United Therapeutics Corporation (UTHR)

August 24, 2011 9:00 am ET

Executives

Martine Rothblatt - Founder, Chairman and Chief Executive Officer

Roger Jeffs - President, Chief Operating Officer and Director

Analysts

Terence Flynn - Goldman Sachs Group Inc.

Robyn Karnauskas - Deutsche Bank AG

Michael Yee - RBC Capital Markets, LLC

Matthew Kaplan - Ladenburg Thalmann & Co. Inc.

Liana Moussatos - Wedbush Securities Inc.

Mark Schoenebaum - ISI Group Inc.

Joseph Schwartz - Leerink Swann LLC

Philip Nadeau - Cowen and Company, LLC

Geoffrey Meacham - JP Morgan Chase & Co

Presentation

Operator

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Good morning. My name is Alene. I will be your conference operator today. At this time, I would like to welcome everyone to the United Therapeutics Corporation 8/24/11 Conference Call. [Operator Instructions]

Remarks today concerning United Therapeutics will include forward-looking statements, which represent United Therapeutics' expectations or beliefs regarding future events based on current assumptions. United Therapeutics cautions that such statements involve risks and uncertainties that may cause actual results to differ materially from those in the forward-looking statements. Consequently, all such forward-looking statements are qualified by the cautionary language and risk factors set forth in United Therapeutics' periodic and other reports filed with the SEC.

There can be no assurance that the actual results, events or developments referenced in such forward-looking statements will occur or be realized. United Therapeutics assumes no obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in factors affecting such forward-looking statements.

Thank you, Dr. Rothblatt. You may begin your conference.

Martine Rothblatt

Good morning, everyone. Thank you for joining us for our conference call this morning. I'm joined on the call by Dr. Roger Jeffs, our President and Chief Operating Officer. The bulk of the call today will be dedicated to reviewing the results of the FREEDOM-C2 study. As described in our press release, we did not hit our primary endpoint for the study. I would like to take a moment though to put the study into context of our broader business.

The company has a fantastic franchise in pulmonary hypertension. We have growing revenues from 3 separate products, Adcirca, Remodulin and Tyvaso. These drugs are the leaders in their respective market shares, and all 3 of them have prospects for continued growth. We have previously guided toward $750 million, $875 million and $1 billion in revenue plus or minus 5% for 2011, '12 and '13, respectively. And none of those revenues included any contribution from oral treprostinil.

We previously reported excellent results from our oral treprostinil FREEDOM-M study as a monotherapy drug, and we remain confident as we expressed at that time that, that single study, with its highly statistically significant p value will support approval on its own. We are also moving forward on strongly into Europe and Asia with anticipated IV Remodulin approval in Europe by the end of this year. The commencement of the TRIUMPH-2 inhaled Tyvaso study for European approval starting in next year. And of course, we will file for approval of all treprostinil as monotherapy in Europe as well as the U.S.

So the company has a tremendous franchise in this field, very strong financial and strong growth business. So despite the disappointment that we announced today, and Dr. Jeffs will provide considerable amount of color on, the company's overall prospects remain extremely good. Roger, could you please now give us some color on the FREEDOM-C2 results.

Roger Jeffs

Certainly, Martine. So I'll use my time today to address 3 fundamental questions. One, what are the FREEDOM-C2 data? Two, what are the possible reasons that contributed to the results observed? And 3, what is the impact of the FREEDOM-C2 study on the NDA filing of FREEDOM-M? With regard to what are the FREEDOM-C2 data, as a prelude, I want to stress that this data review is not meant to be a complete and comprehensive review and all the data that are provided today are based on our preliminary review of the core efficacy data only. I also want to direct listeners to our web portal, www.unither.com, under the Investor Relations section, where summary slides have been uploaded to benefit your review and analysis.

So with regard to the first question. FREEDOM-C2 was a multicenter, randomized double-blind placebo controlled study in PAH patients who are optimized on 1 or more approved oral PAH medicines at the time of study entry. This included ETRAs and PDE-5 inhibitors or both. The study treatment period was 16 weeks. The primary efficacy population or intend to treat population consisted of 310 patients who are randomized 1:1 and who received study drug, with 157 patients in the active group and 153 patients in the placebo group.

The treatment groups were very well balanced at baseline. Approximately 65% of the patients were idiopathic or familial origin, with approximately 31% having collagen vascular disease as their primary etiology and the remainder having PAH as a result of a congenital heart defect or HIV. Approximately 78% of patients in both groups were female.

With regard to WHO functional class at baseline, approximately 26% of patients in those groups were WHO Class II and approximately 73% of patients were WHO Class III. The main baseline 6-Minute Walk distance was 329 meters in the active group and 336 meters in the placebo group. All patients were receiving an approved oral PAH therapies at baseline, with approximately 40% receiving dual ETRA PDE-5 therapy, 42% receiving PDE-5 therapy only and 18% receiving ERA therapy only.

Regarding patient disposition, the number of subjects completing this study was very favorable, with 84% of active patients and 90% of placebo patients completing the 16-week study. Clinical deterioration and deaths were infrequent and similar between the active and controlled groups, but discontinuations due to adverse events were more frequent in the active group with 11% of patients discontinuing due to an adverse event in the oral treprostinil group, compared to 3% of patients in the placebo group. The type of background therapy did not appear to influence the drop-out rate due to intolerance.

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