Martine Rothblatt - Chairman and Chief Executive Officer James Edgemond - Chief Financial Officer and Treasurer Andy Fisher - Chief Strategy Officer.

Geoff Meacham - Barclays Mark Schoenebaum - Evercore ISI Hartaj Singh - BTIG Mark Fram - Cowen and Company.

Good morning. My name is KayIey, and I will be your conference operator today. At this time, I would like to welcome everyone to the United Therapeutics Corporation 2016 First Quarter Financial Results. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session.

[Operator Instructions] Remarks today concerning United Therapeutics will include forward-looking statements, representing the company's expectations or beliefs regarding future events. The company cautions that these statements involve risks and uncertainties that may cause actual results to differ materially.

Please see the company's latest SEC filings, including Form 10-K and 10-Q for additional information on these risks and uncertainties. The company assumes no obligation to update forward-looking statements. Today's remarks may also include financial measures that were not prepared in accordance with the U.S. generally accepted accounting principles.

Reconciliations of non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures can be found in our earnings release, available on our website at www.unither.com.

Finally, please note that today's remarks may include reporting on the progress and results of clinical trials or other developments with respect to the company's products.

These remarks are intended fully to educate investors about the company, and are not intended to promote the company's products to suggest that they are safe and effective for any use other than what is consistent with their FDA approved labeling, or to provide all available information regarding the products, the risks, or related clinical trial results.

Anyone seeking information regarding the use of one of the company's products should consult the full prescribing information for the product available on the company's website at www.unither.com. Thank you. Dr. Rothblatt, you may begin your conference..

Thank you, operator, good morning, everybody. My name is Martine Rothblatt, and I am joined on our conference call by our Chief Financial Officer, James Edgemond; and our Chief Strategy Officer, Andy Fisher.

I will provide a few introductory remarks, and then we will open up the line for questions, which I can direct to either James, Andy, or answer myself. I would like to touch on three main points in my introduction.

First, I will review the financial highlights for the first quarter of 2016; second, discuss the executive changes which we announced earlier today; and third, I'll provide an insight into our late stage pipeline, and especially make sure everybody is aware of the new pipeline product that we have in the pipeline.

So starting with the financial highlights, we’ve had very nice growth in revenues of about 13% from the same period previously. And profits up 18%, cash profits or what we call non-GAAP profits. And this reflects a continued market expansion in WHO Group 1 pulmonary arterial hypertension and on the profit side, continued budget discipline.

The quarter-to-quarter drop of revenues from fourth quarter to first quarter is really of no consequence because our first quarter revenues have always been either down or virtually flat compared to the fourth quarter that’s simply a result of distributor purchasing patterns and our first-quarter revenues have always been the lowest of each quarter for the past five years.

So there is really no color or anything to share on that point.

The year-to-year drop in Remodulin and Tyvaso shown in the press release we issued, as a result of patients who would otherwise be placed on Remodulin and Tyvaso being essentially warehoused so that they could first try the much gentler therapies of Orenitram, which is oral, or the newly launched Uptravi from Actelion.

So new starts onto Remodulin and Tyvaso that would otherwise compensate for discontinuations due to death, as is usually the case, those new starts did not occur at the predicted rate because of them being held back to give them a shot at the new oral meds, Uptravi and Orenitram.

However, more than 90% of the patients on Uptravi are going to go ahead and progress in their pulmonary hypertension and need end-stage drugs such as Remodulin and Tyvaso. Indeed, April saw the highest monthly revenues in our history for Remodulin, $49 million, about $10 million higher than March.

April also saw Tyvaso revenues jump up to $43 million, about $10 million higher than March, also one of the highest monthly revenue numbers ever for Tyvaso.

So this shows that the kind of warehousing effect that I referred to is already beginning to dissipate, and we expect to see many more patients for Remodulin and Tyvaso as the warehouse effect comes to its end.

We stand by our belief that Orenitram will continue growing to its $1 billion in annual sales potential and that both Remodulin and Tyvaso will each continue growing in sales, especially as the implantable pump and the BEAT combination therapy are approved.

So with that overview of the financial highlights, let me now turn to a brief discussion of our executive changes.

Roger Jeffs and Dave Zaccardelli, my President and COO respectively, are retiring on our 20th anniversary at the end of June, and those two are being succeeded by one person, Mike Benkowitz, who serves as my current Chief Administrative Officer.

He will become our President and Chief Operating Officer, so the President title of Roger, the Chief Operating Officer of Dave will be merged into one President and Chief Operating Officer title for Michael Benkowitz. My title will shift back to being CEO from Co-CEO.

This executive change has no practical consequences because Roger and Dave have done a great job, and have long done a great job, of hiring their replacements, which is what every good manager should do.

Dave's main job of being our Chief Manufacturing Officer has been beautifully performed for well over a year now by our current Chief Manufacturing Officer Pat Poisson, and our solid dosage head Mike Camp.

Roger's principal job of treprostinil clinical development has been very nicely performed now for well over a year by our Product Development Chiefs, Kevin Laliberte with regard to most of the treprostinil clinical trials, and Dr. Mary Smith with regard to some of the newer trials including the new pipeline addition, which I will mention shortly.

Having devoted almost 20 years of their lives, Roger and Dave have every right to retire and we wish them all the best with hearts that are full of gratitude for the fantastic shape that they have left the company in.

Now let me turn over to providing a pipeline update, and especially the new information on the new addition to our late stage pipeline. We have four late stage pipeline products in all, and you can expect an important news flow regarding them every year from 2016 through 2020.

Let me start with the newest addition, which is our Tyvaso for WHO Group 3 pulmonary hypertension, associated with interstitial lung disease or combined pulmonary fibrosis and emphysema. We will start enrolling patients in this registration trial next month, all of the IRB profits and everything has been put in place.

Now Group 3 pulmonary hypertension has no drugs currently approved for it, and it really is problematic to treat it with the systemic drugs like pills or infusions due to perfusion/ventilation mismatch.

This perfusion/ventilation mismatch with systemic drugs arises because Group 3 PAH affects the more proximal artery, whereas Group 1 PAH, which is the PAH that everybody has their approvals for, affects the more distal arteries.

This means that Tyvaso is uniquely positioned and uniquely able to address PAH in the Group 3 manifestation in pulmonary fibrosis, emphysema, interstitial lung disease, because it is an inhaled drug so it does not and should not worsen ventilation/perfusion mismatch.

Early trials have been encouraging and we are further encouraged by the census data that this untreated group of pulmonary hypertension patients is about 35,000 in the United States alone, who have not been able to benefit from the WH Group 1 PAH drug, because it would be off label to do so and these are the cost of these drugs, I'm sure very largely unreimbursable.

So the Group 3 PAH market in pulmonary fibrosis, emphysema, interstitial lung disease. This is a blue water market worth about $3 billion to $4 billion that we at United Therapeutics are now in the lead position to develop a drug for. Our second pipeline product I would like to discuss is implacable Remodulin.

As we mentioned subsequent to our last quarterly call, we had a setback at the FDA. This is not unexpected, given that we are talking about a combined drug device approval, including a device which has previously been used in intrathecal spaces and now being moved into the intravascular space.

And you’ve got two different companies working together, and each company has their own flow at the FDA. But we remain confident, as we've said previously, that we can gain approval in 2017. We can’t share the ins and outs of our discussions with the FDA, but we don't glibly say that we're confident about something unless we are.

And we are doing all of the right things, and Medtronic is doing all the right things. And certainly the FDA is doing all the right things to bring this transformative product, which all the intravenous and subcutaneous patients would feel would completely really change their lives for the better into an approved status sometime during 2017.

The third pipeline product I’d like to review is Orenitram for reduction of morbidity and mortality. This product is targeted to complete its enrollment in 2016, so that will be a news item that we will announce and is queued up in our schedule for FDA approval in 2018.

Everyone should keep in mind that up until now, we can only promote Orenitram for improvement and exercise. And that definitely is a tough competition against Uptravi, which can be promoted for reduction and morbidity and mortality.

So being able to promote Orenitram for reduction in morbidity and mortality is a whole other products, it’s a brand-new ball game.

Just to give you an idea of how significant this is, if you take a look, for example, at the package insert for Uptravi you will see that after 36 months, a little bit more than half of the patients on Uptravi have at that point still been morbidity, mortality event free.

So in other words, almost half of the patients on Uptravi have suffered a progression of their pulmonary hypertension. And the difference with placebo is not huge, with placebo a little bit less than half the patients are morbidity, mortality event free after three years.

Meaning just a little bit more than half of the patients suffered an event within those three months. So this just gives you the picture, and there is no plateauing there. It’s just a downward spiral.

These drugs are not cures, and patients with pulmonary hypertension, more than 90% of them progress to the late stage where drugs such as Orenitram and Tyvaso and Remodulin would be the logical next choices.

So we are very excited about being able to report in 2016 completion of enrollment, report trial results in 2017, and then hopefully FDA approval in 2018 for Orenitram. The fourth pipeline product is our esuberaprost product for reduction in morbidity and mortality in Group 1 pulmonary arterial hypertension.

This Phase 3 trial is scheduled to also complete enrollment by the end of 2016, and we will certainly announce those results, as well as report the morbidity, mortality event mark in 2017, 2018 timeframe. And we have queued this drug up for approval in 2019, when it will be launched with a coverage of an orphan drug exclusivity.

So every year, 2016 through 2020, we have a good news flow on the pipeline. And every year, 2017 through 2020, we expect the approval of a new product, each of which has $1 billion or more revenue potential. So with that introductory remark on our pipeline, I’d now like to open up the lines for any questions.

Operator?.

Hi there, thanks for taking my questions. I have a couple, if you can take more than one..

Jessica, I can take - if you could just do one question because there's a huge number of people in the queue..

Okay.

Can you update us on the average daily dose for patients on Orenitram and just update those details you've given in the past about the various time points of where people are titrating to?.

Yes. Nothing has really changed since we reported that information previously, it’s in the 10 to 11 milligram range and the patients most of the time they average out around that range. So the price of Orenitram when it’s reflected as the way patients ordinarily use it is exactly in the same ballpark as it is for both Remodulin and Tyvaso..

Got it. Thank you. .

Sure. Next question please. .

Our next question comes from the line of Michael Yee, with RBC. Your line is open.

Hi Mike or a substitute..

If your phone is on mute, please unmute. .

Hi this is Edmund [ph] for Michael Yee..

You got to talk up, we can barely hear you, Edmund [ph]..

Thank you for taking my question, you mentioned about the MDT implantable pump. So, are you going to focus more on your own DEKA pump, any plans or updates on the pump program? Thank you..

Okay. Thank you, Edmund [ph]. Yes, we are very focused on the SynchroMed II pump. It’s a Medtronic product, I think it is a great and amazing product and we are satisfying the FDA information request regarding that and expect to be able to satisfy their request within the next few months and our target is for approval and launch in 2017.

Next question operator?.

Our next question comes from the line of Geoff Meacham with Barclays. Your line is open. .

Hi this is Evan on for Jeff. Thank you so much for taking my question.

I want to take a step back and look at a broader strategic point of view, given some of the changes to announced today, Martine is there anything that you are going to do differently from a strategic perspective on with the company potentially with regard to business development?.

No, I do not think there is. As I mentioned in my introductory remarks, we’ve got a super strong pipeline, which is all to the credit of our entire management team.

For example, Roger and Dave really deserve all of the credit for doing such a great job of lining up the pipeline, including the implantable pump 2017, the new Orenitram product for reduction morbidity mortality 2018, the esuberaprost product for reduction mobility mortality 2019, and the new edition of the first WHO Class III Type III pulmonary hypertension with interstitial lung disease and combined pulmonary fibrosis and emphysema.

Very difficult conditions, but, we feel that we’ve got some good early data that gives us confidence in designing this registration trial for Tyvaso in that indication. Roger and Dave have done such a great job of what I as an Executive want all of my managers to do, which is to hire their replacements.

And Dave's main job of being Chief Manufacturing Officer has been beautifully performed by our current Chief Manufacturing Officer, Pat Poisson and our Solid-Dosage Facility Head, Mike Camp and Roger’s main job of treprostinil clinical development has been beautifully performed by our VPs and Chiefs of product development, Kevin Laliberte and Mary Smith, respectively.

So it is because they’ve put a ship in such a good port that we of course want to continue the business development course of expanding our current drugs in pulmonary hypertension and especially now moving into - there are five different kinds of pulmonary hypertension, categorized by the World Health Organization.

All of these drugs that everybody is kind of scrambling for, ourselves included, are in WHO 1 pulmonary hypertension. That leaves literally hundreds of thousands of patients with WHO 2, 3, 4, and 5 pulmonary hypertensions unaddressed unmet medical need. We would characterize those areas as corridors of indifference.

And UT’s mantra is to identify corridors of indifference such as category 3 pulmonary hypertension and run like hell down then. And that is what we’re doing with our great Tyvaso product, which is uniquely able to surmount the perfusion ventilation mismatch issue there.

We will also continue pursuing our business development activities in the orphan pediatric oncology space building on Rogers great achievement there with Unituxin for neuroblastoma. And in fact, our Head of Business Development who was previously reporting to Roger as President will now be reporting to Mike Benkowitz as President.

So it’s very much continuing the same course that we have been executing very successfully for the past several years..

Great, thanks for taking my questions..

Our next question comes from the line of Mark Schoenebaum with Evercore ISI. Your line is open..

Hi, good morning. This is Regina Greville in for Mark, and thanks for taking my call.

First, can you shed some color on the proportion of patients that you have switching from Tyvaso to Orenitram as compared to Uptravi? And can you give us an update on your Ex-vivo lung perfusion program?.

Okay. So the number of patients going from Tyvaso to either Orenitram or Uptravi is modest.

Tyvaso is pretty much used as an end-stage pulmonary hypertension treatment for patients that are reluctant or would not be appropriate to put them on, “the pump” which would be something like Remodulin or flow ram [ph] which are obviously much more invasive sorts of therapy.

So the bigger problem is not so much people shifting away from Tyvaso, it is just that there is a certain predictable normal rate of people who come onto Tyvaso from the orals. And those patients have been, as I mentioned, warehoused and held back because very reasonably the doctor said it well maybe Uptravi or Orenitram will work for you.

However, as I mentioned, and as you can see for yourself in the package insert for Uptravi, there is just a steady rate of decline of patients on Uptravi and frankly, on any pulmonary hypertension drug. And that is because pulmonary hypertension is a relentlessly progressive disease in the vast majority of patients with it.

We’ve done a good job in the biotech sector of changing the mean survival with pulmonary hypertension from one to three years which is what it was when I started in this area to somewhere between 5 and 10 years, so that is great, wonderful success.

But the mean survival of let's say 5 years, that is a lot of people progressing each year and even a mean survival of 10 years it's a lot of people progressing. So as those people progress on, they come to the realm of Tyvaso and Remodulin.

And as I mentioned in my introductory remarks, April saw the largest revenues for Remodulin in our company's history. So that warehousing that had – that was in a place is already beginning to wash through. April saw one of the largest monthly revenues for Tyvaso in our history. So this is the process that is going on there.

On the EVLP situation, that program is pursuing its clinical trials, a phase 2 clinical trial, with the Mayo and the Cleveland Clinic and in a few other hospitals I do not have them all memorized. But the Mayo and the Cleveland Clinic are the two ones that jump to my mind. And that clinical trial should be completed sometime during 2017..

Great, thank you..

Sure..

Our next question comes from the line of Hartaj Singh with BTIG. Your line is open..

Yes. Hi, thanks for taking my question. I just had a quick question on the charge for patient assistance. And then, just your margins going forward, I know they've been very, very strong, just what’s your thought on operating expenditures and margin progression over the next of couple of years, Martine? Thank you..

Thanks for asking the question. I think that our margins will continue to be strong, and perhaps even in terms of the company's operating margin, even improve as we continue to become more efficient and more expert at what we're doing.

The company's revenues are continuing to grow but it is not always necessary to spend the same percentage of revenues on functions that can be carried out just as well with the percentage of – with a lower percentage of revenues.

And one big reason for that is that our pipeline is chock-full of late stage developments, and it's a lot of the money that might be spent on the early drug discovery phase is not so necessary to be spent.

Also, as you are probably aware that on the gross margin side, we achieved quite a benefit by being able to finally liberate ourselves from the 10% royalty that we had previously had to pay to GSK.

Also relevant on the margin question and especially what's in the news flow today, I want to share an observation which I think is – I am proud of and I find very insightful. So I just got done mentioning to the previous caller that April Remodulin revenue is highest in our history.

It would be normal like people are skeptical about biotech and pharmaceutical companies that could shuffle and wonder well how much price increase was associated with that largest revenues in history, the answer is zero. We have not increased the price of Remodulin for five years. This is organic business growth.

It is a tremendous testament to the value that physicians and patients place on Remodulin. Operator, I think we have time for one more question..

Our last question comes from the line of Mark Fram with Cowen and Company. Your line is open..

Hi, thank you for fitting me in. I was just wondering, Martine, if you could give us an update on the DEKA semi-disposable pump program that you have going on, and maybe contrast it to what you see from Sedimed being produced as a potential competitor to that product..

Yes, thanks for the question. So the DEKA semi-disposable pump is a great piece of technology from one of the greatest biotech innovators in the last generation, Dean Kamen. Those of you who are familiar with the diabetes phase and the dialysis phase would know that his fundamental inventions underlie all of those business bases.

So Dean has come up with a completely novel technology that underlies the DEKA disposable pump. This novel technology, we believe, has a clear clinical superiority with regard to current methods of delivering drugs subcutaneously, and we certainly intend to demonstrate that clinical superiority.

With regard to Sedimed, to the best of my knowledge, as of now that device has not been used in any patients, so it's almost impossible for me to do a comparison and contrasting of it. But the DEKA pump will go through all of the benefit of United Therapeutics deep bench of expertise in through treprostinil development and in drug device development.

And are excellent relations with physicians, clinical investigators throughout the country. And we believe that when it is introduced, it will be identified as a clinically superior way to deliver our drug. You may be familiar with the FDA’s long-held view that when you can deliver a medicine more safely, that is an aspect of clinical superiority.

When there are fewer side effects, ability for there to be greater patient compliance that is a clinical superiority point. So in that sense a clinical superiority that I feel the DEKA disposable pump will really be very much appreciated. I am sorry that I didn’t have time to highlight that in my initial pipeline overview.

I was trying to give an overview of products that I feel confident are going to be able to achieve $1 billion in revenue each. I can’t say that I feel the semi-disposable pump will reach up to that level, we will have to see.

But it will certainly be good to stand up for the subcutaneous portion of the treprostinil business which is about $0.25 billion a year. Thank you..

I would like to turn the call back to Dr. Rothblatt for closing remarks. .

Thank you very much, and I'm happy to be able to answer everybody's questions this morning. James Edgemond, our Chief Financial Officer, and I will be at the Deutsche Bank Healthcare conference all day next week on May 05, and we look forward to seeing many of our holders there. Thank you very much..

Thank you for participating in today's United Therapeutics Corporation conference call. A rebroadcast will be available for replay for one week by dialing 1-855-859-2056 with international callers dialing 1404-537-3406 and using access code 93447541..