Use these links to rapidly review the document
`TABLE QF QQNTENT§
`ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
`
`Tlfntri
`
`
`
`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`WASHINGTON. 0.1:. 20549
`
`mm One]
`
`FORM Ill-K
`
`3
`
`ANNUAL REPORT PURSUANT TO SECTION 13 OR l5(d)OF THE SECURITIES EXCHANGE ACT 0171934.
`
`For the fiscal yearmrirtd December“. 20”
`
`OR
`
`El
`
`TRANSITION REPORT PURSUANT TO SECTION 13 OR 1501) OF THE SECURITIES EXCHANGE ACT OF 1934.
`
`In
`For the transition period from
`Commission are numlrer fl-ZfiSDl
`
`U nited Therapeutics Corporation
`(Exact Name of Registrant m Specified. in Its Charter)
`Delaware
`52-]986749
`(State or Other Jurisdiction of
`[I.R.S. Employer Ider'ttification No.)
`Incorporation or Organization)
`
`1040 Spring Street. Silver Springs
`MD
`(Address of Principal Executive Offirxs)
`
`209“}
`(Zip Code)
`
`{sun nus-9292
`Registrarrl's Telephone Number. Including Area Code
`
`Securities registered pursuant lo Seclion l2{'b] ofthc Act:
`
`Tirlr: of each class
`Common Stock. par value 5.0I pushare
`and associated prefu'rcd stock purchasc rights
`
`Name of each exchange on nlriclr
`registered
`NASDAQ Global Select Matt:
`
`Securities registered pursuant Io Section Dig} oflhe Act:
`None
`(Title of Class}
`
`Indicate by check mark iflhe registranl is awell-known seasoned issuer, in defined in Rule 405 ofthe Scrmilies Aer. Yes E No Cl
`
`Indiwe by check mark if rhe registrant is not required to file reports pursuant to Section I3 or Section Did] ofthe Act. Yes El No El
`
`Indium: by check mark whether the registrant {I} has flied all reports required to be filed by Section l3 or ISM] of Il'lt: Securities Exchange Aer of1934 during the prowling l2 months (or for such shorter
`period that the registrant Win roquirod Io file such reports). and [2] him been subject Io such filing requirements for the past 90 days. Yes
`No D
`
`Indicate by check mark whether the registrant has submitted eloeironirally and posted on its corporate Website. ifany. every Interactive Dara File required Io be submitted and posted pursuant to Rule 405
`of Regulation S—T 6232.405 oftiris chapter) during the preeeding 12 months [or for such shorter period that the tegistranr was required to submit and post such files}. Yes E No El
`
`Indicate by check mark il‘disclosure ofdelinqum! filers pursuant to Item 405 ofRegularion 5-K $229,405 ofthis chapter} is not contained herein. and will not be containadt lo the best of registrant's
`knowledge, in definitive proxy or information statements incorporated by refermoe in Part “I ofthis Form 10-K or any arnmdmenl to this Form 10-K. E
`
`Indicate by check mark whether the registrant is a large accelerated filer. an aeeelerared titer, a non-mined filer. smaller reporting coronary. or an emerging gmwrh company. See the definitions ol‘
`"large accelerated filer." IIBDOCIWIOU filer." "smaller reporting company," and "merging gth company" in Rule lib-2 ofthc Exchange Act:
`
`Large arxneleraled filer E
`
`Aooeluatod filer El
`
`Non-amelerated filu' El
`(do not check ifa
`smaller reporting company]
`
`Smaller reporting company El
`Emerging growth company El
`
`Indicate by check mark whether the registrant is a shell mom! (as defined in Rule IZb—I oftlre A011 Yes El Ne KB
`
`The aggregate market value ofthe Common Stock held by non-afiliales of the registrant. based on the closing pritx: on June 30. ZOI '1", as reported by the NASDAQ Global Select Market Wm
`
`UNITED THERAPEUTICS, EX. 2087
`WATSON LABORATORIES v. UNITED THERAPEUTICS, |PR2017-01621
`
`Page 1 of 213
`
`

`

`appmximaiely 84,948,412 | .509.
`
`The number ofshnres outstanding oflhe issua’s common stock. par value $0.01 per share. as m" Fcbmzu'y 14, 20l8, wac 43,239,722.
`DOCUMENTS INCORPORATED BY RE FEREXC‘E
`
`Ponions oflhc mgislranl‘s dcfinilivc proxy stalcmml fiJr lhI: regislranl's ZOIS annual mowing ofshmholdcrs scheduled lo be held 011 June 2?. ZOIS, an: inmrporalud by mfm-noc in Part ”I of [his
`Fonn ll'I-K.
`
`UNITED THERAPEUTICS, EX. 2087
`WATSON LABORATORIES v. UNITED THERAPEUTICS, |PR2017-01621
`
`Page 2 of 213
`
`

`

`Ta]
`
`f
`
`ntent
`
`TABLE OF CONTENTS
`
`PART I
`
`m 31.5mm
`
`Item 1A
`
`Risk Fagtggs
`
`Item 18.
`
`n
`
`I
`
`t
`
`mm nt
`
`Lem—2t
`
`miss
`
`Ilem_3.
`
`Legal nggggings
`
`m Min
`
`f
`
`Di
`
`1
`
`r
`
`EAELLI
`
`m
`
`If
`it
`
`E
`
`n '
`
`I
`riti
`
`t
`
`|
`
`t
`
`k
`
`r
`
`tt
`
`[
`
`r
`
`m 1
`
`in
`
`i
`
`t
`
`m Management‘s Discussion and Analysis ofFinancial Condition and Results of! memtions
`
`Quantitative and Qualitative Disclosures About Market Risk
`
`Item 'IA.
`
`m Financial Statements and Supglementag Data
`
`Item 9.
`Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
`
`ltem 9A.
`
`Contnols and Procedures
`
`Item 98.
`
`Other Information
`
`PART II]
`
`m Directors, Executive Officers and Corporate Governance
`
`Item I 1.
`Executive Compensation
`
`
`Item 12.
`Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
`mm
`
`tml3
`
`rtin el ti nhi
`
`a
`
`la
`
`Tran
`
`i
`
`[1 Di
`
`t 1'
`
`n
`
`n
`
`l_te.m_l$ 29W
`
`PflgT IV
`
`It
`
`1
`
`It
`
`in
`
`SIE iNATI Ififlfi
`
`x“tFiaialtt
`
`t
`
`|
`
`F
`
`—K
`
`i
`
`16
`
`5;
`
`12—
`
`i;
`
`fl
`
`51
`
`5.6
`
`fl
`
`Q
`
`fl
`
`fl
`
`3
`
`fl
`
`fl
`
`E
`
`1";
`
`11
`
`1?.
`
`1%
`
`33
`
`fl
`
`UNITED THERAPEUTICS, EX. 2087
`WATSON LABORATORIES v. UNITED THERAPEUTICS, IPR2017—01621
`Page 3 of 213
`
`

`

`T
`
`ntt
`
`ITEM 1. BUSINESS
`
`Overview
`
`PART 1
`
`United Therapeutics Corporation is a biotechnology company focused on the development and commercialization of innovative products to address the
`unmet medical needs of patients with chronic and life-threatening conditions. We market and sell four commercial therapies in the United States to treat
`pulmonary arterial hypertension (PAH): Remodulin® (treprostinil) Injection (Remodulin); Tyvaso® (treprostinil) Inhalation Solution (Tyvaso); Orenitrarn®
`{treprostinil) Extended-Release Tablets (Orenitram); and Adcirca® {tadalafil} Tablets (Adcirca). We also market and sell an oncology product in the United
`States, Unituxin® (dinutuxirnab) Injection (Unituxin), which is approved fortreatment of high-risk neuroblastoma. Outside the United States, our only
`significant revenues are derived floor the sale ofRernodulin, which is approved in Europe and various other countries. We are also engaged in research and
`development of new indications, formulations and delivery devices for our existing products, as well as new products to treat PAH and other conditions.
`Finally, we are engaged in early-stage research and development ofa number of organ transplantation-related technologies.
`
`We generate revenues from sales of our five commercially approved products noted above. Remodulin was approved by the US. Food and Drug
`Administration (FDA) for subcutaneous and intravenous administration in 2002 and 2004, respectively, and has been sold commercially in the United States
`since 2002. Tyvaso and Adcirca were both approved by the FDA and launched commercially in the United States in 2009. Orenitrarn and Unituxin were
`approved by the FDA in 2013 and 2015. respectively. Our sales, marketing and othercommercial staffsupports the availability ofour commercial products in
`the United States, and these efforts are supplemented by our contract distributors. Outside the United States, our contract distributols are primarily responsible
`for sales and marketing efiorts.
`
`United Therapeutics was incorporated in Delaware in June 1996. Our principal executive offices are located at 1040 Spring Street, Silver Spring.
`Maryland 20910 and at 55 T.W. Alexander Drive. Research Triangle Park, North Carolina 27709.
`
`Unless the context requires otherwise or unless otherwise noted, all references in this Annual Report on Form lOnK (this Report) to “United Therapeutics"
`and to the ”company", "we“, "us“ or “out" are to United Therapeutics Corporation and its subsidiaries.
`
`3
`
`UNITED THERAPEUTICS, EX. 2087
`WATSON LABORATORIES v. UNITED THERAPEUTICS, |PR2017-01621
`
`Page 4 of 213
`
`

`

`Indication
`
`Current Status
`
`Commercial in the U.S., most of
`Europe“ , Argentina, Brazil, Canada,
`Chile, China, Israel, Japan, Mexico,
`Peru, Saudi Arabia, South Korea,
`Taiwan and Venezuela
`
`Commercial in the U.S., most of
`Eumpe*,Argentina, Canada, China,
`Israel, Japan, Mexico, Peru, Saudi
`Arabia, South Korea and Switzerland
`
`Du r Torritnrv
`
`Worldwide
`
`Worldwide
`
`Commercial in the U.S. and Israel
`
`Worldwide
`
`Commercial in the U.S.
`
`United States
`
`Commercial in the U.S.
`
`Worldwide
`
`Worldwide
`
`Table ofContents
`
`Our Commercial Products
`
`Ourcornrnercia] product portfolio consists ofthe following:
` Product
`Mode of Deliverv
`Remodulin
`
`PAH
`
`Continuous
`subcutaneous
`
`Remodulin
`
`Continuous
`intravenous
`
`'T‘yvaso
`
`Adcirca
`
`Orenitram
`
`Inhaled
`
`Ora]
`
`Oral
`
`PAH
`
`PAH
`
`PAH
`
`PAH
`
`Unituxin
`
`Intravenous
`
`High-risk
`neuroblastoma
`
`Commercial in the U.S.
`
`*
`
`We have obtained approval for subcutaneous and intravenous Remodulin in 24 member countries of the European Economic Area
`(EEA), as well as other non-EEA countries in Europe, and have received pricing approval in most ofthese countries.
`
`Products to Treat Pulmonary Arterial Hypertension
`
`PAH is a life-threatening disease that affects the blood vessels in the lungs and is characterized by increased pressure in the pulmonary arteries, which are
`the blood vessels leading from the heart to the lungs. The elevated pressure in the pulmonary arteries strains the right side ofthe heart as it pumps blood to
`the lungs. This eventually leads to right heart failure and, ultimately, death. PAH is characterized by structural changes in blood vessel walls, aggregation of
`platelets and alteration of smooth muscle cell function. We believe that PAH affects about 500,000 individuals worldwide. We have seen increases in the
`numberofpeople diagnosed with the disease, but due to the rarity ofthe disease and the complexity ofdiagnosing it, only a small fraction ofpatients with
`PAH are being treated.
`
`Current FDA-approved therapies for PAH focus on three distinct molecular pathways: the prostacyclin pathway. the nitric oxide (NO) pathway, and the
`endothelin (ET) pathway. The classes of drugs that target these three pathways are:
`
`'
`
`Prosracyclin Analogues and IP Prosracyclin Receptor Agonisrs. Patients with PAH have been shown to have reduced levels ofprostacyclin, a
`naturally occurring substance that relaxes the pulmonary blood vessels, prevents platelet aggregation and inhibits the proliferation ofsrnooth
`muscle cells in the pulmonary vessels. Therefore, drugs that mimic the action ofprostacyclin, known as prostacyclin analogues, are established
`PAH treatments. Another class of therapy, called IP prostacyclin receptor agonists, has recently been developed to address PAH through the
`prostacyclin pathway. As compared with prostacycl in analogues, which broadly mimic the effect
`
`4
`
`UNITED THERAPEUTICS, EX. 2087
`WATSON LABORATORIES v. UNITED THERAPEUTICS, |PR2017-01621
`
`Page 5 of 213
`
`

`

`Table 9f! figment;
`
`°
`
`'
`
`of prostacyclin, IF prostacycl in receptor agonists bind selectively to the IP receptor, one of several prostacyclin receptors.
`
`Phosphodr’esterase Type 5 (PBS-5) Inhibitors and Guanyfai‘e Cyciase (SGC) Stimulators. Patients with PAH have also been shown to have
`reduced levels of the enzyme responsible for producing NO, a naturally occun'ing substance in the body that causes relaxation of the
`pulmonary blood vessels. N0 produces this effect by increasing intracellular levels of cyclic guanosine monophosphate GMP {cyclic GMP).
`Therefore, another established therapeutic approach has been to inhibit the degradation of cyclic GMP using dmgs known as PDE-S inhibitors.
`In addition, sGC is an enzyme found in the endotheiial cells and the receptor for N0. When NO binds to sGC, the enzyme enhances production
`of cyclic GMP. As a result, sGC stimulators are also approved to treat PAH.
`
`Endothelr‘n Receptor-Antagonists. PAH patients have also been shown to have elevated levels of endothelin-1, a naturally occun'ing
`substance in the body that causes constriction of, and structural changes to, the pulmonary blood vessels. Therefore, another established
`therapeutic approach has been to block the action of endothel in with drugs that are known as endothelin receptor antagonists (ETRAs).
`
`Because any or all ofthe three pathways may be therapeutic targets in a patient, these classes of drugs are used alone or in combination to treat patients
`with PAH. We currently market drugs in two ofthese classes. Remodulin, Tyvaso and Orenitrarn are all formulations oftreprostinil, a prostacyclin analogue,
`and Adcirca is a PDE-S inhibitor.
`
`The clinical severity of PAH is classified according to a system originally developed for heart failure by the New York Heart Association and then
`modified by the World Health Organization {WHO} for patients with PAH, ranging from functional class I (no symptoms) through fitnetional class IV (severe
`symptoms). Labeled indications for PAH therapies ofiert note that clinical studies for the drug predominantly included patients in one or more fitnctional
`classes.
`
`PAH is a subset of the condition more broadly known as pulmonary hypertension. WHO has classified pulmonary hypertension into five groups, with
`PAH being designated WHO Group 1, which includes multiple etiologies such as idiopathic (meaning the cause is unknown} and heritable PAH, as well as
`PAH associated with connective tissue diseases. While our PAH therapies' labeling is limited to the treatment ofWHO Group 1 PAH, we are engaged in
`research and development efforts to expand the use ofOrenitram to treat pulmonary hypertension in certain categories ofWHO Group 2, and Tyvaso to treat
`pulmonary hypertension in certain categories of WHO Group 3. For fithher details, see Research and Development below.
`
`Remodulin
`
`We sell Remodulin to specialty pharmaceutical distributors in the United States and to pharmaceutical distributors internationally. We recognized
`approximately $670.9 million, $602.3 million and $572.8 million in Remodulin net product sales, representing 39 percent, 38 percent and 39 percent of'our
`total revenues for the years ended December3 l, 2017, 2016 and 2015, respectively. Remodulin is indicated to treat patients with PAH, to diminish symptoms
`associated with exercise. Studies establishing effectiveness included patients with firnctional class ll—IV (moderate to severe} symptoms.
`
`Outside of the United States, Remodulin is approved for the treatment of PAH in 38 countries by continuous subcutaneous administration and in 35
`countries by continuous intravenous administration, and is sold commercially in most of these countries. Applications for approval of both subcutaneous and
`intravenous Remodulin are under review in other countries.
`
`We believe Remodulin has many qualities that make it an appealing alternative to competitive therapies. Remodulin is stable at room temperature, so it
`does not need to be cooled during infiJsion
`
`UNITED THERAPEUTICS, EX. 2087
`WATSON LABORATORIES v. UNITED THERAPEUTICS, |PR2017-01621
`
`Page 6 of 213
`
`

`

`Tgblg gffigfltggt;
`
`and patients do not need to use cooling packs or refi'igeration to keep it stable. Treprostinil is highly soluble and highly potent, which enables us to
`manufacture Remodulin in concentrated solutions. This allows therapeutic concentrations ofRemodulin to be delivered at very low flow rates via
`miniaturized infusion pumps for both subcutaneous and intravenous infiision. Remodulin can be continuously infilsed for up to 48 hours intravenously or
`72 hours subcutaneously before refilling the extemal infusion pump, and is packaged as an aqueous solution so patients do not have to reconstitute the drug
`before refilling theirpumps. This profile contrasts favorably with the othercontinuously infitsed prostacyclin therapies in the market—Flolan®, Veletri® and
`generic epoprostenol.
`
`Flolan and generic epoprosteno] are not stable at room temperature (and therefore require refi'igeration or the use of cooling packs}. but Veletri may be
`stable at room temperature depending on its concentration. Flolan, generic epoprostenol, and Veletri have shorter half-lives than Remodulin, requiring
`mixing prior to pump refills. None ofthese competitive products may be administered via subcutaneous infusion, and therefore may only be delivered
`intravenously.
`
`We have settled patent litigation with four generic dmg companies that filed abbreviated new drug applications (ANDAS) with the FDA to market
`generic versions of Remodulin in the United States. Under the terms of these settlements, Sandoz, Inc. {Sandoz} is permitted to launch its generic version of
`Remodulin in the United States in June 2018, and Teva Pharmaceuticals USA, Inc. (Teva), Par Sterile Products, LLC (Far) and Dr. Reddy's Laboratories, Inc.
`(Dr. Reddy's), are permitted to launch their generic versions ofRemodulin in the United States in December 2018, although each ofthese companies may be
`pemiitted to enter the market earlier under certain circumstances. For further detail, see the section below entitled Patents and Other Proprietary Rights,
`Strategic Licenses and Market Exclustvth—Geueric Competition.
`
`There are serious adverse events associated with Remodulin. For example, when infused subcutaneously, Remodu] in causes varying degrees of infusion
`site pain and reaction (redness and swelling) in most patients, Patients who cannot tolerate the infusion site pain related to the use of subcutaneous
`Remodulin may instead use intravenous Remodulin. Intravenous Remodulin is delivered continuously through a surgically implanted central venous
`catheter, similar to Flolan, Veletri and generic epoprostenol. Patients who receive therapy through implanted venous catheters have a risk of developing
`blood stream infections and a serious systemic infection known as sepsis. Other common side effects associated with both subcutaneous and intravenous
`Remodulin include headache, diarrhea, nausea, jaw pain, vasodilation and edema.
`
`Tyvaso
`
`We sell Tyvaso to the same specialty pharmaceutical distributors in the United States that distribute Remodulin. We recognized approximately
`$372.9 million, $404.6 million and $470.1 million in Tyvaso net product sales, representing 22 percent, 25 percent and 32 percent ofour total revenues for
`the years ended December 31, 201?, 2016 and 2015, respectively.
`
`Tyvaso is administered four times a day by inhaling up to nine breaths during each treatment session, which takes approximately three minutes. Tyvaso
`is required to be administered using our proprietary Tyvaso Inhalation System, which consists of an ultra-sonic nebulizer that provides a dose of Tyvaso on a
`breath-by-breath basis, and related accessories. A single ampule containing Tyvaso is emptied into the Tyvaso Inhalation System once per day, so the Tyvaso
`Inhalation System only needs to be cleaned once daily. Tyvaso is regulated by the FDA as a dmg-device combination product. consisting onyvaso drug
`product and the Tyvaso Inhalation System.
`
`Ventavis® (iloprost) is the only other FDA-approved inhaled prostacyciin analogue. Patients need to inhale Ventavis six to nine times per day via a
`nebulizer. According to its package insert, each Ventavis inhalation consists offourto ten minutes ofcontinuous inhalation via the nebulizer. We completed
`an open-label study in the United States to investigate the clinical effects of switching
`
`6
`
`UNITED THERAPEUTICS, EX. 2087
`WATSON LABORATORIES v. UNITED THERAPEUTICS, |PR2017-01621
`
`Page 7 of 213
`
`

`

`lfntn
`
`patients fiom Ventavis to Tyvaso. Patients in this study saved an average of approximately 1 .4 hours per day when administering Tyvaso compared to
`Ventavis.
`
`Studies establishing efi'ectiveness included predominately patients with functional class II] symptoms (may not have symptoms at rest but activities are
`greatly limited by shortness of breath, fatigue, or near fainting). Tyvaso was generally well tolerated in ourtnals. The most common adverse events were
`transient cough, headache, nausea, dizziness and flushing. Tyvaso is also approved in Israel, where we commenced commercial sales during the second
`quarterof2015,
`
`Orenitrtim
`
`Orenitram is the only FDA approved, orally administered prostacyclin analogue, and is the only oral PAH prostacyclin class therapy approved in the
`United States that is titratable to a maximum tolerated dose, without a dose ceiling. We sell Orenitram to the same specialty pharmaceutical distributors in the
`United States that distribute Remodulin and Tyvaso. We recognized approximately $185.8 million, $157.2 million and $118.4 million in Orenitram net
`product sales, representing 11 percent, ten percent and eight percent ofourtotal revenues for the years ended December3 l, 201 "i. 2016 and 2015,
`respectively. The primary study that established eflicacy included predominately patients with firnctional class II-III symptoms and etiologies of idiopathic
`or heritable PAH (75 percent) or PAH associated with connective tissue disease (19 percent). The most common side effects observed in our clinical studies
`were headache, nausea and diarrhea.
`
`In February 20] 8, we settled patent litigation with Actavis Laboratories FL, Inc. [Actavis) relating to its ANDA seeking to market a generic version of
`Orenitram in the United States. Under the terms of this settlement, Actavis will be permitted to launch its generic version of Orenitram in the United States in
`June 202 7, although Actavis may be permitted to enter the market earlier under certain circumstances. For further detail, see the section below entitled
`Patents and Other Proprietary Rights. Strategic Licenses and Market Ereiusiviry—Generic Competition.
`
`Adcirca
`
`Adcirca is a POE—5 inhibitor, the active pharmaceutical ingredient of which is tadalafi]. Tadalafil is also the active pharmaceutical ingredient in Cialis®,
`which is marketed by Eli Lilly and Company (Lilly) for the treatment oferectile dysfirnction. We acquired the commercial rights to Adcirca for the treatment
`ofPAI-I in the United States from Lilly in 2008. We sell Adcirca at prices established by Lilly, which are at parity with Cialis pricing. We recognized
`approximately $419.? million, $372.2 million and $2'i8.8 million in Adcirca net product sales, representing 24 percent, 23 percent and [9 percent ofour
`total revenues for the years ended Deeember3 l, 2017, 2016 and 2015, respectively.
`
`In 2009, the FDA approved Adcirca with a recommended dose of40 mg, making it the only once-daily PDE»S inhibitor for the treatment ofPAI-i. Adcirca
`is indicated to improve exercise ability in patients with PAH. Studies establishing efiiectiveness included predominately patients with functional class Il-III
`symptoms. Headaches were the most commonly reported side eHect.
`
`Prior to the approval of Adcirca, Revatio®, which is marketed by Pfizer Inc. (Pfizer), was the only PDEAS inhibitor approved forthe treatment ofPAH.
`Sildenafil citrate, the active ingredient in Revatio, is also the active ingredient in Viagra®, which is marketed by Pfizer for the treatment of erectile
`dysfirnction. In 2012, several companies launched generic formulations of sildenafil citlate. Revatio and generic sildenafil citrate are dosed three times daily.
`
`In September 20] 4, Gilead Sciences, Inc. (Gilead) announced the results of a study ofambri sentan (an ETRA) and tadalafil in PAH patients as a first-line
`combination treatment, compared to treating PAH patients with only ambrisentan or tadalafil. In the study, first-line treatment with both therapies reduced the
`risk of clinical failure (a composite endpoint that incorporates clinical worsening events—
`
`'3“
`
`UNITED THERAPEUTICS, EX. 2087
`WATSON LABORATORIES v. UNITED THERAPEUTICS, |PR2017-O1621
`
`Page 8 of 213
`
`

`

`We
`
`death, hospitalization and disease worsening—and a component ofunsati sfactory long-term clinical response] compared to a monotherapy treatment by
`50 percent. Based on these results, in October 2015, the FDA approved an update to the new drug application (NDA) for Letairis® (arnbrisentan), permitting
`the use of Letairis in combination with tadalafil for PAH to reduce the risks ofdisease progression and hospitalization for worsening PAH, and to improve
`exercise ability.
`
`A U.S. patent for Adcirca forthe treatment ofpulmonary hypertension expired in November 2017. Lilly has two additional patents expiring in April and
`November 2020, respectively, covering Adcirca and claiming pharmaceutical compositions and free drug particulate forms (the 2020 Patents). The Patent
`Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (USPTO) has issued a Fi rial Written Decision finding these patents invalid as the
`result ofan interparres review (IPR) proceeding initiated by Actelion Pharmaceuticals Ltd. Lilly's appeal ofthe FTAB's decision is pending before the
`United States Court oprpeals forthe Federal Circuit. In May 20] T, we amended our license agreement with Lilly relating to Adcirca to clarify and extend
`the term of the agreement and to amend the economic terms of the agreement following the expiration of a patent covering Adcirca in November 2017. As a
`result ofthis amendment, beginning December 1, 201?, our royalty rate on net product sales of Adcirca increased from five percent to ten percent, and we are
`required to make milestone payments to Lilly equal to $3 25,000 for each $1 £00,000 in net product sales. Adcirca‘s cost of product sales as a percentage of
`Adcirca's net product sales has increased significantly since December I, 20l7 due to these cost increases. In the event that Lilly prevails in one or both ofthe
`appeals noted above: (a) the previous five percent royalty rate will apply and the effective date of the new payment structure will be deferred until the
`expiration, lapse, abandonment or invalidation ofthe last claim ofthe 2020 Patents covering commercialization ofAdcirca for pulmonary hypertension; and
`(b) to the extent we had previously paid amounts in excess of five percent, those amounts will be refunded by Lilly. The FDA has already tentatively
`approved ANDAs filed by at least two generic companies to market generic versions of Adcirca following the expiration of the November 201? patent.
`However, the FDA granted Lilly's request for pediatric exclusivity, which provides an additional six-month exclusivity period through May 2018. As a result,
`following the expiration of regulatory exclusivity in May 2018, we anticipate the launch of generic versions ofAdcirca resulting in decreased Adcirca sales,
`which will likely lead to a material adverse impact on Adcirca revenue. As amended, the term of our license agreement with Lilly expires on the latest to
`occur of: (l) expiration, lapse, cancellation, abandonment or invalidation of the iast claim to expire within a Lilly patent covering the commercialization of
`Adcirca for the treatment of pulmonary hypertension in the United States; (2) expiration of any govemment-conferred exclusivity rights to use Adcirca for the
`treatment of pulmonary hypertension in the United States; or {3) December 31, 2020.
`
`Product to Treat Ca nicer—Unituxin
`
`In March 2015, the FDA approved our Biologics License Application (BLA) for Unituxin, in combination with granulocyte-macrophage colony-
`stimulating factor (GM «CSFj, interleukinnz (IL—2), and l3-cis-retinoic acid (RA), for the treatment of patients with high-risk neuroblastoma (a rare form of
`pediatric cancer) who achieve at least a partial response to prior first-line multiagent, multimodality therapy. Unituxin is a chimeric, composed ofa
`combination of mouse and human DNA, monoclonal antibody that induces antibody-dependent cell-mediated cytotoxicity, a mechanism of ce] l-mediated
`immunity whereby the immune system actively targets a cell that has been bound by specific antibodies. Unituxin therapy is associated with severe side
`efi'ects, including infections, infiision reactions, hypokalemia, hypotension, pain, fever, and capillary leak syndrome.
`
`We commenced U.S. sales ofUnituxin in the third quarterof2015. We recognized approximately $76.0 million, $62.5 million and $20.5 million in
`Unituxin net product sales, mpmenting fourpercent, fourpercent and one percent ofourtotal revenues forthe years ended December3 1, 2017, 2016 and
`2015, respectively.
`
`
`
`UNITED THERAPEUTICS, EX. 2087
`WATSON LABORATORIES v. UNITED THERAPEUTICS, IPR2017-0162‘I
`
`Page 9 of 213
`
`

`

`Table gfgggntgnts
`
`Research and Development
`
`We focus roost ofour research and development efforts on the following near-term pipeline programs (intended to result in product launches in the 2018-
`202i timef‘rarne) and medium—term pipeline programs (intended to result in product launches in the 2022-2025 timefrarne). We are also engaged in a variety
`of additional medium— and long-term research and development efi'orts, including technologies designed to increase the supply oftransplantable organs and
`tissues and improve outcomes for transplant recipients through regenerative medicine, xenotransplantation, biomechanical lungs and ex—vivo lung perfusion.
`
`Near— Term Pipeline Programs {2018-202 I)
`
`Mode of Delivery
`Continuous
`intravenous via
`implantable pump
`
`Continuous
`subcutaneous via
`pre-filled, semi-
`disposable system
`
`Oral
`
` Product
`Implantable
`System for
`Remodulin
`
`RemUnitym
`(treprostinil)
`
`OreniPlusm
`(Orenitram in
`combination
`with approved
`background
`therapy)
`
`Tysuberprostm Oral {esuberaprost}
`(esuberaprost in
`Inhaled (Tyvaso)
`combination
`with Tyvaso}
`
`Continuous
`subcutaneous
`
`RemoProm
`(pain.fi-ee
`subcutaneous
`Remodulin
`prodrug)
`
`Indicarinn
`
`PAH
`
`PAH
`
`Current Status
`Our Territory
`STUDY NAME
`Pending regulatory United States, United
`approval
`Kingdom, Canada, France,
`Germany, Italy and Japan
`
`Pre-NDA
`
`Worldwide
`
`PAH (decrease morbidity
`and mortality)
`
`Phase IV
`FREEDOM~EV
`
`Worldwide
`
`PAH {decrease morbidity
`and mortality)
`
`Phase 1]]
`BEAT
`
`North America, Europe,
`Mexico, South America,
`Egypt. India, Israel, South
`Africa and Australia
`
`PAH
`
`Pre-Clinical
`
`Worldwide
`
`Dinutuximab
`
`Intravenous
`
`Small cell lung cancer
`
`Tyvaso_]LDm
`(treprostinil)
`
`Inhaled
`
`Pulmonary hypertension
`associated with idiopathic
`pulmonary fibrosis (WHO
`Group 3)
`
`9
`
`Phase IIfllI
`DIS TWCT
`
`Phase I]I
`INCREASE
`
`Worldwide
`
`Worldwide
`
`UNITED THERAPEUTICS, EX. 2087
`WATSON LABORATORIES v. UNITED THERAPEUTICS, |PR2017-01621
`
`Page 10 of 213
`
`

`

`T
`
`f.nt
`
`Medium—Term Pipeline Program (2022—2025)
`
` Product
`Tyvaso
`(treprostinil)
`
`Mode of Delivery
`Inhaled
`
`Indication
`Pulmonary hypertension associated with
`chronic obstructive pulmonary disease
`(WHO Group 3)
`
`Aurora-
`
`Intravenous
`
`PAH
`
`GTTM (eNOS
`gene
`therapy)
`
`Current Status
`STUDY NAME
`Phase Ill
`PERFECT
`
`Phase lII'TII
`
`SAPPHIRE
`
`Our Tem‘tory
`Worldwide
`
`United States
`
`OreniLefim Oral
`(treprostiniI)
`
`Pulmonary hypertension associated with
`Phase III
`giveégicular diastolic dysfimction (WI-IO SOUTHPAW
`“P
`
`Worldwide
`
`Implantable Systemfor Remodelin
`
`We are working with Medtronic, Inc. (Medtronic) on a program to develop Medtronic's proprietary intravascular infilsion catheter to be used with its
`SynchroMed® II implantable infirsion pump and related in Fusion system components {together referred to as the Implantable System for Remodulin) in order
`to deliver Remodulin for the treatment ofPAH. The SynchroMed [1 device is already approved for delivery of medication to treat neuropathic pain. with our
`funding, Medtronic completed the DelIVery clinical trial, which studied the safety ofthe Implantable System for Remodulin. The primary objective was to
`demonstrate a rate of catheter-related complications below 2.5 per 1,000 patient—days while using the Implantable System for Remodulin. In 20 I 3, Medtronic
`informed us that this primary objective was met. If the Implantable System for Remodulin is approved, the technology has the potential to reduce many ofthe
`patient burdens and other complications associated with the use ofexternal pumps to administer prostacyclin analogues. In order to launch the Implantable
`System for Remodulin in the United States, we are pursuing parallel regulatory filings with Medtronic relating to the device and the drug, respectively.
`Medtronic's premarket approval application (PMA) for the device was approved by the FDA in December 2017. We resubmitted our NDA for the use of
`Remodulin in the implantable pump on January 30, 2018, and we anticipate a two-month review period.
`
`Medtronic is entirely responsible for regulatory approvals and all manufacturing and quality systems related to its infusion pump and related
`components. Medtronic entered into a consent decree citing violations ofthe quality system regulation for medical devices and requiring it to stop
`manufacturing, designing and distributing SynchroMed II implantable infirsion pump systems, except in limited circumstances, until the FDA determines
`that Medtronic has met all the provisions listed in the consent decree. During the fourth quarter of 201 'r', Medtronic was notified by the FDA that these
`provisions have been satisfied,