United Therapeutics Corp (UTHR) 2003 Q1 法說會逐字稿

Welcome, ladies and gentlemen, to United Therapeutics First Quarter Earnings Release Conference Call. At this time, I'd like to inform you that this conference is being recorded and that all participants are in a listen-only mode. If you wish to access the replay following the call, you may do so by dialing 1-800-428-6051 or 973-709-2089 with a pass-code ID of 291977. At the request of the company, we will open the conference for questions and answers after the presentation.

Our remarks today concerning United Therapeutics may include forward-looking statements, which represent United Therapeutics' expectations or beliefs regarding future events. We caution 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 on "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 the actual results, changes in assumptions, or changes in factors affecting such forward-looking statements.

I will now turn the conference over to Dr. Martine Rothblatt, Chairman and Chief Executive Officer. Please go ahead..

Thank you very much, and I'd like to welcome everybody to our first quarter 2003 annual results conference call. With me, on this call today is Dr. Roger Jeffs, our President and Chief Operating Officer; and also Mr. Fred Hadeed, our Chief Financial Officer. This morning, the three of us will be pleased to answer any questions you have regarding our first quarter 2003 results.

With regard to a few preparatory comments I'd like to make, I've generally established a precedent at each call providing everyone with our number of total worldwide patients on Remodulin, which is our lead product, the increase in the net reimbursable patients, since our last conference call, our average revenue run rate, and our average patients revenue. And I'd like to continue that precedent with this call.

As of March 30th 2003, which is two months since our last date of reporting which was January 31st 2003, we now have approximately 590 patients on Remodulin, of which, 450 are reimbursable. That's an increase of 50 reimbursable patients since January 31st. Our average revenue run rate for the company, based on those 460 reimbursable patients, is $41m per year. And our average per patient revenue is crept up a couple of thousand dollars from $88,000 on January 31st to approximately $90,000 as of March 30th 2003.

From a more qualitative standpoint, all of the patients looking for Remodulin are very nice indeed. We're especially pleased that there are now almost 100 physicians who have prescribed Remodulin for their patients. That's a significant increase from previously and our quarter target for Remodulin, which is the transition of patients on the intravenous somewhat problematic therapy Flolan to Remodulin. The number of physicians who have now transitioned patients -- it now exceeds 25 physicians, again a significant increase from previously.

Another interesting note is that there are also now approximately 25 physicians, who have more than 20 patients on Remodulin. So the number of centers around the country that have a significant number of Remodulin patients is rapidly increasing. We continue to hold seminars and symposia conferences around the country so that physicians can share with each other their experiences in Remodulin, including the experience with the efficacy and different sub-aspects of pulmonary hypertension such as portal pulmonary hypertension or pulmonary hypertension secondary to rheumatological or scleroderma type of conditions, as well as the ability to share experiences on the successful techniques they have developed to make Remodulin a safer and easier to deliver therapy such as rapid success in mitigating the site pain, which is the predominant side effect of Remodulin.

So it's really quite a pleasurable vista, I would say, as one looks at pulmonary hypertension and Remodulin into the first quarter of this year. We have a lot of exciting things to talk and share with you.

So let me please open the phone lines now to take your questions; and, again, feel free to address any questions of a medical, scientific or regulatory nature to Dr. Jeffs, any questions of a financial or reimbursement related nature to Fred Hadeed, and any other general or strategic questions to myself. Operator.

Thank you. The question and answer session will begin at this time. If you're using a speakerphone, please pick up the handset before pressing any numbers. Should you have a question, please press the "*" "1" on your pushbutton telephone. If you wish to withdraw that question, please press "*" "2." Your questions will be taken in the order that they are received. Please stand by for your first question.

Our first question in queue comes from Martin Auster of Wachovia Securities. Please go ahead.

Hey, guys, wonderful number today.

Thank you very much.

Let me just ask a couple of brief questions, and I'll maybe hop back in queue. The first was -- I was wondering if you could update us on the status of foreign approvals that are pending. And the second thing was -- in the press release, you talked about equal share of new patients coming from the three different ways, specifically the Flolan switches and the patients transitioning from Tracleer. Have those two factors picked up? I know, in the last quarter, you talked about the majority of patients being newly presenting patients. Could you, kind of, give a little more detail into that?

Martin, I hear your point. Let me answer the second question and then turn the first question over to Dr. Jeffs, because the regulatory parts of the company report to him. With regard to the sources of patients, we are now moving into, I think, a stable predictable mode of approximately one-third of the patients being newly presenting, one-third transitioning from Flolan, and one-third transitioning from Tracleer.

Yes indeed, those numbers have picked up. The Flolan transitions have picked up. The Tracleer transitions have also picked up. We've also lost a few patients, two Flolan and two Tracleer; but the patients coming to us from those therapies are in fact several times greater than the number of that we end up losing back to those therapies.

All right. I'd always thought that due to the number of patients starting Tracleer and the likelihood that have actually those transitioned to prostacyclin that eventually the patients coming from Tracleer will represent a majority number of your patient adds. Is that a good way to think about, do you think, on the longer-term basis?

It would be really two speculative markings for me to draw a conclusion about that, because our key targets for Remodulin has always been the oral non-responders and the low-hanging fruit, we believe, for that market are the people who are already oral non-responders, namely the 2,500 patients who are already on Flolan in the US and the smaller numbers of patients overseas who are already on Flolan. So most of our targeted efforts are in fact directed to Flolan transitions.

However, having said that, as time proceeds, there are a larger number of patients who come on to Tracleer and also there are newly presenting patients because Actillian (ph) has done a fantastic job of educating the entire country, even indeed the world about pulmonary hypertension and thereby getting many more patients diagnosed with pulmonary hypertension.

On the other hand, as time goes on, there are many more patients, who are no longer responding to Tracleer therapy; and those patients provide a growing pool of patients for both Flolan and Remodulin. As to eventually, where most of our patients come from Flolan transitions or directly from Tracleer. I would say in the more distant future after we have captured almost all of the Flolan patients than one would have to say that all non-responders would only end up coming to Remodulin.

But in the near term, I think we can expect the continuation of the trend of one third of the patients being newly presenting to Remodulin, a classic patient like that will be a patient with hepatic, psoriatic or other forms of Portopulmonary hypertension. One third of the patients coming from Flolan, a typical patient like that is struggling through, is in fact doing quite well on Flolan, but is just sick and tired or investing two hours of their life, can be constituting the day each day and as far as perhaps experiencing repeated septicemic infections have become lift threatening and there's one third of the patients coming from failures of oral therapy. I

It would be nice if oral therapies worked for everyone, but I would like to remind all callers that pulmonary hypertension is really more of a syndrome than a disease. There are many different pathological conditions that end up expressing itself as pulmonary hypertension. It's very difficult to find a single silver bullet to address all of these conditions. So, overtime more and more people will fail oral therapy and the biggest basket to capture everyone at the end will be Remodulin.

I'd now like to ask Dr. Jeffs to see if he can please address your comment on the status of foreign regulatory approval.

Sure Martine and thanks for the insight.

I think, yes gladly Martine. Hi Martine this is Roger Jeffs. In France, in Europe in general there's really not much new to report. We have filed all of the responses that we intend to file and are really just awaiting the outcome and that's true for both France and Switzerland. The same can be said for our Australia filing, where we filed all of the responses to questions that we've had in general and again are awaiting regulatory outcome. The thing that is new to report is that we have now fully initiated our Japanese regulatory strategy.

We've found the Orphan Drug Designation which is sort of the start point for any filing that we would do in Japan and then our -- in that process of initiating our strategy to start clinical trials there which would be a bridging strategy in any Japanese National experience that we think I've shaded sort of what protocol would be we anticipate starting in the fall a 20 patient, open liable to sort of an experiential trial if you will that will then bridge back to our other control data and be the basis of our Japanese approval. So, that's sort of where we are with currently with that data. I wish I had more to tell you but at this time I don't.

Roger, is there any way you could proffer an estimate of how many of those 130 patients pending approvals might convert to paying patients in '03?

Probably, Martin, in '03, they're not going to be a significant contributor to revenues, because we then have to go, for example, once, we get approval in France, we would have to then go through pricing.

All right. Maybe, a quarter of those patients could convert to paying by the end of the year.

I'm not sure because the other, you know, France is what we're calling our reference members state. So, it's sort of a gating event; and once we have France, we'll go through mutual recognition through the rest of the EU. That process, the mutual recognition process, can take six to nine months. So really the only contributing potential is in France, and that would be pricing very quickly as well. So...

Did you mention other status of Israeli reimbursement at this point?

Still awaiting that outcome as we are in Canada. So, as you well know, we have approval in Canada and Israel. But don't yet have full pricing approval. But we do sort of made it 2003 in Israel we're expecting full pricing approval.

So, those two countries represent us about 30 patients, maybe, is that fair?

Yes, just slightly more than that.

Okay. Thanks.

Thank you. Our next question in queue is from Navdeep Jaikaria of Leerink Swann. Please state your question.

Good morning guys, congratulations.

Thank you, Navdeep.

A few questions, I think, I'll ask to begin with. Can you breakdown the revenue line for me? How much was your margin sales of the 9.67 that you reported?

Yes, I'd like to turn that question over to our Chief Financial Officer, Fred Hadeed.

Navdeep, the revenue breaks down as follows. We did approximately $8.6m in Remodulin sales, about $400,000 in sales related Remodulin for function supplies, $1.1m in telemedicine and about $600,000 in arginine sales. That gives you the total of $10.7m that we recorded.

You might add also, Fred, that the Remodulin figure of $8.6m is almost exactly 1.25 of the revenue run rate. The $36m revenue run rate that we gave two months in our last conference call, and I think that's a nice validation of the revenue rate as a reasonable projection of where cash revenues are going to come out even in the next quarter.

That is absolutely correct.

For the quarter, how many patients did you add?

For the quarter, we're actually, I can tell you as of two months because we've now confirmed our patients reporting to exactly the same calendar quarters that we do. All of our other financial reporting. And by the way the reason for that is that you're aware both the NASDAQ and FEC is requiring companies to shrink the number of days between the end of the quarter and their financial reports. And this call is for example a few days earlier than last quarter's call, which was a few days earlier than the previous quarter's call. So we don't have enough time between the end of a month and this conference call to get validated numbers. So I'm giving you the numbers as of March 30th. We've increased net reimbursable patients by 50 patients between January 30th and March 30th.

All right, so that's a number. I just was just trying to get the sense of how many net patients adds was there for the quarter so we could compare the quarters?

Yes, things are going very well and very much in line with the forecast that we've been providing since the end of '02.

So, can we expect 25 patients a month run rate to be a reasonable one going forward?

We still Navdeep, we still feel most comfortable and again this is not an exact science and plus or minus one, two, three, four, five patients been happen either way. We feel most comfortable sticking to the forecast of 20 patients per month, as our growth rate. That adds for us 240 patients per year, which is a bit more than $20m in fact, in additional revenue. And you stack that $20m on top of the $41m revenue run rate that we have right now and you come to a very nice figure which in fact exceeds our, even our highest levels of historical spending.

So, at this rate alone we should move into the block and therefore we feel comfortable continuing to forecast in average of 20 net patients per month. Some months will be greater; some months may be less. On the long-term trends, we will push things forward; but for now 20 remains the number that we're comfortable to committing to.

Thank you, I'll get back in a queue.

Thank you. Our next question comes from Steve Zabber [ph] of Kilkenny Capital. Please state your question, sir.

Yes. Hi. Thanks. Congratulations on your quarter. I have just -- if I do a little quick back on the envelope and if I take maybe the number of patients from your last quarter. You said you had about 410 patients reimbursable and I take, let's say, $88,000 average cost per year, it's about -- if I do a quick back on the envelope, I'm still having trouble getting to $8.6m. I get a little bit more. And I'm just wondering where I'm going wrong. Thanks.

Yes. Thanks, Steve. Thanks for the congratulations. You're doing the right calculation. The difference is that we have two distributors in the US plus different distributors overseas; and each of them -- their contracts for each is a bit different in terms of how much inventory they're required to keep on hand and stock. So the differences, which are really plus or minus $1m to $2m, are simply the results of our order coming in and being shipped as of like December 30th versus January 2nd. It's just a timing matter of one or two weeks either way. We have to book the revenue as of the date we ship the drug, and it's not anything that we can of course differ with. When the drug is ready, we ship it. So it's purely a little bit of inventory differentials from one distributor and another, vis-à-vis at the end of the quarter.

Okay. Thanks.

Thank you. Our next question in the queue comes from Elmer Apiro [ph] of Rodman & Renshaw. Please state your questions.

Yes. Good morning, gentlemen, and thanks very much. Elmer Apiro from Rodman & Renshaw. You had provided us on the quarterly breakdown for this quarter. Just for comparison sake, could you please provide the fourth quarter breakdown as well?

Yes. If you...

If you still remember it.

Of course. I do remember the numbers. The Remodulin numbers were around $9.7m.

$9.7.

Okay. And the related revenues of constant supplies were consistent about $400,000.

$400,000.

Telemedicine was about $1m, and arginine was about $800,000. So all the numbers were very consistent.

Okay. Thanks very much. Sorry, a couple of other questions, if I may. Could you please update us on the progress that you've made in the Phase IV trial, the transition from Flolan to Remodulin.

Yes. I'd like to direct that question to Dr. Jeffs; and Roger, if you could brief us on the status under the current protocol as well as the recent discussions with the FDA.

Certainly, Martine, and I appreciate the question. We've recently had a meeting with the FDA in April that was to discuss our current enrollment progress. We have four patients enrolled to-date, and three of those four patients have completed the study; and I believe all three of those have then gone on to the commercial Remodulin. That is not where we wanted to be at the timing, in fact.

We were hoping to be further enrolled from June; in fact, 50% enrolled of our 100 patients target. And it was clear that there was an obvious hurdle to the enrollment, which is the randomization of the placebo, but there is really no concern about the transitions themselves to active drug. But there is some hesitation, if you will, in transitioning a patient from a very good drug, Flolan, to a placebo-controlled trial.

So we had discussions with the FDA around the few points to try to minimize the exposure to placebo. And what we've done is -- and we think we've got full agreement with this to the extent that we've actually sent an amendment although we haven't formally received the FDA minutes. But I think these are, in my opinion, at least pretty solid. We're going to change the randomization from 1 to 1 -- so one active to one placebo -- to 2 to 1. So for every three patients, two of the three will now get active drug rather than 50%. Chances now are higher chances of getting active drug. So that's on a minimized placebo exposure.

We've also slightly adjusted our sample size estimates. When we started the trial, we assume that 70% of patients that received placebo were failed and require rescue; and that's the end point of the trial. That's actually very conservative given the quality of Flolan and its ability to manage patients clinically.

So we've relaxed some of these conservative estimates but only slightly. And now we're going to estimate that this placebo group -- 80% of those patients were failed, and then we have lowered the failure rate from 30% to 25% in the active group. And the net result of all that is that it changes the sample size from 100 patients to 39 patients...

Okay.

Yes.

...now in our enrollment target. And, again, this is under final agreement that we believe it will be is now only 39 patients. However, we did agree and discuss and we think successfully negotiate the introduction of an interim analysis after 21 patients. So our hope is that we will now only have to enroll, for example, 21 patients. We're doing an interim efficacy analysis; and we hope, at that point, the efficacy of Remodulin in transitioning from Flolan versus placebo will be overwhelming.

Sure.

So we could stop the trial after 21 patients. That would obviously be a successful win for United Therapeutics. It would be an extraordinary show of efficacy since it would be shown with such a small sample size, and we're more confident that we can achieve.

So all of these things in reducing placebo exposure, we think, will help patients and physicians enroll patients into the trial. Further, we also did slightly broaden the interim criteria to take patients who are well managed on Flolan to also have in addition to primary pulmonary hypertension and connective tissue related disease, the patients with congenital heart disease and HIV since those patients would be good candidates for the trial and they previously were excluded. So now with addition to the changes that I made, we think, these changes will lead to a more rapid enrolment in the trial and we have in an ultimate goal to succeed on a interim analysis. So that's kind of where we are with the Phase IV program.

So now you made it more attractive to people to enroll, and you have to look at a smaller sample size. We believe that you could meet and I can remember what the FDA guideline was or defined limitation by which you would have to complete the study. Do you believe that it's more likely enough than before?

Yes, that's a good question. We have also asked for the timeline extension, that's the part of the equation that we can't really comment on to this point that's still under discussion, though, while we internally will target it again, as much of this enrolled as we can by the end of the year. We do realize that implementing and amendment takes in today's current environment with institutional review boards anywhere from two to three months. So, it's going to take a few months to affect these changes and then get the enrollment done. So we've given them, we have also asked for time on extension, but at this time we can't report whether or not that will be granted.

Okay. Thank you very much. One last question and this is regarding to the site pain that are experienced by some. What percent of the dropouts, and if you could quantify this structure of dropout, would drop on due to injections site pain and could you please talk about your upcoming presentation at ATS?

Yes, thank you and then we should go on to the next call, operator, to give out the people a chance. The site pain dropout has become very, very minimal clearly less than 10% of the dropout are now due to site pains. We go with in fact a week after week, but no dropouts due to site pains.

The primary cause of us losing patient now is the same primary cause of Flolan losing patients, which is unfortunately progression of the disease, and now as most of you are aware, even though, we're all very lucky to have an increasing array of therapies for pulmonary hypertension. It's a terrible disease. It's a devastating disease. Flolan has increased mean survival to just over five years, but that's still a shockingly high progression and deterioration rate and that's the principal cause of us loosing patients right now.

Our next question comes from Matt Teplitz of Quaker Capital Management. Please state your question.

Congratulation as well. Couple of just quick questions here. On the issue of Flolan transition, I just wondered, how many have you done at this point? What's your success rate? And Martine, could you review this? 2500 patients are on Flolan in the US?

That's correct, 2500 patients are on Flolan. We have transitioned on from Flolan to Remodulin about 50 patients and that's been done by about 28 doctors. That represents about a third of the primary prescribing doctors for Flolan.

Just this past week, I attended one of our seminars for a number of doctors who have 50 to 100 Flolan patients. I heard about the transition experience of those who've successfully transitioned patients for the first time and in talking to them in the hallways and afterwards they said "this is just the information we need; we're ready to go back in transition patients." And those kind of meetings we're conducting on a monthly basis throughout the country.

For about 50 patients transition, to the best of my knowledge, every single one except for one patient has made for the successful transition. That patient was suffering from severe prostacyclin side effects in Flolan and suffered from very analogous side effects is Remodulin, one set of basically the results of prostacyclin vasodilator.

So roughly speaking, north of 95% of a success rate in transitioning people from Flolan to Remodulin. I In fact, it has become so successful I can give you a couple of more quantitative that did not have available two months ago. A good measure, a good rule of thumb, for how long it takes to transition a patient from Flolan to Remodulin, is about one hour per nanogram of Flolan drug that they're on.

So, for example, a typical Flolan patient might be on 50 nanograms per kilo per minute of Flolan. So that patient again, to a rough order approximation, can be safely transitioned in 50 hours, so like two and a half days in a hospital, something like that.

The transitions are -- there are algorithms that are now being exchanged among doctors for the transitions that roughly go that you reduce their Flolan dose by a fairly modest amount and increase their Remodulin dose by a larger amount until the two lines cross and then you slow down.

So they've really gotten this down to an art and actually more and more Remodulin patients are being started outpatient and there is even some possibility in the not too distant future. I think of even transitions being accomplished on an out-patient basis without the patient having to stay in the hospital overnight and perhaps come back in the next day. This entire process of transitioning has been shown to be very safe, very effective for the patient and is becoming increasingly scrutinized.

Any thoughts on whether this is one of the sort of tipping point phenomena what I mean, you got to have to develop kind of a critical math?

Well, it's a great question, Matt, and let me tell you what seems to be the mindscape of the PH expert doctors on the subject. Over the first few months, I'd say up through, you know, now the predominant mindset is that these patients are very sick, they've got five years on average to live. We've taken them from death door to a decent quality of life with Flolan, plus have been has been extremely careful not to rock the boat and do anything that hurt the patient's health. But that's only transition patients who're not able to handle the Flolan delivery system.

Those would be patients who, for various reasons it's just too complicated for their situation. It requires you setting up a sterile portion of your house. It requires you, in addition to doing that, to keeping the drug refrigerated at all times, to walking around with ice packs, to keeping everything sterile. For some people this is just too much.

So their first period of time from like approval until now with just transition the patients who really can't handle the Flolan. Included in that set will be people who are, for whatever reason, may be it's due to their own bodies' chemistry or suffering recurrent of septicemic infections in excess of the Flolan package insert rate, which is to expect 0.3 septicemic infections per year.

Now, what has happened, the tipping point, I like your phrase very much, is there's been all the very beginnings of a kind of a seat change to what I'll call preference transition where in front of the transition being for frankly medically necessary reasons. The patients are coming in to the doctors and saying, "I've heard all about Remodulin, the side effects appear to be increasingly manageable. I had met somebody at the PHA meeting that has no site pain at all. They use Nasacort, but they use this with constant protocol." They would like to be transitioned and the doctors are now feeling comfortable having had this year of medically necessary transitions under their belt, to start undertaking more and more preference transitions. So, I do believe frankly, that the coming 12 months will be the tipping point, when preference transitions begin to outstrip medically necessary transitions.

Thank you. Our next question comes from Stephan Patin [ph] of Sectoral Asset Management. Please state your question.

Hi, congratulations. Thanks very much. Just following up on the previous question should we be seeing an acceleration in the number of physicians that are conducting the transitions, as well as, the number of procedures per physician that are doing this?

I think that's an excellent question. And the answer is, of course, must be yes, just again to point out as an example why. There are just under a hundred physicians now that have started patients on Remodulin. On the other hand, there are about twenty-five physicians that have actually transitioned the patient from Flolan to Remodulin. And there are probably several hundred physicians that have at least one patient on Flolan.

So you can see that there is room for experience first in more physicians starting patients on Remodulin, that's rapidly growing. We've almost doubled from fifty to hundred in a short period of time.

Now, once a physician starts the patient on Remodulin the next thing for them to do is, "Okay, I feel comfortable enough now to transition a patient from Flolan to Remodulin." So we certainly do see an acceleration of that trend and I would expect at each call I would be able to report to you that there are A) more physicians who have patients on Remodulin. Right now we're under a hundred. I expect in the next call there will be a greater number who have patients on Remodulin. And secondly, increasing numbers of patients who have transitioned patients from Flolan to Remodulin. So that's going to continue as well.

Okay, thanks very much.

Your next question in queue comes from Kelly Salinger [ph] of (inaudible) Capital. Please state your question.

Good morning. Congratulations on the great quarter.

Thank you Kelly.

Just wanted to, you know, we've spoken to one of the distributors, and they have talked about at least a one patient that has started Remodulin therapy off label for critical ischemia. I wondered if you could give us a little bit more color on that if you're seeing any more patients and what the dozing for those patients? And then, it looks like you are adding about twenty-five patients a month. And I was wondering if that's what you expect going forward and that's what you saw in April?

Thank you for your question Kelly. With regard to critical limb ischemia, we, of course, do not promote or market the drugs for this but instead are undertaking rigorous, randomized, well-controlled, double blinded studies. We, in fact, have three such studies underway, under Dr. Jeffs and under our Vice-president of Clinical Development, Dr. Wade.

Those studies are in different populations, two are in the US, one are in surgical patients namely patients who have had to have surgery for their critical limb ischemia and the questions that we can improve the outcome of the surgery with Remodulin, unfortunately a half or more of surgical patients need repeat surgery because of poor outcomes from that procedure.

The other study in non-surgical patient; patients who are still being treated with conventional meds of one sort or another, bandages and what not for the non-healing ulcers, because many of those patients are not appropriate candidate for surgery. They may not be able to handle the general anesthesia. They may have very diffused disease, which is not treatable with the angioplasty or a bypass.

Despite this fact, because physicians are aware, cardiologists and vascular surgeons are aware of the consensus recommendations of the Transatlantic Society of Cardiology that prostanoids are maybe used in appropriate patients with critical limb ischemia and the physicians are aware the fact that iloprost, another prostacyclin analogue available in Europe had almost a dozen successful studies of its uses in IV therapeutic for critical limb ischemia.

Some physicians are beginning to try Remodulin for critical limb ischemia. And some of the stories are heartbreaking. I'm aware of a recent patient, for example, a young person, a woman in her 40s who had a faced a prognosis, "we need to amputate your limbs, because there is no surgical option available to you." She had serious problem with the embolism in her leg and what not. Very shortly after being started off label on Remodulin, the woman's condition greatly ameliorated. The excruciating pain that she was suffering went away quite quickly. So these sort of case studies are being written up by doctors and they're gaining more experience with Remodulin in this condition.

We at United Therapeutics are really keeping our nose to the grindstone in terms of executing our clinical trials, but we can't share just as human being are joint and been able to see that our drive here is relieving some of the very, very severe pain associated with critical limb ischemia. With regard to the rate, we feel quite confident that we'll achieve 20 net patients month after month. We take very, very seriously our obligation to investment community.

We realized that you folks are investing your own money and other people money based on forecast that we make. That's a heavy responsibility we feel -- some of that responsibility and therefore we want to make forecast that we're confident that we can achieve month after month. Hence we're continuing to stand by the 20 net patients growth factor on particular month after month. Next question.

Our next question comes from Navdeep Jaikaria of Leerink Swann. Please state you question sir.

Thank you for taking the follow-up question. I wanted to ask if you can update us on Nasacort? And how many patients there you can tell us have been tried on and what sort of results are you seeing?

Navdeep, because that's a clinical question I'd like refer that to Dr. Jeffs, although I can mention just at the tail end that there are on the order of about 15 patients who are successfully using that therapy. But Roger, if you could provide more details.

Sure Nasacort's active ingredient is triamcinolone. It's an inhaled corticosteroid, typically used for allergic rhinitis and the dermatology unit at one of our centers in Milwaukee had been using topical administration for other things in pediatric patients in particular to diminishing inflammatory responses and suggested that it be tried on patients with Remodulin.

What's nice about Nasacort is that because it's an inhaled corticosteroid in an aqueous solution it also contains what's called drying agent. But, when it's applied to the dermis the Nasacort with the triamcinolone, the active ingredient is actually very readily exposed to the skin.

So, you know, one of the problems we've had with topically applied corticosteroid cream is that the active ingredient tends to understand the cream rather than going to the skin. But using things like Nasacort and I guess Flonase would be another example of an agent that one could use. This has been a better topical administration for an immediate effect on pain.

What's also nice about the therapy is that the Wisconsin protocol or the FloGel is used for old sites in general. And the Nasacort now is being used on current infusion sites. So while FloGel works very effectively it seems on old sites in reducing the inflammation and pain associated with Remodulin, the Nasacort is effectively managing the current or active sites. So, if patients do have a site that's been currently infused and it's painful he'll take one or two sprays of Nasacort a day.

It's also nice that it's a very cheap therapy. It's probably 200 sprays in canister cost about $60. So that will last in over the course of the month quite easily.

Just how long it suits twice a day you're seeing them spray and it doesn't impede in any way?

Easy, once or twice day. They put it on and then put a inclusive badge over it that would further helps strive the triamcinilone in to skin and then they insert the cannula and begin the infusion. So, it's done then its done sort prophylactically and then it can be read ministered if needed. So, in essence we don't have experience to sort of say what the success rate is although anecdotally we had very good reports.

Stewart Rich in Chicago, for example had a patient that had previously rejoined from Remodulin due to site pain, tried to go on Tracleer, failed that therapy due to symptomatic worsening, came back on Remodulin with the new side-pain medications both the Wisconsin protocol and Nasacort, is experiencing absolutely no site pain with the drugs.

So here's a patient that was previously intolerant to Remodulin, one of the rare ones, who is now experiencing absolutely no pain and thinks it's sliced bread for this patient. So, we are encouraged by it, but we are gearing to formally study it just as we have with the Wisconsin protocol so that we can give you data rather than anecdote.

And when do you -- what are these studies, that is going to be my next question -- planning and studying. What sort of timeline can be expect on that front?

Yes. It would probably take us 2 to 3 months to get them done. We do at 2 to 3 centers. There's already several centers that are using that we -- every time word of mouth seems to spread the use of it, so there's going to be -- there's a lot of interest in using it because it's a simple easy approach to do it. But I would estimate by the end of the year we'll have some data for you.

And how many patients you think?

Probably have sort of similar to what we did with the Wisconsin protocol, around 30 patients exposed in the study.

And how many patients currently in Wisconsin are on FloGel?

From our commercial base, it's anywhere from 50% to 75% of patients.

Okay. And do I have time for another question or shall I get back on the line -- queue?

Sure go ahead while you are on the phone.

Very quickly, can you tell us anything about what Flolan is doing in terms of new patient adds, and any color on that?

We really can't because that information is of course proprietary to the distributors on the one hand such as Accredo and it's not material to SmithKline-Glaxo, so they don't break it out. But the word that we hear around the hallways of the conferences that we go to and what not, is 2500 fairly stable.

Okay. Thank you so much.

Thank you.

Our next question in queue comes from Matt Teplitz of Quaker Capital Management. Please state your question.

Hi, just a couple of quick follow-ups. One on the issue reimbursement, are we getting any push back at $90,000 per patient?

No. We are getting no pushback at all and I think that people realize that it's a -- it's an expensive therapy. It's a drop in the budget compared to any payer's responsibility, because the number of patients afflicted with pulmonary hypertension, especially, oral non-responders is such a minute population.

This is well below the noise level. We are, still, as I think, I've mentioned at the last call or the call before well over 98% of the reimbursable of the patients in the US are on commercial payment or Medicare or Medicaid.

And we have just a handful of what we call patient assistance program patients -- 5 to 6 patients, something like that who -- they have no insurance for some reason. They don't yet qualify for Medicaid or Medicare. Maybe they are changing jobs and there is a waiting period for preexisting conditions. So for those patients, we give the drug to them for free and resume to the patients assistance program, but it's a minute percentage and collections are quite regular No problem, approved even by the Veteran's administration.

Okay. Good. And -- this is a question for Roger, not to probe too far here publicly, but am I detecting any change in your view of the European regulatory situation or is just sort of the -fact that it's a bit of a black box?.

No change, still remain confident that we will ultimately get approval. Just hesitation in terms of being able to say when that will occur, given that it's in a regulatory environment.

Okay. And lastly just an opportunity of you Martine, if there is anything you would like to update us on? Any R&D pipeline overall? If not, understood.

R&D pipeline, I already talked about CLI, which is just an indication expansion for lead approved drugs. So I won't go over them a second time. The next item I would like to mention in the R&D pipeline because, I think, phase 3 is important and material, are our twin pivotal trials of OvaRex for ovarian cancer. Those studies are now pushing towards a 10% enrollment figure, gathering more and more esteem and the studies are going on at approximately 60 centers. Another 20 centers are joining the study.

So, there is quite a nice wide net that's being cast there. And I feel confident it would be able to complete enrollment of that study in the '04 timeframe. And then people will have another year after that to that to show that we are able to significantly extend the period of time before re-allot. So, the pivotal program in OvaRex is going very, very well. We've got a topflight team at our Boston Oncology center handling that. And I think that that will be another shining star in the UT crown in addition to critical limb ischemia and pulmonary hypertension.

Thank you.

Thank you. Our final question comes from Tim O'Reilly of Goldman Sachs. Please state your question.

Hi. Yes. Do you have any thoughts on, given the size of the market, since you've been on the market now for several quarters and sort of the patient adds rate has been accelerant. Even if you are in the size of the market originally, for saying maybe about 25,000 and Actillian (ph) has been saying closer to 50. Do you have any update on that? Thanks.

Sure. We believe actually that the size of the market is larger than we originally anticipated and it's becoming more validated and more credible and it's thanks to the efforts of these oral therapies.

The greatest mystery to me, Tim, as somebody who has been rowing in these waters now for about seven, eight years. Well, how could it be that all the expert books and magazine articles that say 50,000 or may be a 100,000 people have pulmonary hypertension and they have this terrible forecast in terms of what would happen to the patient. And yet only 2500 people were on Flolan and maybe if you take the 20% of the people who are calcium channel blockers responders that would be let's say even generously another 1000 people on calcium channel blockers. Where were the missing tens of thousands of people with pulmonary hypertension?

And interesting insight in that was once referred to my attention by Dr. Reuben, who pointed out that there is a paper done a number of years ago, where serial autopsies were done at Hopkins of people who had died of unknown causes of heart failure. And autopsies were done and biopsies of the lungs and what not and was determined after the fact that a striking number of people who had died and been attributed to left heart failure, in fact had all the signs and symptoms of pulmonary hypertension when their lungs were looked at after the fact.

So the mystery must be that there are very large number of people dying of pulmonary hypertension, but had never been diagnosed and it is just assumed that they died of left heart failure, that being a normal cause of heart attack.

What is happening through the efforts of Actillian (ph) and I would say, prospectively through the actions of Pfizer in developing greater awareness of Viagra, as a possible oral therapy for pulmonary hypertension, is that thousands upon thousands of people who would have never been diagnosed with pulmonary hypertension are getting diagnosed. And ultimately this is such a difficult disease. As I had mentioned before, it's a syndrome. That's a collection of diseases. Oral pills work for some; they don't work for others. I always remember the tragic stories that people took oral pills. They worked for five or ten years and then they stopped working.

So many of these patients have to end up on prostacyclin as the treatment of last resort that I think the only logical conclusion is that the market is much larger than United Therapeutics originally thought. And that our current average per patient revenues, of say, $90,000 per patient per year, with something on the order of 1,000 patients, which we are moving in now at a steady basis, there is a $90 or $100m a year market. But instead, if we look at 10,000 patients as a possible capturable goal, which is certainly realistic if Pfizer and Actelion continue to get many thousands of people diagnosed with pulmonary hypertension, we'd be looking at a several $100m a year market for Remodulin. So in all frankness and objective prospective the market forecast for Remodulin are looking better all the time.

And so would you think it's probably closer to the 50,000 in the US, sort of range, rather then 25,000?

I do believe that. Yes I do, although, again most of those patients are today undiagnosed.

Right.

But, thanks to the oral therapies they are being rapidly diagnosed. And I think we all will agree there is no company in the world that knows how to get the work out better than Pfizer.

Right. And so you think that, you know, may be about 20% of that total market could end up on the prostacyclin therapy.

That would be a very reasonable forecast.

Great. Thanks a lot.

Well, I'd like to thank everybody for participating in the conference call. I'd say the quality of your questions are scientific, medical and financial have been especially insightful this time around. Roger, Fred and I appreciate this opportunity to interact with you guys very, very much. The perspectives of us at United Therapeutics are to keep our nose to the grindstone to keep spending at a predictable level and to continue to grow revenues. We are tightly focused on our goal of achieving profitability just as soon as possible, and very much hope to report achieving that milestone within the next few quarters for you. Thanks very much for your attention and we look forward to seeing at some conferences coming up around the country.

Thank you. Ladies and gentlemen if you wish to access the replay for this call you may do so by dialing 1800-428-6051 or 973-709-2089 with an ID number of 291977. This concludes our conference call for today. Thank you all for participating. Have a great day. All participants may now disconnect.