Good morning. My name is Mary, and I will be your conference operator today. At this time, I would like to welcome everyone to the United Therapeutics Corporation Second Quarter 2011 Earnings 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 and assumptions or changes in factors affecting such forward-looking statements. Thank you. Dr. Rothblatt, you may begin your conference.

Thank you, Cassandra, and thank you, everybody for joining our quarterly United Therapeutics conference call for the second quarter of 2011. I'm Martine Rothblatt, the Chairman and CEO, and I'm pleased to be joined on this conference call by Dr. Roger Jeffs, our President and Chief Operating Officer; and Mr. John Ferrari, our Chief Financial Officer. I'm pleased with the successful unblinding of the FREEDOM-M study this quarter as well as the very good operating results we achieved. We remain on track to reach our 2011 forecast for revenues of $750 million, with a plus/minus margin of 5%. Before I move into the question-and-answer section of the conference call, let me share with you some highlights with regard to, first, our treprostinil franchises. And then I'll review where we are on some of our non-treprostinil franchises. So starting with treprostinil. Remodulin continues to be going very strong, roughly speaking $400 million a year revenue run rate. A couple of interesting notes on Remodulin is that we now have over 20 patients on implantable pumps using Remodulin. That's about 18 or maybe 19 patients in Europe and a couple of patients already in the U.S. The ones in the U.S. using the Medtronic SynchroMed II device and the ones in Europe using a device from a company called OMP. So the implantable pump program is going well, and I think both the physicians and patients really enjoy having that option even though it's just developmental at this point. Tyvaso. Tyvaso revenues also going very strong. An interesting note on Tyvaso is that as the drug has reached a little bit more maturity in the market, we're seeing a steady uptick in the average number of months that patients are on therapy. I believe we're now crossing about 16 months for average…

[Operator Instructions] Our first question comes from Robyn Karnauskas from Deutsche Bank.

It's Navdeep substituting in for Robyn. Just wondering on FREEDOM-C2, do you happen to know what percentage or have a rough idea what percentage of the enrolled patients will already be on a dual background therapy versus a monotherapy?

Dr. Jeff, could you please field that question?

It's going to be roughly 1/2 will be on dual background therapy, with the other patients on either sildenafil monotherapy or ETRA monotherapy. But a lot of -- I think, the trending over time has been that sildenafil or PDE-5 to become more dominant in the markets where we were doing these trials than Tracleer, so I think you're going to see that in terms of the monotherapy, there'll be a higher proportion of PDE-5 background patients. But the majority will be on dual background therapy, and I think dual background combination therapy is becoming the standard of care now, which is good as we start to launch into this market with the oral prostacyclin. But I think, in general, those are what you'll see.

Our next question comes from Mark Schoenebaum from ISI group.

This is Salim stepping in for Mark. Just had a question on BD. I guess it's been a while since you gave us your latest thoughts on that. If you could just [indiscernible]?

Your question got somehow a little bit garbled. Can you repeat the question?

Yes, sure. On BD, could you just give us your latest thoughts on business development?

Yes, sure. Sorry about that. Well, I mean business development is a hard subject to address in just a sound bite type of answer. But the company's business development efforts involve concentrating first and foremost on line extensions for our very successful treprostinil franchise. And the core line extension activities going on there are, of course, the oral treprostinil route of delivery, which from all of our business modeling, we feel quite confident that oral treprostinil's revenue -- peak revenue potential is greater than the sum of Tyvaso plus Remodulin, okay. So it's beholden upon us to put that at the front and foremost of our business development agenda. Another business development activity is being able to make the Remodulin therapy for those patients who end up near the New York Heart Association class IV range of clinical status more enjoyable, if you will, more convenient by the implantable pump, and that implantable pump will hopefully allow more patients to say, yes, I realize that I'm at the end stage of pulmonary hypertension, but I'd like to continue and hope for a really good outcome by having the implantable pump. Because for many people, the ex vivo pump is just too much for them to put up with. So that's a couple of line extension areas just in pulmonary hypertension. Now in addition to that, Dr. Jeffs and his team are doing some very exciting line extension work in terms of, first of all, combination therapy regimens, combining treprostinil with other drugs and even with treprostinil itself, in a way I'll mention in a second, to further expand the market potential. And they're also developing it for indications other than pulmonary hypertension such as critical limb ischemia. So with regard to the combination, we have studies that are in planning…

Our next question comes from Joseph Schwartz from Leerink.

It's Mike Schmidt for Joe Schwartz this morning. One question on oral Remodulin. So a lot of us are wondering how much higher the background hurdle is in FREEDOM-C2 versus FREEDOM-M since there aren't a lot of combination studies for prostacyclin to compare against monotherapy prostacyclin studies. And so the 6-Minute Walk distances for ETRAs and PDE-5, maybe those alone or in combo are pretty high, so all is equal. We were wondering how much the 6-Minute Walk would come down for oral Remodulin in combination versus monotherapy?

I think we'll all be best served by having Dr. Jeffs address that question.

Yes, I appreciate the question. I think maybe if I could rephrase your question. I think you're sort of asking what you believe the effects will be and what are the chances of success based on the fact that it's a combination instead of a standalone new patient trial?

Right.

Yes. So let me just revisit some of the comments we made at the previous call, which was there are 4 things that we think bode well for C2 based on the results of FREEDOM-M, which was as Martine articulated, highly significant and clinically significant results. So firstly, it's a larger trial. So 313 in the primary analysis population versus 228, so a larger end to predict a statistical value of less than 05 [ph]. The other thing is dropouts. So one of the things that hurt us in the original trial was the dosing tolerance to the 1 milligram tablet strength, which we showed in the FREEDOM-M trial. The tablet at 0.25 both as a starting and incremental dose was very favorably tolerated. So now when we look -- so all of the patients have finished the FREEDOM-C2 trial and have exited the trial, so we can actually look at patient disposition at this point in time. And what we're seeing is that we are finding a very analogous situation to what we had observed before in terms of dropout with FREEDOM-M. So in FREEDOM-M, 37 of the 228 patients did not complete the study either for expected reasons such as clinical worsening and death or for reasons due to intolerance such as AE. So there were 16% of those patients in M. In FREEDOM-C2, the total discontinuation that we're aware of to date is 41, which is at 13% total discontinuation rate which is below what was observed in FREEDOM-M. And then the controllable the dropout are the ones that we were very keen to manage was the AE dropout is only 19 of the 6% whereas that was 6% -- or 3% in the FREEDOM-M. So again we've proven the hypothesis that the 1 milligram tablet strength…

Our next question comes from Philip Nadeau from Cowen and Company.

My question is actually on the quarter. The sales trends were very strong. Could you discuss whether there are any inventory changes in the quarter. And also for Tyvaso, what you're seeing in terms of patient additions. Has it been a consistent rate? Was there any acceleration during Q2?

I'm going to ask John Ferrari, our CFO, to talk about the inventory.

Inventory for Remodulin and Tyvaso, based on patient days, were flat. There was really no change during the quarter. Back over to Martine for Adcirca.

Can you repeat the second -- what was the part of the question on Adcirca? Patient growth?

Yes, and there was also on Tyvaso, too. Just the trends that you're seeing.

The trends are upward. Trends are upward. I think we've talked before and I'd like to reiterate now that we're seeing triple digit, meaning over 100 patients starts each month on Tyvaso. Some people say Tyvaso. Whatever. So that's really, really positive. The growth in revenues is because, as I mentioned in my introductory remarks, the drop-offs from therapy, which are generally due to death, are less. And as a result, the average duration on therapy has now hit 16 months, which is actually the highest figure since we launched the drug. So that's very, very positive sign on patient growth for Tyvaso. With regard to Adcirca, there is a strong growth, it's coming from -- first of all, newly diagnosed patients are overwhelmingly being placed on Adcirca compared to sildenafil. But there's always kind of a first move or advantage and sildenafil was in the market for 3 years or so before us, so there are a lot of physicians who sort of automatically prescribe sildenafil. But we've got a fantastic group of field sales reps that are detailing upwards of 4,000 or 5,000 physicians and making sure that all the physicians are aware that with Adcirca, you only have to take your medicine once a day whereas with sildenafil or Revatio you have to take it 3 times a day. And because rebound hypertension is the feared black dragon of pulmonary hypertension, that when the blood vessels in the pulmonary arteries are not forcibly relaxed through pharmacotherapy, then they tend to quickly constrict like a closing fist. And that's very dangerous for the patients. And patients are just normal people like you and me, any one's going to forget to take their medicines or their vitamins or whatever. And so forgetting to take 1 or 2 Revatio dosage is a serious matter. It's nothing to joke about. So I think this is leading to the growth that I mentioned that we're now over 80% of total patients -- or over 75% of total patients in some KOL [ph] centers we're over 80 reps see over 90% of all of their patients, and these people have like 200 patients or more on PDE-5 have -- they've switched them all to Adcirca. You're probably aware that during the past quarter, there was some data presented at one of the major health care conferences that showed that it is very safe and effective to switch a patient from Revatio to Adcirca. So as physicians, for example, ask us for copies of those publications or posters, we're able to send that information to them. At the moment it's mostly in poster form. It'll soon be in publication form, which has even better and stronger weight on the physicians' prescribing practices. So beyond a doubt, Adcirca is the place to be in terms of the PDE-5 therapy.

Our next question comes from Terence Flynn.

Just wondering if you can tell us if the last patient in FREEDOM-C2 has passed week 16 yet? And what you expect for the turnaround time on getting us the data relative to M, which I think is a 5-week turnaround. I know you kind of mentioned end of August, but can you give us a little more details there?

Dr. Jeffs will talk all about those.

So the last patient exited the FREEDOM-C2 trial in mid-July. We expect the final casebook to be completed in early August. Once that's done, we then have to do -- we query the database, all of the data that's entered to all of the electronic case forms, and we generate queries based on things that are maybe inconsistent. Maybe there's an AE listed on the dosing page but not on the adverse events page, for example. So we clarify with the site that if the AE occurred, it should be listed on the AE page so that the data set is pristine. That query process is dictated -- the timing of that is dictated based on the number of queries that are generated and then the response of the sites and turning those queries back around to us. And sometimes the responses themselves generate additional queries. We think we can complete that query process in 2 to 3 weeks. One of the things, though, that's hanging over our heads is that these sites they were sort of an equal share of centers in the U.S., Europe and China. And one of the difficulties in Europe, for example, is the month of August is a holiday month. So we need to make sure that the sites are attentive to these queries. Now we've obviously put all the sites on alert that we need this and we need it in a 2- to 3-week turnaround time. But then the final process is every query must be signed off by the investigator to say that they've looked at the data and the data is exactly as reflected in the actual patient's course of the trial. So those are the nitty-grittys of what we need to do. We think we can do that in 2 to 3 weeks, but it may take longer based on the ability to get every single query and every single signature. So we're confident it will be no later than September as we've previously articulated and as Martine said, it's likely to be late August.

Okay. And then one quick follow-up. Just wondering what's in a event that C2 does not hit the primary endpoint? Just wondering if you guys still would plan to file on the FREEDOM-M results alone and if you've discussed that with FDA at all and any impact to the commercial outlook for oral Remodulin under that scenario?

We haven't discussed that with the FDA because it would be premature to do so. We also would file FREEDOM-M based on the results we have. We're only waiting now. We're building the NDA. Make no mistake, the NDA is under way. We're just waiting to add in the data because regardless of the outcome of FREEDOM-C2, we're going to have to integrate that into both, particularly the safety summary, if not in the efficacy summary. So it's really just an issue of the coincidence and the timing of the 2 trials. And we fully expect to be successful and can seek labeling from both upfront use and combination use. As to the market outcome, I think we'll save that question for the next quarter when we have the C2 data.

Thank you, Terence, and thank, you everybody for participating in the conference call. Just as a quick recap. We have been real happy to report a very good financial results this quarter. The treprostinil franchise continues to be going very strong in every way. The Remodulin activity was discussed very well. I'd like to also mention, simply because it didn't come out in any questions, that we're looking forward to a significant upside on Remodulin coming from Europe with the approval of IV Remodulin and from Japan with approval of Remodulin. Whenever we have, in the past, introduced IV Remodulin, we've seen that it doubles the market size for Remodulin compared to subcu only. And in Europe, all these years, there has only been subcu Remodulin available. So IV Remodulin is very likely to double the revenues coming from Europe. Japan, we've worked quietly and carefully over the past several years, and we feel very optimistic that Remodulin will be able to come in and supplant Flolan, which to the best of our knowledge is doing approximately $100 million a year in Japan. With regard to Tyvaso, I think that not only was I happy to say on the last conference call that April was our best month ever. I can now report that June was even better than April. June has been the best month ever in terms of patient starts and that in turn augurs very well for the third quarter results. And we spent most of this call talking about the unblinding of FREEDOM-M and FREEDOM-C2, all of which is looking very well and with there being 10,000 or so patients in Class II, 10,000 or so patients in Class III, Remodulin and Tyvaso being used by a minority of all of those patients, the prospects for oral treprostinil are transformational for our company. Everything is also going very well in the non-treprostinil franchises. And as the last couple of questions indicated, Adcirca, in particular, is quickly on its way to becoming the single most prescribed drug in the pulmonary hypertension space. So thanks to all of you for participating in the call. And we look forward to seeing you at upcoming health care conferences right after the summer break. Thank you very much.

Thank you for participating in today's United Therapeutics Corporation Second Quarter Earnings Conference Call. This call will be available for replay beginning at 11:35 a.m. Eastern time today through 11:59 p.m. Eastern time on August 12, 2011. The conference ID number for the replay is 80689472. The number to dial for the replay is 1 (800) 642-1687 or (706) 645-9291. Thank you, and have a great day.