Therapeutic Categories Outlook

Equity Research Health Care Therapeutic Categories Outlook Comprehensive Study February 2017 Alzheimer s Disease Bone Diseases Cardiovascular Central Nervous System Dermatology Diabetes/Obesity Epilepsy Gastrointestinal/Ulcer Hepatitis Infectious Diseases Liver Disease Multiple Sclerosis Non-Malignant Hematology Oncology/Hematology Ophthalmology Orphan Diseases Pain Management Respiratory Rheumatology Women s Health www.cowen.com @CowenResearch WATSON LABORATORIES, INC., IPR2017-01622, Ex. 1083, p. 1 of 10

much worse than it used to be. As community physicians have grown more comfortable treating mild patients with oral therapies, patients are increasingly being referred to expert centers only after their disease has become more severe. Chronic thromboembolic pulmonary hypertension (CTEPH) is pulmonary hypertension that occurs secondary to a blood clot. Our consultants note that there are not great incidence or prevalence figures for CTEPH. However, in their experience there are about five times more PAH patients in their practices than there are CTEPH patients, suggesting that there may be about 5,000 treatable CTEPH patients in the U.S. Despite the relatively small number of patients afflicted, the market for pulmonary hypertension therapies is actually quite large in dollar terms. Infused and inhaled prostanoids can demand $100,000+ per patient per year for treatment. With approximately 110,000 patients worldwide, and perhaps 50,000+ patients in the U.S. itself, worldwide sales for major PAH drugs surpassed $5B in 2016. Major PAH Drugs - Worldwide Sales And Consensus Estimates Brand Drug Mechanism of Action Company Reported sales ($MM) Consensus estimate ($MM) 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017E 2018E 2019E 2020E Letairis/Volibris ambrisentan (oral) ET-A antagonist (Endothelin pathway) GILD/GSK $311 $449 $611 $750 $855 $932 $1,036 $1,142 $956 $793 $629 Tracleer bosentan (oral) ET-A, ET-B antagonist (Endothelin pathway) ATLN $1,573 $1,722 $1,600 $1,653 $1,620 $1,260 $1,020 $582 $332 $226 $165 Opsumit macitentan (oral) ET-A, ET-B antagonist (Endothelin pathway) ATLN $0 $0 $0 $5 $197 $537 $831 $1,005 $1,303 $1,567 $1,827 Remodulin treprostinil (i.v., s.c.) Prostacyclin agonist UTHR $404 $430 $458 $491 $554 $573 $602 $605 $543 $471 $395 Tyvaso treprostinil (inhaled) Prostacyclin analogues UTHR $152 $240 $326 $439 $463 $470 $405 $441 $460 $412 $369 Adcirca tadalafil (oral) PDE 5 inhibitor (NO pathway) UTHR $36 $71 $123 $177 $222 $279 $372 $355 $200 $132 $43 Revatio sildenafil (oral) PDE 5 inhibitor (NO pathway) PFE $481 $535 $534 $307 $276 $260 $285 $203 $181 $174 $161 Adempas riociguat (oral) Guanylate cyclase stimulator (NO pathway) BAYN $0 $0 $0 $4 $118 $201 $263 $375 $502 $575 $624 Uptravi selexipag (oral) IP prostanoid receptor agonist ATLN $0 $0 $0 $0 $0 $0 $245 $882 $1,312 $1,818 $2,322 Orenitram treprostinil (oral) Prostacyclin analogues UTHR $0 $0 $0 $0 $41 $118 $157 $214 $277 $336 $388 Veletri epoprostenol (i.v.) Prostacyclin analogues ATLN $3 $17 $26 $40 $70 $86 $97 $246 $268 $289 $311 Ventavis iloprost (inhaled ) Prostacyclin analogues ATLN $114 $120 $117 $119 $123 $109 $73 $53 $45 $38 $34 Flolan epoprostenol (i.v.) Prostacyclin analogues GSK $302 $287 $214 $230 $119 $89 $70 $115 $136 $158 $179 Total $3,376 $3,872 $4,009 $4,215 $4,657 $4,915 $5,456 $6,217 $6,515 $6,990 $7,449 Prostacyclin pathway $974 $1,095 $1,140 $1,319 $1,369 $1,445 $1,649 $2,556 $3,041 $3,522 $4,000 Endothelin pathway $1,884 $2,171 $2,212 $2,408 $2,672 $2,729 $2,887 $2,729 $2,590 $2,587 $2,622 Nitric Oxide pathway $517 $606 $657 $488 $616 $740 $920 $933 $883 $881 $828 Source: Cowen and Company, Consensus estimate from Thomson There are currently 13 drugs indicated for the treatment of PAH in the U.S., and these can be broadly categorized based on their route of administration. Oral therapies include Adempas (riociguat) from Bayer, Revatio (sildenafil) from Pfizer, Adcirca (tadalafil) and Orenitram (treprostinil) from United Therapeutics, Tracleer (bosentan), Opsumit (macitentan), and Uptravi (selexipag) from Actelion, and Letairis (ambrisentan) from Gilead. These therapies tend to be used in newly presenting, less severe patients. There are three branded infused (intravenous and subq) prostacyclins on the U.S. market including Remodulin (treprostinil) from United Therapeutics, Flolan (epoprostenol) from GlaxoSmithKline, and Veletri (epoprostenol) from Actelion. In addition, in 2008 Teva launched a generic version of Flolan. These therapies are considered the most potent, and are used in the most severe patients (WHO FC-III and IV). There are currently two inhaled options, Actelion s Ventavis (iloprost), and United Therapeutics Tyvaso (treprostinil), and these therapies are typically positioned for use in patients who require treatment benefit beyond oral therapies, but whose condition is not considered severe enough to warrant infused prostanoids. 2248 WATSON LABORATORIES, INC., IPR2017-01622, Ex. 1083, p. 2 of 10 www.cowen.com

Pathways And Molecular Targets Associated With PAH There are three major biochemical pathways that have been shown to be associated with PAH: the endothelin pathway, nitric oxide pathway and prostacyclin pathway. These pathways play a critical role in the regulation of vascular tone, and their dysregulation results in vasoconstriction and pulmonary smooth muscle cell proliferation. Endothelin (ET-1) is an endogenous peptide formed by proteolytic processing of preproendothelin-1. ET-1 signaling through the endothelin receptors ET A and ET B, present in the pulmonary vascular smooth muscle cells, maintains vascular tone. In PAH patients, ET-1 levels are elevated in the blood stream and the ability to clear ET-1 from the systemic circulation is reduced. Elevated signaling of the endothelin pathway in smooth muscle cells, from increased levels of ET-1 and endothelin receptors, produces pronounced vasoconstriction and smooth muscle proliferation effects. Endothelin receptor antagonists target ET A and/or ET B receptors to attenuate ET-1 signaling in the smooth muscle cells. There are currently three approved endothelin receptor antagonist drugs: bosentan (Tracleer from Actelion), ambrisentan (Letairis in US from Gilead and Volibris in ex-us from GSK), and macitentan (Opsumit from Actelion). Tracleer and Opsumit target both the ET A and ET B receptor whereas Letairis/Volibris target only the ET A receptor. Drugs targeting the endothelin pathway (Tracleer, Letairis/Volibris, and Opsumit) had worldwide sales of ~$2.9B in 2016. The cumulative sales from these drugs are expected to marginally decline over the next four years. Tracleer and Letairis/Volibris are expected to see heavy generic erosion during this time period, whereas Opsumit, launched in 2013 (and not anticipated to be subject to generic competition during this time period) is expected to grow strongly. Nitric oxide (NO) is a vasodilator and plays a major role in smooth muscle cell signaling. NO is normally produced continuously by the endothelial cells from the conversion of L-arginine to L-citrulline aided by the enzyme NO synthase. NO diffuses into the vascular smooth muscle cells and binds to Guanylate Cyclase to stimulate the synthesis of cgmp, a second messenger that inhibits cell proliferation and produces muscle relaxation. In PAH patients there is decreased bioavailability of NO, resulting in reduced cgmp in smooth muscle cells. In addition, cgmp levels are also affected by the phosphodiesterase 5 (PDE-5) enzyme, which inactivates cgmp in smooth muscle cells. There are two class of approved drugs that target the NO pathway in PAH patients soluble guanylate cyclase stimulators (GCS) and PDE-5 inhibitors. GCS directly bind to guanylate cyclase and mediates the synthesis of cgmp. Riociguat (Adempas from Bayer) is the only drug approved in this category. PDE-5 inhibitors preserve cgmp levels by blocking the inactivation of cgmp by the PDE-5 enzyme. Tadalafil (Adcirca from United Therapeutics) and sildenafil (Revatio) are the two major PDE-5 inhibitors approved for PAH. Drugs targeting the nitric oxide pathway (Adcirca, Revatio, and Adempas) reported worldwide sales of $920MM in 2016. Cumulative sales from these drugs are expected to marginally increase for the next four years. Revatio sales have eroded due to generic entry and Adcirca is also expected to see competition from generic entry at the end of 2017. Adempas, launched in 2013, is expected to grow strongly during this time period. WATSON LABORATORIES, INC., IPR2017-01622, Ex. 1083, p. 3 of 10 www.cowen.com 2249

Mechanism Of PAH Drugs Source: Cowen and Company Prostacyclin is the major arachidonic acid metabolite of vascular endothelial and smooth muscle cells. Prostacyclin binds to the prostaglandin IP receptor on the smooth muscle cells to promote vasodilation and inhibit smooth muscle proliferation through the activation of camp. Prostacyclin levels are reduced in PAH patients thereby leading to reduced dilatory and anti-proliferative effects. Prostacyclin analogues and IP receptor agonists have been approved to target the prostacyclin 2250 WATSON LABORATORIES, INC., IPR2017-01622, Ex. 1083, p. 4 of 10 www.cowen.com

pathway in PAH patients. Epoprostenol (Flolan from GSK and Veletri from Actelion), iloprost (Ventavis from Actelion) and treprostinil (Remodulin, Tyvaso and Orenitram from United Therapeutics) are prostacyclin analogues approved to treat PAH. Selexipag (Uptravi from Actelion) is the only approved prostaglandin IP receptor agonist in the market. Drugs targeting the prostacyclin pathway (Remodulin, Tyvaso, Uptravi, Orenitram, Flolan, Veletri and Ventavis) reported a worldwide sales of $1.6B in 2016. Cumulative sales from these drugs are expected to grow sharply for the next four years, primarily due to the growth expected in oral prostacyclin agent (Uptravi and Orenitram). Worldwide Sales (Reported And Consensus) From PAH Drugs Targeting Major Pathways $4,500 Reported Sales (2010A to 2016A) and Consensus Estimates (2017E to 2020E) $4,000 $3,500 Worldwide Sales ($MM) $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017E 2018E 2019E 2020E Prostacyclin pathway Endothelin pathway Nitric Oxide pathway Source: Cowen and Company In 2016, drugs targeting the prostacyclin, endothelin and nitric oxide pathways contributed 30%, 53%, and 17% to the worldwide PAH sales, respectively. In 2020, prostacyclin drugs are expected to contribute a majority share of 54%, whereas endothelin drugs are predicted to decline to a 35% market share. Nitric oxide pathway drugs market share are also expected to decline to 11% by 2021. Treatment Algorithm For PAH Patients Right-sided heart catheterization (RHC) is generally used to establish the hemodynamic criteria to arrive at a diagnosis for PAH. If PAH is confirmed at an expert center, then an acute vasoreactivity test is conducted to identify a small number of PAH patients (< 15%) that are vasoreactive and can be successfully treated with highdose calcium channel blockers like nifedipine, diltiazem and amlodipine. All of these drugs are available as generics. A majority of diagnosed PAH patients, however, are non-vasoreactive and thus their treatment sequence is determined by their WHO functional classification. Low-risk WHO FC II and intermediate-risk WHO FC III patients start treatment with either a single agent or a combination of agents. ERA, PDE-5i, GCS, IP agonists drugs are used in the monotherapy setting, and ERA+PDE-5i is commonly used in the combination setting. For WHO FC III patients, due to their higher risk profile, can also start with a prostacyclin as a monotherapy. A prostacyclin is then added to the ERA or WATSON LABORATORIES, INC., IPR2017-01622, Ex. 1083, p. 5 of 10 www.cowen.com 2251

ERA+PDE-5i in the combination setting. High risk WHO FC IV patients can be initiated with a prostacyclin or prostacyclin in combination with ERA or ERA+PDE-5i. Given that PAH is a chronically progressive disease, initial treatment regimens tend to produce less adequate clinical responses over time. In such scenarios, double or triple drug combinations therapies have become increasingly employed. Treatment Algorithm For PAH Patients Source: Cowen and Company, 2015 ESC/ERS Guidelines Physicians Start Patients On Monotherapy or Combination, And Add More As The Disease Progresses The latest treatment guidelines from the European Society of Cardiology and the European Respiratory Society, presented in 2015, provides a hierarchy of recommendations for the use of approved drugs in patients with PH based on the level of available evidence, general consensus, efficacy and safety. Drugs are classified as class I (recommended), class IIa (should be considered), class IIb (may be considered), and class III (not recommended) for WHO functional class II, III and IV. The table below provides the hierarchy for drugs for use as monotherapy, initial combination and sequential combination. Monotherapy: All three approved drugs (ambrisentan, bosentan, and macitentan) in the ERA class and the GCS class drug riociguat are recommended for use as monotherapy in WHO-FC II and III patients. In the PDE-5i drug class, sildenafil and tadalafil are recommended over vardenafil. Selexipag is the only drug targeting the prostacyclin pathway recommended for WHO-FC II patients. Prostacyclins are generally recommended as monotherapy for WHO-FC III patients. Epoprostenol i.v. is the only prostacyclin recommended as monotherapy in WHO-FC IV patients. 2252 WATSON LABORATORIES, INC., IPR2017-01622, Ex. 1083, p. 6 of 10 www.cowen.com

Combination: For initial combinations in WHO-FC II and III patients, ambrisentan + Tadalafil is the recommended ERA + PDE-5i combination. For sequential combinations in WHO-FC II and III patients, ERA (macitentan) added to PDE-5i (sildenafil), GCS (riociguat) added to ERA (bosentan) and Prostacyclin (selexipag) added to ERA and/or PDE-5i are recommended. In addition, for WHO-FC III patients, PDE-5i (selexipag) added to Prostacyclin (epoprostenol i.v.) is also recommended. For WHO-FC IV patients, initial and sequential combinations are restricted to a lower level of recommendation (class II). GCS class drug riociguat added to PDE-5i is the only sequential combination that is not recommended (class III) for PAH patients. Physicians choice of an initial agent depends largely on the severity of a patient s disease. Our consultants treat the majority of Class II or III patients initially with either a PDE5 inhibitor (Revatio or Adcirca) or an endothelin receptor antagonist (Opsumit, Tracleer or Letairis). Our consultants note that there is no scientific data that makes any one of the oral therapies an overwhelming favorite for treatment naïve patients. Some use an endothelin receptor antagonist (either Letairis or Opsumit) first, while others use a PDE5 inhibitor, most specifically Adcirca. Physicians traditionally did not consider that there was sufficient data to support the use of combination therapy in treatment naïve patients. However, in 2015 Gilead/GSK reported that the AMBITION trial of first-line Letairis + Adcirca, compared to either agent as a monotherapy, demonstrated a significant reduction in the risk of clinical failure. This was not an expected result and the findings from the AMBITION study are considered paradigm changing, and has prompted the standard of care to include the use of combinations earlier in the course of treatment in the first-line setting. Data from AMBITION was added to the Letairis label in October 2015. If a patient has not improved within 6-8 weeks, or if a patient progresses through their first-line therapy, a second agent is typically added. For patients on a PDE-5 inhibitor, an endothelin receptor antagonist (ERA) such as Actelion s Opsumit, Actelion s Tracleer or Gilead s Letairis, is then added. For those patients already on an ERA, then UTHR s Adcirca is typically added. Within the PDE-5 class Adcirca is the physicians first choice therapy as it is dosed once per day, which is more convenient than Revatio, which is dosed three times per day. Physicians also note that the labeled dose of Adcirca is considered more effective than the labeled dose of Revatio, which is lower than the optimal dose in Revatio s clinical trials. Although Revatio generics are available, thus far physicians do not report being forced by payors to use them ahead of Adcirca. Our consultants suggest each ERA has certain benefits and drawbacks. Which agent they choose for any particular patient depends on the etiology of the patient s PAH, and on the data that has been generated for each agent in the specific patient population. Physicians generally prefer either Letairis or Opsumit over Tracleer, as the former are dosed once per day (while Tracleer is dosed twice per day), and Tracleer is associated with a higher rate of liver toxicity (~10% of Tracleer patients develop elevated liver enzyme levels, while few patients on either Opsumit or Letairis do). Patients whose disease deteriorates further are prescribed an oral, inhaled or infused (for very severe disease) prostacyclin. For their infused option, our consultants prefer subcutaneous Remodulin, and will switch a patient to intravenous Remodulin if injection site pain becomes a problem. They typically do not use much epoprostenol. WATSON LABORATORIES, INC., IPR2017-01622, Ex. 1083, p. 7 of 10 www.cowen.com 2253

Classes Of Recommendation For Approved Drugs Source: Cowen and Company, 2015 ESC/ERS Guidelines PAH Clinical Trials Drugs for PAH are typically approved based on randomized clinical trials comparing the drug to placebo. Head-to-head trials are seen in the combination setting and are generally not required to gain approval as a single agent. Single agent trials have been historically performed with no background therapy or on top of an ERA and/or a PDE- 5i. For the primary endpoint, 6-minute walk distance (6MWD) is the historically preferred endpoint for regulatory approval. However, this is changing with the advent 2254 WATSON LABORATORIES, INC., IPR2017-01622, Ex. 1083, p. 8 of 10 www.cowen.com

of drugs like Uptravi, which was approved based on what is increasingly viewed as a more clinically relevant TTCW (time to clinical worsening) endpoint. 6MWD: The 6-minute walk distance test, a submaximal exercise test, has been the preferred primary endpoint used in clinical trials to demonstrate efficacy. The test is generally reproducible, safe, not complicated to perform, and familiar to patients. Results of the 6MWD test, however, have been shown to be influenced by several factors: age, sex, body habitus, learning curve, coaching and motivation, hence making it a less than ideal clinical endpoint. Superiority in 6MWD over placebo results in a label indicating that the drug has been shown to improve exercise capability in PAH patients. TTCW: A new primary endpoint is emerging in the form of an event driven endpoint denoted by Time To Clinical Worsening. This composite endpoint takes into account key morbidity outcomes as well as mortality. TTCW is now favored over 6WMD as it is less subjective and considered a more clinically relevant measure of therapeutic efficacy. Three recent trials (SERAPHIN, AMBITION, and GRIPHON) have successfully used this endpoint and results have had a major influence on treatment selection in PAH. PAH Drugs Randomized Clinical Trials Summary Source: Cowen and Company Actelion s Tracleer Was The First Oral Therapy For PAH; Its Final Orange Book Listed Patent Has Expired Actelion s Tracleer (bosentan) is an oral endothelin-1 antagonist. Endothelin-1 is a potent vasoconstrictive peptide that also plays a role in vascular remodeling. Tracleer binds to both the ET A and ET B endothelin receptors, resulting in vasodilation of the pulmonary arterial system. Tracleer may also ameliorate vascular remodeling. With a half-life of roughly five hours, Tracleer is administered twice per day. WATSON LABORATORIES, INC., IPR2017-01622, Ex. 1083, p. 9 of 10 www.cowen.com 2255

United Therapeutics PAH Worldwide Revenue Model ($000) Remodulin 2014A 2015A Q1:16A Q2:16A Q3:16A Q4:16A 2016A Q1:17E Q2:17E Q3:17E Q4:17E 2017E 2018E 2019E 2020E 2021E Avg # s.c. Remodulin patients, US 1706 1843 1768 2058 1950 1941 1929 1873 1873 1910 1910 1891 1790 1550 1390 1250 # s.c. Remodulin patients, ROW 394 325 350 350 350 350 350 400 400 400 400 400 400 400 400 400 # s.c. Remodulin patients, W/W 2100 2168 2118 2408 2309 2291 2282 2273 2273 2310 2310 2291 2190 1950 1790 1650 Revenue/patient (000s) 132 132 33 33 33 33 132 33 33 33 33 132 140 140 140 140 S.C. Remodulin revenue (000s) $277,218 $286,110 $69,894 $79,464 $76,197 $75,603 $301,158 $75,000 $75,000 $76,230 $76,230 $302,460 $306,600 $273,000 $250,600 $231,000 Avg # i.v. Remodulin patients, US 2015 1847 1768 2057 1950 1941 1929 1873 1873 1910 1910 1891 1790 1550 1390 1250 # i.v. Remodulin patients, ROW 80 325 350 350 350 350 350 400 400 400 400 400 400 400 400 400 # i.v. Remodulin patients, W/W 2095 2172 2118 2407 2309 2291 2281 2273 2273 2310 2310 2291 2190 1950 1790 1650 Revenue/patient (000s) 132 132 33 33 33 33 132 33 33 33 33 132 140 140 140 140 I.V. Remodulin revenue (000s) $276,508 $286,727 $69,906 $79,431 $76,197 $75,603 $301,137 $75,000 $75,000 $76,230 $76,230 $302,460 $306,600 $273,000 $250,600 $231,000 Infused Remodulin revenue (000s) $553,726 $572,837 $139,800 $158,895 $152,394 $151,206 $602,295 $150,000 $150,000 $152,460 $152,460 $604,920 $613,200 $546,000 $501,200 $462,000 Tyvaso 2014A 2015A Q1:16A Q2:16A Q3:16A Q4:16A 2016A Q1:17E Q2:17E Q3:17E Q4:17E 2017E 2018E 2019E 2020E 2021E Avg # inhaled prostacyclins patients, US 4500 5000 5100 5100 5100 5100 5100 5100 5100 5100 5100 5100 5100 5100 5100 5100 Revenue/patient (000s) 126 126 32 32 32 32 126 32 32 32 32 126 126 126 126 126 # patients on Tyvaso 3675 3731 3244 3397 3232 2971 3211 3200 3200 3200 3200 3200 3300 3200 2976 2556 U.S. Tyvaso revenue $463,068 $470,067 $102,200 $107,006 $101,808 $93,587 $404,600 $100,800 $100,800 $100,800 $100,800 $403,200 $415,800 $403,200 $375,000 $322,000 # inhaled prostacyclin patients, ROW 2000 2000 2600 2700 2800 2900 2750 2800 2800 2800 2800 2750 2800 2800 2800 2800 Revenue/patient (000s) 126 126 32 32 32 32 126 32 32 32 32 126 126 126 126 126 # patients on Tyvaso 0 0 0 0 0 0 0 0 0 0 0 0 0 198 397 476 ROW Tyvaso revenue $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $25,000 $50,000 $60,000 Tyvaso Inhaled Remodulin revenue (000s) $463,068 $470,067 $102,200 $107,006 $101,808 $93,587 $404,600 $100,800 $100,800 $100,800 $100,800 $403,200 $415,800 $428,200 $425,000 $382,000 Adcirca 2014A 2015A Q1:16A Q2:16A Q3:16A Q4:16A 2016A Q1:17E Q2:17E Q3:17E Q4:17E 2017E 2018E 2019E 2020E 2021E Diagnosed PAH Patients, US 25526 26803 27500 27950 28350 28772 28143 29550 29550 29550 29550 29550 31028 32579 34208 35920 Avg # Adcirca patients, US 14520 17734 18284 22666 23700 27550 23050 20000 22000 24000 14583 20146 2015 1007 907 889 Revenue/patient (000s) 15 16 4 4 4 4 16 4 4 4 4 17 17 18 18 18 U.S. Adcirca Revenue (000s) $221,472 $278,832 $72,601 $90,901 $95,998 $112,708 $372,207 $83,048 $91,352 $99,657 $60,556 $334,613 $34,465 $17,750 $16,454 $16,000 Orenitram 2014A 2015A Q1:16A Q2:16A Q3:16A Q4:16A 2016A Q1:17E Q2:17E Q3:17E Q4:17E 2017E 2018E 2019E 2020E 2021E Diagnosed PAH Patients, US 25526 26803 27500 27950 28350 28772 28143 29550 29550 29550 29550 29550 31028 32579 34208 35920 Revenue/patient (000s) 200 155 35 35 35 35 140 38 38 38 38 150 160 170 170 170 # patients on Orenitram 206 801 1149 1086 1163 1094 1123 1075 1100 1150 1200 1131 1300 1450 1600 1765 U.S. Orenitram revenue $41,266 $118,450 $40,200 $38,010 $40,705 $38,290 $157,205 $40,313 $41,250 $43,125 $45,000 $169,688 $208,000 $246,500 $272,000 $300,050 Diagnosed PAH Patients, ROW 25526 26803 27500 27950 28350 28772 28143 29550 29550 29550 29550 29550 31028 32579 34208 35920 Revenue/patient (000s) 100 100 25 25 25 25 100 25 25 25 25 100 100 100 100 100 # patients on Orenitram 0 0 0 0 0 0 0 0 0 0 0 0 150 500 700 1000 ROW Orenitram revenue $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $15,000 $50,000 $70,000 $100,000 Orenitram revenue (000s) $41,266 $118,450 $40,200 $38,010 $40,705 $38,290 $157,205 $40,313 $41,250 $43,125 $45,000 $169,688 $223,000 $296,500 $342,000 $400,050 Source: Cowen and Company Orenitram s Clinical Program Yielded Mixed Results Dosing Issues Tripped Up FREEDOM-C In 2008 The first Phase III trial produced top-line data in November 2008. FREEDOM-C was a 300-patient combination study with other oral agents including Revatio and/or Tracleer in PAH patients failing oral regimens. In its primary endpoint of 6MWD at week 16, Orenitram produced a median change of 11m, p=0.072, just missing statistical significance. As initially designed, patients in FREEDOM-C were started on 1mg Orenitram BID, and patients were to be up-titrated by 1mg BID every week. Not only was 1mg the starting dose, and expected dose increment, but the drug was available only in a 1mg pill size, meaning lower doses or smaller dosing increments were not possible. This dosing paradigm was problematic. Prostacyclins like treprostinil have relatively harsh side effects such as nausea, vomiting, and flushing that are dose-related. To minimize the side effects, patients are typically started at low doses, and as the patients acclimate, the dose is increased to get the patient into the therapeutic range gradually, over weeks. Unfortunately, Orenitram was somewhat more bioavailable than United Therapeutics had originally thought, meaning that patients were being started on and up-dosed by too large of a dose. Many patients experienced harsh prostacyclin-like side effects. United Therapeutics realized its mistake, and worked to introduce smaller Orenitram pill sizes that would permit both a lower starting dose and smaller dose increments. A 0.5mg pill was introduced in July 2007 when the trial had enrolled about 2278 WATSON LABORATORIES, INC., IPR2017-01622, Ex. 1083, p. 10 of 10 www.cowen.com