if you can answer the question.

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R. James White, University of Rochester Medical Center - Professor of Medicine, Pediatrics, Pharmacology & Physiology [5]

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So this is going to be a really important next stage of the analysis. And honestly, we have just now started digging into the 311 data, which is the data that you're asking about. So 310 is the end of the randomized treatment assignment. And when patients had a clinical worsening event, they moved over to investigator described clinical worsening event. They moved over into the 311, the open label study. And patients who were initially signed Orenitram could continue taking Orenitram as long as they could take another parenteral prostacyclin. Patients who initially signed placebo could begin taking Orenitram during that. This is going to be a very rich data set that talks -- that shows us about what happens to the placebo patients when they get on Orenitram. Something that we actually had not seen from some of the other event-driven studies. So we're excited to dig into that data and we're just beginning that process. So I really can't discuss it further. But we will very specifically look to see what other medications were added. I will tell you that we did not allow patients to be on Orenitram and another systemically delivered inhales -- I'm sorry, either systemically delivered prostacyclin or inhaled prostacyclin. So they could be on one for up to 30 days, but they could not be beyond that. So I think that we will have a very good sense. The main thing that we're going to learn from this is what happens to the placebo patients when they're assigned to Orenitram, and we will look carefully to see if there are things other than their initially randomized treatment assignment that might explain this so that we can better understand the mortality. It is true that in the open label extension, where we have the most information, there are already a shift in the number of deaths, again favoring oral treprostinil. So if you look at the deaths, the deaths are balanced in the 310, although the risk adjusted mortality begins to favor Orenitram. At the end of the open label study, there are more deaths in placebo at a time -- the initially assigned placebo, at a time that we know a lot about those patients. And the risk adjusted again starts to shift even further towards Orenitram. And then finally, it's at the end of study closure. And by the way, of course, deaths are still continuing to accumulate, right? We're now not in October 2018 and still our most recent data favors the hypothesis that initially being assigned to Orenitram carries with a mortality benefit or survival benefit.

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [6]

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Great. Thank you, Dr. White. Nicole, can you proceed to the next question?

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Operator [7]

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Our next question comes from Matt Kaplan from Ladenburg Thalmann.

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [8]

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Hi, Matt? Nicole, can you proceed to the next question?

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Operator [9]

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And we have another question from Liana Moussatos from Wedbush Securities.

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Vasiliana Vireen Moussatos, Wedbush Securities Inc., Research Division - MD of Equity Research [10]

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Dr. White, given the FREEDOM-EV data that you've been describing and the mortality benefit of Orenitram, how does this change your decision on whether to prescribe Orenitram versus Uptravi? And what kind of patients would you now treat with Orenitram, which you might have treated with Uptravi before?

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [11]

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Great. Liana, thanks for the question. Yes, Dr. White, can you please address Liana's question?

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R. James White, University of Rochester Medical Center - Professor of Medicine, Pediatrics, Pharmacology & Physiology [12]

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Yes, so I think, that the Orenitram data are going to shift people's perceptions. I think there is a couple of pieces of that. The first is that Remodulin is a drug that doctors and patients know and really like and have a lot of trust in. And this new data, I think, puts into perspective all of the previous development work, the blood levels, the pharmacokinetics, all of the work that we've done in the development of oral treprostinil now comes to life in the FREEDOM-EV data. And so now I think people are going to be much more likely to look at this as an oral form of Remodulin, the drug they know and love, the drug that they are confident about the benefits of. Whereas before they really just didn't understand why the drug did not perform in the initial combination therapies as people have expected, and of course, we now understand that that's all about pharmacokinetics. It was all about 3x daily dosing. It's all about avoiding very, very low trough levels which are associated with a much worse adverse event profile. So to address the specific question about whether you're going to prescribe Orenitram versus Uptravi, I think, that, of course, 3x a day is more of a burden. And it's not just 3x a day, it's 3x a day at carefully separated intervals. What do you get for that? You get meaningful improvements that the Griffin study just does not show. I'll point out that the Griffin data for NT-proBNP is a tiny little line as the very last part of the supplement in the New England Journal of Medicine and there is no color to the data. We don't have any information about whether the NT-proBNP data was mainly because of the 200 treatment naïve patients, we don't have any information about whether the monotherapy patients improve their NT-proBNP, were these improvements trivial, were they clinically meaningful. We're going to present that data in a very exciting way because Orenitram facilitated patient improvement at 24 weeks. Patients want to improve. They don't just want to not get worse. They want to improve Borg score, functional class. These are things that Griffin did not report as favorable, right? So we -- you can either take a drug that's very expensive with a side effect burden very similar to Orenitram, and stay the same or you can take a drug that has clinically important benefits measured at week 24. And the first study to show this difference in risk over time, which translates ultimately into the appearance, the indication of a survival benefit, something that we have never seen in an oral, a drug of any kind. The post-talk analysis of AMBITION suggested that initial combination therapy created a spiral benefit. This was a pre-specified analysis, not a post-talk analysis. And finally, the FDA was very concerned. If you look at the documents available on the website, the FDA was very concerned about the fact that selexipag assigned patients had more deaths in the period of randomized treatment. They're very concerned about that. And Norm Stockbridge has an interesting letter about it. You don't -- we saw balanced deaths. We did not expect to see a difference in deaths in the end of randomized treatment. But we also did not expect to see a 37% reduction in mortality for Orenitram assigned patients at the end of the study. And we're really excited about this. So you have a side effect profile that is slightly worse, it is, but similar to Uptravi. And in return, you get clinically meaningful benefits for patients at 24 weeks. You get an improved risk profile and you may even have improvement in survival over time. And I think that is going to make the difference and very clear to physicians.

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [13]

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Great. Thank you, Dr. White. Nicole, can you please proceed to the next question?

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Operator [14]

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Our next question comes from Hartaj Singh from Oppenheimer & Co.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [15]

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Thank you for the follow-up question on FREEDOM-EV. Just following Liana's question, as you said, Dr. White, selexipag had a -- an imbalance, slight imbalance in deaths. Also, I think, France, actually a year or 1.5 years ago had stopped the dispensation of selexipag probably there, because there was a mortality imbalance post approval. And then you combine that with the ability of oral treprostinil to be titrated, it's a really nice increase in median dose by visit that you show. How does that impact you think the prescribing physician's thinking that they have the flexibility on the dose titration, plus also in the long run, you're getting a potential improvement on mortality and decreasing hospitalization?

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [16]

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Great. Hartaj, thanks for the question. Yes, and Dr. White, would be glad to answer.

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R. James White, University of Rochester Medical Center - Professor of Medicine, Pediatrics, Pharmacology & Physiology [17]

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So this is, again, parries off my earlier point about physician comfort and patient benefits associated with Remodulin. And I think, you just touched on dose titration, right? That's what physicians are very comfortable with, right? They're very comfortable on the dose titration aspect. And I'll tell you that we are -- we had a prespecified plan to analyze doses and dose improvements in terms of -- I'm sorry, doses and clinical improvements in terms of dose response and we did actually hit that. That's data that's not been presented and I won't talk about it in more detail except to say that we do have a clear indication that 3 milligrams 3x daily is a dose at which clinical benefits become quite apparent in terms of NT-proBNP in terms of Borg, in terms of WHO functional class. And so we think that the dose titration or the ability to move the dose up to continue to provide patients with further improvement and the ability to do that over time as -- without limitation, right? We don't have any indication that there's a dose ceiling for Remodulin that there's a dose ceiling for Orenitram. I have a patient whose a full-time nurse working on 18 milligrams 3x daily Orenitram, 18 milligrams 3x daily Orenitram. So I think that your insight that Uptravi doesn't have that support for infinitely large dose increases, coupled with physicians comfort on Remodulin and the dose titration ability for Remodulin makes this drug very attractive. Now that the data package starts to look like something they know. When we say like dose titratable drug that produces meaningfully clinical improvements and has an enduring benefit in terms of clinical worsening and maybe has an indication for a survival improvement.

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [18]

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Great. Thank you, Dr. White. Nicole, there is one more question it looks like in the queue. So can you proceed to the next question?

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Operator [19]

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Our next question comes from Christopher Zopf from Cowen and Company.

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Christopher John Zopf, Cowen and Company, LLC, Research Division - Associate [20]

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Wanted to see what are your expectations about which components of the data would be added to the label, will this include the benefits observed in the open label portion as well? And what additional data should we expect to see in the upcoming 2 meetings that you described that may have been included in the filing that we haven't seen yet?

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [21]

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Great. Chris, thanks for the question. Dr. White, can you address Chris' question?

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R. James White, University of Rochester Medical Center - Professor of Medicine, Pediatrics, Pharmacology & Physiology [22]

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I'll tell you what I'm going to -- I heard in there a question about labeling that I'm definitely not qualified to answer. So I'm going to stay far away from that piece. I'm not going to speculate on that. That's -- I don't write labels. But I will -- what I'll tell you is that we have that you asked about what we're going to see in the upcoming meetings. And in the upcoming meetings, what you're going to see is the -- at the IST -- ISHLT meeting in Florida, you're going to see the sort of bulk of the data, the primary data being presented, the disease progression difference, and then at the effects on Borg, on functional class and NT-proBNP on walk. And then at the ATS meeting is where we're going to focus on this very existing risk assessment and how risk impacted the results, how risk impacted the survival, how risk impacted -- and how risk scores shifted over time, and that's a very exciting platform presentation we have at ATS. And then we have -- I also heard a question in there about the open label data. And as I said earlier, I -- I'm not at liberty to talk about, but have started to see the indications from the open label, and we will be presenting that at most likely at a meeting in the next year when that data is fully accumulated.

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [23]

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Great. Thank you, Dr. White. There is no more questions in the queue. So I do want to go back to what Dr. Rothblatt talked about in terms of what we are seeing in the market. I want to turn the call over now to Mr. Benkowitz, just to follow-up on that earlier question.

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Michael I. Benkowitz, United Therapeutics Corporation - President & COO [24]

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Sure. Thanks, James. And then I guess, Dr. White didn't address the question of the regulatory component of the last question. I just wanted to touch on that briefly too. So we filed our application for label expansion in December. It's our understand that the 10-month review with the FDA, we included most if not all of the data that Dr. White has reviewed this morning. And what makes it into the label, obviously, time will tell as we engage in discussions with the FDA. So as I think as Dr. White discussed, we're really excited about the data, we think there are some really interesting and provocative things associated with this data set. We look forward to engaging in those discussions with the FDA around the label supplement. In terms of what we're seeing in the market, in terms of uptake as a result of this data, it's -- what I would say is this level of data has only really been out in the market, even to a limited degree for about 3 weeks. So we announced the top line results in August. From August until Dr. White gave his presentation at the PVRI conference in January, there wasn't really additional data being presented either at medical conferences or through our medical affairs function. Because we wanted to preserve our ability to communicate this information at these conferences and publications. So now that this data has been presented at PVRI, I think physicians are able to look at the data in its totality. We're able through our medical affairs functions to appropriately discuss questions that physicians have around this data set. Yes, so we do expect that there is going to be renewed interest in Orenitram even before we have the label updated, which will be latter part of this year. And then at the latter part of this year, when we could put our sales and marketing machine behind it, we expect to see even further uptick. So I just wanted to kind of come back and address that question around what we're seeing in the market in response to data. I think, it's just still, still very, very early given that Dr. White presented this data about 3 weeks ago in Barcelona.

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R. James White, University of Rochester Medical Center - Professor of Medicine, Pediatrics, Pharmacology & Physiology [25]

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And Mike, if I could insert myself and just add to that. The -- all of the excitement in this data set is stuff that was not presented in August in the press release, right?

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Michael I. Benkowitz, United Therapeutics Corporation - President & COO [26]

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That's right.

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R. James White, University of Rochester Medical Center - Professor of Medicine, Pediatrics, Pharmacology & Physiology [27]

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So the physicians -- everything that physicians are going to be excited about has to do with the clinical improvements, right? Hitting the endpoint of clinical worsening as the primary enables the unlocking and the analysis of the really exciting stuff, which is how well patients did. And the community knew nothing about that, right? So there was -- there's no reason that anybody should have changed anything that they thought about Orenitram until 3 weeks ago. And I can say that we -- that I personally, as a physician and as the lead investigator for the program, I'm already getting feedback from very senior peers of mine, congratulating me on the data, congratulating us on the analysis, and this is a great opportunity for me to thank Martine for the incredible commitment to getting oral treprostinil across the finish line. And physicians are excited about that aspect of this getting across the finish line and the data package really finally reflecting what they always had hoped to see with oral treprostinil but had never seen. So Martine's commitment to making this happen really is worth emphasizing because I think it speaks to the value of the company in the long term.

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James C. Edgemond, United Therapeutics Corporation - CFO & Treasurer [28]

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Great. Dr. White, Mr. Benkowitz, thank you both so much for joining this morning's teleconference. And we really appreciate your perspectives and insights on the FREEDOM-EV clinical study. Thank you all who joined our teleconference this morning. And Nicole, can you please conclude the teleconference.

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Operator [29]

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Thank you for participating in today's United Therapeutics Corporation conference call. A rebroadcast will be available for replay for 1 week by dialing 1 (855) 859-2056, with international callers dialing 1 (404) 537-3406 and using access code 1595239.