UNITED THERAPEUTICS CORP
`
`FORM 10-K
`
`(Annual Report)
`
`Filed 02/26/09 for the Period Ending 12/31/08
`
`
`Address
`
`
`1110 SPRING ST
`SILVER SPRING, MD 20910
`3016089292
`Telephone
`0001082554
`CIK
`Symbol UTHR
`SIC Code
`2834 - Pharmaceutical Preparations
`Industry
`Biotechnology & Drugs
`Sector Healthcare
`Fiscal Year
`12/31
`
`
`
`http://www.edgar-online.com
`© Copyright 2009, EDGAR Online, Inc. All Rights Reserved.
`Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.
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`Use these links to rapidly review the document
`TABLE OF CONTENTS
`ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
`
`Table of Contents
`
`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`WASHINGTON, D.C. 20549
`
`
`
`FORM 10-K
`
`
`
`
`
`
`
`ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
`ACT OF 1934.
`
`(Mark
`One)
`
` (cid:1)
`
`
`
`
`For the fiscal year ended December 31, 2008
`
`OR
`
`
`TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
`EXCHANGE ACT OF 1934.
`
`
`For the transition period from to
`
`
`
`
`
`
`
`
`Commission file number 0-26301
`
`United Therapeutics Corporation
`(Exact Name of Registrant as Specified in Its Charter)
`
`Delaware
`(State or Other Jurisdiction of
`Incorporation or Organization)
`
`1110 Spring Street, Silver Spring, MD
`(Address of Principal Executive Offices)
`
`
`
`
`
`
`52-1984749
`(I.R.S. Employer
`Identification No.)
`
`20910
`(Zip Code)
`
`(301) 608-9292
`Registrant's Telephone Number, Including Area Code
`
`Securities registered pursuant to Section 12(b) of the Act:
`
`Title of each class
`Common Stock, par value $.01 per share
`and associated preferred stock purchase rights
`
`
`
`
`
`Name of each exchange on which registered
`Nasdaq Global Select Market
`
`Securities registered pursuant to Section 12(g) of the Act:
`
`None
`(Title of Class)
`
` Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:1) No
`
` Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No (cid:1)
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` Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
`for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (cid:1) No
`
` Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of
`registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (cid:1)
`
` Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated
`filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
`
`Large accelerated filer (cid:1)
`
`Accelerated filer
`
`Non-accelerated filer
`(Do not check if a smaller reporting company)
`
`
`
`Smaller reporting company
`
` Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No (cid:1)
`
` The aggregate market value of the Common Stock held by non-affiliates of the registrant, based on the closing price on June 30, 2008, as reported by the NASDAQ National Market was
`approximately $2,199,200,000
`
` The number of shares outstanding of the issuer's common stock, par value $0.01 per share, as of February 20, 2009, was 26,435,865
`
`DOCUMENTS INCORPORATED BY REFERENCE
`
` Portions of the registrant's definitive proxy statement for the registrant's 2009 annual meeting of shareholders scheduled to be held on June 26, 2009, are incorporated by reference in
`Part III of this Form 10-K.
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`Table of Contents
`
`
`TABLE OF CONTENTS
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`PART I
`
` Item 1. Business
` Item 1A. Risk Factors
` Item 1B. Unresolved Staff Comments
` Item 2. Properties
` Item 3. Legal Proceedings
` Item 4. Submission of Matters to a Vote of Security Holders
`
`
`PART II
` Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 53
` Item 6. Selected Financial Data
` 54
` Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
` 55
` Item 7A. Quantitative and Qualitative Disclosure About Market Risk
` 78
` Item 8. Financial Statements and Supplementary Data
` F-1
` Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
` 80
` Item 9A. Controls and Procedures
` 80
` Item 9B. Other Information
` 80
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` 31
` 51
` 51
` 52
` 52
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`PART III
` Item 10. Directors, Executive Officers and Corporate Governance
` Item 11. Executive Compensation
` Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
` Item 13. Certain Relationships and Related Transactions, and Director Independence
` Item 14. Principal Accounting Fees and Services
`
`
`PART IV
` Item 15. Exhibits, Financial Statement Schedules
`
`SIGNATURES
`
`EXHIBITS
` EX-10.44 Agreement between the Registrant and the Whiting-Turner Contracting Company
` EX-12.1 Computation of Earnings to Fixed Charges
` EX-21
` Subsidiaries of the Registrant
` EX-23.1 Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
` EX-31.1 Rule 13a-14(a) Certification of CEO
` EX-31.2 Rule 13a-14(a) Certification of CFO
` EX-32.1 Section 1350 Certification of CEO
` EX-32.2 Section 1350 Certification of CFO
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`ITEM 1. BUSINESS
`
`
`PART I
`
` We are a biotechnology company focused on the development and commercialization of unique products to address the unmet medical needs
`of patients with chronic and life-threatening cardiovascular and infectious diseases and cancer.
`
` Our key therapeutic platforms are:
`
`•
`
`•
`
`•
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`•
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`Prostacyclin Analogues , which are stable synthetic forms of prostacyclin, an important molecule produced by the body that has
`powerful effects on blood vessel health and function. Our lead prostacyclin analogue is Remodulin®, a treprostinil-based
`compound for the treatment of cardiovascular disease. Remodulin (treprostinil sodium) Injection has been approved by the
`U.S. Food and Drug Administration (FDA) for the treatment of pulmonary arterial hypertension (PAH) in patients with New York
`Heart Association (NYHA) Class II-IV (moderate to severe) symptoms to diminish symptoms associated with exercise. Remodulin
`has been approved in most of Europe for the treatment of NYHA Class III patients with idiopathic (familial) PAH and in other
`countries for use similar to that for which it is approved in the United States. Our inhaled and oral formulations of treprostinil are in
`the later stages of development. A New Drug Application (NDA) for our inhaled formulation is currently under review by the FDA
`and a Marketing Authorization Application (MAA) is currently under review by the European Medicines Agency (EMEA). We are
`also developing modified release beraprost (beraprost-MR), another prostacyclin analogue, for the treatment of PAH;
`
`Phosphodiesterase 5 (PDE5) inhibitors , which act to inhibit the degradation of cyclic guanosine monophosphate (cGMP) in cells.
`CGMP is activated by nitric oxide (NO) to signal relaxation of vascular smooth muscle. Our investigational therapy in this platform
`is tadalafil, a product developed by Eli Lilly and Company (Lilly). Lilly's NDA for tadalafil for the treatment of PAH is currently
`under review by the FDA. We entered into a license agreement with Lilly to obtain certain rights to tadalafil for PAH, effective
`December 18, 2008;
`
`Monoclonal Antibodies , which are antibodies that activate patients' immune systems to treat cancer. Our platform includes the 3F8
`and 8H9 murine antibodies, which we are developing for the treatment of neuroblastoma and metastatic brain cancer, respectively.
`We expect to begin a Phase II clinical trial in the second quarter of 2009 of the 3F8 antibody in patients with neuroblastoma; and
`
`Glycobiology Antiviral Agents , which are a novel class of small, sugar-like molecules that have shown pre-clinical indications of
`efficacy against a broad range of viruses, such as hepatitis C.
`
` We devote most of our resources to developing products within our key therapeutic platforms. We also devote resources to the
`commercialization and further development of telemedicine products and services, principally for the detection of cardiac arrhythmias (abnormal
`heart rhythms).
`
` We generate revenues from the sale of Remodulin and telemedicine products and services. Our sales and marketing staff for Remodulin,
`which is supplemented by our specialty pharmaceutical distributors, supports the commercial availability of Remodulin in the United States,
`Canada, Europe and other countries.
`
` United Therapeutics was incorporated in Delaware in June 1996. Our principal executive offices are located at 1110 Spring Street, Silver
`Spring, Maryland 20910. We also maintain executive offices at 55 T.W. Alexander Drive, Research Triangle Park, North Carolina 27709.
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` Unless the context requires otherwise or unless otherwise noted, all references in this Annual Report on Form 10-K to "United Therapeutics"
`and to the "company", "we", "us" or "our" are to United Therapeutics Corporation and its subsidiaries.
`
`Our Products
`
` Our product portfolio includes the following as of December 31, 2008:
`
`Product
`Remodulin
`
`Remodulin
`
`Mode of
`Delivery
`
` Continuous
`subcutaneous
`
`
`
`Continuous
`intravenous
`
`
`CardioPAL® SAVI and Decipher
`Cardiac Monitors
`Inhaled Treprostinil
`
`
`
`Telemedicine
`
`Inhaled
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`Oral Tadalafil
`Oral Treprostinil
`Beraprost-MR
`
`Oral
`Oral
`Oral
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`Indication/Market
` Pulmonary arterial hypertension
`
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`Pulmonary arterial hypertension
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`Cardiac arrhythmias and ischemic heart disease
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`Pulmonary arterial hypertension
`
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`Pulmonary hypertension
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`Pulmonary arterial hypertension
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`Pulmonary arterial hypertension
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`Current Status
`
` Commercial in the U.S., most of Europe*, Canada,
`Israel, Australia, Mexico, Argentina and Peru;
`MAA filed with EMEA
`
`
`
`Commercial in the U.S., Canada, Israel, Mexico,
`Argentina and Peru;
`MAA filed with EMEA
`Commercial
`
`NDA filed with FDA;
`MAA filed with EMEA
`NDA filed with FDA
`Phase III
`Phase II
`
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` Our Territory
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`Worldwide
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`Worldwide
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`Worldwide
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`Worldwide
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`United States
`Worldwide
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`3F8 MAb
`Oral Treprostinil
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`CardioPAL SAVI Wireless
`Cardiac Event Monitors
`Inhaled Treprostinil
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`Inhaled Treprostinil with AERx
`Essence®
`8H9 MAb
`Celgosivir
`Miglustat
`Glycobiology Antiviral Agents
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`Intravenous
`Oral
`Telemedicine
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`Inhaled
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`Inhaled
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`Intravenous
`Oral
`Oral
`Oral
`
`
`Neuroblastoma
`
`Peripheral vascular disease
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`Cardiac arrhythmias and ischemic heart disease
`
`
`Pulmonary arterial hypertension associated with
`Idiopathic pulmonary fibrosis
`
`Pulmonary hypertension
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`
`Metastatic brain cancer
`
`Hepatitis C
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`Hepatitis C
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`Hepatitis C and other infectious diseases
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`Phase II
`Phase II
`Phase II
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`Phase I
`
`Phase I
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`Phase I
`Phase I
`Pre-Clinical
`Pre-Clinical
`
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`North
`America/Europe
`Worldwide
`Worldwide
`Worldwide
`
`Worldwide
`
`Worldwide
`
`Worldwide
`Worldwide
`Worldwide
`Worldwide
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`*
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`We have obtained approval in 23 member countries of the European Union (EU), as well as European countries that are not members of the EU. We have received formal approval
`letters and pricing approval in most of these countries.
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`Remodulin
`
` Our lead product for treating PAH is Remodulin (treprostinil sodium) Injection, the main ingredient of which is treprostinil sodium, a
`prostacyclin analogue. We sell Remodulin to our specialty pharmaceutical distributors in the United States at a discount from an average
`wholesale price recommended by us, and to our international distributors at a transfer price set by us. We recognized approximately
`$269.7 million, $200.9 million and $152.5 million in Remodulin revenues, representing 96%, 95% and 96% of our net revenues in 2008, 2007 and
`2006, respectively. We obtained worldwide rights for all indications to Remodulin from GlaxoSmithKline PLC (formerly Glaxo Wellcome, Inc.)
`(Glaxo) in January 1997 and from Pfizer, Inc. (formerly Pharmacia & Upjohn Company)(Pfizer) in December 1996. In May 2002, Remodulin was
`approved by the FDA as a continuous subcutaneous (under the skin) infusion for the treatment of PAH in patients with NYHA Class II-IV
`(moderate to severe) symptoms. In November 2004, the FDA expanded its approval to permit continuous intravenous (through a vein) infusion for
`patients who cannot tolerate subcutaneous infusion. In March 2006, the FDA expanded its approval to include transition of patients to Remodulin
`from Flolan® (epoprostenol), the first FDA-approved prostacyclin for PAH. Remodulin is also approved as a continuous subcutaneous infusion
`treatment for various forms of PAH in 33 countries throughout the world, and as a continuous intravenous infusion treatment for various forms of
`PAH in Canada, Israel, Mexico, Peru and Argentina. Applications for approval for both subcutaneous and intravenous Remodulin infusion are
`under review in many other countries. We continue to work on expanding Remodulin commercialization to other new territories, including Japan.
`
` PAH is a life-threatening disease that affects the blood vessels in the lungs and is characterized by increased blood pressure in the blood
`vessels leading from the heart to the lungs, known as the pulmonary arteries. The elevated pressure in the pulmonary arteries strains the right side
`of the heart as it pumps blood to the lungs leading to right heart failure and death. PAH is characterized by the disruption of blood vessel walls, the
`aggregation of platelets and the alteration of smooth muscle function. It is estimated that PAH affects between 100,000 and 200,000 individuals
`worldwide. In recent years, as awareness of PAH has grown, we have seen an increase in the number of people diagnosed with the disease.
`However, because of the rarity of PAH and the complexity of diagnosing it, only a small fraction of patients with PAH are being treated. There is
`scientific interest in identifying easier, less invasive methods of diagnosing PAH. If this research is successful, more patients could be diagnosed
`at an earlier stage of the disease.
`
` The complexity of diagnosing PAH reflects in part the current uncertainties surrounding the etiology and pathophysiology of the condition.
`Currently, treatment of PAH focuses on three distinct molecular pathways that have been implicated in the disease process. These are the
`endothelin pathway, the NO pathway, and the prostacyclin pathway. Patients with PAH have been shown to have elevated levels of endothelin, a
`naturally occurring substance in the body that causes constriction of the pulmonary blood vessels. Therefore, one established therapeutic approach
`has been to block the action of endothelin with drugs that are known as endothelin receptor antagonists (ERAs). Patients with PAH have also been
`shown to have reduced levels of the enzyme responsible for producing NO, a naturally occurring substance in the body that has the effect of
`relaxing pulmonary blood vessels. NO produces this effect by increasing intracellular levels of an intermediary known as cGMP. Therefore,
`another established therapeutic approach has been to inhibit the degradation of cGMP, using drugs that are termed Phosphodiesterase 5 (PDE5)
`inhibitors. Finally, patients with PAH have been shown to have reduced levels of prostacyclin, a naturally occurring substance that has the effect
`of relaxing the pulmonary blood vessels, preventing platelet aggregation, and inhibiting the proliferation of smooth muscle cells in pulmonary
`vessels. Therefore, drugs that mimic the action of prostacyclin, termed prostacyclin analogues, are also established PAH treatments. Because any
`or all of these three pathways may be operative in a patient, these three classes of drugs are used alone or in combination to treat patients with
`PAH. We currently market Remodulin, a prostacyclin analogue, and are awaiting FDA approval to market tadalafil, a PDE5 inhibitor, for the
`treatment of pulmonary hypertension.
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` A long-term outcome study published in the European Respiratory Journal (vol. 28, Number 6; December 2006) demonstrated improved
`survival with Remodulin therapy when compared to predicted survival (NIH registry formula) over a four-year period. One-, two-, three- and four-
`year survival was 87%, 78%, 71%, and 68%, respectively, for all 860 patients in the study (including 130 patients who received Remodulin in
`combination with other PAH therapies) and 88%, 79%, 73%, and 70%, respectively, for 730 of the patients in the study who received only
`Remodulin. In patients with idiopathic PAH for whom baseline hemodynamics (measurement of bloodflow and pressures) were available (332
`patients), survival was 91%, 82%, 76%, and 72% at years one through four, respectively. This compares to respective predicted survival estimates
`of 69%, 56%, 46%, and 38% over the four-year period based on the NIH registry formula.
`
` Flolan, the first FDA-approved prostacyclin analogue for PAH, is delivered continuously through a surgically implanted intravenous catheter
`connected to an external pump. Flolan is approved for the treatment of patients with certain subsets of late-stage PAH. We believe Remodulin
`provides patients with a less invasive alternative to Flolan. In contrast to Flolan, Remodulin is stable at room temperature and lasts significantly
`longer inside the human body. These attributes allow for safer and more convenient drug delivery to patients. Unlike Flolan, Remodulin can be
`delivered by subcutaneous infusion with a pager-sized miniature pump device. Subcutaneous delivery of Remodulin also eliminates the risk of
`central venous catheter infection and the hospitalization required to begin intravenous infusion. Remodulin's extended presence in the body may
`also reduce the risk of rebound PAH, and possibly death, if treatment is abruptly interrupted. The stability of Remodulin also allows it to be
`packaged as an aqueous solution, so patients do not have to mix the drug, as they do with Flolan. Remodulin can be continuously infused for up to
`48 hours before refilling the infusion pump, unlike Flolan, which must be mixed and refilled every 24 hours. Treprostinil sodium, the active
`ingredient in Remodulin, is highly soluble in an aqueous solution and therefore Remodulin can be manufactured at highly concentrated solutions.
`This allows therapeutic concentrations of Remodulin to be delivered at low flow rates via miniaturized infusion pumps for both subcutaneous and
`intravenous infusion. Lastly, Remodulin does not require the patient to continuously keep the drug cool even during infusion. This eliminates the
`need for cooling packs or refrigeration to keep it stable, as is required with Flolan due to Flolan's chemical instability at room temperature. In June
`2008, the FDA approved a generic version of Flolan, developed by GeneraMedix, Inc., that is stable at room temperature, but still shares all of
`Flolan's other inconvenient attributes including, but not limited to, risk of central venous catheter infection, required hospitalization at the start of
`treatment, shorter half-life increasing risk of rebound PAH, mixing, greater frequency of pump refills and larger pump size.
`
` There are noteworthy adverse events associated with Remodulin infusion. When infused subcutaneously, Remodulin causes infusion site pain
`and reaction (redness and swelling) in most patients to varying degrees. Patients who cannot tolerate subcutaneous Remodulin may instead use it
`intravenously. Intravenous Remodulin is delivered continuously by an external pump through a surgically implanted central venous catheter,
`similar to Flolan. When delivered intravenously, Remodulin bears the risk of a serious bloodstream infection known as sepsis, as does Flolan.
`
`FDA Review of Subcutaneous Remodulin
`
` In March 2000, we completed an international, randomized, placebo-controlled, double-blind study of subcutaneous Remodulin involving a
`total of 470 patients with PAH. Half of the patients received Remodulin subcutaneously for 12 weeks, while the other half received a placebo. The
`study data showed that patients who received Remodulin had significant improvement in important clinical endpoints. These clinical endpoints
`included a composite index that measured exercise capacity and shortness of breath, cardiopulmonary hemodynamics and the signs and symptoms
`of the disease. Based on the favorable results of this study, we filed an NDA with the FDA in late 2000. In May 2002, the FDA approved
`Remodulin, under Subpart H regulations, as a continuous subcutaneous infusion for the treatment of PAH in patients with NYHA class II-IV
`symptoms to diminish symptoms associated with
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`exercise. Remodulin may be prescribed for all types of PAH and is the only PAH treatment approved for patients with NYHA class II-IV
`symptoms.
`
`FDA Review of Intravenous Remodulin
`
` In July 2003, the FDA accepted our Investigational NDA for the development of Remodulin by intravenous delivery for the treatment of
`PAH. A study in volunteers was performed in late 2003, which established that intravenous and subcutaneous Remodulin are bioequivalent
`(meaning that both routes of infusion result in comparable levels of Remodulin in the blood). In addition, animal toxicology studies were
`completed and indicated that there were no additional safety concerns associated with chronic intravenous infusion.
`
` On January 30, 2004, we filed a supplemental NDA with the FDA to request approval for intravenous use of Remodulin for PAH. On
`November 24, 2004, based on data establishing intravenous Remodulin's bioequivalence with the previously approved subcutaneous
`administration of Remodulin, the FDA approved the intravenous use of Remodulin for those not able to tolerate subcutaneous infusion.
`
` On March 20, 2006, the FDA approved a supplemental NDA that we filed to satisfy of our Subpart H commitment from our original May
`2002 approval for subcutaneous Remodulin. This approval added language to Remodulin's package insert indicating patients can be transitioned
`from Flolan to Remodulin.
`
` In January 2007, the results of a prospective, open-label study demonstrated that rapid transition from intravenous Flolan to intravenous
`Remodulin was achieved in 12 PAH patients with no serious adverse events and baseline clinical status was maintained over 12 weeks. The
`patients were transitioned from Flolan to intravenous Remodulin by a direct switch from a Flolan medication cassette to a Remodulin medication
`cassette. All patients reported fewer prostacyclin-related side effects with Remodulin and remained on Remodulin after study completion. The
`study demonstrated that stable patients with PAH can be safely transitioned from Flolan to intravenous Remodulin using a rapid switch protocol.
`
` Although intravenous Remodulin does not possess all the safety and convenience benefits of subcutaneous Remodulin, it has one important
`advantage: it eliminates infusion site pain and reaction, a common side effect of subcutaneous Remodulin. Many patients are unsuccessful in
`managing their infusion site pain even when using available pain management techniques or medication. Intravenous Remodulin has many
`beneficial characteristics that differentiate it from intravenous Flolan. Intravenous Remodulin does not require refrigeration whereas Flolan must
`be refrigerated. Furthermore, Remodulin persists in the blood for a few hours, whereas Flolan is highly unstable and only remains active in the
`body for a few minutes. Because Remodulin persists in the body longer, it may reduce the risk of rebound PAH, a severe recurrence of the disease
`that can occur when therapy is abruptly interrupted. Intravenous Remodulin can be infused continuously for up to 48 hours once the administering
`pump has been filled, while Flolan can only be infused for 24 hours once the drug has been mixed and the administering pump filled. This allows
`patients to fill their pumps with medication every other day as opposed to daily. Also, because Remodulin can be made in highly concentrated
`solutions, a wide variety of pump options, including miniaturized pumps, is available to patients.
`
` In February 2007, the Scientific Leadership Committee (SLC) of the Pulmonary Hypertension Association announced new guidelines related
`to the treatment of PAH patients on long-term intravenous therapy. The SLC guidelines were issued in response to the release of a slide
`presentation prepared by researchers with the U.S. Centers for Disease Control and Prevention (CDC) entitled, Bloodstream infections among
`patients treated with intravenous epoprostenol and intravenous treprostinil for pulmonary arterial hypertension, United States 2004—2006 .
`These slides accompanied a presentation to the SLC and were subsequently published in the March 2, 2007, issue of the CDC's Morbidity and
`Mortality Weekly Report . The slides and report were prepared in connection with a CDC retrospective
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`inquiry at seven centers into a report of increased blood stream infections (sepsis), particularly gram-negative blood stream infections, among
`PAH patients treated with intravenous Remodulin as compared to intravenous Flolan. The SLC guidelines noted that the CDC observations were
`hypothesis-generating and did not permit definitive or specific conclusions. The SLC reminded physicians of the need to be aware of the range of
`possible gram-negative and gram-positive infectious organisms in patients with long-term central venous catheters and to treat them appropriately.
`The risk of sepsis was already noted in the Remodulin package insert. In February 2008, the FDA approved a revised package insert for
`Remodulin that more fully described the associated infection risk and appropriate techniques to be practiced when preparing and administering
`Remodulin for intravenous infusion.
`
`International Regulatory Review of Subcutaneous and Intravenous Remodulin
`
` Remodulin for subcutaneous use is approved in countries throughout the world. We used the mutual recognition process to obtain approval of
`subcutaneous Remodulin in the EU. The mutual recognition process is described more fully in the section entitled Governmental Regulation
`below. The mutual recognition process for subcutaneous Remodulin was completed in August 2005, with positive decisions received from most
`EU member countries. We withdrew our applications in Ireland, Spain and the United Kingdom following a request for additional documentation
`from these countries. We anticipate resubmitting these applications following approval of intravenous Remodulin in the EU. Licenses and pricing
`approvals have been received in most EU member countries. In addition, we have submitted a variation of the license for approval of intravenous
`Remodulin in the EU through the mutual recognition process, as we are required to follow the same approval process used for the approval of
`subcutaneous Remodulin. The license variation for intravenous Remodulin is currently under review by the host nation, France, which has notified
`us that it is not currently satisfied with our application. We are working to address their concerns and believe that we will eventually receive
`commercial approval for intravenous Remodulin in at least some EU member countries. In the meantime, we will continue to sell (but not market)
`Remodulin under the named-patient system in EU member countries where we are not approved. Under the named-patient system, we are
`permitted to import Remodulin into EU member countries for sale to hospitals for use in treating specifically identified patients.
`
`Sales and Marketing
`
` Our marketing strategy for Remodulin is to use our sales and marketing teams to educate the prescriber community to increase PAH
`awareness and awareness of our products. The sales and marketing team consisted of approximately 80 employees as of December 31, 2008, up
`from approximately 65 employees as of December 31, 2007. We anticipate continued growth in our sales force in the near-term as we position our
`business for further expansion. We divide our domestic sales force into two teams. One sales team is primarily responsible for medical practice
`accounts that are historical Remodulin prescribers. The other sales team is primarily responsible for medical practice accounts that have not
`historically prescribed Remodulin. The efforts of our sales and marketing teams are supplemented by our specialty pharmaceutical distributors.
`For additional information about our agreements with our distributors, see the next section entitled Domestic Distribution of Remodulin . Our
`distributors are experienced in all aspects of using and administering chronic therapies, as well as patient care, the sale and distribution of these
`medicines and reimbursement from insurance companies and other payers. Outside of the United States, we have entered into exclusive
`distribution agreements covering most of Europe, South America, Israel, and parts of Asia. Sales in Canada are currently conducted under the
`management of our wholly-owned subsidiary, Unither Biotech Inc., through a national specialty pharmaceutical wholesaler. We are working with
`our current distributors to expand Remodulin sales into other countries in which they have distribution rights.
`
`8
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`WATSON LABORATORIES, INC. , IPR2017-01621, Ex. 1150, p. 10 of 393
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`Table of Contents
`
`Domestic Distribution of Remodulin
`
` To market, promote and distribute subcutaneous and intravenous Remodulin through specialty pharmaceutical distributors in the United
`States, we entered into non-exclusive distribution agreements with CuraScript, Inc. (a wholly-owned subsidiary of Express Scripts, Inc., formerly
`Priority Healthcare Corporation) (CuraScript), Accredo Therapeutics, Inc. (a wholly-owned subsidiary of Medco Health Solutions, Inc.) (Accredo)
`and CVS Caremark Corporation (Caremark). Effective January 1, 2007, Accredo also became the exclusive U.S. distributor for Flolan. Our
`distributors are responsible for assisting patients with obtaining reimbursement for the cost of Remodulin therapy and providing o